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Berkshire Hathaway Energy Commits To Provide Bill Credits (Likely Through REPs) As Part of Proposed Oncor Acquisition

Other Commitments Address Use of Utility Logo, Code of Conduct


July 10, 2017

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Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

As part of 44 regulatory commitments Berkshire Hathaway Energy has made in its proposed acquisition of Oncor, disclosed in an SEC filing, Berkshire Hathaway Energy has proposed to provide certain rate credits to customers.

The specific mechanism to implement any rate credit was not set forth in the commitment.

Rather, "BHE and Oncor agree to work in good faith with interested parties to determine an acceptable method for implementation of any bill credit to effectuate this commitment, as approved by the Commission. At a minimum, Oncor shall provide retail electric providers 45-day notice of the amount of any customer credits (e.g., for each customer class, the amount per kwh or per-customer credit that would apply) prior to the effective date of the credits and shall implement updated bill credits simultaneously with other changes in Oncor’s rates," the commitment states

As a result of the commitments, Berkshire Hathaway Energy reported that the Staff of the Public Utility Commission of Texas, the Office of Public Utility Counsel, Texas Industrial Energy Consumers, and the Steering Committee of Cities Served by Oncor have agreed to support approval of a transaction by BHE to acquire 100% of Oncor subject to review of the application presented to the PUCT and confirmation that the transaction includes the 44 regulatory commitments contained in the merger agreement and that the transaction otherwise meets the PUCT requirements necessary to find that the transaction is in the public interest.

The rate credit commitment specifically states: "Tangible and Quantifiable Benefits. At a minimum, Oncor will provide the following tangible and quantifiable benefits associated with the merger. Oncor will provide monthly bill credits to electric delivery rates for ultimate credits to customers in an amount equal to 90% of any interest rate savings achieved until: final rates are set in the next Oncor base rate case after the Oncor base rate case currently filed. Savings will not be included in credits if already realized in rates. Interest Rate Savings refers to the improvement in Oncor’s borrowing costs post-close relative to those costs as of June 30, 2017 due to improvement in credit ratings and/or improvement in market spreads. Until final rates are set in the next Oncor base rate case after the Oncor base rate case that is currently filed, Oncor will file a report with the Commission every six months detailing any interest rate savings determined by the amount of debt issued by Oncor by at least 0.15% (amounts above 0.15% being based on actual interest rate savings by Oncor) and demonstrating a calculation of the credit. BHE and Oncor agree to work in good faith with interested parties to determine an acceptable method for implementation of any bill credit to effectuate this commitment, as approved by the Commission. At a minimum, Oncor shall provide retail electric providers 45-day notice of the amount of any customer credits (e.g., for each customer class, the amount per kwh or per-customer credit that would apply) prior to the effective date of the credits and shall implement updated bill credits simultaneously with other changes in Oncor’s rates. In addition, one year after closing, Oncor will present a merger synergy savings analysis to the Commission and provide monthly bill credits to electric rates for inclusion in customer bills in an amount equal to 90% of any synergy savings until final rates are set in the next Oncor base rate proceeding, in which any total synergy savings shall be reflected in Oncor’s rates."

Other notable commitments include:

• Name/Logo Commitment. BHE commits to maintaining a name and logo for Oncor that is separate and distinct from the names of BHE’s REP and wholesale generation companies, if any.

• Code of Conduct. Oncor will continue to conduct its activities in compliance with its existing code of conduct.

• No Recovery of Affiliate REP Bad Debt Commitment. So long as any BHE REP is affiliated with Oncor, Oncor will not seek to recover from its customers any costs incurred as a result of a bankruptcy of any BHE REP.

• Texas Utility Commitment. Oncor will continue to operate solely within the state of Texas as a public utility subject to the continuing jurisdiction of the Commission.

• Commission Jurisdiction. Oncor and Oncor Holdings will not own, operate, or construct capital assets outside of ERCOT without prior approval from the Commission or take any other action that would impair the Commission’s regulatory jurisdiction. Neither Oncor, Oncor Holdings, BHE nor their respective affiliates will take any action that would subject ERCOT assets to the jurisdiction of the Federal Energy Regulatory Commission (“FERC”); provided, however, that FERC continues to have jurisdiction under sections 210, 211, and 212 of the Federal Power Act (“FPA”) and may direct transmission and interconnection services over certain existing facilities outside of ERCOT; provided further that the existing reliability and critical infrastructure standards administered by the North American Electric Reliability Corporation (“NERC”), through delegation of authority from FERC, may affect the operations of assets that are deemed part of the bulk electric system.

Other commitments address board independence and governance as well as dividends

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