Oncor Purchasers Commit To Make "Recommendation" on Merging Oncor, Sharyland Utilities; Would Also File Oncor Rate Case in 2017

Various Hunt Consolidated companies seeking to acquire Oncor have made additional merger commitments in rebuttal testimony filed with the Public Utility Commission of Texas, including a commitment to make a recommendation concerning the potential combination of Oncor and Sharyland Utilities.

As first reported by EnergyChoiceMatters.com, PUCT Staff had recommended in testimony that if the Hunt companies' acquisition of Oncor is approved, then the new owners should be required to study any potential savings that might result from a possible business combination with Sharyland Utilities, L.P., which would be a sister company of the new Oncor.

The Hunt companies seeking to purchase Oncor have now committed to, "prepare a recommendation with respect to a possible business combination with Sharyland Utilities, L.P. within six months after closing and submit it to the Commission."

While the Hunt companies committed to making a, "recommendation," regarding a possible combination of the Oncor and Sharyland utilities, we note the commitment is devoid of certain language used in Staff's specific proposals, including the absence of the term, "study" in the purchasers ' new commitment (purchasers are only committing to make a, "recommendation," with no discussion on what such recommendation would be based).

Specifically, Staff has proposed that purchasers be required to file a, "study to investigate potential net benefits to ratepayers that could be generated by the affiliate relationship between OEDC [post-transaction Oncor Electric Delivery Company] and Sharyland, or by the potential combination of AssetCo/OEDC and SDTS/Sharyland. The examination of such benefits should include, but not be limited to, implications to service reliability, the process for planning future infrastructure, operational benefits of the relationship, improvements in service and/or reliability, and cost reductions. The study should compare scenarios where the utilities remain separate entities and where they combine."

Staff specifically proposed that the Oncor purchasers, "report on the feasibility and logistics of consolidating the operations of Oncor and Sharyland."

Staff also proposed that the purchasers submit a, "filing that details a plan to analyze the steps necessary to appropriately effectuate this outcome [a combination of Oncor and Sharyland]."

The new commitment does not address these specific proposals from Staff in terms of the content for any study and subsequent filing

The purchasers have also committed to file a general base rate case for Oncor by July 1, 2017. "This will allow the Commission and interested stakeholders to review the costs of Oncor AssetCo and OEDC and to establish new rates after the structure has been put in place," the purchasers said.