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Texas regulators again deny approval for NextEra’s $18bn acquisition of Oncor

Published 08 June 2017

Texas regulators have denied approval for NextEra Energy’s proposed deal to buy the state’s largest transmission operator, Oncor Electric Delivery, for a second time.

The Public Utility Commission of Texas has approved an order to reject a rehearing of NextEra's application to acquire Oncor for $18.4bn.

NextEra filed an application with the commission for a rehearing on the acquisition deal after it was first rejected by the authorities in March this year.

In August 2016, NextEra agreed to purchase an 80% stake in Oncor from Energy Future Holdings (EFH). The sale was part of EFH’s restructuring plan to exit bankruptcy.

Under the terms of the agreement, NextEra agreed to fund $9.5bn, mainly to repay the debt of EPH.

Later, in November last year, NextEra agreed to purchase the remaining 20% stake in Oncor Electric Delivery for $2.4bn.

As part of the deal, the company agreed to merge with Texas Transmission Holdings (TTHC), which holds an indirect stake of about 20% in Oncor.

Besides, NextEra agreed to buy the remaining 0.22% interest in Oncor that is owned by Oncor Management Investment (OMI) for approximately $27m.

The commission said: “At no time during the proceeding did NextEra Energy amend its application to seek approval of the transaction to acquire the 19.75% interest in Oncor held by Texas Transmission Holdings. 'NextEra Energy offered no evidence to evaluate this single, standalone transaction.

“Based on the evidentiary record, the Commission is unable to evaluate NextEra Energy's proposed transaction with Texas Transmission 'Investment on a standaloné basis.”

An approval for NextEra’s transactions with EFH, TTHC and OMI would have resulted in 100% percent ownership of Oncor.

The commission added: “While NextEra Energy is a well-regarded utility holding company, the expansive and diversified , structure of NextEra Energy and its affiliates would subject Oncor to new and potentially substantial risks.”


Image: Electric power transmission with overhead line. Photo courtesy of Guam~commonswiki/Wikipedia.