Dive Brief:
- Texas regulators may be nearing approval of Hunt Consolidated's $18 billion plan to purchase Oncor out of bankruptcy, but Fuel Fix reports the proposed order would push back a decision on a controversial $250 million annual tax savings the utility's investors could see.
- Hunt's plan to operate Oncor as a Real Estate Investment Trust would generate significant tax savings, and regulators at the Public Utility Commission of Texas have been debating how that windfall could be shared with ratepayers.
- The PUC had been slated to rule on the case earlier this week, but pushed a decision back until Thursday as they hash out details of the complicated plan.
Dive Insight:
Debate surrounding Hunt's plan for Oncor has focused, for weeks, on the tax reduction scheme aimed at generating a $250 million annual windfall for the utility's investors. At least two of the PUC's three commissioners are backing a proposal outlining how Hunt's plan to operate Oncor as a Real Estate Investment Trust would function, including how ratepayers and investors can share the savings.
As part of the plan to pull Energy Futures Holding out of bankruptcy, a group of creditors want to split the company into two halves, with Hunt Consolidated leading a group of creditors which will own regulated transmission and distribution utility Oncor, and another group taking over the struggling power generation assets.
A decision had been expected Monday, but Fuel Fix reports it has been delayed until tomorrow. But a key portion of the deal, the tax savings issue, could be pushed off for a later decision. According to the Houston Chronicle's energy blog, the PUC's draft decision approves the deal with stipulations, but would delay determining what to do on the tax issue for two years, when the the utility's rates come up for review.
Fuel Fix noted that it is unknown if Hunt will accept the conditions placed on the deal.
