The wave of consolidation rolling through the utility industry for the past couple of years generated some huge deals and created enormous power companies. A prime example would be the 2016 merger of Pepco Holdings and Exelon Corp., resulting in the largest utility by customer base in the United States.

Facing stagnant demand growth, utilities turned to consolidation — and in doing so, helped foster an environment where major deals seemed eminent. This makes the Oncor Electric saga all the more strange.

Oncor, Texas’ largest transmission and distribution utility, has been seeking a new owner for more than two years. In that time, a stream of would-be buyers has come and gone — some making it further along in the process but all ultimately shut down by cautious regulators.

The list is impressive.

In 2015, Hunt Consolidated and a group of smaller creditors banded together to buy Oncor out of Energy Futures Holding's bankruptcy. The company filed for Chapter 11 bankruptcy in 2014, and since then has been working to sell its 80% stake in Oncor.

But Hunt's bid envisioned operating Oncor as a real estate investment trust, which made regulators uncomfortable. As proposed, the deal would have secured significant tax savings for investors while Oncor would have been the largest utility ever operated as a REIT.

The Public Utilities Commission of Texas has made clear that they are not interested in moving Oncor from one tough financial situation to another, and have rigorously pursued a buyer who would leave so-called "ring fencing" in place — protections that ensure Oncor operates independently from the new buyer's operations.

After nixing the Hunt proposal, NextEra Energy came to the table with a more traditional $18.4 billion plan that many believed was heading towards approval — until PUCT staff raised concerns about consumer risk in February, ultimately turning down the deal three times.

Berkshire Hathaway came next, floating a $9 billion offer. But one of EFH's major creditors, Elliott Management Corp., was critical that Berkshire Hathaway's bid undervalued Oncor. Elliott briefly considered its own $9.3 billion bid together for Oncor, but then turned to support Sempra Energy's $9.45 billion bid for EFH, giving the deal an enterprise value of about $18.8 billion.

Timeline

The long saga of Oncor

• April 2014

  Energy Future Holdings files for bankruptcy. EFH owns an 80% stake in Oncor, Texas’ largest transmission and distribution utility.

• September 2014

  CenterPoint Energy, NextEra Energy, Hunt Consolidated and Warren Buffett’s Berkshire Hathaway are reported as potential suitors for Oncor as EFH looks to spin itself out of bankruptcy. NextEra is touted as a “stalking horse” in its bid for the T&D utility.

July 2015

EFH announced plans to “reach rapid closure” in a deal with Hunt Consolidated.

August 2015

EFH taps Hunt Consolidated to acquire its assets out of bankruptcy in a deal expected to value Oncor at $18 billion. As part of the deal, EFH would be restructured into a Real Estate Investment Trust (REIT), managed by Hunt, but still owns Oncor’s assets.

December 2015

Staff at the Public Utilities Commission of Texas recommended regulators should reject Hunt’s plan. The Staff worried the plan would move $250 million annually from ratepayers to shareholders.

March 2016

The PUCT approves Hunt’s bid for Oncor, but added stipulations on the company’s projected tax windfall and set some details aside for later determination.

April 2016

Hunt asks for a rehearing as investors told the PUCT that the transaction “as currently configured” would not close based on the approval order.

May 2016

A group of investors led by Hunt Consolidated withdrew their proposal to purchase Oncor.

September 2016

NextEra resurfaces as a potential suitor for Oncor with an $18 billion bid. EFH earned approval from the Bankruptcy Court for the District of Delaware to enter into the deal.

January 2017

Federal regulators approve NextEra’s bid.

February 2017

Staff at the PUCT recommended regulators reject the deal over fears of consumer risk.

April 2017

The PUCT rejects NextEra’s bid over concerns about the independence of the utility's board and the possibility of increased risk for ratepayers. NextEra’s CEO Jim Robo in an earnings call says the company plans to urge the Commission to reconsider its decision.

June 2017

Texas regulators reject NextEra’s second – and largely unaltered – bid over the same concerns. NextEra again asked the PUCT to reconsider its proposal.

July 2017

The PUCT for a third time rejected NexTEra’s proposal and said it was time to move past its bid. In the same month, Warren Buffett’s Berkshire Hathaway announced a $9 billion all-cash deal to purchase EFH, acquiring Oncor as a result.

August 2017

Sempra announces a $9.5 billion bid for Oncor after EFH abandons Buffett’s proposal.

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And that's largely where things stand now. Successive bids in the past two years have raised the asking price while at the same time proposed financial structures have been simplified to appease cautious regulators. Oncor is considered a solid utility, serving more than 3 million homes and generating about $15 billion in annual earnings. And Sempra says it is the right company to take over.

The deal could close in the first half of next year, but Texas regulator Commissioner Kenneth Anderson Jr. last month issued a memo outlining a range of concerns about the deal and how best to protect customers.

"Our objective should be to ensure that Oncor is not being permitted to hop from one frying pan into another or even just into a simmering pot," Anderson wrote.

According to Angelo Thalassinos, senior distressed debt legal analyst at Reorg Research, Texas regulators have remained true to this concern throughout the process.

"This focus does not present a change in course for the PUCT, even now reviewing its third Oncor deal," said Thalassinos. Regulators have remained loyal to the idea that "a regulated utility and its parent should abide by a lower level of risk-tolerance," he said.

Regulators continue to ask tough questions. For instance, the commission has pressed Sempra to explain how events in California, where it is based, could possibly impact the Texas utility's operations. A spokesperson for the company said this is all expected.

The company's market capitalization over the past decade years has grown to nearly $29 billion from about $15 billion, and Sempra has committed to maintaining the ringfence protections regulators are demanding. In October, the company revised its offer for Oncor to entice regulators. The reworked proposal provided more certainty, as Sempra would purchase all of EFH as opposed to the 60% initially proposed. The revisions also seek to improve Sempra's long-term credit profile and eliminates third-party equity investors and EFH debt.