Dive Brief:
- A bankruptcy judge in Delaware has approved a plan for Energy Futures Holdings to exit bankruptcy, with only the Railroad Commission of Texas still to yet to weigh in. Utility subsidiary Oncor will be sold, with that transaction reviewed by the Public Utilities Commission of Texas (PUCT).
- The plan calls for a tax free spinoff of TCEH, Luminant and TXU Energy; if the plan is approved by state regulators, "Reorganized TCEH” would emerge from bankruptcy.
- As for the company's 80% stake in regulated utility Oncor, NextEra Energy appears to be the leading bidder with an $18.4 billion offer on the table.
Dive Insight:
A decision by the U.S. Bankruptcy Court for the District of Delaware was the next step for Oncor to exit bankruptcy, and now the plan must be approved by the PUCT. That's where the previous deal broke down, but NextEra Energy's offer is a more traditional—and likely, less contentious—offer for Oncor.
A previous offer by Hunt Consolidated would have operated Oncor as a Real Estate Investment Trust (REIT), but the deal fell apart when regulators attached conditions to the tax benefits.
Stacy Nemeroff, a utilities analyst with Bloomberg Intelligence, told Utility Dive that the deal has a better chance of being approved this time around. "NextEra is a more traditional utility holding company," she said. "They have good relationships there, billions of dollars in assets in Texas. All that transmission bringing wind power."
Energy Futures Holdings said in a statement they anticipate a final approval from the Railroad Commission of Texas anticipated in September. Following that approval, the company said TXU Energy and EFH Business Services would be collectively known as “Reorganized TCEH.”
EFH and Energy Future Intermediate Holdings continue to be in the Chapter 11 restructuring process, saddled with roughly $42 billion in debt. Those entities own an 80% stake in Oncor, and the companies said the "confirmation hearing related to emergence for these assets is slated to begin Dec. 1."
