Dive Brief:

• NextEra Energy has agreed to buy Oncor Electric Delivery from its parent company Energy Future Holdings (EFH) in a deal valued at $18.4 billion.
• The deal is part of a larger plan to help EFH emerge from bankruptcy. NextEra plans to fund $9.5 billion, primarily to repay EFH's debt, as a part of the deal. 
• The move comes two weeks after Hawaii regulators rejected NextEra's plan to buy Hawaiian Electric Industries, the parent company of the state's dominant electric providers, on July 15. Texas real estate firm Hunt Consolidated walked away from an approved deal to acquire Oncor in May over stipulations regulators put on the acquisition.

Dive Insight:

When NextEra's plan to acquire HEI began to falter in Hawaii, analysts began to speculate that Oncor could be its next target. 

Now, it appears to have beaten out Warren Buffett's Berkshire Hathaway and Edison International, both floated as interested parties by analysts in recent weeks. 

The transmission and distribution utility provides power to more than 10 million consumers in Northeast and West Texas. Oncor is widely considered as EFH's most valuable asset and has been on the auction block since the holding company tumbled into bankruptcy in 2014. 

Last summer, some analysts named NextEra as the leader in the race to acquire Oncor, but it was upstaged by Texas real estate magnate Ray Hunt and a consortium led by his Hunt Consolidated company, which proposed to convert Oncor into a Real Estate Investment Trust.

That plan raised eyebrows throughout the power sector. While common in other industries, no utility of Oncor's size has taken on a REIT structure, which are designed to help avoid tax liabilities and provide high dividend yields to investors. Texas regulators approved the deal, but attached stipulations they said would help ensure the $250 million in estimated annual tax savings would be split with customers. 

Hunt balked at those provisions, at first filing for reconsideration of its application and then withdrawing it altogether a day before regulators were scheduled to vote on the matter. 

In Hawaii, NextEra's failed effort to acquire HEI was more straightforward. In a nearly two-year proceeding, the company failed to convince most stakeholders and state regulators that it could improve the state's electricity service and help it meet its 100% renewable energy mandate by 2045. In their ruling, regulators wrote they had confidence NextEra could run HEI, but saw no public benefit from changing control of the company. 

NextEra looked to head off that argument from cropping up in Texas on Friday, writing in a release that it can bring the EFH subsidiary back to financial health. The Florida-based company touted its strong balance sheet, promising to fund $9.5 billion to repay EFH debt. Of that amount, some investors will be paid in cash, others in NextEra stock. 

NextEra, which also owns Florida Power & Light, said a better credit rating would bring lower borrowing costs to Oncor, ultimately translating into lower customer bills. 

The deal is subject to bankruptcy court approval of EFH's plan of reorganization, approval by Texas utility regulators, the Federal Energy Regulatory Commission, and the expiration or termination of the waiting period under the Hart-Scott-Rodino Act. If EFH opts to sell Oncor to a different company, it must pay NextEra $275 million under the terms of the agreement.