Sempra nabs Texas regulatory approval to buy Oncor

Dive Brief:

Texas regulators have approved Sempra Energy's $9.45 billion acquisition of bankrupt Energy Future Holdings and its utility subsidiary Oncor Electric, bringing to a close a four-year search for new ownership.
Sempra has succeeded where several other high profile bidders did not. The Public Utilities Commission of Texas halted several proposals as it sought a buyer with financial stability and one willing to commit to maintaining Oncor's independence.
Oncor serves 3.5 million customers and operates 134,000 miles of power lines in the Lone Star state. Worldwide, Sempra serves about 32 million. The deal remains subject to some customary closing conditions but Sempra says it expects the acquisition will be completed this year.

Dive Insight:

The list of companies that attempted to acquire Oncor is impressive: Hunt Consolidated, NextEra Energy and Berkshire Hathaway. The companies proposed a variety of deals, each seeming to hew closer to what Texas regulators were looking for.

Oncor parent company EFH filed for bankruptcy in 2014 and regulators were wary of how any deal might impact customers. Late last year, PUC Commissioner Kenneth Anderson Jr. 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," he wrote.

Ultimately, Sempra cracked the code.

Utility Dive named Oncor-Sempra the "Deal of the Year" in 2017, due to the company's long list of suitors. Oncor is an attractive utility asset, generating about $15 billion in annual earnings. Sempra and EFH signed their deal in August of last year, and Texas' regulators signoff was the final major approval needed to close. Notably, Sempra was able to bring a wide range of stakeholders on board.

Notably, Sempra ensured that settlement with stakeholders includes the kind of strict "ring fencing" provisions to protect ratepayers that previous suitors failed to propose. The lack of such provisions killed NextEra's bid to acquire Oncor before Sempra announced its bid.

Last month Sempra announced it had secured support from all stakeholders involved in the regulatory proceeding, including the Texas Legal Services Center, which represents low income customers and had been the lone holdout. Other supportive entities included the staff of the PUC, and groups representing industrial consumers, renewable energy companies and cities served by Oncor.