Dive Brief:
- Sempra Energy announced Thursday it has secured support from all stakeholders involved in the regulatory proceeding over its $9.45 billion purchase of bankrupt Energy Futures Holdings and its prized Texas utility, Oncor.
- The Texas Legal Services Center, which represents low income customers, previously opposed the merger, but it joined nine other stakeholder groups this week in supporting a settlement agreement on the deal. Other supportive entities include the staff of the Public Service Commission of Texas (PUCT) and groups representing industrial consumers, renewable energy companies and cities served by Oncor.
- Sempra, Oncor and the PUCT staff on Jan. 5 asked PUCT regulators to approve the deal. The commission last year set a timeline to conclude the merger review by April 2018, with a hearing this month.
Dive Insight:
Four companies in two years have seen their bids for Oncor turn sour, but securing support from stakeholders in the merger docket could help Sempra's offer make it over the finish line.
"Gaining unanimous stakeholder support in the regulatory process represents an important milestone for our proposed acquisition of a majority stake in Oncor," Debra L. Reed, chairman, president and CEO of Sempra Energy said in a statement. "We remain focused on working with the PUCT to support its review of our proposal's benefits for the state of Texas."
Along with the Legal Services Center and PUCT staff, parties supporting the merger include the Office of the Public Utility Counsel, Steering Committee of Cities Served by Oncor, Texas Industrial Energy Consumers, The Alliance for Retail Markets and the Texas Energy Association for Marketers, Oncor indicated.
Many stakeholders, however, also supported previous bids to purchase EFH or Oncor, only to see regulators deny the deals. In 2016, real estate firm Hunt Consolidated withdrew its merger bid in response to financial stipulations regulators put on the deal. Then, last year, regulators rejected NextEra Energy's acquisition terms and EFH bondholders blocked a bid from Berkshire Hathaway Energy.
Texas regulators have sought to ensure that Oncor's finances would be separate from any larger company that buys it, outlining their concerns about the Sempra deal in an October memo. Sempra and Oncor say the settlement deal that stakeholders support includes the kind of strict "ring fencing" provisions to protect ratepayers that previous suitors failed to propose.
"Oncor and its long list of suitors" was named "Deal of the Year" by Utility Dive. You can read more about the deal's history here.
