Dive Brief:
- Staff of the Public Utility Commission of Texas believe additional consumer protections need to be put in place before regulators sign off on NextEra's plan to purchase Oncor Electric Delivery Co., the largest utility in the state.
- NextEra Energy has significant merchant generation, which staff said carries "much more risk than that of a T&D utility," particularly if protective ring-fencing keeping Oncor at distance from the parent company is removed.
- Last month the Federal Energy Regulatory Commission approved NextEra's plan to purchase Oncor out of the bankruptcy proceeding of its parent company, Energy Future Holdings
Dive Insight:
Texas regulators are mulling NextEra's plan to purchase Oncor, but despite a lengthy process that has spanned multiple proposed deals and approaches, staff are urging caution.
The deals are "not in the public interest as filed," staff said in an opinion published this month. "However, the public interest standard could be met if the Commission incorporates additional substantive changes to the applicants proposed commitments."
"NextEra Energy has high levels of non-utility business, including one of the largest positions in wholesale electric generation in the U.S.," staff wrote. "Its generation operations include the riskier merchant and nuclear generation sectors that pose substantial risks to other NextEra Energy affiliates."
Among proposed safeguards, staff said the commission may need to direct NextEra to consider alternatives and seek credit rating assessments to determine whether the commission's conditions affect credit linkage, any targeted credit rating, or if alternatives exist for maintaining targeted credit ratings.
Last year, the PUC approved a draft preliminary decision approving the deal, though regulators expressed concerns about provisions related to the rights of minority owners of Texas Transmission Investment (TTI). NextEra intends to purchase TTI, which owns a 20% indirect interest in Oncor.
In 2016 a bankruptcy court in Delaware authorized NextEra's deal to buy the utility valued at more than $18 billion. TTI will be acquired in a separate $2.4 billion transaction
