Sempra Energy in bid to take owning interest of Oncor Electric Delivery Company
Sempra Energy put forward an agreement this week that would give them ownership of Energy Future Holdings Corp. (Energy Future) and, as a bonus, 80 percent of Oncor Electric Delivery Company, LLC (Oncor).
The major move would put Sempra in controlling interest of the largest electric transmission and distribution system in Texas, which is indirectly owned by Energy Future. In the process, Sempra would pay approximately $9.45 billion for the acquisition. This would consequently solve Energy Future’s ongoing bankruptcy case and make Sempra responsible for Oncor’s debts.
“Both Sempra Energy and Oncor share more than 100 years of experience operating utilities that deliver safe, reliable energy to millions of customers,” Debra L. Reed, chairman, president and CEO of Sempra Energy, said. “We believe our agreement with Energy Future will help ensure that Texas utility customers continue to receive the outstanding electric service they have come to expect from Oncor and provide stability to Oncor’s nearly 4,000 employees.”
Furthermore, despite the massive purchase agreement, Sempra expects the transaction to be positive to their earnings beginning as early as 2018. To fund the purchase, Sempra will use its own debt and equity, third-party equity and $3 billion of anticipated investment-grade debt within Energy Future, which will be reorganized. When concluded, Sempra will possess 60 percent equity ownership of Energy Future.
Despite the purchase, Oncor will retain independence of its board of directors. However, of its 13 directors, two will still be from existing equity holders and two will come from its new Sempra Energy-controlled holding company.
“It is important for Oncor to remain financially strong,” Reed said. “Our proposal will help bring a satisfactory resolution to Energy Future’s bankruptcy case, keep Oncor financially strong, and protect Oncor customers while addressing the needs of Texas regulators, creditors, and the U.S. Bankruptcy Court.”
For the deal to go through, it still requires approval from the Public Utility Commission of Texas, U.S. Bankruptcy Court of Delaware, Federal Energy Regulatory Commission and the U.S. Department of Justice. If given the go ahead, though, Sempra also intends to support an Oncor plan to invest $7.5 billion into the expansion of its transmission and distribution network over the next five years.
