North and West Texas Utilities PR Struggles
Oncor, a utility company in Texas serving approximately 3 million homes and businesses is in the middle of a takeover bid by the company owned by the Ray L. Hunt Family. They’ve made a bid to buyout the largest stakeholder (80%) and parent of the utility company – Energy Future Holdings (EFU) to transition it into a Real Estate Investment Trust (REIT). EFU is bankrupt at this point, so they probably are agreeable to the plan.
This takeover would allow the new REIT to take advantage of tax breaks offered such companies. Hunt Consolidated Inc.’s original proposal is a plan costing between $18-$19 billion to buy and transition the utility company, but the Public Utility Commission of Texas that oversees such transactions wants changes made to the plan filed back in September 2015.
At the time the filing was made, Hunter L. Hunt (co-CEO) stated he felt this plan was the best option for both the employees of Oncor and the communities served by them. He added they were ready and willing to work with the Commission and stakeholders to keep the deal open and transparent during the buyout and transition.
First, in the Hunt’s plan, they want profits realized from the transition to go to the shareholders of the company. The commission and customers want those savings to be passed instead to the customers in the form of rate relief. And there’s another issue.
Sharyland, already owned by Hunt is a small utility company whose rates are double the average rate paid by other Texas utility consumers. So the commission would like to see Sharyland become part of the new REIT as well, offering a rate relief to those people and businesses.
The Hunt’s stand at this point seems to be, “one deal at a time, please.” Though there is speculation that combining the two utilities could cause an increase of 1.25 percent for the current Oncor recipients, the Hunts have said:
“We have said since the beginning that rates will not change for Oncor customers as a result of this [the original proposal] proceeding, and that is still the case,” Jeanne Phillips, a spokeswoman for Hunt said in a statement. “As for the possible combination of Sharyland and Oncor, any speculation regarding future rates is just that — pure speculation — until a specific proposal is developed and approved.”
It would appear the commission is doing their part to help the citizens of Texas, and Hunt is offering a valid option, now they just have to come to agreeable terms. The good news, beyond possible rate relief, both sides are making sure the public is aware of what is happening. That’s always a good PR move.