Sempra Energy’s proposed $9.45 billion acquisition of an 80% ownership interest in Oncor Electric Delivery Co. has been approved by a U.S. bankruptcy court. But the company still needs approval from Texas regulators, which have blocked two previous attempts by Oncor’s parent Energy Future Holdings to sell it.
The U.S. Bankruptcy Court for the District of Delaware approved the merger agreement entered into by San Diego–based Sempra and Energy Future on August 21. The deal emerged after Energy Future, which has been in bankruptcy since 2014, rejected a deal to sell the power transmission and distribution service provider to Berkshire Hathaway Inc.
The deal called attention to a trend by utilities looking to snap up transmission and distribution assets to offset their exposure to low wholesale power prices and unprofitability in the power generation sector generally.
Even if the Public Utility Commission (PUC) of Texas approves the deal, Sempra and Energy Futures will still need the blessing of the Federal Energy Regulatory Commission and the U.S. Department of Justice.
The PUC earlier this year rejected a $18.4 billion deal between Florida’s NextEra Energy and Energy Future. In May 2016, an $18 billion proposal to buy Oncor from a group led by Dallas tycoon Ray Hunt collapsed over regulatory concerns.
Sempra Energy expects its equity ownership after the transaction will be approximately 60% of Energy Future, if the deal is approved. For the utility, “Oncor is a well-managed, top-tier utility, operating in one of the strongest U.S. growth markets. We believe it will be an excellent strategic fit with our portfolio of utility and energy infrastructure businesses, while opening up a new avenue for our long-term growth,” it said in a September 6 statement.
“Sempra Energy is a well-respected and experienced utility operator with a quality workforce and management team,” said Bob Shapard, CEO of Oncor. “We look forward to working with Sempra Energy, regulators and other stakeholders as the process unfolds.”
Oncor and Sempra Energy are expected to file a joint application with the PUC in October for approval of the transaction.
—Sonal Patel is a POWER associate editor (@sonalcpatel, @POWERmagazine)