Tuesday, May 22, 2018
Business

NextEra agrees to buy Texas electric giant Oncor for $18.4B

AUSTIN, Texas — A Florida-based energy company announced an $18.4 billion deal on Friday that would give it an 80 percent stake in Texas' largest electric utility under an agreement that could eventually help resolve one of the largest bankruptcies in U.S. history.

NextEra Energy Inc. said it was buying Oncor Energy Delivery Company from parent firm Energy Future Holdings, which entered bankruptcy in 2014 facing more than $40 billion in debt fueled by low energy prices.

NextEra released a statement saying the move was part of a larger "overall plan of reorganization" to help Energy Future Holdings emerge from bankruptcy. The company said the deal will cover all debt associated with Energy Future Holdings' control of Oncor, which supplies power to more than 3 million people in Texas.

The deal must still be approved in federal bankruptcy court. NextEra also said it plans to file a joint application with regulators at Texas' Public Energy Commission.

Based in Juno Beach, NextEra plans to form a new subsidiary to assume Energy Future Holdings' share of Oncor, which is headquartered in Dallas.

"We are incredibly impressed by Oncor's management team and its employees, and we are committed to retaining the Oncor name, its Dallas headquarters and local management," Jim Robo, NextEra's chairman, said in the statement.

NextEra said there will be "no involuntary reductions to Oncor's workforce" for two years after the deal goes through. Over the same period, the company promised no major wage cuts or benefit reductions to Oncor employees.

The announcement comes two months after a group led by Dallas oil mogul Ray L. Hunt withdrew its nearly $18 billion bid to buy Oncor and reorganize it as a real estate trust.

The Texas Public Utility Commission approved that plan on the condition that tax savings from a corporate restructuring be passed onto ratepayers. Hunt wanted $250 million in tax savings to instead go to paying Energy Future Holdings creditors. His group withdrew the bit in May, saying creditors no longer supported it.

NextEra is no stranger to Texas. According to its statement, the company has invested more than $8 billion since 1999 in Texas for transmission, power generation, gas pipelines and other initiatives. Robo referenced the company's "deep operating expertise in Texas and across the nation."

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