NextEra acquisition of Energy Future Holding Corp valued at $18.4 billion
By Jessica DiNapoli
Sept 22 (Reuters) – Texas regulators voiced “deep concern” on Thursday over some terms of NextEra Energy Inc’s $18.4 billion acquisition of reorganized Energy Future Holdings Corp, the owner of an 80 percent stake in electricity transmission and distribution company Oncor Electric Delivery Co.
Public Utility Commission of Texas member Kenneth Anderson Jr said during a public meeting held by the regulator that the biggest issue revolves around a $275 million termination fee in the agreement. He said he planned to file a memo next week that lays out his concerns.
“There are some provisions in there that raise deep concern and I wanted to get them out there,” Anderson said.
The conditions that trigger the breakup fee amount to an “improper attempt” to limit the commission in its duty to regulate for the public interest, he said.
Public Utility Commission of Texas Chairman Donna Nelson said she agreed with Anderson, according to a recording of the meeting published on the regulator’s website.
Energy Future Holdings and NextEra declined to comment.
In court papers, Energy Future said the $275 million termination fee is comparable on a percentage basis to fees in other transactions of publicly traded utility companies.
Regulatory issues have dogged the bankruptcy of Energy Future, which filed in April 2014 with $42 billion in debt. It won court approval for the bulk of its operations to exit bankruptcy last month, but the Oncor stake remains in Chapter 11, with a confirmation hearing scheduled for later this year.
Other plans to sell Oncor to a group of creditors and investors led by privately held Hunt Consolidated Inc of Texas collapsed last year after it hit regulatory hurdles.
Hunt Consolidated and Berkshire Hathaway Inc’s energy subsidiary MidAmerican Energy have both shown interest in reorganized Energy Future and its Oncor stake, according to a person familiar with the matter.
Oncor, which operates the largest transmission and distribution system in Texas, is prized for its steady cash flow. When its deal to acquire the Oncor stake was announced, NextEra said it expected it would be meaningfully accretive to its earnings.
The merger between NextEra and reorganized Energy Future Holdings received approval from a U.S. bankruptcy court earlier this week. They plan to soon file a joint application to the Public Utility Commission of Texas for approval of the deal, but on Thursday one had not yet been received, according to a spokesman for the Commission.
(Reporting by Jessica DiNapoli in New York; Editing by Phil Berlowitz and Meredith Mazzilli)
