Texas PUC directs staff to draft order approving Oncor-Sempra deal
The Public Utility Commission of Texas on Thursday directed its staff to draft an order approving Sempra Energy’s purchase of Oncor Electric Delivery, majority owner of Texas’ largest transmission system, in a deal valued at almost $16.5 billion.
DeAnn Walker, who chairs the PUC, directed Stephen Journeay, the commission’s director of commission advising and docket management, to delegate to a staffer the preparation of an Oncor -Sempra proposed order.
Walker expressed hope the order might be ready in time for the PUC’s March 8 open meeting.
The discussion took relatively little time in an eventful meeting. The PUC also:
Directed staff to draft an order approving the transfer of most of Lubbock Power & Light’s load from Southwest Power Pool to the Electric Reliability Council of Texas
Decided to postpone for one month a change in ERCOT ‘s Operating Reserve
Demand Curve calculation
Received an update on how Texas utilities plan to adjust their rates to account for last year’s federal corporate tax cut
If Sempra succeeds in acquiring Oncor, it will be a significant milestone in the 46-month-old Chapter 11 bankruptcy proceedings of Dallas-based Energy Future Holdings, selling off the last major asset in the giant successor of TXU, which had been acquired in 2007 in a leveraged buyout by Kohlberg Kravis Roberts, Texas Pacific Group and Goldman Sachs Capital Partners that left EFH more than $40 billion in debt.
In October 2016, EFH’s Luminant generation and TXU retail electricity provider businesses were spun off to form Vistra Energy.
On February 1, Matthew Henry, the Vinson & Elkins attorney representing Oncor Electric Delivery, reported to the PUC that a joint stipulation about the terms of the deal had achieved the unanimous support of all intervenors, including PUC staff, the Texas Office of Public Utility Counsel, the Steering Committee of Cities Served by Oncor, Texas Industrial Energy Consumers, Texas Energy Association for Marketers, the Alliance for Retail Markets, Golden Spread Electric Cooperative, Nucor Steel and the Texas Legal Services Center.
The PUC was scheduled to conduct a hearing on the merits of the case February 21 and February 23, which the commission on Thursday cancelled.
LP&L load switch order requested
The commission also directed Journeay to ask for a draft order approving Lubbock Power & Light, Texas’ third-largest municipal utility, to connect 470 MW of its estimated 600-MW load to ERCOT beginning June 1, 2021. Walker asked that the order be ready for the March 8 open meeting.
LP&L applied for the transfer on September 1, and the City of Lubbock on February 8 filed an unopposed joint stipulation outlining the terms of the transfer.
Xcel Energy ‘s Southwestern Public Service currently supplies power to LP&L with one short-term agreement for 470 MW through May 30, 2021, and a long-term agreement serving the remainder through 2044.
The deal’s terms include the following:
LP&L pays $22 million a year for five years to ERCOT wholesale transmission customers
LP&L makes a one-time $24 million hold-harmless payment to SPS upon the date of integration into ERCOT, allocated and credited to SPS customers
LP&L takes no action that would cause the Federal Energy Regulatory Commission to assert jurisdiction over ERCOT
Walker added that the order should make it clear that LP&L cannot convert its two natural gas -fired generation units, totaling about 125 MW, to connect to the ERCOT system without approval by ERCOT .
Regarding the construction of transmission facilities to connect the load to the ERCOT grid, Walker said the order should assign that work to Sharyland Utilities and LP&L, allowing them to divide the work between them.
If they are unable to reach agreement on that, the issue should be brought to the PUC for a decision, she said.
In Project No. 47199, regarding a possible reform of ERCOT pricing rules, the commissioners discussed a staff memo which had advocated the possibility of removing generation committed for reliability purposes from calculations of ERCOT ‘s Operating Reserve Demand Curve price adder, which would result in higher prices during periods of relative capacity scarcity.
