On May 19, 2016, the Texas Public Utility Commission (PUCT) will again consider the acquisition of Oncor by Hunt Consolidated, Inc. The PUCT previously approved the acquisition of the Oncor assets by Hunt but imposed certain conditions that proved unacceptable to Hunt's investors. Hunt sought reconsideration of the conditions and the PUCT passed on the chance to take up the matter at its May 4 meeting.
The core of the Hunt acquisition of the Oncor assets is the use of a Real Estate Investment Trust (REIT) as a financing vehicle for the transaction. Since the use of the REIT enables the investors to avoid federal tax liability, the PUCT has considered whether Hunt should be able to continue to recover in rates an increment that would otherwise be used to pay federal income taxes. Due to the proposed use of the REIT, recovery of a federal income tax component in the rates would not be necessary and would, therefore, result in additional income to investors. The PUCT has set over to another proceeding consideration of the continued rate recovery for taxes.
In the meantime, the current owner of the Oncor assets, Energy Future Holdings, withdrew its plan of reorganization in the Delaware bankruptcy court on May 8, thereby negating the Hunt buyout arrangement. Hunt requested rehearing by the PUCT in an effort to remove the problematic conditions previously imposed on its approval of the acquisition. The Commission at its May 19 meeting will first need to decide whether there remains a case before the Commission, given the maneuvers in the bankruptcy court. If the PUCT determines that there is still a pending matter that it has jurisdiction to handle, it may then consider the Hunt rehearing request. Stay tuned.
Please also visit the previous posts regarding Oncor:
Oncur Buyout Approved – With Reservations
Oncor's Corporate Structure Raises Questions for Regulators
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