NextEra CEO calls emergency meeting with Texas PUC to save Oncor purchase
NextEra Energy CEO and chairman Jim Robo made an unusual visit with Texas regulators last week, stopping by the Texas Public Utilities Commission (PUC) in an emergency session to help shore up support for NextEra’s $18.7 billion purchase of Oncor Electric Delivery Company, the state’s largest utility.
Robo said he had made the visit after learning the PUC had concerns about NextEra’s out-of-state credentials. He highlighted his Texas ties, noting his wife is from Dallas and that he has in-laws in Waco, and that he had only Texas’ best interests at heart.
“There’s been a lot of talk and discussion about how Oncor is a gem, and I couldn’t agree more,” Robo said. “I’ve been very clear … I love the Oncor management team. I’ve asked every one of them to stay. I do know this: As good as Oncor is, as terrific a company as NextEra is, we will be a better utility together. That’s my vision.”
He later shifted his tone to describe the conditions recommended by PUC staff on the deal as “unacceptable,” calling numerous proposals including having an independent board for Oncor, debt restrictions, and credit linkages “burdensome and a deal-killer.”
PUC staff had expressed concerns that with NextEra’s existing debt, as well as the company’s opposition to a so-called “ring fence” which would insulate Oncor customers. PUC staff, industrial customers, cities, and consumers are pushing for stronger protections, which NextEra is resisting.
“NextEra Energy proposes transactions funded with high levels of debt that would significantly increase NextEra Energy’s debt as a percentage of total capitalization, while removing the protective ring fencing currently protecting Oncor,” PUC staff wrote.
Robo repeatedly used the term “deal-killers” to refer to protections PUC staff and other stakeholders have called for. The term was also used by PUC chairwoman Donna Nelson.
“The question still remains whether your deal-killers and our deal-killers match,” said Donna Nelson, PUC chairwoman. “But at least this way, I feel like we know where y’all stand.”
The emergency open meeting allowed Robo to testify off the record, which was justified as a better opportunity for Robo to meet with PUC Commissioners and get to know them better. He was not made available for public comment afterward.
“We envision [Robo’s] discussion as a statement of opportunity and to discuss the company’s position,” said NextEra’s lead legal counsel, Anne Coffin, according to RTO Insider. “This would be a duly noticed open meeting. It’s no different than calling people up before regular open meetings. It’s not evidence, it’s simply dialogue.”
The somewhat candid exchanges were a sharp departure from proceedings over a different deal to purchase Oncor that occurred roughly a year ago. In that deal, Dallas-based Hunt Consolidated agreed to manage the utility through a real estate investment trust, producing about $250 million in tax savings.
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