The Public Utility Commission of Texas adopted an order that lets Sharyland Distribution & Transmission Services LLC and its affiliate Sharyland Utilities LP swap their distribution business for certain transmission assets from Oncor Electric Delivery Co. LLC.
During an Oct. 11 open meeting, Commissioners Kenneth Anderson Jr. and Brandy Marty Marquez adopted an order last modified by Commission Chairman DeAnn Walker. Under the swap, first announced in July, Sharyland Utilities would give Oncor all of its retail customers and distribution network in exchange for about 258 miles of Oncor's transmission lines in Central and West Texas. After the transaction closes, which is expected in late 2017, Oncor would assume 54,000 retail customers from Sharyland. The transaction is valued at about $400 million.
Under an Oct. 2 draft order, Sharyland would transfer its retail distribution business in its Stanton, Brady and Celeste, and McAllen divisions to Oncor but maintain transmission assets in the Stanton and McAllen divisions and those in the Texas Panhandle. The transaction would provide rate relief for retail customers in Stanton, Brady and Celeste and avoids an expected rate increase in the McAllen territory in Hidalgo County along the U.S./Mexico border, according to the draft order. (PUC Docket No. 47469)
The PUCT on Oct. 11 also approved a draft order in Oncor's outstanding rate case. Oncor in March had requested to increase its transmission and distribution rates beginning Nov. 27 by about $317 million. That amount would be roughly 7.5% above the 2016 test-year revenues of $4.2 billion, according to an Oct. 4 draft order. The approved draft order, however, limits the increase to about $118 million, or 3.4%. The rate increase would take effect Nov. 27 as long as the Sharyland transaction closes by that date. (PUC Docket No. 46957)
The closing of the asset swap would also dismiss a pending rate case Sharyland and Sharyland Distribution & Transmission have before the commission. According to an amended filing in December 2016, Sharyland Utilities had requested a $1.4 million, or 1.4%, lift in its distribution rates and to recover another $2.2 million through certain riders. (PUC Docket No. 45414)
Sharyland Utilities and Sharyland Distribution & Transmission are majority owned by InfraREIT Inc., a real estate investment trust, which is managed by a group of investors including Dallas-based Hunt Consolidated Inc.
On Oct. 5, Sempra Energy revised a $9.45 billion bid to buy Oncor, which is majority-owned by Energy Future Holdings Corp. The bid is still subject to approval by the PUCT.