Can’t win them all

Sem­pra En­ergy made sweeter of­fer right be­fore court ap­pear­ance

Houston Chronicle Sunday - - BUSINESS - By Ryan Maye Handy ryan.handy@chron.com twitter.com/ryan­mhandy

War­ren Buf­fett’s Berk­shire Hath­away En­ergy was beaten at the last minute in its On­cor bid.

Af­ter mak­ing a bid to buy Texas’ largest util­ity, Berk­shire Hath­away En­ergy was pre­pared to walk into a Delaware bank­ruptcy court Mon­day and get ap­proval for its $9 bil­lion deal to buy the bank­rupt En­ergy Fu­ture Hold­ings.

In­stead, hours be­fore the court ap­pear­ance, San Diego-based Sem­pra En­ergy of­fered a sweeter deal for En­ergy Fu­ture and its largest in­vestor: more money for the com­pany’s crown jewel, the Dal­las­based util­ity On­cor, and a lower ter­mi­na­tion fee if the agreement fell apart, ac­cord­ing to court doc­u­ments.

Berk­shire, a sub­sidiary of bil­lion­aire in­vestor War­ren Buf­fett’s Berk­shire Hath­away, had se­cured ten­ta­tive ap­proval in July from state reg­u­la­tors and con­sumer ad­vo­cates for its of­fer to buy On­cor, which serves 10 mil­lion Tex­ans and is mostly owned by En­ergy Fu­ture. Berk­shire’s of­fer was the third in the past year — two pre­vi­ous deals had been scrapped by the Pub­lic Util­ity Com­mis­sion.

Un­der the agreement, En­ergy Fu­ture would owe Berk­shire $270 mil­lion if the deal didn’t go through. Berk­shire has de­clined to com­ment on the sta­tus of the ter­mi­na­tion fee; En­ergy Fu­ture did not re­turn re­quests for com­ment.

En­ergy Fu­ture re­scinded its agreement with Berk­shire and signed a new agreement with Sem­pra, which had of­fered $9.45 bil­lion. Sem­pra also agreed to re­duce the deal’s ter­mi­na­tion fee to $190 mil­lion and nar­rowed the re­quire­ments for pay­ing that fee, ac­cord­ing to court doc­u­ments.

As a part of the deal, Sem­pra has agreed to main­tain Texas’ “ring fence” pol­icy, which pre­vents trans­mis­sion and dis­tri­bu­tion util­i­ties like On­cor from own­ing power gen­er­a­tion as­sets.

All mea­sures are meant to pre­vent ratepay­ers from in­cur­ring costs not re­lated to the dis­tri­bu­tion of elec­tric­ity and to en­sure that On­cor has the re­sources to main­tain its trans­mis­sion lines.

Dal­las-based util­ity On­cor, which serves 10 mil­lion Tex­ans, is mostly owned by En­ergy Fu­ture Hold­ings.

Berk­shire Hath­away En­ergy, a sub­sidiary of War­ren Buf­fett’s Berk­shire Hath­away, lost out on On­cor. En­ergy Fu­ture Hold­ings’ Lake Hub­bard Power Plant is near Dal­las. Sem­pra, a Cal­i­for­nia-based en­ergy com­pany, has agreed to pay $9.45 bil­lion for bank­rupt En­ergy Fu­ture Hold­ings and the com­pany’s crown jewel, the util­ity On­cor. New York Times file

Nati Harnik / As­so­ci­ated Press file

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