What’s in it for us? That’s the question recently posed by Dallas Morning News columnist Mitch Schnurman regarding the proposed multi-billion-dollar acquisition of Oncor Electric by Florida-based NextEra.

And it’s a key question: Oncor is the state’s largest transmission and distribution utility. Millions of Texans depend on the utility for safe and affordable electric service. If NextEra makes a mess of things — or worse yet, if the company goes belly up — then it’s Oncor’s captive customers who would suffer.

The Texas Public Utility Commission is considering just these questions during hearings this week in Austin. Because Oncor is a regulated monopoly, any change of ownership must serve the public interest. It’s up to the PUC’s three commissioners to determine whether NextEra’s proposal meets that test. If it doesn’t, the commissioners can reject the deal.

Ken Anderson

“(But) on terms of the public interest and what’s in it for the ratepayers – we’re not quite there yet,” said PUC commissioner Ken Anderson on Thursday. “From my back-of-the-envelope (calculations), there is no quantifiable net benefit (to ratepayers). The quantifiable net benefit, if any, on the utility scale, would be zero.”

Oncor, which serves 3.4 million customers around Texas, went on the auction block after the bankruptcy of its former parent company, Energy Future Holdings. All told, the proposed NextEra deal would be valued at about $18.7 billion.

NextEra claims ratepayers would benefit, largely because Oncor’s credit rating is expected to improve as a consequence. That may lead to some savings, but — as Commissioner Anderson noted — it would be quite small, given the size of the Texas utility.

Other key questions relate to the so-called “ring fence” that currently surrounds Oncor.

Ring Fence protections is regulatory shorthand for legal and financial covenants intended to insulate a monopoly utility’s captive customers from financial losses incurred by the utility’s parent company — especially when those losses are the result of open-market activities. A financial ring fence was placed around Oncor in 2007 and it largely held when Energy Future Holdings went bankrupt.

But critics warn that the NextEra proposal unwinds some of the most important ring fence requirements from 2007, including those relating to the composition of Oncor’s board of directors. Public Utility Commission staff, industrial customers, city representatives and others all agree that NextEra’s current ring fence proposals are insufficient.

Geoffrey Gay, an attorney for the Steering Committee of Cities Served by Oncor, described ring fence protections as a form of insurance. They may not seem necessary now, given NextEra’s strong financial standing — but the future can hold many surprises.

“You never need insurance until there’s a crisis,” he said, speaking recently to Dallas Morning News columnist Schnurman.

The PUC’s three commissioners are expected to make a final decision on NextEra’s acquisition proposal in the not-too-distant future. When they do, it will almost certainly revolve around questions of risk, the ring fence and how Oncor’s customers will benefit — or not — from the multi-billion acquisition.

— R.A. Dyer