Report: Buffett, Edison, others jump into Oncor bidding effort

Photo by Brandon Mulder
Photo by Brandon Mulder

Warren Buffett, Edison International and others are interested in buying Texas’ largest power transmission company, according to Bloomberg and Reuters reports.

Buffett’s Berkshire Hathaway, California-based Edison and Fidelity Investments have joined Florida-based NextEra Energy in pursuing bids to purchase Oncor, which is owned by the bankrupt parent company, Dallas-based Energy Future Holdings.

Other large shareholders of Energy Future Holdings have expressed interest in buying all of EFH, which also owns the state’s largest power producer, Luminant, and retail electricity company, TXU Energy. Potential EFH buyers include Borealis Infrastructure Management and Singapore’s GIC Special Investments, according to the reports.

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Oncor and NextEra, which has pursued the transmission company for more than a year, declined comment. The others did not immediately respond.

Oncor is back on the auction block after an $18 billion deal fell through that would have sold the company to a consortium led by Dallas billionaire Ray Hunt. EFH is trying to emerge from bankruptcy through the sale.

In May, the Hunt group sale fell apart because of stipulations imposed regulators on the consortium’s plan to Oncor into a tax-friendly real estate investment trust. The group is suing the state’s Public Utility Commission for placing restrictions on the deal that allegedly killed it.

The transformation of Oncor into a REIT could have cleared the way for other utilities, including Houston’s CenterPoint Energy, to follow suit. The REIT structure is commonly used for real estate deals such as shopping malls, not public utilities. Such trusts pay out at least 90 percent of their income to investors through dividends.

Critics say a REIT is too unstable and risky to own a significant portion of the state’s electricity transmission.