Texas appeals court upholds PUCT decision approving acquisition

The Texas Appeals Court in Austin has upheld a lower court decision that Texas Energy Future Holdings Partnership (Texas Energy) should be allowed to acquire Oncor Electric Delivery Company, which is a transmission and distribution electric utility. In a March 15 decision, a three-judge appeals court panel agreed that the lower court had ruled correctly when it said the Public Utilities Commission of Texas (PUCT) acted properly in finding the acquisition to be in the public interest.

The PUCT’s ruling was challenged by Nucor Steel – Texas, a division of Nucor Corporation (NYSE:NUE). Nucor challenged the PUCT decision, first at the PUCT then in district court, saying the PUCT disallowed certain evidence that would have weighed on its determination that the transaction is in the public interest, according to the appeals court ruling. Nucor also contended that the PUCT’s public-interest determination was not adequately supported by the evidence in the record.

In the initial application, the PUCT considered a number of commitments made by the two parties, including commitments designed “to support the separateness of Oncor from the rest of TXU Corp. and its subsidiaries.” The PUCT also considered other commitments that were “unrelated to Oncor’s business [or] the [Commission] proceeding,” and that the parties included for “the sake of completeness, according to the appeals court ruling.

Although it considered all the commitments initially, in light of recent deregulation of the electric industry the PUCT concluded that it could “only address commitments that directly affect Oncor” in the public-interest analysis it performed under the state’s utilities code, the appeals court ruling said.

Shortly after the PUCT’s determination that it could not consider certain conditions, Nucor filed discovery requests regarding four commitments previously discussed that were “unrelated to Oncor’s business,” and insisted that the PUCT should consider the information because it demonstrated that the sale of Oncor “will have a negative impact on the State as a whole,” the appeals court said. Texas Energy and Oncor objected to the discovery requests as exceeding the scope of the proceeding.

While the appeals court ruling stated that Nucor presented “a reasonable construction of the various statutes … empowering the Commission to review and enforce all stipulations,” the question was “whether the Commission’s interpretation is also reasonable, consistent with the governing statutes, and therefore, entitled to deference,” the ruling said.

Ultimately, the appeals court sided with the district court and upheld the PUCT’s original determination.

A Nucor spokesperson told TransmissionHub March 19 the company was unable to comment on either the ruling or whether it plans to appeal.