AEP Texas Central Company (TCC), AEP Texas North Company (TNC) and AEP Utilities Inc., on Sept. 12 filed a proposal for decision with the Public Utility Commission (PUC) of Texas that granted their application for approval of their proposal to merge TCC and TNC into AEP Utilities, and then rename that corporate entity AEP Texas Inc.
As noted in the proposal for decision, the companies in June filed an application with the PUC for a public interest determination and related approvals regarding their proposed merger. TCC and TNC are Texas corporations providing transmission and distribution (T&D) service to retail electric providers (REPs) within portions of the ERCOT region of Texas. AEP Utilities, the proposal for decision added, is a Delaware corporation that is the immediate parent company of TCC and TNC, and all three entities are wholly owned subsidiaries of American Electric Power (NYSE:AEP).
TCC and TNC are separate legal entities and transmission and distribution utilities (TDUs) operating in ERCOT, but those companies are managed and operated, to a great extent, as a single business under the brand name, AEP Texas. The proposal for decision also noted that upon the closing of the merger transaction, the certificates of convenience and necessity held by TCC and TNC would inure as a matter of law to AEP Texas.
The proposed merger is a legal entity reorganization among affiliated entities, with no compensation among the parties to the merger. The proposal for decision also noted that the applicants would not seek recovery of the costs to achieve the merger in T&D rates.
The applicants are not proposing any change in their current business unit accounting as a result of the merger, the proposal for decision said. Separate accounting ledgers would be maintained for the TCC and TNC divisions as long as is appropriate, which would allow for costs to be captured in the same manner as currently, and would allow for rates to be maintained separately for each division, the proposal for decision said.
The merger would create a bigger and stronger financial platform from which to access financial markets, which would support the continued and increasing investment in the T&D grid needed to provide reliable service to customers, according to the proposal for decision.
The proposed merger would result in three primary benefits for the companies and their customers: improved access to financing; efficiencies in financial reporting; and efficiencies in regulatory filings, the proposal for decision said.
The proposed merger would not affect the delivery, reliability or availability of electric services or lead to a decline of such services to customers of TCC and TNC, the proposal for decision said.
Under ordering paragraphs, the proposal for decision noted, for instance, that the applicants are to maintain TCC and TNC divisions, which would continue to charge separate rates and riders, and maintain separate tariffs, unless and until such time as the PUC may consider and approve consolidated rates and tariffs.
Subject to PUC review and other regulatory approvals, the companies have scheduled Dec. 31 to close the merger transaction. The companies added in their proposal for decision that the PUC is to make a determination regarding the proposed merger by Dec. 12 – the 180th day after the commencement of the case – or the transaction is considered approved.