As I’ve stated for years, the bankruptcy of Energy Future Holdings has been inevitable. It was coming ever since the bottom dropped out of the natural gas market due to innovations in fracking. And finally, it looks like we can finally see how the Texas electricity market might look once the inevitable finally happens and we survey the surviving landscape.
Last month, Energy Future Holdings announced that they preferred a deal to sell Oncor, the pole and power line company that handles much of the electricity distribution in northeast Texas, to Hunt Consolidated Energy for 12.2 billion dollars. On Monday Energy Future Holdings formally filed for Chapter 11 status. What that means is that Hunt will take control of Oncor, which is easily the stablest of Energy Future Holdings’s major assets.
As a quick reminder to people, Energy Future Holdings consists of 3 major assets. Oncor, the electricity distribution company, Luminent, the energy generation company that owns and operates numerous power plants, and TXU Energy, the retail electricity company that sells electricity to residential and commercial customers in Texas. All 3 companies operate under the EFH umbrella independently. Oncor, once believed to be the least valuable company under the umbrella, has over the years proven to be the steadiest earner of the bunch. EFH will look to spin off the other companies as well, per the article.
What does this mean for Texas electricity customers? Well, interestingly enough, Oncor has historically been the cheapest electricity market in Texas. Customers living within the Oncor footprint have consistently been able to shop from the cheapest electricity rates in Texas. It will be interesting if, and how, a change of ownership to Hunt Consolidated Energy might change that for Texans moving forward. It is definitely something to continue to monitor.