The Federal Energy Regulatory Commission (FERC) is moving quickly to ensure utilities are passing along the cost savings from the reduction of the federal corporate income tax rate from 35% to 21%, effective January 1 of this year. From the moment the tax bill was passed on December 20, 2017, officials and public service commissions from 35 states and the District of Columbia have been calling on FERC to act to direct regulated utilities to reduce their rates.
Energy Future Holdings Corp. (EFH). Sempra Energy, an electric and natural gas utility holding company, serves roughly 32 million consumers worldwide. As part of the deal, Sempra received EFH’s 80% ownership of Oncor, the largest regulated electric transmission and distribution provider in Texas.
In November of 2017, the Alliance for Transportation Electrification (ATE) was formed. The alliance is made up of utilities, international affiliates, automotive firms, electric vehicle (EV) infrastructure firms, and engineering/consulting firms. This coalition advocates for the rapid adoption of electric transportation through educating and promoting its benefits. The Alliance hopes for effective stakeholder collaboration and mutually beneficial industry growth.
The 2017 Atlantic hurricane season officially began July 1. By then, three named systems had already become storms, foreshadowing what became one of the most active and destructive storm seasons ever. Subsequently, five named storms and one tropical depression formed by July 31, but the associated damage by then was minimal, attracting little notice. However, by season’s end:
Formed in 1977 in response to the 1973 oil crisis, the Federal Energy Regulatory Commission (FERC) oversees the transmission and wholesale sale of electricity and natural gas and regulates the transportation of oil by pipeline in interstate commerce. FERC also reviews proposals to build interstate natural gas pipelines, natural gas storage projects, and liquefied natural gas (LNG) terminals, in addition to licensing non-federal hydropower projects. As of November 15, 2017, FERC is at full capacity with five commissioners. The U.S. Senate has approved the final two commissioners which will help with the backlog of permit decisions and in reviewing the plan offered by Rick Perry, the Secretary of the Department of Energy (DOE), for evaluating aging coal and nuclear plants.
On February 27, 2017, Enbridge (headquartered in Calgary, Alberta), acquired Houston-based Spectra Energy—creating the largest energy infrastructure company in North America. The stock-for-stock deal is worth US$28.7 billion. Enbridge’s major business segments are liquid pipelines, gas distribution, gas pipelines and processing, energy services, and renewable power and transmission. The acquisition adds Spectra Energy’s gas distribution, Western Canada transmission and processing, field services, and Spectra Energy Partners businesses. The combined entity has an enterprise value of US$127 billion.
The demand for renewable energy has increased, especially among Fortune 100 companies such as Google, Facebook, and Amazon. This increased demand, and the energy goals of firms like these, have led utilities to tailor their offerings via specialized rates and renewable tariff programs. Large corporations are also examining utility alternatives, e.g., third-party providers.
Due to new economic and political priorities, increasing interest and investment in renewable energy, growth in distributed energy, and cheap natural gas, power systems are being forced to adapt. Reduction in the share of electricity generated by coal is occurring and it is expected to continue. How can baseload coal plants thrive when they are not always in the money?
Within two weeks of the termination of its proposed merger with Hawaiian Electric Industries (HEI), NextEra announced a separate deal to purchase the regulated T&D wires company Oncor Electric Delivery Co. LLC (Oncor) from the bankrupt Energy Future Holdings (EFH). The two deals, each representing $4.3 billion and $18.7 billion in total transaction value respectively, provide a stark contrast in M&A transactions in a very brief period of time. Though the HEI transaction ultimately fell apart, the EFH transaction is on track to achieve the required regulatory approvals, clearing the way for the deal to close in the first half of 2017.
Sussex Economic Advisors is now part of ScottMadden. We invite you to learn more about our expanded firm. Please use the Contact Us form to request additional information.