June 6, 2001
TXU Says Court Decision Allows Refinancing of $1.3 Bln in Debt
Dallas, Bloomberg — TXU Corp. said the Texas Supreme Court upheld a lower court’s ruling that should allow the owner of Texas’s largest utility to refinance $1.3 billion in debt, almost four times the amount regulators had approved.
The state’s Public Utility Commission, however, sees the court’s decision as a victory for the regulators and is unsure how much the Dallas-based utility will be able to refinance, a spokesman said.
A 1999 Texas law lets utilities refinance nuclear-power plant debt and other long-term obligations with low-interest bonds. They can charge consumers fees to make the payments. State regulators determine how much each utility can refinance and last year turned down TXU’s request to refinance $1.65 billion, settling on $363 million.
A district court later ruled that the commission should make changes in how it calculates the amount. TXU expects those changes should allow it to refinance $1.3 billion, company spokesman Christopher Schein said. The Supreme Court upheld the district court’s decision, he said.
The final amount still is undecided, however.
The Supreme Court “gave clear direction on how the PUC should calculate the amounts, but it left the final calculation to the commission,” Schein said.
“We have to do some different calculations, but the present methodology is fine,” PUC spokesman Terry Hadley said. “Will the number be different? Possibly, but there’s nothing there to indicate TXU’s going to get everything it wants.”
TXU will submit to the PUC its plan for calculating how much can be refinanced, and the commission will have 90 days to make a decision. The company expects to sell bonds to investors in four to six weeks following the decision.
The state of Texas will oversee the bond sale to protect consumers’ interests, said Joseph Fichera, senior managing director and chief executive of Saber Partners, the state’s financial adviser for the refinancing.
“We want to make sure the market timing is right,” Fichera said. “We want to get the best possible savings to ratepayers as soon as possible.”
TXU will have another chance to seek refinancing in 2002, when the state opens its power market to competition.
TXU shares fell 66 cents to close at $47.60. The court’s decision was announced after the market closed.