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Oncor insulated against EFH bankruptcy, Moody's says

When private investors were finalizing their $45-billion deal to buy TXU Corp. in 2007, various parties wanted assurances that Oncor Electric Delivery, a regulated utility, wouldn't get caught up in the finances of the company's deregulated operations. The result was a detailed "ring-fencing" of Oncor's debts and obligations from the rest of Energy Future Holdings, as TXU was renamed. And apparently, it worked, says Moody's Investors Service. If so, it's about the only part of the deal that did.

In a report Thursday, Moody's said "a bankruptcy court would be hard-pressed to decide that Oncor can be swept into a filing." The debt rating company said that "if or when EFH does file, we expect Oncor would be only modestly hit around the edges." Further, Moody's expects the Public Utility Commission of Texas to "have a voice in the restructuring, even if it doesn't technically have a seat at the table."  At the worst, Moody's said, Oncor could be left with $150 million to $200 million in receivables from TXU Energy, the power retailing arm of EFH. Unlike every other local utility, Oncor isn't allowed by the terms of its buyout from recovering losses associated with TXU Energy, Moody's said.

-- Jim Fuquay


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