UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM 10-Q
[√] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2016
― OR ―
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Commission File Number 333-100240
Oncor Electric Delivery Company LLC
(Exact Name of Registrant as Specified in its Charter)
Delaware |
75-2967830 |
(State of Organization) |
(I.R.S. Employer Identification No.) |
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1616 Woodall Rodgers Fwy., Dallas, TX 75202 |
(214) 486-2000 |
(Address of Principal Executive Offices) |
(Registrant’s Telephone Number) |
____________________
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No √
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes √ No ____
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ____ Accelerated filer ____ Non-Accelerated filer √ (Do not check if a smaller reporting company)
Smaller reporting company___
Indicate by check mark if the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes___ No √
As of August 1, 2016, 80.03% of the outstanding membership interests in Oncor Electric Delivery Company LLC (Oncor) were directly held by Oncor Electric Delivery Holdings Company LLC and indirectly by Energy Future Holdings Corp., 19.75% of the outstanding membership interests were held by Texas Transmission Investment LLC and 0.22% of the outstanding membership interests were indirectly held by certain members of Oncor’s management and board of directors. None of the membership interests are publicly traded.
TABLE OF CONTENTS
Oncor Electric Delivery Company LLC’s (Oncor) annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports are made available to the public, free of charge, on the Oncor website at http://www.oncor.com as soon as reasonably practicable after they have been filed with or furnished to the Securities and Exchange Commission. The information on Oncor’s website or available by hyperlink from the website shall not be deemed a part of, or incorporated by reference into, this quarterly report on Form 10-Q. The representations and warranties contained in any agreement that we have filed as an exhibit to this quarterly report on Form 10-Q or that we have or may publicly file in the future may contain representations and warranties made by and to the parties thereto as of specific dates. Such representations and warranties may be subject to exceptions and qualifications contained in separate disclosure schedules, may represent the parties’ risk allocation in the particular transaction, or may be qualified by materiality standards that differ from what may be viewed as material for securities law purposes.
This Form 10-Q and other Securities and Exchange Commission filings of Oncor and its subsidiary occasionally make references to Oncor (or “we,” “our,” “us” or “the company”) when describing actions, rights or obligations of its subsidiary. These references reflect the fact that the subsidiary is consolidated with Oncor for financial reporting purposes. However, these references should not be interpreted to imply that Oncor is actually undertaking the action or has the rights or obligations of its subsidiary or that the subsidiary company is undertaking an action or has the rights or obligations of its parent company or of any other affiliate.
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When the following terms and abbreviations appear in the text of this report, they have the meanings indicated below. |
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2015 Form 10-K |
Oncor’s Annual Report on Form 10-K for the year ended December 31, 2015 |
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AMS |
advanced metering system |
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Bondco |
Refers to Oncor Electric Delivery Transition Bond Company LLC, a wholly-owned consolidated bankruptcy-remote financing subsidiary of Oncor that issued securitization (transition) bonds to recover certain regulatory assets and other costs. |
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Deed of Trust |
Deed of Trust, Security Agreement and Fixture Filing, dated as of May 15, 2008, made by Oncor to and for the benefit of The Bank of New York Mellon Trust Company, N.A. (as successor to The Bank of New York Mellon, formerly The Bank of New York), as collateral agent, as amended |
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Debtors |
EFH Corp. and the majority of its direct and indirect subsidiaries, including EFIH, EFCH and TCEH but excluding the Oncor Ring-Fenced Entities |
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EECRF |
energy efficiency cost recovery factor |
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EFCH |
Refers to Energy Future Competitive Holdings Company LLC, a direct, wholly-owned subsidiary of EFH Corp. and the direct parent of TCEH, and/or its subsidiaries, depending on context. |
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EFH Bankruptcy Proceedings |
Refers to voluntary petitions for relief under Chapter 11 of the US Bankruptcy Code filed in US Bankruptcy Court for the District of Delaware on April 29, 2014 (EFH Petition Date) by EFH Corp. and the substantial majority of its direct and indirect subsidiaries, including EFIH, EFCH and TCEH. The Oncor Ring-Fenced Entities are not parties to the EFH Bankruptcy Proceedings. |
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EFH Corp. |
Refers to Energy Future Holdings Corp., a holding company, and/or its subsidiaries, depending on context. Its major subsidiaries include Oncor and TCEH. |
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EFH Debtors |
EFH Corp. and its subsidiaries that are Debtors in the Chapter 11 Cases, excluding the TCEH Debtors |
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EFH Petition Date |
April 29, 2014. See EFH Bankruptcy Proceedings above. |
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EFH Retirement Plan |
Refers to a defined benefit pension plan sponsored by EFH Corp., in which Oncor participates. See Oncor Retirement Plan below. |
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EFIH |
Refers to Energy Future Intermediate Holding Company LLC, a direct, wholly-owned subsidiary of EFH Corp. and the direct parent of Oncor Holdings. |
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ERCOT |
Electric Reliability Council of Texas, Inc., the independent system operator and the regional coordinator of various electricity systems within Texas |
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ERISA |
Employee Retirement Income Security Act of 1974, as amended |
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Fitch |
Fitch Ratings, Ltd. (a credit rating agency) |
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GAAP |
generally accepted accounting principles |
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Investment LLC |
Refers to Oncor Management Investment LLC, a limited liability company and minority membership interest owner (approximately 0.22%) of Oncor, whose managing member is Oncor and whose Class B Interests are owned by certain members of the management team and independent directors of Oncor. |
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IRS |
US Internal Revenue Service |
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LIBOR |
London Interbank Offered Rate, an interest rate at which banks can borrow funds, in marketable size, from other banks in the London interbank market |
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Luminant |
Refers to subsidiaries of TCEH engaged in competitive market activities consisting of electricity generation and wholesale energy sales and purchases as well as commodity risk management and trading activities, all largely in Texas. |
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Moody’s |
Moody’s Investors Services, Inc. (a credit rating agency) |
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Oncor |
Refers to Oncor Electric Delivery Company LLC, a direct, majority-owned subsidiary of Oncor Holdings, and/or its wholly-owned consolidated bankruptcy-remote financing subsidiary, Bondco, depending on context. |
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Oncor Holdings |
Refers to Oncor Electric Delivery Holdings Company LLC, a direct, wholly-owned subsidiary of EFIH and the direct majority owner (approximately 80.03%) of Oncor, and/or its subsidiaries, depending on context. |
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Oncor OPEB Plan |
Refers to a plan sponsored by Oncor that offers certain postretirement health care and life insurance benefits to eligible Oncor retirees, certain eligible EFH Corp. retirees, and their eligible dependents. |
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Oncor Retirement Plan |
Refers to the defined benefit pension plan sponsored by Oncor. |
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Oncor Ring-Fenced Entities |
Refers to Oncor Holdings and its direct and indirect subsidiaries, including Oncor. |
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OPEB |
other postretirement employee benefits |
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PUCT |
Public Utility Commission of Texas |
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PURA |
Texas Public Utility Regulatory Act |
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purchase accounting |
The purchase method of accounting for a business combination as prescribed by US GAAP, whereby the cost or “purchase price” of a business combination, including the amount paid for the equity and direct transaction costs, are allocated to identifiable assets and liabilities (including intangible assets) based upon their fair values. The excess of the purchase price over the fair values of assets and liabilities is recorded as goodwill. |
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REP |
retail electric provider |
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S&P |
Standard & Poor’s Ratings Services, a division of the McGraw-Hill Companies, Inc. (a credit rating agency) |
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SEC |
US Securities and Exchange Commission |
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Sponsor Group |
Refers collectively to certain investment funds affiliated with Kohlberg Kravis Roberts & Co. L.P. (KKR), TPG Global, LLC (together with its affiliates, TPG) and GS Capital Partners, an affiliate of Goldman, Sachs & Co., that have an ownership interest in Texas Holdings. |
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TCEH |
Refers to Texas Competitive Electric Holdings Company LLC, a direct, wholly-owned subsidiary of EFCH and an indirect subsidiary of EFH Corp., and/or its subsidiaries, depending on context. Its major subsidiaries include Luminant and TXU Energy. |
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TCEH Debtors |
EFCH, TCEH and the subsidiaries of TCEH that are Debtors in the Chapter 11 Cases |
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TCOS |
transmission cost of service |
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TCRF |
transmission cost recovery factor |
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Texas Holdings |
Refers to Texas Energy Future Holdings Limited Partnership, a limited partnership controlled by the Sponsor Group that owns substantially all of the common stock of EFH Corp. |
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Texas Holdings Group |
Refers to Texas Holdings and its direct and indirect subsidiaries other than the Oncor Ring-Fenced Entities. |
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Texas margin tax |
A privilege tax imposed on taxable entities chartered/organized or doing business in the State of Texas that, for accounting purposes, is reported as an income tax. |
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Texas Transmission |
Refers to Texas Transmission Investment LLC, a limited liability company that owns a 19.75% equity interest in Oncor. Texas Transmission is an entity indirectly owned by a private investment group led by OMERS Administration Corporation, acting through its infrastructure investment entity, Borealis Infrastructure Management Inc., and the Government of Singapore Investment Corporation, acting through its private equity and infrastructure arm, GIC Special Investments Pte Ltd. Texas Transmission is not affiliated with EFH Corp., any of EFH Corp.’s subsidiaries or any member of the Sponsor Group. |
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TXU Energy |
Refers to TXU Energy Retail Company LLC, a direct, wholly-owned subsidiary of TCEH engaged in the retail sale of electricity to residential and business customers. TXU Energy is a REP in competitive areas of ERCOT. |
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US |
United States of America |
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PART I. FINANCIAL INFORMATION
ONCOR ELECTRIC DELIVERY COMPANY LLC
CONDENSED STATEMENTS OF CONSOLIDATED INCOME
(Unaudited)
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Three Months Ended June 30, |
Six Months Ended June 30, |
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2016 |
2015 |
2016 |
2015 |
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(millions of dollars) |
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Operating revenues: |
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Nonaffiliates |
$ |
732 |
$ |
714 |
$ |
1,455 |
$ |
1,424 | ||||
Affiliates |
216 | 224 | 436 | 460 | ||||||||
Total operating revenues |
948 | 938 | 1,891 | 1,884 | ||||||||
Operating expenses: |
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Wholesale transmission service |
220 | 199 | 440 | 393 | ||||||||
Operation and maintenance (Note 10) |
169 | 168 | 351 | 353 | ||||||||
Depreciation and amortization |
193 | 220 | 403 | 437 | ||||||||
Provision in lieu of income taxes (Note 10) |
63 | 57 | 112 | 115 | ||||||||
Taxes other than amounts related to income taxes |
107 | 108 | 220 | 220 | ||||||||
Total operating expenses |
752 | 752 | 1,526 | 1,518 | ||||||||
Operating income |
196 | 186 | 365 | 366 | ||||||||
Other income and (deductions) - net (Note 11) |
(3) | (6) | (8) | (7) | ||||||||
Nonoperating provision in lieu of income taxes |
(1) | (2) | (2) | (2) | ||||||||
Interest expense and related charges (Note 11) |
84 | 84 | 168 | 165 | ||||||||
Net income |
$ |
110 |
$ |
98 |
$ |
191 |
$ |
196 |
See Notes to Financial Statements.
CONDENSED STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME
(Unaudited)
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Three Months Ended June 30, |
Six Months Ended June 30, |
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2016 |
2015 |
2016 |
2015 |
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(millions of dollars) |
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Net income |
$ |
110 |
$ |
98 |
$ |
191 |
$ |
196 | ||||
Other comprehensive income (loss): |
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Cash flow hedges – derivative value net loss recognized in net income (net of tax expense of $–, $–, $– and $–) (Note 1) |
1 | 1 | 1 | 1 | ||||||||
Defined benefit pension plans (net of tax benefit of $–, $–, $– and $–) (Note 9) |
- |
- |
- |
1 | ||||||||
Total other comprehensive income |
1 | 1 | 1 | 2 | ||||||||
Comprehensive income |
$ |
111 |
$ |
99 |
$ |
192 |
$ |
198 |
See Notes to Financial Statements.
5
ONCOR ELECTRIC DELIVERY COMPANY LLC
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
(Unaudited)
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Six Months Ended June 30, |
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2016 |
2015 |
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(millions of dollars) |
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Cash flows — operating activities: |
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Net income |
$ |
191 |
$ |
196 | ||
Adjustments to reconcile net income to cash provided by operating activities: |
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Depreciation and amortization |
427 | 459 | ||||
Provision in lieu of deferred income taxes – net |
83 | (46) | ||||
Other – net |
(2) | (1) | ||||
Changes in operating assets and liabilities: |
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Regulatory accounts related to reconcilable tariffs (Note 4) |
(103) | (16) | ||||
Other operating assets and liabilities |
(124) | (18) | ||||
Cash provided by operating activities |
472 | 574 | ||||
Cash flows — financing activities: |
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Issuances of long-term debt (Note 6) |
- |
725 | ||||
Repayments of long-term debt (Note 6) |
(41) | (569) | ||||
Net increase in short-term borrowings (Note 5) |
293 | 69 | ||||
Distributions to members (Note 8) |
(121) | (165) | ||||
Debt discount, premium, financing and reacquisition expenses – net |
- |
(12) | ||||
Cash provided by financing activities |
131 | 48 | ||||
Cash flows — investing activities: |
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Capital expenditures (Note 10) |
(671) | (625) | ||||
Other – net |
44 | 15 | ||||
Cash used in investing activities |
(627) | (610) | ||||
Net change in cash and cash equivalents |
(24) | 12 | ||||
Cash and cash equivalents — beginning balance |
25 | 4 | ||||
Cash and cash equivalents — ending balance |
$ |
1 |
$ |
16 |
See Notes to Financial Statements.
6
ONCOR ELECTRIC DELIVERY COMPANY LLC
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
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At June 30, |
At December 31, |
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2016 |
2015 |
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(millions of dollars) |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ |
1 |
$ |
25 | ||
Restricted cash — Bondco (Note 11) |
- |
38 | ||||
Trade accounts receivable from nonaffiliates – net (Note 11) |
407 | 388 | ||||
Trade accounts and other receivables from affiliates – net (Note 10) |
124 | 118 | ||||
Amounts receivable from members related to income taxes (Note 10) |
118 | 136 | ||||
Materials and supplies inventories — at average cost |
95 | 82 | ||||
Prepayments and other current assets |
98 | 89 | ||||
Total current assets |
843 | 876 | ||||
Investments and other property (Note 11) |
99 | 97 | ||||
Property, plant and equipment – net (Note 11) |
13,439 | 13,024 | ||||
Goodwill (Note 11) |
4,064 | 4,064 | ||||
Regulatory assets – net (Note 4) |
1,184 | 1,194 | ||||
Other noncurrent assets |
44 | 32 | ||||
Total assets |
$ |
19,673 |
$ |
19,287 | ||
LIABILITIES AND MEMBERSHIP INTERESTS |
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Current liabilities: |
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Short-term borrowings (Note 5) |
$ |
1,133 |
$ |
840 | ||
Long-term debt due currently ― Bondco (Note 6) |
- |
41 | ||||
Trade accounts payable (Note 10) |
213 | 150 | ||||
Amounts payable to members related to income taxes (Note 10) |
11 | 20 | ||||
Accrued taxes other than amounts related to income |
106 | 181 | ||||
Accrued interest |
82 | 82 | ||||
Other current liabilities |
117 | 144 | ||||
Total current liabilities |
1,662 | 1,458 | ||||
Long-term debt, less amounts due currently ― Oncor (Note 6) |
5,650 | 5,646 | ||||
Liability in lieu of deferred income taxes (Note 10) |
2,693 | 2,612 | ||||
Employee benefit obligations and other (Note 10 and 11) |
2,089 | 2,063 | ||||
Total liabilities |
12,094 | 11,779 | ||||
Commitments and contingencies (Note 7) |
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Membership interests (Note 8): |
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Capital account ― number of interests outstanding 2016 and 2015 – 635,000,000 |
7,691 | 7,621 | ||||
Accumulated other comprehensive loss |
(112) | (113) | ||||
Total membership interests |
7,579 | 7,508 | ||||
Total liabilities and membership interests |
$ |
19,673 |
$ |
19,287 |
See Notes to Financial Statements.
7
ONCOR ELECTRIC DELIVERY COMPANY LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Description of Business
References in this report to “we,” “our,” “us” and “the company” are to Oncor and/or Bondco, its subsidiary as apparent in the context. See “Glossary” for definition of terms and abbreviations.
We are a regulated electricity transmission and distribution company principally engaged in providing delivery services to REPs, including subsidiaries of TCEH, that sell power in the north-central, eastern and western parts of Texas. Revenues from TCEH represented 23% and 24% of our total operating revenues for the six months ended June 30, 2016 and 2015, respectively. We are a direct, majority-owned subsidiary of Oncor Holdings, which is a direct, wholly-owned subsidiary of EFIH, a direct, wholly-owned subsidiary of EFH Corp. EFH Corp. is a subsidiary of Texas Holdings, which is controlled by the Sponsor Group. Oncor Holdings owns 80.03% of our membership interests, Texas Transmission owns 19.75% of our membership interests and certain members of our management team and board of directors indirectly own the remaining membership interests through Investment LLC. We are managed as an integrated business; consequently, there are no separate reportable business segments.
Our consolidated financial statements include our wholly-owned, bankruptcy-remote financing subsidiary, Bondco, a variable interest entity. This financing subsidiary was organized for the limited purpose of issuing certain transition bonds to recover generation-related regulatory asset stranded costs and other qualified costs under an order issued by the PUCT in 2002. Bondco issued an aggregate $1.3 billion principal amount of transition bonds during 2003 and 2004. The 2003 Series transition bonds matured and were paid in full in 2015 and the 2004 Series transition bonds matured and were paid in full in May 2016. Final true-up proceedings for the transition bonds are expected to be conducted by Oncor and the PUCT during 2016 and are expected to have minimal or no net income impact.
Various “ring-fencing” measures have been taken to enhance the separateness between the Oncor Ring-Fenced Entities and the Texas Holdings Group and our credit quality. These measures serve to mitigate our and Oncor Holdings’ credit exposure to the Texas Holdings Group and to reduce the risk that our assets and liabilities or those of Oncor Holdings would be substantively consolidated with the assets and liabilities of the Texas Holdings Group in connection with a bankruptcy of one or more of those entities, including the EFH Bankruptcy Proceedings discussed below. Such measures include, among other things: our sale of a 19.75% equity interest to Texas Transmission in November 2008; maintenance of separate books and records for the Oncor Ring-Fenced Entities; our board of directors being comprised of a majority of independent directors; and prohibitions on the Oncor Ring-Fenced Entities providing credit support to, or receiving credit support from, any member of the Texas Holdings Group. The assets and liabilities of the Oncor Ring-Fenced Entities are separate and distinct from those of the Texas Holdings Group, including TXU Energy and Luminant, and none of the assets of the Oncor Ring-Fenced Entities are available to satisfy the debt or contractual obligations of any member of the Texas Holdings Group. We do not bear any liability for debt or contractual obligations of the Texas Holdings Group, and vice versa. Accordingly, our operations are conducted, and our cash flows are managed, independently from the Texas Holdings Group.
EFH Corp. Bankruptcy Proceedings
On the EFH Petition Date, the EFH Debtors commenced proceedings under Chapter 11 of the US Bankruptcy Code. The Oncor Ring-Fenced Entities are not parties to the EFH Bankruptcy Proceedings. We believe the “ring-fencing” measures discussed above mitigate our potential exposure to the EFH Bankruptcy Proceedings. See Note 2 for a discussion of the potential impacts of the EFH Bankruptcy Proceedings on our financial statements.
Basis of Presentation
These unaudited condensed financial statements should be read in conjunction with the audited financial statements and related notes included in the 2015 Form 10-K. In the opinion of Oncor management, all adjustments
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(consisting of normal recurring accruals) necessary for a fair presentation of the results of operations and financial position have been made. All intercompany items and transactions have been eliminated in consolidation. The results of operations for an interim period may not give a true indication of results for a full year due to seasonality. All dollar amounts in the financial statements and tables in the notes are stated in millions of US dollars unless otherwise indicated.
Use of Estimates
Preparation of our financial statements requires management to make estimates and assumptions about future events that affect the reporting of assets and liabilities at the balance sheet dates and the reported amounts of revenue and expense, including fair value measurements. In the event estimates and/or assumptions prove to be different from actual amounts, adjustments are made in subsequent periods to reflect more current information.
Reconcilable Tariffs
The PUCT has designated certain tariffs (TCRF, EECRF surcharges, AMS surcharges and charges related to transition bonds) as reconcilable, which means the differences between amounts billed under these tariffs and the related incurred costs are deferred as either regulatory assets or regulatory liabilities. Accordingly, at prescribed intervals, future tariffs are adjusted to either repay regulatory liabilities or collect regulatory assets.
Contingencies
We evaluate and account for contingencies using the best information available. A loss contingency is accrued and disclosed when it is probable that an asset has been impaired or a liability incurred and the amount of the loss can be reasonably estimated. If a range of probable loss is established, the minimum amount in the range is accrued, unless some other amount within the range appears to be a better estimate. If the probable loss cannot be reasonably estimated, no accrual is recorded, but the loss contingency is disclosed to the effect that the probable loss cannot be reasonably estimated. A loss contingency will be disclosed when it is reasonably possible that an asset has been impaired or a liability incurred. If the likelihood that an impairment or incurrence is remote, the contingency is neither accrued nor disclosed. Gain contingencies are recognized upon realization.
Changes in Accounting Standards
In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2016-2 (ASU 2016-2), Leases. The ASU amends previous US GAAP to require the balance sheet recognition of lease assets and liabilities for operating leases. Oncor will be required to adopt the ASU by January 1, 2019 and does not expect to early adopt. Retrospective application to the 2017 and 2018 comparative periods presented will be required in the year of adoption. We are currently evaluating the impact of this ASU on our financial statements.
Since May 2014, the FASB has issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers along with other supplemental guidance (together, Topic 606). Topic 606 introduces new, increased requirements for disclosure of revenue in financial statements and guidance that are intended to eliminate inconsistencies in the recognition of revenue. Oncor will be required to adopt Topic 606 by January 1, 2018 and continues to evaluate the impact on its financial statements. At this time, the adoption is not expected to have a material effect on our reported results of operations, financial condition or cash flows.
2. EFH BANKRUPTCY PROCEEDINGS
On the EFH Petition Date, EFH Corp. and the substantial majority of its direct and indirect subsidiaries that are members of the Texas Holdings Group, including EFIH, EFCH and TCEH, commenced proceedings under Chapter 11 of the US Bankruptcy Code. The Oncor Ring-Fenced Entities are not parties to the EFH Bankruptcy Proceedings. We believe the “ring-fencing” measures discussed above mitigate our potential exposure to the EFH Bankruptcy Proceedings. See Note 1 and below for further information regarding the EFH Bankruptcy Proceedings and the proposed change in control of our indirect majority owner in connection with such proceedings.
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The US Bankruptcy Code automatically enjoined, or stayed, us from judicial or administrative proceedings or filing of other actions against our affiliates or their property to recover, collect or secure our claims arising prior to the EFH Petition Date. Following the EFH Petition Date, EFH Corp. received approval from the bankruptcy court to pay or otherwise honor certain prepetition obligations generally designed to stabilize its operations. Included in the approval were the obligations owed to us representing our prepetition electricity delivery fees. As of the EFH Petition Date, we estimated that our receivables from the Texas Holdings Group totaled approximately $129 million. Since that time, we collected $128 million of the prepetition amount. We estimate any potential pre-tax loss resulting from the EFH Bankruptcy Proceedings to be immaterial. A provision for uncollectible accounts from affiliates has not been established as of June 30, 2016.
The EFH Bankruptcy Proceedings continue to be a complex litigation matter and the full extent of potential impacts on us remain unknown. We will continue to evaluate our affiliate transactions and contingencies throughout the EFH Bankruptcy Proceedings to determine any risks and resulting impacts on our results of operations, financial statements and cash flows.
See Note 10 for details of Oncor’s related-party transactions with members of the Texas Holdings Group.
Potential Change in Indirect Ownership of Oncor
As part of the EFH Bankruptcy Proceedings, the bankruptcy court confirmed the Debtors’ Sixth Amended Plan of Reorganization by order dated December 9, 2015. In general, among other things, the Sixth Amended Plan of Reorganization provided for a series of transactions to be effected pursuant to a merger and purchase agreement (Hunt Merger and Purchase Agreement) with an investor group consisting of certain unsecured creditors of TCEH and an affiliate of Hunt Consolidated, Inc. (Hunt), as well as certain other investors designated by Hunt (collectively, the Hunt Investor Group), that would have led to a significant change in the indirect equity ownership of Oncor.
In addition, and in connection with the contemplated transactions referred to above, at the request of and with the consent of EFIH, Oncor and Oncor Holdings entered into a letter agreement with the Hunt Investor Group. The letter agreement set forth certain rights and obligations of the Oncor entities and the Hunt Investor Group to cooperate in the manner set forth therein with respect to initial steps to be taken in connection with the contemplated transactions.
The Debtors and certain creditors entered into a Plan Support Agreement (as amended, Plan Support Agreement) that provided for, among other things, their respective obligations to act and/or support Plans of Reorganization. On May 1, 2016, certain first lien creditors of TCEH delivered a written notice (Plan Support Termination Notice) to the Debtors and the other parties to the Plan Support Agreement notifying such parties of the occurrence of a Plan Support Termination Event (as defined in the Plan Support Agreement). The delivery of the Plan Support Agreement Termination Notice caused the Sixth Amended Plan of Reorganization to become null and void.
On May 1, 2016, following receipt of the Plan Support Termination Notice, EFH Corp. and EFIH delivered a written notice (Merger and Purchase Agreement Termination Notice) to the Hunt Investor Group notifying the Hunt Investor Group that EFH Corp. and EFIH terminated the Merger and Purchase Agreement. The termination of the Hunt Merger and Purchase Agreement also caused the automatic termination (without the necessity of further action) of (i) certain agreements defining the investment obligations of certain Hunt Investor Group members, and (ii) the letter agreement between Oncor and the Hunt Investor Group.
Following the occurrence of the Plan Support Termination Event as described above, the Debtors filed a new joint Plan of Reorganization (New Plan of Reorganization) pursuant to Chapter 11 of the Bankruptcy Code and a related disclosure statement with the bankruptcy court on May 1, 2016.
In connection with the Sixth Amended Plan of Reorganization, EFH Corp. took the position that, unless the Hunt Investor Group had otherwise acquired, or entered into a definitive agreement with Texas Transmission for the acquisition of the equity interest in Oncor held by Texas Transmission at the consummation of the transactions, certain of EFH Corp.’s rights contained in the Investor Rights Agreement (Investor Rights Agreement), dated
10
November 2008 among Oncor and certain of its direct and indirect equity holders, including EFH Corp. and Texas Transmission, would require Texas Transmission to sell its equity interest in Oncor to the Hunt Investor Group. In this regard, in October 2015, EFH Corp. filed a complaint against Texas Transmission alleging breach of Texas Transmission’s obligations under the Investor Rights Agreement for failing to agree to sell its equity interest in Oncor and, if found to be a valid drag right and a valid IPO Conversion (as defined in the Investor Rights Agreement), to cooperate with an IPO Conversion.
The Hunt Investor Group intervened in the pending litigation. On May 20, 2016, following the Plan Support Termination Notice, the bankruptcy court issued an order dismissing the action and related motions and retaining jurisdiction related to the interpretation and implementation of such order. We cannot predict the ultimate outcome of any subsequent litigation relating to the Investor Rights Agreement and the impact of such litigation, particularly in light of the transactions discussed below.
The New Plan of Reorganization provides that the confirmation and effective date of the New Plan of Reorganization with respect to the TCEH Debtors may occur separate from, and independent of, the confirmation and effective date of the New Plan of Reorganization with respect to the EFH Debtors. The New Plan of Reorganization, subject to certain conditions and required regulatory approvals, provides for, among other things:
· |
with respect to the TCEH Debtors, either (a) a tax-free spin-off from EFH Corp. (the Reorganized TCEH Spin-Off), including a transaction that will result in a partial step-up in the tax basis of certain TCEH assets distributed to a newly formed entity wholly owned by TCEH (Reorganized TCEH), or (b) a taxable transaction that results in the assets of the TCEH Debtors being distributed to a Reorganized TCEH (TCEH Transactions), and |
· |
with respect to the EFH Debtors, the reorganization of EFH Corp. and EFIH (Reorganized EFH) either pursuant to (a) an equity investment (which may be from existing creditors or third-party investors) or (b) pursuant to a standalone plan of reorganization, in which creditors receive shares of common stock of Reorganized EFH. |
Solely as it pertains to the TCEH Debtors (and certain EFH Debtors that will become subsidiaries of Reorganized TCEH upon emergence of the TCEH Debtors from the Chapter 11 Cases (the Contributed EFH Debtors)), the disclosure statement has been approved by the bankruptcy court, and the confirmation hearing for the New Plan of Reorganization is scheduled to commence on August 17, 2016. There can be no assurance that the TCEH Debtors’ stakeholders will vote to accept the New Plan of Reorganization or that the bankruptcy court will confirm the New Plan of Reorganization. With respect to the EFH Debtors, no disclosure statement has been approved by the bankruptcy court and no date to confirm the New Plan of Reorganization has been scheduled.
However, on July 29, 2016, (i) the EFH Debtors entered into a Plan Support Agreement (NEE Plan Support Agreement) with NextEra Energy, Inc. (NEE) to effect an agreed upon restructuring of the EFH Debtors pursuant to an amendment to the New Plan of Reorganization (Amended New Plan) and (ii) EFH Corp. and EFIH entered into an Agreement and Plan of Merger (NEE Merger Agreement) with NEE and EFH Merger Co., LLC (Merger Sub), a wholly-owned subsidiary of NEE. Pursuant to the NEE Merger Agreement, at the effective time of the Amended New Plan with respect to the EFH Debtors, EFH Corp. will merge with and into Merger Sub (NEE Merger) with Merger Sub surviving as a wholly owned subsidiary of NEE.
The TCEH Transactions are not dependent on the consummation of the transactions contemplated by the NEE Plan Support Agreement and the NEE Merger Agreement and may occur separately from those transactions. We understand that the EFH Debtors will seek bankruptcy court approval of the NEE Plan Support Agreement. The NEE Merger Agreement includes various conditions precedent to consummation of the transactions contemplated thereby, including, among others, a condition that certain approvals and rulings be obtained, including from, among others, the PUCT and the IRS and a condition that the TCEH Transactions have occurred. NEE will not be required to consummate the NEE Merger if, among other items, the PUCT approval is obtained but with conditions, commitments or requirements that impose a Burdensome Condition (as defined in the NEE Merger Agreement). NEE’s and Merger Sub’s obligations under the NEE Merger Agreement are not subject to any financing condition.
11
Prior to approval of the NEE Merger Agreement by the bankruptcy court, EFH and EFIH may continue to solicit acquisition proposals with respect to Reorganized EFH. In addition, following approval of the NEE Merger Agreement by the bankruptcy court and until confirmation of the Amended New Plan by the bankruptcy court, EFH and EFIH may continue or have discussions or negotiations with respect to acquisition proposals for Reorganized EFH (x) with persons that were in active negotiation at the time of approval of the NEE Merger Agreement by the bankruptcy court and (y) with persons that submit an unsolicited acquisition proposal that is, or is reasonably likely to lead to, a Superior Proposal (as defined in the NEE Merger Agreement).
The NEE Merger Agreement may be terminated upon certain events, including, among other things:
• by either party, if the NEE Merger is not consummated by March 26, 2017, subject to a 90 day extension under certain conditions; or
• by EFH Corp. or EFIH, until the entry of the confirmation order of the Amended New Plan with respect to the EFH Debtors, if their respective board of directors or managers determines after consultation with its independent financial advisors and outside legal counsel, and based on advice of such counsel, that the failure to terminate the NEE Merger Agreement is inconsistent with its fiduciary duties; provided that a material breach of EFH Corp.’s or EFIH’s obligations under certain provisions of the NEE Merger Agreement has not provided the basis for such determination.
Following approval of the NEE Merger Agreement by the bankruptcy court, if the NEE Merger Agreement is terminated for certain reasons set forth therein and an alternative transaction is consummated by EFH or EFIH in which neither NEE nor any of its affiliates obtains direct or indirect ownership of approximately 80% of Oncor, then EFH and EFIH will pay a termination fee of $275,000,000 to NEE.
EFH Corp.’s and EFIH’s respective obligations under the NEE Merger Agreement are subject in all respects to the prior approval of the bankruptcy court. Under the terms of the NEE Plan Support Agreement, the EFH Debtors will seek bankruptcy court approval of the NEE Merger Agreement.
The above description of the NEE Merger Agreement is qualified in its entirety by reference to the NEE Merger Agreement, which EFH Corp., EFIH and EFCH filed as Exhibit 10(b) to their Current Report on Form 8-K/A filed with the SEC on July 29, 2016.
On July 28, 2016, EFIH requested, pursuant to the NEE Merger Agreement, that Oncor Holdings and Oncor enter into a letter agreement (NEE Letter Agreement) with NEE and Merger Sub. The NEE Letter Agreement would set forth certain rights and obligations of the Oncor Entities, NEE and Merger Sub to cooperate in the manner set forth therein with respect to initial steps to be taken in connection with the acquisition of Reorganized EFH (EFH Acquisition) and the other transactions described in the NEE Merger Agreement.
The NEE Letter Agreement would not be intended to give NEE or Merger Sub, directly or indirectly, the right to control or direct the operations of any Oncor Entity prior to the receipt of all approvals required by the bankruptcy court, the PUCT and other governmental entities and the consummation of the EFH Acquisition and related transactions (if and when such transactions are consummated). In addition, Oncor Holdings and Oncor have not endorsed or approved any restructuring involving Oncor Holdings or Oncor or any other transaction proposed by NEE or Merger Sub involving Oncor Holdings or Oncor.
Notwithstanding these pending transactions, we cannot predict the ultimate outcome of the EFH Bankruptcy Proceedings, including whether the transactions contemplated by any Plan of Reorganization, including the EFH Acquisition, will (or when they will) close. In this regard, we cannot predict how any reorganization of EFH Corp. and EFIH ultimately will impact Oncor or what form any change in indirect ownership of Oncor may take.
Regulatory Matters Related to EFH Bankruptcy Proceedings
In September 2015, Oncor and the Hunt Investor Group filed in PUCT Docket No. 45188 a joint application with the PUCT seeking certain regulatory approvals with respect to the transactions contemplated by the Sixth Amended Plan of Reorganization. On March 24, 2016, the PUCT issued an order conditionally approving the joint
12
application. On April 18, 2016, the Hunt Investor Group and certain interveners in PUCT Docket No. 45188 filed motions for rehearing and on May 19, 2016, the PUCT denied such motions and the order became final. The Hunt Investor Group filed a petition with the Travis County District Court on June 17, 2016 seeking review of the order. We cannot predict the results of the review or the ultimate disposition of PUCT Docket No. 45188, particularly in the light of the termination of the Sixth Amended Plan of Reorganization and the other pending transactions discussed above.
In connection with PUCT Docket No. 45188, certain cities that have retained original jurisdiction over electric utility rates passed resolutions directing Oncor to file rate review proceedings. For more information, see Note 3 – “City Rate Reviews”.
The NEE Merger Agreement contemplates that Oncor, NEE and Merger Sub will file a joint application with the PUCT seeking certain regulatory approvals with respect to the transactions contemplated by the Amended New Plan, but that filing has not been made.
Settlement Agreement
In connection with the EFH Bankruptcy Proceedings, the EFH Debtors and various creditor parties entered into a settlement agreement (the Settlement Agreement) in August 2015 (as amended in September 2015) to compromise and settle, among other things (a) intercompany claims among the EFH Debtors, (b) claims and causes of actions against holders of first lien claims against TCEH and the agents under the TCEH Senior Secured Facilities, (c) claims and causes of action against holders of interests in EFH Corp. and certain related entities and (d) claims and causes of action against each of the EFH Debtors' current and former directors, the Sponsor Group, managers and officers and other related entities. The Settlement Agreement contemplates a release of such claims upon approval of the Settlement Agreement by the bankruptcy court, which approval was obtained in December 2015.
The Settlement Agreement settles substantially all inter-debtor claims through the effective date of the Settlement Agreement. These settled claims include potentially contentious inter-debtor claims, including various potential avoidance actions and claims arising under numerous debt agreements, tax sharing agreements, and contested property transfers. The release provisions of the Settlement Agreement took effect immediately upon the entry of the bankruptcy court order approving the Settlement Agreement. In this regard, substantially all of the potential affiliate claims, derivative claims and other types of disputes among affiliates (including claims against Oncor) have been resolved by bankruptcy court order. Accordingly, we believe the Settlement Agreement resolves all affiliate claims against Oncor and its assets existing as of the effective date of the Settlement Agreement.
3. REGULATORY MATTERS
Change in Control Review
In connection with the transactions contemplated by the Sixth Amended Plan of Reorganization filed in the EFH Bankruptcy Proceedings, in September 2015, Oncor and the Hunt Investor Group filed a joint report and application for regulatory approvals pursuant to PURA, which was conditionally approved on March 24, 2016. For additional information regarding the Sixth Amended Plan of Reorganization and application for regulatory approval, see Note 2 to Financial Statements and “City Rate Reviews” below.
The NEE Merger Agreement contemplates that Oncor, NEE and Merger Sub will file a joint application with the PUCT seeking certain regulatory approvals pursuant to PURA with respect to the transactions contemplated by the Amended New Plan, but that filing has not been made. For additional information regarding the Amended New Plan and application for regulatory approval, see Note 2 to Financial Statements.
City Rate Reviews
Oncor has received resolutions passed by approximately 58 cities with original jurisdiction over electric utility rates directing Oncor to file rate review proceedings. The resolutions passed required Oncor to file a rate review
13
with each city by September 1, 2016 based on a January 1, 2015 to December 31, 2015 test year, with the cities’ analysis of such rate review filing due on October 13, 2016, Oncor’s rebuttal due on November 10, 2016, and hearings before city councils to be held between November 15 – December 15, 2016. Final action by each city must be taken within 125 days from the rate review filing date, and Oncor has the right to appeal any city action to the PUCT. However, Oncor has subsequently been notified by counsel representing these cities that these rate review proceedings have been abated indefinitely, pending resolution of Oncor ownership issues. The notice provides that if and when the cities desire to proceed with a rate inquiry, cities will notify Oncor in writing and inform Oncor of a precise date of the rate case, which will be at least 120 days from receipt of the communication that lifts the abatement.
2008 Rate Review
In August 2009, the PUCT issued a final order with respect to our June 2008 rate review filing with the PUCT and 204 cities based on a test year ended December 31, 2007 (PUCT Docket No. 35717), and new rates were implemented in September 2009. We and four other parties appealed various portions of the rate review final order to a state district court. In January 2011, the district court signed its judgment reversing the PUCT with respect to two issues: the PUCT’s disallowance of certain franchise fees and the PUCT’s decision that PURA no longer requires imposition of a rate discount for state colleges and universities. We filed an appeal with the Texas Third Court of Appeals (Austin Court of Appeals) in February 2011 with respect to the issues we appealed to the district court and did not prevail upon, as well as the district court’s decision to reverse the PUCT with respect to discounts for state colleges and universities. In early August 2014, the Austin Court of Appeals reversed the district court and affirmed the PUCT with respect to the PUCT’s disallowance of certain franchise fees and the PUCT’s decision that PURA no longer requires imposition of a rate discount for state colleges and universities. The Austin Court of Appeals also reversed the PUCT and district court’s rejection of a proposed consolidated tax savings adjustment arising out of EFH Corp.’s ability to offset our taxable income against losses from other investments and remanded the issue to the PUCT to determine the amount of the consolidated tax savings adjustment. In late August 2014, we filed a motion on rehearing with the Austin Court of Appeals with respect to certain appeal issues on which we were not successful, including the consolidated tax savings adjustment. In December 2014, the Austin Court of Appeals issued its opinion, clarifying that it was rendering judgment on the rate discount for state colleges and universities issue (affirming that PURA no longer requires imposition of the rate discount) rather than remanding it to the PUCT, and dismissing the motions for rehearing regarding the franchise fee issue and the consolidated tax savings adjustment. We filed a petition for review with the Texas Supreme Court in February 2015. The Texas Supreme Court granted the petition for review and the date of oral arguments has been set for September 13, 2016. There is no deadline for the court to act. If our appeals efforts are unsuccessful and the proposed consolidated tax savings adjustment is implemented, we estimate that on remand, the impact on earnings of the consolidated tax savings adjustment’s value could range from zero, as originally determined by the PUCT in Docket 35717, to a $135 million loss (after tax) including interest. Interest accrues at the PUCT approved rate for over-collections, which is 0.18% for 2016. We do not believe that any of the other issues ruled upon by the Austin Court of Appeals would result in a material impact to our results of operations or financial condition.
See Note 3 to Financial Statements in our 2015 Form 10-K for additional information regarding regulatory matters.
14
4. REGULATORY ASSETS AND LIABILITIES
Recognition of regulatory assets and liabilities and the amortization periods over which they are expected to be recovered or refunded through rate regulation reflect the decisions of the PUCT. Components of the regulatory assets and liabilities are provided in the table below. Amounts not earning a return through rate regulation are noted.
|
Remaining Rate Recovery/Amortization Period at |
Carrying Amount At |
||||||
|
June 30, 2016 |
June 30, 2016 |
December 31, 2015 |
|||||
|
||||||||
Regulatory assets: |
||||||||
Generation-related regulatory assets securitized by transition bonds (a)(e) |
- |
$ |
- |
$ |
31 | |||
Employee retirement costs |
4 years |
31 | 38 | |||||
Employee retirement costs to be reviewed (b)(c) |
To be determined |
308 | 291 | |||||
Employee retirement liability (a)(c)(d) |
To be determined |
826 | 853 | |||||
Self-insurance reserve (primarily storm recovery costs) ― net |
4 years |
80 | 95 | |||||
Self-insurance reserve to be reviewed ― net (b)(c) |
To be determined |
357 | 332 | |||||
Securities reacquisition costs (pre-industry restructure) |
1 year |
9 | 14 | |||||
Securities reacquisition costs (post-industry restructure) ― net |
Lives of related debt |
10 | 9 | |||||
Recoverable amounts in lieu of deferred income taxes ― net |
Life of related asset or liability |
8 | 12 | |||||
Deferred conventional meter and metering facilities depreciation |
Largely 5 years |
89 | 100 | |||||
Deferred AMS costs |
To be determined |
185 | 164 | |||||
Energy efficiency performance bonus (a) |
1 year |
5 | 10 | |||||
Under-recovered wholesale transmission service expense (a) |
1 year |
71 |
- |
|||||
Other regulatory assets |
Various |
7 | 9 | |||||
Total regulatory assets |
1,986 | 1,958 | ||||||
|
||||||||
Regulatory liabilities: |
||||||||
Estimated net removal costs |
Lives of related assets |
760 | 686 | |||||
Investment tax credit and protected excess deferred taxes |
Various |
12 | 14 | |||||
Over-collection of transition bond charges (a)(e) |
< 1 year |
10 | 29 | |||||
Over-recovered wholesale transmission service expense (a) |
1 year |
- |
24 | |||||
Energy efficiency programs (a) |
Not applicable |
20 | 11 | |||||
Total regulatory liabilities |
802 | 764 | ||||||
Net regulatory asset |
$ |
1,184 |
$ |
1,194 |
____________
(a) |
Not earning a return in the regulatory rate-setting process. |
(b) |
Costs incurred since the period covered under the last rate review. |
(c) |
Recovery is specifically authorized by statute or by the PUCT, subject to reasonableness review. |
(d) |
Represents unfunded liabilities recorded in accordance with pension and OPEB accounting standards. |
(e) |
Bondco net regulatory liabilities at June 30, 2016 were zero (excludes $10 million of over-collections related to transition bonds assumed by Oncor for final settlement). Bondco net regulatory assets of $10 million at December 31, 2015 consisted of $31 million included in generation-related regulatory assets net of the regulatory liability for over-collection of transition bond revenues of $21 million (excludes $8 million of over-collections related to transition bonds assumed by Oncor for final settlement). |
15
5. BORROWINGS UNDER CREDIT FACILITIES
At June 30, 2016, we had a $2.0 billion secured revolving credit facility to be used for working capital and general corporate purposes, issuances of letters of credit and support for any commercial paper issuances. The revolving credit facility expires in October 2017. The terms of the revolving credit facility allow us to request an increase in our borrowing capacity of $100 million in the aggregate and/or a one-year extension, provided certain conditions are met, including lender approval.
Borrowings under the revolving credit facility are classified as short-term on the balance sheet and are secured equally and ratably with all of our other secured indebtedness by a first priority lien on property we acquired or constructed for the transmission and distribution of electricity. The property is mortgaged under the Deed of Trust.
At June 30, 2016, we had outstanding borrowings under the revolving credit facility totaling $1.133 billion with an interest rate of 1.59% and outstanding letters of credit totaling $7 million. At December 31, 2015, we had outstanding borrowings under the revolving credit facility totaling $840 million with an interest rate of 1.48% and outstanding letters of credit totaling $7 million.
Borrowings under the revolving credit facility bear interest at per annum rates equal to, at our option, (i) LIBOR plus a spread ranging from 1.00% to 1.75% depending on credit ratings assigned to our senior secured non-credit enhanced long-term debt or (ii) an alternate base rate (the highest of (1) the prime rate of JPMorgan Chase, (2) the federal funds effective rate plus 0.50%, and (3) daily one-month LIBOR plus 1.00%) plus a spread ranging from 0.00% to 0.75% depending on credit ratings assigned to our senior secured non-credit enhanced long-term debt. At June 30, 2016, all outstanding borrowings bore interest at LIBOR plus 1.125%. Amounts borrowed under the revolving credit facility, once repaid, can be borrowed again from time to time.
An unused commitment fee is payable quarterly in arrears and upon termination or commitment reduction at a rate equal to 0.100% to 0.275% (such spread depending on certain credit ratings assigned to our senior secured debt) of the daily unused commitments under the revolving credit facility. Letter of credit fees on the stated amount of letters of credit issued under the revolving credit facility are payable to the lenders quarterly in arrears and upon termination at a rate per annum equal to the spread over adjusted LIBOR. Customary fronting and administrative fees are also payable to letter of credit fronting banks. At June 30, 2016, letters of credit bore interest at 1.325%, and a commitment fee (at a rate of 0.125% per annum) was payable on the unfunded commitments under the revolving credit facility, each based on our current credit ratings.
Subject to the limitations described below, borrowing capacity available under the revolving credit facility at June 30, 2016 and December 31, 2015 was $860 million and $1.153 billion, respectively. Generally, our indentures and revolving credit facility limit the incurrence of other secured indebtedness except for indebtedness secured equally and ratably with the indentures and revolving credit facility and certain permitted exceptions. As described further in Note 6, the Deed of Trust permits us to secure indebtedness (including borrowings under our revolving credit facility) with the lien of the Deed of Trust. At June 30, 2016, the available borrowing capacity of the revolving credit facility could be fully drawn.
The revolving credit facility contains customary covenants for facilities of this type, restricting, subject to certain exceptions, us and our subsidiaries from, among other things: incurring additional liens; entering into mergers and consolidations; and sales of substantial assets. In addition, the revolving credit facility requires that we maintain a consolidated senior debt-to-capitalization ratio of no greater than 0.65 to 1.00 and observe certain customary reporting requirements and other affirmative covenants. For purposes of the ratio, debt is calculated as indebtedness defined in the revolving credit facility (principally, the sum of long-term debt, any capital leases, short-term debt and debt due currently in accordance with US GAAP). The debt calculation excludes transition bonds issued by Bondco, but includes the unamortized fair value discount related to Bondco. Capitalization is calculated as membership interests determined in accordance with US GAAP plus indebtedness described above. At June 30, 2016, we were in compliance with this covenant and with all other covenants.
16
6. LONG-TERM DEBT
At June 30, 2016 and December 31, 2015, our long-term debt consisted of the following:
|
||||||
|
June 30, |
December 31, |
||||
|
2016 |
2015 |
||||
|
||||||
Oncor (a): |
||||||
5.000% Fixed Senior Notes due September 30, 2017 |
$ |
324 |
$ |
324 | ||
6.800% Fixed Senior Notes due September 1, 2018 |
550 | 550 | ||||
2.150% Fixed Senior Notes due June 1, 2019 |
250 | 250 | ||||
5.750% Fixed Senior Notes due September 30, 2020 |
126 | 126 | ||||
4.100% Fixed Senior Notes due June 1, 2022 |
400 | 400 | ||||
7.000% Fixed Debentures due September 1, 2022 |
800 | 800 | ||||
2.950% Fixed Senior Notes due April 1, 2025 |
350 | 350 | ||||
7.000% Fixed Senior Notes due May 1, 2032 |
500 | 500 | ||||
7.250% Fixed Senior Notes due January 15, 2033 |
350 | 350 | ||||
7.500% Fixed Senior Notes due September 1, 2038 |
300 | 300 | ||||
5.250% Fixed Senior Notes due September 30, 2040 |
475 | 475 | ||||
4.550% Fixed Senior Notes due December 1, 2041 |
400 | 400 | ||||
5.300% Fixed Senior Notes due June 1, 2042 |
500 | 500 | ||||
3.750% Fixed Senior Notes due April 1, 2045 |
375 | 375 | ||||
Unamortized discount and debt issuance costs |
(50) | (54) | ||||
Less amount due currently |
- |
- |
||||
Long-term debt, less amounts due currently — Oncor |
5,650 | 5,646 | ||||
|
||||||
Bondco (b): |
||||||
5.290% Fixed Series 2004 Bonds due May 15, 2016 |
- |
41 | ||||
Total |
- |
41 | ||||
Less amount due currently |
- |
(41) | ||||
Long-term debt, less amounts due currently — Bondco |
- |
- |
||||
Total long-term debt, less amounts due currently |
$ |
5,650 |
$ |
5,646 |
__________
(a) Secured by first priority lien on certain transmission and distribution assets equally and ratably with all of Oncor’s other secured indebtedness. See “Deed of Trust” below for additional information.
(b) The transition bonds were nonrecourse to Oncor and were issued to securitize a regulatory asset.
Debt-Related Activity in 2016
Repayments of long-term debt in the six months ended June 30, 2016 totaled $41 million, representing the final transition bond principal payment at the scheduled maturity date.
Deed of Trust
Our secured indebtedness, including the revolving credit facility described in Note 5, is secured equally and ratably by a first priority lien on property we acquired or constructed for the transmission and distribution of electricity. The property is mortgaged under the Deed of Trust. The Deed of Trust permits us to secure indebtedness (including borrowings under our revolving credit facility) with the lien of the Deed of Trust up to the aggregate of (i) the amount of available bond credits, and (ii) 85% of the lower of the fair value or cost of certain property additions that could be certified to the Deed of Trust collateral agent. At June 30, 2016, the amount of available bond credits was $2.281 billion and the amount of future debt we could secure with property additions, subject to those property additions being certified to the Deed of Trust collateral agent, was $1.570 billion.
17
Fair Value of Long-Term Debt
At June 30, 2016 and December 31, 2015, the estimated fair value of our long-term debt (including current maturities, if any) totaled $6.923 billion and $6.287 billion, respectively, and the carrying amount totaled $5.650 billion and $5.687 billion, respectively. The fair value is estimated using observable market data, representing Level 2 valuations under accounting standards related to the determination of fair value.
7. COMMITMENTS AND CONTINGENCIES
EFH Bankruptcy Proceedings
On the EFH Petition Date, the EFH Debtors commenced the EFH Bankruptcy Proceedings. The Oncor Ring-Fenced Entities are not parties to the EFH Bankruptcy Proceedings. See Notes 2 and 10 for a discussion of the potential impacts on us as a result of the EFH Bankruptcy Proceedings and our related-party transactions involving members of the Texas Holdings Group, respectively.
Legal/Regulatory Proceedings
We are involved in various legal and administrative proceedings in the normal course of business, the ultimate resolution of which, in the opinion of management, should not have a material effect upon our financial position, results of operations or cash flows. See Note 3 in this report and Note 8 to Financial Statements in our 2015 Form 10-K for additional information regarding our legal and regulatory proceedings.
8. MEMBERSHIP INTERESTS
Cash Distributions
Distributions are limited by our required regulatory capital structure to be at or below the assumed debt-to-equity ratio established periodically by the PUCT for ratemaking purposes, which is currently set at 60% debt to 40% equity. At June 30, 2016, $98 million was available for distribution to our members as our regulatory capitalization ratio was 59.4% debt to 40.6% equity. The PUCT has the authority to determine what types of debt and equity are included in a utility’s debt-to-equity ratio. For purposes of this ratio, debt is calculated as long-term debt plus unamortized gains on reacquired debt less unamortized issuance expenses, premiums and losses on reacquired debt. The debt calculation excludes transition bonds issued by Bondco. Equity is calculated as membership interests determined in accordance with US GAAP, excluding the effects of purchase accounting (which included recording the initial goodwill and fair value adjustments and the subsequent related impairments and amortization).
On July 27, 2016, our board of directors declared a cash distribution of an amount up to and including $68 million, to be paid to our members in August 2016, with the exact amount to be determined by management in accordance with the regulatory capital structure limitation described above. During the six months ended June 30, 2016, our board of directors declared, and we paid, the following cash distributions to our members:
|
|||||
Declaration Date |
Payment Date |
Amount |
|||
April 27, 2016 |
May 11, 2016 |
$ |
65 | ||
February 24, 2016 |
February 25, 2016 |
$ |
56 |
18
Membership Interests
The following table presents the changes to membership interests during the six months ended June 30, 2016 and 2015:
|
Capital Accounts |
Accumulated Other Comprehensive Income (Loss) |
Total Membership Interests |
|||||
|
||||||||
Balance at December 31, 2015 |
$ |
7,621 |
$ |
(113) |
$ |
7,508 | ||
Net income |
191 |
- |
191 | |||||
Distributions |
(121) |
- |
(121) | |||||
Net effects of cash flow hedges (net of tax) |
- |
1 | 1 | |||||
Defined benefit pension plans (net of tax) |
- |
- |
- |
|||||
Balance at June 30, 2016 |
$ |
7,691 |
$ |
(112) |
$ |
7,579 | ||
|
||||||||
Balance at December 31, 2014 |
$ |
7,625 |
$ |
(107) |
$ |
7,518 | ||
Net income |
196 |
- |
196 | |||||
Distributions |
(165) |
- |
(165) | |||||
Net effects of cash flow hedges (net of tax) |
- |
1 | 1 | |||||
Defined benefit pension plans (net of tax) |
- |
1 | 1 | |||||
Balance at June 30, 2015 |
$ |
7,656 |
$ |
(105) |
$ |
7,551 |
Accumulated Other Comprehensive Income (Loss)
The following table presents the changes to accumulated other comprehensive income (loss) for the six months ended June 30, 2016 and 2015:
|
Cash Flow Hedges – Interest Rate Swap |
Defined Benefit Pension and OPEB Plans |
Accumulated Other Comprehensive Income (Loss) |
|||||
|
||||||||
Balance at December 31, 2015 |
$ |
(22) |
$ |
(91) |
$ |
(113) | ||
Defined benefit pension plans (net of tax) |
- |
- |
- |
|||||
Amounts reclassified from accumulated other comprehensive income (loss) and reported in interest expense and related charges |
1 |
- |
1 | |||||
Balance at June 30, 2016 |
$ |
(21) |
$ |
(91) |
$ |
(112) | ||
|
||||||||
Balance at December 31, 2014 |
$ |
(24) |
$ |
(83) |
$ |
(107) | ||
Defined benefit pension plans (net of tax) |
- |
1 | 1 | |||||
Amounts reclassified from accumulated other comprehensive income (loss) and reported in interest expense and related charges |
1 |
- |
1 | |||||
Balance at June 30, 2015 |
$ |
(23) |
$ |
(82) |
$ |
(105) |
19
9. PENSION AND OTHER POSTRETIREMENT EMPLOYEE BENEFITS PLANS
Pension Plans
We sponsor the Oncor Retirement Plan and also have liabilities under the EFH Retirement Plan, both of which are qualified pension plans under Section 401(a) of the Internal Revenue Code of 1986, as amended, and are subject to the provisions of ERISA. Employees do not contribute to either plan. We also have a supplemental pension plan for certain employees whose retirement benefits cannot be fully earned under the qualified retirement plans. See Note 10 to Financial Statements in our 2015 Form 10-K for additional information regarding pension plans.
Oncor OPEB Plan
The Oncor OPEB Plan covers our eligible current and future retirees as well as certain eligible retirees of EFH Corp. whose employment included service with both Oncor (or a predecessor regulated electric business) and a non-regulated business of EFH Corp. EFH Corp. retains its portion of the liability for retiree benefits related to those retirees. As we are not responsible for EFH Corp.’s portion of the Oncor OPEB Plan’s unfunded liability, that amount is not reported on our balance sheet. See Note 10 to Financial Statements in our 2015 Form 10-K for additional information.
Pension and OPEB Costs
Our net costs related to pension plans and the Oncor OPEB Plan for the three and six months ended June 30, 2016 and 2015 were comprised of the following:
|
||||||||||||
|
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||
|
2016 |
2015 |
2016 |
2015 |
||||||||
|
||||||||||||
Components of net allocated pension costs: |
||||||||||||
Service cost |
$ |
6 |
$ |
6 |
$ |
12 |
$ |
12 | ||||
Interest cost |
34 | 33 | 68 | 66 | ||||||||
Expected return on assets |
(31) | (29) | (62) | (58) | ||||||||
Amortization of net loss |
10 | 16 | 20 | 32 | ||||||||
Net pension costs |
19 | 26 | 38 | 52 | ||||||||
Components of net OPEB costs: |
||||||||||||
Service cost |
2 | 2 | 4 | 4 | ||||||||
Interest cost |
12 | 11 | 24 | 22 | ||||||||
Expected return on assets |
(2) | (3) | (4) | (6) | ||||||||
Amortization of prior service cost |
(5) | (5) | (10) | (10) | ||||||||
Amortization of net loss |
8 | 8 | 17 | 16 | ||||||||
Net OPEB costs |
15 | 13 | 31 | 26 | ||||||||
Total net pension and OPEB costs |
34 | 39 | 69 | 78 | ||||||||
Less amounts deferred principally as property or a regulatory asset |
(25) | (28) | (50) | (56) | ||||||||
Net amounts recognized as expense |
$ |
9 |
$ |
11 |
$ |
19 |
$ |
22 |
The discount rates reflected in net pension and OPEB costs in 2016 are 4.28%, 4.57% and 4.60% for the Oncor Retirement Plan, the EFH Retirement Plan and the Oncor OPEB Plan, respectively. The expected return on pension and OPEB plan assets reflected in the 2016 cost amounts are 5.53%, 5.64% and 6.30% for the Oncor Retirement Plan, the EFH Retirement Plan and the Oncor OPEB Plan, respectively.
20
Pension and OPEB Plans Cash Contributions
We made cash contributions to the pension plans and Oncor OPEB Plan of $2 million and $14 million, respectively, during the six months ended June 30, 2016. We expect to make additional cash contributions to the pension plans and Oncor OPEB Plan of $2 million and $17 million, respectively, during the remainder of 2016. Our aggregate pension plans and Oncor OPEB Plan funding is expected to total approximately $479 million and $153 million, respectively, in the 2016 to 2020 period based on the latest actuarial projections.
10. RELATED-PARTY TRANSACTIONS
The following represent our significant related-party transactions. See Note 2 for additional information regarding related-party contingencies resulting from the EFH Bankruptcy Proceedings.
· |
We record revenue from TCEH, principally for electricity delivery fees, which totaled $216 million and $224 million for the three months ended June 30, 2016 and 2015, respectively, and $436 million and $460 million for the six months ended June 30, 2016 and 2015, respectively. The fees are based on rates regulated by the PUCT that apply to all REPs. These revenues included less than $1 million for each of the three- and six-month periods ended June 30, 2016 and 2015 pursuant to a transformer maintenance agreement with TCEH. |
Trade accounts and other receivables from EFH Corp. affiliates – net reported on our balance sheet, primarily consisting of trade receivables from TCEH related to these electricity delivery fees, are as follows:
|
||||||
|
At June 30, |
At December 31, |
||||
|
2016 |
2015 |
||||
|
||||||
Trade accounts and other receivables from affiliates |
$ |
126 |
$ |
120 | ||
Trade accounts and other payables to affiliates |
(2) | (2) | ||||
Trade accounts and other receivables from affiliates – net |
$ |
124 |
$ |
118 |
· |
EFH Corp. subsidiaries charge us for certain administrative services at cost. Our payments to EFH Corp. subsidiaries for administrative services, which are primarily reported in operation and maintenance expenses, totaled less than $1 million and $4 million for the three months ended June 30, 2016 and 2015, respectively, and less than $1 million and $9 million for the six months ended June 30, 2016 and 2015, respectively. We also charge each other for shared facilities at cost. Our payments to EFH Corp. for shared facilities totaled $1 million for each of the three-month periods ended June 30, 2016 and 2015 and $2 million for each of the six-month periods ended June 30, 2016 and 2015. Payments we received from EFH Corp. subsidiaries related to shared facilities totaled less than $1 million for each of the three-month periods ended June 30, 2016 and 2015 and less than $1 million for each of the six-month periods ended June 30, 2016 and 2015. |
· |
We are not a member of EFH Corp.’s consolidated tax group, but EFH Corp.’s consolidated federal income tax return includes EFH Corp.’s portion of our results due to EFH Corp.’s equity ownership in us. Under the terms of a tax sharing agreement among us, Oncor Holdings, Texas Transmission, Investment LLC and EFH Corp., we are generally obligated to make payments to Texas Transmission, Investment LLC and EFH Corp., pro rata in accordance with their respective membership interests, in an aggregate amount that is substantially equal to the amount of federal income taxes that we would have been required to pay if we were filing our own corporate income tax return. For periods prior to the tax sharing agreement (entered into in October 2007 and amended and restated in November 2008), we are responsible for our share, if any, of redetermined tax liability for the EFH Corp. consolidated tax group. EFH Corp. also includes our results in its consolidated Texas margin tax payments, which are accounted for as income taxes and calculated as if we were filing our own return. See discussion in Note 1 to Financial Statements in our 2015 Form 10-K under “Income Taxes.” Under the “in lieu of” tax concept,
21 |
all in lieu of tax assets and tax liabilities represent amounts that will eventually be settled with our members. In the unlikely event such amounts are not paid under the tax sharing agreement, it is probable that this regulatory liability will continue to be included in Oncor’s rate setting processes. |
Amounts payable to (receivable from) members related to income taxes under the tax sharing agreement and reported on our balance sheet consisted of the following:
|
|||||||||||||||||
|
At June 30, 2016 |
At December 31, 2015 |
|||||||||||||||
|
EFH Corp. |
Texas Transmission |
Total |
EFH Corp. |
Texas Transmission |
Total |
|||||||||||
|
|||||||||||||||||
Federal income taxes receivable |
$ |
(95) |
$ |
(23) |
$ |
(118) |
$ |
(109) |
$ |
(27) |
$ |
(136) | |||||
Texas margin taxes payable |
11 |
- |
11 | 20 |
- |
20 | |||||||||||
Net payable (receivable) |
$ |
(84) |
$ |
(23) |
$ |
(107) |
$ |
(89) |
$ |
(27) |
$ |
(116) |
Cash payments made to members related to income taxes consisted of the following:
|
|||||||||||||||||
|
Six Months Ended June 30, 2016 |
Six Months Ended June 30, 2015 |
|||||||||||||||
|
EFH Corp. |
Texas Transmission |
Total |
EFH Corp. |
Texas Transmission |
Total |
|||||||||||
|
|||||||||||||||||
Federal income taxes |
$ |
- |
$ |
- |
$ |
- |
$ |
- |
$ |
- |
$ |
- |
|||||
Texas margin taxes |
18 |
- |
18 | 22 |
- |
22 | |||||||||||
Total payments (receipts) |
$ |
18 |
$ |
- |
$ |
18 |
$ |
22 |
$ |
- |
$ |
22 |
· |
Our PUCT-approved tariffs include requirements to assure adequate creditworthiness of any REP to support the REP’s obligation to collect transition bond-related charges on behalf of Bondco. Under these tariffs, as a result of TCEH’s credit rating being below investment grade, TCEH is required to post collateral support in an amount equal to estimated transition charges over specified time periods. Accordingly, TCEH had posted security in the amount of zero and $6 million for our benefit at June 30, 2016 and December 31, 2015, respectively. |
· |
At June 30, 2016, Bondco had over-collected approximately $10 million of transition charges, which will be refunded to REPs upon PUC approval. An estimated $2 million of the over-collection will be refunded to TCEH. |
· |
Under Texas regulatory provisions, the trust fund for decommissioning TCEH’s Comanche Peak nuclear generation facility is funded by a delivery fee surcharge we collect from REPs and remit monthly to TCEH. Delivery fee surcharges totaled $4 million for each of the three-month periods ended June 30, 2016 and 2015 and $8 million for each of the six-month periods ended June 30, 2016 and 2015. Our sole obligation with regard to nuclear decommissioning is as the collection agent of funds charged to ratepayers for nuclear decommissioning activities. If, at the time of decommissioning, actual decommissioning costs exceed available trust funds, we would not be obligated to pay any shortfalls but would be required to collect any rates approved by the PUCT to recover any additional decommissioning costs. Further, if there were to be a surplus when decommissioning is complete, such surplus would be returned to ratepayers under terms prescribed by the PUCT. |
· |
Related parties of the Sponsor Group have (1) sold, acquired or participated in the offerings of our debt or debt securities in open market transactions or through loan syndications, and (2) performed various financial advisory, dealer, commercial banking and investment banking services for us and certain of our affiliates for which they have received or will receive customary fees and expenses, and may from time to time in the future participate in any of the items in (1) and (2) above. Also, as of June 30, 2016, 16.6% of
22 |
the equity in an existing vendor of the company is held by a member of the Sponsor Group. During 2016 and 2015, this vendor performed transmission and distribution system construction and maintenance services for us. Cash payments were made for such services to this vendor totaling $84 million dollars for the six months ended June 30, 2016 of which approximately $79 million was capitalized and $5 million recorded to operation and maintenance expense. At June 30, 2016 we had outstanding trade payables to this vendor of $9 million. |
See Note 8 for information regarding distributions to members and Note 9 for information regarding our participation in the EFH Corp. pension plan and transactions with EFH Corp. involving employee benefit matters.
11. SUPPLEMENTARY FINANCIAL INFORMATION
Major Customers
Revenues from TCEH represented 23% and 24% of our total operating revenues for the three months ended June 30, 2016 and 2015, respectively and 23% and 24% for the six months ended June 30, 2016 and 2015, respectively. Revenues from REP subsidiaries of NRG Energy, Inc., a nonaffiliated entity, collectively represented 14% and 15% of our total operating revenues for the three months ended June 30, 2016 and 2015, respectively, and 15% and 16% of our total operating revenues for the six months ended June 30, 2016 and 2015, respectively. No other customer represented 10% or more of our total operating revenues.
Other Income and (Deductions)
|
||||||||||||
|
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||
|
2016 |
2015 |
2016 |
2015 |
||||||||
|
||||||||||||
Accretion of fair value adjustment (discount) to regulatory assets due to purchase accounting |
$ |
- |
$ |
1 |
$ |
1 |
$ |
4 | ||||
Professional fees |
(4) | (5) | (8) | (7) | ||||||||
Non-recoverable pension and OPEB (Note 9) |
- |
(2) | (1) | (4) | ||||||||
Other |
1 |
- |
- |
- |
||||||||
Total other income and (deductions) - net |
$ |
(3) |
$ |
(6) |
$ |
(8) |
$ |
(7) |
Interest Expense and Related Charges
|
||||||||||||
|
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||
|
2016 |
2015 |
2016 |
2015 |
||||||||
|
||||||||||||
Interest expense |
$ |
85 |
$ |
85 |
$ |
170 |
$ |
167 | ||||
Amortization of debt issuance costs and discounts |
1 | 1 | 1 | 1 | ||||||||
Allowance for funds used during construction – capitalized interest portion |
(2) | (2) | (3) | (3) | ||||||||
Total interest expense and related charges |
$ |
84 |
$ |
84 |
$ |
168 |
$ |
165 |
Restricted Cash
Restricted cash at June 30, 2016 was zero as a result of the maturity and payment in full of the 2004 Series transition bonds in May 2016. Restricted cash reported on our balance sheet at December 31, 2015 relates to the transition bonds.
23
Trade Accounts and Other Receivables
Trade accounts and other receivables reported on our balance sheet consisted of the following:
|
||||||
|
At June 30, |
At December 31, |
||||
|
2016 |
2015 |
||||
|
||||||
Gross trade accounts and other receivables - net |
$ |
534 |
$ |
509 | ||
Trade accounts and other receivables from affiliates - net |
(124) | (118) | ||||
Allowance for uncollectible accounts |
(3) | (3) | ||||
Trade accounts receivable from nonaffiliates – net |
$ |
407 |
$ |
388 |
At June 30, 2016 and December 31, 2015, REP subsidiaries of NRG Energy, Inc., a nonaffiliated entity, collectively represented approximately 14% and 13% of the nonaffiliated trade accounts receivable amount, respectively.
Under a PUCT rule relating to the Certification of Retail Electric Providers, write-offs of uncollectible amounts owed by REPs are deferred as a regulatory asset. Due to commitments made to the PUCT in 2007, we are not allowed to recover bad debt expense, or certain other costs and expenses, from ratepayers in the event of a default or bankruptcy by an affiliate REP.
Investments and Other Property
Investments and other property reported on our balance sheet consisted of the following:
|
||||||
|
At June 30, |
At December 31, |
||||
|
2016 |
2015 |
||||
|
||||||
Assets related to employee benefit plans, including employee savings programs |
$ |
96 |
$ |
94 | ||
Land and other investments |
3 | 3 | ||||
Total investments and other property |
$ |
99 |
$ |
97 |
Property, Plant and Equipment
Property, plant and equipment reported on our balance sheet consisted of the following:
|
At June 30, |
At December 31, |
||||
|
2016 |
2015 |
||||
|
||||||
Total assets in service |
$ |
19,600 |
$ |
19,072 | ||
Less accumulated depreciation |
6,661 | 6,479 | ||||
Net of accumulated depreciation |
12,939 | 12,593 | ||||
Construction work in progress |
485 | 416 | ||||
Held for future use |
15 | 15 | ||||
Property, plant and equipment – net |
$ |
13,439 |
$ |
13,024 |
24
Intangible Assets
Intangible assets (other than goodwill) reported on our balance sheet consisted of the following:
|
|||||||||||||||||
|
At June 30, 2016 |
At December 31, 2015 |
|||||||||||||||
|
Gross |
Gross |
|||||||||||||||
|
Carrying |
Accumulated |
Carrying |
Accumulated |
|||||||||||||
|
Amount |
Amortization |
Net |
Amount |
Amortization |
Net |
|||||||||||
|
|||||||||||||||||
Identifiable intangible assets subject to amortization included in property, plant and equipment: |
|||||||||||||||||
Land easements |
$ |
479 |
$ |
93 |
$ |
386 |
$ |
467 |
$ |
91 |
$ |
376 | |||||
Capitalized software |
446 | 299 | 147 | 435 | 269 | 166 | |||||||||||
Total |
$ |
925 |
$ |
392 |
$ |
533 |
$ |
902 |
$ |
360 |
$ |
542 |
Aggregate amortization expense for intangible assets totaled $16 million for each of the three-month periods ended June 30, 2016 and 2015 and $32 million for each of the six-month periods ended June 30, 2016 and 2015. The estimated aggregate amortization expense for each of the next five fiscal years is as follows:
Year |
Amortization Expense |
||
2016 |
$ |
61 | |
2017 |
53 | ||
2018 |
47 | ||
2019 |
44 | ||
2020 |
43 |
At both June 30, 2016 and December 31, 2015, goodwill totaling $4.1 billion was reported on our balance sheet. None of this goodwill is being deducted for tax purposes.
Employee Benefit Obligations and Other
Employee benefit obligations and other reported on our balance sheet consisted of the following:
|
||||||
|
At June 30, |
At December 31, |
||||
|
2016 |
2015 |
||||
|
||||||
Retirement plans and other employee benefits |
$ |
2,003 |
$ |
1,985 | ||
Uncertain tax positions (including accrued interest) |
3 | 3 | ||||
Investment tax credits |
13 | 15 | ||||
Other |
70 | 60 | ||||
Total employee benefit obligations and other |
$ |
2,089 |
$ |
2,063 |
25
Supplemental Cash Flow Information
|
||||||
|
Six Months Ended June 30, |
|||||
|
2016 |
2015 |
||||
|
||||||
Cash payments (receipts) related to: |
||||||
Interest |
$ |
167 |
$ |
177 | ||
Capitalized interest |
(3) | (3) | ||||
Interest (net of amounts capitalized) |
$ |
164 |
$ |
174 | ||
Amount in lieu of income taxes (a): |
||||||
State |
18 | 22 | ||||
Total amount in lieu of income taxes |
$ |
18 |
$ |
22 | ||
Noncash construction expenditures (b) |
$ |
99 |
$ |
61 |
_____________
(a) |
See Note 10 for income tax related detail. |
(b) |
Represents end-of-period accruals. |
26
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations for the three and six months ended June 30, 2016 and 2015 should be read in conjunction with the condensed consolidated financial statements and the notes to those statements as well as the Risk Factors contained in our 2015 Form 10-K.
All dollar amounts in the tables in the following discussion and analysis are stated in millions of US dollars unless otherwise indicated.
BUSINESS
We are a regulated electricity transmission and distribution company principally engaged in providing delivery services to REPs, including subsidiaries of TCEH, that sell power in the north-central, eastern and western parts of Texas. Revenues from TCEH represented 23% and 24% of our reported total operating revenues for the three months ended June 30, 2016 and 2015, respectively and 23% and 24% of our reported total operating revenues for the six months ended June 30, 2016 and 2015, respectively. We are a majority-owned subsidiary of Oncor Holdings, which is a direct, wholly-owned subsidiary of EFIH, a direct, wholly-owned subsidiary of EFH Corp. Oncor Holdings owns 80.03% of our outstanding membership interests, Texas Transmission owns 19.75% of our outstanding membership interests and certain members of our management team and board of directors indirectly own the remaining 0.22% of the outstanding membership interests through Investment LLC. We are managed as an integrated business; consequently, there are no separate reportable business segments.
Various “ring-fencing” measures have been taken to enhance the separateness between the Oncor Ring-Fenced Entities and the Texas Holdings Group and our credit quality. These measures serve to mitigate our and Oncor Holdings’ credit exposure to the Texas Holdings Group and to reduce the risk that our assets and liabilities or those of Oncor Holdings would be substantively consolidated with the assets and liabilities of the Texas Holdings Group in connection with a bankruptcy of one or more of those entities, including the EFH Bankruptcy Proceedings discussed below. Such measures include, among other things: our sale of a 19.75% equity interest to Texas Transmission in November 2008; maintenance of separate books and records for the Oncor Ring-Fenced Entities; our board of directors being comprised of a majority of independent directors; and prohibitions on the Oncor Ring-Fenced Entities providing credit support to, or receiving credit support from, any member of the Texas Holdings Group. The assets and liabilities of the Oncor Ring-Fenced Entities are separate and distinct from those of the Texas Holdings Group, including TXU Energy and Luminant, and none of the assets of the Oncor Ring-Fenced Entities are available to satisfy the debt or contractual obligations of any member of the Texas Holdings Group. We do not bear any liability for debt or contractual obligations of the Texas Holdings Group, and vice versa. Accordingly, our operations are conducted, and our cash flows are managed, independently from the Texas Holdings Group.
Significant Activities and Events
EFH Bankruptcy Proceedings — On the EFH Petition Date, the EFH Debtors commenced proceedings under Chapter 11 of the US Bankruptcy Code. The Oncor Ring-Fenced Entities are not parties to the EFH Bankruptcy Proceedings. We believe the “ring-fencing” measures discussed above mitigate our potential exposure to the EFH Bankruptcy Proceedings. See Note 2 to Financial Statements for a discussion of the potential impacts of the EFH Bankruptcy Proceedings on our financial statements and a discussion of the proposed change in control of Oncor’s indirect majority owner in connection with such proceedings.
The US Bankruptcy Code automatically enjoined, or stayed, us from judicial or administrative proceedings or filing of other actions against our affiliates or their property to recover, collect or secure our claims arising prior to the EFH Petition Date. Following the EFH Petition Date, EFH Corp. received approval from the bankruptcy court to pay or otherwise honor certain prepetition obligations generally designed to stabilize its operations. Included in the approval were the obligations owed to us representing our prepetition electricity delivery fees. As of the EFH Petition Date, we estimated that our receivables from the Texas Holdings Group totaled approximately $129 million. Since that time, we have collected $128 million of the prepetition amount. We estimate any potential pre-tax loss resulting from the EFH Bankruptcy Proceedings to be immaterial. A provision for uncollectible accounts from affiliates has not been established as of June 30, 2016.
27
The EFH Bankruptcy Proceedings are a complex litigation matter and the full extent of potential exposure at this time is unknown. We will continue to evaluate our affiliate transactions and contingencies throughout the EFH Bankruptcy Proceedings to determine any risks and resulting impacts on our results of operations, financial statements and cash flows. See Notes 2, 3, 7 and 10 to Financial Statements and “Item 3. Quantitative and Qualitative Disclosures About Market Risk” for additional information.
For information regarding matters with the PUCT, see discussion below under “Regulation and Rates.”
28
RESULTS OF OPERATIONS
Operating Data
|
||||||||||||||||||
|
Three Months Ended June 30, |
% |
Six Months Ended June 30, |
% |
||||||||||||||
|
2016 |
2015 |
Change |
2016 |
2015 |
Change |
||||||||||||
|
||||||||||||||||||
Operating statistics: |
||||||||||||||||||
Electric energy volumes (gigawatt-hours): |
||||||||||||||||||
Residential |
9,564 | 9,270 | 3.2 | 18,214 | 19,679 | (7.4) | ||||||||||||
Other (a) |
18,998 | 18,579 | 2.3 | 35,881 | 35,487 | 1.1 | ||||||||||||
Total electric energy volumes |
28,562 | 27,849 | 2.6 | 54,095 | 55,166 | (1.9) | ||||||||||||
Reliability statistics (b): |
||||||||||||||||||
System Average Interruption Duration Index (SAIDI) (nonstorm) |
96.2 | 92.0 | 4.6 | |||||||||||||||
System Average Interruption Frequency Index (SAIFI) (nonstorm) |
1.4 | 1.3 | 7.7 | |||||||||||||||
Customer Average Interruption Duration Index (CAIDI) (nonstorm) |
69.1 | 71.0 | (2.7) | |||||||||||||||
Electricity points of delivery (end of period and in thousands): |
||||||||||||||||||
Electricity distribution points of delivery (based on number of active meters) |
3,407 | 3,356 | 1.5 | |||||||||||||||
|
||||||||||||||||||
|
Three Months Ended June 30, |
$ |
Six Months Ended June 30, |
$ |
||||||||||||||
|
2016 |
2015 |
Change |
2016 |
2015 |
Change |
||||||||||||
|
||||||||||||||||||
Operating revenues: |
||||||||||||||||||
Distribution base revenues |
$ |
441 |
$ |
432 |
$ |
9 |
$ |
856 |
$ |
881 |
$ |
(25) | ||||||
Transmission base revenues (c) |
226 | 213 | 13 | 453 | 418 | 35 | ||||||||||||
Reconcilable rates: |
||||||||||||||||||
TCRF (c) |
302 | 275 | 27 | 603 | 542 | 61 | ||||||||||||
Transition charges |
2 | 35 | (33) | 22 | 69 | (47) | ||||||||||||
AMS surcharges |
33 | 35 | (2) | 67 | 72 | (5) | ||||||||||||
EECRF and rate case expense surcharges |
11 | 9 | 2 | 24 | 22 | 2 | ||||||||||||
Other miscellaneous revenues |
15 | 15 |
- |
29 | 29 |
- |
||||||||||||
Intercompany eliminations (c) |
(82) | (76) | (6) | (163) | (149) | (14) | ||||||||||||
Total operating revenues |
$ |
948 |
$ |
938 |
$ |
10 |
$ |
1,891 |
$ |
1,884 |
$ |
7 |
________________
(a)Includes small business, large commercial and industrial and all other non-residential distribution points of delivery.
(b)SAIDI is the average number of minutes electric service is interrupted per consumer in a year. SAIFI is the average number of electric service interruptions per consumer in a year. CAIDI is the average duration in minutes per electric service interruption in a year. The statistics presented are based on twelve months ended June 30, 2016 and 2015 data.
(c)A portion of transmission base revenues (TCOS) is recovered from Oncor’s distribution customers through the TCRF rate.
29
Financial Results — Three Months Ended June 30, 2016 Compared to Three Months Ended June 30, 2015
Total operating revenues increased $10 million to $948 million in 2016. All revenue is billed under tariffs approved by the PUCT. The change reflected:
· |
An Increase in Distribution Base Revenues — Distribution base rates are set periodically in a rate review docket initiated by either us or the PUCT. The present distribution base rates became effective on January 1, 2012. The $9 million increase in distribution base rate revenues includes a $5 million increase due to growth in points of delivery and $3 million in higher consumption primarily driven by warmer weather conditions. |
· |
An Increase in Transmission Base Revenues — Transmission base revenues (or TCOS revenues) are collected from load serving entities benefitting from our transmission system. REPs serving customers in our service territory are billed through the TCRF mechanism discussed below, while other load serving entities are billed directly. In order to reflect changes in our invested transmission capital, PUCT rules allow us to update our TCOS rates by filing up to two interim TCOS rate adjustments in a calendar year. The $13 million increase in transmission base revenues primarily reflects interim rate increases to recover ongoing investment, including a return component, in the transmission system. See TCOS Filings Table below for a listing of Transmission Interim Rate Update Applications impacting revenues for the three months ended June 30, 2016 and 2015, as well as filings that will impact revenues for the year ended December 31, 2016. |
TCOS Filings Table
|
|||||||||||||
Docket No. |
Filed |
Effective |
Annual Revenue Impact |
Third-Party Wholesale Transmission |
Included in TCRF |
||||||||
46210 |
July 2016* |
September 2016 |
$ |
14 |
$ |
9 |
$ |
5 | |||||
44968 |
July 2015 |
September 2015 |
$ |
21 |
$ |
14 |
$ |
7 | |||||
44363 |
January 2015 |
March 2015 |
$ |
35 |
$ |
23 |
$ |
12 | |||||
42706 |
July 2014 |
September 2014 |
$ |
12 |
$ |
8 |
$ |
4 |
*Application pending
· |
A Decrease in Reconcilable Rates — The PUCT has designated certain tariffs (TCRF, EECRF surcharge, AMS surcharge and charges related to transition bonds) as reconcilable, which means the differences between amounts billed under these tariffs and the related incurred costs, including a return component where allowed, are deferred as either regulatory assets or regulatory liabilities. Accordingly, at prescribed intervals, future applicable tariffs are adjusted to either repay regulatory liabilities or collect regulatory assets. While changes in these tariffs affect revenues and the timing of cash flows, they do not impact operating income, except for the AMS return component. See Note 1 to Financial Statements for a discussion of the accounting treatment of reconcilable tariffs. |
- |
An Increase in TCRF — TCRF is a distribution rate charged to REPs to recover fees we pay to other transmission service providers under their TCOS rates and the retail portion of our own TCOS rate. PUCT rules allow us to update the TCRF component of our retail delivery rates on March 1 and September 1 each year. The $27 million increase in TCRF revenue reflects the pass through of a $21 million increase in third-party wholesale transmission expense described below and a $6 million increase in our own TCOS rate to recover ongoing investment in our transmission system including a return component. At June 30, 2016, $71 million was deferred as under-recovered wholesale transmission service expense (see Note 4 to Financial Statements). See TCRF Filings Table below for a listing of TCRF filings impacting cash flows for the three months ended June 30, 2016 and 2015, as well as filings that will impact cash flows for the year ended December 31, 2016. |
30
TCRF Filings Table
|
|||||||
|
Semi-Annual |
||||||
|
Billing Impact |
||||||
Docket No. |
Filed |
Effective |
Increase (Decrease) |
||||
46012 |
May 2016 |
September 2016 – February 2017 |
$ |
163 | |||
45406 |
December 2015 |
March 2016 – August 2016 |
$ |
(64) | |||
44771 |
May 2015 |
September 2015 – February 2016 |
$ |
47 | |||
43858 |
December 2014 |
March 2015 – August 2015 |
$ |
(27) | |||
42558 |
May 2014 |
September 2014 – February 2015 |
$ |
71 |
- |
A Decrease in Transition Charges — Transition charge revenue is dedicated to paying the principal and interest of transition bonds. We account for the difference between transition charge revenue recognized and cost related to the transition bonds as a regulatory asset or liability. The $33 million decrease in charges related to transition bonds corresponds with an offsetting decrease in amortization and interest expense and primarily reflects the maturity of the 2003 Series transition bonds during 2015 and the maturity of the 2004 Series transition bonds in May 2016. Final true-up proceedings for the transition bonds are expected to be conducted by Oncor and the PUCT during 2016 and are expected to have minimal or no net income impact. |
- |
A Decrease in AMS Surcharges — The PUCT has authorized monthly per customer advanced meter cost recovery factors designed to recover the cost of our initial AMS deployment over an eleven-year period ending in 2019. We recognize revenues equal to reconcilable expenses incurred including depreciation net of calculated savings plus a return component on our investment. The $2 million decrease in recognized AMS revenues is due to lower reconcilable expenses and a declining AMS investment balance. |
- |
An Increase in EECRF and Rate Case Expense Surcharges — The EECRF is a reconcilable rate designed to recover current energy efficiency program costs and performance bonuses earned by exceeding PUCT targets in prior years and recover or refund any over/under recovery of our costs in prior years. We recognize the performance bonuses in other miscellaneous revenues upon approval by the PUCT. PUCT rules require us to file an annual EECRF tariff update by the first business day in June of each year for implementation on March 1 of the next calendar year. The $2 million increase in EECRF surcharges is offset in operation and maintenance expense. See EECRF Filings Table below for a listing of EECRF filings impacting revenues for the three months ended June 30, 2016 and 2015, as well as filings that will impact revenues for the year ended December 31, 2016. |
EECRF Filings Table
|
|||||||||||||||||||||||||||||||
Docket No. |
Filed |
Effective |
Average Monthly Charge per Residential Customer (a) |
Program Costs |
Performance Bonus |
Under-/ (Over)- Recovery |
|||||||||||||||||||||||||
46013 |
June 2016* |
March 2017 |
$ |
0.94 |
$ |
49 |
$ |
10 |
$ |
(4) | |||||||||||||||||||||
44784 |
June 2015 |
March 2016 |
$ |
1.19 |
$ |
61 |
$ |
10 |
$ |
(4) | |||||||||||||||||||||
42559 |
May 2014 |
March 2015 |
$ |
1.23 |
$ |
50 |
$ |
23 |
$ |
(5) | |||||||||||||||||||||
|
______________
*Application pending
(a) As of March 2014, average monthly charges are for a residential customer using 1,200 kWh, as the energy efficiency substantive rules require rates to be on a volumetric basis rather than a fixed monthly charge.
· |
No Change in Other Miscellaneous Revenues — Miscellaneous revenues include disconnect/reconnect fees and other discretionary revenues for services requested by REPs, services provided on a time and materials
31 |
basis, rents, energy efficiency performance bonuses approved by the PUCT and other miscellaneous revenues. |
Wholesale transmission service expense increased $21 million, or 11%, to $220 million in 2016 due to higher fees paid to other transmission entities.
Operation and maintenance expense increased $1 million, or 1%, to $169 million in 2016. Operation and maintenance expense increased due to higher energy efficiency expenses of $2 million, partially offset by lower contractor costs of $1 million. Operation and maintenance expense reflects fluctuations in expenses that are offset by corresponding reconcilable rate revenues, including the $2 million increase related to the energy efficiency program above. Amortization of regulatory assets reported in operation and maintenance expense totaled $12 million and $13 million for the three months ended June 30, 2016 and 2015, respectively.
Depreciation and amortization decreased $27 million, or 12%, to $193 million in 2016. The decrease reflects lower amortization of regulatory assets of $33 million related to the maturity of the transition bonds (with an offsetting decrease in revenues), which was partially offset by a $6 million increase attributed to ongoing investments in property, plant and equipment.
Taxes other than amounts related to income taxes decreased $1 million, or 1%, to $107 million in 2016. The change is primarily driven by a decrease in local franchise fees.
Other income and (deductions) – net declined $3 million in 2016. The change primarily reflects a reduction in non-recoverable pension and OPEB costs, lower professional fees and gains on certain benefit plan trust assets. See Note 11 to Financial Statements for more details.
Provision in lieu of income taxes totaled $62 million (including a $1 million benefit related to nonoperating income) in 2016 compared to $55 million (including a $2 million benefit related to nonoperating income) in 2015. The effective income tax rate on pretax income was 36.0% and 35.9% for the years 2016 and 2015, respectively. The effective income tax rate on pretax income differs from the US federal statutory rate of 35% primarily due to the effect of the Texas margin tax.
Interest expense and related charges was $84 million for both 2016 and 2015. The current period includes a $3 million increase due to higher outstanding borrowings, largely offset by lower average interest rates.
Net income increased $12 million, or 12%, to $110 million in 2016. The change primarily reflects higher distribution base revenues driven by warmer weather conditions and higher transmission base revenues due to increased investment, partially offset by higher income taxes.
32
Financial Results — Six Months Ended June 30, 2016 Compared to Six Months Ended June 30, 2015
Total operating revenues increased $7 million to $1,891 million in 2016. All revenue is billed under tariffs approved by the PUCT. The change reflected:
· |
A Decrease in Distribution Base Revenues — Distribution base rates are set periodically in a rate review docket initiated by either us or the PUCT. The present distribution base rates became effective on January 1, 2012. The $25 million decrease in distribution base rate revenues consisted of an estimated $36 million impact due to lower average consumption primarily driven by milder winter and spring weather, partially offset by an effect of growth in points of delivery of $11 million. |
· |
An Increase in Transmission Base Revenues — Transmission base revenues (or TCOS revenues) are collected from load serving entities benefitting from our transmission system. REPs serving customers in our service territory are billed through the TCRF mechanism discussed below while other load serving entities are billed directly. In order to reflect changes in our invested transmission capital, PUCT rules allow us to update our TCOS rates by filing up to two interim TCOS rate adjustments in a calendar year. The $35 million increase in transmission base revenues primarily reflects interim rate increases to recover ongoing investment, including a return component, in the transmission system. See TCOS Filings Table above for a listing of Transmission Interim Rate Update Applications impacting revenues for the six months ended June 30, 2016 and 2015, as well as filings that will impact revenues for the year ended December 31, 2016. |
· |
An Increase in Reconcilable Rates — The PUCT has designated certain tariffs (TCRF, EECRF surcharge, AMS surcharge and charges related to transition bonds) as reconcilable, which means the differences between amounts billed under these tariffs and the related incurred costs, including a return component where allowed, are deferred as either regulatory assets or regulatory liabilities. Accordingly, at prescribed intervals, future applicable tariffs are adjusted to either repay regulatory liabilities or collect regulatory assets. While changes in these tariffs affect revenues and the timing of cash flows, they do not impact operating income, except for the AMS return component. See Note 1 to Financial Statements for accounting treatment of reconcilable tariffs. |
- |
An Increase in TCRF — TCRF is a distribution rate charged to REPs to recover fees we pay to other transmission service providers under their TCOS rates and the retail portion of our own TCOS rate. PUCT rules allow us to update the TCRF component of our retail delivery rates on March 1 and September 1 each year. The $61 million increase in TCRF revenue reflects the pass through of a $47 million increase in third-party wholesale transmission expense described below and a $14 million increase in our own TCOS rate to recover ongoing investment in our transmission system including a return component. At June 30, 2016, $71 million was deferred as under-recovered wholesale transmission service expense (see Note 4 to Financial Statements). See TCRF Filings Table above for a listing of TCRF filings impacting cash flows for the six months ended June 30, 2016 and 2015, as well as filings that will impact cash flows for the year ended December 31, 2016. |
- |
A Decrease in Transition Charges — Transition charge revenue is dedicated to paying the principal and interest of transition bonds. We account for the difference between transition charge revenue recognized and cost related to the transition bonds as a regulatory liability. The $47 million decrease in charges related to transition bonds corresponds with an offsetting decrease in amortization and interest expense and primarily reflects the maturity of the 2003 Series transition bonds during 2015 and the maturity of the 2004 Series transition bonds in May 2016. Final true-up proceedings for the transition bonds are expected to be conducted by Oncor and the PUCT during 2016 and are expected to have minimal or no net income impact. |
- |
A Decrease in AMS Surcharges — The PUCT has authorized monthly per customer advanced meter cost recovery factors designed to recover the cost of our initial AMS deployment over an eleven-year period ending in 2019. We recognize revenues equal to reconcilable expenses incurred including
33 |
depreciation net of calculated savings plus a return component on our investment. AMS revenues decreased $5 million due to lower reconcilable expenses and a declining AMS investment balance. |
- |
An Increase in EECRF Surcharges — The EECRF is a reconcilable rate designed to recover current energy efficiency program costs and performance bonuses earned by exceeding PUCT targets in prior years and recover or refund any over/under recovery of our costs in prior years. We recognize the performance bonuses in other miscellaneous revenues upon approval by the PUCT. PUCT rules require us to file an annual EECRF tariff update by the first business day in June of each year for implementation on March 1 of the next calendar year. The $2 million increase in EECRF surcharges is offset in operation and maintenance expense. See EECRF Filings Table above for a listing of EECRF filings impacting revenues for the six months ended June 30, 2016 and 2015, as well as filings that will impact revenues for the year ended December 31, 2016. |
· |
No Change in Other Miscellaneous Revenues — Miscellaneous revenues include disconnect/reconnect fees and other discretionary revenues for services requested by REPs, services provided on a time and materials basis, rents, energy efficiency performance bonuses approved by the PUCT and other miscellaneous revenues. |
Wholesale transmission service expense increased $47 million, or 12%, to $440 million in 2016 due to higher fees paid to other transmission entities.
Operation and maintenance expense decreased $2 million, or 1%, to $351 million in 2016. The change included $5 million in lower contractor costs, $1 million in lower vegetation management costs, $1 million lower regulatory amortization expense, partially offset by $3 million higher labor related costs. Operation and maintenance expense also reflects fluctuations in expenses that are offset by corresponding reconcilable rate revenues, including a $2 million increase related to the energy efficiency program. Amortization of regulatory assets reported in operation and maintenance expense totaled $25 million and $26 million for the six months ended June 30, 2016 and 2015, respectively.
Depreciation and amortization decreased $34 million, or 8%, to $403 million in 2016. The decrease primarily reflects $46 million in lower amortization of regulatory assets associated with transition bonds (with an offsetting decrease in revenues), partially offset by $13 million increase attributed to ongoing investments in property, plant and equipment.
Taxes other than amounts related to income taxes totaled $220 million in both 2016 and 2015. The 2016 amount includes a $3 million decrease in local franchise fees offset by a $3 million increase in property taxes.
Other income and (deductions) – net increased $1 million in 2016. See Note 11 to Financial Statements for details.
Provision in lieu of income taxes totaled $110 million (including a $2 million benefit related to nonoperating income) in 2016 compared to $113 million (including a $2 million benefit related to nonoperating income) in 2015. The effective income tax rate on pretax income was 36.5% in 2016 and 36.6% in 2015. The 2016 effective income tax rate on pretax income differs from the US federal statutory rate of 35% primarily due to the effect of the Texas margin tax.
Interest expense and related charges increased $3 million, or 2%, to $168 million in 2016. The change was driven by a $4 million increase attributable to higher average borrowings reflecting ongoing capital investments, partially offset by $1 million due to lower average interest rates.
Net income decreased $5 million, or 3%, to $191 million in 2016. The change primarily reflects lower distribution base revenues and higher depreciation and amortization expense (excluding transition bond related effects which are offset in revenues), partially offset by higher transmission base revenues.
34
FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows — Six Months Ended June 30, 2016 Compared to Six Months Ended June 30, 2015
Cash provided by operating activities totaled $472 million and $574 million in 2016 and 2015, respectively. The $102 million decrease is primarily the result of an $89 million decrease in transmission and distribution receipts driven in part by mild winter and spring weather and lower TCRF billings, a $25 million increase in prepayments, a $16 million increase in cash purchases of materials and supplies, partially offset by a $32 million decrease in storm related repairs.
Cash provided by financing activities totaled $131 million and $48 million in 2016 and 2015, respectively. The $83 million increase primarily reflects a decrease of $528 million of debt repayments, an increase in short-term borrowings of $224 million, a decrease in distributions to our members of $44 million and a decrease in debt issuance costs of $12 million, partially offset by a $725 million debt issuance in the prior period. See Notes 6 and 8 to Financial Statements for additional information regarding long-term debt activity and distributions to our members, respectively.
Cash used in investing activities, which consists primarily of capital expenditures, totaled $627 million and $610 million in 2016 and 2015, respectively. The 2016 activity reflected increases in capital expenditures for transmission and distribution facilities to serve new customers and infrastructure capital maintenance spending, partially offset by a $38 million release of Bondco restricted cash due to the maturity of the final transition bonds. This is reflected in the Other caption under investing activities.
Depreciation and amortization expense reported in the statements of consolidated cash flows was $24 million and $22 million more than the amounts reported in the statements of consolidated income in the six months ended June 30, 2016 and 2015, respectively. The differences result from amortization reported in the following different lines items in the statements of consolidated income: regulatory asset amortization (reported in operation and maintenance expense), the accretion of the adjustment (discount) to regulatory assets (reported in other income) and the amortization of debt fair value discount (reported in interest expense and related charges).
Long-Term Debt Activity — Repayments of long-term debt in the six months ended June 30, 2016 totaled $41 million representing the final transition bond principal payment at the scheduled maturity date.
See Note 6 to Financial Statements for additional information regarding long-term debt.
Available Liquidity/Credit Facility — Our primary source of liquidity, aside from operating cash flows, is our ability to borrow under our revolving credit facility. At June 30, 2016, we had a $2.0 billion secured revolving credit facility. The revolving credit facility expires in October 2017. Subject to the limitations described below, available borrowing capacity under our revolving credit facility totaled $860 million and $1.153 billion at June 30, 2016 and December 31, 2015, respectively. We may request an increase in our borrowing capacity of $100 million in the aggregate and/or a one-year extension, provided certain conditions are met, including lender approval.
The revolving credit facility contains a senior debt-to-capitalization ratio covenant that effectively limits our ability to incur indebtedness in the future. At June 30, 2016, we were in compliance with the covenant. See “Financial Covenants, Credit Rating Provisions and Cross Default Provisions” below for additional information on this covenant and the calculation of this ratio. The revolving credit facility and the senior notes and debentures issued by us are secured by the Deed of Trust, which permits us to secure other indebtedness with the lien of the Deed of Trust up to the aggregate of (i) the amount of available bond credits, and (ii) 85% of the lower of the fair value or cost of certain property additions that have been certified to the Deed of Trust collateral agent. Accordingly, the availability under our revolving credit facility is limited by the amount of available bond credits and any property additions certified to the Deed of Trust collateral agent in connection with the revolving credit facility borrowings. To the extent we continue to issue debt securities secured by the Deed of Trust, those debt securities would also be limited by the amount of available bond credits and any property additions that have been certified to the Deed of Trust collateral agent. At June 30, 2016, the available bond credits totaled $2.281 billion,
35
and the amount of additional potential indebtedness that could be secured by property additions, subject to the completion of a certification process, totaled $1.570 billion. At June 30, 2016, the available borrowing capacity of the revolving credit facility could be fully drawn.
Under the terms of our revolving credit facility, the commitments of the lenders to make loans to us are several and not joint. Accordingly, if any lender fails to make loans to us, our available liquidity could be reduced by an amount up to the aggregate amount of such lender’s commitments under the facility. See Note 5 to Financial Statements for additional information regarding the revolving credit facility.
Cash and cash equivalents totaled $1 million and $25 million at June 30, 2016 and December 31, 2015, respectively. Available liquidity (cash and available revolving credit facility capacity) at June 30, 2016 totaled $861 million, reflecting a decrease of $317 million from December 31, 2015. The decrease reflects the ongoing capital investment in transmission and distribution infrastructure.
We also committed to the PUCT that we would maintain a regulatory capital structure at or below the assumed debt-to-equity ratio established periodically by the PUCT for ratemaking purposes, which is currently set at 60% debt to 40% equity. At June 30, 2016 and December 31, 2015, our regulatory capitalization ratios were 59.4% debt to 40.6% equity and 59.8% debt to 40.2% equity, respectively. See Note 8 to Financial Statements for discussion of the regulatory capitalization ratio.
Liquidity Needs, Including Capital Expenditures — Our board of directors, which annually approves capital expenditure estimates for the following year, has approved capital expenditures totaling $1.4 billion in 2016. Management currently expects to recommend to our board of directors capital expenditures of approximately $1.5 billion in each of the years 2017 through 2021. These capital expenditures are expected to be used for investment in transmission and distribution infrastructure.
We expect cash flows from operations, combined with availability under the revolving credit facility, to provide sufficient liquidity to fund current obligations, projected working capital requirements, maturities of long-term debt and capital spending for at least the next twelve months. We do not anticipate the EFH Bankruptcy Proceedings to have a material impact on our liquidity. Should additional liquidity or capital requirements arise, we may need to access capital markets, generate equity capital or preserve equity through reductions or suspension of distributions to members. In addition, we may also consider new debt issuances, repurchases, exchange offers and other transactions in order to refinance or manage our long-term debt. The inability to raise capital on favorable terms or failure of counterparties to perform under credit or other financial agreements, particularly during any uncertainty in the financial markets, could impact our ability to sustain and grow the business and would likely increase capital costs that may not be recoverable through rates.
Distributions — On July 27, 2016, our board of directors declared a cash distribution of an amount up to and including $68 million, to be paid to our members in August 2016, with the exact amount to be determined by management in accordance with the regulatory capital structure limitation described above. During the six months ended June 30, 2016, our board of directors declared and we paid the following cash distributions to our members:
Declaration Date |
Payment Date |
Amount |
|||
April 27, 2016 |
May 11, 2016 |
$ |
65 | ||
February 24, 2016 |
February 25, 2016 |
$ |
56 |
See Note 8 to Financial Statements for discussion of the distribution restriction.
Pension and OPEB Plan Funding — Our funding for the pension plans and the Oncor OPEB Plan in the calendar year 2016 is expected to total $4 million and $31 million, respectively. In the six months ended June 30, 2016, we made cash contributions to the pension plans and the Oncor OPEB Plan of $2 million and $14 million, respectively.
Financial Covenants, Credit Rating Provisions and Cross Default Provisions — Our revolving credit facility contains a financial covenant that requires maintenance of a consolidated senior debt-to-capitalization ratio of no
36
greater than 0.65 to 1.00. For purposes of this ratio, debt is calculated as indebtedness defined in the revolving credit facility (principally, the sum of long-term debt, any capital leases, short-term debt and debt due currently in accordance with US GAAP). The debt calculation excludes transition bonds issued by Bondco, but includes the unamortized fair value discount related to Bondco. Capitalization is calculated as membership interests determined in accordance with US GAAP plus indebtedness described above. At June 30, 2016, we were in compliance with this covenant.
Impact on Liquidity of Credit Ratings — The rating agencies assign credit ratings to certain of our debt securities. Our access to capital markets and cost of debt could be directly affected by our credit ratings. Any adverse action with respect to our credit ratings could generally cause borrowing costs to increase and the potential pool of investors and funding sources to decrease. In particular, a decline in credit ratings would increase the cost of our revolving credit facility (as discussed below). In the event any adverse action with respect to our credit ratings takes place and causes borrowing costs to increase, we may not be able to recover such increased costs if they exceed our PUCT-approved cost of debt determined in our most recent rate review or subsequent rate reviews.
Most of our large suppliers and counterparties require an expected level of creditworthiness in order for them to enter into transactions with us. If our credit ratings decline, the costs to operate our business could increase because counterparties could require the posting of collateral in the form of cash-related instruments, or counterparties could decline to do business with us.
Presented below are the credit ratings assigned for our debt securities at August 1, 2016.
|
||
|
Senior Secured |
|
S&P |
A |
|
Moody’s |
A3 |
|
Fitch |
BBB+ |
|
|
On July 29, 2016, Moody’s upgraded our senior secured rating to A3 from Baa1 and changed our rating outlook to “review for further upgrade” from “positive”. On August 1, 2016, Fitch placed our Issue Default Rating on rating watch positive. These rating actions follow the July 29, 2016 announcement that NEE and EFH Corp. had entered into the NEE Merger Agreement (see Note 2 to Financial Statements for information regarding the NEE Merger Agreement and the EFH Bankruptcy Proceedings). Oncor remains on “developing” outlook with S&P.
As described in Note 7 to Financial Statements in our 2015 Form 10-K, our long-term debt, excluding Bondco’s non-recourse debt, is currently secured pursuant to the Deed of Trust by a first priority lien on certain of our transmission and distribution assets and is considered senior secured debt.
A rating reflects only the view of a rating agency, and is not a recommendation to buy, sell or hold securities. Ratings can be revised upward or downward at any time by a rating agency if such rating agency decides that circumstances warrant such a change.
Material Credit Rating Covenants — Our revolving credit facility contains terms pursuant to which the interest rates charged under the agreement may be adjusted depending on credit ratings. Borrowings under the revolving credit facility bear interest at per annum rates equal to, at our option, (i) LIBOR plus a spread ranging from 1.00% to 1.75% depending on credit ratings assigned to our senior secured non-credit enhanced long-term debt or (ii) an alternate base rate (the highest of (1) the prime rate of JPMorgan Chase, (2) the federal funds effective rate plus 0.50%, and (3) daily one-month LIBOR plus 1.00%) plus a spread ranging from 0.00% to 0.75% depending on credit ratings assigned to our senior secured non-credit enhanced long-term debt. Based on the current ratings assigned to our debt securities at August 1, 2016, our borrowings are generally LIBOR-based and will bear interest at LIBOR plus 1.00%. A decline in credit ratings would increase the cost of our revolving credit facility and likely increase the cost of any debt issuances and additional credit facilities.
Material Cross Default Provisions — Certain financing arrangements contain provisions that may result in an event of default if there was a failure under other financing arrangements to meet payment terms or to observe other
37
covenants that could result in an acceleration of payments due. Such provisions are referred to as “cross default” provisions.
Under our revolving credit facility, a default by us in respect of indebtedness in a principal amount in excess of $100 million or any judgments for the payment of money in excess of $50 million that are not discharged within 60 days may cause the maturity of outstanding balances ($1.133 billion in short-term borrowings and $7 million in letters of credit at June 30, 2016) under that facility to be accelerated. Additionally, under the Deed of Trust, an event of default under either our revolving credit facility or our indentures would permit our lenders and the holders of our senior secured notes to exercise their remedies under the Deed of Trust.
Guarantees — At June 30, 2016, we did not have any material guarantees.
OFF-BALANCE SHEET ARRANGEMENTS
At June 30, 2016, we did not have any material off-balance sheet arrangements with special purpose entities or variable interest entities.
COMMITMENTS AND CONTINGENCIES
See Note 7 to Financial Statements for discussion of commitments and contingencies.
CHANGES IN ACCOUNTING STANDARDS
See Note 1 to Financial Statements for discussion of changes in accounting standards.
REGULATION AND RATES
Matters with the PUCT
Change in Control Review (PUCT Docket No. 45188) - In connection with the transactions contemplated by the Sixth Amended Plan of Reorganization filed in the EFH Bankruptcy Proceedings, in September 2015, Oncor and the Hunt Investor Group filed a joint report and application for regulatory approvals pursuant to PURA, which was conditionally approved on March 24, 2016. For additional information regarding the Sixth Amended Plan of Reorganization and application for regulatory approval, see Note 2 to Financial Statements and “City Rate Reviews” below.
The NEE Merger Agreement contemplates that Oncor, NEE and Merger Sub will file a joint application with the PUCT seeking certain regulatory approvals with respect to the transactions contemplated by the New Plan of Reorganization, but that filing has not been made. For additional information regarding the New Plan of Reorganization and application for regulatory approval, see Note 2 to Financial Statements.
City Rate Reviews - Oncor has received resolutions passed by approximately 58 cities with original jurisdiction over electric utility rates directing Oncor to file rate review proceedings. The resolutions passed required Oncor to file a rate review with each city by September 1, 2016 based on a January 1, 2015 to December 31, 2015 test year, with the cities’ analysis of such rate review filing due on October 13, 2016, Oncor’s rebuttal due on November 10, 2016, and hearings before city councils to be held between November 15 – December 15, 2016. Final action by each city must be taken within 125 days from the rate review filing date, and Oncor has the right to appeal any city action to the PUCT. However, Oncor has subsequently been notified by counsel representing these cities that these rate review proceedings have been abated indefinitely, pending resolution of Oncor ownership issues. The notice provides that if and when the cities desire to proceed with a rate inquiry, cities will notify Oncor in writing and inform Oncor of a precise date of the rate case, which will be at least 120 days from receipt of the communication that lifts the abatement.
2008 Rate Review (PUCT Docket No. 35717) — In August 2009, the PUCT issued a final order with respect to our June 2008 rate review filing with the PUCT and 204 cities based on a test year ended December 31, 2007 (PUCT Docket No. 35717), and new rates were implemented in September 2009. We and four other parties
38
appealed various portions of the rate review final order to a state district court. In January 2011, the district court signed its judgment reversing the PUCT with respect to two issues: the PUCT’s disallowance of certain franchise fees and the PUCT’s decision that PURA no longer requires imposition of a rate discount for state colleges and universities. We filed an appeal with the Texas Third Court of Appeals (Austin Court of Appeals) in February 2011 with respect to the issues we appealed to the district court and did not prevail upon, as well as the district court’s decision to reverse the PUCT with respect to discounts for state colleges and universities. In early August 2014, the Austin Court of Appeals reversed the district court and affirmed the PUCT with respect to the PUCT’s disallowance of certain franchise fees and the PUCT’s decision that PURA no longer requires imposition of a rate discount for state colleges and universities. The Austin Court of Appeals also reversed the PUCT and district court’s rejection of a proposed consolidated tax savings adjustment arising out of EFH Corp.’s ability to offset our taxable income against losses from other investments and remanded the issue to the PUCT to determine the amount of the consolidated tax savings adjustment. In late August 2014, we filed a motion on rehearing with the Austin Court of Appeals with respect to certain appeal issues on which we were not successful, including the consolidated tax savings adjustment. In December 2014, the Austin Court of Appeals issued its opinion, clarifying that it was rendering judgment on the rate discount for state colleges and universities issue (affirming that PURA no longer requires imposition of the rate discount) rather than remanding it to the PUCT, and dismissing the motions for rehearing regarding the franchise fee issue and the consolidated tax savings adjustment. We filed a petition for review with the Texas Supreme Court in February 2015. The Texas Supreme Court granted the petition for review and the date of oral arguments has been set for September 13, 2016. There is no deadline for the court to act. If our appeals efforts are unsuccessful and the proposed consolidated tax savings adjustment is implemented, we estimate that on remand, the impact on earnings of the consolidated tax savings adjustment’s value could range from zero, as originally determined by the PUCT in Docket 35717, to a $135 million loss (after tax) including interest. Interest accrues at the PUCT approved rate for over-collections, which is 0.18% for 2016. We do not believe that any of the other issues ruled upon by the Austin Court of Appeals would result in a material impact to our results of operations or financial condition.
Summary
We cannot predict future regulatory or legislative actions or any changes in economic and securities market conditions. Such actions or changes could significantly alter our basic financial position, results of operations or cash flows.
39
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Risk
Market risk is the risk that we may experience a loss in value as a result of changes in market conditions such as interest rates that may be experienced in the ordinary course of business. We may transact in financial instruments to hedge interest rate risk related to our debt, but there are currently no such hedges in place. All of our long-term debt at June 30, 2016 and December 31, 2015 carried fixed interest rates.
Except as discussed below, the information required hereunder is not significantly different from the information set forth in “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” in our 2015 Form 10-K and is therefore not presented herein.
Credit Risk
Credit risk relates to the risk of loss associated with nonperformance by counterparties. Our customers consist primarily of REPs. As a prerequisite for obtaining and maintaining certification, a REP must meet the financial resource standards established by the PUCT. Meeting these standards does not guarantee that a REP will be able to perform its obligations. REP certificates granted by the PUCT are subject to suspension and revocation for significant violation of PURA and PUCT rules. Significant violations include failure to timely remit payments for invoiced charges to a transmission and distribution utility pursuant to the terms of tariffs approved by the PUCT. We believe PUCT rules that allow for the recovery of uncollectible amounts due from nonaffiliated REPs through rates significantly reduce our credit risk.
Our net exposure to credit risk associated with trade accounts and other receivables from affiliates totaled $124 million at June 30, 2016, of which $2 million has been offset with trade accounts and other payables. Our credit risk exposure associated with receivables from members related to income taxes totaled $107 million at June 30, 2016. Due to commitments made to the PUCT, this concentration of accounts receivable from affiliates increases the risk that a default could have a material effect on earnings and cash flows. See Notes 2, 7 and 10 to Financial Statements for additional information regarding the potential impacts of the EFH Bankruptcy Proceedings on our transactions with affiliates and for additional information regarding our transactions involving members of the Texas Holdings Group.
Our exposure to credit risk associated with trade accounts receivable from nonaffiliates totaled $410 million at June 30, 2016. The nonaffiliated receivable amount is before the allowance for uncollectible accounts, which totaled $3 million at June 30, 2016. The nonaffiliated exposure includes trade accounts receivable from REPs totaling $308 million, which are almost entirely noninvestment grade. At June 30, 2016, REP subsidiaries of a nonaffiliated entity collectively represented approximately 14% of the nonaffiliated trade receivable amount. No single other nonaffiliated party represented 10% or more of the total trade accounts receivable amount. We view our exposure to this customer to be within an acceptable level of risk tolerance considering PUCT rules and regulations; however, this concentration increases the risk that a default could have a material effect on cash flows.
40
FORWARD-LOOKING STATEMENTS
This report and other presentations made by us contain “forward-looking statements.” All statements, other than statements of historical facts, that are included in this report, or made in presentations, in response to questions or otherwise, that address activities, events or developments that we expect or anticipate to occur in the future, including such matters as projections, capital allocation, future capital expenditures, business strategy, competitive strengths, goals, future acquisitions or dispositions, development or operation of facilities, market and industry developments and the growth of our business and operations (often, but not always, through the use of words or phrases such as “intends,” “plans,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimated,” “should,” “projection,” “target,” “goal,” “objective” and “outlook”), are forward-looking statements. Although we believe that in making any such forward-looking statement our expectations are based on reasonable assumptions, any such forward-looking statement involves uncertainties and is qualified in its entirety by reference to the discussion of risk factors under “Item 1A. Risk Factors” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations" in our 2015 Form 10-K, “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations" in this report and the following important factors, among others, that could cause actual results to differ materially from those projected in such forward-looking statements:
· |
prevailing governmental policies and regulatory actions, including those of the US Congress, the Texas Legislature, the Governor of Texas, the US Federal Energy Regulatory Commission, the PUCT, the North American Energy Regulatory Corporation, the Texas Reliability Entity, Inc., the Environmental Protection Agency, and the Texas Commission on Environmental Quality, with respect to: |
- |
allowed rate of return; |
- |
permitted capital structure; |
- |
industry, market and rate structure; |
- |
recovery of investments; |
- |
acquisition and disposal of assets and facilities; |
- |
operation and construction of facilities; |
- |
changes in tax laws and policies, and |
- |
changes in and compliance with environmental, reliability and safety laws and policies; |
· |
legal and administrative proceedings and settlements, including the exercise of equitable powers by courts; |
· |
any impacts on us as a result of the EFH Bankruptcy Proceedings and the change in indirect ownership of Oncor proposed in such proceedings; |
· |
weather conditions and other natural phenomena; |
· |
acts of sabotage, wars or terrorist or cyber security threats or activities; |
· |
economic conditions, including the impact of a recessionary environment; |
· |
unanticipated population growth or decline, or changes in market demand and demographic patterns, particularly in ERCOT; |
· |
changes in business strategy, development plans or vendor relationships; |
· |
unanticipated changes in interest rates or rates of inflation; |
· |
unanticipated changes in operating expenses, liquidity needs and capital expenditures; |
· |
inability of various counterparties to meet their financial obligations to us, including failure of counterparties to perform under agreements; |
· |
general industry trends; |
· |
hazards customary to the industry and the possibility that we may not have adequate insurance to cover losses resulting from such hazards; |
· |
changes in technology used by and services offered by us; |
· |
significant changes in our relationship with our employees, including the availability of qualified personnel, and the potential adverse effects if labor disputes or grievances were to occur; |
· |
changes in assumptions used to estimate costs of providing employee benefits, including pension and OPEB, and future funding requirements related thereto; |
· |
significant changes in critical accounting policies material to us; |
41
· |
commercial bank and financial market conditions, access to capital, the cost of such capital, and the results of financing and refinancing efforts, including availability of funds in the capital markets and the potential impact of disruptions in US credit markets; |
· |
circumstances which may contribute to future impairment of goodwill, intangible or other long-lived assets; |
· |
financial restrictions under our revolving credit facility and indentures governing our debt instruments; |
· |
our ability to generate sufficient cash flow to make interest payments on our debt instruments; |
· |
actions by credit rating agencies, and |
· |
our ability to effectively execute our operational strategy. |
Any forward-looking statement speaks only at the date on which it is made, and, except as may be required by law, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which it is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to predict all of them; nor can we assess the impact of each such factor or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement. As such, you should not unduly rely on such forward-looking statements.
ITEM 4. CONTROLS AND PROCEDURES
An evaluation was performed under the supervision and with the participation of our management, including the principal executive officer and principal financial officer, of the effectiveness of the design and operation of the disclosure controls and procedures in effect at the end of the current period included in this quarterly report. Based on the evaluation performed, our management, including the principal executive officer and principal financial officer, concluded that the disclosure controls and procedures were effective. During the most recent fiscal quarter covered by this report, no changes in internal controls over financial reporting have occurred that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
42
Reference is made to the discussion in Notes 3 and 7 to Financial Statements regarding legal and regulatory proceedings.
There are numerous factors that affect our business and results of operations, many of which are beyond our control. In addition to the other information set forth in this report, including “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” you should carefully consider the factors discussed in “Part I, Item 1A. Risk Factors” in our 2015 Form 10-K, which could materially affect our business, financial condition or future results. The risks described in such reports are not the only risks we face.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
None.
43
(a) Exhibits provided as part of Part II are: |
||||
Exhibits |
Previously Filed* |
As |
|
|
With File Number |
Exhibit |
|||
(10) |
Material Contracts. |
|||
|
|
|||
|
Management Contracts; Compensatory Plans, Contracts and Arrangements. |
|||
10(a) |
333-100240 Form 10-Q (filed May 5, 2016) |
10(a) |
— |
Oncor Supplemental Retirement Plan, as amended. |
(31) |
Rule 13a – 14(a)/15d – 14(a) Certifications. |
|||
|
|
|||
31(a) |
— |
Certification of Robert S. Shapard, chief executive of Oncor Electric Delivery Company LLC, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
||
31(b) |
|
|
— |
Certification of David M. Davis, senior vice president and chief financial officer of Oncor Electric Delivery Company LLC, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
(32) |
Section 1350 Certifications. |
|||
|
|
|||
32(a) |
— |
Certification of Robert S. Shapard, chief executive of Oncor Electric Delivery Company LLC, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
||
32(b) |
|
|
— |
Certification of David M. Davis, senior vice president and chief financial officer of Oncor Electric Delivery Company LLC, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
(99) |
Additional Exhibits. |
|||
|
|
|
|
|
99 |
|
|
— |
Condensed Statement of Consolidated Income – Twelve Months Ended June 30, 2016. |
|
|
|
|
|
|
XBRL Data Files. |
|||
101.INS |
|
|
— |
XBRL Instance Document |
101.SCH |
|
|
— |
XBRL Taxonomy Extension Schema Document |
101.CAL |
|
|
— |
XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF |
|
|
— |
XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB |
|
|
— |
XBRL Taxonomy Extension Labels Linkbase Document |
101.PRE |
|
|
— |
XBRL Taxonomy Extension Presentation Linkbase Document |
__________________
* Incorporated herein by reference.
44
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
ONCOR ELECTRIC DELIVERY COMPANY LLC
!! |
||
|
||
By: |
/s/ David M. Davis |
|
|
David M. Davis |
|
|
Senior Vice President and Chief Financial Officer (Principal Financial Officer and Duly Authorized Officer) |
Date: August 1, 2016
45
EXHIBIT INDEX
|
|||||
(a) Exhibits provided as part of Part II are: |
|||||
Exhibits |
Previously Filed* With File Number |
As |
|
|
|
(10) |
Material Contracts. |
||||
|
Management Contracts; Compensatory Plans, Contracts and Arrangements. |
||||
10(a) |
333-100240 Form 10-Q (filed May 5, 2016) |
10(a) |
— |
Oncor Supplemental Retirement Plan, as amended. |
|
(31) |
Rule 13a – 14(a)/15d – 14(a) Certifications. |
||||
|
|
||||
31(a) |
— |
Certification of Robert S. Shapard, chief executive of Oncor Electric Delivery Company LLC, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|||
31(b) |
|
|
— |
Certification of David M. Davis, senior vice president and chief financial officer of Oncor Electric Delivery Company LLC, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
(32) |
Section 1350 Certifications. |
||||
|
|
||||
32(a) |
— |
Certification of Robert S. Shapard, chief executive of Oncor Electric Delivery Company LLC, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|||
32(b) |
|
|
— |
Certification of David M. Davis, senior vice president and chief financial officer of Oncor Electric Delivery Company LLC, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
(99) |
Additional Exhibits. |
||||
|
|
|
|
|
|
99 |
|
|
— |
Condensed Statement of Consolidated Income – Twelve Months Ended June 30, 2016. |
|
|
|
|
|
|
|
XBRL Data Files. |
|||
101.INS |
|
|
— |
XBRL Instance Document |
101.SCH |
|
|
— |
XBRL Taxonomy Extension Schema Document |
101.CAL |
|
|
— |
XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF |
|
|
— |
XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB |
|
|
— |
XBRL Taxonomy Extension Labels Linkbase Document |
101.PRE |
|
|
— |
XBRL Taxonomy Extension Presentation Linkbase Document |
__________________
* Incorporated herein by reference.
46
ONCOR ELECTRIC DELIVERY COMPANY LLC
Certificate of Chief Executive Officer
Pursuant to Section 302 of Sarbanes – Oxley Act of 2002
I, Robert S. Shapard, certify that:
1. |
I have reviewed this quarterly report on Form 10-Q of Oncor Electric Delivery Company LLC; |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: August 1, 2016 |
|
/s/ Robert S. Shapard |
|
|
Name: |
Robert S. Shapard |
|
|
Title: |
Chief Executive |
|
ONCOR ELECTRIC DELIVERY COMPANY LLC
Certificate of Chief Financial Officer
Pursuant to Section 302 of Sarbanes – Oxley Act of 2002
I, David M. Davis, certify that:
1. |
I have reviewed this quarterly report on Form 10-Q of Oncor Electric Delivery Company LLC; |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: August 1, 2016 |
|
/s/ David M. Davis |
|
|
Name: |
David M. Davis |
|
|
Title: |
Senior Vice President and Chief Financial Officer |
|
ONCOR ELECTRIC DELIVERY COMPANY LLC
Certificate of Chief Executive Officer
Pursuant to Section 906 of Sarbanes – Oxley Act of 2002
The undersigned, Robert S. Shapard, Chief Executive of Oncor Electric Delivery Company LLC (the “Company”), DOES HEREBY CERTIFY that:
1. |
The Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2016 (the “Report”) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
2. |
Information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
IN WITNESS WHEREOF, the undersigned has caused this instrument to be executed this 1st day of August 2016.
|
|
/s/ Robert S. Shapard |
|
|
Name: |
Robert S. Shapard |
|
|
Title: |
Chief Executive |
|
A signed original of this written statement required by Section 906 has been provided to Oncor Electric Delivery Company LLC and will be retained by Oncor Electric Delivery Company LLC and furnished to the Securities and Exchange Commission or its staff upon request.
ONCOR ELECTRIC DELIVERY COMPANY LLC
Certificate of Chief Financial Officer
Pursuant to Section 906 of Sarbanes – Oxley Act of 2002
The undersigned, David M. Davis, Senior Vice President and Chief Financial Officer of Oncor Electric Delivery Company LLC (the “Company”), DOES HEREBY CERTIFY that:
1. |
The Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2016 (the “Report”) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
2. |
Information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
IN WITNESS WHEREOF, the undersigned has caused this instrument to be executed this 1st day of August, 2016.
|
|
/s/ David M. Davis |
|
|
Name: |
David M. Davis |
|
|
Title: |
Senior Vice President and Chief Financial Officer |
|
A signed original of this written statement required by Section 906 has been provided to Oncor Electric Delivery Company LLC and will be retained by Oncor Electric Delivery Company LLC and furnished to the Securities and Exchange Commission or its staff upon request.
ONCOR ELECTRIC DELIVERY COMPANY LLC
CONDENSED STATEMENT OF CONSOLIDATED INCOME
(Unaudited)
|
||
|
Twelve Months Ended |
|
|
June 30, 2016 |
|
|
(millions of dollars) |
|
Operating revenues: |
||
Nonaffiliates |
$ |
2,954 |
Affiliates |
931 | |
Total operating revenues |
3,885 | |
Operating expenses: |
||
Wholesale transmission service |
849 | |
Operation and maintenance |
722 | |
Depreciation and amortization |
829 | |
Provision in lieu of income taxes |
257 | |
Taxes other than amounts related to income taxes |
450 | |
Total operating expenses |
3,107 | |
Operating income |
778 | |
Other income and (deductions) - net |
(23) | |
Nonoperating provision in lieu of income taxes |
(8) | |
Interest expense and related charges |
336 | |
Net income |
$ |
427 |
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Aug. 01, 2016 |
|
Entity Registrant Name | ONCOR ELECTRIC DELIVERY CO LLC | |
Entity Central Index Key | 0001193311 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2016 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q2 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 0 | |
Oncor's Management and Board of Directors [Member] | ||
Entity Outstanding Membership Interests | 0.22% | |
Oncor Electric Delivery Holdings Company LLC [Member] | ||
Entity Outstanding Membership Interests | 80.03% | |
Texas Transmission [Member] | ||
Entity Outstanding Membership Interests | 19.75% |
Condensed Statements of Consolidated Income - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Operating revenues: | ||||
Nonaffiliates | $ 732 | $ 714 | $ 1,455 | $ 1,424 |
Affiliates | 216 | 224 | 436 | 460 |
Total operating revenues | 948 | 938 | 1,891 | 1,884 |
Operating expenses: | ||||
Wholesale transmission service | 220 | 199 | 440 | 393 |
Operation and maintenance (Note 10) | 169 | 168 | 351 | 353 |
Depreciation and amortization | 193 | 220 | 403 | 437 |
Provision in lieu of income taxes (Note 10) | 63 | 57 | 112 | 115 |
Taxes other than amounts related to income taxes | 107 | 108 | 220 | 220 |
Total operating expenses | 752 | 752 | 1,526 | 1,518 |
Operating income | 196 | 186 | 365 | 366 |
Other income and (deductions) - net (Note 11) | (3) | (6) | (8) | (7) |
Nonoperating provision in lieu of income taxes | (1) | (2) | (2) | (2) |
Interest expense and related charges (Note 11) | 84 | 84 | 168 | 165 |
Net income | $ 110 | $ 98 | $ 191 | $ 196 |
Condensed Statements of Consolidated Comprehensive Income - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Condensed Statements Of Consolidated Comprehensive Income [Abstract] | ||||
Net income | $ 110 | $ 98 | $ 191 | $ 196 |
Other comprehensive income (loss): | ||||
Cash flow hedges – derivative value net loss recognized in net income (net of tax expense of $–, $–, $– and $–) (Note 1) | 1 | 1 | 1 | 1 |
Defined benefit pension plans (net of tax benefit of $–, $–, $– and $–) (Note 9) | 1 | |||
Total other comprehensive income | 1 | 1 | 1 | 2 |
Comprehensive income | $ 111 | $ 99 | $ 192 | $ 198 |
Condensed Statements Of Consolidated Comprehensive Income (Parenthetical) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Condensed Statements Of Consolidated Comprehensive Income [Abstract] | ||||
Cash flow hedges - derivative value net loss recognized in net income, tax expense | ||||
Defined benefit pension plans- net tax benefit |
Condensed Consolidated Balance Sheets (Parenthetical) - shares |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Condensed Consolidated Balance Sheets [Abstract] | ||
Capital account, interests outstanding | 635,000,000 | 635,000,000 |
Business and Significant Accounting Policies |
6 Months Ended |
---|---|
Jun. 30, 2016 | |
Business And Significant Accounting Policies [Abstract] | |
Business And Significant Accounting Policies | 1. BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES Description of Business References in this report to “we,” “our,” “us” and “the company” are to Oncor and/or Bondco, its subsidiary as apparent in the context. See “Glossary” for definition of terms and abbreviations. We are a regulated electricity transmission and distribution company principally engaged in providing delivery services to REPs, including subsidiaries of TCEH, that sell power in the north-central, eastern and western parts of Texas. Revenues from TCEH represented 23% and 24% of our total operating revenues for the six months ended June 30, 2016 and 2015, respectively. We are a direct, majority-owned subsidiary of Oncor Holdings, which is a direct, wholly-owned subsidiary of EFIH, a direct, wholly-owned subsidiary of EFH Corp. EFH Corp. is a subsidiary of Texas Holdings, which is controlled by the Sponsor Group. Oncor Holdings owns 80.03% of our membership interests, Texas Transmission owns 19.75% of our membership interests and certain members of our management team and board of directors indirectly own the remaining membership interests through Investment LLC. We are managed as an integrated business; consequently, there are no separate reportable business segments. Our consolidated financial statements include our wholly-owned, bankruptcy-remote financing subsidiary, Bondco, a variable interest entity. This financing subsidiary was organized for the limited purpose of issuing certain transition bonds to recover generation-related regulatory asset stranded costs and other qualified costs under an order issued by the PUCT in 2002. Bondco issued an aggregate $1.3 billion principal amount of transition bonds during 2003 and 2004. The 2003 Series transition bonds matured and were paid in full in 2015 and the 2004 Series transition bonds matured and were paid in full in May 2016. Final true-up proceedings for the transition bonds are expected to be conducted by Oncor and the PUCT during 2016 and are expected to have minimal or no net income impact. Various “ring-fencing” measures have been taken to enhance the separateness between the Oncor Ring-Fenced Entities and the Texas Holdings Group and our credit quality. These measures serve to mitigate our and Oncor Holdings’ credit exposure to the Texas Holdings Group and to reduce the risk that our assets and liabilities or those of Oncor Holdings would be substantively consolidated with the assets and liabilities of the Texas Holdings Group in connection with a bankruptcy of one or more of those entities, including the EFH Bankruptcy Proceedings discussed below. Such measures include, among other things: our sale of a 19.75% equity interest to Texas Transmission in November 2008; maintenance of separate books and records for the Oncor Ring-Fenced Entities; our board of directors being comprised of a majority of independent directors; and prohibitions on the Oncor Ring-Fenced Entities providing credit support to, or receiving credit support from, any member of the Texas Holdings Group. The assets and liabilities of the Oncor Ring-Fenced Entities are separate and distinct from those of the Texas Holdings Group, including TXU Energy and Luminant, and none of the assets of the Oncor Ring-Fenced Entities are available to satisfy the debt or contractual obligations of any member of the Texas Holdings Group. We do not bear any liability for debt or contractual obligations of the Texas Holdings Group, and vice versa. Accordingly, our operations are conducted, and our cash flows are managed, independently from the Texas Holdings Group. EFH Corp. Bankruptcy Proceedings On the EFH Petition Date, the EFH Debtors commenced proceedings under Chapter 11 of the US Bankruptcy Code. The Oncor Ring-Fenced Entities are not parties to the EFH Bankruptcy Proceedings. We believe the “ring-fencing” measures discussed above mitigate our potential exposure to the EFH Bankruptcy Proceedings. See Note 2 for a discussion of the potential impacts of the EFH Bankruptcy Proceedings on our financial statements. Basis of Presentation These unaudited condensed financial statements should be read in conjunction with the audited financial statements and related notes included in the 2015 Form 10-K. In the opinion of Oncor management, all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of the results of operations and financial position have been made. All intercompany items and transactions have been eliminated in consolidation. The results of operations for an interim period may not give a true indication of results for a full year due to seasonality. All dollar amounts in the financial statements and tables in the notes are stated in millions of US dollars unless otherwise indicated. Use of Estimates Preparation of our financial statements requires management to make estimates and assumptions about future events that affect the reporting of assets and liabilities at the balance sheet dates and the reported amounts of revenue and expense, including fair value measurements. In the event estimates and/or assumptions prove to be different from actual amounts, adjustments are made in subsequent periods to reflect more current information.
Reconcilable Tariffs The PUCT has designated certain tariffs (TCRF, EECRF surcharges, AMS surcharges and charges related to transition bonds) as reconcilable, which means the differences between amounts billed under these tariffs and the related incurred costs are deferred as either regulatory assets or regulatory liabilities. Accordingly, at prescribed intervals, future tariffs are adjusted to either repay regulatory liabilities or collect regulatory assets. Contingencies We evaluate and account for contingencies using the best information available. A loss contingency is accrued and disclosed when it is probable that an asset has been impaired or a liability incurred and the amount of the loss can be reasonably estimated. If a range of probable loss is established, the minimum amount in the range is accrued, unless some other amount within the range appears to be a better estimate. If the probable loss cannot be reasonably estimated, no accrual is recorded, but the loss contingency is disclosed to the effect that the probable loss cannot be reasonably estimated. A loss contingency will be disclosed when it is reasonably possible that an asset has been impaired or a liability incurred. If the likelihood that an impairment or incurrence is remote, the contingency is neither accrued nor disclosed. Gain contingencies are recognized upon realization. Changes in Accounting Standards In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2016-2 (ASU 2016-2), Leases. The ASU amends previous US GAAP to require the balance sheet recognition of lease assets and liabilities for operating leases. Oncor will be required to adopt the ASU by January 1, 2019 and does not expect to early adopt. Retrospective application to the 2017 and 2018 comparative periods presented will be required in the year of adoption. We are currently evaluating the impact of this ASU on our financial statements. Since May 2014, the FASB has issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers along with other supplemental guidance (together, Topic 606). Topic 606 introduces new, increased requirements for disclosure of revenue in financial statements and guidance that are intended to eliminate inconsistencies in the recognition of revenue. Oncor will be required to adopt Topic 606 by January 1, 2018 and continues to evaluate the impact on its financial statements. At this time, the adoption is not expected to have a material effect on our reported results of operations, financial condition or cash flows.
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EFH Bankruptcy Proceedings |
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Jun. 30, 2016 | |||||||||
EFH Bankruptcy Proceedings [Abstract] | |||||||||
EFH BANKRUPTCY PROCEEDINGS | 2. EFH BANKRUPTCY PROCEEDINGS On the EFH Petition Date, EFH Corp. and the substantial majority of its direct and indirect subsidiaries that are members of the Texas Holdings Group, including EFIH, EFCH and TCEH, commenced proceedings under Chapter 11 of the US Bankruptcy Code. The Oncor Ring-Fenced Entities are not parties to the EFH Bankruptcy Proceedings. We believe the “ring-fencing” measures discussed above mitigate our potential exposure to the EFH Bankruptcy Proceedings. See Note 1 and below for further information regarding the EFH Bankruptcy Proceedings and the proposed change in control of our indirect majority owner in connection with such proceedings. The US Bankruptcy Code automatically enjoined, or stayed, us from judicial or administrative proceedings or filing of other actions against our affiliates or their property to recover, collect or secure our claims arising prior to the EFH Petition Date. Following the EFH Petition Date, EFH Corp. received approval from the bankruptcy court to pay or otherwise honor certain prepetition obligations generally designed to stabilize its operations. Included in the approval were the obligations owed to us representing our prepetition electricity delivery fees. As of the EFH Petition Date, we estimated that our receivables from the Texas Holdings Group totaled approximately $129 million. Since that time, we collected $128 million of the prepetition amount. We estimate any potential pre-tax loss resulting from the EFH Bankruptcy Proceedings to be immaterial. A provision for uncollectible accounts from affiliates has not been established as of June 30, 2016. The EFH Bankruptcy Proceedings continue to be a complex litigation matter and the full extent of potential impacts on us remain unknown. We will continue to evaluate our affiliate transactions and contingencies throughout the EFH Bankruptcy Proceedings to determine any risks and resulting impacts on our results of operations, financial statements and cash flows. See Note 10 for details of Oncor’s related-party transactions with members of the Texas Holdings Group. Potential Change in Indirect Ownership of Oncor As part of the EFH Bankruptcy Proceedings, the bankruptcy court confirmed the Debtors’ Sixth Amended Plan of Reorganization by order dated December 9, 2015. In general, among other things, the Sixth Amended Plan of Reorganization provided for a series of transactions to be effected pursuant to a merger and purchase agreement (Hunt Merger and Purchase Agreement) with an investor group consisting of certain unsecured creditors of TCEH and an affiliate of Hunt Consolidated, Inc. (Hunt), as well as certain other investors designated by Hunt (collectively, the Hunt Investor Group), that would have led to a significant change in the indirect equity ownership of Oncor. In addition, and in connection with the contemplated transactions referred to above, at the request of and with the consent of EFIH, Oncor and Oncor Holdings entered into a letter agreement with the Hunt Investor Group. The letter agreement set forth certain rights and obligations of the Oncor entities and the Hunt Investor Group to cooperate in the manner set forth therein with respect to initial steps to be taken in connection with the contemplated transactions. The Debtors and certain creditors entered into a Plan Support Agreement (as amended, Plan Support Agreement) that provided for, among other things, their respective obligations to act and/or support Plans of Reorganization. On May 1, 2016, certain first lien creditors of TCEH delivered a written notice (Plan Support Termination Notice) to the Debtors and the other parties to the Plan Support Agreement notifying such parties of the occurrence of a Plan Support Termination Event (as defined in the Plan Support Agreement). The delivery of the Plan Support Agreement Termination Notice caused the Sixth Amended Plan of Reorganization to become null and void. On May 1, 2016, following receipt of the Plan Support Termination Notice, EFH Corp. and EFIH delivered a written notice (Merger and Purchase Agreement Termination Notice) to the Hunt Investor Group notifying the Hunt Investor Group that EFH Corp. and EFIH terminated the Merger and Purchase Agreement. The termination of the Hunt Merger and Purchase Agreement also caused the automatic termination (without the necessity of further action) of (i) certain agreements defining the investment obligations of certain Hunt Investor Group members, and (ii) the letter agreement between Oncor and the Hunt Investor Group. Following the occurrence of the Plan Support Termination Event as described above, the Debtors filed a new joint Plan of Reorganization (New Plan of Reorganization) pursuant to Chapter 11 of the Bankruptcy Code and a related disclosure statement with the bankruptcy court on May 1, 2016. In connection with the Sixth Amended Plan of Reorganization, EFH Corp. took the position that, unless the Hunt Investor Group had otherwise acquired, or entered into a definitive agreement with Texas Transmission for the acquisition of the equity interest in Oncor held by Texas Transmission at the consummation of the transactions, certain of EFH Corp.’s rights contained in the Investor Rights Agreement (Investor Rights Agreement), dated November 2008 among Oncor and certain of its direct and indirect equity holders, including EFH Corp. and Texas Transmission, would require Texas Transmission to sell its equity interest in Oncor to the Hunt Investor Group. In this regard, in October 2015, EFH Corp. filed a complaint against Texas Transmission alleging breach of Texas Transmission’s obligations under the Investor Rights Agreement for failing to agree to sell its equity interest in Oncor and, if found to be a valid drag right and a valid IPO Conversion (as defined in the Investor Rights Agreement), to cooperate with an IPO Conversion. The Hunt Investor Group intervened in the pending litigation. On May 20, 2016, following the Plan Support Termination Notice, the bankruptcy court issued an order dismissing the action and related motions and retaining jurisdiction related to the interpretation and implementation of such order. We cannot predict the ultimate outcome of any subsequent litigation relating to the Investor Rights Agreement and the impact of such litigation, particularly in light of the transactions discussed below. The New Plan of Reorganization provides that the confirmation and effective date of the New Plan of Reorganization with respect to the TCEH Debtors may occur separate from, and independent of, the confirmation and effective date of the New Plan of Reorganization with respect to the EFH Debtors. The New Plan of Reorganization, subject to certain conditions and required regulatory approvals, provides for, among other things:
Solely as it pertains to the TCEH Debtors (and certain EFH Debtors that will become subsidiaries of Reorganized TCEH upon emergence of the TCEH Debtors from the Chapter 11 Cases (the Contributed EFH Debtors)), the disclosure statement has been approved by the bankruptcy court, and the confirmation hearing for the New Plan of Reorganization is scheduled to commence on August 17, 2016. There can be no assurance that the TCEH Debtors’ stakeholders will vote to accept the New Plan of Reorganization or that the bankruptcy court will confirm the New Plan of Reorganization. With respect to the EFH Debtors, no disclosure statement has been approved by the bankruptcy court and no date to confirm the New Plan of Reorganization has been scheduled. However, on July 29, 2016, (i) the EFH Debtors entered into a Plan Support Agreement (NEE Plan Support Agreement) with NextEra Energy, Inc. (NEE) to effect an agreed upon restructuring of the EFH Debtors pursuant to an amendment to the New Plan of Reorganization (Amended New Plan) and (ii) EFH Corp. and EFIH entered into an Agreement and Plan of Merger (NEE Merger Agreement) with NEE and EFH Merger Co., LLC (Merger Sub), a wholly-owned subsidiary of NEE. Pursuant to the NEE Merger Agreement, at the effective time of the Amended New Plan with respect to the EFH Debtors, EFH Corp. will merge with and into Merger Sub (NEE Merger) with Merger Sub surviving as a wholly owned subsidiary of NEE. The TCEH Transactions are not dependent on the consummation of the transactions contemplated by the NEE Plan Support Agreement and the NEE Merger Agreement and may occur separately from those transactions. We understand that the EFH Debtors will seek bankruptcy court approval of the NEE Plan Support Agreement. The NEE Merger Agreement includes various conditions precedent to consummation of the transactions contemplated thereby, including, among others, a condition that certain approvals and rulings be obtained, including from, among others, the PUCT and the IRS and a condition that the TCEH Transactions have occurred. NEE will not be required to consummate the NEE Merger if, among other items, the PUCT approval is obtained but with conditions, commitments or requirements that impose a Burdensome Condition (as defined in the NEE Merger Agreement). NEE’s and Merger Sub’s obligations under the NEE Merger Agreement are not subject to any financing condition. Prior to approval of the NEE Merger Agreement by the bankruptcy court, EFH and EFIH may continue to solicit acquisition proposals with respect to Reorganized EFH. In addition, following approval of the NEE Merger Agreement by the bankruptcy court and until confirmation of the Amended New Plan by the bankruptcy court, EFH and EFIH may continue or have discussions or negotiations with respect to acquisition proposals for Reorganized EFH (x) with persons that were in active negotiation at the time of approval of the NEE Merger Agreement by the bankruptcy court and (y) with persons that submit an unsolicited acquisition proposal that is, or is reasonably likely to lead to, a Superior Proposal (as defined in the NEE Merger Agreement).
The NEE Merger Agreement may be terminated upon certain events, including, among other things:
• by either party, if the NEE Merger is not consummated by March 26, 2017, subject to a 90 day extension under certain conditions; or
• by EFH Corp. or EFIH, until the entry of the confirmation order of the Amended New Plan with respect to the EFH Debtors, if their respective board of directors or managers determines after consultation with its independent financial advisors and outside legal counsel, and based on advice of such counsel, that the failure to terminate the NEE Merger Agreement is inconsistent with its fiduciary duties; provided that a material breach of EFH Corp.’s or EFIH’s obligations under certain provisions of the NEE Merger Agreement has not provided the basis for such determination.
Following approval of the NEE Merger Agreement by the bankruptcy court, if the NEE Merger Agreement is terminated for certain reasons set forth therein and an alternative transaction is consummated by EFH or EFIH in which neither NEE nor any of its affiliates obtains direct or indirect ownership of approximately 80% of Oncor, then EFH and EFIH will pay a termination fee of $275,000,000 to NEE.
EFH Corp.’s and EFIH’s respective obligations under the NEE Merger Agreement are subject in all respects to the prior approval of the bankruptcy court. Under the terms of the NEE Plan Support Agreement, the EFH Debtors will seek bankruptcy court approval of the NEE Merger Agreement. The above description of the NEE Merger Agreement is qualified in its entirety by reference to the NEE Merger Agreement, which EFH Corp., EFIH and EFCH filed as Exhibit 10(b) to their Current Report on Form 8-K/A filed with the SEC on July 29, 2016. On July 28, 2016, EFIH requested, pursuant to the NEE Merger Agreement, that Oncor Holdings and Oncor enter into a letter agreement (NEE Letter Agreement) with NEE and Merger Sub. The NEE Letter Agreement would set forth certain rights and obligations of the Oncor Entities, NEE and Merger Sub to cooperate in the manner set forth therein with respect to initial steps to be taken in connection with the acquisition of Reorganized EFH (EFH Acquisition) and the other transactions described in the NEE Merger Agreement.
The NEE Letter Agreement would not be intended to give NEE or Merger Sub, directly or indirectly, the right to control or direct the operations of any Oncor Entity prior to the receipt of all approvals required by the bankruptcy court, the PUCT and other governmental entities and the consummation of the EFH Acquisition and related transactions (if and when such transactions are consummated). In addition, Oncor Holdings and Oncor have not endorsed or approved any restructuring involving Oncor Holdings or Oncor or any other transaction proposed by NEE or Merger Sub involving Oncor Holdings or Oncor. Notwithstanding these pending transactions, we cannot predict the ultimate outcome of the EFH Bankruptcy Proceedings, including whether the transactions contemplated by any Plan of Reorganization, including the EFH Acquisition, will (or when they will) close. In this regard, we cannot predict how any reorganization of EFH Corp. and EFIH ultimately will impact Oncor or what form any change in indirect ownership of Oncor may take. Regulatory Matters Related to EFH Bankruptcy Proceedings In September 2015, Oncor and the Hunt Investor Group filed in PUCT Docket No. 45188 a joint application with the PUCT seeking certain regulatory approvals with respect to the transactions contemplated by the Sixth Amended Plan of Reorganization. On March 24, 2016, the PUCT issued an order conditionally approving the joint application. On April 18, 2016, the Hunt Investor Group and certain interveners in PUCT Docket No. 45188 filed motions for rehearing and on May 19, 2016, the PUCT denied such motions and the order became final. The Hunt Investor Group filed a petition with the Travis County District Court on June 17, 2016 seeking review of the order. We cannot predict the results of the review or the ultimate disposition of PUCT Docket No. 45188, particularly in the light of the termination of the Sixth Amended Plan of Reorganization and the other pending transactions discussed above. In connection with PUCT Docket No. 45188, certain cities that have retained original jurisdiction over electric utility rates passed resolutions directing Oncor to file rate review proceedings. For more information, see Note 3 – “City Rate Reviews”. The NEE Merger Agreement contemplates that Oncor, NEE and Merger Sub will file a joint application with the PUCT seeking certain regulatory approvals with respect to the transactions contemplated by the Amended New Plan, but that filing has not been made. Settlement Agreement In connection with the EFH Bankruptcy Proceedings, the EFH Debtors and various creditor parties entered into a settlement agreement (the Settlement Agreement) in August 2015 (as amended in September 2015) to compromise and settle, among other things (a) intercompany claims among the EFH Debtors, (b) claims and causes of actions against holders of first lien claims against TCEH and the agents under the TCEH Senior Secured Facilities, (c) claims and causes of action against holders of interests in EFH Corp. and certain related entities and (d) claims and causes of action against each of the EFH Debtors' current and former directors, the Sponsor Group, managers and officers and other related entities. The Settlement Agreement contemplates a release of such claims upon approval of the Settlement Agreement by the bankruptcy court, which approval was obtained in December 2015. The Settlement Agreement settles substantially all inter-debtor claims through the effective date of the Settlement Agreement. These settled claims include potentially contentious inter-debtor claims, including various potential avoidance actions and claims arising under numerous debt agreements, tax sharing agreements, and contested property transfers. The release provisions of the Settlement Agreement took effect immediately upon the entry of the bankruptcy court order approving the Settlement Agreement. In this regard, substantially all of the potential affiliate claims, derivative claims and other types of disputes among affiliates (including claims against Oncor) have been resolved by bankruptcy court order. Accordingly, we believe the Settlement Agreement resolves all affiliate claims against Oncor and its assets existing as of the effective date of the Settlement Agreement.
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Regulatory Matters |
6 Months Ended |
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Jun. 30, 2016 | |
Regulatory Matters [Abstract] | |
REGULATORY MATTERS | 3. REGULATORY MATTERS Change in Control Review In connection with the transactions contemplated by the Sixth Amended Plan of Reorganization filed in the EFH Bankruptcy Proceedings, in September 2015, Oncor and the Hunt Investor Group filed a joint report and application for regulatory approvals pursuant to PURA, which was conditionally approved on March 24, 2016. For additional information regarding the Sixth Amended Plan of Reorganization and application for regulatory approval, see Note 2 to Financial Statements and “City Rate Reviews” below. The NEE Merger Agreement contemplates that Oncor, NEE and Merger Sub will file a joint application with the PUCT seeking certain regulatory approvals pursuant to PURA with respect to the transactions contemplated by the Amended New Plan, but that filing has not been made. For additional information regarding the Amended New Plan and application for regulatory approval, see Note 2 to Financial Statements. City Rate Reviews Oncor has received resolutions passed by approximately 58 cities with original jurisdiction over electric utility rates directing Oncor to file rate review proceedings. The resolutions passed required Oncor to file a rate review with each city by September 1, 2016 based on a January 1, 2015 to December 31, 2015 test year, with the cities’ analysis of such rate review filing due on October 13, 2016, Oncor’s rebuttal due on November 10, 2016, and hearings before city councils to be held between November 15 – December 15, 2016. Final action by each city must be taken within 125 days from the rate review filing date, and Oncor has the right to appeal any city action to the PUCT. However, Oncor has subsequently been notified by counsel representing these cities that these rate review proceedings have been abated indefinitely, pending resolution of Oncor ownership issues. The notice provides that if and when the cities desire to proceed with a rate inquiry, cities will notify Oncor in writing and inform Oncor of a precise date of the rate case, which will be at least 120 days from receipt of the communication that lifts the abatement. 2008 Rate Review In August 2009, the PUCT issued a final order with respect to our June 2008 rate review filing with the PUCT and 204 cities based on a test year ended December 31, 2007 (PUCT Docket No. 35717), and new rates were implemented in September 2009. We and four other parties appealed various portions of the rate review final order to a state district court. In January 2011, the district court signed its judgment reversing the PUCT with respect to two issues: the PUCT’s disallowance of certain franchise fees and the PUCT’s decision that PURA no longer requires imposition of a rate discount for state colleges and universities. We filed an appeal with the Texas Third Court of Appeals (Austin Court of Appeals) in February 2011 with respect to the issues we appealed to the district court and did not prevail upon, as well as the district court’s decision to reverse the PUCT with respect to discounts for state colleges and universities. In early August 2014, the Austin Court of Appeals reversed the district court and affirmed the PUCT with respect to the PUCT’s disallowance of certain franchise fees and the PUCT’s decision that PURA no longer requires imposition of a rate discount for state colleges and universities. The Austin Court of Appeals also reversed the PUCT and district court’s rejection of a proposed consolidated tax savings adjustment arising out of EFH Corp.’s ability to offset our taxable income against losses from other investments and remanded the issue to the PUCT to determine the amount of the consolidated tax savings adjustment. In late August 2014, we filed a motion on rehearing with the Austin Court of Appeals with respect to certain appeal issues on which we were not successful, including the consolidated tax savings adjustment. In December 2014, the Austin Court of Appeals issued its opinion, clarifying that it was rendering judgment on the rate discount for state colleges and universities issue (affirming that PURA no longer requires imposition of the rate discount) rather than remanding it to the PUCT, and dismissing the motions for rehearing regarding the franchise fee issue and the consolidated tax savings adjustment. We filed a petition for review with the Texas Supreme Court in February 2015. The Texas Supreme Court granted the petition for review and the date of oral arguments has been set for September 13, 2016. There is no deadline for the court to act. If our appeals efforts are unsuccessful and the proposed consolidated tax savings adjustment is implemented, we estimate that on remand, the impact on earnings of the consolidated tax savings adjustment’s value could range from zero, as originally determined by the PUCT in Docket 35717, to a $135 million loss (after tax) including interest. Interest accrues at the PUCT approved rate for over-collections, which is 0.18% for 2016. We do not believe that any of the other issues ruled upon by the Austin Court of Appeals would result in a material impact to our results of operations or financial condition. See Note 3 to Financial Statements in our 2015 Form 10-K for additional information regarding regulatory matters.
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Regulatory Assets and Liabilities |
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REGULATORY ASSETS AND LIABILITIES | 4. REGULATORY ASSETS AND LIABILITIES Recognition of regulatory assets and liabilities and the amortization periods over which they are expected to be recovered or refunded through rate regulation reflect the decisions of the PUCT. Components of the regulatory assets and liabilities are provided in the table below. Amounts not earning a return through rate regulation are noted.
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Borrowings Under Credit Facilities |
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Jun. 30, 2016 | |
Borrowings Under Credit Facilities [Abstract] | |
BORROWINGS UNDER CREDIT FACILITIES | 5. BORROWINGS UNDER CREDIT FACILITIES At June 30, 2016, we had a $2.0 billion secured revolving credit facility to be used for working capital and general corporate purposes, issuances of letters of credit and support for any commercial paper issuances. The revolving credit facility expires in October 2017. The terms of the revolving credit facility allow us to request an increase in our borrowing capacity of $100 million in the aggregate and/or a one-year extension, provided certain conditions are met, including lender approval. Borrowings under the revolving credit facility are classified as short-term on the balance sheet and are secured equally and ratably with all of our other secured indebtedness by a first priority lien on property we acquired or constructed for the transmission and distribution of electricity. The property is mortgaged under the Deed of Trust. At June 30, 2016, we had outstanding borrowings under the revolving credit facility totaling $1.133 billion with an interest rate of 1.59% and outstanding letters of credit totaling $7 million. At December 31, 2015, we had outstanding borrowings under the revolving credit facility totaling $840 million with an interest rate of 1.48% and outstanding letters of credit totaling $7 million. Borrowings under the revolving credit facility bear interest at per annum rates equal to, at our option, (i) LIBOR plus a spread ranging from 1.00% to 1.75% depending on credit ratings assigned to our senior secured non-credit enhanced long-term debt or (ii) an alternate base rate (the highest of (1) the prime rate of JPMorgan Chase, (2) the federal funds effective rate plus 0.50%, and (3) daily one-month LIBOR plus 1.00%) plus a spread ranging from 0.00% to 0.75% depending on credit ratings assigned to our senior secured non-credit enhanced long-term debt. At June 30, 2016, all outstanding borrowings bore interest at LIBOR plus 1.125%. Amounts borrowed under the revolving credit facility, once repaid, can be borrowed again from time to time. An unused commitment fee is payable quarterly in arrears and upon termination or commitment reduction at a rate equal to 0.100% to 0.275% (such spread depending on certain credit ratings assigned to our senior secured debt) of the daily unused commitments under the revolving credit facility. Letter of credit fees on the stated amount of letters of credit issued under the revolving credit facility are payable to the lenders quarterly in arrears and upon termination at a rate per annum equal to the spread over adjusted LIBOR. Customary fronting and administrative fees are also payable to letter of credit fronting banks. At June 30, 2016, letters of credit bore interest at 1.325%, and a commitment fee (at a rate of 0.125% per annum) was payable on the unfunded commitments under the revolving credit facility, each based on our current credit ratings. Subject to the limitations described below, borrowing capacity available under the revolving credit facility at June 30, 2016 and December 31, 2015 was $860 million and $1.153 billion, respectively. Generally, our indentures and revolving credit facility limit the incurrence of other secured indebtedness except for indebtedness secured equally and ratably with the indentures and revolving credit facility and certain permitted exceptions. As described further in Note 6, the Deed of Trust permits us to secure indebtedness (including borrowings under our revolving credit facility) with the lien of the Deed of Trust. At June 30, 2016, the available borrowing capacity of the revolving credit facility could be fully drawn. The revolving credit facility contains customary covenants for facilities of this type, restricting, subject to certain exceptions, us and our subsidiaries from, among other things: incurring additional liens; entering into mergers and consolidations; and sales of substantial assets. In addition, the revolving credit facility requires that we maintain a consolidated senior debt-to-capitalization ratio of no greater than 0.65 to 1.00 and observe certain customary reporting requirements and other affirmative covenants. For purposes of the ratio, debt is calculated as indebtedness defined in the revolving credit facility (principally, the sum of long-term debt, any capital leases, short-term debt and debt due currently in accordance with US GAAP). The debt calculation excludes transition bonds issued by Bondco, but includes the unamortized fair value discount related to Bondco. Capitalization is calculated as membership interests determined in accordance with US GAAP plus indebtedness described above. At June 30, 2016, we were in compliance with this covenant and with all other covenants.
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Long-Term Debt |
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Long-Term Debt [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LONG-TERM DEBT | 6. LONG-TERM DEBT At June 30, 2016 and December 31, 2015, our long-term debt consisted of the following:
__________ (a) Secured by first priority lien on certain transmission and distribution assets equally and ratably with all of Oncor’s other secured indebtedness. See “Deed of Trust” below for additional information. (b) The transition bonds were nonrecourse to Oncor and were issued to securitize a regulatory asset. Debt-Related Activity in 2016 Repayments of long-term debt in the six months ended June 30, 2016 totaled $41 million, representing the final transition bond principal payment at the scheduled maturity date. Deed of Trust Our secured indebtedness, including the revolving credit facility described in Note 5, is secured equally and ratably by a first priority lien on property we acquired or constructed for the transmission and distribution of electricity. The property is mortgaged under the Deed of Trust. The Deed of Trust permits us to secure indebtedness (including borrowings under our revolving credit facility) with the lien of the Deed of Trust up to the aggregate of (i) the amount of available bond credits, and (ii) 85% of the lower of the fair value or cost of certain property additions that could be certified to the Deed of Trust collateral agent. At June 30, 2016, the amount of available bond credits was $2.281 billion and the amount of future debt we could secure with property additions, subject to those property additions being certified to the Deed of Trust collateral agent, was $1.570 billion. Fair Value of Long-Term Debt At June 30, 2016 and December 31, 2015, the estimated fair value of our long-term debt (including current maturities, if any) totaled $6.923 billion and $6.287 billion, respectively, and the carrying amount totaled $5.650 billion and $5.687 billion, respectively. The fair value is estimated using observable market data, representing Level 2 valuations under accounting standards related to the determination of fair value.
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Commitments and Contingencies |
6 Months Ended |
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Jun. 30, 2016 | |
Commitments and Contingencies [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 7. COMMITMENTS AND CONTINGENCIES EFH Bankruptcy Proceedings On the EFH Petition Date, the EFH Debtors commenced the EFH Bankruptcy Proceedings. The Oncor Ring-Fenced Entities are not parties to the EFH Bankruptcy Proceedings. See Notes 2 and 10 for a discussion of the potential impacts on us as a result of the EFH Bankruptcy Proceedings and our related-party transactions involving members of the Texas Holdings Group, respectively. Legal/Regulatory Proceedings We are involved in various legal and administrative proceedings in the normal course of business, the ultimate resolution of which, in the opinion of management, should not have a material effect upon our financial position, results of operations or cash flows. See Note 3 in this report and Note 8 to Financial Statements in our 2015 Form 10-K for additional information regarding our legal and regulatory proceedings.
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Membership Interests |
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Membership Interests [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MEMBERSHIP INTERESTS | 8. MEMBERSHIP INTERESTS Cash Distributions Distributions are limited by our required regulatory capital structure to be at or below the assumed debt-to-equity ratio established periodically by the PUCT for ratemaking purposes, which is currently set at 60% debt to 40% equity. At June 30, 2016, $98 million was available for distribution to our members as our regulatory capitalization ratio was 59.4% debt to 40.6% equity. The PUCT has the authority to determine what types of debt and equity are included in a utility’s debt-to-equity ratio. For purposes of this ratio, debt is calculated as long-term debt plus unamortized gains on reacquired debt less unamortized issuance expenses, premiums and losses on reacquired debt. The debt calculation excludes transition bonds issued by Bondco. Equity is calculated as membership interests determined in accordance with US GAAP, excluding the effects of purchase accounting (which included recording the initial goodwill and fair value adjustments and the subsequent related impairments and amortization). On July 27, 2016, our board of directors declared a cash distribution of an amount up to and including $68 million, to be paid to our members in August 2016, with the exact amount to be determined by management in accordance with the regulatory capital structure limitation described above. During the six months ended June 30, 2016, our board of directors declared, and we paid, the following cash distributions to our members:
Membership Interests The following table presents the changes to membership interests during the six months ended June 30, 2016 and 2015:
Accumulated Other Comprehensive Income (Loss) The following table presents the changes to accumulated other comprehensive income (loss) for the six months ended June 30, 2016 and 2015:
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Pension and Other Postretirement Employee Benefits Plans |
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Pension And Other Postretirement Employee Benefits Plans [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PENSION AND OTHER POSTRETIREMENT EMPLOYEE BENEFITS PLANS | 9. PENSION AND OTHER POSTRETIREMENT EMPLOYEE BENEFITS PLANS Pension Plans We sponsor the Oncor Retirement Plan and also have liabilities under the EFH Retirement Plan, both of which are qualified pension plans under Section 401(a) of the Internal Revenue Code of 1986, as amended, and are subject to the provisions of ERISA. Employees do not contribute to either plan. We also have a supplemental pension plan for certain employees whose retirement benefits cannot be fully earned under the qualified retirement plans. See Note 10 to Financial Statements in our 2015 Form 10-K for additional information regarding pension plans. Oncor OPEB Plan The Oncor OPEB Plan covers our eligible current and future retirees as well as certain eligible retirees of EFH Corp. whose employment included service with both Oncor (or a predecessor regulated electric business) and a non-regulated business of EFH Corp. EFH Corp. retains its portion of the liability for retiree benefits related to those retirees. As we are not responsible for EFH Corp.’s portion of the Oncor OPEB Plan’s unfunded liability, that amount is not reported on our balance sheet. See Note 10 to Financial Statements in our 2015 Form 10-K for additional information. Pension and OPEB Costs Our net costs related to pension plans and the Oncor OPEB Plan for the three and six months ended June 30, 2016 and 2015 were comprised of the following:
The discount rates reflected in net pension and OPEB costs in 2016 are 4.28%, 4.57% and 4.60% for the Oncor Retirement Plan, the EFH Retirement Plan and the Oncor OPEB Plan, respectively. The expected return on pension and OPEB plan assets reflected in the 2016 cost amounts are 5.53%, 5.64% and 6.30% for the Oncor Retirement Plan, the EFH Retirement Plan and the Oncor OPEB Plan, respectively. Pension and OPEB Plans Cash Contributions We made cash contributions to the pension plans and Oncor OPEB Plan of $2 million and $14 million, respectively, during the six months ended June 30, 2016. We expect to make additional cash contributions to the pension plans and Oncor OPEB Plan of $2 million and $17 million, respectively, during the remainder of 2016. Our aggregate pension plans and Oncor OPEB Plan funding is expected to total approximately $479 million and $153 million, respectively, in the 2016 to 2020 period based on the latest actuarial projections.
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Related-Party Transactions |
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Related-Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RELATED-PARTY TRANSACTIONS | 10. RELATED-PARTY TRANSACTIONS The following represent our significant related-party transactions. See Note 2 for additional information regarding related-party contingencies resulting from the EFH Bankruptcy Proceedings.
Trade accounts and other receivables from EFH Corp. affiliates – net reported on our balance sheet, primarily consisting of trade receivables from TCEH related to these electricity delivery fees, are as follows:
Amounts payable to (receivable from) members related to income taxes under the tax sharing agreement and reported on our balance sheet consisted of the following:
Cash payments made to members related to income taxes consisted of the following:
See Note 8 for information regarding distributions to members and Note 9 for information regarding our participation in the EFH Corp. pension plan and transactions with EFH Corp. involving employee benefit matters.
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Supplementary Financial Information |
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Supplementary Financial Information [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUPPLEMENTARY FINANCIAL INFORMATION | 11. SUPPLEMENTARY FINANCIAL INFORMATION Major Customers Revenues from TCEH represented 23% and 24% of our total operating revenues for the three months ended June 30, 2016 and 2015, respectively and 23% and 24% for the six months ended June 30, 2016 and 2015, respectively. Revenues from REP subsidiaries of NRG Energy, Inc., a nonaffiliated entity, collectively represented 14% and 15% of our total operating revenues for the three months ended June 30, 2016 and 2015, respectively, and 15% and 16% of our total operating revenues for the six months ended June 30, 2016 and 2015, respectively. No other customer represented 10% or more of our total operating revenues. Other Income and (Deductions)
Interest Expense and Related Charges
Restricted Cash Restricted cash at June 30, 2016 was zero as a result of the maturity and payment in full of the 2004 Series transition bonds in May 2016. Restricted cash reported on our balance sheet at December 31, 2015 relates to the transition bonds. Trade Accounts and Other Receivables Trade accounts and other receivables reported on our balance sheet consisted of the following:
At June 30, 2016 and December 31, 2015, REP subsidiaries of NRG Energy, Inc., a nonaffiliated entity, collectively represented approximately 14% and 13% of the nonaffiliated trade accounts receivable amount, respectively. Under a PUCT rule relating to the Certification of Retail Electric Providers, write-offs of uncollectible amounts owed by REPs are deferred as a regulatory asset. Due to commitments made to the PUCT in 2007, we are not allowed to recover bad debt expense, or certain other costs and expenses, from ratepayers in the event of a default or bankruptcy by an affiliate REP. Investments and Other Property Investments and other property reported on our balance sheet consisted of the following:
Property, Plant and Equipment Property, plant and equipment reported on our balance sheet consisted of the following:
Intangible Assets Intangible assets (other than goodwill) reported on our balance sheet consisted of the following:
Aggregate amortization expense for intangible assets totaled $16 million for each of the three-month periods ended June 30, 2016 and 2015 and $32 million for each of the six-month periods ended June 30, 2016 and 2015. The estimated aggregate amortization expense for each of the next five fiscal years is as follows:
At both June 30, 2016 and December 31, 2015, goodwill totaling $4.1 billion was reported on our balance sheet. None of this goodwill is being deducted for tax purposes. Employee Benefit Obligations and Other Employee benefit obligations and other reported on our balance sheet consisted of the following:
Supplemental Cash Flow Information
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Business and Significant Accounting Policies (Policies) |
6 Months Ended |
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Jun. 30, 2016 | |
Business And Significant Accounting Policies [Abstract] | |
Description Of Business | Description of Business References in this report to “we,” “our,” “us” and “the company” are to Oncor and/or Bondco, its subsidiary as apparent in the context. See “Glossary” for definition of terms and abbreviations. We are a regulated electricity transmission and distribution company principally engaged in providing delivery services to REPs, including subsidiaries of TCEH, that sell power in the north-central, eastern and western parts of Texas. Revenues from TCEH represented 23% and 24% of our total operating revenues for the six months ended June 30, 2016 and 2015, respectively. We are a direct, majority-owned subsidiary of Oncor Holdings, which is a direct, wholly-owned subsidiary of EFIH, a direct, wholly-owned subsidiary of EFH Corp. EFH Corp. is a subsidiary of Texas Holdings, which is controlled by the Sponsor Group. Oncor Holdings owns 80.03% of our membership interests, Texas Transmission owns 19.75% of our membership interests and certain members of our management team and board of directors indirectly own the remaining membership interests through Investment LLC. We are managed as an integrated business; consequently, there are no separate reportable business segments. Our consolidated financial statements include our wholly-owned, bankruptcy-remote financing subsidiary, Bondco, a variable interest entity. This financing subsidiary was organized for the limited purpose of issuing certain transition bonds to recover generation-related regulatory asset stranded costs and other qualified costs under an order issued by the PUCT in 2002. Bondco issued an aggregate $1.3 billion principal amount of transition bonds during 2003 and 2004. The 2003 Series transition bonds matured and were paid in full in 2015 and the 2004 Series transition bonds matured and were paid in full in May 2016. Final true-up proceedings for the transition bonds are expected to be conducted by Oncor and the PUCT during 2016 and are expected to have minimal or no net income impact. Various “ring-fencing” measures have been taken to enhance the separateness between the Oncor Ring-Fenced Entities and the Texas Holdings Group and our credit quality. These measures serve to mitigate our and Oncor Holdings’ credit exposure to the Texas Holdings Group and to reduce the risk that our assets and liabilities or those of Oncor Holdings would be substantively consolidated with the assets and liabilities of the Texas Holdings Group in connection with a bankruptcy of one or more of those entities, including the EFH Bankruptcy Proceedings discussed below. Such measures include, among other things: our sale of a 19.75% equity interest to Texas Transmission in November 2008; maintenance of separate books and records for the Oncor Ring-Fenced Entities; our board of directors being comprised of a majority of independent directors; and prohibitions on the Oncor Ring-Fenced Entities providing credit support to, or receiving credit support from, any member of the Texas Holdings Group. The assets and liabilities of the Oncor Ring-Fenced Entities are separate and distinct from those of the Texas Holdings Group, including TXU Energy and Luminant, and none of the assets of the Oncor Ring-Fenced Entities are available to satisfy the debt or contractual obligations of any member of the Texas Holdings Group. We do not bear any liability for debt or contractual obligations of the Texas Holdings Group, and vice versa. Accordingly, our operations are conducted, and our cash flows are managed, independently from the Texas Holdings Group.
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EFH Corp. Bankruptcy Proceedings | EFH Corp. Bankruptcy Proceedings On the EFH Petition Date, the EFH Debtors commenced proceedings under Chapter 11 of the US Bankruptcy Code. The Oncor Ring-Fenced Entities are not parties to the EFH Bankruptcy Proceedings. We believe the “ring-fencing” measures discussed above mitigate our potential exposure to the EFH Bankruptcy Proceedings. See Note 2 for a discussion of the potential impacts of the EFH Bankruptcy Proceedings on our financial statements.
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Basis Of Presentation | Basis of Presentation These unaudited condensed financial statements should be read in conjunction with the audited financial statements and related notes included in the 2015 Form 10-K. In the opinion of Oncor management, all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of the results of operations and financial position have been made. All intercompany items and transactions have been eliminated in consolidation. The results of operations for an interim period may not give a true indication of results for a full year due to seasonality. All dollar amounts in the financial statements and tables in the notes are stated in millions of US dollars unless otherwise indicated.
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Use Of Estimates | Use of Estimates Preparation of our financial statements requires management to make estimates and assumptions about future events that affect the reporting of assets and liabilities at the balance sheet dates and the reported amounts of revenue and expense, including fair value measurements. In the event estimates and/or assumptions prove to be different from actual amounts, adjustments are made in subsequent periods to reflect more current information.
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Reconcilable Tariffs | Reconcilable Tariffs The PUCT has designated certain tariffs (TCRF, EECRF surcharges, AMS surcharges and charges related to transition bonds) as reconcilable, which means the differences between amounts billed under these tariffs and the related incurred costs are deferred as either regulatory assets or regulatory liabilities. Accordingly, at prescribed intervals, future tariffs are adjusted to either repay regulatory liabilities or collect regulatory assets.
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Contingencies | Contingencies We evaluate and account for contingencies using the best information available. A loss contingency is accrued and disclosed when it is probable that an asset has been impaired or a liability incurred and the amount of the loss can be reasonably estimated. If a range of probable loss is established, the minimum amount in the range is accrued, unless some other amount within the range appears to be a better estimate. If the probable loss cannot be reasonably estimated, no accrual is recorded, but the loss contingency is disclosed to the effect that the probable loss cannot be reasonably estimated. A loss contingency will be disclosed when it is reasonably possible that an asset has been impaired or a liability incurred. If the likelihood that an impairment or incurrence is remote, the contingency is neither accrued nor disclosed. Gain contingencies are recognized upon realization.
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Changes In Accounting Standards | Changes in Accounting Standards In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2016-2 (ASU 2016-2), Leases. The ASU amends previous US GAAP to require the balance sheet recognition of lease assets and liabilities for operating leases. Oncor will be required to adopt the ASU by January 1, 2019 and does not expect to early adopt. Retrospective application to the 2017 and 2018 comparative periods presented will be required in the year of adoption. We are currently evaluating the impact of this ASU on our financial statements. Since May 2014, the FASB has issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers along with other supplemental guidance (together, Topic 606). Topic 606 introduces new, increased requirements for disclosure of revenue in financial statements and guidance that are intended to eliminate inconsistencies in the recognition of revenue. Oncor will be required to adopt Topic 606 by January 1, 2018 and continues to evaluate the impact on its financial statements. At this time, the adoption is not expected to have a material effect on our reported results of operations, financial condition or cash flows.
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Regulatory Assets and Liabilities (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Regulatory Assets and Liabilities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components Of Regulatory Assets And Liabilities |
____________
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Long-Term Debt (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Long-Term Debt |
__________ (a) Secured by first priority lien on certain transmission and distribution assets equally and ratably with all of Oncor’s other secured indebtedness. See “Deed of Trust” below for additional information. (b) The transition bonds were nonrecourse to Oncor and were issued to securitize a regulatory asset.
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Membership Interests (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Membership Interests [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Distributions Paid |
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Schedule Of Changes To Membership Interests |
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Schedule Of Changes To Accumulated Other Comprehensive Income (Loss) |
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Pension and Other Postretirement Employee Benefits Plans (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pension And Other Postretirement Employee Benefits Plans [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Pension And OPEB Plan Costs |
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Related-Party Transactions (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related-Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Trade Accounts And Other Receivables From Related Parties |
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Schedule Of Related Party Transactions | Amounts payable to (receivable from) members related to income taxes under the tax sharing agreement and reported on our balance sheet consisted of the following:
Cash payments made to members related to income taxes consisted of the following:
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Supplementary Financial Information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplementary Financial Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Other Income And (Deductions) |
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Schedule Of Interest Expense And Related Charges |
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Schedule Of Trade Accounts And Other Receivables |
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Summary of Investments And Other Property |
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Schedule Of Property, Plant And Equipment |
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Schedule Of Intangible Assets |
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Schedule Of Estimated Aggregate Amortization Expenses |
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Schedule Of Employee Benefit Obligations And Other |
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Schedule Of Supplemental Cash Flow Information |
_____________
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Business And Significant Accounting Policies (Details) $ in Billions |
1 Months Ended | 3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|---|
Nov. 30, 2008 |
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016
entity
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Jun. 30, 2015 |
Dec. 31, 2004
USD ($)
|
Dec. 31, 2003
USD ($)
|
|
Business And Significant Accounting Polices [Line Items] | |||||||
Number of entities that would possibly be bankrupt | entity | 1 | ||||||
Principal amount of transition bonds issued | $ | $ 1.3 | $ 1.3 | |||||
Percentage of equity interest sold in the event of bankruptcy | 19.75% | ||||||
Oncor Holdings [Member] | |||||||
Business And Significant Accounting Polices [Line Items] | |||||||
Ownership | 80.03% | 80.03% | |||||
Texas Transmission [Member] | |||||||
Business And Significant Accounting Polices [Line Items] | |||||||
Percentage of membership interest owned by non-controlling owners | 19.75% | 19.75% | |||||
Sales [Member] | TCEH [Member] | |||||||
Business And Significant Accounting Polices [Line Items] | |||||||
Concentration Risk Percentage | 23.00% | 24.00% | 23.00% | 24.00% |
EFH Bankruptcy Proceedings (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Apr. 28, 2014 |
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Bankruptcy [Line Items] | ||
Amount receivable from related party | $ 129 | |
Amount collected from related party | $ 128 | |
EFH Corp [Member] | NEE Merger Agreement [Member] | ||
Bankruptcy [Line Items] | ||
Agreement extension period | 90 days | |
Percent of outstanding equity interests required | 80.00% | |
Termination fee | $ 275 |
Regulatory Matters (Details) $ in Millions |
6 Months Ended |
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Jun. 30, 2016
USD ($)
item
| |
Number of original jurisdiction cities | 204 |
Number of other parties appealed various portions of rate review final order to state district court | 4 |
Number of issues revised judgment | 2 |
Rate at which interest accrues for over-collections | 0.18% |
Maximum [Member] | |
Estimated impact on earnings | $ | $ 135 |
Minimum [Member] | |
Estimated impact on earnings | $ | $ 0 |
Regulatory Assets And Liabilities (Details) - USD ($) $ in Millions |
6 Months Ended | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2016 |
Dec. 31, 2015 |
||||||||||||
Regulatory Assets And Liabilities [Line Items] | |||||||||||||
Carrying Amount, Regulatory Assets | $ 1,986 | $ 1,958 | |||||||||||
Carrying Amount, Regulatory Liabilities | 802 | 764 | |||||||||||
Net regulatory asset | 1,184 | 1,194 | |||||||||||
Bondco [Member] | |||||||||||||
Regulatory Assets And Liabilities [Line Items] | |||||||||||||
Carrying Amount, Regulatory Liabilities | $ 0 | ||||||||||||
Net regulatory asset | 10 | ||||||||||||
Estimated Net Removal Costs [Member] | |||||||||||||
Regulatory Assets And Liabilities [Line Items] | |||||||||||||
Remaining Rate Recovery/Amortization Period | Lives of related assets | ||||||||||||
Carrying Amount, Regulatory Liabilities | $ 760 | 686 | |||||||||||
Investment Tax Credit and Protected Excess Deferred Taxes [Member] | |||||||||||||
Regulatory Assets And Liabilities [Line Items] | |||||||||||||
Remaining Rate Recovery/Amortization Period | Various | ||||||||||||
Carrying Amount, Regulatory Liabilities | $ 12 | 14 | |||||||||||
Over-Collection Of Transition Bond Charges [Member] | |||||||||||||
Regulatory Assets And Liabilities [Line Items] | |||||||||||||
Remaining Rate Recovery/Amortization Period | [1],[2] | < 1 year | |||||||||||
Carrying Amount, Regulatory Liabilities | [1],[2] | $ 10 | 29 | ||||||||||
Over-Collection Of Transition Bond Charges [Member] | Bondco [Member] | |||||||||||||
Regulatory Assets And Liabilities [Line Items] | |||||||||||||
Carrying Amount, Regulatory Liabilities | $ 10 | 21 | |||||||||||
Over-Recovered Wholesale Transmission Service Expense - Net [Member] | |||||||||||||
Regulatory Assets And Liabilities [Line Items] | |||||||||||||
Remaining Rate Recovery/Amortization Period | [2] | 1 year | |||||||||||
Carrying Amount, Regulatory Liabilities | [2] | 24 | |||||||||||
Energy Efficiency Programs [Member] | |||||||||||||
Regulatory Assets And Liabilities [Line Items] | |||||||||||||
Remaining Rate Recovery/Amortization Period | [2] | Not applicable | |||||||||||
Carrying Amount, Regulatory Liabilities | [2] | $ 20 | 11 | ||||||||||
Excluded Over-Collected Series 2003-1 Transition Bond Revenues [Member] | Bondco [Member] | |||||||||||||
Regulatory Assets And Liabilities [Line Items] | |||||||||||||
Net regulatory asset | 8 | ||||||||||||
Generation Related Regulatory Assets Securitized by Transition Bonds [Member] | |||||||||||||
Regulatory Assets And Liabilities [Line Items] | |||||||||||||
Remaining Rate Recovery/Amortization Period | [1],[2] | - | |||||||||||
Carrying Amount, Regulatory Assets | [1],[2] | 31 | |||||||||||
Generation Related Regulatory Assets Securitized by Transition Bonds [Member] | Bondco [Member] | |||||||||||||
Regulatory Assets And Liabilities [Line Items] | |||||||||||||
Carrying Amount, Regulatory Assets | 31 | ||||||||||||
Employee Retirement Costs [Member] | |||||||||||||
Regulatory Assets And Liabilities [Line Items] | |||||||||||||
Remaining Rate Recovery/Amortization Period | 4 years | ||||||||||||
Carrying Amount, Regulatory Assets | $ 31 | 38 | |||||||||||
Employee Retirement Costs To Be Reviewed [Member] | |||||||||||||
Regulatory Assets And Liabilities [Line Items] | |||||||||||||
Remaining Rate Recovery/Amortization Period | [3],[4] | To be determined | |||||||||||
Carrying Amount, Regulatory Assets | [3],[4] | $ 308 | 291 | ||||||||||
Employee Retirement Liability [Member] | |||||||||||||
Regulatory Assets And Liabilities [Line Items] | |||||||||||||
Remaining Rate Recovery/Amortization Period | [2],[4],[5] | To be determined | |||||||||||
Carrying Amount, Regulatory Assets | [2],[4],[5] | $ 826 | 853 | ||||||||||
Self Insurance Reserve (Primarily Storm Recovery Costs) - Net [Member] | |||||||||||||
Regulatory Assets And Liabilities [Line Items] | |||||||||||||
Remaining Rate Recovery/Amortization Period | 4 years | ||||||||||||
Carrying Amount, Regulatory Assets | $ 80 | 95 | |||||||||||
Self Insurance Reserve to be Reviewed [Member] | |||||||||||||
Regulatory Assets And Liabilities [Line Items] | |||||||||||||
Remaining Rate Recovery/Amortization Period | [3],[4] | To be determined | |||||||||||
Carrying Amount, Regulatory Assets | [3],[4] | $ 357 | 332 | ||||||||||
Securities Reacquisition Costs (Pre-Industry Restructure) [Member] | |||||||||||||
Regulatory Assets And Liabilities [Line Items] | |||||||||||||
Remaining Rate Recovery/Amortization Period | 1 year | ||||||||||||
Carrying Amount, Regulatory Assets | $ 9 | 14 | |||||||||||
Securities Reacquisition Costs (Post-Industry Restructure) - Net [Member] | |||||||||||||
Regulatory Assets And Liabilities [Line Items] | |||||||||||||
Remaining Rate Recovery/Amortization Period | Lives of related debt | ||||||||||||
Carrying Amount, Regulatory Assets | $ 10 | 9 | |||||||||||
Recoverable Amounts In Lieu Of Deferred Income Taxes - Net [Member] | |||||||||||||
Regulatory Assets And Liabilities [Line Items] | |||||||||||||
Remaining Rate Recovery/Amortization Period | Life of related asset or liability | ||||||||||||
Carrying Amount, Regulatory Assets | $ 8 | 12 | |||||||||||
Deferred Conventional Meter And Metering Facilities Depreciation [Member] | |||||||||||||
Regulatory Assets And Liabilities [Line Items] | |||||||||||||
Remaining Rate Recovery/Amortization Period | Largely 5 years | ||||||||||||
Carrying Amount, Regulatory Assets | $ 89 | 100 | |||||||||||
Deferred AMS Costs [Member] | |||||||||||||
Regulatory Assets And Liabilities [Line Items] | |||||||||||||
Remaining Rate Recovery/Amortization Period | To be determined | ||||||||||||
Carrying Amount, Regulatory Assets | $ 185 | 164 | |||||||||||
Energy Efficiency Performance Bonus [Member] | |||||||||||||
Regulatory Assets And Liabilities [Line Items] | |||||||||||||
Remaining Rate Recovery/Amortization Period | [2] | 1 year | |||||||||||
Carrying Amount, Regulatory Assets | [2] | $ 5 | 10 | ||||||||||
Under-Recovered Wholesale Transmission Service Expense - Net [Member] | |||||||||||||
Regulatory Assets And Liabilities [Line Items] | |||||||||||||
Remaining Rate Recovery/Amortization Period | [2] | 1 year | |||||||||||
Carrying Amount, Regulatory Assets | [2] | $ 71 | |||||||||||
Other Regulatory Assets [Member] | |||||||||||||
Regulatory Assets And Liabilities [Line Items] | |||||||||||||
Remaining Rate Recovery/Amortization Period | Various | ||||||||||||
Carrying Amount, Regulatory Assets | $ 7 | $ 9 | |||||||||||
|
Borrowings Under Credit Facilities (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Dec. 31, 2015 |
|
Line of Credit Facility [Line Items] | ||
Outstanding borrowing under the revolving credit facility | $ 1,133 | $ 840 |
Outstanding borrowing, interest rate | 1.59% | 1.48% |
Letters of credit | $ 7 | $ 7 |
Commitment fee | 0.125% | |
Borrowing capacity available under the credit facility | $ 860 | $ 1,153 |
Maximum [Member] | ||
Line of Credit Facility [Line Items] | ||
Commitment rate reduction under the revolving credit facility | 0.275% | |
Debt-to-capitalization ratio | 1.00 | |
Minimum [Member] | ||
Line of Credit Facility [Line Items] | ||
Commitment rate reduction under the revolving credit facility | 0.10% | |
Debt-to-capitalization ratio | 0.65 | |
Letter of Credit [Member] | ||
Line of Credit Facility [Line Items] | ||
Outstanding borrowing, interest rate | 1.325% | |
Revolving Credit Facility [Member] | ||
Line of Credit Facility [Line Items] | ||
Maximum borrowing capacity | $ 2,000 | |
Expiration of revolving credit facility | Oct. 01, 2017 | |
Extension period for revolving line of credit | 1 year | |
Additional increase in borrowing capacity amount | $ 100 | |
London Interbank Offered Rate (LIBOR) [Member] | ||
Line of Credit Facility [Line Items] | ||
Spread over variable rate | 1.125% | |
London Interbank Offered Rate (LIBOR) [Member] | Maximum [Member] | ||
Line of Credit Facility [Line Items] | ||
Spread over variable rate | 1.75% | |
London Interbank Offered Rate (LIBOR) [Member] | Minimum [Member] | ||
Line of Credit Facility [Line Items] | ||
Spread over variable rate | 1.00% | |
Federal Funds Effective Rate [Member] | ||
Line of Credit Facility [Line Items] | ||
Spread over variable rate | 0.50% | |
One-Month London Interbank Offered Rate [Member] | ||
Line of Credit Facility [Line Items] | ||
Spread over variable rate | 1.00% | |
One-Month London Interbank Offered Rate [Member] | Maximum [Member] | ||
Line of Credit Facility [Line Items] | ||
Spread over variable rate | 0.75% | |
One-Month London Interbank Offered Rate [Member] | Minimum [Member] | ||
Line of Credit Facility [Line Items] | ||
Spread over variable rate | 0.00% |
Long-Term Debt (Narrative) (Details) - USD ($) $ in Millions |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Dec. 31, 2015 |
|
Long-Term Debt [Line Items] | |||
Repayments of long-term debt | $ 41 | $ 569 | |
Percentage of fair value of cost of property additions certified to the Deed of Trust collateral agent | 85.00% | ||
Available bond credits | $ 2,281 | ||
Future debt subject to property additions to the Deed of Trust | 1,570 | ||
Estimated fair value of our long-term debt including current maturities | 6,923 | $ 6,287 | |
Carrying amount | 5,650 | $ 5,687 | |
Transition Bond [Member] | |||
Long-Term Debt [Line Items] | |||
Repayments of long-term debt | $ 41 |
Long-Term Debt (Schedule Of Long-Term Debt) (Details) - USD ($) $ in Millions |
6 Months Ended | 12 Months Ended | |||||
---|---|---|---|---|---|---|---|
Jun. 30, 2016 |
Dec. 31, 2015 |
||||||
Debt Instrument [Line Items] | |||||||
Unamortized discount and debt issuance costs | [1] | $ (50) | $ (54) | ||||
Total long-term debt, less amounts due currently | [1] | 5,650 | 5,646 | ||||
5.000% Fixed Senior Notes Due September 30, 2017 [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Fixed Senior Note | [1] | $ 324 | $ 324 | ||||
Interest percentage | 5.00% | 5.00% | |||||
Due date | Sep. 30, 2017 | Sep. 30, 2017 | |||||
6.800% Fixed Senior Notes Due September 1, 2018 [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Fixed Senior Note | [1] | $ 550 | $ 550 | ||||
Interest percentage | 6.80% | 6.80% | |||||
Due date | Sep. 01, 2018 | Sep. 01, 2018 | |||||
2.150% Fixed Senior Notes Due June 1, 2019 [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Fixed Senior Note | [1] | $ 250 | $ 250 | ||||
Interest percentage | 2.15% | 2.15% | |||||
Due date | Jun. 01, 2019 | Jun. 01, 2019 | |||||
5.750% Fixed Senior Notes Due September 30, 2020 [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Fixed Senior Note | [1] | $ 126 | $ 126 | ||||
Interest percentage | 5.75% | 5.75% | |||||
Due date | Sep. 30, 2020 | Sep. 30, 2020 | |||||
4.100% Fixed Senior Notes Due June 1, 2022 [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Fixed Senior Note | [1] | $ 400 | $ 400 | ||||
Interest percentage | 4.10% | 4.10% | |||||
Due date | Jun. 01, 2022 | Jun. 01, 2022 | |||||
7.000% Fixed Debentures Due September 1, 2022 [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Fixed Senior Note | [1] | $ 800 | $ 800 | ||||
Interest percentage | 7.00% | 7.00% | |||||
Due date | Sep. 01, 2022 | Sep. 01, 2022 | |||||
2.950% Fixed Senior Notes due April 1, 2025 [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Fixed Senior Note | [1] | $ 350 | $ 350 | ||||
Interest percentage | 2.95% | 2.95% | |||||
Due date | Apr. 01, 2025 | Apr. 01, 2025 | |||||
7.000% Fixed Senior Notes Due May 1, 2032 [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Fixed Senior Note | [1] | $ 500 | $ 500 | ||||
Interest percentage | 7.00% | 7.00% | |||||
Due date | May 01, 2032 | May 01, 2032 | |||||
7.250% Fixed Senior Notes Due January 15, 2033 [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Fixed Senior Note | [1] | $ 350 | $ 350 | ||||
Interest percentage | 7.25% | 7.25% | |||||
Due date | Jan. 15, 2033 | Jan. 15, 2033 | |||||
7.500% Fixed Senior Notes Due September 1, 2038 [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Fixed Senior Note | [1] | $ 300 | $ 300 | ||||
Interest percentage | 7.50% | 7.50% | |||||
Due date | Sep. 01, 2038 | Sep. 01, 2038 | |||||
5.250% Fixed Senior Notes Due September 30, 2040 [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Fixed Senior Note | [1] | $ 475 | $ 475 | ||||
Interest percentage | 5.25% | 5.25% | |||||
Due date | Sep. 30, 2040 | Sep. 30, 2040 | |||||
4.550% Fixed Senior Notes Due December 1, 2041 [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Fixed Senior Note | [1] | $ 400 | $ 400 | ||||
Interest percentage | 4.55% | 4.55% | |||||
Due date | Dec. 01, 2041 | Dec. 01, 2041 | |||||
5.300% Fixed Senior Notes Due June 1, 2042 [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Fixed Senior Note | [1] | $ 500 | $ 500 | ||||
Interest percentage | 5.30% | 5.30% | |||||
Due date | Jun. 01, 2042 | Jun. 01, 2042 | |||||
3.750% Fixed Senior Notes due April 1, 2045 [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Fixed Senior Note | [1] | $ 375 | $ 375 | ||||
Interest percentage | 3.75% | 3.75% | |||||
Due date | Apr. 01, 2045 | Apr. 01, 2045 | |||||
Bondco [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Fixed Senior Note | [2] | $ 41 | |||||
Less amount due currently | [2] | (41) | |||||
Bondco [Member] | 5.290% Fixed Series 2004 Bonds Due May 15, 2016 [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Fixed Senior Note | [2] | $ 41 | |||||
Interest percentage | 5.29% | 5.29% | |||||
Due date | May 15, 2016 | May 15, 2016 | |||||
|
Membership Interests (Narrative) (Details) - USD ($) $ in Millions |
6 Months Ended | ||
---|---|---|---|
Jul. 27, 2016 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Subsequent Event [Line Items] | |||
Cash distribution to members | $ 121 | $ 165 | |
Assumed debt to equity ratio, debt | 60.00% | ||
Assumed debt to equity ratio, equity | 40.00% | ||
Regulatory capitalization ratio, debt | 59.40% | ||
Regulatory capitalization ratio, equity | 40.60% | ||
Cash available for distribution under the capital structure restriction | $ 98 | ||
Subsequent Event [Member] | |||
Subsequent Event [Line Items] | |||
Cash distribution to members | $ 68 |
Membership Interests (Schedule Of Distributions Paid) (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Dividends Payable [Line Items] | ||
Amount | $ 121 | $ 165 |
Payment One FY 2016 [Member] | ||
Dividends Payable [Line Items] | ||
Declaration Date | Apr. 27, 2016 | |
Payment Date | May 11, 2016 | |
Amount | $ 65 | |
Payment Two FY 2016 [Member] | ||
Dividends Payable [Line Items] | ||
Declaration Date | Feb. 24, 2016 | |
Payment Date | Feb. 25, 2016 | |
Amount | $ 56 |
Membership Interests (Schedule Of Changes To Membership Interests) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | ||||
Balance | $ 7,508 | $ 7,518 | ||
Net income | $ 110 | $ 98 | 191 | 196 |
Distributions | (121) | (165) | ||
Net effects of cash flow hedges (net of tax) | 1 | 1 | 1 | 1 |
Defined benefit pension plans (net of tax) | 1 | |||
Balance | 7,579 | 7,551 | 7,579 | 7,551 |
Capital Accounts [Member] | ||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | ||||
Balance | 7,621 | 7,625 | ||
Net income | 191 | 196 | ||
Distributions | (121) | (165) | ||
Net effects of cash flow hedges (net of tax) | ||||
Defined benefit pension plans (net of tax) | ||||
Balance | 7,691 | 7,656 | 7,691 | 7,656 |
Accumulated Other Comprehensive Income (Loss) [Member] | ||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | ||||
Balance | (113) | (107) | ||
Net income | ||||
Distributions | ||||
Net effects of cash flow hedges (net of tax) | 1 | 1 | ||
Defined benefit pension plans (net of tax) | 1 | |||
Balance | $ (112) | $ (105) | $ (112) | $ (105) |
Membership Interests (Schedule Of Changes To Accumulated Other Comprehensive Income (Loss)) (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Balance at beginning of period | $ (113) | |
Balance at end of period | (112) | |
Cash Flow Hedges - Interest Rate Swap [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Balance at beginning of period | (22) | $ (24) |
Defined benefit pension plans (net of tax) | ||
Amounts reclassified from accumulated other comprehensive income (loss) and reported in interest expense and related charges | 1 | 1 |
Balance at end of period | (21) | (23) |
Defined Benefit Pension and OPEB Plans [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Balance at beginning of period | (91) | (83) |
Defined benefit pension plans (net of tax) | 1 | |
Amounts reclassified from accumulated other comprehensive income (loss) and reported in interest expense and related charges | ||
Balance at end of period | (91) | (82) |
Accumulated Other Comprehensive Income (Loss) [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Balance at beginning of period | (113) | (107) |
Defined benefit pension plans (net of tax) | 1 | |
Amounts reclassified from accumulated other comprehensive income (loss) and reported in interest expense and related charges | 1 | 1 |
Balance at end of period | $ (112) | $ (105) |
Pension And Other Postretirement Employee Benefits Plans (Narrative) (Details) $ in Millions |
6 Months Ended |
---|---|
Jun. 30, 2016
USD ($)
| |
Oncor Retirement Plan [Member] | |
Defined Benefit Plan Disclosure [Line Items] | |
Discount rate | 4.28% |
Expected return on plan assets | 5.53% |
EFH Retirement Plan [Member] | |
Defined Benefit Plan Disclosure [Line Items] | |
Discount rate | 4.57% |
Expected return on plan assets | 5.64% |
Pension Plan [Member] | |
Defined Benefit Plan Disclosure [Line Items] | |
Cash contributions | $ 2 |
Additional cash contributions | 2 |
Additional cash contributions, next five years | $ 479 |
OPEB Plan [Member] | |
Defined Benefit Plan Disclosure [Line Items] | |
Discount rate | 4.60% |
Expected return on plan assets | 6.30% |
Cash contributions | $ 14 |
Additional cash contributions | 17 |
Additional cash contributions, next five years | $ 153 |
Pension And Other Postretirement Employee Benefits Plans (Schedule Of Pension And OPEB Plan Costs) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Defined Benefit Plan Disclosure [Line Items] | ||||
Net costs | $ 34 | $ 39 | $ 69 | $ 78 |
Less amounts deferred principally as property or a regulatory asset | (25) | (28) | (50) | (56) |
Net amounts recognized as expense | 9 | 11 | 19 | 22 |
Pension Plan [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | 6 | 6 | 12 | 12 |
Interest cost | 34 | 33 | 68 | 66 |
Expected return on assets | (31) | (29) | (62) | (58) |
Amortization of net loss | 10 | 16 | 20 | 32 |
Net costs | 19 | 26 | 38 | 52 |
OPEB [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | 2 | 2 | 4 | 4 |
Interest cost | 12 | 11 | 24 | 22 |
Expected return on assets | (2) | (3) | (4) | (6) |
Amortization of prior service cost | (5) | (5) | (10) | (10) |
Amortization of net loss | 8 | 8 | 17 | 16 |
Net costs | $ 15 | $ 13 | $ 31 | $ 26 |
Related-Party Transactions (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
Dec. 31, 2015 |
|
Related Party Transaction [Line Items] | |||||
Revenues from electricity delivery fees | $ 216 | $ 224 | $ 436 | $ 460 | |
Bondco [Member] | |||||
Related Party Transaction [Line Items] | |||||
Over-collection of transition charges to be refunded | 10 | 10 | |||
TCEH [Member] | |||||
Related Party Transaction [Line Items] | |||||
Revenues from electricity delivery fees | 216 | 224 | 436 | 460 | |
Posted security amount | 0 | 0 | $ 6 | ||
Over-collection of transition charges to be refunded | 2 | 2 | |||
Delivery fee surcharges | 4 | 4 | 8 | 8 | |
EFH Corp [Member] | |||||
Related Party Transaction [Line Items] | |||||
Administrative and services costs | 4 | 9 | |||
Shared facilities expense | 1 | 1 | 2 | 2 | |
Over-collection of transition charges to be refunded | $ 2 | $ 2 | $ 2 | ||
Sponsor Group [Member] | |||||
Related Party Transaction [Line Items] | |||||
Equity in existing vendor | 16.60% | 16.60% | |||
Cash payments to vendors | $ 84 | ||||
Trade payables related parties | $ 9 | 9 | |||
Sponsor Group [Member] | Capitalized [Member] | |||||
Related Party Transaction [Line Items] | |||||
Cash payments to vendors | 79 | ||||
Sponsor Group [Member] | Operation And Maintenance Expense [Member] | |||||
Related Party Transaction [Line Items] | |||||
Cash payments to vendors | 5 | ||||
Maximum [Member] | TCEH [Member] | |||||
Related Party Transaction [Line Items] | |||||
Transformer maintenance revenue | 1 | 1 | 1 | 1 | |
Maximum [Member] | EFH Corp [Member] | |||||
Related Party Transaction [Line Items] | |||||
Administrative and services costs | 1 | 1 | |||
Shared facilities payments received | $ 1 | $ 1 | $ 1 | $ 1 |
Related-Party Transactions (Schedule Of Trade Accounts And Other Receivables From Related Parties) (Details) - EFH Corp [Member] - USD ($) $ in Millions |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Related Party Transaction [Line Items] | ||
Trade accounts and other receivables from affiliates | $ 126 | $ 120 |
Trade accounts and other payables to affiliates | (2) | (2) |
Trade accounts and other receivables from affiliates - net | $ 124 | $ 118 |
Related-Party Transactions (Schedule Of Amounts Payable To (Receivable From) Members In Lieu Of Income Taxes) (Details) - USD ($) $ in Millions |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Related Party Transaction [Line Items] | ||
Federal income taxes receivable | $ (118) | $ (136) |
Texas margin taxes payable | 11 | 20 |
Net payable (receivable) | (107) | (116) |
EFH Corp [Member] | ||
Related Party Transaction [Line Items] | ||
Federal income taxes receivable | (95) | (109) |
Texas margin taxes payable | 11 | 20 |
Net payable (receivable) | (84) | (89) |
Texas Transmission [Member] | ||
Related Party Transaction [Line Items] | ||
Federal income taxes receivable | (23) | (27) |
Net payable (receivable) | $ (23) | $ (27) |
Related-Party Transactions (Cash Payments Made To (Received From) Members In Lieu Of Income Taxes) (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Related Party Transaction [Line Items] | ||
Texas margin taxes | $ 18 | $ 22 |
Total payments (receipts) | 18 | 22 |
EFH Corp [Member] | ||
Related Party Transaction [Line Items] | ||
Texas margin taxes | 18 | 22 |
Total payments (receipts) | $ 18 | $ 22 |
Supplementary Financial Information (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
Dec. 31, 2015 |
|
Supplemental Financial Information [Line Items] | |||||
Restricted cash | $ 0 | $ 0 | $ 38 | ||
Aggregate amortization expenses | 16 | $ 16 | 32 | $ 32 | |
Goodwill | $ 4,064 | $ 4,064 | $ 4,064 | ||
Sales [Member] | TCEH [Member] | |||||
Supplemental Financial Information [Line Items] | |||||
Concentration Risk Percentage | 23.00% | 24.00% | 23.00% | 24.00% | |
Sales [Member] | Nonaffiliated REP [Member] | |||||
Supplemental Financial Information [Line Items] | |||||
Concentration Risk Percentage | 14.00% | 15.00% | 15.00% | 16.00% | |
Nonaffiliated Trade Accounts Receivable [Member] | Nonaffiliated REP [Member] | |||||
Supplemental Financial Information [Line Items] | |||||
Concentration Risk Percentage | 14.00% | 13.00% |
Supplementary Financial Information (Schedule Of Other Income And (Deductions)) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Supplementary Financial Information [Abstract] | ||||
Accretion of fair value adjustment (discount) to regulatory assets due to purchase accounting | $ 1 | $ 1 | $ 4 | |
Professional fees | (4) | (5) | (8) | (7) |
Non-recoverable pension and OPEB (Note 9) | (2) | (1) | (4) | |
Other | 1 | |||
Total other income and (deductions) - net | $ (3) | $ (6) | $ (8) | $ (7) |
Supplementary Financial Information (Schedule Of Interest Expense And Related Charges) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Supplementary Financial Information [Abstract] | ||||
Interest expense | $ 85 | $ 85 | $ 170 | $ 167 |
Amortization of debt issuance costs and discounts | 1 | 1 | 1 | 1 |
Allowance for funds used during construction — capitalized interest portion | (2) | (2) | (3) | (3) |
Total interest expense and related charges | $ 84 | $ 84 | $ 168 | $ 165 |
Supplementary Financial Information (Schedule Of Trade Accounts And Other Receivables) (Details) - USD ($) $ in Millions |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Supplementary Financial Information [Abstract] | ||
Gross trade accounts and other receivables - net | $ 534 | $ 509 |
Trade accounts and other receivables from affiliates - net | (124) | (118) |
Allowance for uncollectible accounts | (3) | (3) |
Trade accounts receivable from nonaffiliates - net | $ 407 | $ 388 |
Supplementary Financial Information (Summary of Investments And Other Property) (Details) - USD ($) $ in Millions |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Supplementary Financial Information [Abstract] | ||
Assets related to employee benefit plans, including employee savings programs | $ 96 | $ 94 |
Land and other investments | 3 | 3 |
Total investments and other property | $ 99 | $ 97 |
Supplementary Financial Information (Schedule Of Property, Plant And Equipment) (Details) - USD ($) $ in Millions |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Supplementary Financial Information [Abstract] | ||
Total assets in service | $ 19,600 | $ 19,072 |
Less accumulated depreciation | 6,661 | 6,479 |
Net of accumulated depreciation | 12,939 | 12,593 |
Construction work in progress | 485 | 416 |
Held for future use | 15 | 15 |
Property, plant and equipment - net | $ 13,439 | $ 13,024 |
Supplementary Financial Information (Schedule Of Intangible Assets) (Details) - USD ($) $ in Millions |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 925 | $ 902 |
Accumulated Amortization | 392 | 360 |
Net | 533 | 542 |
Land Easements [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 479 | 467 |
Accumulated Amortization | 93 | 91 |
Net | 386 | 376 |
Capitalized Software [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 446 | 435 |
Accumulated Amortization | 299 | 269 |
Net | $ 147 | $ 166 |
Supplementary Financial Information (Schedule Of Estimated Aggregate Amortization Expenses) (Details) $ in Millions |
Jun. 30, 2016
USD ($)
|
---|---|
Supplementary Financial Information [Abstract] | |
2016 | $ 61 |
2017 | 53 |
2018 | 47 |
2019 | 44 |
2020 | $ 43 |
Supplementary Financial Information (Schedule Of Employee Benefit Obligations And Other) (Details) - USD ($) $ in Millions |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Supplementary Financial Information [Abstract] | ||
Retirement plans and other employee benefits | $ 2,003 | $ 1,985 |
Uncertain tax positions (including accrued interest) | 3 | 3 |
Investment tax credits | 13 | 15 |
Other | 70 | 60 |
Total employee benefit obligations and other | $ 2,089 | $ 2,063 |
Supplementary Financial Information (Schedule Of Supplemental Cash Flow Information) (Details) - USD ($) $ in Millions |
6 Months Ended | ||||||
---|---|---|---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
||||||
Supplementary Financial Information [Abstract] | |||||||
Interest | $ 167 | $ 177 | |||||
Capitalized interest | (3) | (3) | |||||
Interest (net of amounts capitalized) | 164 | 174 | |||||
State | [1] | 18 | 22 | ||||
Total amount is lieu of income taxes | [1] | 18 | 22 | ||||
Noncash construction expenditures | [2] | $ 99 | $ 61 | ||||
|
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