Company Quick10K Filing
Oncor Electric Delivery
Price1.00 EPS-637,000,000
Shares-0 P/E-0
MCap-0 P/FCF-0
Net Debt8,975,990 EBIT1,024
TEV8,975,990 TEV/EBIT8,766
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-03-31 Filed 2020-05-04
10-K 2019-12-31 Filed 2020-02-27
10-Q 2019-09-30 Filed 2019-11-01
10-Q 2019-06-30 Filed 2019-08-02
10-Q 2019-03-31 Filed 2019-05-07
10-K 2018-12-31 Filed 2019-02-26
10-Q 2018-09-30 Filed 2018-11-07
10-Q 2018-06-30 Filed 2018-08-06
10-Q 2018-03-31 Filed 2018-05-07
10-K 2017-12-31 Filed 2018-02-23
10-Q 2017-09-30 Filed 2017-10-27
10-Q 2017-06-30 Filed 2017-07-28
10-Q 2017-03-31 Filed 2017-04-28
10-K 2016-12-31 Filed 2017-03-09
10-Q 2016-09-30 Filed 2016-11-01
10-Q 2016-06-30 Filed 2016-08-02
10-Q 2016-03-31 Filed 2016-05-05
10-K 2015-12-31 Filed 2016-02-26
10-Q 2015-09-30 Filed 2015-10-30
10-Q 2015-06-30 Filed 2015-07-31
10-Q 2015-03-31 Filed 2015-05-01
10-K 2014-12-31 Filed 2015-02-27
10-Q 2014-09-30 Filed 2014-10-31
10-Q 2014-06-30 Filed 2014-08-01
10-Q 2014-03-31 Filed 2014-05-02
10-K 2013-12-31 Filed 2014-02-28
10-Q 2013-09-30 Filed 2013-11-01
10-Q 2013-06-30 Filed 2013-08-02
10-Q 2013-03-31 Filed 2013-05-02
10-K 2012-12-31 Filed 2013-02-19
10-Q 2012-09-30 Filed 2012-10-30
10-Q 2012-06-30 Filed 2012-07-31
10-Q 2012-03-31 Filed 2012-05-01
10-K 2011-12-31 Filed 2012-02-21
10-Q 2011-09-30 Filed 2011-10-28
10-Q 2011-06-30 Filed 2011-07-29
10-Q 2011-03-31 Filed 2011-04-29
10-K 2010-12-31 Filed 2011-02-18
10-Q 2010-09-30 Filed 2010-10-29
10-Q 2010-06-30 Filed 2010-08-02
10-Q 2010-03-31 Filed 2010-05-04
10-K 2009-12-31 Filed 2010-02-19
8-K 2020-06-19
8-K 2020-05-04
8-K 2020-03-30
8-K 2020-03-23
8-K 2020-03-20
8-K 2020-03-16
8-K 2020-02-27
8-K 2020-02-18
8-K 2020-01-28
8-K 2019-11-01
8-K 2019-11-01
8-K 2019-09-25
8-K 2019-09-12
8-K 2019-09-06
8-K 2019-08-26
8-K 2019-07-29
8-K 2019-05-23
8-K 2019-05-16
8-K 2019-05-09
8-K 2019-05-07
8-K 2019-05-03
8-K 2019-03-27
8-K 2019-02-26
8-K 2019-02-12
8-K 2018-12-14
8-K 2018-12-10
8-K 2018-11-30
8-K 2018-11-20
8-K 2018-11-07
8-K 2018-10-29
8-K 2018-10-18
8-K 2018-10-18
8-K 2018-08-10
8-K 2018-08-06
8-K 2018-07-16
8-K 2018-06-28
8-K 2018-05-07
8-K 2018-03-26
8-K 2018-03-08
8-K 2018-03-06

C311 10Q Quarterly Report

Part I. Financial Information
Item 1.Financial Statements
Item 2. Management’S Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.A c311-20200331xex31_a.htm
EX-31.B c311-20200331xex31_b.htm
EX-32.A c311-20200331xex32_a.htm
EX-32.B c311-20200331xex32_b.htm

Oncor Electric Delivery Earnings 2020-03-31

Balance SheetIncome StatementCash Flow
30241812602012201420172020
Assets, Equity
1.31.00.80.50.30.02012201420172020
Rev, G Profit, Net Income
1.71.00.3-0.5-1.2-1.92012201420172020
Ops, Inv, Fin

10-Q 1 c311-20200331x10q.htm 10-Q Oncor_20200331 Q1_Taxonomy2019

 





 

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 MARCH 31, 2020



― OR ―



[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

____________________



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.)



 

1616 Woodall Rodgers Fwy.,  Dallas,  TX    75202

(214)  486-2000

(Address of Principal Executive Offices)

(Registrant’s Telephone Number)

____________________



Securities registered pursuant to Section 12(b) of the Act:



 

 

Title of each class

Trading Symbol

Name of each exchange on which registered

None

None

None



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 every Interactive Data File required to be submitted 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 such files).  Yes       No ____



Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ____    Accelerated filer ____    Non-Accelerated filer   √         

Smaller reporting company___ Emerging growth company ___



If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Yes___ No___



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 May 4,  2020,  635,000,000 limited liability company membership interests of Oncor Electric Delivery Company LLC were outstanding, 80.25% of which were directly held by Oncor Electric Delivery Holdings Company LLC and 19.75% of which were held by Texas Transmission Investment LLC.  None of the membership interests are publicly traded.







 

 


 

 

TABLE OF CONTENTS



Page

GLOSSARY

PART I.      FINANCIAL INFORMATION

Item 1.        Financial Statements (Unaudited)

Condensed Statements of Consolidated Income —
Three Months Ended March 31, 2020 and 2019

Condensed Statements of Consolidated Comprehensive Income —
Three Months Ended March 31, 2020 and 2019

Condensed Statements of Consolidated Cash Flows —
Three Months Ended March 31, 2020 and 2019

Condensed Consolidated Balance Sheets —
March 31, 2020 and December 31, 2019

Notes to Condensed Consolidated Financial Statements

10 

Item 2.        Management’s Discussion and Analysis of Financial Condition and Results of Operations

29 

Item 3.        Quantitative and Qualitative Disclosures About Market Risk

42 

Item 4.        Controls and Procedures

44 

PART II.    OTHER INFORMATION

44 

Item 1.        Legal Proceedings

44 

Item 1A.     Risk Factors

44 

Item 2.        Unregistered Sales of Equity Securities and Use of Proceeds

46 

Item 3.        Defaults Upon Senior Securities

46 

Item 4.        MINE SAFETY DISCLOSURES

46 

Item 5.        Other Information

46 

Item 6.        Exhibits

47 

SIGNATURE

50 





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 occasionally make references to Oncor (or “we,” “our,” “us” or “the company”) when describing actions, rights or obligations of Oncor and/or its subsidiaries.  These references reflect the fact that the subsidiaries are 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 any 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.





 

2


 

 



GLOSSARY



 





 

When the following terms and abbreviations appear in the text of this report, they have the meanings indicated below.



2019 Form 10-K

Oncor’s Annual Report on Form 10-K for the year ended December 31, 2019

AMS

Advanced metering system

ASU

Accounting Standards Update

COVID-19

Coronavirus Disease 2019, the disease caused by the novel strain of coronavirus reported to have surfaced in late 2019

CP Notes

Unsecured commercial paper notes issued under our CP Program

CP Program

Commercial paper program

Credit Facility

Revolving Credit Agreement, dated as of November 17, 2017, among Oncor, as borrower, the lenders from time to time party thereto, JPMorgan Chase Bank, N.A., as administrative agent and swingline lender, and the fronting banks from time to time party thereto

DCRF

Distribution cost recovery factor

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

Disinterested Director

Refers to a member of our board of directors who is a “disinterested director” pursuant to our Limited Liability Company Agreement. Our Limited Liability Company Agreement requires that seven of the thirteen members of our board of directors be “disinterested directors” who (i) shall be independent directors in all material respects under the rules of the New York Stock Exchange in relation to Sempra or its subsidiaries and affiliated entities and any entity with a direct or indirect ownership interest in Oncor or Oncor Holdings, and (ii) shall have no material relationship with Sempra or its subsidiaries or affiliated entities or any entity with a direct or indirect ownership interest in Oncor or Oncor Holdings, currently or within the previous ten years

EECRF

Energy efficiency cost recovery factor

EFH Bankruptcy Proceedings

Refers to voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code filed in U.S. Bankruptcy Court for the District of Delaware on April 29, 2014 by EFH Corp. and the substantial majority of its direct and indirect subsidiaries.  The Oncor Ring-Fenced Entities were not parties to the EFH Bankruptcy Proceedings

EFH Corp.

Refers to Energy Future Holdings Corp., a holding company, and/or its subsidiaries, depending on context.  Renamed Sempra Texas Holdings Corp. upon closing of the Sempra Acquisition

EFIH

Refers to Energy Future Intermediate Holding Company LLC, a direct, wholly owned subsidiary of EFH Corp. and the direct parent of Oncor Holdings. Renamed Sempra Texas Intermediate Holding Company LLC upon closing of the Sempra Acquisition

3


 

 

ERCOT

Electric Reliability Council of Texas, Inc., the independent system operator and the regional coordinator of various electricity systems within Texas

ERISA

Employee Retirement Income Security Act of 1974, as amended

FASB

Financial Accounting Standards Board

FERC

U.S. Federal Energy Regulatory Commission

Fitch

Fitch Ratings, Ltd. (a credit rating agency)

GAAP

Generally accepted accounting principles of the U.S.

InfraREIT

InfraREIT, Inc., which was merged with and into a wholly owned subsidiary of Oncor on May 16, 2019 in the InfraREIT Acquisition, with the surviving entity being a wholly owned subsidiary of Oncor renamed Oncor NTU Holdings Company LLC

InfraREIT Acquisition

Refers to Oncor’s acquisition of all of the equity interests of InfraREIT and InfraREIT Partners on May 16, 2019 pursuant to the transactions contemplated by the InfraREIT Merger Agreement and the SDTS-SU Asset Exchange

InfraREIT Merger Agreement

Refers to the Agreement and Plan of Merger, dated as of October 18, 2018, among Oncor, 1912 Merger Sub LLC (a wholly owned, subsidiary of Oncor), Oncor T&D Partners, LP (a wholly owned indirect subsidiary of Oncor), InfraREIT and InfraREIT Partners, which was completed on May 16, 2019

InfraREIT Partners

InfraREIT Partners, LP, a subsidiary of InfraREIT, which, as a result of the InfraREIT Acquisition, became an indirect wholly owned subsidiary of Oncor and was renamed Oncor NTU Partnership LP

kV

Kilovolts

kWh

Kilowatt-hours

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

Limited Liability Company Agreement

The Third Amended and Restated Limited Liability Company Agreement of Oncor, dated as of March 9, 2018, by and between Oncor Holdings and Texas Transmission, as amended

Moody’s

Moody’s Investors Service, Inc. (a credit rating agency)

MW

Megawatts

MWh

Megawatt-hours

Note Purchase Agreements

Refers to (i) the Note Purchase Agreement, dated May 3, 2019, pursuant to which Oncor issued its 6.47% Senior Notes, Series A, due September 30, 2030, 7.25% Senior Notes, Series B, due December 30, 2029, and 8.50% Senior Notes, Series C, due December 30, 2020 and (ii) the Note Purchase Agreement, dated May 6, 2019, pursuant to which Oncor issued its 3.86% Senior Notes, Series A, due December 3, 2025 and 3.86% Senior Notes, Series B, due January 14, 2026

NTU

Oncor Electric Delivery Company NTU LLC (formerly SDTS until the closing of the InfraREIT Acquisition), a wholly owned, indirect subsidiary of Oncor

4


 

 

Oncor

Oncor Electric Delivery Company LLC, a direct, majority-owned subsidiary of Oncor Holdings

Oncor Holdings

Oncor Electric Delivery Holdings Company LLC, the direct majority owner (80.25% equity interest) of Oncor. Oncor Holdings is wholly owned by STIH

Oncor OPEB Plans

Refers to plans sponsored by Oncor that offer certain postretirement health care and life insurance benefits to eligible current and former Oncor employees, certain eligible current and former EFH Corp. and Vistra employees, and their eligible dependents

Oncor Retirement Plan

Refers to a defined benefit pension plan sponsored by Oncor

Oncor Ring-Fenced Entities

Refers to Oncor Holdings and its direct and indirect subsidiaries, including Oncor and Oncor’s direct and indirect subsidiaries

OPEB

Other postretirement employee benefits

PUCT

Public Utility Commission of Texas

PURA

Texas Public Utility Regulatory Act

REP

Retail electric provider

ROU

Right-of-use

S&P

S&P Global Ratings, a division of S&P Global Inc. (a credit rating agency)

SDTS

Sharyland Distribution & Transmission Services, L.L.C., an indirect subsidiary of InfraREIT, which was renamed Oncor Electric Delivery Company NTU LLC in connection with the InfraREIT Acquisition

SDTS-SU Asset Exchange

Refers to the transactions contemplated by the Agreement and Plan of Merger, dated as of October 18, 2018, by and among SU, SDTS and Oncor pursuant to which SU and SDTS exchanged certain assets as a condition to the closing of the transactions contemplated by the InfraREIT Merger Agreement

SEC

U.S. Securities and Exchange Commission

Securities Act

The Securities Act of 1933, as amended

Sempra

Sempra Energy

Sempra Acquisition

Refers to the transactions contemplated by the plan of reorganization confirmed in the EFH Bankruptcy Proceedings and that certain Agreement and Plan of Merger, dated as of August 21, 2017, by and among EFH Corp., EFIH, Sempra and one of Sempra’s wholly owned subsidiaries, pursuant to which Sempra indirectly acquired the 80.03% of Oncor’s membership interests owned indirectly by EFH Corp. and EFIH. The transactions closed March 9, 2018

Sempra-Sharyland Transaction

Refers to Sempra’s May 16, 2019 acquisition of an indirect 50% ownership interest in Sharyland Holdings

Sharyland

Refers to Sharyland Utilities, L.L.C. (formerly SU), a subsidiary of Sharyland Holdings

5


 

 

Sharyland Holdings

Refers to Sharyland Holdings, L.P., an entity in which Sempra acquired an indirect 50% ownership interest in the Sempra-Sharyland Transaction. Sharyland Holdings is the parent of Sharyland

STH

Refers to Sempra Texas Holdings Corp., a Texas corporation (formerly EFH Corp. prior to the closing of the Sempra Acquisition), which is wholly owned by Sempra and the direct parent of STIH

STIH

Refers to Sempra Texas Intermediate Holding Company LLC., a Delaware limited liability company (formerly EFIH prior to the closing of the Sempra Acquisition), and the sole member of Oncor Holdings following the Sempra Acquisition

SU

Refers to Sharyland Utilities, L.P., which was converted into Sharyland on May 16, 2019 in connection with the Sempra-Sharyland Transaction

TCJA

“Tax Cuts and Jobs Act,” enacted on December 22, 2017

TCOS

Transmission cost of service

TCRF

Transmission cost recovery factor

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

Texas RE

Refers to Texas Reliability Entity, Inc., an independent organization that develops reliability standards for the ERCOT region and monitors and enforces compliance with North American Electric Reliability Corporation standards and ERCOT protocols

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, OMERS Infrastructure Management Inc.) and Cheyne Walk Investment Pte. Ltd. Sempra (through STIH) owns an indirect 1% ownership interest in Texas Transmission

U.S.

United States of America

Vistra

Refers to Vistra Energy Corp., and/or its subsidiaries, depending on context, formerly a subsidiary of EFH Corp. until October 2016

Vistra Retirement Plan

Refers to a defined benefit pension plan sponsored by an affiliate of Vistra, in which Oncor participates (formerly EFH Retirement Plan)



6


 

 

PART I.  FINANCIAL INFORMATION



ITEM 1.FINANCIAL STATEMENTS



ONCOR ELECTRIC DELIVERY COMPANY LLC

CONDENSED STATEMENTS OF CONSOLIDATED INCOME

(Unaudited)





 

 

 

 

 

 



 

Three Months Ended March 31,



 

2020

 

2019



 

(millions of dollars)

Operating revenues (Note 3)

 

$

1,072 

 

$

1,016 

Operating expenses:

 

 

 

 

 

 

Wholesale transmission service

 

 

245 

 

 

260 

Operation and maintenance

 

 

232 

 

 

221 

Depreciation and amortization

 

 

193 

 

 

172 

Provision in lieu of income taxes (Note 9)

 

 

29 

 

 

25 

Taxes other than amounts related to income taxes

 

 

131 

 

 

122 

Total operating expenses

 

 

830 

 

 

800 

Operating income

 

 

242 

 

 

216 

Other deductions and (income) - net (Note 10)

 

 

13 

 

 

17 

Nonoperating benefit in lieu of income taxes

 

 

(3)

 

 

(3)

Interest expense and related charges (Note 10)

 

 

101 

 

 

86 

Net income

 

$

131 

 

$

116 



See Notes to Financial Statements.





CONDENSED STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME

(Unaudited)





 

 

 

 

 

 



 

Three Months Ended March 31,



 

2020

 

2019



 

(millions of dollars)

Net income

 

$

131 

 

$

116 

Other comprehensive income (loss):

 

 

 

 

 

 

Net effects of cash flow hedges (net of tax) (Note 5)

 

 

(23)

 

 

(4)

Defined benefit pension plans (net of tax)

 

 

 

 

Total other comprehensive income (loss)

 

 

(22)

 

 

(3)

Comprehensive income

 

$

109 

 

$

113 



See Notes to Financial Statements.

7


 

 



ONCOR ELECTRIC DELIVERY COMPANY LLC

CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS

(Unaudited)







 

 

 

 

 

 



 

Three Months Ended

March 31,



 

2020

 

2019



 

(millions of dollars)

Cash flows — operating activities:

 

 

 

 

 

 

Net income

 

$

131 

 

$

116 

Adjustments to reconcile net income to cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization, including regulatory amortization

 

 

213 

 

 

192 

Provision in lieu of deferred income taxes - net

 

 

13 

 

 

Other – net 

 

 

 -

 

 

(2)

Changes in operating assets and liabilities:

 

 

 

 

 

 

Regulatory accounts related to reconcilable tariffs (Note 2)

 

 

(3)

 

 

(20)

Other operating assets and liabilities

 

 

(152)

 

 

(108)

Cash provided by operating activities

 

 

202 

 

 

186 

Cash flows — financing activities:

 

 

 

 

 

 

Issuances of long-term debt (Note 5)

 

 

1,250 

 

 

 -

Repayment of long-term debt (Note 5)

 

 

(462)

 

 

 -

Net change in short-term borrowings (Note 4)

 

 

(46)

 

 

328 

Capital contributions from members (Note 7)

 

 

87 

 

 

70 

Distributions to members (Note 7)

 

 

(91)

 

 

(71)

Debt discount and financing costs – net

 

 

(34)

 

 

 -

Cash provided by financing activities

 

 

704 

 

 

327 

Cash flows — investing activities:

 

 

 

 

 

 

Capital expenditures

 

 

(628)

 

 

(523)

Other – net 

 

 

 

 

12 

Cash used in investing activities

 

 

(620)

 

 

(511)

Net change in cash and cash equivalents

 

 

286 

 

 

Cash and cash equivalents — beginning balance

 

 

 

 

Cash and cash equivalents — ending balance

 

$

290 

 

$

























See Notes to Financial Statements.

8


 

 

ONCOR ELECTRIC DELIVERY COMPANY LLC

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)





 

 

 

 

 

 



 

At March 31,

 

At December 31,



 

2020

 

2019



 

(millions of dollars)

ASSETS

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

290 

 

$

Trade accounts receivable – net (Note 10)

 

 

656 

 

 

661 

Amounts receivable from members related to income taxes (Note 9)

 

 

 -

 

 

Materials and supplies inventories — at average cost

 

 

159 

 

 

148 

Prepayments and other current assets

 

 

106 

 

 

96 

Total current assets

 

 

1,211 

 

 

912 

Investments and other property (Note 10)

 

 

126 

 

 

133 

Property, plant and equipment – net (Note 10)

 

 

19,816 

 

 

19,370 

Goodwill (Notes 1 and 11)

 

 

4,740 

 

 

4,740 

Regulatory assets (Note 2)

 

 

1,720 

 

 

1,775 

Operating lease ROU and other assets (Note 6)

 

 

141 

 

 

106 

Total assets

 

$

27,754 

 

$

27,036 



 

 

 

 

 

 

LIABILITIES AND MEMBERSHIP INTERESTS

Current liabilities:

 

 

 

 

 

 

Short-term borrowings (Note 4)

 

$

 -

 

$

46 

Long-term debt due currently (Note 5)

 

 

148 

 

 

608 

Trade accounts payable

 

 

393 

 

 

394 

Amounts payable to members related to income taxes (Note 9)

 

 

32 

 

 

22 

Accrued taxes other than amounts related to income taxes

 

 

92 

 

 

236 

Accrued interest

 

 

94 

 

 

83 

Operating lease and other current liabilities (Note 6)

 

 

205 

 

 

237 

Total current liabilities

 

 

964 

 

 

1,626 

Long-term debt, less amounts due currently (Note 5)

 

 

9,256 

 

 

8,017 

Liability in lieu of deferred income taxes (Note 9)

 

 

1,846 

 

 

1,821 

Regulatory liabilities (Note 2)

 

 

2,786 

 

 

2,793 

Employee benefit, operating lease and other obligations (Notes 6, 8 and 10)

 

 

1,998 

 

 

1,980 

Total liabilities

 

 

16,850 

 

 

16,237 

Commitments and contingencies (Note 6)

 

 

 

 

 

 

Membership interests (Note 7):

 

 

 

 

 

 

Capital account ― number of units outstanding 2020 and 2019 – 635,000,000 

 

 

11,065 

 

 

10,938 

Accumulated other comprehensive loss

 

 

(161)

 

 

(139)

Total membership interests

 

 

10,904 

 

 

10,799 

Total liabilities and membership interests

 

$

27,754 

 

$

27,036 



See Notes to Financial Statements.

9


 

 

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 its subsidiaries 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 that sell power in the north-central, eastern, western and panhandle regions of Texas.  We are a direct, majority-owned subsidiary of Oncor Holdings, which is indirectly and wholly owned by Sempra. Oncor Holdings owns 80.25% of our outstanding membership interests and Texas Transmission owns 19.75% of our outstanding membership interests.  We are managed as an integrated business; consequently, there is only one reportable segment.



Our condensed consolidated financial statements for the three months ended March 31, 2020, include the results of our wholly owned indirect subsidiary, NTU, which is a regulated utility that provides electricity transmission delivery service in the north-central, western and panhandle regions of Texas. We acquired NTU as part of the InfraREIT Acquisition that closed on May 16, 2019.



Ring-Fencing Measures



Since 2007, various ring-fencing measures have been taken to enhance our credit quality and the separateness between the Oncor Ring-Fenced Entities and entities with ownership interests in Oncor or Oncor Holdings. These ring-fencing measures serve to mitigate the Oncor Ring-Fenced Entities’ credit exposure to owners of Oncor and Oncor Holdings, and to reduce the risk that the assets and liabilities of Oncor Ring-Fenced Entities would be substantively consolidated with the assets and liabilities of any direct or indirect owners of Oncor and Oncor Holdings in connection with a bankruptcy of any such entities. These measures include the November 2008 sale of 19.75% of Oncor’s equity interests to Texas Transmission.



In March 2018, Sempra indirectly acquired Oncor Holdings through the Sempra Acquisition. The Sempra Acquisition was consummated after obtaining the approval of the bankruptcy court in the EFH Bankruptcy Proceedings and the PUCT. The PUCT approval was obtained in Docket No. 47675, and the final order issued in that docket (Sempra Order) outlines certain ring-fencing measures, governance mechanisms and restrictions that apply after the Sempra Acquisition. As a result of these ring-fencing measures, Sempra does not control Oncor, and the ring-fencing measures limit Sempra’s ability to direct the management, policies and operations of Oncor, including the deployment or disposition of Oncor’s assets, declarations of dividends, strategic planning and other important corporate issues and actions.



None of the assets of the Oncor Ring-Fenced Entities are available to satisfy the debt or obligations of any Sempra entity or any other direct or indirect owner of Oncor or Oncor Holdings.  The assets and liabilities of the Oncor Ring-Fenced Entities are separate and distinct from those of any Sempra entities and any other direct or indirect owner of Oncor or Oncor Holdings.  We do not bear any liability for debt or contractual obligations of Sempra and its affiliates or any other direct or indirect owner of Oncor or Oncor Holdings, and vice versa.  Accordingly, our operations are conducted, and our cash flows are managed, independently from Sempra and its affiliates and any other direct or indirect owner of Oncor or Oncor Holdings.



Oncor is a limited liability company governed by a board of directors, not its members. The Sempra Order and our Limited Liability Company Agreement require that the board of directors of Oncor consist of thirteen members, constituted as follows:



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·

seven Disinterested Directors, who (i) shall be independent directors in all material respects under the rules of the New York Stock Exchange in relation to Sempra or its subsidiaries and affiliated entities and any entity with a direct or indirect ownership interest in Oncor or Oncor Holdings, and (ii) shall have no material relationship with Sempra or its subsidiaries or affiliated entities or any entity with a direct or indirect ownership interest in Oncor or Oncor Holdings, currently or within the previous ten years;

·

two members designated by Sempra (through Oncor Holdings);

·

two members designated by Texas Transmission; and

·

two current or former officers of Oncor (the Oncor Officer Directors), currently Robert S. Shapard and E. Allen Nye, Jr., who are our Chairman of the Board and Chief Executive, respectively.



In order for a current or former officer of Oncor to be eligible to serve as an Oncor Officer Director, the officer cannot have worked for Sempra or any of its affiliates (excluding Oncor Holdings and Oncor) or any other entity with a direct or indirect ownership interest in Oncor or Oncor Holdings in the ten-year period prior to the officer being employed by Oncor.  Oncor Holdings, at the direction of STIH, has the right to nominate and/or seek the removal of the Oncor Officer Directors, subject to approval by a majority of the Oncor board of directors.  STIH is a wholly owned indirect subsidiary of, and controlled by, Sempra following the Sempra Acquisition.



In addition, the Sempra Order provides that Oncor’s board cannot be overruled by the board of Sempra or any of its subsidiaries on dividend policy, the issuance of dividends or other distributions (except for contractual tax payments), debt issuance, capital expenditures, operation and maintenance expenditures, management and service fees, and appointment or removal of board members, provided that certain actions may also require the additional approval of the Oncor Holdings board of directors. The Sempra Order also provides that any changes to the size, composition, structure or rights of the board must first be approved by the PUCT.  In addition, if Sempra acquires Texas Transmission’s interest in Oncor, the two board positions on Oncor’s board of directors that Texas Transmission is entitled to appoint will be eliminated and the size of Oncor’s board of directors will be reduced by two.



Additional regulatory commitments, governance mechanisms and restrictions provided in the Sempra Order and our Limited Liability Company Agreement to ring-fence Oncor from its owners include, among others:



·

A majority of the Disinterested Directors of Oncor must approve any annual or multi-year budget if the aggregate amount of capital expenditures or operating and maintenance expenditures in such budget is more than a 10% increase or decrease from the corresponding amounts of such expenditures in the budget for the preceding fiscal year or multi-year period, as applicable;



·

Oncor may not pay any dividends or make any other distributions (except for contractual tax payments) if a majority of its Disinterested Directors determines that it is in the best interests of Oncor to retain such amounts to meet expected future requirements;



·

At all times, Oncor will remain in compliance with the debt-to-equity ratio established by the PUCT from time to time for ratemaking purposes, and Oncor will not pay dividends or other distributions (except for contractual tax payments), if that payment would cause its debt-to-equity ratio to exceed the debt-to-equity ratio approved by the PUCT;



·

If the credit rating on Oncor’s senior secured debt by any of the three major rating agencies falls below BBB (or the equivalent), Oncor will suspend dividends and other distributions (except for contractual tax payments), unless otherwise allowed by the PUCT;



·

Without the prior approval of the PUCT, neither Sempra nor any of its affiliates (excluding Oncor) will incur, guaranty or pledge assets in respect of any indebtedness that is dependent on the revenues of Oncor in more than a proportionate degree than the other revenues of Sempra or on the stock of Oncor, and there will be no debt at STH or STIH at any time following the closing of the Sempra Acquisition;



·

Neither Oncor nor Oncor Holdings will lend money to or borrow money from Sempra or any of its affiliates (other than Oncor subsidiaries), or any entity with a direct or indirect ownership interest in Oncor

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or Oncor Holdings, and neither Oncor nor Oncor Holdings will share credit facilities with Sempra or any of its affiliates (other than Oncor subsidiaries), or any entity with a direct or indirect ownership interest in Oncor or Oncor Holdings;



·

There must be maintained certain “separateness measures” that reinforce the financial separation of Oncor from its owners, including a requirement that dealings between Oncor, Oncor Holdings and their subsidiaries with Sempra, any of Sempra’s other affiliates or any entity with a direct or indirect ownership interest in Oncor or Oncor Holdings, must be on an arm’s-length basis, limitations on affiliate transactions, separate recordkeeping requirements and a prohibition on Sempra or its affiliates pledging Oncor assets or stock for any entity other than Oncor; and



·

Sempra will continue to hold indirectly at least 51% of the ownership interests in Oncor and Oncor Holdings for at least five years following the closing of the Sempra Acquisition, unless otherwise specifically authorized by the PUCT.



Basis of Presentation



These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and related notes included in our 2019 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.  We have evaluated all subsequent events through the date the financial statements were issued.  All appropriate 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 (see Note 13 to Financial Statements in our 2019 Form 10-K for additional information regarding quarterly results of operations). 



Our consolidated financial statements have been prepared in accordance with GAAP governing rate-regulated operations.  All dollar amounts in the financial statements and tables in the notes are stated in millions of U.S. 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.  No material adjustments were made to previous estimates or assumptions during the current period.



Interest Rate Derivatives and Hedge Accounting



We are exposed to interest rates primarily as a result of our current and expected use of financing. We may, from time to time, utilize interest rate derivative instruments typically designated as cash flow hedges, to lock in interest rates in anticipation of future financings.  We may designate an interest rate derivative instrument as a cash flow hedge if it effectively converts anticipated cash flows associated with interest payments to a fixed dollar amount.  In accounting for cash flow hedges, derivative assets and liabilities are recorded on the balance sheet at fair value with an offset to other comprehensive income.  Amounts remain in accumulated other comprehensive income and are reclassified into net income as the interest expense on the related debt affects net income.  See Note 5 for details on our interest rate hedging activity.



Impairment of Long-Lived Assets and Goodwill



We evaluate long-lived assets (including intangible assets with finite lives) for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. 



We also evaluate goodwill for impairment annually on October 1 and whenever events or changes in circumstances indicate that an impairment may exist. The determination of the existence of these and other

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indications of impairment involves judgments that are subjective in nature and may require the use of estimates in forecasting future results and cash flows. 



Changes in Accounting Standards  



Topic 326, “Financial Instruments—Credit Losses” – In June 2016 the FASB issued ASU No. 2016-13, which changes how entities account for credit losses on receivables and certain other financial assets. The guidance requires use of a current expected credit loss model, which may result in earlier recognition of credit losses than under previous accounting standards.  We adopted the new standard effective January 1, 2020. The adoption of the new standard did not have a material impact on our consolidated financial statements.



Topic 848, “Facilitation of the Effects of Reference Rate Reform on Financial Reporting” – In March 2020 the FASB issued ASU No. 2020-04, which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.  ASU No. 2020-04 is effective for all entities as of March 12, 2020 through December 31, 2022. The standard allows entities to account for contract modifications as an event that does not require reassessment or remeasurement (i.e., as a continuation of the existing contract). We are currently evaluating the optional expedients and exceptions under the standard. 



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2.    REGULATORY MATTERS



Regulatory Assets and Liabilities  



Recognition of regulatory assets and liabilities and the periods over which they are to be recovered or refunded through rate regulation reflect the decisions of the PUCT.  Components of our regulatory assets and liabilities and their remaining recovery periods as of March 31, 2020 are provided in the table below.  Amounts not currently earning a return through rate regulation are noted.







 

 

 

 

 

 

 

 



 

Remaining Rate Recovery/

Amortization Period

 

 

 

 



 

At March 31, 2020

 

At March 31, 2020

 

At December 31, 2019

Regulatory assets:

 

 

 

 

 

 

 

 

Employee retirement liability (a)(b)(c)

 

To be determined

 

$

615 

 

$

623 

Employee retirement costs being amortized 

 

8 years

 

 

253 

 

 

262 

Employee retirement costs incurred since the last rate review period (b)

 

To be determined

 

 

76 

 

 

79 

Self-insurance reserve (primarily storm recovery costs) being amortized

 

8 years

 

 

298 

 

 

309 

Self-insurance reserve incurred since the last rate review period (primarily storm related) (b)

 

To be determined

 

 

221 

 

 

238 

Securities reacquisition costs

 

Lives of related debt

 

 

27 

 

 

29 

Deferred conventional meter and metering facilities depreciation

 

1 year

 

 

10 

 

 

15 

Under-recovered AMS costs

 

8 years

 

 

165 

 

 

170 

Energy efficiency performance bonus (a)

 

1 year or less

 

 

 

 

Wholesale distribution substation service

 

To be determined

 

 

39 

 

 

34 

Other regulatory assets (d)

 

Various

 

 

 

 

Total regulatory assets

 

 

 

 

1,720 

 

 

1,775 



 

 

 

 

 

 

 

 

Regulatory liabilities:

 

 

 

 

 

 

 

 

Estimated net removal costs

 

Lives of related assets

 

 

1,199 

 

 

1,178 

Excess deferred taxes

 

Primarily over lives of related assets

 

 

1,557 

 

 

1,574 

Over-recovered wholesale transmission service expense (a)

 

1 year or less

 

 

14 

 

 

30 

Other regulatory liabilities

 

Various

 

 

16 

 

 

11 

Total regulatory liabilities

 

 

 

 

2,786 

 

 

2,793 

Net regulatory assets (liabilities)

 

 

 

$

(1,066)

 

$

(1,018)

____________

(a)

Not earning a return in the regulatory rate-setting process.

(b)

Recovery is specifically authorized by statute or by the PUCT, subject to reasonableness review.

(c)

Represents unfunded liabilities recorded in accordance with pension and OPEB accounting standards.

(d)

Includes $1 million in regulatory assets established to track our incremental costs related to the impact of COVID-19, including costs relating to our pandemic response plan.

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PUCT Project No. 50664 Issues Related to the State of Disaster for the Coronavirus Disease 2019  



On March 26, 2020, the PUCT issued an order in PUCT Project No. 50664 Issues Related to the State of Disaster for the Coronavirus Disease 2019 creating the COVID-19 Electricity Relief Program (COVID-19 ERP) to aid certain eligible residential customers unable to pay their electricity bills as a result of COVID-19 impacts. To fund that program, the PUCT order also provided for an initial $0.33 per MWh surcharge to be collected by transmission and distribution utilities through rates and directed ERCOT to provide an aggregate amount of $15 million in loans to those transmission and distribution utilities for the initial funding of the COVID-19 ERP. As a result, we filed a tariff rider on April 1, 2020 implementing the surcharge. The PUCT order provides that we may request an increase of the surcharge amount if the collections appear insufficient to cover eligible costs of the COVID-19 ERP. Surcharge collections will be recorded as a regulatory liability until the funds are used. Surcharge collections may only be used to reimburse transmission and distribution utilities and REPs for eligible unpaid bills from residential customers enrolled in the COVID-19 ERP, to cover costs of a third-party administrator to administer the eligibility process, and to reimburse ERCOT for the initial funding of the program. Pursuant to an order issued April 17, 2020, the COVID-19 ERP will expire July 17, 2020 unless extended by the PUCT.



Pursuant to the PUCT order, we received an unsecured loan from ERCOT on April 9, 2020 in the amount of $7 million. Under the terms of the loan agreement, we must repay the amount of the loan prior to September 26, 2020, (the original expiration date of the COVID-19 ERP pursuant to the March 26, 2020 PUCT order) or such  repayment date as may be set forth in a PUCT order.



The PUCT also authorized the transmission and distribution utilities to use a regulatory asset accounting mechanism and a subsequent process to seek future recovery of expenses resulting from the effects of COVID-19. Therefore, we are recording incremental costs incurred by Oncor resulting from the effects of COVID-19, including costs relating to the implementation of our pandemic response plan, as a regulatory asset.    



3.   REVENUES



General



Our revenue is billed monthly under tariffs approved by the PUCT and the majority of revenues are related to providing electric delivery service to consumers.  Tariff rates are designed to recover the cost of providing electric delivery service to customers including a reasonable rate of return on invested capital.  As the volumes delivered can be directly measured, our revenues are recognized when the underlying service has been provided in an amount prescribed by the related tariff. We recognize revenue in the amount that we have the right to invoice.  Substantially all of our revenues are from contracts with customers except for alternative revenue program revenues discussed below.



Reconcilable Tariffs



The PUCT has designated certain tariffs (primarily TCRF and EECRF) 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. 



Alternative Revenue Program 



The PUCT has implemented an incentive program allowing us to earn performance bonuses by exceeding PUCT-approved energy efficiency program targets. This incentive program and the related performance bonus revenues are considered an “alternative revenue program” under GAAP.  Annual performance bonuses are recognized as revenue when approved by the PUCT, typically in the third or fourth quarter each year. 



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Disaggregation of Revenues 



The following table reflects electric delivery revenues disaggregated by tariff for the three months ended March 31, 2020 and 2019:



 

 

 

 

 

 



 

Three Months Ended March 31,



 

2020

 

2019

Operating revenues

 

 

 

 

 

 

Revenues contributing to earnings:

 

 

 

 

 

 

Distribution base revenues

 

$

496 

 

$

499 

Transmission base revenues (TCOS revenues):

 

 

 

 

 

 

Billed to third-party wholesale customers

 

 

196 

 

 

143 

Billed to REPs serving Oncor distribution customers, through TCRF

 

 

109 

 

 

85 

Total transmission base revenues

 

 

305 

 

 

228 

Other miscellaneous revenues

 

 

16 

 

 

17 

Total revenues contributing to earnings

 

 

817 

 

 

744 



 

 

 

 

 

 

Revenues collected for pass-through expenses:

 

 

 

 

 

 

TCRF - third-party wholesale transmission service

 

 

245 

 

 

260 

EECRF and other regulatory charges

 

 

10 

 

 

12 

Revenues collected for pass-through expenses

 

 

255 

 

 

272 



 

 

 

 

 

 

Total operating revenues

 

$

1,072 

 

$

1,016 



Customers



Our distribution customers consist of approximately 90 REPs and certain electric cooperatives in our certificated service area.  The consumers of the electricity we deliver are free to choose their electricity supplier from REPs who compete for their business.  Our transmission base revenues are collected from load serving entities benefiting from our transmission system.  Our transmission customers consist of municipalities, electric cooperatives and other distribution companies.  REP subsidiaries of our two largest counterparties represented 25% and 18% of our total operating revenues for the three months ended March 31, 2020.  No other customer represented more than 10% of our total operating revenues.



Variability



Our revenues and cash flows are subject to seasonality, timing of customer billings, weather conditions and other electricity usage drivers, with revenues being highest in the summer. Payment is due 35 days after invoicing. Under a PUCT rule relating to the Certification of Retail Electric Providers, write-offs of uncollectible amounts owed by REPs are recoverable as a regulatory asset. 



Pass-through Expenses



Expenses which are allowed to be passed-through to customers (primarily, third party wholesale transmission service and energy efficiency program costs) are generally recognized as revenue at the time the costs are incurred.  Franchise taxes are assessed by local governmental bodies, based on kWh delivered and are not a “pass-through” item.  The rates we charge customers are intended to recover the franchise taxes, but we are not acting as an agent to collect the taxes from customers; therefore, franchise taxes are reported as a principal component of “taxes other than amounts related to income taxes” instead of a reduction to “revenues” in the income statement.



 

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4.    SHORT-TERM BORROWINGS



At March 31, 2020 and December 31, 2019, outstanding short-term borrowings under our CP Program and Credit Facility consisted of the following:



 

 

 

 

 

 



 

At March 31,

 

At December 31,



 

2020

 

2019

Total credit facility borrowing capacity

 

$

2,000 

 

$

2,000 

Commercial paper outstanding (a)

 

 

 -

 

 

(46)

Credit facility outstanding (b)

 

 

 -

 

 

 -

Letters of credit outstanding (c)

 

 

(9)

 

 

(10)

Available unused credit

 

$

1,991 

 

$

1,944 

____________

a)

The weighted average interest rate for commercial paper was 1.84% at December 31, 2019.

b)

At March 31, 2020, the applicable interest rate for any outstanding borrowings was LIBOR plus 1.00%.

c)

The interest rate on outstanding letters of credit at both March 31, 2020 and December 31, 2019 was 1.20% based on our credit ratings.

 

CP Program



In March 2018, we established the CP Program, under which we may issue CP Notes on a private placement basis up to a maximum aggregate face or principal amount outstanding at any time of $2.0 billion.  The proceeds of CP Notes issued under the CP Program are used for working capital and general corporate purposes. The CP Program obtains liquidity support from our Credit Facility, which is discussed below.  We may utilize either the CP Program or the Credit Facility, at our option, to meet our funding needs.



Credit Facility     



In November 2017, we entered into a $2.0 billion unsecured Credit Facility to be used for working capital and general corporate purposes, issuances of letters of credit and support our CP Program.  We may request increases in our borrowing capacity in increments of not less than $100 million, not to exceed $400 million in the aggregate provided certain conditions are met, including lender approvals. The Credit Facility’s five-year term expires in November 2022 and gives us the option of requesting up to two one-year extensions, with such extensions subject to certain conditions and lender approvals.     



March 2020 Term Loan Agreement



On March 23, 2020, we entered into a short-term unsecured term loan credit agreement (March 2020 Term Loan Agreement) in an aggregate principal amount of $350 million, which may be increased, at our option and upon the agreement of one or more existing or additional lenders, by an aggregate principal amount of between $50 million and $100 million prior to our first borrowing under the March 2020 Term Loan Agreement. The March 2020 Term Loan Agreement has a maturity date of March 22, 2021, which may be extended once, in whole or part, at our option and upon the payment to the extending lenders of an extension fee to be agreed upon by such extending lenders, to a date not later than September 24, 2021. We may borrow up to $350 million in up to four borrowings which may be made, at our option, at any time between April 1, 2020 and July 21, 2020. Upon the earlier to occur of the fourth borrowing and July 21, 2020, the unused commitments of the lenders to make term loans shall terminate. Loans under the March 2020 Term Loan Agreement bear interest at per annum rates equal to, at our option, (i) LIBOR plus 0.675%, or (ii) an alternate base rate (the highest of (1) the prime rate of Wells Fargo Bank, National Association, the administrative agent and a lender under the agreement, (2) the federal funds effective rate plus 0.50%, and (3) daily one-month LIBOR plus 1%). No amounts were outstanding under the March 2020 Term Loan Agreement as of March 31, 2020.



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5.    LONG-TERM DEBT



Our senior notes are secured by a 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.  At March 31, 2020 and December 31, 2019, our long-term debt consisted of the following:



 

 

 

 

 

 



 

March 31,

 

December 31,



 

2020

 

2019

Fixed Rate Secured:

 

 

 

 

 

 

5.75%  Senior Notes due September 30, 2020

 

$

126 

 

$

126 

8.50%  Senior Notes, Series C, due December 30, 2020

 

 

13 

 

 

14 

4.10%  Senior Notes, due June 1, 2022

 

 

400 

 

 

400 

7.00%  Debentures due September 1, 2022

 

 

482 

 

 

482 

2.75%  Senior Notes due June 1, 2024

 

 

500 

 

 

500 

2.95%  Senior Notes due April 1, 2025

 

 

350 

 

 

350 

3.86%  Senior Notes, Series A, due December 3, 2025

 

 

174 

 

 

174 

3.86%  Senior Notes, Series B, due January 14, 2026

 

 

38 

 

 

38 

3.70%  Senior Notes due November 15, 2028

 

 

650 

 

 

650 

5.75%  Senior Notes due March 15, 2029

 

 

318 

 

 

318 

7.25%  Senior Notes, Series B, due December 30, 2029

 

 

36 

 

 

36 

2.75%  Senior Notes due May 15, 2030

 

 

400 

 

 

 -

6.47%  Senior Notes, Series A, due September 30, 2030

 

 

82 

 

 

83 

7.00%  Senior Notes due May 1, 2032

 

 

500 

 

 

500 

7.25%  Senior Notes due January 15, 2033

 

 

350 

 

 

350 

7.50%  Senior Notes due September 1, 2038

 

 

300 

 

 

300 

5.25%  Senior Notes due September 30, 2040

 

 

475 

 

 

475 

4.55%  Senior Notes due December 1, 2041

 

 

400 

 

 

400 

5.30%  Senior Notes due June 1, 2042

 

 

500 

 

 

500 

3.75%  Senior Notes due April 1, 2045

 

 

550 

 

 

550 

3.80%  Senior Notes due September 30, 2047

 

 

325 

 

 

325 

4.10%  Senior Notes due November 15, 2048

 

 

450 

 

 

450 

3.80%  Senior Notes, due June 1, 2049

 

 

500 

 

 

500 

3.10%  Senior Notes, due September 15, 2049

 

 

700 

 

 

700 

3.70%  Senior Notes due May 15, 2050

 

 

400 

 

 

 -

Secured long-term debt

 

 

9,019 

 

 

8,221 

Unsecured:

 

 

 

 

 

 

Term loan credit agreement maturing October 6, 2020

 

 

 -

 

 

460 

Term loan credit agreement maturing June 1, 2021

 

 

450 

 

 

 -

Total long-term debt

 

 

9,469 

 

 

8,681 

Unamortized discount and debt issuance costs

 

 

(65)

 

 

(56)

Less amount due currently

 

 

(148)

 

 

(608)

       Long-term debt, less amounts due currently

 

$

9,256 

 

$

8,017 

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Long-Term Debt-Related Activity in 2020



Debt Issuances 



On March 20, 2020, we completed a sale of $400 million aggregate principal amount of 2.75% Senior Secured Notes due 2030 (2030 Notes) and $400 million aggregate principal amount of 3.70% Senior Secured Notes due 2050 (2050 Notes and, together with the 2030 Notes, the Notes). We used the proceeds (net of the initial purchasers’ discount, fees and expenses) of approximately $790 million from the sale of the Notes for general corporate purposes, including the repayment of short-term and long-term debt.



The Notes were issued pursuant to the provisions of an Indenture, dated as of August 1, 2002, between Oncor and 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 amended and supplemented, the Indenture). The 2030 Notes and the 2050 Notes each constitute a separate series of notes under the Indenture, but will be treated together with Oncor’s other outstanding debt securities issued under the Indenture for amendments and waivers and for taking certain other actions.



The Notes were issued in separate private placements and were not registered under the Securities Act.  We have agreed, subject to certain exceptions, to register with the SEC notes having substantially identical terms as the Notes (except for provisions relating to the transfer restriction and payment of additional interest) as part of our offers to exchange freely tradable exchange notes for the Notes.  We have agreed to use commercially reasonable efforts to cause the exchange offers to be completed within 315 days after the applicable issue date of the Notes.  If a registration statement for the exchange offers is not declared effective by the SEC within 270 days after the applicable issue date of the Notes or the exchange offers are not completed within 315 days after the applicable issue date of the Notes (an exchange default), then the annual interest rate on each series of the Notes will increase 50 basis points per annum until the earlier of the expiration of the exchange default or the second anniversary of the issue dates of the Notes.



January 2020 Term Loan Credit Agreement



On January 28, 2020, we executed a $450 million term loan credit agreement that matures on June 1, 2021 (January 2020 Term Loan Agreement).  The January 2020 Term Loan Agreement provides that we can borrow the full amount in up to four borrowings by April 27, 2020.  We borrowed $163 million on January 29, 2020, $55 million on February 28, 2020 and $232 million on March 17, 2020 under the January 2020 Term Loan Agreement. At March 31, 2020, borrowings under the January 2020 Term Loan Agreement totaled $450 million, the full amount available under the agreement.



The proceeds from each borrowing were used for general corporate purposes, including the repayment of notes outstanding under our CP Program. Loans under the January 2020 Term Loan Agreement bear interest at per annum rates equal to, at our option, (i) LIBOR plus 0.50% until June 1, 2021, or (ii) an alternate base rate (the highest of (1) the prime rate of Sumitomo Mitsui Banking Corporation, the administrative agent and a lender under the agreement, (2) the federal funds effective rate plus 0.50%, and (3) daily one-month LIBOR plus 1%).



Interest Rate Hedge Transactions



In February and March of 2020, we entered into interest rate hedge transactions hedging the variability of benchmark bond rates used to determine interest rates on anticipated issuances of ten-year and thirty-year senior secured notes.  The hedges were terminated in March 2020 upon our issuance of the senior secured notes discussed in “Debt Issuances” above.  We recognized a  $29 million ($23 million after-tax) loss related to the fair value of the hedge transactions in accumulated other comprehensive loss.  We expect approximately $4 million of the amount reported in accumulated other comprehensive loss at March 31, 2020 related to interest rate hedges to be reclassified into net income as an increase to interest expense within the next 12 months, including $2 million from the current period transactions.

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Debt Repayments



Repayments of long-term debt in the three months ended March 31, 2020 included $460 million principal amount borrowed under a term loan agreement entered into in 2019 that was to mature in October 2020 (2019 Term Loan Agreement) and $2 million principal amount of the quarterly amortizing debt for senior secured notes issued under one of our Note Purchase Agreements. The $460 million repaid under the 2019 Term Loan Agreement constituted all amounts outstanding under that agreement, and as a result of that repayment the agreement is no longer in effect.



Deed of Trust



Our secured indebtedness 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 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 March 31, 2020, the amount of available bond credits was $1.973 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 $2.602 billion.



Borrowings under the CP Program, the Credit Facility, and our term loan credit agreements are not secured.



Maturities



Long-term maturities (including current maturities) at March 31, 2020, are as follows:





 

 

 

Year

 

Amount

2020 (excluding first three months of 2020)

 

$

148 

2021

 

 

459 

2022

 

 

891 

2023

 

 

10 

2024

 

 

510 

Thereafter

 

 

7,451 

Unamortized discount and debt issuance costs

 

 

(65)

Total

 

$

9,404 



Fair Value of Long-Term Debt



At March 31, 2020 and December 31, 2019, the estimated fair value of our long-term debt (including current maturities) totaled $10.734 billion and $10.003 billion, respectively, and the carrying amount totaled $9.404 billion and $8.625 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.



6.    COMMITMENTS AND CONTINGENCIES



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 2 above and Note 8 to Financial Statements in our 2019 Form 10-K for additional information regarding our regulatory and legal proceedings, respectively. 



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Leases



As lessee, our leased assets primarily consist of our vehicle fleet and real estate leased for company offices and service centers.  Our leases are accounted for as operating leases for both GAAP and rate-making purposes. We generally recognize operating lease costs on a straight-line basis over the lease term in operating expenses.  We are not a lessor to any material lease contracts.



In December 2019, we entered into a 15 year lease agreement for replacement office space. The operating lease partially commenced in February 2020 and increased our lease obligation by $24 million.



The table below presents the maturity analysis of our lease liabilities and reconciliation to the present value of lease liabilities:





 

 

 

Year

 

Amount

2020 (remaining nine months)

 

$

23 

2021

 

 

28 

2022

 

 

24 

2023

 

 

18 

2024

 

 

12 

Thereafter

 

 

28 

Total undiscounted lease payments

 

 

133 

Less imputed interest

 

 

(12)

Total future minimum lease payments

 

$

121 





See Note 8 to Financial Statements in our 2019 Form 10-K for additional information on leases.





7.    MEMBERSHIP INTERESTS



Cash Contributions





We received cash capital contributions from our members on February 18, 2020 and April 27, 2020 each totaling $87 million.    



Cash Distributions





The PUCT order issued in the Sempra Acquisition and our Limited Liability Company Agreement set forth various restrictions on distributions to our members. Among those restrictions is the commitment that we will make no distributions that would cause us to be out of compliance with the PUCT’s approved debt-to-equity ratio, which is currently 57.5% debt to 42.5% equity. The distribution restrictions also include the ability of our board, a majority of the Disinterested Directors, or either of the two member directors designated by Texas Transmission to limit distributions to the extent each determines it is necessary to meet expected future requirements of Oncor (including continuing compliance with the PUCT debt-to-equity ratio commitment).  At March 31, 2020, we had $301 million available to distribute to our members as our regulatory capitalization ratio was 56.5% debt to 43.5% 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 including any finance leases plus unamortized gains on reacquired debt less unamortized issuance expenses, premiums and losses on reacquired debt.  Equity is calculated as membership interests determined in accordance with GAAP, excluding accumulated other comprehensive loss and the effects of acquisition accounting from a 2007 transaction.



On February 19, 2020, our board of directors declared a cash distribution of $91 million, which was paid to our members on February 20, 2020. On April 29, 2020, our board of directors declared a cash distribution of $91 million, which was paid to our members on April 30, 2020. 

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Membership Interests



The following tables present the changes to membership interests during the three months ended March 31, 2020 and 2019, net of tax: 





 

 

 

 

 

 

 

 



Capital Accounts

 

Accumulated Other Comprehensive Income (Loss)

 

Total Membership Interests



Three Months Ended March 31, 2020

Balance at December 31, 2019

$

10,938 

 

$

(139)

 

$

10,799 

Net income

 

131 

 

 

 -

 

 

131 

Distributions

 

(91)

 

 

 -

 

 

(91)

Capital contributions

 

87 

 

 

 -

 

 

87 

Net effects of cash flow hedges (Note 5)

 

 -

 

 

(23)

 

 

(23)

Defined benefit pension plans

 

 -

 

 

 

 

Balance at March 31, 2020

$

11,065 

 

$

(161)

 

$

10,904 







 

 

 

 

 

 

 

 



Capital Accounts

 

Accumulated Other Comprehensive Income (Loss)

 

Total Membership Interests



Three Months Ended March 31, 2019

Balance at December 31, 2018

$

8,624 

 

$

(164)

 

$

8,460 

Net income

 

116 

 

 

 -

 

 

116 

Distributions

 

(71)

 

 

 -

 

 

(71)

Capital contributions

 

70 

 

 

 -

 

 

70 

Net effects of cash flow hedges

 

 

 

(4)

 

 

 -

Defined benefit pension plans

 

 -

 

 

 

 

Balance at March 31, 2019

$

8,743 

 

$

(167)

 

$

8,576 



Accumulated Other Comprehensive Income (Loss) (AOCI)



The following table presents the changes to AOCI for the three months ended March 31, 2020 and 2019, net of tax:



 

 

 

 

 

 

 

 



Cash Flow Hedges – Interest Rate Swaps

 

Defined Benefit Pension and OPEB Plans

 

Accumulated Other Comprehensive Income (Loss)

Balance at December 31, 2019

$

(18)

 

$

(121)

 

$

(139)

Defined benefit pension plans

 

 -

 

 

 

 

Cash flow hedges — net decrease in fair value of derivatives (net of tax benefit of $6) (Note 5)

 

(23)

 

 

 -

 

 

(23)

Balance at March 31, 2020

$

(41)

 

$

(120)

 

$

(161)



 

 

 

 

 

 

 

 

Balance at December 31, 2018

$

(16)

 

$

(148)

 

$

(164)

Defined benefit pension plans

 

 -

 

 

 

 

Amounts reclassified from accumulated other comprehensive income (loss) to capital account

 

(4)

 

 

 -

 

 

(4)

Balance at March 31, 2019

$

(20)

 

$

(147)

 

$

(167)















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8.    PENSION AND OPEB PLANS



Pension Plans



We sponsor the Oncor Retirement Plan and also have liabilities under the Vistra 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 Retirement Plan for certain employees whose retirement benefits cannot be fully earned under the qualified retirement plans.  See Note 10 to Financial Statements in our 2019 Form 10-K for additional information regarding pension plans.



OPEB Plans



We currently sponsor two OPEB plans. One plan covers our eligible current and future retirees whose services are 100% attributed to the regulated business.  Effective January 1, 2018, we established a second plan to cover EFH Corp./Vistra retirees and eligible current and future retirees whose employment services were assigned to both Oncor (or a predecessor regulated utility business) and the non-regulated business of EFH Corp./Vistra.  Vistra is solely responsible for its portion of the liability for retiree benefits related to those retirees.  See Note 10 to Financial Statements in our 2019 Form 10-K for additional information.



Pension and OPEB Costs



Our net costs related to pension plans and the Oncor OPEB Plans for the three months ended March 31, 2020 and 2019 were comprised of the following:



 

 

 

 

 

 



 

Three Months Ended March 31,



 

2020

 

2019



 

 

 

 

 

 

Components of net allocated pension costs:

 

 

 

 

 

 

Service cost

 

$

 

$

Interest cost

 

 

25 

 

 

32 

Expected return on assets

 

 

(27)

 

 

(30)

Amortization of net loss

 

 

12 

 

 

Net pension costs

 

 

18 

 

 

16 

Components of net OPEB costs:

 

 

 

 

 

 

Service cost

 

 

 

 

Interest cost

 

 

 

 

11 

Expected return on assets

 

 

(2)

 

 

(2)

Amortization of prior service cost

 

 

(5)

 

 

(5)

Amortization of net loss

 

 

 

 

Net OPEB costs

 

 

 

 

10 

Total net pension and OPEB costs

 

 

23 

 

 

26 

Less amounts deferred principally as property or a regulatory asset

 

 

(4)

 

 

(7)

Net amounts recognized as operation and maintenance expense or other deductions

 

$

19 

 

$

19 



The discount rates reflected in net pension and OPEB costs in 2020 are 3.12%,  3.26% and 3.29% for the Oncor Retirement Plan, the Vistra Retirement Plan and the Oncor OPEB Plans, respectively.  The expected return on pension and OPEB plan assets reflected in the 2020 cost amounts are 4.94%,  4.89% and 5.90% for the Oncor Retirement Plan, the Vistra Retirement Plan and the Oncor OPEB Plans, respectively.



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Pension and OPEB Plans Cash Contributions



We made cash contributions to the pension plans and Oncor OPEB Plans of $13 million and $10 million, respectively, during the three months ended March 31, 2020.  We expect to make additional cash contributions to the pension plans and Oncor OPEB Plans of $164 million and $25 million, respectively, during the remainder of 2020.  Our aggregate pension plans and Oncor OPEB Plans funding is expected to total approximately $571 million and $176 million, respectively, in the five-year period 2020 to 2024 based on the latest actuarial projections.    



9.   RELATED-PARTY TRANSACTIONS



The following represent our significant related-party transactions.  As a result of the Sempra-Sharyland Transaction, Sharyland became a related party as of May 16, 2019.



·

We are not a member of another entity’s consolidated tax group, but our owners’ federal income tax returns include their portion of our results.  Under the terms of a tax sharing agreement among us, Oncor Holdings, Texas Transmission and STH (as successor to EFH Corp.), we are generally obligated to make payments to our owners, 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.  STH will file a combined Texas margin tax return that includes our results and our share of 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 2019 Form 10-K under “Provision in Lieu of Income Taxes.”  Under the “in lieu of” tax concept, all in lieu of tax assets and tax liabilities represent amounts that will eventually be settled with our members.  In the 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 sheets consisted of the following:



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



At March 31, 2020

 

At December 31, 2019



STH

 

Texas Transmission

 

Total

 

STH

 

Texas Transmission

 

Total



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal income taxes payable (receivable)

$

 

$

 

$

 

$

(2)

 

$

(1)

 

$

(3)

Texas margin taxes payable

 

28 

 

 

-

 

 

28 

 

 

22 

 

 

-

 

 

22 

Net payable (receivable)

$

31 

 

$

 

$

32 

 

$

20 

 

$

(1)

 

$

19 



There were no cash payments made to (received from) members related to income taxes for the three months ended March 31, 2020 and 2019.



See Note 7 for information regarding distributions to and capital contributions from members.



·

Sharyland provided wholesale transmission service to us in the amount of $3 million and we provided Sharyland with substation monitoring and switching services of less than $1 million in the three months ended March 31, 2020.







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10.   SUPPLEMENTARY FINANCIAL INFORMATION



Other Deductions and (Income)



 

 

 

 

 

 



 

Three Months Ended March 31,



 

2020

 

2019



 

 

 

 

 

 

Professional fees

 

$

 

$

Recoverable pension and OPEB - non-service costs

 

 

14 

 

 

14 

AFUDC equity income

 

 

(5)

 

 

 -

Other, including interest income

 

 

 

 

 -

Total other deductions and (income) - net

 

$

13 

 

$

17 



Interest Expense and Related Charges



 

 

 

 

 

 



 

Three Months Ended March 31,



 

2020

 

2019



 

 

 

Interest

 

$

101 

 

$

88 

Amortization of debt issuance costs and discounts

 

 

 

 

Less allowance for funds used during construction – capitalized interest portion