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Oncor reports a $60 million boost in profits from Texas’ summer heat wave

The state’s largest regulated utility says the rise in electric demand was directly tied to ‘one of the hottest summers here in Texas in recent memory.’

Dallas-Fort Worth’s searing summer heat is boosting the bottom line of Oncor, the state’s largest regulated utility, by $60 million for the three-month period that ended June 30.

Dallas-based Oncor’s quarterly profit soared to $229 million — up from $169 million during the same months last year — as sweltering temperatures drove electricity demand to new highs. The quarterly results didn’t even include July, which was one of the region’s hottest months on record.

Oncor doesn’t sell electricity directly to consumers. Instead, it makes money by delivering it through power lines, and customers pay for that service based on their usage, meaning higher demand translates directly to higher revenue for Oncor.

“It has been a great quarter, and I am so proud of our financial and operational performance,” said Oncor CEO Allen Nye in a statement. “The second quarter brought on record heat, beginning one of the hottest summers here in Texas in recent memory. That heat has led to several new peak demand records, with ERCOT peak demand of nearly 80,000 megawatts for the first time in July. Our vibrant and growing market will require new generation, transmission and distribution resources, and Oncor stands ready to make the investments necessary to support the needs of our market and our growing state.”

Aside from higher power use, Oncor outlined updates to its transmission and distribution rates, invested capital, customer growth and increased operation as contributing factors to the profits.

“We added 19,000 additional premises and saw a 73% increase in new transmission point-of-interconnection requests in the second quarter,” Nye said. “This represents an all-time record.”

The company received service requests for 110 new housing subdivisions in June, the most in any single month, Nye said, and July requests were up 40% above what was forecasted.

Nye also highlighted an increase in major manufacturing expected to arrive in Oncor’s service territory over the next several years.

A $5 billion silicon wafer manufacturing facility being built by GlobiTech has been approved, on top of another $30 billion semiconductor wafer manufacturing plant project being undertaken by Texas Instruments, both in Sherman. A Samsung chip manufacturing facility, estimated at $17 billion, is also coming to Taylor in Central Texas.

“The Oncor service territory has become a powerhouse for advanced, highly skilled manufacturing critical to the future economic and national security of the United States,” Nye said.

Oncor’s parent company, San Diego-based Sempra, attributed $48 million of its total quarterly profits to Texas based on higher customer consumption and growth and increased invested capital in the state. Sempra Texas was the highest earner within the company in the second quarter, ahead of Sempra California.

In April, Oncor expanded its capital spending to $3 billion this year in anticipation of service territory growth and inflation. At the end of June, Oncor had 525 active requests for transmission connections, with 51% solar, 35% storage, 9% wind and 4% gas.

“In recent weeks, ERCOT has set records for peak electrical demand. As a grid operator, Oncor has been doing its part to help maintain grid reliability during these extreme weather events while also executing against a record $15 billion capital plan for 2022-2026,” said Sempra chief financial officer Trevor Mihalik during an earnings call Thursday with analysts.

Mihalik said Sempra expects Oncor to expand its investment program again this fall.

Oncor’s record profits come as the company also seeks to raise its base rates by 4.5% to give it an additional $251 million in annual revenue. Oncor filed for a rate hike on May 13 with the Public Utility Commission of Texas, which must approve any change in the company’s pricing.

“Right now, we are in the discovery phase of the proceedings,” said Nye in the earnings call. “Discovery will end on our direct case on the 22nd of this month, intervenor testimony is due on Aug. 26, and staff testimony is due on Sept. 2nd.”

If the changes are not settled by the PUC, the request will go to a hearing beginning on Sept. 26.

“We’re going to work very hard to try and find something that benefits us, our state, and our customers,” said Nye of the pending rate case.

Oncor anticipates the new rates, once approved, would go into effect by the end of the first quarter of 2023.

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