DALLAS, Feb. 27, 2024 /PRNewswire/ — Oncor Electric Delivery Company LLC (“Oncor”) today reported twelve months ended December 31, 2023 net income of $864 million compared to twelve months ended December 31, 2022 net income of $905 million. This $41 million decrease was driven by higher costs associated with increases in invested capital (primarily borrowing costs and depreciation), higher operation and maintenance expense (primarily regulatory asset amortization and self-insurance reserve accrual recovery amounts in new base rates) and the write-off of rate base disallowances recorded in the first quarter of 2023 resulting from the Public Utility Commission of Texas’ (“PUCT”) final order in Oncor’s comprehensive base rate review in PUCT Docket No. 53601, partially offset by higher revenues primarily attributable to updated interim rates to reflect increases in invested capital, increases in transmission billing units as a result of certain increases in average Electric Reliability Council of Texas, Inc. (“ERCOT”) peak demand, the new base rates implemented May 1, 2023 following the PUCT’s final order in the base rate review and customer growth.
“Texas continues to secure major investments from world-class companies like Oncor to further bolster our critical infrastructure and the resiliency of the Texas electric grid,” said Governor Greg Abbott. “Oncor’s announcement today of a new $24.2 billion, five-year capital expenditures plan is a testament to Texas’ ongoing partnerships with companies to boost economic growth in our state in tandem with making our state’s electric grid more reliable and resilient for generations to come. As Texas’ population and economy continues to grow, I look forward to continuing to work with electricity providers like Oncor to help build an even bigger, better Texas for all.”
“As we reflect on our performance in the fourth quarter, and throughout 2023, it’s clear that we’re on an extraordinary and diverse growth path across our service area. This growth is driving our largest-ever capital plan, which will expand our investments in the ERCOT market and also help make our service more reliable, helping to better serve both new and existing customers,” said Oncor CEO Allen Nye. “We also expect our first system resiliency plan filing later this year will lay out additional strategic investments in system hardening and modernization, enhanced vegetation management, wildfire mitigation, new technology and other resiliency measures over a three-year period. This will help us deliver a safer, smarter and more resilient electric grid for our state. As Texas continues to grow, it’s crucial that we continue to build the electric infrastructure needed for the coming demand.”
Oncor’s reported net income of $181 million in the three months ended December 31, 2023 compared favorably to net income of $164 million in the three months ended December 31, 2022. This $17 million increase was driven by higher revenues primarily attributable to updated interim rates to reflect increases in invested capital, the new base rates implemented May 1, 2023 and customer growth, partially offset by higher costs associated with increases in invested capital (primarily borrowing costs and depreciation), higher operation and maintenance expense (primarily regulatory asset amortization and self-insurance reserve accrual recovery amounts in new base rates) and lower customer consumption due to milder weather in the quarter.
Oncor’s total distribution base revenues in the twelve months ended December 31, 2023 as compared to the twelve months ended December 31, 2022 increased 7.4% (9.2% increase on a weather-normalized basis). The change in Oncor’s total distribution base revenues in the twelve months ended December 31, 2023 included a 9.8% increase in distribution base revenues from residential customers (13.9% increase on a weather-normalized basis) and an 8.2% increase in distribution base revenues from large commercial and industrial (“LC&I”) customers. Oncor’s total distribution base revenues in the three months ended December 31, 2023 as compared to the three months ended December 31, 2022 increased 11.3% (15.2% increase on a weather-normalized basis). The change in Oncor’s total distribution base revenues in the fourth quarter of 2023 included a 15.5% increase in distribution base revenues from residential customers (24.0% increase on a weather-normalized basis) and a 13.5% increase in distribution base revenues from LC&I customers. Financial and operational results are provided in Tables A, B, C, and D below.
Growth Within Oncor’s Service Territory
Oncor experienced another strong year in 2023 with solid growth in premises and the construction of new transmission and distribution lines, as well as the setting of new year-end company records for transmission point-of-interconnection (“POI”) requests, all while remaining focused on safety and reliability.
Ongoing growth within Texas as a whole, and Oncor’s service territory in particular, continues to be a driver of distribution and transmission operational activity. Oncor increased its premise count by 73,000 in 2023 as compared to 64,000 in 2022. Additionally, Oncor placed approximately $1.6 billion of transmission projects into service in 2023. The continued growth across Oncor’s service territory resulted in the construction or upgrading of approximately 390 circuit miles of transmission lines and included 42 major substation projects and 34 major switching station projects, all being placed into service in 2023. The dynamic growth across Oncor’s service territory results in the continued opportunity to deploy capital to grow the Oncor system.
In 2023, Oncor set company records for annual active and new generation and retail transmission POI requests in queue. At December 31, 2023, Oncor had 763 active generation and retail transmission POI requests in queue, representing a 25% increase as compared to December 31, 2022. Of the 481 active generation POI requests in queue at December 31, 2023, 46% are solar, 42% are storage, 9% are wind and 3% are gas. Additionally, in 2023, Oncor entered 332 new generation and retail transmission POI requests into queue, representing a 19% increase as compared to 2022.
Oncor’s service territory continues to be vibrant, diverse and growing and has seen significant growth in commercial and industrial customers representing electric loads that are substantially larger than traditional commercial projects. Data center development continues to be robust across the Oncor service territory, including new sites that have the potential to support hyperscale computing and generative artificial intelligence services. These projects represent the potential for hundreds of megawatts of new electric load.
Capital Plan Update
Capital expenditures totaled approximately $3.8 billion in 2023. Oncor’s board of directors has approved a capital expenditures budget of approximately $4.5 billion for 2024. Oncor currently contemplates that its aggregate capital expenditures plan over the five-year period 2024-2028 will total approximately $24.2 billion, plus additional amounts attributable to capital expenditures associated with system resiliency plans (“SRPs”) pursuant to recently enacted Texas House Bill 2555 and related rules promulgated by the PUCT. SRPs are required to cover a minimum three-year period, and Oncor currently targets filing its first three-year SRP with the PUCT in the first half of 2024. Texas House Bill 2555 contemplates that the PUCT will review and approve, modify or deny a filed SRP within 180 days.
The increase in Oncor’s five-year capital plan compared to its prior five-year capital plan is due primarily to continued projected growth and expansion of its system, particularly on the transmission side of Oncor’s business as a result of the large volume of customer interconnection requests and generator interconnection requests that it has received through 2023 and expects to continue to receive. The increase is also partially driven by higher material costs due to tightening supply chains as well as increases in labor and contractor costs. In addition, Oncor anticipates that significant potential capital investment opportunities incremental to its five-year capital plan may be available as a result of continued growth in ERCOT, particularly on the transmission side of its business due to increased customer demand and additional distribution-related reliability and resiliency needs.
Operational Highlights
Oncor’s employees helped to ensure Texans had reliable power in 2023 as the state experienced significantly higher than normal summer temperatures in 2023. The ERCOT market saw 10 new peak demand records and reached a new all-time record peak demand of 85,508 megawatts on August 10, 2023, reflecting a 6.7% increase over the prior year’s peak. For the industry’s primary benchmark for reliability, System Average Interruption
Duration Index (non-storm), Oncor’s customers experienced on average five fewer minutes of outage in 2023 compared to 2022 – an improvement of approximately 7%. The extreme heat experienced during the summer months of 2023 and extreme cold spell experienced in early January 2024, when ERCOT set a new record winter peak of 78,138 megawatts, demonstrate the continuing need for, and effectiveness of, system hardening and resiliency projects.
In the fourth quarter of 2023, Oncor completed its annual review of its wildfire mitigation plan, which contains focused initiatives in areas such as asset management, operational protocols, vegetation management, system protection technology and stakeholder engagement. Oncor’s wildfire mitigation strategy also includes a risk modeling tool, through which various risk factors are analyzed to inform long-term initiatives and real-time operational protocols, such as identification of wildfire mitigation zones. Oncor anticipates building on these efforts through new investments in wildfire mitigation in its inaugural SRP.
Oncor continued to be active in sustainability matters in 2023. In May, Oncor published its green bond spend report relating to its inaugural green bond issuance. In October, an independent third party environmental, social and governance (“ESG”) ratings company issued its annual ESG risk rating of Oncor, improving Oncor’s rating and ranking Oncor in the top 2 percent of electric utilities rated by that company at that time, reflecting lower ESG risk. Also, in 2023, Oncor was named as a 2023 Best Places to Work for Disability Inclusion by Disability:IN.
Liquidity
As of February 26, 2024, Oncor’s available liquidity, consisting of cash on hand and available borrowing capacity under its existing credit facilities, commercial paper program and accounts receivable facility (“AR Facility”), totaled $2.5 billion. Oncor expects cash flows from operations combined with long-term debt issuances and credit agreements as well as availability under its existing credit facilities, commercial paper program and AR Facility to be sufficient to fund current obligations, projected working capital requirements, maturities of long-term debt and capital expenditures for at least the next twelve months. Oncor currently expects to issue approximately $2.0 billion of long-term debt securities in 2024.
Sempra Internet Broadcast Today
Sempra (NYSE:SRE) (BMV:SRE) will broadcast a live discussion of its earnings results over the Internet today at 12 p.m. ET, which will include discussion of 2023 results and other information relating to Oncor. Oncor Chief Executive Allen Nye will also participate in the broadcast. Access to the broadcast is available by logging onto the Investors section of Sempra’s website, sempra.com/investors. Prior to the conference call, an accompanying slide presentation will be posted on sempra.com/investors. For those unable to participate in the live webcast, it will be available on replay a few hours after its conclusion at sempra.com/investors.
Annual Report on Form 10-K
Oncor’s Annual Report on Form 10-K for the year ended December 31, 2023 will be filed with the U.S. Securities and Exchange Commission after Sempra’s conference call and once filed, will be available on Oncor’s website, oncor.com. The annual financial statements of Oncor Electric Delivery Holdings Company LLC (which holds 80.25% of Oncor’s outstanding equity interests and is indirectly wholly owned by Sempra) for the year ended December 31, 2023 will be included as an exhibit to Sempra’s Annual Report on Form 10-K for the year ended December 31, 2023.
Oncor Electric Delivery Company LLC
Table A – Statements of Consolidated Net Income
Three and Twelve Months Ended December 31, 2023 and 2022; $ millions
Q4 ’23
Q4 ’22
TME ’23
TME ’22
Operating revenues
$ 1,359
$ 1,263
$ 5,586
$
5,243
Operating expenses:
Wholesale transmission service
326
300
1,291
1,162
Operation and maintenance
320
287
1,150
1,055
Depreciation and amortization
249
232
978
904
Provision in lieu of income taxes
39
39
185
201
Taxes other than amounts related to income taxes
124
129
552
561
Write-off of rate base disallowances
–
–
55
–
Total operating expenses
1,058
987
4,211
3,883
Operating income
301
276
1,375
1,360
Other (income) and deductions – net
(21)
1
(31)
20
Non-operating provision (benefit) in lieu of income taxes
1
(3)
(8)
(10)
Interest expense and related charges
140