Subsequent Events

9 Months Ended

Sep. 30, 2016

Subsequent Events [Abstract]

Subsequent Events

17.Subsequent Events

As a result of a preliminary order issued by the PUCT in October 2016, Sharyland and SDTS are required to:

• File amended rate filing packages no later than January 1, 2017;

• Amend the rate case application to request PUCT approval of a tariff establishing terms and conditions for the leases between Sharyland and SDTS; and

• Amend the rate case application to request the PUCT to issue SDTS its own certificate of convenience and necessity.

The preliminary order also contemplates that we will replace the five current lease agreements between Sharyland and SDTS with two leases, one for transmission assets and one for distribution assets. The preliminary order provides that the PUCT’s determinations in the rate case will supersede prior orders to the extent of any conflict, but will not rescind the PUCT’s 2008 approval of the transfer of T&D assets from Sharyland to SDTS. As a result of the PUCT’s regulation of our leases as part of a PUCT approved tariff for SDTS, the rent that we are permitted to charge Sharyland under the leases will be established and approved by the PUCT. We also expect that other rate case issues, such as the allowed return on equity, capital structure, cost of debt and income tax allowance, will be determined by the PUCT’s final order at the conclusion of the rate case. The timing and outcome of the rate case is uncertain, although we currently expect it to be completed during 2017.