Sharyland Utilities Announces Transaction with Oncor and Agreement on Rate Case Dismissal; Deal Would Exchange Sharyland Distribution Business for Oncor Transmission Lines and Significantly Reduce Rat

DALLAS, July 24, 2017

This proposed transaction means that Sharyland's approximately 54,000 retail distribution customers will become Oncor customers and, as a result, will see significantly reduced regulated retail delivery rates.

"This provides significant rate relief for our retail distribution customers," said David A. Campbell, CEO of Sharyland Utilities and InfraREIT, Inc. "This transaction is the right thing to do for our customers and for the communities we serve.  We would like to thank the Staff of the Public Utility Commission of Texas, the Texas Office of Public Utility Counsel, and the other parties for working diligently and constructively with the companies to reach these agreements."

"Since our inception, Sharyland Utilities has been strongly committed to serving as a community-centric utility, providing our customers with safe, reliable, affordable power," said Hunter Hunt, Chairman of Sharyland Utilities. "We believe the most community-centric action we can take is to give our customers access to a world class utility like Oncor with the lowest rates in the State, and focus our forward strategy in support of the transmission infrastructure necessary for our communities to continue to grow and prosper."

Brian Lloyd, Executive Director of the Public Utility Commission of Texas (PUCT), commented, "I am immensely appreciative of Sharyland, SDTS and Oncor for the months of hard work that went into crafting these agreements.  This landmark settlement will provide substantial rate relief to Sharyland customers by rolling them into the much larger customer base of Oncor, a fair resolution to Oncor's rate case, and regulatory certainty for these utilities and their customers.  I am proud to have the PUCT Staff join the other signatories in presenting these agreements to the Commissioners for their prompt consideration."

Specific details of the proposed transaction include:

• Sharyland and SDTS will transfer to Oncor their retail distribution assets and retail distribution operations located in their Stanton, Brady, and Celeste (SBC) service territories, as well as their McAllen service territory.
• Oncor will transfer to SDTS transmission lines of similar value located in West and Central Texas, which Sharyland will operate on behalf of SDTS.
• Along with the assets transferred by Oncor, Sharyland and SDTS will retain their transmission system in the Texas Panhandle and their transmission assets and substations in the Stanton and McAllen service territories.
• Once all required approvals are obtained and the transaction closes, after a brief transition period Sharyland's retail distribution customers in all of its service territories will transfer to Oncor and Oncor's tariff schedule.
• Sharyland's retail distribution customers in its SBC territories will receive a significant reduction in their regulated delivery rates.
• For Sharyland's retail distribution customers in its McAllen territory, this transaction will prevent the anticipated rate increases that were proposed in Sharyland's pending rate case.
• In the interim, Sharyland will reduce its base distribution rates by approximately 10 percent for its residential customers in its SBC service area. This interim rate relief for residential customers will reflect a $3 million decrease in Sharyland's retail distribution revenue requirement on an annualized basis. Sharyland is seeking regulatory approval for the interim rate relief and hopes that it will take effect in the next 60 days and remain in effect until customers are transitioned to Oncor after the transaction closes.
• Upon closing of the transaction, the rate case for Sharyland and SDTS will be dismissed.
• Going forward, Sharyland will operate transmission assets and substations and will serve as a transmission service provider.

"We are excited and optimistic about our current and expanding transmission business," said Campbell.  "Texas continues to experience electric load growth, the addition of renewables generation, and the ongoing modernization of the grid, and Sharyland looks forward to supporting the infrastructure needs of the state."