TXU Board Approves Sale, New Owners Would Drop Plans For Most Coal Plants

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Over the weekend, we pondered what would happen to the 11 new coal-fired power plants that TXU is planning to build if they were in fact acquired by KKR.

Now, we have the answer. After news came that TXU’s board had agreed to the sale to KKR for $32 billion (and $12 billion in debt), it was also announced that eight of the 11 plants would be ashcanned as part of a deal between KKR and environmental groups:

The agreement to scale back TXU’s $10 billion plant-building effort — first reported Saturday by the Star-Telegram — will also include a wide array of clean-air initiatives designed to stave off opposition to the sale from environmental groups and increased scrutiny from congressional leaders who are considering legislation designed to reduce pollution from power plants.

The agreement will be formally announced today, sources involved in the negotiations said. The deal would affect eight electricity-generating units at the seven plants.

And, although earlier reports only mentioned Kohlberg Kravis Roberts, Fort Worth-based Texas Pacific Group is partnering with KKR for the purchase.
However, though eight of the 11 plants will be scuttled, one of the more controversial ones will still be going up, Oak Grove in Central Texas:

In addition, the agreement would allow the new owners to build the controversial Oak Grove power plant in Robertson County, which has been hotly contested by nearby residents and some elected leaders. A state administrative law panel last year recommended against permitting the plant because it did not use the best available pollution control technology.

If the deal sticks, it would be a major victory for environmental groups that have fought hard against the plant-building plan. Pollution from the plants would increase ozone in Waco and Dallas-Fort Worth and, according to a recent study by a Texas Christian University geologist, could send toxic mercury emissions as far away as Ohio and Illinois.

But, it does come with some other important concessions by KKR and Texas Pacific, as they will agree to:

Commit to cut emissions companywide by 20 percent, a commitment TXU had vowed to make, but only if it received permission to build the 11 plants.

Agree to slash emissions of carbon dioxide, the chief man-made contributor to climate change and a major environmental concern, to 1990 levels by 2020.
Agree to support congressional legislation capping emissions of carbon dioxides. TXU’s 11 proposed plants would have emitted 78 million tons a year.

Pledge to increase the amount of renewable energy sources that make up the company’s energy portfolio.

Here are the plants that TXU will not be building

Monticello plant in Titus County

Martin Lake plant in Rusk County

Lake Creek plant in McLennan County

Big Brown plant in Freestone County

Trading House plant in McLennan County; this plan called for two electric-generating units at the plant.

Valley Steam plant in Fannin County

Morgan Creek plant in Mitchell County

Written by Vince Leibowitz

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Vince Leibowitz posted this article under Texas Environment on Monday, February 26th, 2007 at 8:00 am You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a comment. Pinging is currently not allowed. View Technorati Linkbacks.