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TXU buyout rings hollow to some enviros |
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While the participants in last week's $45 billion buyout of TXU Corp. are trumpeting a provision to scale back TXU's controversial plans to build 11 new coal-fired power plants in Texas to three, groups outside the deal are saying the environmental negotiators should have held out for more.
TXU tentatively agreed last week to sell itself to a group of private firms that includes Kohlberg Kravis Roberts, Texas Pacific Group, GS Capital Partners, Lehman Brothers, Citigroup and Morgan Stanley. TXU has not committed to the offer and has contacted Apollo Management, Blackstone, Carlyle, Hellman & Friedman and Warburg Pincus to solicit competing bids.
In the portion of the deal approved by the advocacy groups Environmental Defense and Natural Resources Defense Council in exchange for dropping their legal challenges to TXU's construction plans, KKR and Texas Pacific will forego eight plants, build three and rely on expanded investments in renewables and energy efficiency to make up the difference. The plan includes $400 million in demand side management programs (Greenwire, Feb. 27).
But newly revealed details of the agreement indicate loopholes would allow TXU to "apply or reapply" for permits for the scuttled plants. TXU CEO C. John Wilder said in a conference call with investors last week that the utility would not build coal-fired plants "unless our customers face reliability issues, shortages leading to higher prices, or our competitors propose plants that are expected to have a meaningful impact on market dynamics."
Those conditions could be met as early as 2009, as Texas grid operator Electric Reliability Council of Texas has said it foresees reserves possibly becoming endangered by then.
Another objection raised by smaller environmental groups is that TXU had already been considering killing some plants before the deal. As Wilder said in his call to investors, TXU was already "reshaping our development program to focus on a smaller number of plants" when the buyout group approached with an offer.
Tim Hernach of the Oregon-based Native Forest Council said NRDC and Environmental Defense "should be hung for what they've done." He and others said the groups should have held out for all the plants to be shelved.
NRDC Climate Center Director David Hawkins dismissed the criticism. He said he had not known before the deal that TXU was considering scaling back its plans, but said he was not surprised given the obstacles they faced. He also denied accusations that his organization has been co-opted by big businesses in exchange for recognition. "We've been around long enough that we don't flatter very easily," he said (Smith/Carlton, Wall Street Journal, March 3).
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