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TXU Nixes Plans for Eight Coal-Fueled Power Units

Apr 1, 2007 12:00 PM

Shortly after reaching a reported $45 billion definitive merger agreement led by Kohlberg Kravis Roberts & Co. (KKR, New York City), Dallas-based utility giant TXU Corp. officially suspended efforts to obtain permits for eight coal-fueled power units in Texas.

The company filed a Motion to Stay on February 28 with the State Office of Administrative Hearings (SOAH) for seven coal-fueled power units under consideration in contested proceedings before SOAH. Moreover, TXU halted permitting activities related to an eighth permit that was not part of the contested proceedings.

“Upon closing the merger agreement, TXU does not intend to apply or reapply for permits to build additional coal units utilizing current pulverized coal-fuel technology,” said Mike McCall, CEO, TXU Wholesale.

What does this mean for Texas, one of the fastest growing and second most populous states in the country? On the plus side, TXU says the reduction in coal-fueled generation units will prevent 56 million tons of annual carbon emissions. In a press release issued by the company, TXU says it will support the mandatory cap and trade program to regulate carbon emissions, and “will become a leader in providing electricity from renewable sources by more than doubling its purchase of wind power to more than 1,500MW.” The company also intends to promote solar power through solar/photovoltaic rebates, as well join the FutureGen Alliance, a non-profit consortium of companies supporting FutureGen, the U.S. Department of Energy project intended to create the world's first new-zero-emissions fossil-fuel power plant.

On the other hand, the 75% reduction in new coal capacity has raised concern about a possible electricity shortage. To allay these fears and to satisfy the Electric Reliability Council of Texas' (ERCOT) requirement for immediate additional capacity to meet the state's growing electricity needs, TXU expects to build two coal units at the Oak Grovesite and one coal unit at the Sandow site. In addition, the utility will invest $400 million in demand side initiatives, as well as create an independent Sustainable Energy Advisory Board comprised of individuals who represent ERCOT reliability standards, Texas economic development, the environment, and customers.

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