If you have an ACS member number, please enter it here so we can link this account to your membership. (optional)

ACS values your privacy. By submitting your information, you are gaining access to C&EN and subscribing to our weekly newsletter. We use the information you provide to make your reading experience better, and we will never sell your data to third party members.



Texas Utility Goes Green

TXU deal may lead to cleaner electricity generation plan

by Jeff Johnson
March 5, 2007 | A version of this story appeared in Volume 85, Issue 10

Credit: TXU
With 18,300 MW of generation, TXU is Texas' largest retail electricity provider.
Credit: TXU
With 18,300 MW of generation, TXU is Texas' largest retail electricity provider.

THE LARGE Texas-based electric utility TXU has agreed to trim back a controversial plan to construct 11 new coal-fired power plants in the state and also to implement several "green" initiatives. These actions are part of a buyout agreement with an investor consortium led by Kohlberg Kravis Roberts & Co., Texas Pacific Group, and Goldman Sachs Group. The deal includes terms negotiated with several national environmental groups.

The investors will spend $45 billion to acquire TXU, and if the deal goes through, it will mark the largest ever leveraged private equity buyout. Still to come, however, is approval by stockholders and regulators, as well as the possibility that other bidders may seek to purchase the utility before the deal goes final 50 days from the Feb. 26 agreement.

TXU had planned to construct some 9,000 MW of new coal-fired power-plant capacity, and the company enjoyed the support of the Texas governor and others. But that proposal drew firm opposition from a mix of residents, environmental groups, and state pension fund administrators who promised to use shareholder resolutions to challenge the costs, environmental impact, and long-term financial consequences of building new coal plants in a greenhouse-gas-constrained world.

Growing opposition along with permit delays, difficulty in moving sufficient amounts of coal to Texas, and possible construction workforce shortages led TXU to consider and finally accept the buyout offer, says Kim Morgan, a TXU spokeswoman. "This investor group brings a knowledge base, skill set, and technical expertise that just made the most sense for us," she adds.

TXU still plans to build three coal plants. To meet future consumer electricity needs, TXU also has committed to spend $400 million for efficiency and conservation efforts to reduce demand, double its purchase of wind energy to 1,500 MW, and move toward greater use of natural gas to generate electricity.

TXU also announced its intention to join a clean-coal-technology consortium and will explore siting a coal-gasification power plant in the state.



This article has been sent to the following recipient:

Chemistry matters. Join us to get the news you need.