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TXU going green in $45 billion deal

Tuesday, 27 February 2007

US utility giant TXU is announcing a new environmental focus, including plans to abandon plans for eight new coal-fired power stations and devote itself to supporting mandatory limits on power-plant emissions, as well as cutting power demand in its home state of Texas.

The move comes as part of the takeover of TXU in the "biggest ever private equity deal" by private equity firms Texas Pacific Group and Kohlberg Kravis Roberts (KKR), with Goldman Sachs, Leman Brothers, Citigroup and Morgan Stanley investing in the equity portion of the transaction. The takeover has received the blessing of environmental groups.

By building three new coal-fired plants instead of the 11 plants as planned, TXU claims it will save the emission of 56 million tonnes of carbon dioxide. Coincidentally, scrapping the coal projects is a huge potential saving in capital expenditure, with each of the plants costing up to $1 billion to build. The company is also announcing increased investment in alternative energy technology, a commitment to renewable energy, and pledges to support carbon emission regulation. It says that it will not reapply for permits to build further plants using current pulverised coal technology. TXU plans to double its purchase of wind power to 1500 MWe.

Nuclear plans have not been cited in TXU�s new green ethos, although TXU owns and operates two 1150 MWe pressurised water reactors at Commanche Peak and has previously announced plans to file for construction and operating licences in 2008 to build up to 6000 MWe of new nuclear capacity which would enter service between 2015 and 2020.

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