NEW YORK (February 24, 2007) – The record-setting buyout of the utility giant TXU being proposed by a group of top private equity investors includes an unprecedented set of commitments developed in close consultation with leading environmental experts to reverse the company’s drive to build a new fleet of high-emission coal power plants in favor of a new strategy focused on energy efficiency, clean technology and a commitment to cut global warming pollution, according to the Natural Resources Defense Council (NRDC), which has been involved in the extensive negotiations.
“This turnaround marks the beginning of a new, competitive focus on clean, efficient, renewable energy strategies to deliver the power we need while cutting global warming emissions,” said NRDC President Frances Beinecke. “It is a big step forward for the State of Texas and for the American energy economy as a whole.”
Arrangements with the two buyout firms, Kohlberg Kravis Roberts & Co. and Texas Pacific Group, include a commitment to withdraw permit applications for eight of eleven pulverized coal power plants proposed in Texas. The prospective owners would also throw their support behind a mandatory nationwide limit on global warming emissions paired with a market-based emissions trading system. They also say they will endorse the positions of the recently-announced U.S. Climate Action Partnership, and will seek to formally join the group of companies and environmental organizations already involved.
The new company would aim to limit its total CO2 emissions from its generating operations and reduce them over time, and pledge not to propose any additional traditional pulverized coal plants outside Texas.
“What we’re witnessing is the beginning of the end of investments in old-fashioned coal plants,” said David G. Hawkins, a former top EPA official with more than 35 years experience in utility environmental issues, who heads NRDC’s Climate Center. “These are very big investors coming to the energy table with very big ideas about where the competitive market is heading. Strategies to fight global warming and save energy are crucial for anyone hoping to succeed in today’s electricity industry.”
The new investors also plan to invest $400 million in initiatives to help customers reduce their energy needs over the next five years, a strategy known as “demand-side management” (DSM), as a way to meet Texas energy needs while reducing the need to build expensive new generating capacity. The company will also expand its investment in energy generated from renewable sources including wind and solar, and take steps to increase its own energy efficiency.
The bidders say they will also begin to explore a variety of new coal generating technologies including integrated combined cycle gasification (IGCC) and flue gas/algae carbon capture.
Finally, executive compensation and performance measurement at the new company would be tied directly to the climate protection goals. There will also be a new, impartial Sustainable Energy Advisory Board consisting of experts in carbon-neutral energy technologies, environmental policy, and Texas reliability standards.