Posted in Coal, Consumers, Energy, natural gas, Texas Legislature, tagged coal plant, Energy, energy future holdings, Moody, Private equity, Public Citizen, public citizen texas, Texas, Texas Legislature, wall street on June 7, 2012 |
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Energy Future Holdings, formerly TXU, of Dallas might be looking for a handout – from you.
Back in January, Moody’s changed Energy Future Holdings Corp’s rating outlook to negative and made it impossible to ignore what anyone who had been paying attention to the company’s quarterly reports already knew: Energy Future Holdings is on a path heading towards bankruptcy. Now there are rumors floating around that the company may ask the Texas Legislature to approve a public or ratepayer-funded bailout.
Neither option would benefit majority of Texas citizens and we urge everyone to sign our petition in opposition to any bailout proposal for Energy Future Holdings.
You might wonder how the profitable TXU end up as the failing Energy Future Holdings. The answer is twofold.
First, in Texas, electricity prices are set based on the price of natural gas. When natural gas prices were high, this meant that coal-fired power plants could reap additional profit. This made TXU an attractive acquisition because the company owned many coal-fired power plants. But now, natural gas prices have plummeted and those same coal-fired power plants, especially the oldest and most inefficient, are dragging Energy Future Holdings down. The private equity investors made a big bet on the wrong energy source.
The second problem is that Energy Future Holdings was acquired in a leveraged buyout. What that means is that instead of the investors paying the full amount to buy TXU, they financed the deal partially through loans to the company. While the company has done a good job of staving off the day of reckoning by refinancing many of those loans, many are approaching maturity and additional refinancing options are limited by the negative prospects for the company.
So, while TXU was a profitable company with relatively low debt, Energy Future Holdings is an unprofitable company (because of low natural gas prices) with massive debt (because of the leveraged buyout) that is approaching maturity. This isn’t a good combination and some people are going to lose money on the deal (many already have). However, those losses shouldn’t be placed on Texas taxpayers or ratepayers.
Tell your state representatives and senators that you oppose bailing out failed corporations.
Most of us have to live with the consequences of our bad decisions. Help us make sure that Wall Street and private equity firms must do the same.
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Here’s some great news! With EPA tightening the standards for coal plant emissions, Energy Future Holdings, the parent company of Luminant (formerly TXU) and the major electric power provider for much of North and West Texas, is considering how to respond to new federal clean-air regulations. Yesterday they announced they will mothball 3 coal plants in Northeast Texas.
In a filing with the U.S. Securities and Exchange Commission, the company said it was looking at all options including other shutdowns or slowdowns, as well as seasonal or temporary shutdowns, and the option of installing scrubbers to remove sulfur dioxide from plant emissions, or even switching fuels to fire the furnaces that generate the steam used to generate electric power.
This will significantly improve air quality and the health of people that live near the plants and downwind. The company is concerned about the expense of controls that would be needed for these old and dirty plants.
CPS Energy in San Antonio is already planning to mothball and then retire Deely 1 & 2 coal plants for the same reasons.
Blue skies smiling at me,
Nothing but blue skies do I see
Ozone days, all of them gone
Nothing but blue skies from now on
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Posted in Energy, solar, tagged 82nd legislature, carrollton, dallas, democrats, distributed energy, energy future holdings, environment texas, farmers branch, females, green jobs, hispanics, incentives, irving, jobs, legislator of the year, males, manufacturing, market development, mccall johnson, oncor, Public Citizen, public utility commission, PUC, rafael anchia, republicans, retail electric providers, silicon, solar, solar power, solarcity, TXU on March 12, 2010 |
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Great joint op-ed by our friend McCall Johnson over at Environment Texas and State Rep. Rafael Anchia, winner of Public Citizen’s Legislator of the Year award. Following on the heels of TXU’s announcement last week that it will offer customers an affordable solar leasing program, the gist of it is that we can’t let the momentum for solar wane whenever the program’s money runs out. Sounds like Rep. Anchia may have some ideas for a legislative fix, check it out… (more…)
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