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Posts Tagged ‘Luminant Generation Company LLC’

Today the Dallas County Medical Society filed a petition with the Texas Commission on Environmental Quality asking the agency to adopt rules to reduce the pollution from three old coal-fired power plants that contribute disproportionately to high ozone levels in Dallas-Fort Worth and East Texas.

“Evidence is overwhelming that our high ozone levels are causing increasing numbers of area children to develop asthma, and are contributing to the many asthma attacks, chronic lung disease exacerbations, and heart attacks we see every day in our emergency rooms, clinics and hospitals,” said Robert Haley, MD, a Dallas internist and epidemiologist. “A large body of medical research shows that more people of all ages develop respiratory illnesses and die prematurely in cities with high ozone levels, and we have among the highest ozone levels in the country.”

To address this issue, DCMS and the Texas Medical Association sponsored a study by Daniel Cohan, PhD, an environmental engineering scientist at Rice University, to review all the scientific information about ozone pollution in North Texas and identify ways to reduce ozone levels without compromising the state’s energy grid or jobs. Click here for study. 2013 white paper august 1 2013

“The Cohan Report identified these three very old coal-fired power plants south and east of Dallas, built in the 1970s, that have never been required to meet current emission limits and which contribute disproportionately to ozone levels in the Dallas-Fort Worth area,” according to Cynthia Sherry, MD, DCMS president. “With the impending bankruptcy of the plants’ owner, Energy Future Holdings, the plants likely will change hands.” The petition asks that the TCEQ require these plants to meet the same low emission levels for ozone-forming gasses that are required of the company’s two newer lignite-fired power plants. “This is the time to require that the plants lower their emissions to protect the health of North Texans,” Dr. Sherry said.

The three power plants are Big Brown near Fairfield, Martin Lake near Longview, and Monticello near Mount Pleasant.

“Because of their age, these three plants emit large amounts of pollution for a relatively small amount of electricity produced,” said   Cohan, the report’s author. “Today’s technologies offer economically more attractive alternatives that would be far less polluting.”

According to the report, a combination of natural gas, geothermal, coastal wind, and solar production could replace the energy production capacity — and the East Texas jobs — of the three old coal plants at equivalent prices to Texas ratepayers. East Texas, where the three coal plants operate, has uniquely amenable geologic characteristics that make geothermal power generation unusually attractive.

Energy Future Holdings, an investment group that purchased the power plants from TXU, is facing bankruptcy because the drop in energy prices from the boom in natural gas production has reduced the profitability of coal. It also faces new requirements to control mercury emissions, and the Environmental Protection Agency is formulating additional requirements for controls on CO2 emissions.

“The financial press is predicting bankruptcy or restructuring of Energy Future Holdings,” according to Tom “Smitty” Smith of Public Citizen’s Texas office.  “The petition by the physicians and environmental groups will put the company or new owners on notice that they can’t keep running these old, polluting plants without investing in new pollution controls. Concerned citizens can add their names to the petition by visiting PETITION WEB SITE.”

The petition can be found at http://www.ipetitions.com/petition/tceq-please-clean-up-northeast-texas/

To comment on the petition, go to  http://www10.tceq.state.tx.us/epic/efilings/ . To submit comments, use Docket No. 2013-1612-RUL, which was assigned to this Petition for Rulemaking (Dallas County Medical Society Petition: EPA-Compliant Pollution Control on Old Coal Plants).

The scientific report can be found at www.dallas-cms.org/news/coalplants.pdf.

“Bad air day: Report details power plant dangers,” Texas Medicine, June 2013, pp. 45-49, accessed at: http://www.texmed.org/Template.aspx?id=23977

 

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NPR’s State Impact reported this morning that Energy Future Holdings (formerly TXU) has “self-bonded” approximately $1 billion for future mining restoration in Texas in lieu of real cash bonds. Click here to hear the entire story.

In the transcript of the story it discusses the main concerns of Public Citizen and Sierra Club who have been investigating this issue for the past six months.

At the heart of the two groups’ (Public Citizen and Sierra Club) concern is what’s called “self-bonding.” Under federal law, mining companies must post bonds as a form of insurance to cover the cost of reclamation in case the companies run into financial trouble. Instead of using an outside company to provide the bonds, mining operators in Texas are allowed to self-bond. Some coal states don’t accept self-bonding.

Texas has approved Luminant Mining’s self-bonding. The self-bond’s “third party guarantor” is a sister company, Luminant Generation. It’s the power plant company that burns the coal from Luminant Mining.

The environmentalists say they’re worried that those power plant assets might also be claimed by other creditors, jeopardizing the funds Texas might recover to pay for reclamation.

Luminant’s parent company, Energy Future Holdings, has explained in annual reports to the United States Securities and Exchange Commission that the company faces creditworthiness requirements for different regulators in Texas, among them the Railroad Commission. For years,  the reports said that “we believe we will have adequate liquidity to satisfy such requirements” or “we believe we would have adequate liquidity capacity and/or financing capacity to satisfy such requirements.”

But then, in a 2012 report, that line disappeared.

“It was the smoking gun,” said Public Citizen’s Smitty Smith.

On page 100 of EFH’s 2008 10K filing, page 100 of EFH’s 2009 10K filing, page 98 of EFH’s 2010 10K filing, and page 93 of EFH’s 2011 10K filing, the following appears

The RRC has rules in place to assure that parties can meet their mining reclamation obligations, including through self-bonding when appropriate. If Luminant Generation Company LLC (a subsidiary of TCEH) does not continue to meet the self-bonding requirements as applied by the RRC, TCEH may be required to post cash, letter of credit or other tangible assets as collateral support in an amount currently estimated to be approximately $xxx (from a low of $600 million in 2008 to a high of 990 million in 2011) million. The actual amount (if required) could vary depending upon numerous factors, including the amount of Luminant Generation Company LLC’s self-bond accepted by the RRC and the level of mining reclamation obligations. . . .

In the event that any or all of the additional collateral requirements discussed above are triggered, we believe we would have adequate liquidity and/or financing capacity to satisfy such requirements.

On page 85 of EFH’s 2012 10K filing, only

The RRC has rules in place to assure that parties can meet their mining reclamation obligations, including through self-bonding when appropriate. If Luminant Generation Company LLC (a subsidiary of TCEH) does not continue to meet the self-bonding requirements as applied by the RRC, TCEH may be required to post cash, letter of credit or other tangible assets as collateral support in an amount currently estimated to be approximately $850 million to $1.1 billion. The actual amount (if required) could vary depending upon numerous factors, including the amount of Luminant Generation Company LLC’s self-bond accepted by the RRC and the level of mining reclamation obligations. . . .

appears, the followup statement, found in the previous 4 years 10K filings is conspicuously missing.

In the event that any or all of the additional collateral requirements discussed above are triggered, we believe we would have adequate liquidity and/or financing capacity to satisfy such requirements.

NPR’s story goes on to say “a media liaison for Energy Future Holdings, Allan Koenig, would not comment specifically about the line that disappeared.”  But that was followed up by an email from the company saying, “We fully satisfy the bonding requirements of the Railroad Commission of Texas for our coal mines, which means that our reclamation obligations are guaranteed.”

Well, yes they do satisfy the bonding requirements allowed by the RRC and their obligations are guaranteed by Luminant Generation, but it is all the same company and still at risk if the assets of the company, should a reorganization occur, be found insufficient to meet the bond amount currently estimated at $850 million to $1.1 billion.  EFH is telling the Railroad Commission ‘Trust us, we’re good for it’ even though the company debt is rated as junk status by the financial ratings agencies like Standard and Poor’s. What EFH is doing is like a family getting a second mortgage on a house and losing their jobs.  How can Texas regulators have any confidence that the assets of Luminant Generation will be protected from the bankruptcy process and available to cover future mining reclamation costs?

In a memo from the Railroad Commission (RRC) to Luminant Mining Company regarding Docket No C12-0006-SC-46-E, on the Oak Hill Mine application for replacement bond, it appears Luminant reassured the RRC that in their 2012 3rd quarter filing EFH’s liquidity amount (at that time) was $3.8B and that amount would be sufficient to cover all obligations including Luminant Minings reclamation needs.  However, we don’t know that this will still be the case 3 to 12 months from now should EFH file for bankruptcy.

We believe the RRC and Texas would be best served by requiring a more secure form of bonding for reclamation needs.

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