TXU buyout may include environmental deal
HOUSTON, Feb 24 (Reuters) - A proposed buyout of TXU Corp. TXU.N, Texas' largest electric company, may include an agreement with an environmental group for the Dallas-based firm to scrap plans to build eight of 11 coal plants in the state, the Natural Resources Defense Council said on Saturday.
On Friday, sources confirmed that Kohlberg Kravis Roberts & Co. KKR.UL and Texas Pacific Group TPG.UL were set to offer about $32 billion for TXU in what would be the largest private equity deal ever.
The deal could be announced as early as Monday, sources said. TXU officials on Friday would not comment on any potential offer for the company. Efforts to reach TXU officials late Saturday were unsuccessful.
The NRDC said KKR and Texas Pacific Group have committed to withdrawing eight of 11 permits for pulverized coal plants TXU wants to build in Texas.
The potential new owners would also support a mandatory nationwide limit on emissions of carbon dioxide -- blamed for global warming -- support an emissions-trading program, drop plans to build coal plants outside Texas and invest in energy efficiency programs to reduce the need for new power plants in the state, the environmental group said.
"What we are witnessing is the beginning of the end of investments in old-fashioned coal plants," said David Hawkins, head of NRDC's climate center and a former official with the Environmental Protection Agency. "These are very big investors coming to the energy table with very big ideas about where the competitive market is heading."
Despite escalating opposition to its coal proposals in Texas from environmental groups, elected officials and other energy companies, TXU has not wavered in its push to obtain permits to build new coal units at its existing power-plant sites.
As late as last week, TXU attorneys argued against a delay in the start of a regulatory hearing in Austin covering six Texas coal-plant permits after a state judge blocked the governor's effort to accelerate the permit process. The permit hearing was delayed four months.
Because of delays in obtaining permits, TXU was unlikely to have met its ambitious target to get any of its proposed new coal units built and operating in 2009, according to industry sources.
TXU officials have said that Texas needs low-cost coal-fired power plants to meet growth in electric demand and to reduce the state's reliance on expensive natural gas to produce power.
The NRDC said KKR and Texas Pacific have agreed to explore new coal technology, including coal gasification, a technology TXU deemed too unreliable to build at this time in Texas.
"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," NRDC President Frances Beinecke said in the release.
