The New and Improved TXU!
February 28th, 2007 at 12:41 pm
During a House committee hearing yesterday afternoon, legislators grilled parties to the TXU buyout for more details on the deal. Lawmakers especially wanted to how the new company was going to be different than TXU, which has been under severe legislative attack for high electric prices and plans to build 11 coal plants. Briefly, some interesting items that emerged in testimony:
-Buyout discussions began “late fall, early winter” of last year, according to Fred Goltz, a KKR executive. Detailed negotiations started in January. In other words, while TXU was threatening an energy crisis lest they get permission to build 11 coal plants they were really thinking about selling off their company.
-The 10 percent rate reduction the new owners are promising to some TXU consumers is in fact mostly a repackaging of two pre-existing $25 “customer appreciation bonuses.”
-The current management team, including CEO John Wilder, is staying on for the time being.
-Under “the current regulatory system” the new owners will commit to holding a “majority of [their] ownership interest” in TXU for at least five years, Goltz revealed. However, the five-year commitment apparently hinges on the Lege not tampering with the current deregulated scheme. Specifically, Goltz said bills that would limit TXU’s market share sponsored by Sen. Troy Fraser and Rep. Phil King would “obviate” the commitment. Sounds like a threat. (I guess that explains the language in the merger agreement that allows the companies to walk away from the deal if the Legislature passes legislation requiring TXU to “divest or submit to capacity auctions for baseload solid fuel generation capacity.” That’s an apparent reference to a provision in one of the Fraser/King bills that would force TXU to sell of some of its power plants.)
-It appears that the promise to not build eight of TXU’s 11 proposed coal-fired power plants does not constitute a future ban on all coal plants. “We did not commit for any time period to a complete moratorium on coal plants,” said the private equity rep.
-Rep. Sylvester Turner told the committee that if the deal is finalized then he will regret ever voting for electricity deregulation.
February 28th, 2007 at 2:59 pm
Re:
Rep. Sylvester Turner told the committee that if the deal is finalized then he will regret ever voting for electricity deregulation.
Why doesn’t he regret it already?
March 8th, 2007 at 1:56 pm
[…] an astro-turf group going called Texans for Affordable Reliable Power. When Fred Goltz, of New TXU, testified at the House Committee on Regulated Industries his answer to every tough question was […]
March 28th, 2007 at 5:28 am
[…] almost a challenge.” Or a threat. After all this isn’t the first time the buyers have warned legislators not to meddle in the transaction. KKR and TPG have generously committed to at least […]