Jim Marston

When The Wall Street Journal called our environmental agreement with TXU Corp.’s prospective new owners “The New Greenmail,” we knew we were on the right track.

Yep, it’s true: Hell has frozen over. Texas’ largest utility and power generator is being bought out, and the new owners want to remake TXU into a green company.

After some intense negotiations with Environmental Defense (in consultation with a couple of other groups), the new owners have agreed to withdraw eight of TXU’s 11 permit applications for new, conventionally designed, coal-fired power plants—plants that would have put more than 50 million tons of global warming pollution into our atmosphere each year for the next 50 years.

How did TXU lose its fight to build these new plants that would have made them enormous sums of money? The company had greased the political skids with campaign contributions. They had 46—count ’em—registered lobbyists on the payroll. They created numerous front groups and spent millions on advertising to convince Texans that coal pollution is good for us. They had everything going for them. Yet the plants were in trouble even before the new owners made pledges to withdraw the permit applications.

What went wrong? Well, first TXU violated the rule that pigs get fed and hogs get slaughtered. They simply overreached. Moreover, the company showed disdain for anyone who dared question its plan or offered alternatives, whether they were dealing with mayors, business leaders, or environmentalists.

TXU also underestimated the environmental community in Texas. Environmental Defense, along with many other state and local groups such as Public Citizen and the SEED Coalition, mounted an unprecedented campaign against the TXU plants. Our campaign included a vigorous legal challenge made possible by the willingness of numerous Texas lawyers to donate large chunks of their time pro bono. Other initiatives ranged from a hunger strike to paid TV ads.

Frankly, the global climate threat posed by TXU’s plan—together with Gov. Rick Perry’s blatantly unfair executive order that dramatically limited public input in the permit process—raised a lot of new resources for Environmental Defense and other groups opposed to the plants. We received emergency grants from national foundations, unsolicited five-figure donations from individual Texans, and in-kind help from other national groups. With these resources, we were able to make a convincing legal case against TXU’s new plants and mount an effective public education campaign across the state.

But it wasn’t just the environmental community that TXU underestimated—its officers really didn’t think the people of Texas would pay much attention. TXU certainly didn’t expect mayors like Laura Miller of Dallas and Bill White of Houston to fight ferociously for the health of their citizens and the rights of their local businesses. TXU didn’t count on an uprising of Texas business leaders who understand that clean air is important if Texas is to attract and keep new businesses. TXU failed to notice that the faith community in Texas is rallying its members to get involved to protect God’s creation from the threat of global warming. And finally, TXU’s plans angered everyday Texans who are simply concerned about their children’s health and futures.

TXU has awakened the environmental consciousness of Texans, and I believe the political landscape of our state will never be the same.

But while we’ve won a major victory in the fight to clean up our air and reduce Texas’ contribution to global warming, it’s important that we forge ahead and let Texans know there are plenty of cleaner and cheaper ways to meet our future energy needs.

First, we can stay above the state target of a 12.5 percent reserve margin above peak energy demand in the summers of 2008 and 2009 through energy efficiency, interruptible load, and the refurbishing of a few mothballed, gas-fired “peaking plants.” Unlike the proposed TXU plants, these sources of electricity can be put in place in time to maintain an optimal reserve margin.

Energy efficiency simply means employing technology to make our existing supply of electricity go further—it does not mean asking folks to wear cardigan sweaters (as President Jimmy Carter famously urged in the late ’70s). Many other states have successfully employed efficiency to reduce their need for new power plants and to lower consumers’ electric bills. We don’t have to look outside of Texas for proof that efficiency can help meet our electricity needs here. All we need is to follow the lead of Austin Energy, the municipally owned electric company.

In 2006 alone, by doing simple things like providing incentives for everything from insulating attics to replacing old air-conditioners with more efficient units, Austin Energy shaved 57 megawatts from electricity demand. Austin Energy represents only 4 percent of the state’s electricity load. That means that if the Austin program were applied throughout Texas, we could save more than 1,300 megawatts of electricity annually, almost the amount of electricity from two of TXU’s proposed coal plants.

Efficiency produces no dirty emissions and costs a whole lot less. The Austin Energy efficiency program costs only $280 per megawatt. TXU said the coal plants it was proposing would have cost $1,100 per megawatt for capital costs alone—a number other electric companies say is unrealistically low.

Moreover, with efficiency programs, consumers use less electricity and save on their electric bills.

We’ve just released a report we commissioned by the respected American Council for an Energy Efficient Economy detailing the major efficiency opportunities in Texas, their potential to reduce demand, and the costs of various programs. (The study is posted on our Web site at www.environmentaldefense.org/go/texas.) There’s good reason to believe this report will serve as more than shelf liner: In our negotiations, TXU’s new owners pledged to double the company’s energy efficiency program to $400 million over five years. We’ll happily provide them with a menu of measures we’d like to see them promote.

Efficiency could meet all the short-term needs in Texas. If policymakers want additional energy security, we merely need to utilize a strategy widely employed in the past called interruptible load. In one shining example, Austin Energy provides free, programmable thermostats to customers—like our office—who want the savings we get when the high-tech thermostat automatically dials down our air-conditioning during hours we’re not there. In exchange for this free benefit, we agree that Austin Energy can cycle our air-conditioning off for 10 minutes each half hour during a hot summer afternoon in the rare event it appears that capacity is stretched to its limit. There are similar programs for large industrial customers. Currently 1,100 megawatts of capacity in Texas are categorized as interruptible load. We could easily go to 3,200 megawatts of interruptible load, as existed during the year 2000, by using interruptible tariffs more widely, as we have in the past.

Another way we can provide additional electricity security is to assure that natural gas is fully utilized to meet peak loads and that plants are not mothballed unnecessarily. In the Houston area alone, according to utility Reliant Energy, there are 3,000 megawatts of mothballed natural gas plants that have been retrofitted to reduce their nitrogen oxide emissions; these plants could be brought on line quickly to “push out the need for new generation by several years.”

In addition, now that natural gas prices have come down, there is a role for new gas-fired generating capacity. In Greenville, just northeast of Dallas, Cobisa Corp. plans a 1,750-megawatt, gas-fired project that can be built much faster than coal plants. Neither this plant nor the mothballed plants are factored into the state’s forecasts of shortages in reserve margin.

Nor is the proposed Panhandle Loop. In a mid-February story that was widely overlooked as the TXU battle raged, Sharyland Utilities (a transmission line operator) announced plans to build an 800-mile loop of transmission lines to link the Texas Panhandle into the power grid that serves most of the rest of the state. As a result, two companies—one headed by former Public Utility Commission of Texas Chairman Pat Wood—plan to build Panhandle wind-turbine farms capable of generating 2,800 megawatts by 2011.

The loop will also link a planned Yoakum County 500 megawatt, gas-fired plant to the state grid.

Additionally, State Land Commissioner Jerry Patterson is aggressively pushing the potential of wind power along the Texas Gulf Coast.

Utilizing these resources would provide all the electricity Texas will need through the middle of the next decade. However, it is probably prudent to build a couple of “clean coal” “integrated gasification combined cycle” plants that could be up and running by 2013 to provide additional capacity. We have already announced support for one such plant proposed by the Tondu Corp. in Corpus Christi. This is truly state-of-the-art technology that turns coal into gas before it is combusted to drive generators. The Tondu plant will use a combination of coal and “pet coke,” a refinery waste product abundant in Texas.

The Tondu IGCC plant will emit about 60 percent less nitrogen oxide, 80 percent less sulfur dioxide, and 15 percent less mercury than TXU wanted to impose on Texas children. It also produces less global warming pollution, but more important, the carbon dioxide from IGCC plants can readily be concentrated for capture and then “sequestered” underground as part of the solution to global warming.

(I’m happy to say that as part of our negotiations, the new TXU owners agreed to take a serious, open-minded look at IGCC technology if they consider any future plants. This is a major turnaround from the company’s hard-line resistance in the past.)

Our plan wouldn’t squeeze out emerging technologies, as 11 TXU plants would have. Over the next decade, as needed, our plan would add plants utilizing the latest advances in technologies, such as fuel cells and storage of off-peak, renewable energy.

Our plan also leaves room for further improvements in true “clean coal” technology and the next generation of nuclear power. Yes, nuclear, if nuclear proponents can answer the real questions of high costs, safe waste disposal, and proliferation. While we believe these problems have not been adequately addressed to date, we also believe that global warming is such a serious threat that all very-low-carbon technologies must be considered afresh.

In any event, we’re pleased that TXU’s scuttled plans will not crowd out new innovative technologies, whether they are nuclear, hydrogen, or the inevitable coming breakthroughs in renewable energy technologies.

TXU’s plan had little to do with meeting the energy needs of Texas. Its approach would have displaced cleaner existing plants, and TXU was planning to take advantage of an unintended consequence of the 1999 electric restructuring law—and to game future global warming regulations—to make extraordinary windfall profits.

Fortunately, the utility giant’s new owners have signaled a real commitment to adopting a business plan reflecting 21st-century environmental sensibilities, not the 1950s mindset of the old management.

The importance of the TXU sale and philosophical turnaround is enormous, partly because of its size and partly because TXU had been so intransigent in its resistance to the reality of global warming.

Already the new attitude of this corporate giant is reverberating far beyond the Great State’s borders and into the hallways of our nation’s Capitol.

And while a lot is being done at the state, local, and household level around the nation, Washington is where the real turnaround has to happen. We need federal global warming legislation now.

Jim Marston of Austin is director of the Texas office of Environmental Defense, a national nonprofit with 500,000 member activists. He is also the group’s national director of state climate initiatives and works to promote emission-reduction measures in state legislatures around the country. Marston serves on the board of the Texas Democracy Foundation, the nonprofit that publishes The Texas Observer.