The new owners of TXU, Luminant, formerly killed plans to build eight new coal-fired power plants yesterday -- making good on a promise the investors made when announced plans to take the energy company private in February. The companies inked the financial deal last week. The environmental deal is now inked too.
The deal to take the huge Texas electric power company TXU private was historic for two reason. First, at $45 billion, it was the largest leveraged buyout in history. Second, it was the first time powerful investors have demanded the scuttling of plans to build new coal-fired power plants as a condition of a deal.
In February, Kohlberg Kravis Roberts & Co. and TPG announced its intentions to take the company private (it's now called Energy Future Holdings, a subsidiary, Luminant, handled the plant deal, and you won't find either on the New York Stock Exchange). TXU has been a target of ire because of its plans to build 11 new coal-fired power plants at a time when coal is maligned as the biggest source of greenhouse gas emissions linked to global warming (not to mention its contribution to pollutants that cause acid rain, smog and a number of lung and heart ailments).
Now, eight of those plants are off the table.
"We said we would pull these permit applications from consideration once the TXU merger was complete, and we are delivering on that commitment," said Mike Greene, chief executive officer, Luminant.
Whether the move turns out to set precedents for investors concerned about the risk -- financial, environmental or otherwise -- of buying into dirty energy projects remains to be seen. It's certainly a positive sign that the deal went through, particularly since some TXU shareholders had expressed skepticism early on.
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