Texas Hunger Strike, Mayors Oppose TXU Plan for Coal Plants

Texas Hunger Strike, Mayors Oppose TXU Plan for Coal Plants

TXU Corp. Chief Executive Officer C. John Wilder wasn’t counting on hunger strikes and opposition from big-city mayors when he proposed spending $10 billion to build coal-fueled power plants in Texas.

The energy company has invested time and money in building corporate goodwill in Texas, where it is the largest power producer. Wilder, 48, is United Way CEO of the Year in Dallas, where the company is based, and TXU employees donated 20,000 hours of volunteer service in 2005.

Yet Dallas Mayor Laura Miller and Houston Mayor Bill White helped build a coalition of 35 local governments and related groups that are fighting TXU’s expansion. While the plants will meet federal clean-air standards, the critics say TXU is ignoring alternatives that pollute the state’s air less than coal does.

“TXU is purposely misleading the public in order to build old-technology coal plants the cheapest way possible to get the biggest return on their money,” Miller said.

Wilder said his plan, unveiled in April, is the fastest, most efficient way to meet the need for added power capacity in Texas, which consumes more electricity than any other state.

Two Texas environmental groups filed suit in U.S. District Court in Waco in December to block one of the first projects. The San Francisco-based Sierra Club joined a lawsuit filed by the New York-based Environmental Defense in Travis County District Court, seeking to block a plan by Texas Governor Rick Perry to speed the review process for coal-fueled power plants, most of which are TXU’s.

“This company is a renegade company that’s way out of control, and they need to be responsible to the community,” said Karen Hadden, executive director of the Sustainable Energy and Economic Development Coalition in Austin, Texas.

Lemon, Pepper, Syrup

Hadden, 50, and two other environmentalists went on a 10- day hunger strike before the November elections to attract attention to their fight against coal-fueled power and demand a meeting with Perry. Hadden, who said she consumed only a concoction of water, lemon juice, red pepper and maple syrup, succeeded only in getting a meeting with a Perry staff member.

Criticism from leaders like Dallas’s Miller stings more than complaints by environmental groups, which are never satisfied, said Mike McCall, CEO of TXU’s power-generation unit. He said TXU has a “100-year history of being straightforward and candid about our actions.”

TXU’s plan, part of which will go before Texas environmental regulators as soon as Jan. 24, includes more than 9,000 megawatts of new capacity from 11 generation units at nine sites. Lignite coal would fuel three units, while cleaner- burning Wyoming coal would be used at the others. The goal is to have all of the turbines operating in 2010.

Coal Versus Gas

About 70 percent of power generation in Texas is fueled by natural gas, more than triple the U.S. average. Gas, which pollutes less than coal, is also more expensive. Coal is the biggest generator fuel nationwide.

TXU has idled seven of its least efficient gas-fueled generators and plans to shut down seven more as coal-fired plants are opened. McCall said the new generators will reduce the state’s reliance on gas, thereby pulling down power prices, and will add the capacity needed to increase system reliability.

Texas had rolling blackouts in April, its first since 1989, as plants were idled for repairs and temperatures soared past 100 degrees Fahrenheit (38 degrees Celsius).

TXU said it would have to sell electricity from the new coal-fueled plants for $50 to $53 per megawatt-hour to break even. That compares with about $60 for the most efficient gas- fueled plant and $86 for wind turbines, it said.

The cheaper coal plants will allow TXU to spend money on reducing emissions at existing plants, McCall said.

Competing Producers

NRG Energy Inc., the second-largest power producer in Texas, is taking a less polluting approach to expansion — and paying a price.

Two months after TXU announced its plan, NRG said it would spend $16 billion to boost capacity in the U.S., including nuclear and gas-fueled generation in Texas. The plants will cost more and take longer to build than TXU’s.

In the six months after TXU’s announcement, its shares jumped 35 percent. In the same period, shares of Princeton, New Jersey-based NRG fell 1 percent.

“I think whenever you’re out front on an issue, you know by definition it’s a lonely place for a while,” NRG’s chief executive, David Crane, said in an October interview. “But it’s not something that I’m losing sleep over, because I don’t think we’re going to be out front on that issue for long.”

TXU’s shares slid 14 percent in the last two months of 2006, after the company cut its profit forecast and opposition to the coal-fired plants mounted. The shares closed at $53.49 on Jan. 8.

Most of TXU’s proposed plants will be approved, regardless of complaints, said investor Barry Abramson, who helps manage about $28 billion, including 200,000 TXU shares, at Gamco Investors in Rye, New York.

Hadden, the Austin hunger striker, said she, too, expects TXU to get the go-ahead, but isn’t giving up.

“Of course we’re going to fight their permits — they’re outrageous,” she said.

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