Former New York State First Deputy Comptroller-turned-investment banker Tom Sanzillo released a report this morning, via the Sierra Club, demanding that Dallas-based Energy Future Holding (and its Luminant subsidiary) shutter three of its coal-fired power plants: Big Brown (in Fairfield), Monticello (in Mount Pleasant) and Martin Lake. In a press release accompanying the report -- which revisits at length TXU's $46-billion sale to Kohlberg Kravis Roberts & Co. and Texas Pacific Group in 2007 -- Sanzillo says that those plants are little more than a "big financial burden to Texas" and that "there are better, cleaner, financially stable and more efficient solutions that do not cover the Texas landscape in mountains of toxic debt."
The entire report -- titled The Case to Retire Big Brown, Monticello and Martin Lake Coal Plants: Three Financially Mismanaged, Unprofitable, Outmoded and Worthless Coal Plants in North Texas -- is available here. An excerpt:
The sale of then Texas based TXU to a large group of outside investors meant that the lights in Dallas -- and the electricity supplied by the three coal plants -- were now owned by private investors. The outside owners promised lower prices, innovation and cleaner skies, recognizing the challenges that these three coal plants in particular held as the largest emitters of pollution in North Texas. Today, however, these plants, and the complex corporate structure used in the buy-out are almost worthless, struggling to remain cash-positive, and under serious allegations of major violations under the Clean Air Act. The outside investors have recently become involved in a highly public debate over their investment claims. This report shows from a financial perspective what happened and why these three plants are high priority candidates for retirement.
North Texas has historically been the region of the state most dependent on coal fired power generation. Coal-fired technology has reliably produced affordable electricity, but with the trade-off of significant levels of air pollution in the Dallas/Fort Worth area. Today, the economic benefits of these coal plants are fading and the outlook is poor. In addition, the environmental pollution requires substantial remediation that only heightens the risks to this poor financial outlook.
Update at 1:30 p.m.: Meranda Cohn, who used to be at Dallas City Hall but now works for Luminant's corporate communications department, sends this response to today's report:
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We believe this report is completely without merit. Since the 2007 transaction, EFH/Luminant has invested billions in this state - in job growth, new power plants, renewables and energy efficiency. Texans depend on Luminant, the state's largest power generator, to produce much-needed electricity and fuel our fast growing, and vibrantly competitive state. EFH and Luminant have been a proud part of the Texas energy landscape for more than 100 years, and we remain more committed than ever to providing, safe, affordable, reliable and clean power.