Energy Future Holdings' end-o'-year popped up on the U.S. Securities and Exchange Commission's website late Tuesday, and, boy, is it ugly. Now, why should you care? Because Energy Future is the parent company of Luminant, Texas's biggest generator of electricity. And TXU Energy, a huge retail supplier. And Oncor, the power line company.
Like every other generator of wholesale electricity, the last few years have been tough. The shale boom drove natural gas prices into the basement. And since natural gas-fired power plants set the marginal electricity price for most of Texas, the margin between the cost of generating power and the price it sells for is razor thin.
Throw in Energy Future's prodigious debt -- the result of the highly leveraged purchase of TXU by private equity barons Kohlberg Kravis Roberts and Goldman Sachs -- and you have a company throwing a huge slice of its shrinking profits at fat interest payments. Like, as much as 60 cents of every dollar.
Gleaned from the company's 10-k, here are a few reasons why 2011 was the year of hemorrhaging for this Dallas-based power company:
Why Bother?: During certain periods in 2011, they shut down power plant units because the wholesale price of electricity was actually less than the cost of making it.
Underwater: The holding company for Energy Future's Luminant has outstanding debts that currently exceed its value.
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Less Money, Mo' Problems: Revenues were down to $7.04 billion from $8.235 billion.
Sucks For Them: Investors' held stock is now worth negative $7.8 billion.
That's The Free Market!: TXU Energy, the retail provider, lost 9 percent of its customers in 2011. Each percent is worth roughly $35 million.
Performance Pay?: Don't worry about the guys running the ship. Despite all the red in this 10-K, they're still in the green. Energy Future CEO John Young's total compensation was $15.124 million in 2011, up from $6.862 million in 2010. Luminant CEO David Campbell was paid $1.766 million in 2010. In 2011, he received $7.667 million.