TXU to spend 10-billion to build 11 new coal fired power plants

TXU, Texas' largest electric provider--and the only provider until just a couple of years ago when deregulation came into play,  is spending 10 billion dollars to build 11 new coal fired power plants. TXU is hinging it on the fact that they say it will save consumers 1.7 billion annually.

Below are some of the articles in response to this issue, along with an editorial from the Waco Tribune Herald, which praised State Rep Doc Anderson for backing the environment and not TXU. Bold move it says!

TXU stands by coal-fired power plan

Some shareholders protest the strategy of building traditional plants that pollute more
 12:00 AM CDT on Saturday, May 20, 2006

By ELIZABETH SOUDER / The Dallas Morning News

 

TXU Corp. chief executive John Wilder isn't very concerned about possible environmental regulations of greenhouse gas emissions.

The power company is about to build 11 traditional coal-fired power plants that will emit 78 million tons of carbon dioxide each year. But Mr. Wilder has a plan.

After running the numbers, he's concluded that it's in shareholders' best interest to build the plants.

If U.S. lawmakers ever agree on carbon regulations, TXU can retrofit the plants with technology cutting carbon emissions in half.

This strategy also allows TXU to boost emissions ahead of any carbon regulation and maximize the carbon credits it gets under a carbon trading scheme. The company could then sell those credits as its emissions decline.

"We're not endorsing a carbon legislation, but if society believes that they want to have a charge on the economy – which is what ultimately happens," then TXU has a plan, Mr. Wilder said.

He said consumers would end up bearing the cost of the carbon-regulating equipment, just as they've done in Europe.

TXU's carbon strategy came under fire Friday at the electricity company's annual meeting from environmental groups and some shareholders.

Those groups worry about the risks to the environment, to TXU finances and to retail electricity prices, if the company doesn't invest in better carbon technology now rather than later.

"How dare they sacrifice our climate for their profits?" said Tom "Smitty" Smith of consumer advocacy group Public Citizen.

Mr. Smith and other consumer advocates want TXU to switch to coal gasification technology, which can capture all carbon emissions.

TXU says such technology is too expensive and too risky for Texas' deregulated market, though the company expects to eventually invest in coal gasification plants once they're proven to work.

TXU plans to spend $10 billion to build 11 traditional coal-fired power plants.

By trimming the cost of building those plants, Mr. Wilder expects to save electricity consumers $1.7 billion annually.

Further, TXU plans to cut total emissions by 20 percent from current levels, once the new plants are in service.

"It's the largest single voluntary reduction of any company in the U.S.," Mr. Wilder said.

Once those plants are in service, TXU will turn its attention to new technology, such as coal gasification or nuclear technology, to cut pollution further, Mr. Wilder said.

But before that happens, Mr. Wilder plans to sell or "mow down" almost all of TXU's natural gas-fired plants to make way for higher-polluting coal plants.

TXU has said it could dismantle four of the company's 14 natural gas plants to build coal plants. That leaves 10 that could be sold, though Mr. Wilder said he wants to keep "a plant or two."

Some of the natural gas plants are old and expensive to run. So TXU wants to sell those plants, possibly to other retail electricity companies that could fire up the plants on days when electricity demand spikes.

If TXU runs the plants on heavy demand days, and power prices spike, the company could be accused of manipulating the market. Mr. Wilder said that's one reason he doesn't want to own those plants.

Meanwhile, Mr. Wilder is busy drumming up investment for the coal plants. He said he expects to announce investment plans this summer.

Executives at TXU rival Direct Energy have said they'd like to invest in the coal plants, but the companies haven't reached a deal.

"We're keenly interested," said Deryk King, head of Direct Energy's North American operations. Direct Energy is a unit of the U.K.'s Centrica PLC.

E-mail esouder@dallasnews.com

 
Posted on Fri, May. 19, 2006


Is more coal a wise idea for TXU?
Concerns are well-founded
By MINDY S. LUBBER
Special to the Star-Telegram
 

NO: TXU can expect tough questions from investors at today's annual shareholder meeting in Dallas about its plan to build 11 coal-fired power plants in Texas at a cost of $10 billion. In addition to posing risks for the regional economy, the strategy has investors nervous, given the growing pressure on power companies to reduce greenhouse gas emissions.

TXU's strategy stands in stark contrast to those of many of its industry peers.

Sempra Energy recently dropped plans to build two coal-fired power plants in Nevada and Idaho because of impending state regulations to curb global warming pollutants. PG&E has avoided coal altogether, opting instead to spend billions of dollars on energy efficiency so that it will delay needing new power sources. And even though American Electric Power is relying on coal, it is pushing to build "clean coal" power plants in the Midwest that will be able to capture carbon dioxide, the main pollutant causing global warming.

But TXU, one of the nation's biggest electric power companies, is doing none of this. Instead, the company wants to build "business-as-usual" coal plants, despite the fact that coal is the state's dirtiest fuel source and plays a major role in the nation's skyrocketing greenhouse gas emissions.

Investors and environmentalists are right to be concerned. Even before the company's announcement last month, the Wall Street investment firm Bernstein Research issued a report raising concerns about TXU's significant financial exposure to future greenhouse gas regulations. It also leaves unanswered the region's smog pollution, a problem so severe that it is prompting major companies to avoid North Texas.

TXU is already the nation's 10th-largest source of greenhouse gas emissions in the electric sector, emitting 55 million tons in 2004 alone. And those numbers will jump dramatically if it builds 8,600 megawatts of new coal plant capacity -- all without any controls for capturing greenhouse gases.

Several leading investors contacted the company this week to better understand the potential risks of its strategy, in light of foreseeable greenhouse limits in the United States.

"Given the long lifespan of these plants, we believe TXU is potentially exposing itself to unprecedented compliance costs," wrote the investors, including the California and New York City public employee retirement funds, which collectively manage more than $400 billion in assets.

A growing number of states are requiring utilities to assume they will have to reduce global warming emissions or buy credits to offset them. Similar legislation is under consideration in Congress.

For TXU, which will more than double its greenhouse gas emissions if the coal plants are built, paying for such credits could easily cost hundreds of millions of dollars a year -- and that's a conservative estimate. Based on a report to its shareholders in fall 2004, TXU seems to be assuming that any new coal plants it builds won't be subject to new regulations -- a belief that is not widely held among industry experts and policymakers.

But the price tag for the environmental and public health impacts could be even larger.

Coal plants and mercury pollution go hand-in-hand -- especially in Texas, where nearly a dozen lakes and the entire Gulf of Mexico are subject to fish consumption advisories because of mercury contamination. With TXU already the second-largest emitter of mercury in the U.S. electric sector, the new coal plants will send thousands of additional pounds of mercury into local airways each year.

Nor will the coal plants solve the region's vexing smog problem. Although the new facilities will enable TXU to mothball some of its dirtier coal plants, the air quality benefits fall far short of the reductions needed to meet federal health-based smog standards. And that means thousands of area residents will continue to be hospitalized each year with smog-induced asthma attacks and other respiratory ailments.

Businesses will suffer, too -- a fact made all too clear when Toyota and Boeing opted recently to locate in San Antonio and Chicago instead of North Texas, citing the region's poor air quality.

The bottom line: North Texas deserves better from TXU. Instead of opting for risky, shortsighted coal facilities that compromise regional and global health, the company should be taking the long view by reducing electricity demand, encouraging renewable energy and using clean coal gasification technology that will capture carbon dioxide, mercury and additional smog-forming pollutants at the outset. This combined strategy would go much farther to protect both shareholders and area residents.
 
 
 
WACO Tribune Herald
Proposed coal-fired power plants raise pollution concerns with area leaders
Sunday, May 28, 2006

By J.B. Smith

Tribune-Herald staff writer

Waco-based legislators and city officials have joined a chorus of concern about the cumulative impact of seven coal-fired power plants planned in east Central Texas.

Waco’s state senator and both its state representatives have raised concern that the plants — including three in McLennan County — might move Waco toward being a federal “nonattainment area” for ozone pollution, like Dallas and its surrounding counties. State environmental officials say they won’t let that happen, but legislators said more research and modeling is needed.

State Sen. Kip Averitt, R-Waco, chairman of the Senate Natural Resources Committee, said he will seek committee hearings in the next month to determine whether the state is doing enough to monitor and model air pollution and whether the plants could be required to use new technologies for burning coal more cleanly.

“We have clean air, and we want to maintain that,” he said. “The best way to do that is to do scientific studies. If you don’t have a good understanding of where you are, it’s harder to speculate where you’re going to be down the road.”

Averitt said the proposed power plants are much cleaner than the coal-fired plants of a generation ago, but he is concerned about the sheer number of plants in the works.

LS Power last week won an air permit to build a coal unit in Riesel, while TXU Electric recently applied to build three coal units to replace existing gas-fired plants near Riesel: two at Tradinghouse Creek and one at Lake Creek. Other units are planned in Robertson, Freestone and Milam counties.

“I’m not too concerned about the emissions of a single plant, but I’m concerned about the prospect of having four in one county and another three a few miles away,” Averitt said. “I’m not opposed to economic development, and having a stable source of energy in our backyard is a good thing. But we have to be responsible to the next generation as well.”

State Rep. Jim Dunnam, D-Waco, said he shares those concerns. He sent a letter asking the Texas Commission on Environmental Quality commissioners at their May 17 meeting not to approve LS Power’s air permit application until more study has been done on the impact of the Riesel plant and the others on Central Texas and Dallas-Fort Worth. He also urged the TCEQ to begin monitoring air quality in Waco to establish a baseline for future studies.

Meanwhile, the Waco City Council is planning next month to hold a work session on the cumulative air pollution impact of the new plants.

“The question is, when is enough enough?” City Manager Larry Groth said.

TCEQ officials said they are busy developing models that will predict the air quality impact of the new plants, but they said there’s reason to be optimistic. The eastern part of Texas has reduced its concentrations of nitrogen oxides, a precursor of smog, by half since 2000. And TXU is promising that its new Texas plants will result in a 20 percent reduction in the company’s key emissions — nitrogen oxide, sulfur dioxide and mercury — even as it doubles its coal-fired energy capacity.

Coal power project

TXU is building 11 new coal-powered generating plants statewide as part of a $10 billion project. Company officials said that $2 billion will go toward air pollution controls at new plants and that $500 million will be used to curb emissions at existing plants.

The company plans to switch from lignite to cleaner-burning Wyoming coal at its Freestone County plant, Big Brown, where it also is building a new unit. At the aging Sandow plant in Milam County, TXU plans to shut down two boilers and build a much cleaner one.

And TXU’s new plants in McLennan County will emit up to 75 percent less nitrogen oxide than the existing gas-fired plants at Tradinghouse and Lake Creek, company spokeswoman Kimberly Morgan said. On a peak summer day, the current plants emit up to 60 tons of nitrogen oxide a day, while the new plants would emit only 15.56 tons, she said.

The new units will emit at least two pollutants that gas plants don’t create: Sulfur dioxide, a component of acid rain; and mercury, a heavy metal linked with developmental problems in children. However, TXU officials say their efforts will significantly reduce their statewide mercury and sulfur emissions, even with the new coal plants.

TCEQ air permit officials say they are still waiting to learn exactly where and how TXU plans to cut its emissions.

“That sounds good, but what’s really important to us is where those cuts are going to occur,” said Erik Hendrickson, a team leader in the agency’s air permits division.

Hendrickson said the TCEQ’s goal in the permitting process is both to reduce pollution levels in nonattainment areas like Dallas-Fort Worth and keep other areas from slipping into nonattainment status.

The TCEQ does a limited amount of air modeling during the permitting process to estimate how a new plant would affect air quality for its neighbors, Hendrickson said. But it also does a more comprehensive modeling process under the State Implementation Plan that looks at the cumulative impact of all pollution sources within a region. Based on that model, the TCEQ can mandate restrictions on power plants and other sources.

That means that the plants in Riesel and elsewhere could see further restrictions even after they get their permits, Hendrickson said.

However, Hendrickson said LS Power probably will not face further restrictions because its proposed emission rates are among the lowest in the country. “It’s unlikely you’re going to get better controls than that,” he said.

But Dunnam and others question how reliable the TCEQ’s air quality models can be when the agency has no hard data on McLennan County’s current air quality. The agency has not had an air quality monitor here in years, though it plans to do some mobile testing in Riesel this fall.

Lack of data

One critic is Max Shauck, director of Baylor University’s Air Science Institute, who monitors air quality using equipment mounted on airplanes. Shauck, who has done contract work for the TCEQ over the years, said there’s not enough data to know how close McLennan County is to being considered a nonattainment area. He said that his equipment has picked up high ozone levels in Waco on some summer days but that no one knows how serious a problem it is.

In addition to routine air modeling, he said more research needs to be done on how pollutants from coal plants travel. He is hoping to get funding to do such a study by flying through the emissions plume of a coal plant similar to the ones proposed in McLennan County.

“I think it’s a huge mistake to go ahead without doing that study,” he said.

Shauck has spoken in opposition to the Riesel permit at TCEQ hearings, saying the pollution risks are unknown.

“For Waco, I don’t know how significant Riesel is going to be,” he said. “It’s my opinion that it could be serious enough for concern. At the very extreme, it could move us toward being a nonattainment area.”

Hendrickson said the TCEQ hasn’t done routine air testing in McLennan County because the data it has collected at stations closest to Waco have not shown the need for it.

Averitt said routine air monitoring in Waco sounds like a good idea, and he plans to talk to TCEQ officials about it. In addition, he plans to hold a Senate Natural Resources Committee hearing next month on a clean coal technology that involves coal gasification before combustion. State Reps. Dunnam and Charles “Doc” Anderson, R-Waco, also are urging the state to require the new coal plant applicants to study the possibility of using the technology.

Morgan, the TXU spokeswoman, said that TXU is planning to spend $2 billion developing gasification technology in the future but that the need for more power is too urgent to wait on that technology.

“We do think it’s very promising,” she said. “It’s just not ready yet.”

Meanwhile, McLennan County and city of Waco officials have expressed mixed reactions to the boom in coal-fired power plants, with some worrying about pollution and others seeing an economic boom.

Waco councilwoman Robin McDurham, who asked for the council work session on the coal-fired power plants, said she doesn’t have enough information to judge the risks.

“I want to know, what are the consequences for this area?” she said. “Where are we crossing the line with emissions? How much can the community take? . . .We just have to figure out how we can best protect our community.”
 
Waco Tribune Herald Editoral
Editorial: Bold stand on coal-fired power plants
Sunday, May 28, 2006

Charles “Doc” Anderson, a Waco veterinarian and Republican state representative for District 56, deserves considerable credit for challenging Texas to become a national leader in clean burning coal-fired power plants.

When McLennan County residents first learned that an out-of-state energy company had plans to build a coal-fired power plant near Riesel, the main concern was balancing the economic benefits with the pollution risks.

It was a close call considering that Sandy Creek Energy Associates L.P., a subsidiary of St. Louis-based LS Power Development Corp., planned to add 100 new jobs, increase the county’s tax base and purchase water from the city of Waco.

Since that initial announcement, however, TXU Energy announced plans to build three more coal-fired units in McLennan County. Two of the units would go on the Tradinghouse Creek Reservoir site and the other at TXU’s Lake Creek site.

While Texas hasn’t had a new coal-fired power plant in many years, suddenly Texans are faced with the prospect of living with 18 new coal plants. Four of them are planned to be put in McLennan County and nine of them within 60 miles of Waco.

Unfortunately, burning coal is the most polluting method to produce electricity. Natural gas is one of the cleanest boiler fuels available but dwindling supplies and escalating costs are causing power plants to turn to readily available coal.

Texas already has a considerable problem with air pollution with large urban areas designated as nonattainment zones under the Clean Air Act. McLennan County is only about 25 miles from the nonattainment zone that encompasses the Dallas-Fort Worth metroplex.

Recently, the Texas Commission on Environmental Quality (TCEQ) granted an air permit for the proposed Riesel coal-fired power plant despite concerns from area legislators and environmental groups. State Sen. Kip Averitt, R-Waco, and state Rep. Jim Dunnam, D-Waco, both urged TCEQ commissioners to study the cumulative impact of the Riesel plant along with the other coal-fired plants planned in McLennan, Freestone, Robertson and Milam counties.

In a May 24 Tribune-Herald guest column, Anderson wrote that the combined effect of emissions and pollutants from the 18 coal-burning plants proposed for Texas could expand the air pollution problem into rural areas.

Anderson challenged the state to consider adoption of gasification technology while the coal-fired plants are still on the drawing boards.

Gasification is the gold standard for burning coal with low emissions of mercury, sulphur dioxide, nitrogen oxide and particulate matter.

Although the TCEQ does not even consider gasification as an operating standard for coal-fired plants, it should.

Anderson makes an excellent point. Lawmakers should support gasification as the standard for new coal-fired power plants.