A Charred Life 
Three Generations of Texas Wind Men 
Coal Hard Facts
Climate change, shrinking ice caps, rising seas, air pollution, asthma at epidemic levels: GOOD THING Texas hasn’t built any soot-belching coal plants in the past FIFTEEN years. But with our population booming, and an energy crisis looming, The black rock is back. Let’s take a deep breath—while we still can.
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To many people, including Rick Perry, this sounds like a good deal: loads of new power accompanied by a net drop in pollution, compliance with federal and state clean-air standards five years ahead of schedule, and lower wholesale prices for electricity. But the governor’s tacit endorsement of the plan has struck some as corporate favoritism. They point to the fact that Perry has received $128,000 in political contributions from former TXU chairman Erle Nye and that the path to approval for the coal plants goes through the Texas Commission on Environmental Quality (TCEQ), which was established as a watchdog for the public interest but has, according to its critics, become a rubber stamp for industry. In 2000 a bipartisan panel of legislators criticized the TCEQ (then called the Texas Natural Resource Conservation Commission) in a blistering review for failing to “comprehensively assess the performance of regulated entities and ultimately its own performance.” Yet an independent study released in August appeared to side with the TCEQ, confirming a TXU claim of a net reduction in pollution in Dallas—Fort Worth. “The DFW-average impact showed ozone reductions, albeit small, in all four episodes and scenarios when including offsets,” said the report by the Texas Environmental Research Consortium (TERC). “The TXU proposed offsets more than mitigated the ozone contributions from these proposed EGUs [electric generating units].”
For his part, Wilder is so confident that the plan represents the best emissions offsets anywhere in the country that he is offering it on a take-it-or-leave-it basis. “We are going to give it our best shot,” he said. “But if the decision makers don’t like our proposal, it’s the only one we’ve got. We don’t have alternatives. This isn’t a negotiation.” If that sounds like hardball, in a memo laying out the proposal, TXU management goes even further, warning that “delay will be extremely costly for both TXU and its customers, forcing TXU to consider other options to redeploy its generation in other markets.” In the absence of approval for the new plants, “TXU will not have the ability to voluntarily retrofit its existing generation.” Meaning that Big Brown and its three other old lignite-burning plants won’t get anywhere near the $500 million of retrofits and thus will see far less radical reductions in their emissions. Instead of cleaning them up, TXU will trade emission credits with other companies under the current “cap and trade” system, which allows companies that pollute to buy credits from companies whose plants meet regulations—and keep on polluting.
IN SPITE OF ALL THE talk about carbon dioxide, the bedrock issue here is still entirely local: air quality in Texas cities, especially smog-causing chemicals that may make it difficult for Houston, Dallas—Fort Worth, and other cities to meet increasingly strict federal clean-air standards. Though TXU’s plan represents a 20 percent reduction in average pollution across the entire region, on certain days and with certain wind conditions, individual areas may be worse off. “People don’t breathe average air,” says Jim Marston, the executive director of Environmental Defense. “They breathe the air that they breathe.” Adds his colleague Ramon Alvarez: “There are more offsets from old plants in northeast Texas, more new emissions in south central Texas, so that in certain areas, improving the average isn’t going to mean anything.”
Perhaps the best example of this is TXU’s mammoth new two-boiler plant proposed at Oak Grove, near the town of Franklin, just north of College Station. Unlike the rest of the TXU plants, which will run on Powder River Basin coal, Oak Grove will burn lignite. The plant will run through 2.5 million pounds of it each hour, emitting vast amounts of pollutants that were not in this area before: 1,446 pounds of mercury and as much nitrogen oxide as from the exhaust of 470,000 automobiles. On its first day of operation, the plant will be the fourth-largest emitter of mercury in the country; however, when averaged with TXU’s proposed coal fleet, it is part of the 20 percent overall reduction in pollutants.
The local residents don’t see it that way. Some have banded together to form Our Land, Our Lives, a group whose goal is to stop the Oak Grove plant. They have signed petitions and taken out ads in newspapers and filed a federal lawsuit claiming that TXU’s permit application violates the federal Clean Air Act. They have also had a stunning bit of recent success. After they contested TXU’s permit application, an administrative law judge in Austin ruled in August that the Oak Grove plant “failed to prove by a preponderance of the evidence that its proposed source would not cause or contribute to a condition of air pollution.” Such a ruling does not carry the force of law; it constitutes merely a “recommendation” to the TCEQ. Virtually no one interviewed for this story, on either side, believed that the TCEQ would deny the application, and in fact, following the ruling, TCEQ executive director Glenn Shankle wrote a detailed response arguing on TXU’s behalf. Still, it showed that there may be legal obstacles ahead for TXU in its quest for approval.
This same notion of “local” versus “average” pollution can be applied to Dallas—Fort Worth and other cities in the region. While the TERC study did state that, based on average air quality, TXU’s proposed plants would reduce the overall pollution in Dallas—Fort Worth, the report also said, partly in contradiction to itself: “The ozone impacts of the proposed new EGUs tend to be geographically separated from the benefits of TXU’s offset strategy. This is because many of the new EGUs are in Central Texas whereas many of TXU’s offset emissions reductions occur in Northeast Texas… . The net impact on DFW … depends upon the relative frequency of high ozone days with southeast winds (from Central Texas) versus east winds (from Northeast Texas).”
The point may be a technical one, but on it hangs a good deal of the case against TXU’s plan. At issue is whether Dallas—Fort Worth is in compliance with federal clean-air standards. Right now it is not, and unless it improves, it will soon face penalties—denial of industrial permits and road building funds, difficulty in attracting new industries, and so forth. Compliance is measured by air quality on four selected days. On some days, certain spots will be much more polluted than others. “It’s the difference between meeting the rule or not being subject to sanctions and having to do a bunch of offsets,” says Marston. “We think this will make it almost impossible for Dallas—Fort Worth to reach attainment.” That could mean hundreds of millions of dollars in lost annual revenues and resources, according to Laura Miller and the Texas Clean Air Cities Coalition. “We have only eighteen plants now, which have helped Dallas—Fort Worth and Houston fall out of compliance with federal environmental laws,” Miller wrote in an August 21 opinion column in the Dallas Morning News. “What’s the point of cities screwing in low-wattage bulbs and buying natural gas—fueled police cars if you’ve got soot from seventeen new coal plants billowing your way?”
WITH LAWSUITS FLYING, challenges likely to be made to all of TXU’s permit applications, and a legislative session starting this month, the question looms: Can anyone really force TXU to use IGCC instead of pulverized coal? Or to reduce the number of plants it wants to build? According to Wilder, the question is moot. He is not negotiating because the key to profitability is the scale of the build. And he will not experiment with IGCC. If it comes to that, he says he will seek investments elsewhere. Nor is it likely that the TCEQ, packed with Perry and Bush appointees, will deny TXU its air permits, even in cases like Oak Grove where administrative law judges have recommended doing just that. But all will be challenged: As of the end of October Miller had raised $500,000 to pay for air modeling in the Dallas—Fort Worth area.
Wilder contends that in a deregulated world all he has to do is secure air permits from the TCEQ. If he complies with federal and state air-quality laws, he is free to go after as many customers as he can get. Unlike the old days, when legislators were often heavily involved with public utility commissions, in the new process, Wilder firmly believes that lawmakers “do not have a seat at the table.” That may anger plenty of people at the Legislature, but his point is that the Texas House and Senate voted to deregulate the industry, encouraging private competition and allowing companies to make their own decisions, set their own prices, and take their own risks. To a great extent, the proposed seventeen plants are a direct result of that vote. We are getting exactly what our legislators said we wanted.
What the fight over these coal plants suggests, however, is that some people may very well decide that they prefer the good old days when the public utility commissions told companies like TXU how much they would charge and the types of plants they would build. California, Arizona, and other states have deregulated only to decide later that they wanted to “reregulate.” Texas is thus far the most radical national experiment in free-market competition in the electric power business. It is possible that legislators may try to rein it back in. And it is entirely possible, too, that some of the anti-TXU lawsuits may bear fruit. One of them, filed by Environmental Defense, claims that the state is breaking its own laws by refusing to make TXU and other companies consider IGCC technology.
In the meantime, there is little reason to expect that TXU is going to behave differently than it does today. Blaming TXU for proposing its plants is a lot like blaming General Motors for building Suburbans. The two companies are acting fully in accordance with who they are and with what their goals are. They are both obeying government rules and selling products in a free marketplace. Like the environmental lobby, their behavior is virtually encoded at this point. In a deregulated world, sweeping changes like carbon limits or pollution controls or rules governing the uses of power-plant technology can come only from government intervention, from intense regulation. And that was what Texas legislators worked for most of the nineties to get rid of. We will soon see if they have second thoughts.
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