More TXU musings…
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In the 17 years that Jim Marston has been working for the Environmental Defense Fund, no other environmental issue has so galvanized the Texas public as TXU’s coal plant construction strategy and Rick Perry’s executive order fast-tracking the permitting process. Not only did prominent business leaders and Texas mayors join forces to fight the plants, but rank-and-file people were outraged, too. After TXU’s plan became public, Marston said, people began thrusting unsolicited checks at him. Big checks, including a $50,000 contribution from a guy he knows from his daughter’s club volleyball team. “He said, ‘This is offensive and I don’t have time to help. Here’a check,'” Marston recalled today. “I’ve never had that happen before.”
For the past 10 months, Marston and the EDF have spent $1 million at war with TXU, paying for $200,000 in television ads and an army of lawyers. Environmentalists were motivated by the sheer magnitude of the new emissions to be generated by the plants, which would exceed the current carbon dioxide emissions of 21 states. TXU, Marston said, was going to “make money by making the global warming problem worse.” Marston was especially concerned that the coal plant permits would have undermined the credibility of the cap and trade system, which allows for the sale of pollution credits. Since the new permits would have increased TXU’s emission baseline (giving the company more credits to sell) “they were gaming the (cap and trade) system,” Marston said.
“Their whole play was they had the Texas political system greased and they would rush these permits and it was a done deal,” Marston said. Instead, TXU began to feel the backlash, where it hurt most: its stock price. “They were starting to have concerns. What they thought was a slam dunk, the legal strategy, was not going as well as they expected. They were doing things that hurt their brand. They forgot they were in a competitive world. They didn’t have captive customers.”
Public reaction was near unanimous in approval of the buyout deal, which includes a promised 10 percent rate reduction, as well as abandonment of plans to build 8 coals plants. One avowed TXU enemy was not appeased: Sen. Troy Fraser, who issued a press release pledging to proceed full steam ahead on his bill concerning market forces.
“Over the past twelve months, I have expressed concerns about the competitive market forces and their impact on residential electricity rates,” the statement said. “The sale of TXU to a private equity firm only heightens those concerns. While I appreciate the involved parties’ willingness to address coal plants and carbon emissions, at the end of the day, we must continue to protect ratepayers. Offering consumers a rate that is still above the market price only serves to further their current stranglehold on the residential market. At the end of the day, this transaction does nothing to improve competition forces throughout the state.”
The proposed buy-out represented a huge victory for environmentalists, but raised some uncertainties. Does the Public Utility Commission have to bless the deal? If so, on what grounds? If coal plants (for the most part) are off the table, where will Texas get its future generating capacity? A huge investment needs to be made before transmission lines tap into West Texas wind power. How will that affect rates? Will environmentalists now embrace nukes?
And the most burning question of the day at the Capitol: what happens to the legions of lobbyists hired to promote coal?