TXU DEAL GOOD FOR WIND

This $45 billion buy-out may, as described here earlier in the week, shift the way energy is delivered to electricity grids across the US.

TXU merger will boost wind
Kristyn Ecochard, February 28, 2007 (UPI)

- TXU, if its buyout agreement is approved, will double the amount of money it spends on wind power purchases.
- The deal between the Texas utility giant and a group of investors led by Kohlberg, Kravis, Roberts & Co. is the largest private investment merger in U.S. business history at $45 billion…$32 after TXU's $13 billion in debt is paid off.
- Included in the group of investors are Texas Pacific Group, Goldman Sachs & Co., GS Capital Partners, Lehman Brothers and Morgan Stanley. Goldman Sachs, Lehman Brothers and Morgan Stanley are already investors in the wind market. Under the agreement, shareholders would receive $69.25 per share, 25 percent more than the closing…when the deal was being finalized…

- Though the deal was already endorsed by the Environmental Defense and Natural Resources Defense Council, it still must be approved by the shareholders and regulators…TXU also has 50 days to accept other bids…
- To gain the support of reluctant environmental organizations, negotiators agreed to meet electricity demand with renewable sources, generated more cleanly than the proposed coal projects. TXU announced the company will spend twice the amount of money it now spends on buying wind power…

- Texas has the largest installed capacity in the United States…The largest wind farm in Texas was developed by FPL Energy, a subsidiary of Florida Power & Light. Its 421 turbines were manufactured by Siemens and GE…high demand [is] causing somewhat of a turbine shortage…Foreign manufacturers and developers are hesitant to invest in the unstable U.S. wind market. Many industry officials and supporters of wind power have suggested a long-term production tax credit or a federal renewable portfolio standard…
- The wind market faces stormy conditions with increasingly high capital costs and turbine and raw material shortages…Despite a lack of security, the wind industry has grown exponentially over the last several years.
- Aside from the power purchase agreement, TXU will invest $400 million conservation and energy activities over the next five years. The company pledged to reduce mercury, sulfur dioxide and nitrogen oxide emissions and use clean coal IGCC technology in its two new coal facilities…The company will also seek to join the U.S. Climate Action Partnership…

- The deal also entails a 10 percent decrease in electricity prices for customers through 2008…[and] the cancellation of eight proposed coal plants, preventing the emission of about 56 million tons of carbon annually.