04.20.06
TXU Plans $10 Billion Investment to Power the Future of Texas
Dallas, TX -
In response to the electric power needs of the growing Texas economy, TXU Corp. (NYSE:TXU) announced today a plan to invest $10 billion in power generation to provide lower-cost, secure and stable power, the introduction of new consumer and business service offerings, and the largest voluntary emissions reduction program of its type in the nation.
“Texans want ample generation supply, access to lower electric prices, and better air quality, and TXU will deliver all three,” said C. John Wilder, TXU chairman and CEO. “Our new service offerings and this massive investment in power infrastructure will save consumers money, add reliable electric generating capacity to reduce dependence on high cost natural gas, create jobs, and lower key emissions -- all at the same time.”
Volatile energy markets pose challenges for Texans
The future growth of the now vibrant economy could be dampened by volatile and rising energy commodity prices. Texas has one of the fastest growing economies in the country and is projected to add nearly 6 million residents within a decade. At the same time, Texas electric power reserve margins are compressing rapidly and are expected to fall below levels deemed reliable by 2010.
Texas has a high reliance on natural gas for power generation, with 72 percent of the state’s generation capacity depending on natural gas for fuel, compared to the U.S. average of 45 percent. This reliance causes substantial challenges because natural gas prices have quadrupled and most experts believe the low gas prices of the 1990s will not return. At the same time, U.S. reliance on imported natural gas is increasing significantly; over the next 20 years, U.S. imports are expected to increase five-fold.
“There is no quick fix,” said Wilder. “There is no easy solution to reduce U.S. dependence on foreign energy sources and to reduce power prices. To address these challenges, TXU has a three-part plan. We will invest in lower cost power supplies, innovate with new service offerings that enable customers to save money and improve air quality by reducing emissions.”
INVEST: TXU’s generation plan will provide lower-cost, secure and stable power
TXU will invest up to $10 billion in state-of-the-art technologies to provide near-term solutions to meet Texas’ growing need for power.
Proposed New Generation Units
Primary fuel type; MW; Location
|
Unit |
Fuel* |
Net Capacity |
County |
|
Previously announced: |
|
|
|
|
Oak Grove 1 & 2 |
Lignite |
1,600 |
Robertson |
|
Sandow 5 |
Lignite |
600 |
Milam |
|
Subtotal |
2,200 |
||
|
Announced today: |
|||
|
Big Brown 3 |
PRB |
800 |
Freestone |
|
Lake Creek 3 |
PRB |
800 |
McLennan |
|
Martin Lake 4 |
PRB |
800 |
Rusk |
|
Monticello 4 |
PRB |
800 |
Titus |
|
Morgan Creek 7 |
PRB |
800 |
Mitchell |
|
Tradinghouse 3 & 4 |
PRB |
1,600 |
McLennan |
|
Valley 4 |
PRB |
800 |
Fannin |
|
Subtotal |
6,400 |
||
|
Total |
|
8,600 |
|
*PRB refers to coal from the Powder River Basin (PRB) region in Wyoming.
This plan encompasses 11 new generation units at nine existing TXU Power sites. Air permit applications were filed today with the Texas Commission on Environmental Quality (TCEQ) for eight of these units, totaling 6,400 megawatts (MW) of net capacity. The new units will be located at existing power plant sites in Fannin, Freestone, McLennan, Mitchell, Rusk, and Titus Counties. If approved, the new units are expected to be operational by 2010. TXU previously announced the other three units, totaling 2,200 MW of net capacity, at Oak Grove and Sandow, located in Robertson and Milam Counties.
By taking advantage of TXU’s scale, existing sites, rail facilities, water rights, and other infrastructure, TXU can drive this development initiative at three-quarters the cost of a typical power developer. To manage the complexity of the effort and reduce engineering, procurement, and construction costs, TXU will work in exclusive partnerships with two of the leading engineering and construction firms in the world, Bechtel Power and Fluor Corp. Bechtel and Fluor have built more of the world's coal-fired power plants over the past 20 years than any other firms.
“After extensive review, we selected sites that maximize opportunities to leverage existing infrastructure, minimize costs, and enable a more efficient construction timeline,” Wilder said. “We are pleased to partner in this program with two of the best engineering and construction firms in the world.”
This endeavor will increase energy reliability and independence by expanding reserve margins and diversifying supply. In aggregate, this plan will add an estimated 10 percent to the ERCOT supply, enough to serve 6.5 million homes. This increase should be sufficient to meet Texas’ growing demand through 2015.
In addition, TXU is launching a new company, TXU Renew, to double its renewable energy portfolio by 2011. TXU Renew will focus on the growing renewable energy market by investing in renewable power facilities. This will bring TXU’s total renewable energy portfolio to approximately 1,400 MW, enough wind energy to power about 275,000 homes.
To help find innovative solutions to Texas’ long-term power needs, TXU also plans to invest up to $2 billion in the development and commercialization of the next horizon of cleaner power plant technology, including integrated gasification combined cycle (IGCC) technology.
In total, TXU’s investment plan is projected to create thousands of Texas jobs and save Texans billions of dollars. With the approval of these projects, the $10 billion investment will create approximately 40,000 construction and other temporary jobs and 21,000 permanent jobs, and add nearly $14 billion to the state gross product. TXU believes this plan will make it the largest private capital investor in Texas. Reflecting the advantaged cost of coal, the new plants are expected to lower long-term power costs for customers by $1.7 billion annually.
INNOVATE: ‘Peace of Mind’ and ‘Stable and Secure Power’ service plans will enable customers to save money today
Spurred by the competitive Texas market, TXU Energy is introducing a set of new, innovative service offerings that substantially increase the options that consumers have to manage their electricity consumption. Texans will now have access to the most innovative assortment of retail electricity options in the U.S. The new plans offer consumers the option to save money today, secure long-term price certainty, and take more control over their energy usage. Some of the new options in the Peace of Mind program include:
- Time of Use – Empowers customers to use electricity efficiently and wisely while saving as much as 20 percent during off peak periods, allowing customers to save money if they shift power usage to lower cost, off peak periods.
- SummerSavings 24SM – Offers immediate summer savings when customers use the most electricity due to the Texas heat - 10 percent savings in the summer months plus a rate that is lower than the current Price-to-Beat rate during the other months over a two year period.
- SureValueSM – Provides savings, certainty, and up to 10 percent off current Price to Beat rates, for a full five year period.
TXU Wholesale will offer large business customers the ‘Stable and Secure Power’ program. Large customers, including industrial companies, will have the opportunity to participate in the economics of these large-scale, coal-fired power plants through a combination of equity investments or upfront payments. These customers could enjoy power prices that reflect the marginal economics and costs of coal-fired power.
“For our customers, the ‘Peace of Mind’ and ‘Stable and Secure Power’ programs provide short- and long-term solutions, lower-priced electricity and tools to better control electricity consumption,” added Wilder.
IMPROVE: TXU’s plan will set a new environmental standard
TXU will set a new environmental standard - more than offsetting key emissions from the new units by reducing emissions at existing facilities. With this plan, TXU will double its solid-fuel generation capacity and at the same time will reduce key emissions by 20 percent from where they are today. This will be the largest voluntary program of its type in the nation, lowering total emissions while simultaneously bringing significant new capacity into the market. If all other plant construction follows this standard, Texas will be able to serve its growing power needs while improving air quality for the future.
TXU’s plan includes up to $500 million for voluntary emission reductions, accomplished through fuel switching and retrofitting state-of-the-art emission controls at existing units. These actions will reduce TXU’s current mercury emissions by more than 50 percent, well beyond current regulatory requirements, and make substantial reductions in sulfur dioxide (SO2) and nitrogen oxide (NOx) emissions as well.
TXU’s planned investment also includes up to $2 billion for installation of the best available control technology (BACT) to minimize emissions at the 11 expansion units. The new plants will have among the lowest SO2, NOx, and mercury emissions rates in the nation and will be 80 percent cleaner than the average U.S. coal plant.
Overall, these actions will more than offset the SO2, NOx, and mercury emissions from the new coal plants. TXU will reduce at least 1.5 pounds of these key emissions for every one pound from the new units – equal to an overall reduction of 20 percent relative to current levels.
“TXU recognizes the need for unprecedented action,” said Wilder. “TXU is introducing new service offerings to give our customers more choices, tools and savings. In addition, our massive infrastructure investment will create more low-cost supply, thousands of jobs, and improved air quality for the future. In short, TXU will ‘Power the Future’ of Texas.”
TXU Corp., a Dallas-based energy company, manages a portfolio of competitive and regulated energy businesses primarily in Texas. In the competitive TXU Energy Holdings segment (comprised of electricity generation, wholesale marketing and retailing), TXU Energy provides electricity and related services to 2.3 million competitive electricity customers in Texas, more customers than any other retail electric provider in the state. TXU Power has over 18,300 megawatts of generation in Texas, including 2,300 MW of nuclear and 5,837 MW of lignite/coal-fired generation capacity. The company is also one of the largest purchasers of wind-generated electricity in Texas and North America. TXU Wholesale optimizes the purchases and sales of energy for TXU Energy and TXU Power and provides related services to other market participants. TXU Corp.’s regulated segment, TXU Electric Delivery, is an electric distribution and transmission business that complements the competitive operations, using superior asset management skills to provide reliable electricity delivery to consumers. TXU Electric Delivery operates the largest distribution and transmission system in Texas, providing power to three million electric delivery points over more than 100,000 miles of distribution and 14,000 miles of transmission lines. Visit http://www.txucorp.com/ for more information about TXU Corp.
This release contains forward-looking statements, which are subject to various risks and uncertainties. Discussion of risks and uncertainties that could cause actual results to differ materially from management's current projections, forecasts, estimates and expectations is contained in the company's SEC filings. In addition to the risks and uncertainties set forth in the company's SEC filings, the forward-looking statements in this release could be affected by, among other things, the company’s ability to fund the investments described herein, delays in approval of, or failure to obtain, air and other environmental permits, changes in competitive market rules, changes in environmental laws or regulations, changes in electric generation and emissions control technologies, changes in projected demand for electricity in Texas, the ability of the company to attract and retain skilled labor for planning and building the plants, changes in wholesale electricity prices or energy commodity prices, changes in the cost and availability of materials necessary for the developments, the ability of the company to manage the significant construction program to a timely conclusion with limited cost overruns, and the terms under which the company executes these initiatives.
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Kimberly Morgan
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Steve Oakley
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