TXU may build new power plants to maintain surplus of electricity in Texas

TXU may build new power plants to maintain surplus of electricity in Texas

By Dan Piller, Fort Worth Star-Telegram, Texas Knight Ridder/Tribune Business News - May 21

TXU Corp. is considering building new coal-fired generating plants as the state's surplus of electricity is expected to lessen through the end of the decade, chief executive John Wilder told shareholders Friday.

"A new plant takes four or five years to build, and when you see that Texas' reserve margins are likely to narrow by the end of the decade, it makes sense to take a look at new plants starting now," Wilder said.

Texas has boasted having as much as 20 percent more generating capacity than its peak loads of about 60,000 megawatts, which generally occur during summer air-conditioning season. That reserve, created largely by the construction of 70 generators during the 1990s, has been a major reason Texas has avoided steep price spikes like those that occurred in California four years ago or the kind of blackout that shut down much of the Northeast two summers ago.

But officials with the state's electricity grid have warned that increasing demand is eating up more power.

Wilder said at the meeting that TXU has ruled out another nuclear plant to go with the one it has at Glen Rose and that is it not likely to build another natural-gas-fired plant because natural gas prices have tripled since 2000.

TXU's current generating capacity includes four lignite-fired plants near mines in East Texas. Wilder said that some of the plants burn a combination of lignite and low-sulphur coal from Wyoming.

He said that before TXU would begin a coal-fired generating project, it would seek assurance from state and federal regulators that environmental laws and regulations would remain constant through the lengthy permit and construction process.

TXU has reduced its generating capacity in recent years with the sales of generators at Handley in east Fort Worth and Mountain Creek Lake in Dallas County to Exelon Corp. of Philadelphia. Together, they provided about half of the electricity needed for the Metroplex.

In addition, TXU has closed its century-old North Main generating station in downtown Fort Worth. The site is to become a new campus for Tarrant County College.

TXU has asked to close or mothball eight older generating plants strung along its system that extends from East Texas to Midland. The Electric Reliability Council of Texas, operator of the state grid, has delayed approval of the closings pending a review of the state's reserve situation.

Also at Friday's meeting, Fort Worth native Erle Nye said he will end his 45-year career with TXU, the last decade as chairman, this month. Nye will remain a director and act as a consultant on community matters.

Wilder was elected to the chairman's post, adding to his position as CEO. Wilder came to TXU from Entergy Corp. of New Orleans in Feburary 2004.

"TXU is in very good hands," Nye told the audience. And as a slide image of his grandchildren appeared on a giant screen behind him, the 67-year-old Nye said, "This is where I'll be spending most of my time."

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