You Know Who's Not That Impressed with the TXU Deal? Mayor Laura Miller. And She Has a Point.

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At 10:30 this morning, Environmental Defense's president Fred Krupp and Austin-based regional director Jim Marston and Natural Resources Defense Council's David Hawkins got on the phone with journalists from around the country to discuss their roles in TXU's decision to withdraw permits for eight of the 11 coal-fired plants it wanted to build across Texas. TXU, of course, dropped those plans when Kohlberg Kravis Roberts and Texas Pacific Group announced, privately two weeks ago and then publicly over the weekend, their intentions to pay $45 billion for the Dallas-based energy provider.

But the way Mayor Laura Miller puts it to Unfair Park this morning, victory's not quite at hand. After all, she points out, TXU is still going forward with three plants -- including the Oak Grove plant in Robertson County near Waco, which two state administrative law judges said in August would make the region's air pollution worse before those judges rejected TXU's permit application. Indeed, Oak Grove will be a lignite-powered plant -- lignite being a brown coal, considered the dirtiest variety of coal used to generate power plants.

Miller, who in September created the Texas Clean Air Cities Coalition to fight the 11 plant permits, says that TXU will still have a fight on its hands should the company go forward with constructing Oak Grove. There are several groups, including Public Citizen and Our Land Our Lives, who are trying to stop the Oak Grove plant from being built, and TCACC is trying to find out whether it can join the battle either at the Texas Public Utility Commission level or the state district court level should the permit get approved (it probaby will) and, inevitably, litigated.


"We have members of our coalition who are still worried about their towns, because they're still getting coal plants the administrative judges said were too dirty," Miller tells Unfair Park. "They recommended denial, and those folks in Robertson County got the permit denied without money, without [TCACC's attorney] Steve Susman, without air modeling studies. Well, guess what. Now we have a whole lot of information about that plant, so I've asked Susman if he would look at the case and see if we can get standing, since we weren't even a coalition when that permit first went before the judges."


As Miller points out, it would be easy for TCACC to proclaim a victory and walk away. After all, it got TXU to bury the permits for the plants the coalition originally protested. But Miller says TXU offered ED's Marston those permits even before negotiations began between the private equity firms purchasing TXU and the two environmental nonprofits who helped broker the deal. Indeed, she says, last Thursday in San Francisco, William K. Reilly -- the former administrator for the Environmental Protection Agency under President George H. W. Bush who now works for Texas Pacific -- gave Marston the permits even before negotiations began. Reilly said TXU was abandoning the applications.


And why? Because, Miller insists, TCACC and Susman, in preparing for their aborted hearing last week in front of the State Office of Administrative Hearings, had enough information to sink those plants, and TXU figured it would be easier to give up a bulk of its permits and keep a handful of plants than try to save them all. Plus, everyone would come out of the weekend's dealings looking like heroes: NRDC and ED would get to take credit for killing eight coal-fired plants, while TXU could look like it was going green, even after the company had insisted it needed all 11 plants to keep the lights on in Texas in the coming years.


"What did ED get out of this deal except a place on TXU's advisory board?" she says. "Maybe that's important, but what are they going to do except talk about the future of coal plants?"


Fact is, Miller says, TXU has not committed in writing not to seek permits for those eight plants in the future. After all, the company's already signed exclusive contract with Bechtel Corporation and another contractor to build the plants, and it's already purchased the turbines for all 11 plants. This info comes from "a three-inch stack" of confidential documents TXU turned over to Susman two weeks ago, which he planned to use against the company during the permit hearings canceled after a state district judge said Governor Rick Perry did not have authority to fast-track the permits.


Miller says that during their initial meetings, the equity firms tried to get ED's Marston to sign off on Oak Grove. Only problem was, he had no say in the matter, since neither his organization nor NRDC was involved in the TCACC litigation against that particular plant. And during the conference call this morning, Marston said he had "agreed to introduce our new friends at TPG and KKR to Public Citizen and Our Land Our Lives and let them get together to work [Oak Grove] out." He described their initial get-together last Friday as "cordial and a beginning."


Meanwhile, Miller says the TCACC will remain together "at a minimum till all the bills get paid," but also suggests that it may evolve into something else.


"Two months ago I told the coalition, 'Why don't we start looking at group buying power?' After all, we represent 7.2 million people, so let's do deals with clean-air companies,'" she says. "So that's something we'll look into. And does the coalition want to ask its attorneys to pursue getting involved with Oak Grove? I don't know the answer yet. It's too early to know."


Speaking of early, the mayor says she got a very early morning phone call today from, of all people, Ron Kirk. And was the former mayor calling to congratulate his former nemesis? Uh, not quite. Turns out, Kirk -- whose a partner at Vinson & Elkins, which is TXU's law firm -- is in charge of "dialoguing" with the TCACC mayors concerning the buyout and its ramifications. Miller says she told Kirk that if the equity firms wanted to dialogue, they could call her directly and not have their lobbyist do it for them. She says she later got a call from David Bonderman, the founding partner of Texas Pacific Group, with whom she expects to speak later today. --Robert Wilonsky


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