Former NY State Comptroller Makes Case For Retiring Three of Luminant's Coal-Fired Plants

TXU_BigBrown-coal-plant.jpg
Big Brown
Former New York State First Deputy Comptroller-turned-investment banker Tom Sanzillo released a report this morning, via the Sierra Club, demanding that Dallas-based Energy Future Holding (and its Luminant subsidiary) shutter three of its coal-fired power plants: Big Brown (in Fairfield), Monticello (in Mount Pleasant) and Martin Lake. In a press release accompanying the report -- which revisits at length TXU's $46-billion sale to Kohlberg Kravis Roberts & Co. and Texas Pacific Group in 2007 -- Sanzillo says that those plants are little more than a "big financial burden to Texas" and that "there are better, cleaner, financially stable and more efficient solutions that do not cover the Texas landscape in mountains of toxic debt."

The entire report -- titled The Case to Retire Big Brown, Monticello and Martin Lake Coal Plants: Three Financially Mismanaged, Unprofitable, Outmoded and Worthless Coal Plants in North Texas -- is available here. An excerpt:
The sale of then Texas based TXU to a large group of outside investors meant that the lights in Dallas -- and the electricity supplied by the three coal plants -- were now owned by private investors. The outside owners promised lower prices, innovation and cleaner skies, recognizing the challenges that these three coal plants in particular held as the largest emitters of pollution in North Texas. Today, however, these plants, and the complex corporate structure used in the buy-out are almost worthless, struggling to remain cash-positive, and under serious allegations of major violations under the Clean Air Act. The outside investors have recently become involved in a highly public debate over their investment claims. This report shows from a financial perspective what happened and why these three plants are high priority candidates for retirement.

North Texas has historically been the region of the state most dependent on coal fired power generation. Coal-fired technology has reliably produced affordable electricity, but with the trade-off of significant levels of air pollution in the Dallas/Fort Worth area. Today, the economic benefits of these coal plants are fading and the outlook is poor. In addition, the environmental pollution requires substantial remediation that only heightens the risks to this poor financial outlook.
Update at 1:30 p.m.: Meranda Cohn, who used to be at Dallas City Hall but now works for Luminant's corporate communications department, sends this response to today's report:
We believe this report is completely without merit. Since the 2007 transaction, EFH/Luminant has invested billions in this state - in job growth, new power plants, renewables and energy efficiency. Texans depend on Luminant, the state's largest power generator, to produce much-needed electricity and fuel our fast growing, and vibrantly competitive state. EFH and Luminant have been a proud part of the Texas energy landscape for more than 100 years, and we remain more committed than ever to providing, safe, affordable, reliable and clean power.
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16 comments
Darrd2010
Darrd2010

so when you so called 'natural gas' enthusiasts find a way to produce this shale gas so that it does not pollute our lives, you let me know.You will get very little argument that this gas BURNS cleaner, but it's the PRODUCTION of it that is filthy and renders us all collateral damage.

Just the facts, ma'am
Just the facts, ma'am

Old and fully depreciated smoke bellowing dirty coal burning power plants make for exceptional financials for the new private owners (and before them the shareholders of TXU). Why ruin a good thing? Yes, we as society pay for all those naughty nasty bad side effects. But do not confuse the TXU folks with such facts and concerns. The sad part was that when the private investors bought TXU they promised to clean up the former TXU's plan to build more dirty nasty coal plants. The Texas regulators gave in even though Oregon regulators and Arizona regulators told the same investors to high tail it out of their respective states.

Steve
Steve

The plants are being recommended for closure, doesn't the source need to be replaced if so? Anonymous said pro-nuke. I'm down with that somewhat, it's better than burning coal. I just think Natural Gas is the best solution at this time.

Ccarpent1
Ccarpent1

Contact my father, Marty Shankle, who has worked in all three of these plants and currently works in the Martin Lake plant for the last 26 years for facts. We face more pollution from the automobiles and cement plants in DFW than from these coal plants.

Steve
Steve

Natural Gas. It is the only solution. If people would get off their lazy asses and see how much fiction Gasland contained then they might be able to relax a bit and see the benefits. Coal plants should be eliminated and we're seeing what can happen with Nuclear now. It's the best solution RIGHT NOW. Look at the economy in North Dakota right now.

Syd_Nancy
Syd_Nancy

Luminant is trying to get permission to build two more nuclear silos, next to the current ones in Comanche peak. Connect the dots?

scottindallas
scottindallas

We DO need to look more at that transaction, and how their highly leveraged purchase has kept them from improving the network of power production.

scottindallas
scottindallas

Yes Steve, we, by all means should get four-square behind only one power source. Coal is cheap, it's not as dirty as you think. Consider that Natural gas fracking uses millions of gallons of water that we hope is never effectively reclaimed. Truly, so long as the fracking fluids remain secret, a secret toxic sludge that we have to hope are never recovered, I have to be cautious. Few studies have been done. I am open to there being costs to energy extraction, we should proceed with caution. Coal is abundant and domestically produced, it can be made cleaner and should be. I don't have a problem with Natural Gas, and we should certainly use it for electricity production, as with Nuclear power. I would like to see more solar power, but wind seems to be of little utility.

Anon
Anon

the problem with wind is that it's fairly expensive, and abundant at the wrong time of day. it swings into full gear at night when power demand is already low, and thus wholesale prices are low and don't justify the expense of wind power. it also produces a reasonably consistent amount of power over long periods of time, but you can't just put a bunch on your power grid and hope that it's a windy day. you need to have back up capacity for when the weather lets you down. the best chance for wind would seem to be setting up some "storage" system to allow for strategic release. i'm not talking about a battery - i'm talking pumping water with the wind power and then using it to create hydro power on a predictable schedule. but even that scenario has environmental implications. the unfortunate truth that activists won't tell you is that curbing demand is the only way forward, which tells people what to do. most people don't take well to that message.

Steve
Steve

Will you please provide a solution. Are you pro-coal burning? Pro Nuke? What's your solution to provide power? Throw a bunch of windmills up? How many Drilling booms exist? Millions? How many times has one gone boom? What is your solution? Do you like having your AC on in August?

scottindallas
scottindallas

Wind power only works about 10% of the time. I too thought of the Hydro-battery/wind pump. Solar really makes sense considering the output coincided exactly with demand for Texas and the Temperate world. Someone has suggested that Solar power, like computer memory will become twice as efficient and half as cheap year to year. Though none of this addresses much of our auto needs. There gas is hard to beat, if we would allow diesel more widely (enviro. limits) as these are the most cost efficient engines going.

DoubleOJoe
DoubleOJoe

A better first step, rather than build any new plants, is to upgrade and improve the transmission grid. The US power system loses more than 265 billion kWh per year in transmission and distribution. Increased stability and efficiency will mean we can do more with what we already have.

Then, once we get to a stable point, we need to look at replacing existing plants with cleaner and more efficient ones. I don't care how many miners it employs; coal needs to fall by the wayside. I think a move needs to be made towards more distributed generation as well, to remove the risk of single points of failure. Solar, wind, natural gas, geothermal, hydroelectric and nuclear are the ways forward, at least to me. The key is that we build generator plants that are appropriate to the area. Coastal and Great Plains need wind power, the Southwest could benefit more from solar, and so forth.

Edited to add:Newer and more efficient generators at the power stations are needed as well. Sandia National Laboratories currently has two testbeds running supercritical CO2 generators, which appear to have the potential to increase turbine efficiency by around 50%.

Oak Cliff Townie
Oak Cliff Townie

Sorry Steve ...

"Look at the economy in North Dakota right now. "

I have worked the oilfields By Boom I meant Good times when every one is working Bust means .That day all the money for drilling stops . And the work drys up.

I live in a 834 Sq foot well insulated House .In the winter we back the heat down to keep from Toasting . In the summer we have to set the temp at about 75 to keep from freezing. Our heating and cooling units are six years old.

My Bill is about 195 to 200 a month. I

I tend to think smaller is better ..

A for the making Energy Issue.

These is a NEW natural Gas electric generating plant about five miles away from the Comanche Peak Nuclear Power plant .......

What is up with that ?

Anonymous
Anonymous

This is the stupidest thing I've ever heard. There is no "need" to increase the power supply at all. Just stop creating more power plants. Literally, the problem of wondering what risks we should accept in the name of low energy prices is over. The price for power will go up and people will actually have an incentive to stop using it so wastefully. Is this actually going to happen? No, it won't. But there is no reason that more power "has" to be created. It is simply that we'd prefer to have low power prices than to wonder what we are doing to the environment by generating more power.But for the record, I am pro Nuke in a big way. I just think it's lazy to say that the people and the market would not be able to react to new price levels for inputs. Labor got too expensive so we figured out how to reduce the number of human beings required to make the things we want. The same would be true of energy prices.

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