TXU Buyout Makes Utility Greener

TXU Buyout Makes Utility Greener

A unique coalition of financiers, environmentalists and shareholders has announced the $32 billion buyout of TXU Corporation, a Dallas-based energy giant, by Kohlberg Kravis Roberts & Co. and Texas Pacific Group, two of the nation's leading private equity firms, and also the investment bank Goldman Sachs. The buyout, which will turn the publicly held TXU into a private company, is the largest such purchase in corporate history.

The buyout is also significant because of the close involvement of environmental groups Enivronmental Defense and the Natural Resources Defense Council. Goldman Sachs, which in recent years has taken the lead in many areas in the fight against climate change, courted environmentalists during the deal to secure their support for the buyout. TXU has come under heavy fire lately for its plans to build as many as 11 new coal-fired power plants, which are major emitters of greenhouse gases.

TXU was recently named one of the ten worst climate-changing companies by a shareholders' action group. TXU announced that as a result of the buyout, the company has shelved plans to build eight of the 11 coal-fired plants, a move that will prevent an estimated 56 million tons of annual carbon emissions.

The new owners of TXU will significantly increase the environmental policies of the company's practices, including:
  • Significant investments in alternative energy;

  • instituting corporate policies tied to climate stewardship;

  • joining the United States Climate Action Partnership, a broad-based group of businesses and leading environmental groups working to enact an environmentally effective, economically sustainable and fair climate change program;

  • pledging to support the mandatory cap and trade program to regulate carbon emissions;

  • and inviting environmental leaders to shape the direction TXU.
In celebrating the buyout, Environmental Defense's President, Fred Krupp, said, "This is one of the most significant developments in America's fight against global warming. Environmental Defense commends KKR and TPG for not only dropping TXU's applications for eight proposed coal plants in Texas, but also for the many other commitments they have made to reduce air pollution and global warming emissions, including their support for a mandatory federal cap and trade program to regulate carbon emissions, doubling TXU's expenditures on efficiency measures and their overall desire to rebuild TXU as a leader in the clean energy economy."

And Rich Friedman, who head Goldman Sachs' Merchant Banking Division, added, "This transaction serves as a model for long-term environmental stewardship. By investing in new technologies, encouraging conservation and reducing carbon emissions and pollutants, TXU is on the path to being a 21st century power company."