The masterminds of history's biggest leveraged buyout wrongly bet that stable Texas electricity prices would pay off Energy Future Holdings Corp.'s $35 billion debt. Even as it hurtles toward bankruptcy, Energy Future continues to wield immense power. Contributors tied to Energy Future have invested $2.4 million in Texas elections just since 2009; Governor Perry is the No. 1 beneficiary. As the governor's Utility Commissioners approve measures that jack up Texas electric bills, they are fueling rumors of a crude gubernatorial attempt to bail out Energy Future.
It all makes for one electrifying new edition of TPJ's Lobby Watch.
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Showing posts with label TXU/Energy Future. Show all posts
Showing posts with label TXU/Energy Future. Show all posts
Monday, March 15, 2010
Lobby Watch: Political Juice Amped Up
$5 Billion Power-Grid Contracts
The Texas Public Utility Commission awarded almost $5 billion in electrical-grid contracts to energy companies. The contractors' PACs and executives, in turn, pumped almost $5 million into state elections over the past five years. Grid contractors also spent up to $45 million on Texas lobbyists during this period.
Follow Lobby Watch as it follows the money through the grid.
Follow Lobby Watch as it follows the money through the grid.
Friday, June 13, 2008
The Texas Observer: Laura Miller's Carbon Admission
In a bizarre turn of the revolving door, a power company with a right-wing pedigree has hired former Dallas Mayor Laura Miller to promote its bid to build a coal-gasification plant in Texas. Last January, Summit Power Group Inc.-headed by a lion of the Christian right best known for opposing environmental regulation-started paying Miller to promote "clean" coal. In 2006 then-Mayor Miller led the charge against TXU Corp.'s plans to build 11 new dirty-coal plants in Texas. The role reversal is a story that Miller herself might have relished in her former life as a muckraking reporter. Read the article at the Texas Observer
by Andrew Wheat|June 13, 2008
TEXAS OBSERVER
In a bizarre turn of the revolving door, a power company with a right-wing pedigree has hired former Dallas Mayor Laura Miller to promote its bid to build a coal-gasification plant in Texas. Last January, Summit Power Group Inc.-headed by a lion of the Christian right best known for opposing environmental regulation-started paying Miller to promote "clean" coal. In 2006 then-Mayor Miller led the charge against TXU Corp.'s plans to build 11 new dirty-coal plants in Texas. The role reversal is a story that Miller herself might have relished in her former life as a muckraking reporter.
Miller's new boss at Summit Power is an unlikely prophet of "clean coal." Summit Chairman Donald Paul Hodel did stints as President Ronald Reagan's energy secretary and interior secretary. He is perhaps best known for opposing a ban on aerosol chlorofluorocarbons to protect the Earth's ozone layer. At the time, the Washington Post reported that Hodel urged people to don hats, sunscreen and dark glasses instead. Despite Hodel's insistence that he never said any such thing, the apocryphal quote has dogged him for decades.
Now Hodel seeks to build a coal-gasification plant that would remove half of the global-warming emissions it produces. Oddly, the Arizona-based Center for the Study of Carbon Dioxide and Global Change lists Hodel as a science adviser. The center, a think tank, touts the planetary advantages of warmer climates, and questions alleged links between CO2 emissions and global warming. It has received funding from oil giant Exxon Mobil Corp. Hodel has been president of James Dobson's Focus on the Family and Pat Robertson's Christian Coalition. His wife, Barbara, sits on the board of Virginia-based Patrick Henry College, which caters to home-schooled evangelicals (and is unrivaled at placing interns in the current White House). Another member of Patrick Henry's board is Texas Christian-right godfather James Leininger, who has spent millions of dollars in Austin promoting school vouchers, protecting fetuses, and battling with plaintiff attorneys over liability laws.
By contrast, Miller's spouse, Steve Wolens, is a former state lawmaker and plaintiffs' attorney who is often mentioned as a Democratic candidate for statewide office. During his last legislative session in 2003, this liberal Democrat scored a lowly 19 percent on key conservative votes tabulated by the Dallas-based Heritage Alliance. His wife seemed to cement her liberal bona fides in 2006, when she co-founded the Texas Clean Air Cities Coalition. Back then, Miller warned communities surrounding the proposed coal plants that TXU was "purposely misleading the public in order to build old-technology coal plants the cheapest way possible." When investment firms KKR & Co. and TPG Capital (formerly Texas Pacific Group) successfully sought to take over TXU in early 2007, some environmental groups endorsed the buyers' pledge to cancel all but three of the proposed plants. Not so Miller, who stood her ground, pointing out that just two of the surviving plants would spew more mercury emissions than all of the canceled ones put together. "Environmental Defense blessed those two stacks when they don't have the authority to do that," she said at the time. (Environmental Defense Fund's Texas director, Jim Marston, chairs the nonprofit board that publishes the Observer.)
A year after Miller lambasted TXU's outdated technology and told the company that "carbon dioxide is a huge, huge issue for us," Summit hired the ex-mayor to promote a proposed coal-gasification plant that will sequester at most 60 percent of its CO2 emissions. Asked about coal-gasification technologies that target 90 percent of CO2 emissions, Miller told the Observer, "You can't capture more than 60 percent and have it be [economically] viable."
A Florida-based consulting engineer who has worked for power companies and environmentalists concurred. While technology exists to remove 90 percent of a plant's CO2, said Richard Furman, 60 percent is "becoming the consensus of what is cost effective." Thereafter, the cost of removing CO2 escalates to the point that you would be better off spending the additional money on plants with no CO2 controls, Furman said. Some of Miller's allies in the TXU fight feel betrayed. "No project should move forward right now that adds fuel to the global-warming fire," said Karen Hadden, who heads the Austin-based Sustainable Energy and Economic Development Coalition. Hadden advocates solar and wind power as more cost-effective alternatives.
"The best way to fight dirty coal plants is to build clean ones," Miller said. She signed on as Summit's Texas projects director because the company was willing to privately finance a coal-gasification plant with carbon sequestration. Once that is demonstrated, Miller said, the next challenge will be achieving higher rates of CO2 sequestration. Asked why a man who appears to question the link between CO2 and global warming would build a CO2 sequestering plant, Miller said Hodel "is a true believer in the United States not being dependent on other countries for energy." Asked if she ever discusses fetuses with the former Christian Coalition president, Miller said, "We talk about coal."
In a written statement to the Observer, Hodel acknowledged opposing the 1980s ban on chlorfluorocarbons based on cost-benefit analyses that "I thought were totally speculative." He said the Washington Post relied on anonymous sources to falsely attribute the apocryphal sunscreen quote to him. Although he said he was unaware that the Center for the Study of Carbon Dioxide and Global Change claims him as a science adviser, Hodel said the group does "interesting work" on "some of the benefits of having increased CO2 in the atmosphere." He added, "Coal gasification is a vastly cleaner use of coal than burning it, whether you capture the carbon or not. Whether global warming is caused by human activity is not the issue. What matters is that an increasing number of very influential people around the globe believe this to be a fact."
Summit, based in Poulsbo, Washington, announced its coal-gasification plans at a crucial time. Texas Gov. Rick Perry put up $21 million in cash and $240 million in tax credits last year to lure to Texas an experimental coal-gasification plant that would screen out toxic emissions and global-warming gases. The U.S. Department of Energy pledged to finance most of the $2 billion plant, with additional funding from the so-called FutureGen Alliance of coal and power companies (including TXU successor Luminant Energy Co.). Texas promoted two potential DOE sites: one between Waco and Lufkin, and the other outside Odessa. Then DOE scrapped these plans early this year, arguing that it is more efficient to fund carbon-dioxide removal at coal-gasification plants being pursued by private companies across the country.
When Summit subsequently announced its intent to build a coal-gasification plant in Texas, Midland-Odessa officials promoted their area as an ideal site. Part of their pitch is that the carbon dioxide stripped from the coal can be sold to local energy companies, which use CO2 gas to force more oil and gas out of wells. Summit said its gasification plant will generate five times more energy than the one DOE planned to build. It also will do a poorer job of controlling CO2 (removing 50 to 60 percent of the gas, compared with DOE's target of 90 percent). Summit builds power plants but does not operate them. Miller declined to identify the client behind this project, which she said would open in 2013 at the earliest.
One Summit co-founder already boasts West Texas business connections. Earl Gjelde-a top Hodel aide in the Reagan years-sat on the board of Didax Inc. during the 1990s. Former CIA technology chief William Bowers founded this evangelical Internet company in Virginia in 1993. After dotcoms bombed, Texas oil fortunes invested in the remains. The Texans remade the company in their own image in 2002. They sold its core Internet assets to evangelical radio company Salem Communications Corp. (where Hodel is a director), transplanted the company to Midland, and renamed it Amen Properties Inc. Amen invests in commercial properties and energy wells, and founded electricity retailer W Power & Light (see, "Low Wattage Regulators," page 4). Despite this radical makeover, Amen retained Didax's evangelical bylaws, which require employees and directors to believe in such things as Jesus' virgin birth and the Bible as God's infallible revelation.
Now Earl Gjelde and Donald Hodel are paying Laura Miller to promote a coal-gasification plant. While it would mark a huge improvement over Texas' existing dirty-coal plants, the proposed plant falls short of the best possible technology to counter global warming. Looks like those hats, shades, and sunscreen could come in handy after all.
Award-winning Observer columnist Andrew Wheat is research director for Texans for Public Justice.
Laura Miller's Carbon Admission
by Andrew Wheat|June 13, 2008
TEXAS OBSERVER
In a bizarre turn of the revolving door, a power company with a right-wing pedigree has hired former Dallas Mayor Laura Miller to promote its bid to build a coal-gasification plant in Texas. Last January, Summit Power Group Inc.-headed by a lion of the Christian right best known for opposing environmental regulation-started paying Miller to promote "clean" coal. In 2006 then-Mayor Miller led the charge against TXU Corp.'s plans to build 11 new dirty-coal plants in Texas. The role reversal is a story that Miller herself might have relished in her former life as a muckraking reporter.
Miller's new boss at Summit Power is an unlikely prophet of "clean coal." Summit Chairman Donald Paul Hodel did stints as President Ronald Reagan's energy secretary and interior secretary. He is perhaps best known for opposing a ban on aerosol chlorofluorocarbons to protect the Earth's ozone layer. At the time, the Washington Post reported that Hodel urged people to don hats, sunscreen and dark glasses instead. Despite Hodel's insistence that he never said any such thing, the apocryphal quote has dogged him for decades.
Now Hodel seeks to build a coal-gasification plant that would remove half of the global-warming emissions it produces. Oddly, the Arizona-based Center for the Study of Carbon Dioxide and Global Change lists Hodel as a science adviser. The center, a think tank, touts the planetary advantages of warmer climates, and questions alleged links between CO2 emissions and global warming. It has received funding from oil giant Exxon Mobil Corp. Hodel has been president of James Dobson's Focus on the Family and Pat Robertson's Christian Coalition. His wife, Barbara, sits on the board of Virginia-based Patrick Henry College, which caters to home-schooled evangelicals (and is unrivaled at placing interns in the current White House). Another member of Patrick Henry's board is Texas Christian-right godfather James Leininger, who has spent millions of dollars in Austin promoting school vouchers, protecting fetuses, and battling with plaintiff attorneys over liability laws.
By contrast, Miller's spouse, Steve Wolens, is a former state lawmaker and plaintiffs' attorney who is often mentioned as a Democratic candidate for statewide office. During his last legislative session in 2003, this liberal Democrat scored a lowly 19 percent on key conservative votes tabulated by the Dallas-based Heritage Alliance. His wife seemed to cement her liberal bona fides in 2006, when she co-founded the Texas Clean Air Cities Coalition. Back then, Miller warned communities surrounding the proposed coal plants that TXU was "purposely misleading the public in order to build old-technology coal plants the cheapest way possible." When investment firms KKR & Co. and TPG Capital (formerly Texas Pacific Group) successfully sought to take over TXU in early 2007, some environmental groups endorsed the buyers' pledge to cancel all but three of the proposed plants. Not so Miller, who stood her ground, pointing out that just two of the surviving plants would spew more mercury emissions than all of the canceled ones put together. "Environmental Defense blessed those two stacks when they don't have the authority to do that," she said at the time. (Environmental Defense Fund's Texas director, Jim Marston, chairs the nonprofit board that publishes the Observer.)
A year after Miller lambasted TXU's outdated technology and told the company that "carbon dioxide is a huge, huge issue for us," Summit hired the ex-mayor to promote a proposed coal-gasification plant that will sequester at most 60 percent of its CO2 emissions. Asked about coal-gasification technologies that target 90 percent of CO2 emissions, Miller told the Observer, "You can't capture more than 60 percent and have it be [economically] viable."
A Florida-based consulting engineer who has worked for power companies and environmentalists concurred. While technology exists to remove 90 percent of a plant's CO2, said Richard Furman, 60 percent is "becoming the consensus of what is cost effective." Thereafter, the cost of removing CO2 escalates to the point that you would be better off spending the additional money on plants with no CO2 controls, Furman said. Some of Miller's allies in the TXU fight feel betrayed. "No project should move forward right now that adds fuel to the global-warming fire," said Karen Hadden, who heads the Austin-based Sustainable Energy and Economic Development Coalition. Hadden advocates solar and wind power as more cost-effective alternatives.
"The best way to fight dirty coal plants is to build clean ones," Miller said. She signed on as Summit's Texas projects director because the company was willing to privately finance a coal-gasification plant with carbon sequestration. Once that is demonstrated, Miller said, the next challenge will be achieving higher rates of CO2 sequestration. Asked why a man who appears to question the link between CO2 and global warming would build a CO2 sequestering plant, Miller said Hodel "is a true believer in the United States not being dependent on other countries for energy." Asked if she ever discusses fetuses with the former Christian Coalition president, Miller said, "We talk about coal."
In a written statement to the Observer, Hodel acknowledged opposing the 1980s ban on chlorfluorocarbons based on cost-benefit analyses that "I thought were totally speculative." He said the Washington Post relied on anonymous sources to falsely attribute the apocryphal sunscreen quote to him. Although he said he was unaware that the Center for the Study of Carbon Dioxide and Global Change claims him as a science adviser, Hodel said the group does "interesting work" on "some of the benefits of having increased CO2 in the atmosphere." He added, "Coal gasification is a vastly cleaner use of coal than burning it, whether you capture the carbon or not. Whether global warming is caused by human activity is not the issue. What matters is that an increasing number of very influential people around the globe believe this to be a fact."
Summit, based in Poulsbo, Washington, announced its coal-gasification plans at a crucial time. Texas Gov. Rick Perry put up $21 million in cash and $240 million in tax credits last year to lure to Texas an experimental coal-gasification plant that would screen out toxic emissions and global-warming gases. The U.S. Department of Energy pledged to finance most of the $2 billion plant, with additional funding from the so-called FutureGen Alliance of coal and power companies (including TXU successor Luminant Energy Co.). Texas promoted two potential DOE sites: one between Waco and Lufkin, and the other outside Odessa. Then DOE scrapped these plans early this year, arguing that it is more efficient to fund carbon-dioxide removal at coal-gasification plants being pursued by private companies across the country.
When Summit subsequently announced its intent to build a coal-gasification plant in Texas, Midland-Odessa officials promoted their area as an ideal site. Part of their pitch is that the carbon dioxide stripped from the coal can be sold to local energy companies, which use CO2 gas to force more oil and gas out of wells. Summit said its gasification plant will generate five times more energy than the one DOE planned to build. It also will do a poorer job of controlling CO2 (removing 50 to 60 percent of the gas, compared with DOE's target of 90 percent). Summit builds power plants but does not operate them. Miller declined to identify the client behind this project, which she said would open in 2013 at the earliest.
One Summit co-founder already boasts West Texas business connections. Earl Gjelde-a top Hodel aide in the Reagan years-sat on the board of Didax Inc. during the 1990s. Former CIA technology chief William Bowers founded this evangelical Internet company in Virginia in 1993. After dotcoms bombed, Texas oil fortunes invested in the remains. The Texans remade the company in their own image in 2002. They sold its core Internet assets to evangelical radio company Salem Communications Corp. (where Hodel is a director), transplanted the company to Midland, and renamed it Amen Properties Inc. Amen invests in commercial properties and energy wells, and founded electricity retailer W Power & Light (see, "Low Wattage Regulators," page 4). Despite this radical makeover, Amen retained Didax's evangelical bylaws, which require employees and directors to believe in such things as Jesus' virgin birth and the Bible as God's infallible revelation.
Now Earl Gjelde and Donald Hodel are paying Laura Miller to promote a coal-gasification plant. While it would mark a huge improvement over Texas' existing dirty-coal plants, the proposed plant falls short of the best possible technology to counter global warming. Looks like those hats, shades, and sunscreen could come in handy after all.
Award-winning Observer columnist Andrew Wheat is research director for Texans for Public Justice.
Wednesday, June 11, 2008
Fort Worth Weekly: Hear No Evil, Smell No Evil
TXU's influence with state government is strong, thanks to a massive long-term lobbying effort. In early 2007, for example, TXU spent more on lobbying than any company in Texas except AT&T, according to the political watchdog group Texans for Public Justice. Their political influence, activists say, affects not only the state's treatment of emissions, but actions like approval of the recent sale of TXU to new owners, construction of the new coal plants, and--just as seriously--the levels of pollution that continue to be permitted from some of TXU's older plants. Read the article at the Fort Worth Weekly
By JOAQUIN SAPIEN, Data analysis by Ben Welsh
FORT WORTH WEEKLY
Rusk County - A gentle twilight pink stretches across the sky, touching the waters of Martin Creek Lake. The still air, smelling only of East Texas pines, brings the faint sounds of wildlife in the surrounding woods. Smog and traffic seem much farther away than the 145-mile drive to Dallas.
But like so many still-idyllic scenes in Texas in the 21st century, this one is pristine only from a certain camera angle and maybe only when the wind blows a certain way. Turn to the west, and three enormous smokestacks loom up, towering over jet-black pyramids of coal, products of the strip-mining that TXU helps facilitate throughout the state.
The draglines and smokestacks serve the Martin Lake Steam Electric Station, one of four coal-fired power plants operated by TXU, the vast utility that is the leading energy producer in the leading energy-using state in the country.
One night in October 2003, in the space of three hours, while the 94,000-plus inhabitants of Tyler slept nearby, the Martin Lake plant pumped more than 150,000 pounds of sulfur dioxide into the East Texas air. The pollution was more than eight times the plant's hourly emissions limit under federal regulations. Sulfur dioxide air pollution, as environmentalists, regulators, and TXU officials have known for many years, helps trigger asthma attacks and other respiratory diseases.
Like many power plants, the Martin Lake plant is fitted with electronic sensors that monitor smokestack emissions, including sulfur dioxide, and send hourly measurements to the federal Environmental Protection Agency. Although the EPA keeps records, it relies on state agencies to enforce federal air pollution standards. In Texas, state law requires companies to file deviation reports to the Texas Commission on Environmental Quality when a power plant exceeds federal emissions limits.
After the October 2003 event, TXU reported the excess emissions to TCEQ. But a comparison between EPA and TCEQ records shows that the company gave a far lower emissions figure to state officials than the smokestack monitor registered. Until reporters started raising questions nearly a year ago, TCEQ officials said they had no idea of the extent of TXU's emissions.
If the October 2003 sulfur release were an isolated incident, perhaps Texas' air-breathing citizens downwind of Martin Lake and TXU's other plants might not have that much to worry about. But a three-month review of federal and state records by the Washington, D.C.-based Center for Public Integrity, a nonprofit journalism organization, suggests otherwise. The review, encompassing 25 million data entries spanning 10 years, shows that between 1997 and 2006, TXU's coal-fired plants exceeded federal emission limits nearly 650 times, spewing more than 1.3 million pounds of excess sulfur dioxide into the Texas air.
A TCEQ spokesman called TXU's action "inaccurate reporting." Contacted about the reports, TXU representatives declined to explain, saying the company prefers to let its submissions to state and federal agencies stand on their own merits.
But the company insisted that its environmental record is a good one. TXU spokesman Tom Kleckner said coal-fired power plants sometimes exceed standard emissions levels when a unit is shutting down, starting up, or is in an "upset condition" caused by maintenance. "At times the plants can also experience an exceedance in the course of providing safe working conditions for the workers repairing equipment. While these examples are exceedances, they are not compliance issues," he wrote in an e-mail.
If companies knowingly provide false reports, they could potentially face costly fines under the federal Clean Air Act. "If TXU deliberately misled the agency, that is criminal, really," said Eric Schaeffer, former head of the EPA's Office of Civil Enforcement, who now runs the watchdog Environmental Integrity Project in Washington, D.C.
Equally important, Schaeffer said, if the state was aware that TXU was exceeding emission limits, it could have forced the utility to install improved pollution control technology at its plants.
But here is what really happened as a result of the company's inaccurate reporting: Nothing. In the first place, TCEQ allowed utilities to "self-report" such emission violations and has no system for checking the EPA emission logs, though they are readily available. And when TXU did accurately report its emission overages from coal-fired plants to the state agency, it was never fined, despite the fact that some plants went over the line hundreds of times.
In fact, over the past 10 years, while North Texas governments wrestled with increasingly serious air pollution and the prospect of EPA sanctions, TXU was penalized only once for an air quality violation--a single fine of $720, according to TCEQ's penalty-enforcement records.
Faced with some of the dirtiest air in the country and with what critics say is lax enforcement by the state, Texas has become a place where key air pollution controls in many cases have come only as a result of lobbying and lawsuits filed by citizen groups. Major business leaders and big-city mayors in recent years have joined forces to try to convince the state to enforce clean air laws. And a broad coalition of Texas citizens who have grown increasingly skeptical of coal-based power and the state's ability to protect their health are appealing the state permits granted to two planned TXU coal-burners.
They have a formidable opponent: TXU's influence with state government is strong, thanks to a massive long-term lobbying effort. In early 2007, for example, TXU spent more on lobbying than any company in Texas except AT&T, according to the political watchdog group Texans for Public Justice. Their political influence, activists say, affects not only the state's treatment of emissions, but actions like approval of the recent sale of TXU to new owners, construction of the new coal plants, and--just as seriously--the levels of pollution that continue to be permitted from some of TXU's older plants.
While environmentalists and utility officials fight over emission levels and economic impacts, the personal toll of air pollution is brought home every day to families like Robert and Carol Taylor of Freestone County, who live just downwind of a TXU coal-burner and whose grandson Jesse Hanson suffers from asthma so serious that he has become a well-known figure in the local hospital emergency room.
"There are days when the pollution is so bad that it blocks out the sun," Carol Taylor said. And that's why she and her family members have joined the fight to change things in Texas.
The living room table in the Taylors' double-wide trailer is covered with medical equipment's prescription bottles, a shoebox-sized breathing machine called a nebulizer, the ever-present handheld plastic inhaler that Jesse carries at all times. A 3-foot-tall steel oxygen tank and mask stand nearby, for jumpstarting his breathing if the other equipment can't do the job.
There are times when even the oxygen tank isn't enough to deal with his asthma. "I have had to carry him out of school to take him to the emergency room dozens of times," said Robert. He knows many local police officers by name because of all the times he's called to warn them that he will be speeding down the highway to get his grandson to the nearest hospital, 35 miles away in Palestine. "During the drive he is panting, sweating, and gasping for air, because he just cannot breathe," Robert said.
The Taylors are convinced that 10-year-old Jesse's severe asthma is closely linked to power plant emissions. When the pollution from the TXU plant 15 miles away is at its worst, "I close the windows and lock the doors so that it doesn't get into the house," Carol Taylor said. The Taylors say that Jesse's asthma attacks become more frequent and more intense when the power plant emissions are heaviest and that many other kids in his class also have breathing problems. "In the winter time you can see the smoke wafting right over our house," Carol said.
Volumes of scientific evidence show that sulfur dioxide and other air pollutants released by power plants are closely linked to a variety of respiratory ailments. When particulate matter, or soot, which includes sulfur dioxide, becomes lodged in the lungs, it constricts breathing, triggers asthma attacks, and can exacerbate respiratory disease.
Prominent doctors in the east Texas medical community are concerned that TCEQ may have failed to force TXU to adhere to its federal emissions limits. "The tools I have to help people suffering from chest disease and respiratory ailments are fairly limited, and if they [TCEQ] are letting polluters exceed their limits, then they are counteracting whatwe are trying do here, as physicians," said Dr. David Coultas, a pulmonologist at the University of Texas Health Center at Tyler, one of the nation's most prestigious lung and chest disease research institutions, located about 25 miles west of Martin Lake. He said many of his patients complain that their symptoms are intensified on days when air pollution is particularly bad.
Childhood asthma affected about 3 percent of the population in the 1960s, but that figure has climbed above 9 percent, according to the federal Centers for Disease Control. In Fort Worth, a 2003 city health department survey found that asthma rates here were more than double the statewide average and even higher for children ("Ill Winds," June 8, 2005, Fort Worth Weekly).
The facility that plays such an unpleasant role in the life of the Taylor household-- and in Fort Worth's pollution rates and ozone alert days--is Big Brown, a TXU power plant that was making news in Texas long before its Thoroughbred namesake won the first two legs of the Triple Crown this spring. Located just off I-45 about 120 miles southeast of Fort Worth, Big Brown shares with Martin Lake the dubious distinction of having been named by the Environmental Integrity Project as one of the worst-polluting coal-fired plants in the country, not just for sulfur dioxide, but also for carbon, which affects global warming, and nitrogen oxide, which contributes to smog, one of the most serious air pollution problems in North Texas.
In the late 1960s, TXU lobbied successfully to get permits for the Big Brown plant approved just under the wire before passage of the Clean Air Act raised the standards on power plant emissions. Because it was grandfathered under the old rules, Big Brown is allowed to emit sulfur dioxide at more than twice the rate of its newer counterparts. Mostly, it stays within those emissions limits. But if it were subjected to the same rules that govern Martin Lake's pollution, Big Brown would be breaking the rules virtually all year long.
In all, 19 coal-fired power plants currently operate in Texas, including the four owned by TXU. Texas has more plants on the list of top carbon dioxide polluters than any other state, and three of the five plants on the list are owned by TXU. According to 2005 figures from the federal government, Texas emits more carbon dioxide than any other state in the country -- 70 percent more than California, the next highest state.
It's those kinds of facts and figures, along with the suffering of kids like Jesse Hanson, that convinced a coalition of environmental groups to appeal the granting of permits for two TXU coal-burning plants at a site called Oak Grove in Robertson County, which stands to threaten air quality in Austin and the Metroplex, and to fight Gov. Rick Perry's fast-tracking of the TXU plant permits.
Neil Carman, air program director for the Texas chapter of the Sierra Club, worked as a TCEQ investigator for 12 years. He believes the Center's findings--the discrepancies in TXU's excess emission reports and the lack of enforcement by TCEQ-- provide a missing piece of TXU's environmental record and should be considered during the citizen appeal against Oak Grove.
Schaeffer, the former EPA official, said the findings show the need for TCEQ--and the legislature--to rethink whether TCEQ's self-reporting system actually works.
As the battle between TXU and the environmental community over proposed new power plants wore on, the Center for Public Integrity was filing dozens of requests under state and federal public information laws, for hourly emissions records and enforcement reports in Texas.
In the summer of 2005, TXU had originally proposed to build a whopping 11 new coal-fired power plant units across Texas. The proposal caused an uproar, with citizens ranging from ranchers to businesspeople turning out to voice their objections in hearings and demonstrations. Some were so vehemently opposed to the plan that they took part in a hunger strike in front of the Texas statehouse. But Gov. Perry, a major recipient of TXU political support, moved to put the permits on a fast track, shortening the period for hearings and other public input.
The battle took a surprising turn in February 2007 when two private equity groups, the Texas Pacific Group and Kohlberg, Kravis, and Roberts, bought out TXU and announced plans to reduce the construction agenda from 11 to three new plants. The change was hailed by many in the Texas environmental community as a victory, but some remain concerned about the pollution potential of the three remaining plants.
State administrative law judges recommended that TXU's permit applications for two of the three remaining plants, both located at Oak Grove, be denied because the company had failed to prove that its proposed emission controls would work properly.
The TCEQ board, however, overrode that recommendation in June 2007 and approved the two permits. Although the Oak Grove permits are being appealed in court, the plants are now under construction.
In making that decision, the TCEQ commissioners cited the agency's ability to enforce federal emissions limits. "I think the permits are strong. And to the applicants, if you can't meet these limits, then you can't operate," said TCEQ Commissioner Buddy Garcia after the approval. But the records obtained by the Center raise questions about both TXU's environmental record and TCEQ's own enforcement record--questions not addressed in the hearings process.
In an e-mail, TCEQ spokeswoman Daphne McMurrer wrote that the agency challenges a report submitted by a power plant operator only if conflicting information is presented to TCEQ staff. And staffers themselves do not check the hourly emission records against what the company reports to TCEQ, even though the records are easily accessible on the EPA web site.
And so, in 2003, when TXU reported to the state agency that its Martin Lake plant had released twice as much sulfur dioxide on Oct. 20 as allowed, TCEQ failed to look at the EPA records and find out that the actual release was more than eight times the legal limit. And TCEQ levied no fines or other penalties against TXU for what it did report.
In her e-mail, McMurrer attributed the disparity between what TXU reported for that date and what is in their own records to "inaccurate reporting by the company." She expressed confidence that the potential penalties associated with inaccurate reporting provide enough incentive to keep polluters honest, but she acknowledged that TXU was never subjected to such a penalty for its underreporting.
Dr. Jeffrey Levin, an occupational health expert based at the UT Health Center at Tyler, said that the new data on the company's emissions should be incorporated into any further review of TXU that may result as part of the appeal against construction of the plants at Oak Grove. "If you [TXU] are one to exceed what your permit says you are able to do and you do that without particular concern, then I think as a society we should look at that in the future and decide whether or not we want to grant that authority again," said Levin.
The discrepancies between TXU's state and federal emission reports also skew the record on the utility's compliance history, say activists, as do time limits on a company's record. TCEQ rules dictate that only the last five years of a company's pollution record can be considered in the permitting process. "It's pretty outrageous that a company's environmental record can be wiped clean after five years," said Carman, of the Sierra Club.
Although TXU filed reports that the state now calls inaccurate, it is questionable whether the company would have been fined if TCEQ had known the truth about its pollution levels. When TXU did tell TCEQ it had surpassed its permitted limits, the state agency used a controversial loophole in Texas state law--since declared illegal by the EPA--that allowed for increased levels of pollutants under certain circumstances.
In March 2003, environmental groups lodged a series of complaints in the Federal Register, one of which claimed that the loophole was illegal and allowed TCEQ to avoid proper enforcement of the federal Clean Air Act. EPA agreed with the environmental groups and gave TCEQ a deadline by which the state agency either had to revise the rule or allow it to expire. TCEQ never revised the rule, and it expired in 2006.
During the 10 years before the loophole expired, TXU put more than 1.3 million pounds of excess sulfur dioxide into the Texas atmosphere with no regulatory repercussions. More than 1 million pounds of it came from one plant--Martin Lake. Most of the time, the excess would have been marginal, but not on days like Oct. 20, 2003.
Short-term exposures to such spikes in air pollution can be harmful to human health, says former EPA enforcement chief Schaeffer. "Its like being pulled over for driving 150 miles per hour in a school zone, and you say to a cop that 99 percent of the time you are within the speed limit. You would be handcuffed, and the cop would laugh."
Perhaps more importantly, TCEQ's failure to act may have denied Texans a chance to force utility officials to clean up their act long-term, Schaeffer said. The excess emissions and threats of fines could have been used to induce TXU to install better air-scrubbing equipment on its dirtiest plants, he noted.
Carman blames TXU's record on lax enforcement by state authorities. "They are trying to pass the buck on to TXU, and I think that is bogus," the Sierra Club official said. When he was a TCEQ employee, he said, he was trained to make sure that polluters accurately reported their emissions. "These people are on the front lines of air enforcement," he said. "What the heck are they doing?"
TCEQ's McMurrer, in her e-mail, also pointed out that citizens can register complaints about air pollution through the TCEQ hotline and web site and that citizens can also challenge the accuracy of utility air pollution reports. But environmentalists counter that it's irresponsible for TCEQ to say it will question a utility's emission report only if someone in the general public--rather than TCEQ's own staff--presents evidence to challenge company reports.
Environmentalists said average citizens stand little chance of being able to determine whether a power plant is exceeding its pollution permit or to evaluate reports submitted by power plant operators. "It's a dereliction of duty for TCEQ to rely on citizens to do their dirty work," said Ilan Levin, a Texas-based environmental lawyer who works for Schaeffer's Environmental Integrity Project.
TXU was by no means the only polluter given a free pass by TCEQ. The records gathered by the Center show that, again and again in Texas, air quality enforcement came at the point of a citizen lawsuit, not from the agency.
The Texas chapter of the Sierra Club and Public Citizen, for example, sued the American Electric Power company for a federal permit violation--releasing more carbon monoxide and soot than it is allowed, at a plant not far from Martin Lake. The lawsuit was later settled.
And in fact, the worst single polluter, in terms of excess sulfur dioxide emissions during the period of the Center's analysis, was a power co-operative based in the small South Texas town of Christine. The San Miguel Electric Cooperative was the only plant penalized--$57,200 for emissions of sulfur dioxide and other pollutants--and had the most emission violations, more than 10,000 over a 10-year period.
But even that penalty, stiff by TCEQ standards, seemed to have little effect and didn't even address some of the utility's worst overages. San Miguel also continued to exceed its sulfur dioxide limit even after the penalty was assessed in 2000.
Company officials say the plant is in compliance today. "Since we were penalized, we have reduced emissions, and addressed the problem that caused the excess SO2 emissions," said Joe Eutizi, engineering manager of the San Miguel co-op.
Then there are Texas' oil refineries. In January, the Sierra Club and Environment Texas filed a lawsuit against Shell Oil Company claiming the company exceeded its permitted limits on several air pollutants, including benzene, a toxin that causes cancer. The environmental groups allege that Shell self-reported excess emissions to TCEQ that amount to 1,000 separate violations stemming from unauthorized bursts of air pollution caused by maintenance and refinery malfunctions.
In an e-mail, Shell spokesman Dave McKinney wrote, "The figure of 1,000 violations is greatly overstated and occurred over a period of five years. Many of the reported emissions cited in the lawsuit were authorized or within our permit limits. In some cases single emission events were reported by Shell several times as part of the reporting process." He went on to say that 12 percent of the total emissions overages occurring between 2003 and 2007 were related to Hurricane Katrina.
Overall, according to a report by the Environmental Integrity Project, during 2004 more than 45 million extra pounds of pollution were released by 28 Texas oil refineries due to these spikes, which TCEQ calls "emissions events." As with power companies, TCEQ has not challenged the oil companies' explanations for these events and rarely imposes any kind of penalty or enforcement action.
Cleaning up emissions from electric utilities and refineries would cost those industries many millions of dollars. And environmentalists point out that, like the oil companies, which historically have been some of the biggest players on the Texas economic stage, TXU is a political powerhouse that has spent plenty of money over the years lobbying to make sure that Texas clean air laws and enforcement are weak.
As the largest energy provider in Texas, TXU has established an exceptional degree of influence in the Texas statehouse, through a network of high-profile lobbyists and political connections.
In spring 2007, when legislation to increase public oversight of the TXU buyout process was pending in the Senate, TXU and its buyers unleashed a lobbying team that included former state legislators Curtis Seidlits, Jr., Rudy Garza, Eddie Cavazos, Paul Sadler, and Stan Schlueter, and former Dallas Mayor Ron Kirk.
According to Texans for Public Justice, TXU and two investor groups spent approximately $17 million during the 2007 Texas legislative session on lobbyists, advertising, food and beverages, entertainment, and gifts--including sending 2,400 tacos to legislators and their aides on the first day of the session.
TXU is never a slouch when it comes to lobbying. During the 2006 election cycle, according to another Texans for Public Justice report, TXU gave contributions to all but seven members of the Texas Legislature.
In October 2005, two years before the buyout of TXU was officially announced, Perry issued an executive order shortening the permitting process for TXU's proposed new coal-burners from 18 months to six. That same day, former TXU CEO Earl Nye cut a $2,000 check to the governor's campaign fund. And the year after Perry expedited TXU's permit, the company's political action committees and its executives contributed more than $100,000 to his campaign.
Environmentalists allege that part of the reason that TXU has made a full-court press in the last two years is the possibility that Congress might pass carbon-regulating legislation in the near future, which could stymie their plans to build more plants.
"It was clearly part of the plan to get the original 11 [new] plants permitted and under construction before carbon legislation passed the [U.S.] House," said Tom "Smitty" Smith of Public Citizen. "But when the Democrats took control of Congress in November 2006, their free ride quickly came to an end, and that might be the underlying reason why they scrapped plans to build all 11 plants."
Many observers see a direct parallel with a similar push the company made in the late 1960s and early 1970s. TXU, then a group of electric utilities under one corporate umbrella, fought to ensure that a few planned plants be approved ahead of the passage of the Clean Air Act, which occurred in 1970. Their effort was successful: The company's Martin Lake, Monticello, and Big Brown plants were all permitted and built in that era, and all of them are currently among the dirtiest plants in Texas.
As public awareness about air pollution--the effects of carbon dioxide on global warming, the heavy price that North Texas cities will have to pay economically if their air isn't cleaned up, the health effects of sulfur dioxide and other pollutants --Texas' status as a dirty-air state has become increasingly problematic. And the controversy over TXU's old plants and new ones and TCEQ's enforcement record continues to heat up.
Karen Hadden, executive director of the SEED Coalition, an Austin-based environmental group, is especially concerned about the expected mercury levels to come from two of the new plants to be built at Oak Grove, about 115 miles northeast of Austin. "This will be one of the largest mercury polluters in the nation," said Hadden. Studies have shown that exposure to mercury, a neurotoxin, can stunt mental development in children.
For its part, TXU says it is working to cut emissions by installing new technology. Kleckner says TXU has promised to cut coal plant emissions of nitrous oxide and sulfur dioxide as well as mercury by 20 percent from 2005 levels. "We know of no other company that has made such as significant commitment," he wrote in an e-mail statement.
At UT-Tyler, Dr. James Stocks, head of the school's Texas Asthma Camp for Kids, said that the sheer volume of pollution the power plants are allowed to put out legally is more troubling to him than questions about over-the-limit emission incidents. "The fact that TCEQ hasn't penalized them doesn't bother me at all," Stocks said. "It's that we allow too much in the first place."
Families across Texas like the Taylors, who live in the shadow of enormous power plants with outdated pollution control technology, are growing increasingly skeptical of the state's assurances that their health and environment is protected.
So the Taylors take what precautions they can when the smoke from Big Brown rolls their way. They keep Jesse indoors, have his medication ready, and, if need be, are prepared to call the police to warn them that they will be speeding down the highway to take Jesse to the hospital--always worrying that each trip to the emergency room might be their last.
Chris Campbell contributed to this report, which is a project of the Center for Public Integrity.
Joaquin Sapien can be reached at jbsapien@gmail.com.
This story is being published concurrently by the Center for Public Integrity at http://www.publicintegrity.org/txu/default.htm
Hear No Evil, Smell No Evil
State regulators don't seem worried about TXU's lapses in reporting power plant pollution.By JOAQUIN SAPIEN, Data analysis by Ben Welsh
FORT WORTH WEEKLY
Rusk County - A gentle twilight pink stretches across the sky, touching the waters of Martin Creek Lake. The still air, smelling only of East Texas pines, brings the faint sounds of wildlife in the surrounding woods. Smog and traffic seem much farther away than the 145-mile drive to Dallas.
But like so many still-idyllic scenes in Texas in the 21st century, this one is pristine only from a certain camera angle and maybe only when the wind blows a certain way. Turn to the west, and three enormous smokestacks loom up, towering over jet-black pyramids of coal, products of the strip-mining that TXU helps facilitate throughout the state.
The draglines and smokestacks serve the Martin Lake Steam Electric Station, one of four coal-fired power plants operated by TXU, the vast utility that is the leading energy producer in the leading energy-using state in the country.
One night in October 2003, in the space of three hours, while the 94,000-plus inhabitants of Tyler slept nearby, the Martin Lake plant pumped more than 150,000 pounds of sulfur dioxide into the East Texas air. The pollution was more than eight times the plant's hourly emissions limit under federal regulations. Sulfur dioxide air pollution, as environmentalists, regulators, and TXU officials have known for many years, helps trigger asthma attacks and other respiratory diseases.
Like many power plants, the Martin Lake plant is fitted with electronic sensors that monitor smokestack emissions, including sulfur dioxide, and send hourly measurements to the federal Environmental Protection Agency. Although the EPA keeps records, it relies on state agencies to enforce federal air pollution standards. In Texas, state law requires companies to file deviation reports to the Texas Commission on Environmental Quality when a power plant exceeds federal emissions limits.
After the October 2003 event, TXU reported the excess emissions to TCEQ. But a comparison between EPA and TCEQ records shows that the company gave a far lower emissions figure to state officials than the smokestack monitor registered. Until reporters started raising questions nearly a year ago, TCEQ officials said they had no idea of the extent of TXU's emissions.
If the October 2003 sulfur release were an isolated incident, perhaps Texas' air-breathing citizens downwind of Martin Lake and TXU's other plants might not have that much to worry about. But a three-month review of federal and state records by the Washington, D.C.-based Center for Public Integrity, a nonprofit journalism organization, suggests otherwise. The review, encompassing 25 million data entries spanning 10 years, shows that between 1997 and 2006, TXU's coal-fired plants exceeded federal emission limits nearly 650 times, spewing more than 1.3 million pounds of excess sulfur dioxide into the Texas air.
A TCEQ spokesman called TXU's action "inaccurate reporting." Contacted about the reports, TXU representatives declined to explain, saying the company prefers to let its submissions to state and federal agencies stand on their own merits.
But the company insisted that its environmental record is a good one. TXU spokesman Tom Kleckner said coal-fired power plants sometimes exceed standard emissions levels when a unit is shutting down, starting up, or is in an "upset condition" caused by maintenance. "At times the plants can also experience an exceedance in the course of providing safe working conditions for the workers repairing equipment. While these examples are exceedances, they are not compliance issues," he wrote in an e-mail.
If companies knowingly provide false reports, they could potentially face costly fines under the federal Clean Air Act. "If TXU deliberately misled the agency, that is criminal, really," said Eric Schaeffer, former head of the EPA's Office of Civil Enforcement, who now runs the watchdog Environmental Integrity Project in Washington, D.C.
Equally important, Schaeffer said, if the state was aware that TXU was exceeding emission limits, it could have forced the utility to install improved pollution control technology at its plants.
But here is what really happened as a result of the company's inaccurate reporting: Nothing. In the first place, TCEQ allowed utilities to "self-report" such emission violations and has no system for checking the EPA emission logs, though they are readily available. And when TXU did accurately report its emission overages from coal-fired plants to the state agency, it was never fined, despite the fact that some plants went over the line hundreds of times.
In fact, over the past 10 years, while North Texas governments wrestled with increasingly serious air pollution and the prospect of EPA sanctions, TXU was penalized only once for an air quality violation--a single fine of $720, according to TCEQ's penalty-enforcement records.
Faced with some of the dirtiest air in the country and with what critics say is lax enforcement by the state, Texas has become a place where key air pollution controls in many cases have come only as a result of lobbying and lawsuits filed by citizen groups. Major business leaders and big-city mayors in recent years have joined forces to try to convince the state to enforce clean air laws. And a broad coalition of Texas citizens who have grown increasingly skeptical of coal-based power and the state's ability to protect their health are appealing the state permits granted to two planned TXU coal-burners.
They have a formidable opponent: TXU's influence with state government is strong, thanks to a massive long-term lobbying effort. In early 2007, for example, TXU spent more on lobbying than any company in Texas except AT&T, according to the political watchdog group Texans for Public Justice. Their political influence, activists say, affects not only the state's treatment of emissions, but actions like approval of the recent sale of TXU to new owners, construction of the new coal plants, and--just as seriously--the levels of pollution that continue to be permitted from some of TXU's older plants.
While environmentalists and utility officials fight over emission levels and economic impacts, the personal toll of air pollution is brought home every day to families like Robert and Carol Taylor of Freestone County, who live just downwind of a TXU coal-burner and whose grandson Jesse Hanson suffers from asthma so serious that he has become a well-known figure in the local hospital emergency room.
"There are days when the pollution is so bad that it blocks out the sun," Carol Taylor said. And that's why she and her family members have joined the fight to change things in Texas.
The living room table in the Taylors' double-wide trailer is covered with medical equipment's prescription bottles, a shoebox-sized breathing machine called a nebulizer, the ever-present handheld plastic inhaler that Jesse carries at all times. A 3-foot-tall steel oxygen tank and mask stand nearby, for jumpstarting his breathing if the other equipment can't do the job.
There are times when even the oxygen tank isn't enough to deal with his asthma. "I have had to carry him out of school to take him to the emergency room dozens of times," said Robert. He knows many local police officers by name because of all the times he's called to warn them that he will be speeding down the highway to get his grandson to the nearest hospital, 35 miles away in Palestine. "During the drive he is panting, sweating, and gasping for air, because he just cannot breathe," Robert said.
The Taylors are convinced that 10-year-old Jesse's severe asthma is closely linked to power plant emissions. When the pollution from the TXU plant 15 miles away is at its worst, "I close the windows and lock the doors so that it doesn't get into the house," Carol Taylor said. The Taylors say that Jesse's asthma attacks become more frequent and more intense when the power plant emissions are heaviest and that many other kids in his class also have breathing problems. "In the winter time you can see the smoke wafting right over our house," Carol said.
Volumes of scientific evidence show that sulfur dioxide and other air pollutants released by power plants are closely linked to a variety of respiratory ailments. When particulate matter, or soot, which includes sulfur dioxide, becomes lodged in the lungs, it constricts breathing, triggers asthma attacks, and can exacerbate respiratory disease.
Prominent doctors in the east Texas medical community are concerned that TCEQ may have failed to force TXU to adhere to its federal emissions limits. "The tools I have to help people suffering from chest disease and respiratory ailments are fairly limited, and if they [TCEQ] are letting polluters exceed their limits, then they are counteracting whatwe are trying do here, as physicians," said Dr. David Coultas, a pulmonologist at the University of Texas Health Center at Tyler, one of the nation's most prestigious lung and chest disease research institutions, located about 25 miles west of Martin Lake. He said many of his patients complain that their symptoms are intensified on days when air pollution is particularly bad.
Childhood asthma affected about 3 percent of the population in the 1960s, but that figure has climbed above 9 percent, according to the federal Centers for Disease Control. In Fort Worth, a 2003 city health department survey found that asthma rates here were more than double the statewide average and even higher for children ("Ill Winds," June 8, 2005, Fort Worth Weekly).
The facility that plays such an unpleasant role in the life of the Taylor household-- and in Fort Worth's pollution rates and ozone alert days--is Big Brown, a TXU power plant that was making news in Texas long before its Thoroughbred namesake won the first two legs of the Triple Crown this spring. Located just off I-45 about 120 miles southeast of Fort Worth, Big Brown shares with Martin Lake the dubious distinction of having been named by the Environmental Integrity Project as one of the worst-polluting coal-fired plants in the country, not just for sulfur dioxide, but also for carbon, which affects global warming, and nitrogen oxide, which contributes to smog, one of the most serious air pollution problems in North Texas.
In the late 1960s, TXU lobbied successfully to get permits for the Big Brown plant approved just under the wire before passage of the Clean Air Act raised the standards on power plant emissions. Because it was grandfathered under the old rules, Big Brown is allowed to emit sulfur dioxide at more than twice the rate of its newer counterparts. Mostly, it stays within those emissions limits. But if it were subjected to the same rules that govern Martin Lake's pollution, Big Brown would be breaking the rules virtually all year long.
In all, 19 coal-fired power plants currently operate in Texas, including the four owned by TXU. Texas has more plants on the list of top carbon dioxide polluters than any other state, and three of the five plants on the list are owned by TXU. According to 2005 figures from the federal government, Texas emits more carbon dioxide than any other state in the country -- 70 percent more than California, the next highest state.
It's those kinds of facts and figures, along with the suffering of kids like Jesse Hanson, that convinced a coalition of environmental groups to appeal the granting of permits for two TXU coal-burning plants at a site called Oak Grove in Robertson County, which stands to threaten air quality in Austin and the Metroplex, and to fight Gov. Rick Perry's fast-tracking of the TXU plant permits.
Neil Carman, air program director for the Texas chapter of the Sierra Club, worked as a TCEQ investigator for 12 years. He believes the Center's findings--the discrepancies in TXU's excess emission reports and the lack of enforcement by TCEQ-- provide a missing piece of TXU's environmental record and should be considered during the citizen appeal against Oak Grove.
Schaeffer, the former EPA official, said the findings show the need for TCEQ--and the legislature--to rethink whether TCEQ's self-reporting system actually works.
As the battle between TXU and the environmental community over proposed new power plants wore on, the Center for Public Integrity was filing dozens of requests under state and federal public information laws, for hourly emissions records and enforcement reports in Texas.
In the summer of 2005, TXU had originally proposed to build a whopping 11 new coal-fired power plant units across Texas. The proposal caused an uproar, with citizens ranging from ranchers to businesspeople turning out to voice their objections in hearings and demonstrations. Some were so vehemently opposed to the plan that they took part in a hunger strike in front of the Texas statehouse. But Gov. Perry, a major recipient of TXU political support, moved to put the permits on a fast track, shortening the period for hearings and other public input.
The battle took a surprising turn in February 2007 when two private equity groups, the Texas Pacific Group and Kohlberg, Kravis, and Roberts, bought out TXU and announced plans to reduce the construction agenda from 11 to three new plants. The change was hailed by many in the Texas environmental community as a victory, but some remain concerned about the pollution potential of the three remaining plants.
State administrative law judges recommended that TXU's permit applications for two of the three remaining plants, both located at Oak Grove, be denied because the company had failed to prove that its proposed emission controls would work properly.
The TCEQ board, however, overrode that recommendation in June 2007 and approved the two permits. Although the Oak Grove permits are being appealed in court, the plants are now under construction.
In making that decision, the TCEQ commissioners cited the agency's ability to enforce federal emissions limits. "I think the permits are strong. And to the applicants, if you can't meet these limits, then you can't operate," said TCEQ Commissioner Buddy Garcia after the approval. But the records obtained by the Center raise questions about both TXU's environmental record and TCEQ's own enforcement record--questions not addressed in the hearings process.
In an e-mail, TCEQ spokeswoman Daphne McMurrer wrote that the agency challenges a report submitted by a power plant operator only if conflicting information is presented to TCEQ staff. And staffers themselves do not check the hourly emission records against what the company reports to TCEQ, even though the records are easily accessible on the EPA web site.
And so, in 2003, when TXU reported to the state agency that its Martin Lake plant had released twice as much sulfur dioxide on Oct. 20 as allowed, TCEQ failed to look at the EPA records and find out that the actual release was more than eight times the legal limit. And TCEQ levied no fines or other penalties against TXU for what it did report.
In her e-mail, McMurrer attributed the disparity between what TXU reported for that date and what is in their own records to "inaccurate reporting by the company." She expressed confidence that the potential penalties associated with inaccurate reporting provide enough incentive to keep polluters honest, but she acknowledged that TXU was never subjected to such a penalty for its underreporting.
Dr. Jeffrey Levin, an occupational health expert based at the UT Health Center at Tyler, said that the new data on the company's emissions should be incorporated into any further review of TXU that may result as part of the appeal against construction of the plants at Oak Grove. "If you [TXU] are one to exceed what your permit says you are able to do and you do that without particular concern, then I think as a society we should look at that in the future and decide whether or not we want to grant that authority again," said Levin.
The discrepancies between TXU's state and federal emission reports also skew the record on the utility's compliance history, say activists, as do time limits on a company's record. TCEQ rules dictate that only the last five years of a company's pollution record can be considered in the permitting process. "It's pretty outrageous that a company's environmental record can be wiped clean after five years," said Carman, of the Sierra Club.
Although TXU filed reports that the state now calls inaccurate, it is questionable whether the company would have been fined if TCEQ had known the truth about its pollution levels. When TXU did tell TCEQ it had surpassed its permitted limits, the state agency used a controversial loophole in Texas state law--since declared illegal by the EPA--that allowed for increased levels of pollutants under certain circumstances.
In March 2003, environmental groups lodged a series of complaints in the Federal Register, one of which claimed that the loophole was illegal and allowed TCEQ to avoid proper enforcement of the federal Clean Air Act. EPA agreed with the environmental groups and gave TCEQ a deadline by which the state agency either had to revise the rule or allow it to expire. TCEQ never revised the rule, and it expired in 2006.
During the 10 years before the loophole expired, TXU put more than 1.3 million pounds of excess sulfur dioxide into the Texas atmosphere with no regulatory repercussions. More than 1 million pounds of it came from one plant--Martin Lake. Most of the time, the excess would have been marginal, but not on days like Oct. 20, 2003.
Short-term exposures to such spikes in air pollution can be harmful to human health, says former EPA enforcement chief Schaeffer. "Its like being pulled over for driving 150 miles per hour in a school zone, and you say to a cop that 99 percent of the time you are within the speed limit. You would be handcuffed, and the cop would laugh."
Perhaps more importantly, TCEQ's failure to act may have denied Texans a chance to force utility officials to clean up their act long-term, Schaeffer said. The excess emissions and threats of fines could have been used to induce TXU to install better air-scrubbing equipment on its dirtiest plants, he noted.
Carman blames TXU's record on lax enforcement by state authorities. "They are trying to pass the buck on to TXU, and I think that is bogus," the Sierra Club official said. When he was a TCEQ employee, he said, he was trained to make sure that polluters accurately reported their emissions. "These people are on the front lines of air enforcement," he said. "What the heck are they doing?"
TCEQ's McMurrer, in her e-mail, also pointed out that citizens can register complaints about air pollution through the TCEQ hotline and web site and that citizens can also challenge the accuracy of utility air pollution reports. But environmentalists counter that it's irresponsible for TCEQ to say it will question a utility's emission report only if someone in the general public--rather than TCEQ's own staff--presents evidence to challenge company reports.
Environmentalists said average citizens stand little chance of being able to determine whether a power plant is exceeding its pollution permit or to evaluate reports submitted by power plant operators. "It's a dereliction of duty for TCEQ to rely on citizens to do their dirty work," said Ilan Levin, a Texas-based environmental lawyer who works for Schaeffer's Environmental Integrity Project.
TXU was by no means the only polluter given a free pass by TCEQ. The records gathered by the Center show that, again and again in Texas, air quality enforcement came at the point of a citizen lawsuit, not from the agency.
The Texas chapter of the Sierra Club and Public Citizen, for example, sued the American Electric Power company for a federal permit violation--releasing more carbon monoxide and soot than it is allowed, at a plant not far from Martin Lake. The lawsuit was later settled.
And in fact, the worst single polluter, in terms of excess sulfur dioxide emissions during the period of the Center's analysis, was a power co-operative based in the small South Texas town of Christine. The San Miguel Electric Cooperative was the only plant penalized--$57,200 for emissions of sulfur dioxide and other pollutants--and had the most emission violations, more than 10,000 over a 10-year period.
But even that penalty, stiff by TCEQ standards, seemed to have little effect and didn't even address some of the utility's worst overages. San Miguel also continued to exceed its sulfur dioxide limit even after the penalty was assessed in 2000.
Company officials say the plant is in compliance today. "Since we were penalized, we have reduced emissions, and addressed the problem that caused the excess SO2 emissions," said Joe Eutizi, engineering manager of the San Miguel co-op.
Then there are Texas' oil refineries. In January, the Sierra Club and Environment Texas filed a lawsuit against Shell Oil Company claiming the company exceeded its permitted limits on several air pollutants, including benzene, a toxin that causes cancer. The environmental groups allege that Shell self-reported excess emissions to TCEQ that amount to 1,000 separate violations stemming from unauthorized bursts of air pollution caused by maintenance and refinery malfunctions.
In an e-mail, Shell spokesman Dave McKinney wrote, "The figure of 1,000 violations is greatly overstated and occurred over a period of five years. Many of the reported emissions cited in the lawsuit were authorized or within our permit limits. In some cases single emission events were reported by Shell several times as part of the reporting process." He went on to say that 12 percent of the total emissions overages occurring between 2003 and 2007 were related to Hurricane Katrina.
Overall, according to a report by the Environmental Integrity Project, during 2004 more than 45 million extra pounds of pollution were released by 28 Texas oil refineries due to these spikes, which TCEQ calls "emissions events." As with power companies, TCEQ has not challenged the oil companies' explanations for these events and rarely imposes any kind of penalty or enforcement action.
Cleaning up emissions from electric utilities and refineries would cost those industries many millions of dollars. And environmentalists point out that, like the oil companies, which historically have been some of the biggest players on the Texas economic stage, TXU is a political powerhouse that has spent plenty of money over the years lobbying to make sure that Texas clean air laws and enforcement are weak.
As the largest energy provider in Texas, TXU has established an exceptional degree of influence in the Texas statehouse, through a network of high-profile lobbyists and political connections.
In spring 2007, when legislation to increase public oversight of the TXU buyout process was pending in the Senate, TXU and its buyers unleashed a lobbying team that included former state legislators Curtis Seidlits, Jr., Rudy Garza, Eddie Cavazos, Paul Sadler, and Stan Schlueter, and former Dallas Mayor Ron Kirk.
According to Texans for Public Justice, TXU and two investor groups spent approximately $17 million during the 2007 Texas legislative session on lobbyists, advertising, food and beverages, entertainment, and gifts--including sending 2,400 tacos to legislators and their aides on the first day of the session.
TXU is never a slouch when it comes to lobbying. During the 2006 election cycle, according to another Texans for Public Justice report, TXU gave contributions to all but seven members of the Texas Legislature.
In October 2005, two years before the buyout of TXU was officially announced, Perry issued an executive order shortening the permitting process for TXU's proposed new coal-burners from 18 months to six. That same day, former TXU CEO Earl Nye cut a $2,000 check to the governor's campaign fund. And the year after Perry expedited TXU's permit, the company's political action committees and its executives contributed more than $100,000 to his campaign.
Environmentalists allege that part of the reason that TXU has made a full-court press in the last two years is the possibility that Congress might pass carbon-regulating legislation in the near future, which could stymie their plans to build more plants.
"It was clearly part of the plan to get the original 11 [new] plants permitted and under construction before carbon legislation passed the [U.S.] House," said Tom "Smitty" Smith of Public Citizen. "But when the Democrats took control of Congress in November 2006, their free ride quickly came to an end, and that might be the underlying reason why they scrapped plans to build all 11 plants."
Many observers see a direct parallel with a similar push the company made in the late 1960s and early 1970s. TXU, then a group of electric utilities under one corporate umbrella, fought to ensure that a few planned plants be approved ahead of the passage of the Clean Air Act, which occurred in 1970. Their effort was successful: The company's Martin Lake, Monticello, and Big Brown plants were all permitted and built in that era, and all of them are currently among the dirtiest plants in Texas.
As public awareness about air pollution--the effects of carbon dioxide on global warming, the heavy price that North Texas cities will have to pay economically if their air isn't cleaned up, the health effects of sulfur dioxide and other pollutants --Texas' status as a dirty-air state has become increasingly problematic. And the controversy over TXU's old plants and new ones and TCEQ's enforcement record continues to heat up.
Karen Hadden, executive director of the SEED Coalition, an Austin-based environmental group, is especially concerned about the expected mercury levels to come from two of the new plants to be built at Oak Grove, about 115 miles northeast of Austin. "This will be one of the largest mercury polluters in the nation," said Hadden. Studies have shown that exposure to mercury, a neurotoxin, can stunt mental development in children.
For its part, TXU says it is working to cut emissions by installing new technology. Kleckner says TXU has promised to cut coal plant emissions of nitrous oxide and sulfur dioxide as well as mercury by 20 percent from 2005 levels. "We know of no other company that has made such as significant commitment," he wrote in an e-mail statement.
At UT-Tyler, Dr. James Stocks, head of the school's Texas Asthma Camp for Kids, said that the sheer volume of pollution the power plants are allowed to put out legally is more troubling to him than questions about over-the-limit emission incidents. "The fact that TCEQ hasn't penalized them doesn't bother me at all," Stocks said. "It's that we allow too much in the first place."
Families across Texas like the Taylors, who live in the shadow of enormous power plants with outdated pollution control technology, are growing increasingly skeptical of the state's assurances that their health and environment is protected.
So the Taylors take what precautions they can when the smoke from Big Brown rolls their way. They keep Jesse indoors, have his medication ready, and, if need be, are prepared to call the police to warn them that they will be speeding down the highway to take Jesse to the hospital--always worrying that each trip to the emergency room might be their last.
Chris Campbell contributed to this report, which is a project of the Center for Public Integrity.
Joaquin Sapien can be reached at jbsapien@gmail.com.
This story is being published concurrently by the Center for Public Integrity at http://www.publicintegrity.org/txu/default.htm
Tuesday, February 19, 2008
Dallas Morning News: Energy Future Holdings realigns PACs
Energy Future Holdings is realigning its political action committees, tweaking organizations that typically blanket Austin with hundreds of thousands of dollars in political contributions each year. The Dallas power company, formerly known as TXU Corp., started a new PAC that pools contributions from some private equity investors in the company, including heavyweight investor David Bonderman. "They wallpaper with money," said Craig McDonald, director of watchdog group Texans for Public Justice. He expects Energy Future to continue to contribute to just about everybody. Read the article at the Dallas Morning News
By ELIZABETH SOUDER / The Dallas Morning News
esouder@dallasnews.com
Tuesday, February 19, 2008
Energy Future Holdings is realigning its political action committees, tweaking organizations that typically blanket Austin with hundreds of thousands of dollars in political contributions each year.
The Dallas power company, formerly known as TXU Corp., started a new PAC that pools contributions from some private equity investors in the company, including heavyweight investor David Bonderman.
That new group, called Texas Energy Future Capital Holdings Political Action Committee, is branching out a bit. It contributed in its first two months to some Houston Democrats but skipped gifts to a couple of powerful legislators who've been close to the top of TXU's list in previous years.
But that's just the first two months of operations.
"They wallpaper with money," said Craig McDonald, director of watchdog group Texans for Public Justice. He expects Energy Future to continue to contribute to just about everybody.
During the 2006 election cycle, TXU contributed to all but seven legislators, according to a study by Mr. McDonald's organization.
In addition to the new committee, five other political action committees are associated with Energy Future Holdings: Texas Employee PAC of TXU Corp., TXU Corp. PAC, Oncor Texas PAC, Electric Delivery PAC of TXU, and Power and Energy PAC of TXU Corp.
Energy Future spokeswoman Lisa Singleton said the company is reorganizing the committees since TXU was bought late last year by private equity investors TPG and Kohlberg Kravis Roberts & Co.
She declined to talk about the committees' political strategies, other than to say that employees want to engage in the legislative process.
"Maintaining relationships, participating in the political process is part of running a good business and part of being a good corporate citizen," Ms. Singleton said.
The new PAC contributes to both Republicans and Democrats in various areas of the state. It doesn't limit itself to those who sit on committees that directly affect the company or to those who avoid environmental causes. The PAC contributes to legislators who are up for re-election soon and those who won't have to campaign for years.
The new committee is contributing to a number of Houston Democrats, a group that was traditionally outside the Dallas utility's territory.
Old utility monopolies may now do business outside their traditional territories. So legislators can glean contributions from lots of electricity companies, not just the hometown utility.
Further, some Democratic leaders last session opposed legislation that could have limited TXU's market share.
"I'd rather see this bill go down than promote the feint that this is a consumer bill," Rep. Rene Oliveira, D-Brownsville, said during debate about the legislation.
The new PAC gave $10,000 to Mr. Oliveira, a member of the Regulated Industries committee.
The company's contributions also reflect a shift toward the Democratic Party in Texas.
"There was a time there when a lot of people didn't give to us Democrats. So it's a good sign that people who've been outside the rail may be inside the rail," said Rep. Garnet Coleman, D-Houston, who received $5,000 from the new Energy Future PAC.
In January, the new PAC gave $1,000 to one of the seven legislators the TXU PACs skipped last time: Jessica Farrar, D-Houston.
She said she doesn't recall actively soliciting the contribution, she isn't sure which lobbyist sent the cashier's check because there was no business card attached, and she doesn't know why the Energy Future PAC would be attracted to her.
"I have no idea. It's a mystery to me," she said.
The Energy Future committee continues to give to TXU's old friends. Lt. Gov. David Dewhurst got $15,000 from the new committee, and Sen. Kevin Eltife, R-Tyler, a member of the Business and Commerce committee, got $5,000.
Mr. Eltife said he didn't solicit the money but got a call from Energy Future lobbyist Mark Malone.
"He didn't do it any differently than he normally does," Mr. Eltife said. "He said, 'Kevin, I have a check for you,' and I said, 'Mail it to my office.' "
A couple of legislators who were favorites among the TXU PACs were absent from the new committee's list of payees.
Sen. Troy Fraser, R-Horseshoe Bay, chairman of the Business and Commerce committee, hasn't received contributions from the Energy Future committees recently. Mr. Fraser proposed legislation that TXU opposed last session.
Phil King, R-Weatherford, also hasn't received a donation of late. Mr. King sponsored Mr. Fraser's bills in the House but also worked on a compromise with major power companies. Time ran out before Mr. King could get his compromise passed.
Both Mr. Fraser and Mr. King were among the top 11 recipients of money from TXU groups from 2005 to 2006, according to Texans for Public Justice.
"Things have changed," Mr. King said.
Mr. King is up for re-election, and his list of contributors is packed with energy and electricity companies, since he is chairman of the Regulated Industries committee.
But this time, he asked the Energy Future political action committees not to donate to his campaign. He said he even declined a check one of the groups offered to send because he doubts the company will agree with his position next session.
Energy Future Holdings realigns PACs
Utility adds one donor group, reassesses othersBy ELIZABETH SOUDER / The Dallas Morning News
esouder@dallasnews.com
Tuesday, February 19, 2008
Energy Future Holdings is realigning its political action committees, tweaking organizations that typically blanket Austin with hundreds of thousands of dollars in political contributions each year.
The Dallas power company, formerly known as TXU Corp., started a new PAC that pools contributions from some private equity investors in the company, including heavyweight investor David Bonderman.
That new group, called Texas Energy Future Capital Holdings Political Action Committee, is branching out a bit. It contributed in its first two months to some Houston Democrats but skipped gifts to a couple of powerful legislators who've been close to the top of TXU's list in previous years.
But that's just the first two months of operations.
"They wallpaper with money," said Craig McDonald, director of watchdog group Texans for Public Justice. He expects Energy Future to continue to contribute to just about everybody.
During the 2006 election cycle, TXU contributed to all but seven legislators, according to a study by Mr. McDonald's organization.
In addition to the new committee, five other political action committees are associated with Energy Future Holdings: Texas Employee PAC of TXU Corp., TXU Corp. PAC, Oncor Texas PAC, Electric Delivery PAC of TXU, and Power and Energy PAC of TXU Corp.
Energy Future spokeswoman Lisa Singleton said the company is reorganizing the committees since TXU was bought late last year by private equity investors TPG and Kohlberg Kravis Roberts & Co.
She declined to talk about the committees' political strategies, other than to say that employees want to engage in the legislative process.
"Maintaining relationships, participating in the political process is part of running a good business and part of being a good corporate citizen," Ms. Singleton said.
The new PAC contributes to both Republicans and Democrats in various areas of the state. It doesn't limit itself to those who sit on committees that directly affect the company or to those who avoid environmental causes. The PAC contributes to legislators who are up for re-election soon and those who won't have to campaign for years.
The new committee is contributing to a number of Houston Democrats, a group that was traditionally outside the Dallas utility's territory.
Old utility monopolies may now do business outside their traditional territories. So legislators can glean contributions from lots of electricity companies, not just the hometown utility.
Further, some Democratic leaders last session opposed legislation that could have limited TXU's market share.
"I'd rather see this bill go down than promote the feint that this is a consumer bill," Rep. Rene Oliveira, D-Brownsville, said during debate about the legislation.
The new PAC gave $10,000 to Mr. Oliveira, a member of the Regulated Industries committee.
The company's contributions also reflect a shift toward the Democratic Party in Texas.
"There was a time there when a lot of people didn't give to us Democrats. So it's a good sign that people who've been outside the rail may be inside the rail," said Rep. Garnet Coleman, D-Houston, who received $5,000 from the new Energy Future PAC.
In January, the new PAC gave $1,000 to one of the seven legislators the TXU PACs skipped last time: Jessica Farrar, D-Houston.
She said she doesn't recall actively soliciting the contribution, she isn't sure which lobbyist sent the cashier's check because there was no business card attached, and she doesn't know why the Energy Future PAC would be attracted to her.
"I have no idea. It's a mystery to me," she said.
The Energy Future committee continues to give to TXU's old friends. Lt. Gov. David Dewhurst got $15,000 from the new committee, and Sen. Kevin Eltife, R-Tyler, a member of the Business and Commerce committee, got $5,000.
Mr. Eltife said he didn't solicit the money but got a call from Energy Future lobbyist Mark Malone.
"He didn't do it any differently than he normally does," Mr. Eltife said. "He said, 'Kevin, I have a check for you,' and I said, 'Mail it to my office.' "
A couple of legislators who were favorites among the TXU PACs were absent from the new committee's list of payees.
Sen. Troy Fraser, R-Horseshoe Bay, chairman of the Business and Commerce committee, hasn't received contributions from the Energy Future committees recently. Mr. Fraser proposed legislation that TXU opposed last session.
Phil King, R-Weatherford, also hasn't received a donation of late. Mr. King sponsored Mr. Fraser's bills in the House but also worked on a compromise with major power companies. Time ran out before Mr. King could get his compromise passed.
Both Mr. Fraser and Mr. King were among the top 11 recipients of money from TXU groups from 2005 to 2006, according to Texans for Public Justice.
"Things have changed," Mr. King said.
Mr. King is up for re-election, and his list of contributors is packed with energy and electricity companies, since he is chairman of the Regulated Industries committee.
But this time, he asked the Energy Future political action committees not to donate to his campaign. He said he even declined a check one of the groups offered to send because he doubts the company will agree with his position next session.
Thursday, November 8, 2007
Click 2 Houston: Electric Industry Gives Big Bucks To Politicians
"The biggest, single business industry in the Texas lobby is the energy and natural resource sector," said Andrew Wheat with the non-profit group Texans for Public Justice. The group tracks every dollar doled out to Texas lawmakers. And we discovered millionaire executives and political groups from the same companies you pay for electricity each month give hundreds of thousands of dollars in campaign contributions to the same politicians you count on to protect you. Read the transcript at Click 2 Houston
Like clockwork, around every election the campaign signs go up, the votes roll in and so does the money.
"The biggest, single business industry in the Texas lobby is the energy and natural resource sector," said Andrew Wheat with the non-profit group Texans for Public Justice.
The group tracks every dollar doled out to Texas lawmakers. And we discovered millionaire executives and political groups from the same companies you pay for electricity each month give hundreds of thousands of dollars in campaign contributions to the same politicians you count on to protect you.
"These are heavy hitters," said Wheat.
Campaign contribution reports show the electric industry started at the top, giving Gov. Rick Perry more than $325,000.
The next most powerful state lawmaker, Speaker of the House Tom Craddick, filled his campaign coffers with $124,000 from electric company employees and their political groups.
So exactly who is parting with all that cash?
Those associated with TXU Energy generously gave $337,000 between 2005 and 2006. Reliant Energy executives and political groups donated $206,000.
And CenterPoint Energy's representatives and affiliates followed with their own gift of $186,000.
All total, the electric industry spread $1.8 million dollars across the state capitol and Wheat says that money is strategically donated.
"If you're sitting as a chairman of a powerful committee, they know that industry is going to pour money into your campaign coffers," said Wheat.
And that's exactly what Local 2 Investigates found.
The two chairs of the House and Senate committees that write the bills affecting electric companies and your bill each had a windfall of more than $80,000 -- money straight from the industry they're charged with keeping in line.
Both legislators refused to talk with Local 2 Investigates.
"The last thing they want is an independent watchdog in the legislature or the PUC. They want lapdogs," said Wheat.
Senator Kyle Janek, who represents the Houston and Galveston area, received $16,000 from the electric industry. But Janek says the money has no influence on how he votes.
"The public needs to look at me and say, 'Do I believe this guy? Is he credible when he says that he got $16,000, he voted for or against electric bills? Is he credible in the way he votes?" said Janek.
Janek sits on the Senate committee that introduces legislation specifically targeting the electric industry.
State Rep. Sylvester Turner sits on a similar committee in the House. But that seat didn't stop Turner from taking in $18,000 from the industry.
"I think the industry will say to you that a contribution made to me, to Rep. Turner certainly does not influence his position in terms of their interests," explained Turner.
But in a statement, CenterPoint Energy said this.
"CenterPoint Energy does not make campaign contributions. The company sponsors a political action committee (PAC) and all contributions to the PAC come from our employees. The PAC "looks at a variety of factors related to our company's business in selecting candidates to support" like "does the incumbent chair a committee of importance to our industry? Is the incumbent a member of a committee that can have a direct effect on our industry?"
"Why do you think the electric industry gives you money? If it's not for influence, why do they give you money?" Davis asked Turner.
"They give you money for access," replied Turner.
And that's access Wheat says you are denied.
"We just don't have a consumer lobby that's pouring hundreds of thousands of dollars into the governor's campaign coffers and if we did, I think things would be very different," said Wheat.
Reliant Energy sent us this statement.
"Reliant Energy employees, through political action committees (PACs), contribute to the election campaigns of political candidates, Democrats and Republicans alike, who take an interest in issues that are important to the electric industry and to our company. Employees of many U.S. companies, including other energy companies and our competitors, participate in the political process in this manner.
Reliant Energy is committed to strict compliance with all applicable local, state and federal campaign contribution and election laws. In jurisdictions where laws permit corporate contributions, the company along with many other citizens participates in the democratic process by making financial contributions to candidates and groups that support competitive electricity markets. In fact, our business model is based on the fundamental belief that competitive markets provide benefits to consumers and we support the continued growth of these markets."
Reliant Energy adds that it takes issue with the method Texans for Public Justice used in calculating the total dollar amount contributed by Reliant and its employees. A company spokesperson wrote, "Connecting the contributions of our former executives who were not affiliated with the company during the 2006 time period that we discussed, would not be accurate."
To see all of the campaign contributions made to Texas legislatures by the electric industry, click on the following links.
List Of Political Contributions By Electric Industry, Jan. 2005-Dec. 2006
Amount Of Electric Industry Money Received By Candidates, Jan. 2005-Dec. 2006
And the giving doesn't stop there. If you think the electric industry shelled out a lot for campaign contributions, wait until you hear how it spent between $10 and $20 million in recent months. Watch for that investigation on KPRC Local 2 next Wednesday at 10 p.m.
Electric Industry Gives Big Bucks To Politicians
HOUSTON -- Note: The following story is a verbatim transcript of an Investigators story that aired on Wednesday, Nov. 7, 2007, on KPRC Local 2 at 10 p.m.Like clockwork, around every election the campaign signs go up, the votes roll in and so does the money.
"The biggest, single business industry in the Texas lobby is the energy and natural resource sector," said Andrew Wheat with the non-profit group Texans for Public Justice.
The group tracks every dollar doled out to Texas lawmakers. And we discovered millionaire executives and political groups from the same companies you pay for electricity each month give hundreds of thousands of dollars in campaign contributions to the same politicians you count on to protect you.
"These are heavy hitters," said Wheat.
Campaign contribution reports show the electric industry started at the top, giving Gov. Rick Perry more than $325,000.
The next most powerful state lawmaker, Speaker of the House Tom Craddick, filled his campaign coffers with $124,000 from electric company employees and their political groups.
So exactly who is parting with all that cash?
Those associated with TXU Energy generously gave $337,000 between 2005 and 2006. Reliant Energy executives and political groups donated $206,000.
And CenterPoint Energy's representatives and affiliates followed with their own gift of $186,000.
All total, the electric industry spread $1.8 million dollars across the state capitol and Wheat says that money is strategically donated.
"If you're sitting as a chairman of a powerful committee, they know that industry is going to pour money into your campaign coffers," said Wheat.
And that's exactly what Local 2 Investigates found.
The two chairs of the House and Senate committees that write the bills affecting electric companies and your bill each had a windfall of more than $80,000 -- money straight from the industry they're charged with keeping in line.
Both legislators refused to talk with Local 2 Investigates.
"The last thing they want is an independent watchdog in the legislature or the PUC. They want lapdogs," said Wheat.
Senator Kyle Janek, who represents the Houston and Galveston area, received $16,000 from the electric industry. But Janek says the money has no influence on how he votes.
"The public needs to look at me and say, 'Do I believe this guy? Is he credible when he says that he got $16,000, he voted for or against electric bills? Is he credible in the way he votes?" said Janek.
Janek sits on the Senate committee that introduces legislation specifically targeting the electric industry.
State Rep. Sylvester Turner sits on a similar committee in the House. But that seat didn't stop Turner from taking in $18,000 from the industry.
"I think the industry will say to you that a contribution made to me, to Rep. Turner certainly does not influence his position in terms of their interests," explained Turner.
But in a statement, CenterPoint Energy said this.
"CenterPoint Energy does not make campaign contributions. The company sponsors a political action committee (PAC) and all contributions to the PAC come from our employees. The PAC "looks at a variety of factors related to our company's business in selecting candidates to support" like "does the incumbent chair a committee of importance to our industry? Is the incumbent a member of a committee that can have a direct effect on our industry?"
"Why do you think the electric industry gives you money? If it's not for influence, why do they give you money?" Davis asked Turner.
"They give you money for access," replied Turner.
And that's access Wheat says you are denied.
"We just don't have a consumer lobby that's pouring hundreds of thousands of dollars into the governor's campaign coffers and if we did, I think things would be very different," said Wheat.
Reliant Energy sent us this statement.
"Reliant Energy employees, through political action committees (PACs), contribute to the election campaigns of political candidates, Democrats and Republicans alike, who take an interest in issues that are important to the electric industry and to our company. Employees of many U.S. companies, including other energy companies and our competitors, participate in the political process in this manner.
Reliant Energy is committed to strict compliance with all applicable local, state and federal campaign contribution and election laws. In jurisdictions where laws permit corporate contributions, the company along with many other citizens participates in the democratic process by making financial contributions to candidates and groups that support competitive electricity markets. In fact, our business model is based on the fundamental belief that competitive markets provide benefits to consumers and we support the continued growth of these markets."
Reliant Energy adds that it takes issue with the method Texans for Public Justice used in calculating the total dollar amount contributed by Reliant and its employees. A company spokesperson wrote, "Connecting the contributions of our former executives who were not affiliated with the company during the 2006 time period that we discussed, would not be accurate."
To see all of the campaign contributions made to Texas legislatures by the electric industry, click on the following links.
List Of Political Contributions By Electric Industry, Jan. 2005-Dec. 2006
Amount Of Electric Industry Money Received By Candidates, Jan. 2005-Dec. 2006
And the giving doesn't stop there. If you think the electric industry shelled out a lot for campaign contributions, wait until you hear how it spent between $10 and $20 million in recent months. Watch for that investigation on KPRC Local 2 next Wednesday at 10 p.m.
Wednesday, August 22, 2007
Fort Worth Star -Telegram: Millions spent on lobbyists, legislators
TXU and its buyout partners spent about $6 million for lobbyists, $11 million for advertising and $200,000 for legislative gifts during the most recent session of the Legislature, according to political spending watchdog group Texans for Public Justice." TXU lobbyist power paid off. They accomplished all of their goals during the session. They stopped any rate rollbacks. They stopped any oversight over the buyout. If there is a lesson, it's that money can help buy you success," said Craig McDonald, director of Texans for Public Justice.
By R.A. DYER
Star-Telegram Staff Writer
AUSTIN -- TXU and its buyout partners spent about $6 million for lobbyists, $11 million for advertising and $200,000 for legislative gifts during the most recent session of the Legislature, according to political spending watchdog group Texans for Public Justice.
The organization noted that the $17.2 million is about twice what TXU had said it planned to spend before the controversial buyout was announced.
But TXU notes that Public Justice's calculations also include spending during the 2007 session by the private-equity firms vying to buy the utility -- not just TXU. A spokesman for the governor accused Public Justice of hypocrisy because it does not disclose its funding sources.
TPG, formerly Texas Pacific Group, and Kohlberg Kravis Roberts & Co. hope to buy TXU. They have nearly completed the $45 billion transaction.
But it has been dogged by controversy from the beginning, with major consumer groups saying it could lead to higher electric rates. Texas lawmakers had considered legislation that would have required up-or-down regulatory approval and other concessions, but the measure failed under heavy lobbying pressure. A look at expenditures:
Lobbying and advertising
-$3.8 million for 65 Texas lobbyists hired by TXU.
-$2 million for 21 Texas lobbyists hired by Texas Pacific and KKR.
-$11 million for advertising reported by lobbyists.
Entertainment
-$146,851 to entertain lawmakers and their staff members, as reported by TXU lobbyists.
-$6,000 for 2,400 breakfast tacos purchased by TXU for legislators and their aides on the session's opening day.
Up to $1,000 for San Antonio Spurs playoff tickets purchased by Michael MacDougall, a partner with Fort Worth-based TPG, for Rep. Rene Oliveira, D-Brownsville, and his chief of staff, J.J. Garza. Oliveira and Rep. Jim Dunnam, D-Waco, opposed utility legislation favored by consumer groups. Oliveira and Garza declined to comment.
Other expenses
TXU lobbyist Chris Shields bought NCAA tickets for Gov. Rick Perry's legislative director and his son-in-law. The tickets were worth up to $150 apiece, according to Public Justice. A spokesman for the governor said that Shields provided the tickets on behalf of the San Antonio Chamber of Commerce and that as such they were not an inappropriate gift. Shields said the Chamber of Commerce and Toyota, which has a large plant in San Antonio, split the expense of the tickets.
The reaction
"We are conservative in our reporting, as indicated by the number of full-time TXU employees who are reported as lobbyists. It may only be a small part of their overall job. A large number of those listed as solely TXU lobbyists are in fact full-time TXU employees whose full-time job is not lobbying."
-- TXU spokeswoman Lisa Singleton
"TXU lobbyist power paid off. They accomplished all of their goals during the session. They stopped any rate rollbacks. They stopped any oversight over the buyout. If there is a lesson, it's that money can help buy you success."
-- Craig McDonald, director of Texans for Public Justice
Accepting lobby gifts "is certainly not something that the governor encourages his employees to do."
-- Perry spokesman Robert Black
Millions spent on lobbyists, legislators
By R.A. DYER
Star-Telegram Staff Writer
AUSTIN -- TXU and its buyout partners spent about $6 million for lobbyists, $11 million for advertising and $200,000 for legislative gifts during the most recent session of the Legislature, according to political spending watchdog group Texans for Public Justice.
The organization noted that the $17.2 million is about twice what TXU had said it planned to spend before the controversial buyout was announced.
But TXU notes that Public Justice's calculations also include spending during the 2007 session by the private-equity firms vying to buy the utility -- not just TXU. A spokesman for the governor accused Public Justice of hypocrisy because it does not disclose its funding sources.
TPG, formerly Texas Pacific Group, and Kohlberg Kravis Roberts & Co. hope to buy TXU. They have nearly completed the $45 billion transaction.
But it has been dogged by controversy from the beginning, with major consumer groups saying it could lead to higher electric rates. Texas lawmakers had considered legislation that would have required up-or-down regulatory approval and other concessions, but the measure failed under heavy lobbying pressure. A look at expenditures:
Lobbying and advertising
-$3.8 million for 65 Texas lobbyists hired by TXU.
-$2 million for 21 Texas lobbyists hired by Texas Pacific and KKR.
-$11 million for advertising reported by lobbyists.
Entertainment
-$146,851 to entertain lawmakers and their staff members, as reported by TXU lobbyists.
-$6,000 for 2,400 breakfast tacos purchased by TXU for legislators and their aides on the session's opening day.
Up to $1,000 for San Antonio Spurs playoff tickets purchased by Michael MacDougall, a partner with Fort Worth-based TPG, for Rep. Rene Oliveira, D-Brownsville, and his chief of staff, J.J. Garza. Oliveira and Rep. Jim Dunnam, D-Waco, opposed utility legislation favored by consumer groups. Oliveira and Garza declined to comment.
Other expenses
TXU lobbyist Chris Shields bought NCAA tickets for Gov. Rick Perry's legislative director and his son-in-law. The tickets were worth up to $150 apiece, according to Public Justice. A spokesman for the governor said that Shields provided the tickets on behalf of the San Antonio Chamber of Commerce and that as such they were not an inappropriate gift. Shields said the Chamber of Commerce and Toyota, which has a large plant in San Antonio, split the expense of the tickets.
The reaction
"We are conservative in our reporting, as indicated by the number of full-time TXU employees who are reported as lobbyists. It may only be a small part of their overall job. A large number of those listed as solely TXU lobbyists are in fact full-time TXU employees whose full-time job is not lobbying."
-- TXU spokeswoman Lisa Singleton
"TXU lobbyist power paid off. They accomplished all of their goals during the session. They stopped any rate rollbacks. They stopped any oversight over the buyout. If there is a lesson, it's that money can help buy you success."
-- Craig McDonald, director of Texans for Public Justice
Accepting lobby gifts "is certainly not something that the governor encourages his employees to do."
-- Perry spokesman Robert Black
Associated Press: Group says TXU, buyers spent $17 million wooing Legislature
TXU Corp. and the private equity firms trying to buy the company spent about $17 million on lobbyists and advertising during the most recent session of the state Legislature, according to a report by a group that tracks political spending.
August 22, 2007
AUSTIN - TXU Corp. and the private equity firms trying to buy the company spent about $17 million on lobbyists and advertising during the most recent session of the state Legislature, according to a report by a group that tracks political spending.
The Legislature considered but rejected bills that could have spoiled the pending $32 billion buyout of TXU.
Texans for Public Justice said TXU and the investors trying to buy the company spent nearly $11 million on advertising, $5.8 million on lobbyists, and about $180,000 to entertain lawmakers and their staffs, as reported by TXU lobbyists.
The advocacy group said TXU hired 65 lobbyists during the legislative session, and the investors trying to buy the company hired another 21 lobbyists. The highest-paid lobbyist, at $351,000, was former Dallas Mayor Ron Kirk, the group said.
TXU spokeswoman Lisa Singleton said the company reported employees as lobbyists even if lobbying "may only be a small part of their overall job."
Almost all of the advertising spending, $10.9 million, was reported by Clifford Angelo of Public Strategies, a lobbying and public relations firm. Angelo's only client was the investor group trying to buy TXU, which ran ads promoting the buyout.
Private investors led by Kohlberg Kravis Roberts & Co. and TPG Capital, formerly known as Texas Pacific Group, are nearing completion of the deal. TXU shareholders are scheduled to vote Sept. 7 on the $69.25-per-share offer.
Among the gifts cited in the advocacy group's report was up to $1,000 for San Antonio Spurs playoff tickets, which TPG partner Michael MacDougall bought for Rep. Rene Oliveira, D-Brownsville, and his chief of staff, J.J. Garza. Oliveira and Garza declined to comment.
The state Senate passed legislation - opposed by TXU and the buyout firms - that would have imposed new state regulation of utility takeovers and forced TXU to sell power plants. The bills failed to win final passage.
Dallas-based TXU generates power, runs a regulated electric distribution business, and sells electricity to residents and businesses.
Group says TXU, buyers spent $17 million wooing Legislature
© 2007 The Associated PressAugust 22, 2007
AUSTIN - TXU Corp. and the private equity firms trying to buy the company spent about $17 million on lobbyists and advertising during the most recent session of the state Legislature, according to a report by a group that tracks political spending.
The Legislature considered but rejected bills that could have spoiled the pending $32 billion buyout of TXU.
Texans for Public Justice said TXU and the investors trying to buy the company spent nearly $11 million on advertising, $5.8 million on lobbyists, and about $180,000 to entertain lawmakers and their staffs, as reported by TXU lobbyists.
The advocacy group said TXU hired 65 lobbyists during the legislative session, and the investors trying to buy the company hired another 21 lobbyists. The highest-paid lobbyist, at $351,000, was former Dallas Mayor Ron Kirk, the group said.
TXU spokeswoman Lisa Singleton said the company reported employees as lobbyists even if lobbying "may only be a small part of their overall job."
Almost all of the advertising spending, $10.9 million, was reported by Clifford Angelo of Public Strategies, a lobbying and public relations firm. Angelo's only client was the investor group trying to buy TXU, which ran ads promoting the buyout.
Private investors led by Kohlberg Kravis Roberts & Co. and TPG Capital, formerly known as Texas Pacific Group, are nearing completion of the deal. TXU shareholders are scheduled to vote Sept. 7 on the $69.25-per-share offer.
Among the gifts cited in the advocacy group's report was up to $1,000 for San Antonio Spurs playoff tickets, which TPG partner Michael MacDougall bought for Rep. Rene Oliveira, D-Brownsville, and his chief of staff, J.J. Garza. Oliveira and Garza declined to comment.
The state Senate passed legislation - opposed by TXU and the buyout firms - that would have imposed new state regulation of utility takeovers and forced TXU to sell power plants. The bills failed to win final passage.
Dallas-based TXU generates power, runs a regulated electric distribution business, and sells electricity to residents and businesses.
Tuesday, August 14, 2007
Lobby Watch:
Leveraging a Buyout: TXU's Takeover Lobby Cost About $17 Million
TXU and its suitors spent approximately $17 million in early 2007 to convince state officials not to impose significant consumer or environmental restrictions on the giant utility or its pending takeover by the Texas Pacific Group and Kohlberg Kravis Roberts & Co.
Read the Lobby Watch
Read the Lobby Watch
Thursday, March 22, 2007
Fort Worth Star Telegram: Dewhurst’s TXU ties are criticized
A recent report by Texans for Public Justice said TXU spends more on lobby contracts than any company except AT&T. The group reports that TXU has spent up to $24 million on 674 state lobby contracts since 1993. It also said that the company spent up to $3.3 million on 60 lobbyists by late February 2007, which already exceeded what it spent in any previous year. The organization said that after Gov. Rick Perry, Dewhurst received the most campaign cash from the company, $62,250, during the most recent election cycle.
By R.A. DYER
STAR-TELEGRAM AUSTIN BUREAU
March 22, 2007
AUSTIN — Over the last four years as his chief of staff, Bruce Gibson worked at the right hand of Lt. Gov. David Dewhurst advising him on all manner of policy.
Now Gibson has gone directly from the lieutenant governor’s office to a job as a legislative consultant for TXU, a company seeking big favors from Dewhurst and other Texas lawmakers.
And while Gibson insists he does not lobby on behalf of the North Texas utility, the opposite is true of another former associate of the lieutenant governor.
Dennis Thomas, a former Public Utility Commission chairman, was once a consultant to Dewhurst’s Falcon Seaboard company and also teamed up with Dewhurst during the 1990s on the sale of cogeneration facilities in Florida and New York.
Thomas is listed as one of TXU’s highest-paid independent lobbyists. He was in Dewhurst’s office last week lobbying on behalf of Texas Pacific Group and Kohlberg Kravis Roberts, the investment firms proposing to acquire TXU in a $45 billion buyout.
Public advocacy groups are crying foul over the coziness of the relations between the lieutenant governor and top company representatives. They note that TXU has major business before the Texas Legislature, much of it dealing with the controversial buyout.
Insider knowledge
“Mr. Thomas and Mr. Gibson are being paid by TXU, at least in part, for their insider knowledge and personal ties with government officials,” said Andrew Wheat, a policy analyst for Texans for Public Justice, a political watchdog group. “This undermines the public’s confidence in their government. The public starts to wonder whose interests are being served.”
Dewhurst, a Republican, said that he has not been lobbied by Gibson. He said that Gibson recently came by his office on personal business, and that Gibson declined his request to discuss utility matters.
Dewhurst does acknowledge speaking with Thomas about utility legislation. But he insists that he has maintained his independence.
He described both men as good friends.
“I have a well-deserved reputation for doing what I think is best,” he said. “I’m friends with all the senators, and I treat everybody with respect. At the end of the day, I do what I think and the majority of the senators think is in the best interest of all Texas.”
Although a TXU spokeswoman said Gibson’s contract began on Jan. 1, 2007, records show he was a state employee until Jan. 5. The spokeswoman also said the company’s top lobbyist, Curt Seidlits, approached Gibson in December with a suggestion that he come to work for TXU.
Nonetheless, Gibson and the company said there was no overlap between his state employment and his TXU work. Neither he nor TXU would disclose the value of his contract, which they say is for consulting and not for lobbying.
Help with connections
“We brought someone in who knows Austin politics and knows the right people and to help with the connections we need to have — but he has not been asked to talk to legislators about the transaction or any of the legislation that is pending,” said TXU spokeswoman Lisa Singleton.
Records show that Gibson, 53, made $13,390 per month as Dewhurst’s chief of staff. The lieutenant governor also said he used his own money to supplement Gibson’s state salary with bonuses totaling between $200,000 and $300,000 over Gibson’s four years in his office.
Before working for Dewhurst, Gibson was a top official at Reliant Energy of Houston. He said he does not discount the possibility of eventually lobbying for TXU or other companies but does not do so now.
“I help them with strategy — it’s for messaging, what is the right thing to say, and how to position the company for the best,” said Gibson. “The lieutenant governor wasn’t involved at all [in his getting a job at TXU]. . . . This is just a way to make a little money.”
Tom “Smitty” Smith, director of the Texas office of the advocacy group Public Citizen, said the public should be concerned whether he works as a consultant or a lobbyist.
In either case, “The former chief of staff to an elected official is going to know how to move the elected official in ways that no outsider will understand,” said Smith. “If TXU didn’t think it would pay off, they wouldn’t have hired Gibson as soon as he walked out the door.”
As for Thomas, the former Public Utility Commission chairman says he worked for several years as a consultant to Dewhurst’s oil industry company, Falcon Seaboard. He also acknowledges partnering with Dewhurst on a deal involving cogeneration plants in New York and Florida.
Falcon Seaboard paid Thomas about $10,000 annually until January 2003 for consulting work, according to Dewhurst. But the lieutenant governor says he has no involvement in the operations of Falcon Seaboard and that his ownership interests are held in an arm’s-length trust.
He says he now has no business relationship with Thomas.
“I consider Dennis Thomas a friend,” said Dewhurst. “Dennis knows that I’m not going to do anything for anybody that I don’t think is in the best interest of Texans. I will tell you that I always found Dennis Thomas to be squeaky clean and brutally honest.”
For his part, Thomas acknowledges meeting with Dewhurst last week to discuss several bills by state Sen. Troy Fraser, R-Horseshoe Bay, which have drawn opposition from TXU. “Right now, as a lobbyist, I’m engaged to help clients, and I advise clients about what they need,” he said.
Highly paid lobbyist
According to Texans for Public Justice, Thomas is one of highest-paid independent lobbyists contracted by TXU, with a contract worth between $100,000 and $150,000. Thomas also has a lobby contract with the partnership formed to purchase the utility.
TXU’s other top independent lobby contract is with former Dallas Mayor Ron Kirk, who also reports payment of between $100,000 and $150,000 from TXU, according to the watchdog group.
A recent report by Texans for Public Justice said TXU spends more on lobby contracts than any company except AT&T. The group reports that TXU has spent up to $24 million on 674 state lobby contracts since 1993. It also said that the company spent up to $3.3 million on 60 lobbyists by late February 2007, which already exceeded what it spent in any previous year.
The organization said that after Gov. Rick Perry, Dewhurst received the most campaign cash from the company, $62,250, during the most recent election cycle.
Dewhurst’s TXU ties are criticized
By R.A. DYER
STAR-TELEGRAM AUSTIN BUREAU
March 22, 2007
AUSTIN — Over the last four years as his chief of staff, Bruce Gibson worked at the right hand of Lt. Gov. David Dewhurst advising him on all manner of policy.
Now Gibson has gone directly from the lieutenant governor’s office to a job as a legislative consultant for TXU, a company seeking big favors from Dewhurst and other Texas lawmakers.
And while Gibson insists he does not lobby on behalf of the North Texas utility, the opposite is true of another former associate of the lieutenant governor.
Dennis Thomas, a former Public Utility Commission chairman, was once a consultant to Dewhurst’s Falcon Seaboard company and also teamed up with Dewhurst during the 1990s on the sale of cogeneration facilities in Florida and New York.
Thomas is listed as one of TXU’s highest-paid independent lobbyists. He was in Dewhurst’s office last week lobbying on behalf of Texas Pacific Group and Kohlberg Kravis Roberts, the investment firms proposing to acquire TXU in a $45 billion buyout.
Public advocacy groups are crying foul over the coziness of the relations between the lieutenant governor and top company representatives. They note that TXU has major business before the Texas Legislature, much of it dealing with the controversial buyout.
Insider knowledge
“Mr. Thomas and Mr. Gibson are being paid by TXU, at least in part, for their insider knowledge and personal ties with government officials,” said Andrew Wheat, a policy analyst for Texans for Public Justice, a political watchdog group. “This undermines the public’s confidence in their government. The public starts to wonder whose interests are being served.”
Dewhurst, a Republican, said that he has not been lobbied by Gibson. He said that Gibson recently came by his office on personal business, and that Gibson declined his request to discuss utility matters.
Dewhurst does acknowledge speaking with Thomas about utility legislation. But he insists that he has maintained his independence.
He described both men as good friends.
“I have a well-deserved reputation for doing what I think is best,” he said. “I’m friends with all the senators, and I treat everybody with respect. At the end of the day, I do what I think and the majority of the senators think is in the best interest of all Texas.”
Although a TXU spokeswoman said Gibson’s contract began on Jan. 1, 2007, records show he was a state employee until Jan. 5. The spokeswoman also said the company’s top lobbyist, Curt Seidlits, approached Gibson in December with a suggestion that he come to work for TXU.
Nonetheless, Gibson and the company said there was no overlap between his state employment and his TXU work. Neither he nor TXU would disclose the value of his contract, which they say is for consulting and not for lobbying.
Help with connections
“We brought someone in who knows Austin politics and knows the right people and to help with the connections we need to have — but he has not been asked to talk to legislators about the transaction or any of the legislation that is pending,” said TXU spokeswoman Lisa Singleton.
Records show that Gibson, 53, made $13,390 per month as Dewhurst’s chief of staff. The lieutenant governor also said he used his own money to supplement Gibson’s state salary with bonuses totaling between $200,000 and $300,000 over Gibson’s four years in his office.
Before working for Dewhurst, Gibson was a top official at Reliant Energy of Houston. He said he does not discount the possibility of eventually lobbying for TXU or other companies but does not do so now.
“I help them with strategy — it’s for messaging, what is the right thing to say, and how to position the company for the best,” said Gibson. “The lieutenant governor wasn’t involved at all [in his getting a job at TXU]. . . . This is just a way to make a little money.”
Tom “Smitty” Smith, director of the Texas office of the advocacy group Public Citizen, said the public should be concerned whether he works as a consultant or a lobbyist.
In either case, “The former chief of staff to an elected official is going to know how to move the elected official in ways that no outsider will understand,” said Smith. “If TXU didn’t think it would pay off, they wouldn’t have hired Gibson as soon as he walked out the door.”
As for Thomas, the former Public Utility Commission chairman says he worked for several years as a consultant to Dewhurst’s oil industry company, Falcon Seaboard. He also acknowledges partnering with Dewhurst on a deal involving cogeneration plants in New York and Florida.
Falcon Seaboard paid Thomas about $10,000 annually until January 2003 for consulting work, according to Dewhurst. But the lieutenant governor says he has no involvement in the operations of Falcon Seaboard and that his ownership interests are held in an arm’s-length trust.
He says he now has no business relationship with Thomas.
“I consider Dennis Thomas a friend,” said Dewhurst. “Dennis knows that I’m not going to do anything for anybody that I don’t think is in the best interest of Texans. I will tell you that I always found Dennis Thomas to be squeaky clean and brutally honest.”
For his part, Thomas acknowledges meeting with Dewhurst last week to discuss several bills by state Sen. Troy Fraser, R-Horseshoe Bay, which have drawn opposition from TXU. “Right now, as a lobbyist, I’m engaged to help clients, and I advise clients about what they need,” he said.
Highly paid lobbyist
According to Texans for Public Justice, Thomas is one of highest-paid independent lobbyists contracted by TXU, with a contract worth between $100,000 and $150,000. Thomas also has a lobby contract with the partnership formed to purchase the utility.
TXU’s other top independent lobby contract is with former Dallas Mayor Ron Kirk, who also reports payment of between $100,000 and $150,000 from TXU, according to the watchdog group.
A recent report by Texans for Public Justice said TXU spends more on lobby contracts than any company except AT&T. The group reports that TXU has spent up to $24 million on 674 state lobby contracts since 1993. It also said that the company spent up to $3.3 million on 60 lobbyists by late February 2007, which already exceeded what it spent in any previous year.
The organization said that after Gov. Rick Perry, Dewhurst received the most campaign cash from the company, $62,250, during the most recent election cycle.
Monday, March 5, 2007
Dallas Morning News: Missteps led up to TXU deal
Three days after rolling blackouts hit North Texas last April, TXU Corp. chief executive John Wilder and Gov. Rick Perry stood together in downtown Dallas to announce a plan to keep power flowing, to lower electricity prices and to clean the air. TXU would build 11 coal-fired power plants. Read the article at the Dallas Morning News
Monday, March 5, 2007
By ELIZABETH SOUDER, SUDEEP REDDY and RANDY LEE LOFTIS / The Dallas Morning News
Three days after rolling blackouts hit North Texas last April, TXU Corp. chief executive John Wilder and Gov. Rick Perry stood together in downtown Dallas to announce a plan to keep power flowing, to lower electricity prices and to clean the air.
TXU would build 11 coal-fired power plants.
Mr. Perry called it "an essential step to meeting long-term challenges."
"We will be part of the Texas miracle," Mr. Wilder said.
But for Mr. Wilder, the plan was meant to be more a miracle for shareholders than for consumers.
He spent the next 11 months focusing so intensely on shareholder returns that he alienated nearly every other constituency – customers, politicians, environmentalists and community groups. The company's missteps included failing to have community relations people in place for all the cities where TXU wanted to build until six months after announcing the expansion plan; failing to recognize the importance of cutting the regulated electricity rate; and failing to pay enough attention to key legislators.
The way Mr. Wilder's company dealt with the public backfired, causing outrage that damaged the share price, killed the coal plan and set the stage for a buyout of the company.
"I will say that I believe that they were aggressively pursuing sound policies," said former TXU CEO Erle Nye. "I think perhaps they were so aggressive that, perhaps the public relations aspect didn't have time to develop. And, you know, that can happen. I don't think there was as good a communication as there could have been, and I think the management felt that way as well."
The buyers, Texas Pacific Group and Kohlberg Kravis Roberts & Co., recognized the pickle Mr. Wilder was in. After they approached him about buying the company for a record $45 billion in November, they asked William Reilly, a former Environmental Protection Agency administrator – and a vice president of Texas Pacific Group – to help.
Mr. Reilly last month negotiated a pact with Environmental Defense and Natural Resources Defense Council. The TXU buyers agreed to build only three of the 11 coal plants TXU proposed, to cut pollution and greenhouse gas emissions, and to continue to listen to environmental concerns, if the two national groups would give the deal their stamp of approval. The groups agreed.
Those are concessions TXU probably would have made anyway. Mr. Wilder, 48, said last week he was already working on shrinking the coal deal back in November, when the buyers made their offer. He saw hurdles to the project: public frustration, rising costs to transport the coal for the plants, rising labor costs, and permitting delays.
"Yes, certainly the opposition [to the coal plants] was a factor, but it was not the only factor. We had several moving parts on this, and when it gets to the point that the balance of factors gets out of sync, it's time to re-evaluate the plan," said TXU spokeswoman Kim Morgan.
The buyers offered $69.25 a share. That's a premium to the depressed value of the shares before the offer.
Since taking over the company in 2004, Mr. Wilder's changes have caused the TXU share price to increase six-fold. The momentum stopped in November, as public outrage about the plants hit a peak, and legislators made it clear they were listening. The share price dropped from $65 a share to $55, and didn't fully recover until the buyout offer became public.
Now the Securities and Exchange Commission is alleging that some people made millions by purchasing options to buy TXU stock before the announcement of the buyout deal. The commission said Friday it won a court order freezing more than $5.3 million in assets connected to the unknown investors and requiring the purchasers to identify themselves.
Consumer rates
Much of the consumer outrage started in the autumn of 2005, when TXU sought to boost its standard retail electricity rate 24 percent to keep up with the rise in natural gas markets caused by the hurricanes. As Texas' most important generation fuel, natural gas markets tend to establish wholesale power prices.
But the company didn't reduce rates when natural gas prices fell. That left TXU unable to convince many customers that generating electricity with cheaper coal plants would change the retail price situation.
And when legislators returned to Austin after the November elections, many had a clear mandate from voters to do something about TXU.
Rep. Phil King, R-Weatherford, chairman of the regulated industries committee, said he couldn't go to church or the grocery store without hearing complaints from voters about their TXU bills.
Troy Fraser, R-Horseshoe Bay, head of the Senate committee on business and commerce, was livid. He confronted Mr. Wilder at a joint hearing in November of his Senate committee and Mr. King's committee. The hearing took place on the very day TXU announced third-quarter results that showed 2006 would be the company's most profitable year ever.
"I'm assuming congratulations are in order," Mr. Fraser said when Mr. Wilder took the chair to testify.
"No, Mr. Chairman, our investors were actually disappointed in us. We didn't achieve what they expected us to achieve," Mr. Wilder replied.
Mr. Fraser would go on to propose legislation meant to cut TXU's size and, in turn, reduce electricity prices. And he's not backing down, even though the TXU buyers are offering to drop rates and break the company apart. For Troy Fraser, the situation is almost personal.
"John Wilder sat in my office across from me last March, after they had moved their prices to record levels," Mr. Fraser said Thursday. "I said, 'John, the price of natural gas is going down. ... We're going to be trying to determine if the market's working. And if the market's working that means your retail prices will start sliding down. I'll be watching that.' "
"He looked blankly at me; he had no response," Mr. Fraser said. "Every time I would try to talk to him about it, he would remind me that his loyalty was to shareholders."
TXU did eventually offer discounts to all of its customers as an incentive to stick with TXU. But the company never dropped its standard price.
TXU's relationship with the governor was friendlier than with Mr. Fraser. But it also drew suspicions from the public.
Mr. Perry has received $404,100 in contributions tied to TXU since his 1998 lieutenant governor campaign, according to Texans for Public Justice, the nonprofit group that tracks spending in political campaigns. In the 2006 election cycle, 174 out of 181 state legislators received funding from TXU sources, according to the group.
Further, Mr. Perry struck a deal with TXU to buffer consumers from a second possible price hike. TXU agreed not to seek to raise rates again until April 2006, along with other concessions.
And on Oct. 27, 2005, one day before TXU received permission for its rate hike, Mr. Perry directed state agencies to speed up approval of new power plants. The order slashed in half, from a year to six months, how long outside groups could fight construction of a new plant.
Need for power
Three days before Mr. Wilder and Mr. Perry announced the coal plan in April, temperatures in North Texas hit 100 degrees. Folks started turning on their air conditioners and using lots more juice than expected. Then a power plant unexpectedly tripped, and neighborhoods saw rolling blackouts. Mr. Perry said during the coal announcement that the blackouts pointed to Texas' need for more power.
TXU officials said only natural gas and conventional coal plants could be built quickly enough to meet the need. Mr. Wilder said his coal plan would offer enough capacity to keep Texas electricity reliable until 2015.
But when environmentalists dug into the supply forecast data, many groups found it difficult to believe TXU's statement that, without the 11 plants, Texas would face "widespread blackouts."
Environmental groups suggested conservation could shore up most of the supply need, along with maybe a few new power plants. And that's what the TXU buyers have promised – new investment in conservation and to build only three of the proposed plants. Three plants will keep Texas juiced for now, and the buyers will consider cleaner technology to meet demand growth.
Emission cuts
Environmentalists were also skeptical of Mr. Wilder's promise to cut total emissions 20 percent from current levels, even after the new plants were built. When TXU consistently refused to say exactly how, when, or where those cuts would come, critics called the promise a ruse.
TXU would have to make those cuts anyway in a few years just to comply with air quality laws. And when a TXU executive admitted the company might sell the credits the company would earn on the early cuts to other polluters, many environmentalists wondered if the pollution promise would benefit Texas at all.
The sides also disagreed on whether the plan would worsen air quality in North Texas, even without selling emission credits to others.
TXU employees touted a study contending that all of TXU's new plants together would have little or no effect on North Texas smog – based on TXU's promise to cut its existing emissions. But the company refused to release the data that it gave the consultant for the study. An opposition group commissioned its own study that showed the opposite, that the plants would boost ozone levels here.
Throughout the debate, environmental and community groups called on TXU to use cleaner technology. They focused on coal gasification, which eliminates many pollutants and holds the promise – once more technology is developed – to capture and store greenhouse gas emissions.
But TXU executives said coal gasification hasn't proved to work reliably with the types of coal TXU uses.
TXU snubbed a government-funded coal gasification program called FutureGen, which Mr. Perry is trying to bring to Texas. As other coal companies joined the FutureGen board or contributed to the group, TXU declined. TXU officials said they prefer to work on their own proprietary technology, rather than support a public project that wouldn't directly benefit shareholders.
The TXU buyers made a point of promising to consider coal gasification and to support FutureGen.
Still, some opposition groups say the buyers aren't giving up much with the environmental pact. A judge last month declared Mr. Perry's fast-track order unconstitutional. When the permit hearings began the following day on seven plants, the judges delayed formal hearings by four months, causing many observers to doubt TXU would have been allowed to build all 11 plants.
And back in July, the judges hearing the case for Oak Grove units – two of the three plants the TXU buyers still want to build – recommended that the Texas Commission on Environmental Quality deny the permits. The judges found that TXU hadn't proved that Oak Grove could meet its emissions limits. The recommendation for denial went to the TCEQ commissioners, who haven't voted yet.
Debate goes national
When Mr. Wilder announced the coal plan and made his pollution promise, he failed to mention one type of pollution that would put TXU on the front pages of national newspapers. The new plants would poof out 78 million tons of greenhouse gases a year.
And when some shareholders complained about carbon dioxide at the TXU annual meeting in May, Mr. Wilder dismissed the concern. He said it seemed unlikely that Congress would regulate the gas anytime soon. Besides, he said, TXU could simply retrofit the coal units to deal with such limits.
By the end of the summer, TXU had become a national symbol of a carbon dioxide emitter.
TXU executives responded by talking about a new, nebulous plan to spend $2 billion on emissions control equipment, including carbon dioxide controls. And executives promised they would save room at the new plants to add the technology, whenever it was developed.
But the company's arguments that it's detrimental for Americans to limit carbon dioxide if the rest of the world keeps emitting seemed provincial, and tugged on the Texas pride of many business leaders and politicians in Dallas.
"Carbon dioxide is a huge, huge issue for us," Dallas Mayor Laura Miller said during a TXU-sponsored luncheon.
Mayor Miller's group
TXU didn't see Laura Miller coming.
At the end of August, Ms. Miller announced she and Houston Mayor Bill White had formed a coalition of cities that oppose coal plant pollution. They wanted to make sure that TXU's plants wouldn't worsen Houston and Dallas air. Neither city meets federal clean air standards.
The coalition wanted to intervene in TXU's coal plant permit hearings. But TXU lawyers made it clear they would block anyone who wasn't part of the local coal plant communities from participating in the hearings. So Ms. Miller and some staff spent the first few weeks of November traveling around East and Central Texas, scouting for towns near the proposed power plants that would join her coalition.
TXU wasn't ready for her. Six months after announcing the coal expansion plan, the company still didn't have all its community relations employees in place. The company promoted Don Montgomery to lead community relations for the coal plants, and he didn't move to his new job in Waco until the autumn.
TXU's community staff persuaded most towns to steer clear of Ms. Miller's coalition.
But even in the towns that didn't join her, she started a debate that helped rally the grass-roots base of conservationism that's a traditional part of rural life.
"Until Ms. Miller came, it was good news," said Tom Ramsey, a real estate agent in Mount Vernon and a former state representative who welcomed the TXU expansion. "She stirred the pot."
Waco was an important victory for Ms. Miller. City officials joined the coalition because they worried that if TXU turned the nearby natural gas plants into coal plant sites, Waco would no longer meet federal clean air standards. The town became a rallying spot for the group, and environmentalists began referring to the Waco plants as the "ring of fire."
Mr. Montgomery, who attended Baylor University, was in charge of relations with Waco.
"The first thing that you have to do is build trust," Mr. Montgomery said in an interview last November. "We're going to have to prove up. If we can't, there won't be coal plants."
Rivals
By the time Ms. Miller's group had won permission to intervene in the permit hearings, Mr. Wilder realized he would need to cut his coal plan.
And, he said, when the buyers came to him with an offer for the company in late November, he was already working on a new strategy.
But Mr. Wilder didn't communicate his strategy to the outside world.
Three Dallas businessmen, Garrett Boone, founder of The Container Store; David Litman, founder of Hotels.com; and real estate scion Trammell S. Crow, worried about the coal plant pollution. They saw the fight TXU had with environmentalists, Ms. Miller and others, and wanted to help work out a compromise.
So they gathered an elite circle of entrepreneurs and local executives that supported their efforts. Then the three men met with the head of TXU's coal program, Mike McCall, to ask him to build fewer plants, or slow down, or at least negotiate. He declined.
So the men took their case to the media and hired lobbyists.
The entry of the business leaders to the debate opened an opportunity for TXU's rivals.
One member of the group is Aubrey McClendon, chief executive of Chesapeake Energy Corp., who considers coal a rival fuel to the natural gas he produces. He helped finance a separate group that ran an advertising campaign that called coal filthy.
And a few weeks ago, the chief executive of the state's second-largest power company, NRG Energy Inc. threw a bomb. David Crane offered to build a coal gasification plant in Texas, if the state helps out with the cost. To many observers, his statement proved that cleaner coal technology is real, not a distant hope.
The buck stops here
Mr. Wilder made it clear from the time he took over the company in 2004 that shareholders were his top priority.
The former finance chief at Entergy and longtime employee of oil giant Royal Dutch/Shell had already become a favorite son of utility investors.
To Wall Street, Mr. Wilder was a 180-degree turn from the back-slapping era of regulated utilities with boring returns. He vowed to bring an industrial lean-manufacturing mindset to a 120-year-old business and give TXU industry-leading returns within three years. He cut hundreds of jobs, alienating many employees.
And he quickly upset key legislators with a plan to tie retail electricity prices to consumer credit scores – an idea that lawmakers forced him to reverse. And he left other executives to maintain many key public relationships.
"The decision-makers are paid to make tough calls," he said in a spring 2004 interview. "This is absolutely not a popularity contest."
From early on, Mr. Wilder shunned the public spotlight and didn't care to schmooze around town. Mr. Wilder commuted between Dallas and his home in New Orleans on weekends, and only moved his family to Texas after the hurricanes.
To this day, Mr. Wilder hasn't met the mayor of Dallas. But on Monday, David Bonderman of Texas Pacific Group has an appointment to meet Ms. Miller at City Hall.
Mr. Wilder recognizes that the TXU buyers have better resources to influence public thinking than TXU. He said in an interview last week that his own strength is business strategy. But the buyers, as international firms, have contacts among leading environmental thinkers and influential politicians that TXU, as a regional company, couldn't match.
"They ... bring a reach in political and community influencing that certainly I don't have, nor do I think broadly our management or our company has at TXU," Mr. Wilder said.
WILDER'S WILD RIDE AT TXU
Feb. 23, 2004: John Wilder is named TXU chief executive.
Aug. 29, 2005: Hurricane Katrina hits the Gulf Coast, damaging natural gas operations and driving prices to all-time highs. TXU and other former utility monopolies soon file requests to increase their benchmark electricity prices.
2006
April 20: TXU formally announces plans to spend $10 billion to build 11 coal-fired power plants. Executives hold a news conference with the governor in Dallas.
July 13: Senate Natural Resources Committee meets at Dallas City Hall and hears testimony from Texas Commission for Environmental Quality Commissioner Larry Soward, who expresses deep concerns over flaws in Texas' air permitting rules.
Aug. 31: Dallas Mayor Laura Miller and Houston Mayor Bill White announce a new coalition of cities that oppose coal plant pollution in Houston.
Nov. 9: Joint hearing in Austin of the Texas House Committee on Regulated Industries and the Senate Committee on Business and Commerce, in which Sen. Troy Fraser intensely chastises Mr. Wilder for keeping prices high.
Dec. 12: Texas Business for Clean Air, a group of Dallas business leaders who oppose coal plant pollution, take their concerns to the media.
Dec. 14: Ms. Miller's coalition gains permission to intervene in the coal permit hearings, and hearing judges set a hearing schedule to meet Gov. Rick Perry's fast-track order.
2007
Feb. 6: Anti-coal advertisements appear around Texas, funded by a group called the Texas Clean Sky Coalition. Membership is kept secret, except for natural gas producer Chesapeake Energy Corp.
Feb. 21: Permit hearing officers delay formal hearings for seven of TXU's proposed coal plants, bowing to a ruling that Mr. Perry's fast-track order might be unconstitutional.
Feb. 26: TXU announces the board's acceptance of an offer from Texas Pacific Group and Kohlberg Kravis Roberts & Co. to buy the company.
Missteps led up to TXU deal
CEO has focused on shareholders but failed to connect with othersMonday, March 5, 2007
By ELIZABETH SOUDER, SUDEEP REDDY and RANDY LEE LOFTIS / The Dallas Morning News
Three days after rolling blackouts hit North Texas last April, TXU Corp. chief executive John Wilder and Gov. Rick Perry stood together in downtown Dallas to announce a plan to keep power flowing, to lower electricity prices and to clean the air.
TXU would build 11 coal-fired power plants.
Mr. Perry called it "an essential step to meeting long-term challenges."
"We will be part of the Texas miracle," Mr. Wilder said.
But for Mr. Wilder, the plan was meant to be more a miracle for shareholders than for consumers.
He spent the next 11 months focusing so intensely on shareholder returns that he alienated nearly every other constituency – customers, politicians, environmentalists and community groups. The company's missteps included failing to have community relations people in place for all the cities where TXU wanted to build until six months after announcing the expansion plan; failing to recognize the importance of cutting the regulated electricity rate; and failing to pay enough attention to key legislators.
The way Mr. Wilder's company dealt with the public backfired, causing outrage that damaged the share price, killed the coal plan and set the stage for a buyout of the company.
"I will say that I believe that they were aggressively pursuing sound policies," said former TXU CEO Erle Nye. "I think perhaps they were so aggressive that, perhaps the public relations aspect didn't have time to develop. And, you know, that can happen. I don't think there was as good a communication as there could have been, and I think the management felt that way as well."
The buyers, Texas Pacific Group and Kohlberg Kravis Roberts & Co., recognized the pickle Mr. Wilder was in. After they approached him about buying the company for a record $45 billion in November, they asked William Reilly, a former Environmental Protection Agency administrator – and a vice president of Texas Pacific Group – to help.
Mr. Reilly last month negotiated a pact with Environmental Defense and Natural Resources Defense Council. The TXU buyers agreed to build only three of the 11 coal plants TXU proposed, to cut pollution and greenhouse gas emissions, and to continue to listen to environmental concerns, if the two national groups would give the deal their stamp of approval. The groups agreed.
Those are concessions TXU probably would have made anyway. Mr. Wilder, 48, said last week he was already working on shrinking the coal deal back in November, when the buyers made their offer. He saw hurdles to the project: public frustration, rising costs to transport the coal for the plants, rising labor costs, and permitting delays.
"Yes, certainly the opposition [to the coal plants] was a factor, but it was not the only factor. We had several moving parts on this, and when it gets to the point that the balance of factors gets out of sync, it's time to re-evaluate the plan," said TXU spokeswoman Kim Morgan.
The buyers offered $69.25 a share. That's a premium to the depressed value of the shares before the offer.
Since taking over the company in 2004, Mr. Wilder's changes have caused the TXU share price to increase six-fold. The momentum stopped in November, as public outrage about the plants hit a peak, and legislators made it clear they were listening. The share price dropped from $65 a share to $55, and didn't fully recover until the buyout offer became public.
Now the Securities and Exchange Commission is alleging that some people made millions by purchasing options to buy TXU stock before the announcement of the buyout deal. The commission said Friday it won a court order freezing more than $5.3 million in assets connected to the unknown investors and requiring the purchasers to identify themselves.
Consumer rates
Much of the consumer outrage started in the autumn of 2005, when TXU sought to boost its standard retail electricity rate 24 percent to keep up with the rise in natural gas markets caused by the hurricanes. As Texas' most important generation fuel, natural gas markets tend to establish wholesale power prices.
But the company didn't reduce rates when natural gas prices fell. That left TXU unable to convince many customers that generating electricity with cheaper coal plants would change the retail price situation.
And when legislators returned to Austin after the November elections, many had a clear mandate from voters to do something about TXU.
Rep. Phil King, R-Weatherford, chairman of the regulated industries committee, said he couldn't go to church or the grocery store without hearing complaints from voters about their TXU bills.
Troy Fraser, R-Horseshoe Bay, head of the Senate committee on business and commerce, was livid. He confronted Mr. Wilder at a joint hearing in November of his Senate committee and Mr. King's committee. The hearing took place on the very day TXU announced third-quarter results that showed 2006 would be the company's most profitable year ever.
"I'm assuming congratulations are in order," Mr. Fraser said when Mr. Wilder took the chair to testify.
"No, Mr. Chairman, our investors were actually disappointed in us. We didn't achieve what they expected us to achieve," Mr. Wilder replied.
Mr. Fraser would go on to propose legislation meant to cut TXU's size and, in turn, reduce electricity prices. And he's not backing down, even though the TXU buyers are offering to drop rates and break the company apart. For Troy Fraser, the situation is almost personal.
"John Wilder sat in my office across from me last March, after they had moved their prices to record levels," Mr. Fraser said Thursday. "I said, 'John, the price of natural gas is going down. ... We're going to be trying to determine if the market's working. And if the market's working that means your retail prices will start sliding down. I'll be watching that.' "
"He looked blankly at me; he had no response," Mr. Fraser said. "Every time I would try to talk to him about it, he would remind me that his loyalty was to shareholders."
TXU did eventually offer discounts to all of its customers as an incentive to stick with TXU. But the company never dropped its standard price.
TXU's relationship with the governor was friendlier than with Mr. Fraser. But it also drew suspicions from the public.
Mr. Perry has received $404,100 in contributions tied to TXU since his 1998 lieutenant governor campaign, according to Texans for Public Justice, the nonprofit group that tracks spending in political campaigns. In the 2006 election cycle, 174 out of 181 state legislators received funding from TXU sources, according to the group.
Further, Mr. Perry struck a deal with TXU to buffer consumers from a second possible price hike. TXU agreed not to seek to raise rates again until April 2006, along with other concessions.
And on Oct. 27, 2005, one day before TXU received permission for its rate hike, Mr. Perry directed state agencies to speed up approval of new power plants. The order slashed in half, from a year to six months, how long outside groups could fight construction of a new plant.
Need for power
Three days before Mr. Wilder and Mr. Perry announced the coal plan in April, temperatures in North Texas hit 100 degrees. Folks started turning on their air conditioners and using lots more juice than expected. Then a power plant unexpectedly tripped, and neighborhoods saw rolling blackouts. Mr. Perry said during the coal announcement that the blackouts pointed to Texas' need for more power.
TXU officials said only natural gas and conventional coal plants could be built quickly enough to meet the need. Mr. Wilder said his coal plan would offer enough capacity to keep Texas electricity reliable until 2015.
But when environmentalists dug into the supply forecast data, many groups found it difficult to believe TXU's statement that, without the 11 plants, Texas would face "widespread blackouts."
Environmental groups suggested conservation could shore up most of the supply need, along with maybe a few new power plants. And that's what the TXU buyers have promised – new investment in conservation and to build only three of the proposed plants. Three plants will keep Texas juiced for now, and the buyers will consider cleaner technology to meet demand growth.
Emission cuts
Environmentalists were also skeptical of Mr. Wilder's promise to cut total emissions 20 percent from current levels, even after the new plants were built. When TXU consistently refused to say exactly how, when, or where those cuts would come, critics called the promise a ruse.
TXU would have to make those cuts anyway in a few years just to comply with air quality laws. And when a TXU executive admitted the company might sell the credits the company would earn on the early cuts to other polluters, many environmentalists wondered if the pollution promise would benefit Texas at all.
The sides also disagreed on whether the plan would worsen air quality in North Texas, even without selling emission credits to others.
TXU employees touted a study contending that all of TXU's new plants together would have little or no effect on North Texas smog – based on TXU's promise to cut its existing emissions. But the company refused to release the data that it gave the consultant for the study. An opposition group commissioned its own study that showed the opposite, that the plants would boost ozone levels here.
Throughout the debate, environmental and community groups called on TXU to use cleaner technology. They focused on coal gasification, which eliminates many pollutants and holds the promise – once more technology is developed – to capture and store greenhouse gas emissions.
But TXU executives said coal gasification hasn't proved to work reliably with the types of coal TXU uses.
TXU snubbed a government-funded coal gasification program called FutureGen, which Mr. Perry is trying to bring to Texas. As other coal companies joined the FutureGen board or contributed to the group, TXU declined. TXU officials said they prefer to work on their own proprietary technology, rather than support a public project that wouldn't directly benefit shareholders.
The TXU buyers made a point of promising to consider coal gasification and to support FutureGen.
Still, some opposition groups say the buyers aren't giving up much with the environmental pact. A judge last month declared Mr. Perry's fast-track order unconstitutional. When the permit hearings began the following day on seven plants, the judges delayed formal hearings by four months, causing many observers to doubt TXU would have been allowed to build all 11 plants.
And back in July, the judges hearing the case for Oak Grove units – two of the three plants the TXU buyers still want to build – recommended that the Texas Commission on Environmental Quality deny the permits. The judges found that TXU hadn't proved that Oak Grove could meet its emissions limits. The recommendation for denial went to the TCEQ commissioners, who haven't voted yet.
Debate goes national
When Mr. Wilder announced the coal plan and made his pollution promise, he failed to mention one type of pollution that would put TXU on the front pages of national newspapers. The new plants would poof out 78 million tons of greenhouse gases a year.
And when some shareholders complained about carbon dioxide at the TXU annual meeting in May, Mr. Wilder dismissed the concern. He said it seemed unlikely that Congress would regulate the gas anytime soon. Besides, he said, TXU could simply retrofit the coal units to deal with such limits.
By the end of the summer, TXU had become a national symbol of a carbon dioxide emitter.
TXU executives responded by talking about a new, nebulous plan to spend $2 billion on emissions control equipment, including carbon dioxide controls. And executives promised they would save room at the new plants to add the technology, whenever it was developed.
But the company's arguments that it's detrimental for Americans to limit carbon dioxide if the rest of the world keeps emitting seemed provincial, and tugged on the Texas pride of many business leaders and politicians in Dallas.
"Carbon dioxide is a huge, huge issue for us," Dallas Mayor Laura Miller said during a TXU-sponsored luncheon.
Mayor Miller's group
TXU didn't see Laura Miller coming.
At the end of August, Ms. Miller announced she and Houston Mayor Bill White had formed a coalition of cities that oppose coal plant pollution. They wanted to make sure that TXU's plants wouldn't worsen Houston and Dallas air. Neither city meets federal clean air standards.
The coalition wanted to intervene in TXU's coal plant permit hearings. But TXU lawyers made it clear they would block anyone who wasn't part of the local coal plant communities from participating in the hearings. So Ms. Miller and some staff spent the first few weeks of November traveling around East and Central Texas, scouting for towns near the proposed power plants that would join her coalition.
TXU wasn't ready for her. Six months after announcing the coal expansion plan, the company still didn't have all its community relations employees in place. The company promoted Don Montgomery to lead community relations for the coal plants, and he didn't move to his new job in Waco until the autumn.
TXU's community staff persuaded most towns to steer clear of Ms. Miller's coalition.
But even in the towns that didn't join her, she started a debate that helped rally the grass-roots base of conservationism that's a traditional part of rural life.
"Until Ms. Miller came, it was good news," said Tom Ramsey, a real estate agent in Mount Vernon and a former state representative who welcomed the TXU expansion. "She stirred the pot."
Waco was an important victory for Ms. Miller. City officials joined the coalition because they worried that if TXU turned the nearby natural gas plants into coal plant sites, Waco would no longer meet federal clean air standards. The town became a rallying spot for the group, and environmentalists began referring to the Waco plants as the "ring of fire."
Mr. Montgomery, who attended Baylor University, was in charge of relations with Waco.
"The first thing that you have to do is build trust," Mr. Montgomery said in an interview last November. "We're going to have to prove up. If we can't, there won't be coal plants."
Rivals
By the time Ms. Miller's group had won permission to intervene in the permit hearings, Mr. Wilder realized he would need to cut his coal plan.
And, he said, when the buyers came to him with an offer for the company in late November, he was already working on a new strategy.
But Mr. Wilder didn't communicate his strategy to the outside world.
Three Dallas businessmen, Garrett Boone, founder of The Container Store; David Litman, founder of Hotels.com; and real estate scion Trammell S. Crow, worried about the coal plant pollution. They saw the fight TXU had with environmentalists, Ms. Miller and others, and wanted to help work out a compromise.
So they gathered an elite circle of entrepreneurs and local executives that supported their efforts. Then the three men met with the head of TXU's coal program, Mike McCall, to ask him to build fewer plants, or slow down, or at least negotiate. He declined.
So the men took their case to the media and hired lobbyists.
The entry of the business leaders to the debate opened an opportunity for TXU's rivals.
One member of the group is Aubrey McClendon, chief executive of Chesapeake Energy Corp., who considers coal a rival fuel to the natural gas he produces. He helped finance a separate group that ran an advertising campaign that called coal filthy.
And a few weeks ago, the chief executive of the state's second-largest power company, NRG Energy Inc. threw a bomb. David Crane offered to build a coal gasification plant in Texas, if the state helps out with the cost. To many observers, his statement proved that cleaner coal technology is real, not a distant hope.
The buck stops here
Mr. Wilder made it clear from the time he took over the company in 2004 that shareholders were his top priority.
The former finance chief at Entergy and longtime employee of oil giant Royal Dutch/Shell had already become a favorite son of utility investors.
To Wall Street, Mr. Wilder was a 180-degree turn from the back-slapping era of regulated utilities with boring returns. He vowed to bring an industrial lean-manufacturing mindset to a 120-year-old business and give TXU industry-leading returns within three years. He cut hundreds of jobs, alienating many employees.
And he quickly upset key legislators with a plan to tie retail electricity prices to consumer credit scores – an idea that lawmakers forced him to reverse. And he left other executives to maintain many key public relationships.
"The decision-makers are paid to make tough calls," he said in a spring 2004 interview. "This is absolutely not a popularity contest."
From early on, Mr. Wilder shunned the public spotlight and didn't care to schmooze around town. Mr. Wilder commuted between Dallas and his home in New Orleans on weekends, and only moved his family to Texas after the hurricanes.
To this day, Mr. Wilder hasn't met the mayor of Dallas. But on Monday, David Bonderman of Texas Pacific Group has an appointment to meet Ms. Miller at City Hall.
Mr. Wilder recognizes that the TXU buyers have better resources to influence public thinking than TXU. He said in an interview last week that his own strength is business strategy. But the buyers, as international firms, have contacts among leading environmental thinkers and influential politicians that TXU, as a regional company, couldn't match.
"They ... bring a reach in political and community influencing that certainly I don't have, nor do I think broadly our management or our company has at TXU," Mr. Wilder said.
WILDER'S WILD RIDE AT TXU
Feb. 23, 2004: John Wilder is named TXU chief executive.
Aug. 29, 2005: Hurricane Katrina hits the Gulf Coast, damaging natural gas operations and driving prices to all-time highs. TXU and other former utility monopolies soon file requests to increase their benchmark electricity prices.
2006
April 20: TXU formally announces plans to spend $10 billion to build 11 coal-fired power plants. Executives hold a news conference with the governor in Dallas.
July 13: Senate Natural Resources Committee meets at Dallas City Hall and hears testimony from Texas Commission for Environmental Quality Commissioner Larry Soward, who expresses deep concerns over flaws in Texas' air permitting rules.
Aug. 31: Dallas Mayor Laura Miller and Houston Mayor Bill White announce a new coalition of cities that oppose coal plant pollution in Houston.
Nov. 9: Joint hearing in Austin of the Texas House Committee on Regulated Industries and the Senate Committee on Business and Commerce, in which Sen. Troy Fraser intensely chastises Mr. Wilder for keeping prices high.
Dec. 12: Texas Business for Clean Air, a group of Dallas business leaders who oppose coal plant pollution, take their concerns to the media.
Dec. 14: Ms. Miller's coalition gains permission to intervene in the coal permit hearings, and hearing judges set a hearing schedule to meet Gov. Rick Perry's fast-track order.
2007
Feb. 6: Anti-coal advertisements appear around Texas, funded by a group called the Texas Clean Sky Coalition. Membership is kept secret, except for natural gas producer Chesapeake Energy Corp.
Feb. 21: Permit hearing officers delay formal hearings for seven of TXU's proposed coal plants, bowing to a ruling that Mr. Perry's fast-track order might be unconstitutional.
Feb. 26: TXU announces the board's acceptance of an offer from Texas Pacific Group and Kohlberg Kravis Roberts & Co. to buy the company.
Thursday, March 1, 2007
Lobby Watch:
TXU’s Patronage Grid Plugs All But Seven Lawmakers
One overlooked barrier to TXU Corp’s unraveling scheme to build 11 new dirty-coal plants across Texas may have been the company’s failure in the 2006 election cycle to deliver campaign checks to seven current members of the Texas Legislature.
Read the Lobby Watch
Read the Lobby Watch
Saturday, December 2, 2006
San Antonio Express-News: Politicians' cash hunt is on now
Lobbyist Raul Liendo wasn't keen to explain why he forked over $250 to a San Antonio lawmaker in the weeks leading up to the 2007 legislative session. He was just following orders from his client, TXU Energy's political action committee. "I'm just the delivery guy," Liendo said at a Tuesday night fundraiser for Rep. Joaquin Castro, D-San Antonio. Read the article at the San Antonio Express-News
San Antonio Express-News
AUSTIN — The setting was a rear room in a private club. Two already-acquainted men in suits met briefly. Pleasantries were exchanged.
A check passed between them.
This wasn't a business deal or scene from a gangster movie, but a run-of-the-mill political fundraiser, where lobbyists ply elected officials with contributions, hoping, hinting — though never explicitly asking — for political favors down the road.
Lobbyist Raul Liendo wasn't keen to explain why he forked over $250 to a San Antonio lawmaker in the weeks leading up to the 2007 legislative session. He was just following orders from his client, TXU Energy's political action committee.
I'm just the delivery guy," Liendo said at a Tuesday night fundraiser for Rep. Joaquin Castro, D-San Antonio.
Liendo didn't want to discuss whether the commingling of money and politics best serves the public good, saying, "I just work with the system that's in place."
As a hired gun for an energy giant, Liendo was a bit player in the elaborate though rarely displayed ritual of political fundraising. It's a busy time for him: Austin's high season of check writing and catered receptions in the parlors of exclusive clubs.
For politicians, the period between the general election and the barring of political contributions for 30 days before the Legislature convenes is a last-minute scramble for funds.
This year, that window of opportunity ends Dec. 9. For lobbyists, it is a time to deepen existing friendships — and a chance for those who backed losing candidates to mend fences with the winners.
"They call it 'the late train,'" said Andrew Wheat, research director of Texans for Public Justice, an Austin-based group that backs campaign finance reform.
Embracing the railroad motif, at least one politician made clear he wasn't holding any grudges.
"Choo-Choo ... It's not too late!" Rep.-elect John Zerwas, a Republican from the Houston area, wrote in his train-illustrated invitations to a Thursday night reception at the Headliners Club. Zerwas did not return calls for comment.
The single biggest fundraising week of 2002 — the last year there was a gubernatorial race — occurred during the year-end late train period, Wheat said. According to his numbers, more than $6 million was raised that week. Fundraising totals for 2006 won't be known until next month.
Castro said his fundraiser at the Austin Club, to which he allowed access to a reporter, was his chance to repay $12,000 in campaign debt incurred in his race against Republican challenger Nelson Balido.
"I'm not trying to make off like a bandit," Castro said.
Looking dapper in a navy suit, he stood for two hours in the stately President's Room beside a table of potato chips, popcorn and mixed nuts, greeting a dozen or so guests.
There were handshakes, chitchat, and, almost invariably, the passing of an envelope, which Castro tucked discreetly into the pocket of his pressed shirt. Most lobbyists stayed no more than five minutes.
Castro raised $9,800 that night. Nursing a hot chocolate afterward, he said he'd like to see less special interest money in politics. But there's been little appetite in Texas, he noted, for taxpayer-financed campaigns.
So for now, he thinks the best chance for reducing the effect of special interest money is to back campaign contribution limits. He hopes that will pass next year.
Upstairs, in the Millennium Room, a newcomer, Rep.-elect Borris Miles, a Houston Democrat, was hosting a fundraiser of his own — and showing his position on the learning curve.
Campaign workers had sought contributions of as much as $5,000, a faux pas given Miles' newness, according to veteran political consultant Bill Miller.
"When people ask for these exorbitant amounts it tells you two things: They don't know the way the system works up here or the hierarchy of the pecking order," Miller said.
"The caboose," he added, "is the freshmen-elects."
In most cases, incoming freshmen ask for a maximum contribution of $1,000, but that doesn't mean they're going to get it, Miller said.
Reached later, Miles agreed he had some learning to do.
Politicians' cash hunt is on now
12/01/2006San Antonio Express-News
AUSTIN — The setting was a rear room in a private club. Two already-acquainted men in suits met briefly. Pleasantries were exchanged.
A check passed between them.
This wasn't a business deal or scene from a gangster movie, but a run-of-the-mill political fundraiser, where lobbyists ply elected officials with contributions, hoping, hinting — though never explicitly asking — for political favors down the road.
Lobbyist Raul Liendo wasn't keen to explain why he forked over $250 to a San Antonio lawmaker in the weeks leading up to the 2007 legislative session. He was just following orders from his client, TXU Energy's political action committee.
I'm just the delivery guy," Liendo said at a Tuesday night fundraiser for Rep. Joaquin Castro, D-San Antonio.
Liendo didn't want to discuss whether the commingling of money and politics best serves the public good, saying, "I just work with the system that's in place."
As a hired gun for an energy giant, Liendo was a bit player in the elaborate though rarely displayed ritual of political fundraising. It's a busy time for him: Austin's high season of check writing and catered receptions in the parlors of exclusive clubs.
For politicians, the period between the general election and the barring of political contributions for 30 days before the Legislature convenes is a last-minute scramble for funds.
This year, that window of opportunity ends Dec. 9. For lobbyists, it is a time to deepen existing friendships — and a chance for those who backed losing candidates to mend fences with the winners.
"They call it 'the late train,'" said Andrew Wheat, research director of Texans for Public Justice, an Austin-based group that backs campaign finance reform.
Embracing the railroad motif, at least one politician made clear he wasn't holding any grudges.
"Choo-Choo ... It's not too late!" Rep.-elect John Zerwas, a Republican from the Houston area, wrote in his train-illustrated invitations to a Thursday night reception at the Headliners Club. Zerwas did not return calls for comment.
The single biggest fundraising week of 2002 — the last year there was a gubernatorial race — occurred during the year-end late train period, Wheat said. According to his numbers, more than $6 million was raised that week. Fundraising totals for 2006 won't be known until next month.
Castro said his fundraiser at the Austin Club, to which he allowed access to a reporter, was his chance to repay $12,000 in campaign debt incurred in his race against Republican challenger Nelson Balido.
"I'm not trying to make off like a bandit," Castro said.
Looking dapper in a navy suit, he stood for two hours in the stately President's Room beside a table of potato chips, popcorn and mixed nuts, greeting a dozen or so guests.
There were handshakes, chitchat, and, almost invariably, the passing of an envelope, which Castro tucked discreetly into the pocket of his pressed shirt. Most lobbyists stayed no more than five minutes.
Castro raised $9,800 that night. Nursing a hot chocolate afterward, he said he'd like to see less special interest money in politics. But there's been little appetite in Texas, he noted, for taxpayer-financed campaigns.
So for now, he thinks the best chance for reducing the effect of special interest money is to back campaign contribution limits. He hopes that will pass next year.
Upstairs, in the Millennium Room, a newcomer, Rep.-elect Borris Miles, a Houston Democrat, was hosting a fundraiser of his own — and showing his position on the learning curve.
Campaign workers had sought contributions of as much as $5,000, a faux pas given Miles' newness, according to veteran political consultant Bill Miller.
"When people ask for these exorbitant amounts it tells you two things: They don't know the way the system works up here or the hierarchy of the pecking order," Miller said.
"The caboose," he added, "is the freshmen-elects."
In most cases, incoming freshmen ask for a maximum contribution of $1,000, but that doesn't mean they're going to get it, Miller said.
Reached later, Miles agreed he had some learning to do.
Monday, March 14, 2005
Lobby Watch:
Texas Becomes the Nation's Lone-Star Nuclear Dump
Rarely have so few given away so much for so little. Most states would be shocked if their legislatures agreed to serve as the nation’s default dump site for low-level nuclear waste. The closest thing to shock here, however, is how little Texas politicians have received in exchange for taking nuclear waste rejected by every other state.
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Read the Lobby Watch
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