Dallas, TX, April 24, 2006 — In response to the electric power needs of the growing Texas economy, TXU Corp. announced a plan to invest $10 billion in power generation to provide lower-cost, secure and stable power, the introduction of new consumer and business service offerings, and a voluntary emissions reduction program.
C. John Wilder, TXU chairman and CEO, said the new investments will provide reliable electricity thereby reducing dependence on natural gas, as well as create jobs and lower emissions.
The future growth of the economy could be dampened by volatile and rising energy commodity prices, said TXU in a recent press release. Texas is projected to add nearly 6 million residents within a decade. At the same time, Texas electric power reserve margins are compressing rapidly and are expected to fall below levels deemed reliable by 2010.
Texas has a high reliance on natural gas for power generation, with 72 percent of the state’s generation capacity depending on natural gas for fuel, compared to the U.S. average of 45 percent. This reliance causes substantial challenges because natural gas prices have quadrupled and most experts believe the low gas prices of the 1990s will not return. At the same time, U.S. reliance on imported natural gas is increasing significantly; over the next 20 years, U.S. imports are expected to increase five-fold, said the press release.
“There is no quick fix,” said Wilder. “There is no easy solution to reduce U.S. dependence on foreign energy sources and to reduce power prices. To address these challenges, TXU has a three-part plan. We will invest in lower cost power supplies, innovate with new service offerings that enable customers to save money and improve air quality by reducing emissions.”
TXU will invest up to $10 billion in modern technologies to provide near-term solutions to meet Texas’ growing need for power.
The plan encompasses 11 new generation units at nine existing TXU Power sites. The new units will be located at existing power plant sites and, if approved, the units are expected to be operational by 2010.
By taking advantage of TXU’s scale, existing sites, rail facilities, water rights, and other infrastructure, TXU can drive this development initiative at three-quarters the cost of a typical power developer. To manage the complexity of the effort and reduce engineering, procurement, and construction costs, TXU will work in exclusive partnerships with Bechtel Power and Fluor Corp.
“After extensive review, we selected sites that maximize opportunities to leverage existing infrastructure, minimize costs, and enable a more efficient construction timeline,” Wilder said.
The endeavor hopes to increase energy reliability and independence by expanding reserve margins and diversifying supply. In aggregate, the plan will add an estimated 10 percent to the ERCOT supply, enough to serve 6.5 million homes. This increase should be sufficient to meet Texas’ growing demand through 2015, said the release.
In addition, TXU is launching a new company, TXU Renew, to double its renewable energy portfolio by 2011. TXU Renew will focus on the growing renewable energy market by investing in renewable power facilities. This will bring TXU’s total renewable energy portfolio to approximately 1,400 MW, enough wind energy to power about 275,000 homes.
To help find solutions to Texas’ long-term power needs, TXU also plans to invest up to $2 billion in the development and commercialization of integrated gasification combined cycle (IGCC) technology.