Pressure, Buyout Halts TXU Coal Buildout in Texas

(Austin – February 26, 2007) As part of their plan to purchase Texas electricity provider TXU Corp, Texas Pacific Group and KKR have agreed to terminate the applications for eight of TXU’s 11 proposed coal plants in Texas and will adopt a platform of initiatives that will significantly reduce the company’s environmental impact in Texas. Environmental Defense praised the new owners’ pledge to rebuild TXU as a leader in the clean energy economy. Texas Pacific Group and KKR developed the company’s environmental agenda with Environmental Defense’s regional director Jim Marston in the week leading up to the announcement.

“This is a watershed moment in America’s fight against global warming,” said Environmental Defense president Fred Krupp. “Environmental Defense commends Texas Pacific Group and KKR not only for dropping TXU’s applications for eight proposed coal plants in Texas, but also for the many other commitments they have made to reduce air pollution and global warming emissions, including their support of a mandatory federal cap on carbon emissions.”

The collaboration with Texas Pacific Group and KKR echoes partnerships between Environmental Defense and other corporations, such as McDonalds, FedEx, DuPont and Wal-Mart, that promoted economic growth and environmental stewardship.

“Smart companies are realizing that green business is good business,” Krupp said. “This announcement and these pledges show that even an energy company in Texas understands that global warming is real and that businesses must be part of the solution. Texas Pacific Group and KKR’s support of a federal cap on carbon emissions illustrates the undeniable momentum behind a call for a national policy. We saw it with California’s new carbon cap and the announcement by the ten USCAP companies, and now we’re seeing that momentum take hold in Texas. “

As part of the negotiations leading up to the announcement, Environmental Defense agreed to settle its federal lawsuit against TXU (regarding the Sandow unit) in exchange for an aggressive environmental pledge from Texas Pacific Group and KKR. The new company will continue to pursue permits for the Sandow unit and the two Oak Grove units.

In addition to withdrawing permit applications for eight proposed coal plants, Texas Pacific Group and KKR have agreed to:

• Terminate TXU’s previous plans to expand coal operations in other states
• Endorse the U.S. Climate Action Partnership (US CAP) platform, including the call for a mandatory federal cap on carbon emissions
• Reduce the company’s carbon emissions to 1990 levels by 2020
• Promote Demand-Side Management programs to reduce energy consumption
• Double the company’s expenditures on energy efficiency measures
• Double the company’s purchase of wind power
• Honor TXU’s agreement to reduce criteria pollutants in Texas by 20% (TXU’s 20% pledge was contingent upon approval of all 11 plants)
• Establish a Sustainable Energy Advisory Board, on which Environmental Defense regional director Jim Marston will serve

“We look forward to working closely with the new company as a member of its Sustainable Energy Advisory Committee and to settling our federal lawsuit against TXU,” Marston said. “We opposed the proposed TXU plants because of the negative impact they would have on local air quality and on America’s fight against global warming. We hope that our conflict with TXU over the last year can transform into a productive relationship in the months ahead.”