A Texas proposal to limit the electricity generation capacity of power companies by region isn't intended to harm the planned $32 billion sale of TXU Corp., state Representative Todd Smith said in a telephone interview last night.
Smith, a Republican, said there are ``plenty of other ways to protect'' the public besides forcing asset sales by TXU. The amendment may cap a company's generation at about 40 percent in each of the state's regions, he said, with possible exceptions for new nuclear generation and coal-gasification plants. Companies over the limit could suggest mitigation plans.
TXU, based in Dallas, agreed in February to a buyout by a group led by Kohlberg Kravis Roberts & Co. and TPG Inc., formerly known as Texas Pacific Group. The transaction would be the largest leveraged buyout ever, valued at $44 billion including debt. The discussion of forced asset sales, which could result from a Senate bill, has raised questions about how legislation could affect the deal.
``The investors would have to evaluate their offer if a requirement were implemented forcing a mandated sell off of a significant amount of generation capacity,'' Jeff Eller, a spokesman for the investors, said in an e-mail.
The bill passed by the Texas Senate would cap a company's generation capacity at 25 percent in each region, with an exception for clean-coal technologies. Senator Troy Fraser, also a Republican, sponsored that proposal and his office has said TXU would be over that limit in two zones while NRG Energy Inc. would be over in one. Attempts to reach Representative Phil King, the Republican chairman of a House committee that oversees electricity legislation, weren't successful.
`Power Abuse'
The TXU buyers, which include Goldman Sachs Group Inc., have scuttled plans to build eight coal-fired power plants and have promised rate reductions as they seek to gain support for the transaction. A bill passed by the Texas Senate would give the Texas Public Utility Commission the ability to review and potentially block the TXU deal, although such a provision hasn't passed the Texas House.
The PUC staff said in March that TXU should pay $210 million for ''market power abuse'' during a time of high demand in 2005. TXU denied the charges and is contesting the proposed penalty.
Two energy traders fired by TXU claim in lawsuits filed this year that the company manipulated the Texas electricity market in the past. TXU said the terminations were valid because the traders submitted false information to the Electric Reliability Council of Texas, the state's main power market, or knew about it.
Smith, a Republican, said there are ``plenty of other ways to protect'' the public besides forcing asset sales by TXU. The amendment may cap a company's generation at about 40 percent in each of the state's regions, he said, with possible exceptions for new nuclear generation and coal-gasification plants. Companies over the limit could suggest mitigation plans.
TXU, based in Dallas, agreed in February to a buyout by a group led by Kohlberg Kravis Roberts & Co. and TPG Inc., formerly known as Texas Pacific Group. The transaction would be the largest leveraged buyout ever, valued at $44 billion including debt. The discussion of forced asset sales, which could result from a Senate bill, has raised questions about how legislation could affect the deal.
``The investors would have to evaluate their offer if a requirement were implemented forcing a mandated sell off of a significant amount of generation capacity,'' Jeff Eller, a spokesman for the investors, said in an e-mail.
The bill passed by the Texas Senate would cap a company's generation capacity at 25 percent in each region, with an exception for clean-coal technologies. Senator Troy Fraser, also a Republican, sponsored that proposal and his office has said TXU would be over that limit in two zones while NRG Energy Inc. would be over in one. Attempts to reach Representative Phil King, the Republican chairman of a House committee that oversees electricity legislation, weren't successful.
`Power Abuse'
The TXU buyers, which include Goldman Sachs Group Inc., have scuttled plans to build eight coal-fired power plants and have promised rate reductions as they seek to gain support for the transaction. A bill passed by the Texas Senate would give the Texas Public Utility Commission the ability to review and potentially block the TXU deal, although such a provision hasn't passed the Texas House.
The PUC staff said in March that TXU should pay $210 million for ''market power abuse'' during a time of high demand in 2005. TXU denied the charges and is contesting the proposed penalty.
Two energy traders fired by TXU claim in lawsuits filed this year that the company manipulated the Texas electricity market in the past. TXU said the terminations were valid because the traders submitted false information to the Electric Reliability Council of Texas, the state's main power market, or knew about it.
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