Sept. 4, 2007
Public Interest, Environmental Groups Urge TXU Shareholders to Improve Buyout Deal
DALLAS – Three public interest and environmental groups in Texas are urging TXU shareholders to reject a proposed company buyout because consumers and the environment will lose on the deal.
TXU stockholders are scheduled to vote Friday on the proposed buyout by Kohlberg Kravis & Roberts (KKR) and Texas Pacific Group (TPG). Three organizations – ACORN, the SEED Coalition and Public Citizen – today issued a list of must-haves the deal should include. The groups called for the deal to extend a promised 18-month discount for low-income customers to five years, redirect TXU CEO John Wilder’s $270 million bonus to low-income families and require the company to withdraw permit applications for eight proposed coal-fired plants. Some stockholders also have questions and concerns about the buyout.
“If the buyout is completed, Wilder could walk away with $270 million. Most of that would come from cashing in his estimated four million company shares,” said Derrick Richardson, member of ACORN. “This absurd golden parachute is almost as much as consumers have been overcharged since Wilder became CEO. Wilder and other TXU stockholders stand to profit substantially from the buyout, while consumers will likely be left paying even higher electricity bills to take care of the $24 billion in new debt that the ‘New TXU’ will acquire through the buyout. Any way you look at it, the buyout will be a bad deal for Texans, and we are urging shareholders to vote against it.”
“TXU’s buyers have promised not to build eight of 11 proposed coal plants, but loopholes in their promises will allow them to change their mind. The company should withdraw the permits for these plants prior to completion of the buyout, since they are suspended only now. They should also agree to put their proposed pollution reductions for existing plants into writing in the permits for each plant. TXU still wants to build Oak Grove, by far the largest and dirtiest of its proposed coal plants. Administrative law judges recommended denial of the Oak Grove permit, but the Texas Commission on Environmental Quality approved it anyway. Citizens are appealing the decision. This polluting plant alone would result in about 51 premature deaths per year and should be scrapped in favor of cleaner energy,” said Karen Hadden, director of the SEED Coalition. “No one should have to die to turn the lights on. Children shouldn’t have to suffer more asthma in order to have electricity, and we shouldn’t have to worry about toxic mercury in our fish. Now is the time to truly shift to cleaner energy, not just talk about it.”
“In an economy where subprime mortgages have become an investment that is too hot to handle, we believe carbon-based utilities like TXU will soon heat up and follow. While the new buyers want to claim green glory for their pledge not to build eight coal plants and to work for carbon dioxide regulation in the future, their actions belie their intent,” said Tom “Smitty” Smith, director of Public Citizen’s Texas office. “Cancellation of the eight plants will remove from the equation about 66 million tons of carbon dioxide emission annually, and it will still allow about 22 million tons from the three planned lignite-fired plants to be emitted each year. The emissions from these new plants will make our current climate crisis even more acute. TXU should withdraw the permit applications for all eight plants and stop building the rest. The company should keep its promise to establish a global climate working group to develop specific policies and programs for the corporation and its holding companies to implement prior to building any new plants.
A shareholder proposal regarding the adoption of quantitative goals for emissions at TXU’s existing and proposed plants is on the Friday agenda. “Not only should shareholders adopt such a measure, but they should go further and commit to not build the plants or offset 100 percent of their global warming emissions,” Smith said. “The consequence of increasing emissions are grave and immediate, especially to people who live on low-lying islands or lands around the world.”
“Our low-lying island is especially at risk, as are thousands of islands around the worlds,” said Bishop Daniel Nixon, who lives on the island of Eleuthera in the Bahamas. “We are already seeing the effects of the climate crisis. Our islands are getting hotter, our coral reefs are dying, making us more vulnerable to hurricanes, and those hurricanes are becoming more severe. The fish we eat are moving to cooler and deeper waters and our fruits are getting burned by the sun. When we hear about TXU’s $45 billion buyout while they are building carbon-belching coal plants, we wonder, where is our buyout? Who will come to our rescue when our islands become unlivable?”
“As shareholders in TXU, religious shareholders affiliated with the Socially Responsible Investment Coalition in Texas and the Interfaith Center on Corporate Responsibility in New York have raised environmental questions with the company for more than 20 years,” said Sister Susan Mika, member of the Interfaith Center for Corporate Responsibility. “Shareholders have filed resolutions that challenge management to take certain actions. The 2007 shareholder resolution filed by the Benedictine Sisters of Boerne, Texas, and three other groups, asks TXU to adopt quantitative goals for existing and proposed plants to reduce mercury emissions and total carbon dioxide emissions to below 2004 levels. These are goals that need to be adopted and implemented, regardless of the status of TXU as a public or private company. This resolution will be voted on by shareholders at the Friday meeting. We are hoping that other shareholders will recognize the urgency of this resolution and send management a strong message.”