The Environmental Integrity Project has released its latest report (pdf) on toxic emissions from coal-fired power plants. Given the political whining and legal wrangling over the EPA's long, long, long-delayed Mercury and Air Toxics Standards (MATS) rules, I thought it would be wise show how older plants are endangering public health. However, I was quickly sidetracked by vulture capitalism at its worst in Texas.
Take a look at the top 5 mercury polluters in the country. Notice anything?
1. Luminant Generation, Martin Lake Steam Electric Station & Lignite Mine in Rusk County, Texas (1,501 lbs. of mercury emissions).The list is dominated by plants in Texas operated by Luminant Generation, a subsidiary of Energy Future Holdings.
2. Southern Co., Gaston Steam Plant in Shelby, Ala. (1,244 lbs. of mercury emissions).
3. Luminant Generation, Big Brown Steam Electric Station & Lignite Mine in Freestone County, Texas (1,240 lbs. of mercury emissions).
4. Luminant Generation, Monticello Steam Electric Station & Lignite Mine in Titus County, Texas (911 lbs. of mercury emissions).
5. Luminant Generation, Sandow Steam Electric Station in Milam County, Texas (841 lbs. of mercury emissions).
When the EPA announced the final MACTS rules for existing power plants in February of 2012 after decades of wrangling, Luminant Generation blamed its current operating failures on the EPA, spent millions on lobbyists and political contributions, and called in political favors from the Texas Republican Party establishment. The gambit looked promising as the Texas Commission on Environmental Quality created a state implementation plan that gave Luminant a license to pollute.
The EPA rejected large parts of the plan and Luminant went to court. Fortunately, the 5th U.S. Circuit Court of Appeals in New Orleans upheld the EPA decision and the company was left with few options but try to whip up public support with horror stories of the EPA turning off their lights. Texas Republicans were quick to join in the fray.
"The implementation of this rule will result in a loss of valuable jobs in the 4th District at Luminant, the largest power generator in Texas," said U.S. Representative Ralph Hall of Rockwall, chairman of the powerful House Committee on Science, Space and Technology. "The rule will also seriously jeopardize the ability of the state's electric grid to supply power to Texas businesses and consumers, and will have damaging effects on families and local communities whose economies depend on the success of Luminant's facilities."It is standard Republican tripe about "job-killing EPA regulations," with the script written by the coal industry.
The chairman of the Texas Commission on Environmental Quality, Bryan Shaw, laid out a doomsday scenario: "The rule will impose great costs on coal-fired power plants, causing some to shut down or curtail operations, threatening the state's electrical capacity reserve margins needed to avoid power disruptions during times of peak demand. Such a scenario could lead to blackouts, which create serious health risks for Texans dependent on reliable energy."
The problem with the industry and political narrative is that it overlooks the real reason Luminant has reliability problems and cannot afford pollution controls. Energy Future Holdings (EFH), which includes TXU, Luminant, and Oncor, is drowning in debt and on the verge of bankruptcy. So how did the conglomerate that controls much of the electricity generation and distribution in Texas get into such dire straights? It turns out it was the victim of vulture capitalism.
Private equity firms bought the former TXU Corp. five years ago and renamed it Energy Future Holdings, saddling the new company with $37.7 billion in debt.The private equity vultures thought they could make a quick killing because of the peculiarities of the deregulated electricity market in Texas. The benchmark price for electricity was set by natural gas prices, which were relatively high in 2007. Much of the generation capacity of TXU and Luminant was from coal-fired plants, which cost far less to operate than natural gas facilities. As long as natural gas prices remained high, they could sell electricity at considerable profit.
Those firms -- KKR & Co., TPC Capital and Goldman Sachs Capital Partners -- have paid themselves $528.3 million in fees while EFH has faced near-term restructuring or bankruptcy, Bloomberg said.
EFH's long-term debt has risen to $42 billion since the acquisition and, Bloomberg said the company faces its seventh straight quarterly loss driven by low natural gas prices.
Then came the great gas rush of 2009 in the Barnett Shale Formation courtesy of hydraulic fracturing. Electricity benchmark prices in Texas fell and the cash cow that was EHF was suddenly on the verge of bankruptcy. Funny how those Republican champions of the "free market" are trying to blame EHF's problems on the EPA. That is cynical and deeply dishonest. In other words, standard conservative operating procedure.
There is one other element of this story that bears mention. Environmental organizations fell prey to the narrative being pushed by the vulture capitalists. The key to the con was TXU promising to build 11 new coal-fired plants. The vulture capitalists promised they would only move forward if plans for those new plants were scrapped.
The buyout group made clear that, if it bought TXU, the multibillion-dollar plans to build 11 coal-fired plants would be scrapped; they'd only build three. KKR, Goldman, TPG Capital and their newly formed company, Energy Future Holdings — which as yet had no assets — were hailed as heroes. The Environmental Defense Fund announced a green partnership with KKR, whose enterprise value was $410 billion and whose holdings included healthcare behemoth HCA.I was one of those cheering the "cancellation" of 8 new coal plants in Texas. It was a feel good story line that seemed like the tide was turning against coal and venture capitalists were trying to build a less carbon intense energy portfolio.
KKR and Energy Future were going to usher in the new, green dawn of Texas. They were going to join the U.S. Climate Action Partnership to help enact "environmentally effective and economically sustainable climate change programs." And they were willing to pay TXU's shareholders $45 billion for the privilege of dragging the utility out of its dirty past and into the sustainable age. (emphasis added)
Never mind that KKR's plan would involve saddling the acquired company with debt, slashing costs and flipping it for a 20-percent profit in five years — or failing that, liquidating its assets. Or that the company never had any financial incentive to bring 11 new plants online, which would only drive down the cost of electricity and its profits.
Meanwhile, Luminant continues to poison eastern Texas with its old coal-fired plants. Here is one estimate of some of the public health costs of the toxic emissions.
We have known for years that pollution from the big coal plants to the south and east of the DFW area affect air quality in North Texas. Pollution from Big Brown, Martin Lake and Monticello, all owned by Luminant, was estimated to cause 136 early deaths; 204 heart attacks and 149 asthma hospitalizations a year, according to an Abt Associates study commissioned by the Clean Air Task Force in 2010. These three plants are the largest sources of sulfur dioxide emissions in Texas and are some of the worst in the country. They also graced the EPA’s top 10 list for nitrogen oxides emissions in Texas.The next time you hear a Texas Republican talk about their opposition to reducing carbon emissions because they are skeptical of the science, remember their opposition to reducing mercury, heavy metals, and other toxic compounds from coal-fired power plants. So much for their so-called reverence for life.
The next time you hear a Texas Republican complain about the EPA, remember the real reason why there is no excess electricity generation capacity in Texas and why the largest electricity conglomerate in the state may have to be bailed out. The unregulated "free market" made this mess.
Now if just remember where I put my lump of clean coal. . . It is probably next to my respirator, gas mask, and industrial grade water purification system.