Environmental groups fault EFH, regulators on reclamation costs

Posted Wednesday, Oct. 16, 2013  comments  Print Reprints

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Two environmental groups say it’s far from assured that Dallas-based Energy Future Holdings will be able to meet its obligations to reclaim East Texas coal mines if the big utility files for bankruptcy and the mines are closed in the future.

The Sierra Club and Public Citizen said Wednesday that a new study shows that EFH subsidiary Luminant Generation, the state’s biggest power producer, hasn’t been required to put up money aimed at covering the cost of restoring tens of thousands of acres disrupted by lignite mining. Those mines feed power plants operated by Luminant.

Instead, the study by the Institute for Energy Economics and Financial Analysis shows that the Texas Railroad Commission has allowed EFH’s Luminant Mining to pledge assets of a sister company, Luminant Generation, as a self-bond. Those multiple self-bonds add up to about $1 billion, study author Tom Sanzillo said.

The groups want the Railroad Commission to demand cash or an equivalent guarantee so state or federal taxpayers won’t face the possibility of paying for the mines’ reclamation.

Luminant spokesman Brad Watson said the company doesn’t plan to close the mines and has complied with all state rules governing reclamation obligations. He said the company spent $93 million on land reclamation in 2012 as it reclaimed 3,774 acres.

It has reclaimed 73,069 acres disrupted by its lignite mines since 1971, he said.

The Railroad Commission, in an email, said Luminant Mining “currently meets the financial requirements of the Texas Coal Mining Regulations, and therefore no additional bonding is required.” It said Luminant Mining has 13 surface-mining permits from the commission with self-bonding totaling $1 billion and an estimated reclamation expense of $917 million.

Tom “Smitty” Smith of Public Citizen’s Austin office said Texas regulators should be preparing to secure a priority standing for the state among EFH’s creditors in the event of a bankruptcy.

Jim Fuquay, 817-390-7552 Twitter: @jimfuquay

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