February 4, 2014

Luminant to begin using three coal-fired power plants again

The power plants, all in East Texas, have become more economic as natural gas prices have increased, raising electricity rates.

Luminant Generation said Tuesday it will bring three coal-fired power units back into production sooner than previously planned as higher Texas power prices make the plants more economic.

Last fall, the big Dallas-based electricity generator had idled the power plants, all in East Texas, saying the state’s low wholesale power prices didn’t justify their operation. It will now bring back two units by Feb. 15 and a third by March 1. They have combined capacity of 1,880 megawatts, enough to power more than 900,000 typical Texas residences during a period of average demand.

Particularly cold weather in Texas and much of the nation in recent months has driven up both the price of natural gas and electricity in deregulated markets. Natural gas was the No. 1 fuel for generating electricity in Texas last year, but coal was close behind.

On Tuesday, natural gas futures jumped 8 percent on prospects of another cold snap. Futures for March delivery closed at $5.29 per million British thermal units.

“Power prices have risen in recent weeks following the rise in natural gas prices due to the cold weather across the nation that is increasing demand,” Luminant spokesman Brad Watson said in a prepared release.

“By bringing these units back online, we not only make more electricity capacity available for Texas’ grid, we make more natural gas available for Texas and the rest of the nation that would otherwise have been used for electricity generation here,” Watson said.

Last month, the state’s biggest power grid, the Electric Reliability Council of Texas, recorded a new high for winter demand. While there was sufficient capacity to meet demand, ERCOT has issued several alerts this winter as power demand rose and capacity was lost unexpectedly.

Those instances have been accompanied by temporary spikes in wholesale power prices.

Luminant is owned by Dallas-based Energy Future Holdings, which has been flirting with bankruptcy as it struggles with $38 billion in long-term debt left from the $45 billion leveraged buyout of TXU Corp. in 2007 by KKR, TPG Capital and Goldman Sachs.

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