TXU last week said that its TXU Energy subsidiary will retire eight power plant units due to electric industry market conditions in Texas and will also temporarily close four other units and place them under evaluation for retirement. The 12 units represent a total of 1,471 MW, or more than 13% of TXU Energy’s gas-fired generation capacity in Texas.

“In a competitive, changing market, we are constantly evaluating our fleet’s position in the marketplace,” says Richard Wistrand, TXU Energy senior vice president of fossil production. “Texas has a sufficient supply of power and idling these plants will have no impact on reliability of service for TXU Energy customers or any other Texan.”

Of the 12 units impacted, eight will be taken out of service permanently and four will be “mothballed,” or temporarily closed, with the possibility of restarting them at a later date. The four mothballed units are also under evaluation for full retirement in the future.

A majority of the 12 units were designated as “peaking units” and operated only during the summer for many years and have operated only sparingly during the last two years. Most of the units were built in the 1950s.

The units that will be retired are:

Units being mothballed are:

According to Wistrand, closing the power plant units is a prudent business decision, given the supply of electricity in Texas, the higher cost of operating these older power plants, and the ability to buy less expensive power in the marketplace — all a reflection of a robust, competitive wholesale market in Texas that has attracted independent power producers. This action is not expected to materially affect 2004 earnings.

Approximately 55 employees will be affected by the closing and may have the opportunity to transfer to other areas within the company. Eligible employees who leave the company will be offered severance benefits and outplacement counseling to help them secure other employment.

TXU Energy will meet with Electric Reliability Council of Texas (ERCOT) officials to discuss the decision to close the units and will continue to work closely with them during the shutdown. ERCOT may request any of the units to continue operating under contract with ERCOT if needed for reliability. ERCOT has oversight responsibilities for the electricity grid in most of Texas.

CenterPoint subsidiary Texas Genco Holdings in September 2003 said that it will mothball 2,990 MW of older gas-fired generation because of an oversupply situation in ERCOT. American Electric Power made a similar decision in late 2002 and ended up shutting down nine of its power plants in Texas.

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