Big Coal's Dirty Move

In 2001, the energy task force headed by Vice President Dick Cheney used the threat of blackouts to justify a call for up to 1,900 new coal-fired power plants. In Texas, the playbook is the same. The Electric Reliability Council of Texas, which runs the state's power grid and which, until recently, was headed by a TXU executive, has warned that starting around 2009, the state's power supplies will be running low. According to TXU, the solution is simple: Burn more coal.

"We believe wind, solar and nuclear power are all important," says Kimberly Morgan, a company spokeswoman. "But all these sources have problems — the wind doesn't blow all the time, solar is still very expensive, and nuclear power, which we're a strong supporter of, takes too long to get permitted. Conservation is also necessary, but on its own, it's not enough. We're already too dependent on natural gas. So that leaves coal as the best, most affordable way to generate power in Texas."

But building old-fashioned coal-fired plants to meet rising power needs is a nineteenth-century solution to a twenty-first-century problem. The projected power shortage in Texas, for example, is mostly an issue on hot days when AC usage spikes — a problem that could largely be handled by getting serious about energy efficiency (per-capita energy use in Texas is among the highest in the nation) or by pushing alternative sources of power (the state has plenty of sun and wind). "Texas may be where we find out how much the world has changed in recent years," says Dan Dudek, chief economist for the advocacy group Environmental Defense. "Are we serious about dealing with global warming, or are we just messing around?"

Perversely, it was Hurricane Katrina that spurred TXU's push for more coal. For many Americans, Katrina was a wake-up call to the dangers of global warming. After all, scientists have convincingly demonstrated that warmer oceans contribute to the intensity, if not the frequency, of hurricanes. For John Wilder, however, Katrina represented an opportunity. When the hurricane disrupted energy production in the Gulf and drove up the price of natural gas — which is used to generate seventy percent of all electricity in Texas — Wilder went looking for another source of power. But instead of turning to solar or wind or even nuclear, he decided to burn more coal.

Wilder, who worked for years at Royal Dutch Shell, is known in the industry as a brilliant numbers guy and a fierce advocate of deregulation. When he took the top job at TXU three years ago, the company was near bankruptcy, having lost $4 billion investing in overseas power generation. Wilder sold the art at corporate headquarters, spun off assets, outsourced 2,700 jobs and refocused TXU on generating power for its 2.2 million Texas customers. In his first year on the job, the company's stock price tripled. Wilder did pretty well himself: He was the eleventh-highest-paid executive in America in 2005, raking in over $55 million — more than twice the compensation of former ExxonMobil boss Lee Raymond.

To get around regulations for new coal plants, Wilder cultivated a key ally in Texas: Gov. Rick Perry, a conservative who has long carried the water for big business in the state. A month or so after Katrina hit, the Galveston Daily News reported, a TXU senior executive met with Perry's chief of staff. The governor was concerned about rising electricity rates in the aftermath of Katrina, especially with an election coming up. TXU agreed to delay some of its price hikes until after voters went to the polls — and two weeks later, Perry issued an executive order fast-tracking permits for the new power plants that TXU and other coal companies want to build. The decree means that instead of submitting to lengthy regulatory scrutiny and public comment, TXU's plants could be slipped through in a matter of months. TXU and other coal-industry interests repaid the favor by donating heavily to Perry's re-election campaign, contributing more than $130,000.