About Air and Water

Saturday, June 30, 2007

Operators, excavators face revamped pipeline rules

Railroad Commission granted power to levy fines up to $10,000 per day
Galen Scott - Weatherford Democrat - June 27, 2007

The Texas Railroad Commission (RRC) recently announced new rules to help protect the state’s 200,000 miles of intrastate pipelines — more intrastate pipelines than any other state in the nation.

Historically, domestic oil and gas exploration has taken place in rural, underdeveloped parts of the country, but the Barnett Shale is buried beneath some of the most densely populated areas in North Texas. When they run through urban development, pipelines can become especially vulnerable.

According to the RRC, damage by third-parties — homeowners, contractors, city or state employees or anyone digging near pipelines — is the leading cause of pipeline accidents.

In March, an excavator laying pipeline for Crosstex Energy Services struck a pipeline near the East Parker County community of Dicey. Though no serious injuries were reported, the accident ignited a towering stack of flames and the concerns of local residents already worried about the growing number of petrocarbon pipelines crisscrossing Parker County.

Pipeline accidents are happening more and more often in Texas. Railroad Commission Chairperson Elizabeth Ames Jones reported receiving 149 notifications of third-party pipeline damage in 2004. That number increased to 275 the next year and in 2006 it jumped even higher to 301 reports, or an average of six incidents each week.

Jones said the RRC’s new rules are designed to stop the trend toward increasing numbers of damage reports.

The RRC held three public meetings in 2006 to gather input on proposed rules from pipeline operators and contractors and other groups that dig near lines. Based on these meetings, the rules came to incorporate 10 “best practices” from a national pipeline protection safety organization called the Common Ground Alliance.

And for the first time, the RRC has the authority to issue fines for rule violations. Monetary penalties made possible by the new laws allow for up to $10,000 per day for each violation. The RRC also can also impose non-monetary penalties, such as issuing a warning or requiring mandatory attendance at safety training.

Railroad Commissioner Michael Williams expects the new rules to bring about a significant reduction in the number of pipeline incidents and said the RRC will continue monitoring data in order to gauge impact.

Fellow Commissioner Victor Carrillo emphasized the importance of having enforcement teeth built in to the state’s damage prevention efforts and said the action, “will help achieve a key agency goal in enhancing public safety regarding underground pipelines in Texas.”

See Weatherford-Democrat

Regional focus on air quality - State environmental agency offers grants to clean up gas compressors

Galen Scott - Weatherford Democrat - June 22, 2007
State environmental officials announced $4 million in grants designed to help Texas natural gas producers limit harmful emission levels Friday.

Nine counties in the Dallas/Fort Worth air quality non-attainment area, including Parker, were identified in a group where “rich-burn” gas compressor engines are producing high levels of nitrogen oxide (NOx).
“Rich-burn” engines run on natural gas and are usually located near individual gas wells or at extraction junctions. Though most produce less than 500 horsepower, official estimates indicate the engines emit 32 tons of NOx per day and contribute to the growing Metroplex air quality problem.

The engines are used for moving natural gas to market. Since mineral production levels in the Fort Worth Basin began their steady climb six years ago, an unknown number of compressors have been installed.

Andrea Morrow, a spokesperson for the Texas Commission on Environmental Quality said the agency is currently conducting a study to find out how many of the rich-burn compressor engines are in each county.

“[The engines] are going to need to be retrofitted in order to comply with the new rules and these grants are going to help with the cost of that,” Morrow said.

Despite prolific activity associated with the Barnett Shale, the incentive to cooperate could be higher in East Texas where the state also offered 33 other counties the same retrofit reimbursement deal.

Sen. Kevin Eltife (R-Tyler) authored Senate Bill 2000, which freed up the funding. Eltife’s district managed to ward off non-attainment classification in 1997 when the federal Environmental Protection Agency announced additional eight-hour ozone standards. If East Texas counties remain in attainment, the region could avoid the same set of motor vehicle restrictions currently hinging on the next Metroplex air quality assessment.

“This legislation set up a grant program to help reduce emissions in our area on certain compressors in the oil field by over 96 percent,” Eltife said in a statement. “This is very important in helping us keep our area in attainment.”

In 1990, the EPA classified nine counties surrounding Dallas and Fort Worth as “moderate” ozone non-attainment, meaning those counties failed to meet national air quality standards. Since the original federal designation, Metroplex non-attainment areas have failed to achieve compliance by deadlines mandated in 1996 and 1999, and the EPA reclassified the region as “serious.” After an extension was granted in 1999, the pending DFW attainment date was set for November of this year.

Several important federal concessions are tied to an area’s EPA air quality attainment status, including transportation funding, but whether or not gas operators in the Dallas/Fort Worth area will choose to participate in the grant program remains to be seen.

The grant system was designed to serve as a partial reimbursement of costs associated with the installation of new NOx reduction systems. So far, retrofitting remains voluntary, emissions reductions must be verified in order to receive grant money and the state only provides a 75 percent reimbursement of capital costs.

And because much of local gas exploration is taking place near businesses and homes, some Barnett Shale drillers are already paying out of pocket to address noise and safety concerns.

Three local operators did not immediately respond to requests for interviews regarding the compressor engine grant program Friday.
See Weatherford-Democrat


State environmental officials announced $4 million in grants designed to help Texas natural gas producers limit harmful emission levels Friday.

Nine counties in the Dallas/Fort Worth air quality non-attainment area, including Parker, were identified in a group where “rich-burn” gas compressor engines are producing high levels of nitrogen oxide (NOx).

“Rich-burn” engines run on natural gas and are usually located near individual gas wells or at extraction junctions. Though most produce less than 500 horsepower, official estimates indicate the engines emit 32 tons of NOx per day and contribute to the growing Metroplex air quality problem.

The engines are used for moving natural gas to market. Since mineral production levels in the Fort Worth Basin began their steady climb six years ago, an unknown number of compressors have been installed.

Andrea Morrow, a spokesperson for the Texas Commission on Environmental Quality said the agency is currently conducting a study to find out how many of the rich-burn compressor engines are in each county.

“[The engines] are going to need to be retrofitted in order to comply with the new rules and these grants are going to help with the cost of that,” Morrow said.

Despite prolific activity associated with the Barnett Shale, the incentive to cooperate could be higher in East Texas where the state also offered 33 other counties the same retrofit reimbursement deal.

Sen. Kevin Eltife (R-Tyler) authored Senate Bill 2000, which freed up the funding. Eltife’s district managed to ward off non-attainment classification in 1997 when the federal Environmental Protection Agency announced additional eight-hour ozone standards. If East Texas counties remain in attainment, the region could avoid the same set of motor vehicle restrictions currently hinging on the next Metroplex air quality assessment.

“This legislation set up a grant program to help reduce emissions in our area on certain compressors in the oil field by over 96 percent,” Eltife said in a statement. “This is very important in helping us keep our area in attainment.”

In 1990, the EPA classified nine counties surrounding Dallas and Fort Worth as “moderate” ozone non-attainment, meaning those counties failed to meet national air quality standards. Since the original federal designation, Metroplex non-attainment areas have failed to achieve compliance by deadlines mandated in 1996 and 1999, and the EPA reclassified the region as “serious.” After an extension was granted in 1999, the pending DFW attainment date was set for November of this year.

Several important federal concessions are tied to an area’s EPA air quality attainment status, including transportation funding, but whether or not gas operators in the Dallas/Fort Worth area will choose to participate in the grant program remains to be seen.

The grant system was designed to serve as a partial reimbursement of costs associated with the installation of new NOx reduction systems. So far, retrofitting remains voluntary, emissions reductions must be verified in order to receive grant money and the state only provides a 75 percent reimbursement of capital costs.

And because much of local gas exploration is taking place near businesses and homes, some Barnett Shale drillers are already paying out of pocket to address noise and safety concerns.

Three local operators did not immediately respond to requests for interviews regarding the compressor engine grant program Friday.

Mayors Climate Protection Agreement

Don Young - FWCanDo - June 29, 2007
In June 21, 2007, mayors from 540 cities around the nation gathered in Los Angeles to sign the U.S Conference of Mayors Climate Protection Agreement, committing to reduce carbon emissions in cities below 1990 levels.

Fort Worth mayor Mike Moncrief did not attend the meeting. While he was fiddling over his Barnett Shale holdings, Metroplex air was getting dirtier as a result of his industry friendly, gas drilling ordinance.

For two years now FWCanDo has been demanding that Moncrief conduct environmental impact studies to measure the effects of gas drilling on air quality in the region. After all, Metroplex air is alraedy declared to be " SERIOUSLY out of compliance" by the EPA. The city has consistently declined to do studies, despite the fact that Fort Worth is Ground Zero for natural gas extraction is the USA. Goodbye "Livable City".

How does gas drilling affect Metroplex air quality? One of many factors are the "rich-burn" gas compressor engines that are scattered around the region.

Read this enlightening report in the Weatherford Democrat and then ask yourself, "Why are my tax dollars paying billionaire energy extractors to clean the air they dirty?"

Friday, June 29, 2007

Waste transformation generates interest - using waste products to fuel energy in North Texas

By ELIZABETH SOUDER - The Dallas Morning News - Wednesday, June 27, 2007

North Texas is beginning to be fueled by its own filth.

Companies are building several new facilities to turn waste, manure and even smellier stuff into fuel for power plants.

Waste Management Inc. recently fired up a small power generator that runs off the methane produced by its landfill in Ferris, just south of Dallas. The company plans to spend $400 million to add generators to 60 landfills across the country.

MONA REEDER/DMN The Waste Management landfill near Ferris is dotted with gas lines that pop up to vent methane. The gas fuels four generators, pumping out enough electricity to power about 5,000 homes. And Environmental Power Corp. built a plant near Stephenville to turn manure and animal fats into methane. The facility pumps the gas into pipelines and sells it to the Lower Colorado River Authority as power plant fuel.

"The higher the cost of current energy sources, the higher natural gas prices and electricity prices, the more viable the renewable energy sources become," said Russel Smith, executive director of the Texas Renewable Energy Industries Association.

He added that public demand for cleaner energy also spurs such investment.

The only disappointment for environmental advocates is that such plants are small. Each can supply enough electricity for a few thousand households – hardly enough to feed Texas' growing appetite for power.

Eighty-four of Waste Management's 281 U.S. landfills already fuel power plants. Eight landfills in Texas have generators, including one in Lewisville.

And investing in such plants has become a lot more attractive recently as electricity prices rise and regulators require power companies to accumulate renewable energy credits.

Federal tax benefits sweeten the economics.

Now, the country's largest garbage collector plans to install power plants on every landfill it operates with enough methane to run a generator. Sites in Fort Worth and Austin are slated for power plants.

And the company wants to offer its services to other landfill operators to install and run power plants at their sites, too.

The Ferris landfill looks like a grassy hill with a few black pipes sticking out. Those are gas wells that draw off methane produced by the decades-old garbage under ground.

Waste Management must tap the gas and burn it off, or the landfill belches methane. In the past, the company just burned off the gas.

"They're a good investment. It's a cliché, but it's the right thing to do, and it makes use of a fuel that's otherwise flared," said Paul Pabor, vice president of renewable energy for the Houston company.

Now, the methane fuels four yellow Caterpillar generators, each about the size of a compact car. They pump out enough electricity to power about 5,000 homes.

"It used to be a dump," said Kano Galindo, a district manager who oversees the plant. But don't use that term around him, he said; he admires the shiny generators.

The manure and animal-fat processing center near Stephenville isn't quite so squeaky clean or fragrant as the landfill. When the smell of manure wafts past, it's actually a relief from the stench of the animal parts, or "material," as the executives say.

Just like the landfill operator, Microgy, a unit of New Hampshire's Environmental Power Corp., gets its fuel for free.

The plant, which used to be a composting site, takes in manure and materials from dairies and food processing plants.

The waste naturally emits methane when it decomposes. Microgy's eight digesters use microorganisms to hasten that process.

The $13 million plant can churn out up to 635,000 million British thermal units of gas a year. That's enough gas to power around 10,000 homes.

Environmental Power is eyeing another potential revenue stream. By burning the potent greenhouse gas as a fuel, rather than venting it, the facility can qualify for greenhouse gas offset credits.

If the U.S. limits such emissions, those credits could be in high demand.

"We believe that could be equal to or even greater than our gas" business, said Richard Kessel, chief executive of Environmental Power.
See WFAA Report

Thursday, June 28, 2007

Residents oppose UTA gas drilling

By JOHN AUSTIN - Star-Telegram staff writer - Sat, Jun. 16, 2007

Drilling dispute ARLINGTON -- Everybody in North Texas, it seems, wants a piece of the region's red-hot gas-well action these days.

Everybody, that is, but Linda Yarbrough and her neighbors near the University of Texas at Arlington's Maverick Stadium on the west side of campus.

UT-Arlington officials signed a deal this spring to allow on-campus drilling. Seismic work has been delayed by heavy spring rains, but should begin this month according to John Hall, UT-Arlington's vice president for finance and administration.

Drilling sites have not been announced. Up to five potential drilling sites have been identified, but there has been no decision about how many wells will be drilled, Hall said.

University officials' plans to discuss the deal with residents near campus don't make Yarbrough feel any better.

Yarbrough moved to 1300 W. Second St. 14 years ago. Her neighborhood, Vellenga Acres, includes about 80 houses on large, heavily wooded lots.

"It would ordinarily be an ideal neighborhood," Yarbrough said, adding that she doesn't want to be anywhere near a gas well.

What's new?

City and university officials met last week to discuss the planned gas well. Yarbrough estimated that about 100 residents attended.

City Councilwoman Lana Wolff said a public meeting with residents is expected in early August, after Carrizo Oil conducts seismological studies and decides on well locations, pipelines and truck routes.

The university has posted questions and answers about the deal under the "Official Statements" section of its Web site, www.uta.edu.

The posting states that the final site "will also be chosen to minimize the level of peripheral noise to campus and community residents."

As a state university, UT-Arlington is not subject to city ordinances stipulating the distance or buffers between a rig and residences. But on its Web site, the university said its practice is to "meet or exceed all relevant city ordinances." Drilling is expected to last 30 to 45 days, according to the site, and after that time "there is virtually no noise or risk."

What's next?

Yarbrough plans to be at Tuesday's City Council meeting, along with neighbors, to underscore what they believe to be potential problems. On Friday, she sent a letter to Mayor Robert Cluck and City Council members calling for strengthened urban gas-drilling rules.

Among her recommendations:

Restrictions on hours of operation

1000-foot proximity limits between property lines and drilling sites

Mandatory, 24-hour on-site security

Online: www.uta.edu

See Map in Star Telegram

Big Retail Stores Prime Solar Energy Generators

By Jeff Brady - NPR
Morning Edition, June 28, 2007 · A few solar energy companies have discovered an opportunity on the roofs of big retail stores. They're offering to install solar panels for free. They then sell the electricity back to the store, often at lower rates than the local utility charges. Retailers like it because it lets them boast about being "green."

High Court Limits Endangered Species Act

Listen to report on NPR
by John Nielsen NPR
Morning Edition, June 26, 2007 · The U.S. Supreme Court sides with developers and the Bush administration on a ruling that reduces the power of the federal Endangered Species Act. States will have greater latitude in issuing building permits and will operate with fewer federal requirements aimed at protecting endangered species.

Buyers may go national with TXU - Expansion beyond Texas could put consumer protections in jeopardy

By ELIZABETH SOUDER - The Dallas Morning News - Monday, June 25, 2007

Second of three parts
See Part 1
TXU Corp. could become the first national electricity company Americans have ever seen.

Private equity firms Kohlberg Kravis Roberts & Co. and TPG aren't saying how they plan to make money with their $45 billion bid for the public utility, but a consultant hired by The Dallas Morning News to analyze the deal speculates the buyers just might be planning to extend TXU from sea to shining sea.

That's the best guess for why the investors would put together the biggest leveraged buyout ever, taking on $24.6 billion in debt, to net a company that's already healthy and lean, according to the independent report by GF Energy LLC of Washington, D.C.
Trouble is, the U.S. doesn't have the regulatory framework to protect customers of a national utility, the report says. And the high level of debt involved in the deal could push up rates, leaving customers vulnerable.

Officials with the buyout companies declined to be interviewed on the record for this story. After reading the report last week, the buyout group said in an e-mail that it is "filled with generalizations and erroneous conclusions" but didn't elaborate.

Mike McCall, chief executive of TXU Wholesale, wrote in an e-mail last week to the lead author of the report, Roger W. Gale, that a change in ownership doesn't change the regulatory framework, and "a substantial body of enforceable rules, laws, procedures and protocols already exists" to regulate the power industry.

"This could be a recipe for trouble," said Tom "Smitty" Smith, head of the Texas office for consumer advocate Public Citizen.

Potential mergers
"In the end, much of the judgment about it comes down to whether one believes that big national companies owning large swathes of market share – like what we see in nearly every industry – is in the best interest of consumers. This transaction could ultimately result in its being turned into a national company – whether via organic growth or via acquisition of or by non-Texas companies."

Mr. Gale says the buyers' promise for greater separation between TXU's three businesses is the first step toward expanding them nationally and eventually spinning them off for a profit.

Already since the buyout was announced, TXU has changed the names of some units to reinforce the separation between them, and possibly set the stage for spinoffs. TXU Wholesale and TXU Power became Luminant. TXU Electric Delivery, the regulated power-line business, became Oncor.

"By separating the assets, the buyers get the ability to maximize the debt and equity and to position the new companies – Luminant, Oncor and TXU Energy – to be recapitalized, resold or rebundled," the report states.

TXU could expand nationally by buying other companies, such as power line operators, or entering another state cold by building new plants or offering retail service.

Retail electricity is one of the few businesses in the U.S. that hasn't been consolidated into a national platform, the report notes.

And expanding Luminant, the generation and wholesale business, might mirror NRG Energy, Texas' second-largest generation company, behind TXU.

New Jersey power plant operator NRG entered Texas in 2005 when it bought Texas Genco Holding LLC from a group of private equity companies, including KKR and TPG. Texas Genco was an old-fashioned private equity flip: The investors bought a lower-performing unit of a large company, shut down some unprofitable plants and sold it within two years at a profit.

TXU chief executive John Wilder had considered expanding TXU's reach to the Northeast, building coal-fired power plants possibly in Pennsylvania. But when the buyers showed up, those plans stalled.

He had also considered spinning off the power line business as a national transmission and delivery company.

Mr. Wilder said in an interview on Feb. 26, the day he announced the buyout deal, that he expects the investors to use TXU as a vehicle for growth in the utility industry.

"If they invested in TXU overall, then they would have this ongoing conduit to put investment capital to work on projects," he said.
he said.

The U.S. utility industry is about as disjointed and regional as an industry gets. But states have begun to deregulate the retail and wholesale power segments, and a federal law preventing private, out-of-state, nonutility ownership has been repealed, making the industry ripe for mergers, some say.

The utility industry could be on the cusp of moving in the direction of the telephone or airline industries, which broke out of their regional molds after deregulation. Already a few power companies focus exclusively on operating generating plants and have expanded their reach across state borders.

Bringing in cash
"It is our view that it is more – rather than less – likely that the owners will transform the assets using them as a platform for future growth, recapitalizing them through initial public offerings, etc., and, perhaps, selling them. If so, this is not by definition a long-term transaction."

In the short term, the buyers will have to take other measures to make sure TXU is pumping out the cash needed to pay off the billions in debt required to finance the buyout. And they've only given a few clues about their plans.

They might innovate their way to revenue, the report states, or they may have to hike consumer prices.

The buyers have said they plan to sell a 20 percent stake in the power line business to another investor. Such a sale might generate enough money to "satisfy debtors and credit agencies, cash in on some returns for investors and invest in remaining assets," according to the GF Energy report.

That could put the new TXU owners in a position to innovate and invest in new retail products, perhaps products inspired by the $400 million the buyers will spend to help people cut their demand for power.

Or, the report says, the buyers may simply cut retail prices until 2008 to retain customers, then raise prices again and generate more cash flow.

Another possible money-making strategy is to simply sit on TXU until the stock prices of similar utilities rise, then sell, the report says.

The buyers' silence on this issue has worried some bond analysts.

"There is uncertainty concerning the strategic direction of the company as well as likely changes to the financial practices and corporate structure of TXU and subsidiaries," Fitch Ratings said in a research note.

The ratings agency has said it expects to downgrade TXU debt after the buyout. Some agencies already rate TXU at junk status.

When ratings agencies downgrade a company, lenders expect the company to pay higher interest rates to cover the higher risk. The buyers' cost of capital, therefore, could rise. And those costs could be passed on to consumers.

"We ... assume that the board is cognizant of the significantly increased risks of defaulting on its future debt obligations and the ramifications such an event could have on the assets and services provided by the company's businesses," Moody's Investors Service wrote in a research note.

Power plants
"If the buyers are able to build three new coal plants in the next five years, especially grandfathered units that don't require advanced CO{-2} controls, the value of those plants could be enormous to a potential buyer. Nuclear plants and IGCC [integrated gasification combined cycle], on the other hand, take longer to build, introduce significant technological and political risk, and are probably less likely to be built by the new owners than by a more traditional utility."

A big question for bond holders and consumers is whether investors view power plants as a short-term cash cow or a long-term value proposition.

The buyers promised to build only three of the 11 coal-fired power plants TXU had originally proposed. Some analysts say that's a strategy to boost profit right away.

"The ability to maintain the robust cash flow position was largely a function, in our opinion, of the continuation of favorable [wholesale] market conditions, and we now believe the cancellation of many of the new coal projects will ensure, to some degree, that TXU's base load fleet remains well positioned over the longer-term,"
Moody's said in the research note.

In other words: Limit electricity supply, and prices will rise.

The buyers have said they will consider building a coal gasification plant, which uses cleaner technology, and more nuclear reactors, but there's no commitment to spend money on generation beyond the three higher-pollution coal plants.

The report questions whether there's any incentive for the buyers to make such long-term plans, since they've only committed to owning the company for five years. It can take a few years just to gain the licenses, permits, engineering assessments and construction plans required to break ground on a nuclear or clean-coal plant.

Colin Blaydon, director of the Center for Private Equity and Entrepreneurship at Dartmouth College, says that's the wrong way to think about a private equity deal.

"They're accused of not taking a long-term focus, they're asset strippers, flippers, all these pejorative terms," he said.
"They have to do an exit, probably into a public market or to a buyer that's a public company. So they've got to have built something that has substantial value," he said.

If the value of TXU is based on how much profit the company is expected to generate in the future, then building more power plants is a money-making strategy, Mr. Blaydon said. The plans alone to build such plants could be valuable to a buyer, he said.

Game plan
"Private equity players are much less consumer-focused than TXU is today. They are driven by achieving a single goal: Maximizing the value of the asset as quickly and dramatically as possible."

In the past, private equity investors have snapped up distressed or flabby companies, trimmed costs and resold for a hefty profit. Those days are over as a surge of investors hunt for deals. Now, the game is to actually improve the company before selling it, experts say.

Those past deals left private equity firms facing a lot of scrutiny. Critics worry that the investors, shrouded in secrecy, are out to strip companies of their assets and sell off everything bit by bit for a giant profit.

The investors don't face as much regulatory oversight as a public company. And regular people don't get to invest within the high-profit deals. Rather than market their funds to the masses, private equity companies tend to focus on big institutional investors or wealthy people.

The whole idea for private equity investors is to buy a company and boost the cash flow – or at least expectations of future cash flow – so that the value of the company increases. These aren't investors that hold on to companies to enjoy slow, steady profit. Private equity buyers make their money by selling the companies for a big return.

There are three ways to boost the value of a company to maximize that return, according to Mr. Blaydon at Dartmouth.

"Buy it cheap and sell it at a better price,"
he said. That's characteristic of the deals in the 1980s, when giant, inefficient conglomerates didn't always understand the value of some of their businesses. Private investors often bought undervalued businesses and remarketed them for a hefty return.

A more complicated way of making money is through fancy financing.

Buy a company that doesn't have much debt and load it up with more. This can actually lower costs, said Mr. Blaydon, who has worked as a private equity partner.

The interest the company must pay on bonds might be lower than the dividends it was paying on stocks. Also, interest payments are tax-deductible, Mr. Blaydon said. Dividend payments aren't.

These days, with so many buyout companies competing for deals, private equity companies have a third way of making money.

"The way everyone has to do it now is to actually improve the company, improve the cash flows,"
Mr. Blaydon said, by cutting costs or boosting revenue.

"It's some variation of all of that that they're going to be looking at when they look at TXU,"
he said.

Lack of regulation
"These 'barbarians at the grid' are driven by fundamentally different incentives than TXU and other utilities that have grown out of a slow-moving, low-risk, customer service driven culture and monopolistic structure."

Should TXU be purchased by a private company and expand operations to other states, it could challenge regulators' authority to monitor the company's full activities across business units, and threaten their access to all of TXU's financial data, the GF Energy report shows.

TXU became an especially attractive target for KKR and TPG when Congress gave utilities the right to sell to private, out-of-state investors. Yet, the government hasn't created a regulatory framework that would offer the same protections to consumers in multiple states, the report says.

Top brass at the buyout companies and Mr. Wilder, the chief executive of TXU, had been kicking around the idea of a deal for years. The investors mostly thought about acquiring one of TXU's businesses, not buying the whole company, Mr. Wilder said in the Feb. 26 interview.

That was the day the buyout group made their offer of $69.25 a share, higher than TXU stock had ever traded.

"I think just the depth of the capital markets and the amount of liquidity they could access, I think it opened up their eyes that they could potentially be a corporate investor in TXU, and then use TXU as their vehicle to invest capital in the energy infrastructure in the future,"
Mr. Wilder said in the interview.

The investors won the right to buy the whole company in 2005, when Congress repealed the Public Utility Holding Company Act. The act had blocked out-of-state, private, nonutility investors from buying power companies.

But there's no regulatory structure meant to protect all consumers equally if an out-of-state company exercises its right to buy a utility and expand it to many states, according to the report by GF Energy.

The buyout must gain permission from the Federal Energy Regulatory Commission, which is "broadly disposed to approve almost any merger," the report states, and has done so before state regulators could act.

The proposed TXU deal must go before the Public Utility Commission of Texas for a review of the buyout's impact on the regulated power-line business unit, Oncor. The PUC still sets rates for that.

The commission has a more limited, fuzzy role in overseeing the deregulated wholesale and retail markets.

"Ownership of utilities by a holding company or by private entities raises concerns over transparency," the report states. "While most utilities are required by state law to file reports detailing operations and some level of finance, the existence of multiple layers of regulated, unregulated, and holding companies – especially those straddling multiple states – makes this more difficult."

See chart of KKR's previous acquisitions

TXU deal may lead to higher rates - Consumers promised cuts now, but electricity rates may rise in the long run

By ELIZABETH SOUDER - The Dallas Morning News - Tuesday, June 26, 2007

Last of three parts

Two summers from now, you may pay a lot more for electricity.

The companies that wish to buy TXU Corp., Kohlberg Kravis Roberts & Co. and TPG, promised to cut standard electricity prices and keep them low through 2008.

And, they've committed to exhibit restraint in the costs of debt they include in rate cases this year and next for TXU's regulated power-line business unit, Oncor.

But those promises expire in 2009, just when Texas' power supply may become uncomfortably tight, pushing prices up.

A consultant hired by The Dallas Morning News to assess the impact of the $45 billion buyout concludes the deal offers no net benefit for customers. The consultant, GF Energy LLC of Washington, D.C., calls on the Public Utility Commission to negotiate long-term gains for regular consumers.

"The issue is whether the new owners will keep prices as low as possible and, most important, not be inclined to push price increases beyond what other publicly traded utilities will do," the report states. "We do not believe there can be air-tight guarantees that the buyer will not be inclined to squeeze the customers."

The PUC faces a fundamental question: Does a regulator have authority to protect customers in a deregulated market, where, in theory, competition is supposed to promote consumer interests?

The author of the report, Roger W. Gale, says absolutely. Electricity is vital for human health and prosperity. And while he has long promoted competition, he said no market is perfect, and Texas still has behemoths like TXU that can exert great influence.

TXU says any meddling by regulators in the deregulated markets is destructive.

"The Texas Legislature made a public policy decision in 1999 when it mandated a competitive market structure that customer prices would be driven by competition, not regulatory intervention," Mike McCall, head of TXU Wholesale, wrote in an e-mail to Mr. Gale on Wednesday, after receiving the report. "Such intervention would only result in negative consequences to the robust Texas competitive market, driving investment away."

The News gave copies of the report to TXU and the buyers, as well as the PUC, Jim Marston of Environmental Defense and two key legislators, Sen. Troy Fraser, R-Horseshoe Bay, and Rep. Phil King, R-Weatherford. Reporters asked each to comment on the report.

TXU and the buyers declined requests for on-the-record interviews and chose to respond by e-mail.

Consumer rates

"TXU has the opportunity in the near term to price low enough to win new customers or, at a minimum, stanch the bleeding of existing customers. Then, in December 2008, when TXU is no longer committed to keeping rates low, they can raise prices again."

The buyout group promised to cut prices 15 percent for about 1 million customers. The promise expires at the end of 2008.

Come 2009, it's anyone's guess what the buyers might do to prices. Raise them to recoup costs? Lower them to draw more customers or to please politicians, as the Texas Legislature goes back into session?

"The buyers believe they will win much more than customers; otherwise the deal makes no sense," the report states.

The promised cut would drop only the standard price that TXU charges, the former so-called price to beat, to 12.75 cents per kilowatt hour from 15 cents. TXU has already implemented a 10 percent reduction. The remainder of the decrease will come once the buyout closes, probably later this year.

The deal doesn't extend to customers on TXU's longer-term pricing plans, some of which are cheaper.

Texas retail electricity rates historically follow the price of natural gas, because most of the state's power comes from natural gas plants. When natural gas prices spiked after Hurricane Katrina, TXU raised its standard retail price 24 percent.

Since that time, natural gas prices have declined, but TXU only recently cut the standard price.
Instead, before the buyout crew came along, TXU had been offering cash bonuses to customers willing to stick with the former monopoly, rather than switch to other providers. And TXU offers lower rates to customers willing to sign long-term contracts. The company has been losing customers each year, with customer count down 6.4 percent in the first quarter compared with the year-earlier quarter.

Competing electricity providers have cut prices here and there as TXU offered its bonuses. Prices in North Texas tend to be in a range of 11 cents to 15 cents per kilowatt hour.

Eventually, pricing could go the way of the deregulated airline industry. Vigorous airline competition has pushed fares down, lower than the price of bus tickets, in some cases. But while an individual airline may cut fares in a given market to win customers, there's a collective desire to charge the highest prices the market will bear.

"Regulation was often put in place to prevent monopolistic pricing, which harms consumers. But deregulation does little to prevent oligopolistic pricing, which can equally disadvantage customers," the report states.

Power supply
"Reliability might be affected by the new owner's reticence to make capital expenditures. Private equity funds' principal objectives of providing returns to their owners and investors can pose an inherent conflict with utilities' needs for long-term capital investment as well as innovation to ensure long term resource adequacy."

The buyout group curtailed TXU's immediate plans to build more coal-fired power plants and hasn't promised to replace those plants with cleaner technology. Experts say the investors' move, meant to quell public outrage over pollution, could cause wholesale prices to rise.

The buyers' plans could throttle Texas' power supply at a time when population and economic growth are boosting demand for electricity. The Electric Reliability Council of Texas predicts supply will become uncomfortably tight in 2009.

Tight supply means higher, more volatile wholesale prices.

Without more generation capacity, power companies will have to fire up older, more expensive natural gas plants to meet demand. Doing so boosts the wholesale market price, which is set at any given moment by the most expensive plant running, called the plant on the margin.

"The cancellation of eight of the 11 planned coal-fired plants was billed as an environmentally friendly move,"
Phil Adams, an analyst with independent bond research firm Gimme Credit, wrote in an e-mail.

"I think it was a useful way to ... ensure that relatively more expensive natural gas fired generation stays on the margin in Texas, thereby making TXU's existing nuclear and coal-lignite fueled capacity (relatively less expensive than gas) that much more valuable," he added.

The buyers have pledged to consider nuclear and coal gasification plants, which use cleaner technology. But they've only promised to hold on to TXU for five years, which isn't enough time to build those types of plants.

"The job of building sufficient generating resources to serve the load in Texas does not properly fall solely on the shoulders of one company or even a small number of companies," Frederick M. Goltz with KKR said in testimony accompanying the buyout filing with the PUC.

"This is best illustrated by the fact that since 1995, there have been in excess of 100 new generating units completed in Texas and not a single one of those units has been constructed by TXU Generation," he said.

In the deregulated power market, competition is supposed to ensure that Texans always have enough power at reasonable prices. Trouble is, regulators no longer have explicit authority to make sure there's enough competition to benefit customers. It's up to power plant investors to decide when and where to build, and what type of technology to use.

Industry experts have praised the Texas retail electricity market for its high level of competition, but many worry that the wholesale market doesn't have enough players with the money to invest in big projects.

"My concern for the medium and long-term is for sufficient generation capacity," said Ehud Ronn, head of the Center for Energy Finance at the University of Texas at Austin. "We don't have sufficient competition at the generation level."

He's concerned that the buyers' environmental stance, and the public resistance to pollution, could make it nearly impossible for any other company to build a traditional coal plant. That could cause retail prices to rise in the short term because of a lack of power, and to rise in the long term because of the more expensive investments that cleaner plants require.

Some state lawmakers wrestled during the recent legislative session with the question of how to boost competition in the wholesale markets. The Legislature passed a bill that would create a committee to study the state's electricity demand for the next 50 years and the infrastructure Texas will need to keep the lights on.

The Legislature would have considered the results of the study during the next session, in 2009.

But Gov. Rick Perry vetoed the bill.

Passing on costs
"One of the criticisms of private equity is the reliance on debt. Increases in interest rates, inflation and unexpectedly low return on investments can result in serious financial problems for holders. For customers, it could mean that the higher cost of money gets passed through to them, and it would almost certainly mean that the owners would try to push up rates."

The buyout group has committed to exhibiting restraint when asking the PUC to set rates for TXU's only regulated business, the power line company Oncor. Yet, a key promise not to pass along higher debt costs expires next year.

The report points out consumers may get stuck paying for TXU's higher costs if borrowing expenses rise.

Other promises from the buyout group soothed some concerns that the report brings up.

The investors won't pass along any buyout-related costs in Oncor rates. They committed to operate the business separately from the competitive units. And they will ring-fence Oncor, which means they'll separate the company's finances from the rest of TXU to protect Oncor from any problems at the other TXU companies.

Such commitments put to rest worries that the buyers might unfairly shift excess costs to the regulated unit from other businesses, to be passed along to consumers in state-approved rates, the report states.

However, there's no guarantee the buyers won't shift costs between the deregulated wholesale and retail units in this way, using, for example, wholesale power plants to secure loans to the retail operations.

The Texas Legislature considered a bill that would have prevented this by requiring each business unit, including the corporate holding company, to operate absolutely separately. The bill failed.

But one key commitment from the buyers has an expiration date. Oncor has promised not to ask the PUC to add any higher borrowing costs to consumer rates for the next two years. But come 2009, Oncor could begin trying to add such costs to the regulated transmission rate, which makes up a small portion of a typical monthly bill.

Colin Blaydon, director of the Center for Private Equity and Entrepreneurship at Dartmouth College, argues that a debt-heavy private equity deal is meant to cut the cost of capital, not raise costs.

"If you put too much debt on to it and the financial risk begins to go up so that the cost of ... debt goes up, then it can turn against you," he said.

"But if you get a somewhat more aggressive capital structure with some more debt, that, for most companies, leads to an increase in their value," allowing the private equity investors to sell the company at a profit down the road, he said.

The trouble is, according to the GF Energy report, consumers might be harmed by rising debt costs, but there's no assurance consumers will share the rewards when the investors cash in. The report concludes that the PUC has a duty to require the buyers share their spoils with consumers.

"If the buyers are winners, customers need to be winners, too," the report states.
Read this series in the Dallas Morning News

Grove 0, Gas Well 1 - Chesapeake won’t back off plans to level trees next to the Trinity Trail.

By JESSECA BAGHERPOUR - Fort Worth Weekly - Wednesday, June 27, 2007

Hikers and bikers on the Trinity near University Drive will soon find this view replaced, in part, by a gas drilling rig.

When Colonial Country Club signed a contract in May to allow gas drilling under its property off University Drive, it joined the long line of Fort Worth institutions expecting to rake in a lot of the green stuff from the Barnett Shale boom. What’s more, the club will be able to reap those profits without having to put up with the noise and traffic of a gas rig.

But the deal that’s making profits for Colonial apparently will end up costing local nature enthusiasts a lot of green of a different kind, when Chesapeake Energy Corp. cuts down a major part of an eight-acre stand of old-growth oaks, elms, and cedars along the Trinity Trail across the river from the country club.

Jim Marshall, former owner of Marshall Grain Company, bikes along the trail frequently. “It’s such a beautiful grove of trees, one of the prettiest on Trinity Trails,” he said. “It would be horrible if a large number of trees were to be destroyed.” On other parts of the trail, Marshall has installed special “ box nests” that are helping re-establish the Eastern bluebird in Fort Worth.

Marshall told Don Young, founder of Fort Worth Citizens Against Neighborhood Drilling Ordinance (FWCanDo), about Chesapeake’s plans, and Young was outraged. He said the grove is home to some of the biggest and oldest trees in Fort Worth.

“In a more progressive city, these trees would be classified ‘Heritage Trees’ and be protected,” Young said. He has used Trinity Trails since the 1970s, when he was a boy. Back then, he said, “People seemed to care more about nature.”

Young and others say they don’t think most people who use the trail are aware of what may happen to the trees over the next several months. In the last few weeks, Young has been stopping people along the trail to ask them if they know about the plan. Everyone he has talked to was unaware of it, he said — and all were under the impression that the land is part of the city trail system.

He also contacted several groups, including Save Our Parks, a committee devoted to preserving Fort Worth’s parks, and the local chapter of the Sierra Club, as well as Fort Worth City Council member Wendy Davis, all of whom said there was nothing that could be done. The grove is on private property, Davis said, and there is no action the city can take to protect the land.

Not even the city’s tree ordinance can help. Gas well sites are exceptions to the city’s Urban Forestry Plan, according to changes made in January to bring the plan into line with the city’s gas well ordinance. That means Chesapeake is free to clear the tract as long as it replaces a minimum of 30 percent of the trees removed — although there’s no rule about where the new trees must be planted. The company must submit its landscaping plans to the city before tree removal begins. The “replacement” trees must be a minimum of three inches in diameter.

Chesapeake spokeswoman Julie Wilson said the company will not need to clear the entire lot for drilling. Between three and five acres of land are generally required for well sites, she said. There will be more than one well site on the plot, with only one rig running at a time.

“I understand when people are upset when trees are removed,” Wilson said. “The good news is we will not be clearing the entire lot and plan to save as many trees as possible.”

Wilson also said that the land is better off under Chesapeake’s ownership. The prior owner planned to clear it completely in order to put up an apartment complex and a shopping center.

Wilson represented Chesapeake at a meeting with Davis on June 21. Marshall attended the meeting and suggested that Chesapeake drill instead on one of its other properties. He suggested the company use Union Pacific property that is already industrialized, the University Park Church location that is going to be developed, or an open area just upstream from the Hulen Street bridge. If the company relocates the drilling site, Marshall said, it could turn the grove into a public park. Wilson said she would have her company check into Marshall’s suggestions, but she reminded him that the parcel of land was expensive. Turning the land into a park would mean losing a great deal of money.

Terry Jensen, vice-chairwoman of the Fort Worth chapter of the Sierra Club, was horrified when she learned about Chesapeake’s plans to remove the trees. She said it is “environmentally irresponsible” for the club to allow the trees to be cut down for profit. “We don’t have many woods left in Tarrant County,” she said. “Trees are beneficial to the environment and to people’s way of life. ... We have an innate desire to enjoy nature. Some people seem to have forgotten about that.”
If Colonial Country Club wants the gas well royalties, she said, the club should “allow drilling on their own property.”

Young said he has looked at Colonial’s land and that the country club has plenty of room for a well site without much inconvenience to club members or to nature. Colonial officials did not return repeated calls about their part in the deal.

If Chesapeake goes ahead with plans to drill on the site, the company will do what it can to preserve the site’s beauty, including by planting replacement trees in the area, Wilson said. “With Chesapeake’s focus on ... being good stewards to the environment, we will be as responsible as possible while still taking care of our stakeholders,” she said.

The planting of new trees to replace the old is not an acceptable alternative, in Young’s eyes. “When they plant a sapling to replace an old tree, who’s gonna be here in 200 years to see that sapling?” he said. “Gas drillers are ruining this city, slowly but surely.”

Bernie Scheffler, co-owner of Panther City Bicycles, rides his bike along Trinity Trails every day. The grove is one of his favorite spots to rest. “That’s the most pleasant grove of trees along the whole trail,” he said. Scheffler said his many customers who use Trinity Trails have been unaware of the planned drilling until he tells them about it. They are surprised and saddened by the news, he said. Most of them thought the land was owned by the city. “In a sense it’s nice that we could use private land for so long,” he said.

Gas wells in urban areas are noisy, traffic-generating eyesores, the bike store owner said. “The best option for getting it stopped is going to be citizen protest,” he said. “It’s a big misconception that gas companies are unstoppable. People are going to have to band together and be vocal about what they want.”

See Fort Worth Weekly

Politics and Power - TXU’s 800-pound gorilla blocks out the sun’s energy.

By JIM DUNCAN - The Fort Worth Weekly - Wednesday, June 27, 2007

I started my first business in the obscure solar electric installation field in 1993. Over the years, I have witnessed the gradual decrease in the price of pure silicon, the power source that is the heart of the solar panel. I waited for the cost of a kilowatt hour of solar-generated electricity to edge low enough to compete with heavily subsidized, non-renewable utility power.

The decline slowed, stopped, and then reversed around 2002 as the worldwide demand for solar modules began to skyrocket. Our domestic solar PV (photovoltaic) industry was quick to blame the surge on growing demand in Germany, which had instituted an aggressive national program designed to reduce its massive appetite for coal-generated electricity and replace it with solar and wind energy. Then China came into the picture, an investor-rich nation also intent on reducing its deadly dependence on coal for electricity.

Two nations with the same goal but vastly different strategies. German solar companies began buying up every available PV-related business they could find, while China started building their solar production infrastructure from scratch. Each nation was increasing its domestic investment in clean, renewable energy by 20 percent to 30 percent per year. The predictable effect was a worldwide shortage, and price spike, in semi-conductor-grade silicon wafers.

Then there’s the United States.

At a distant third behind Japan and Germany, and just barely ahead of Spain in total PV production and installation, the U.S. should still be leading the world in both categories. The photovoltaic cell was developed and patented here in the mid- 1950s, giving us an untouchable lead in production for decades — until a handful of electric utilities became aware of the potential of solar power.

The oil embargo of the ’70s forced a panicky Congress to require utilities to evaluate and consider solar and wind as alternative sources of electric power. Unfortunately for all Americans since, the utilities insisted on “helping” Congress write the language of these requirements. The result: rules that assigned virtually no value to those renewable energy assets, namely free fuel-generating non-polluting power. Only the cost per kilowatt-hour mattered to Congress.

It also assures that as long as the costs of coal, natural gas, and nuclear generating plants are subsidized heavily enough by the taxpayers, and the development of a solar PV industry in the U.S. is not, traditional fuels will always appear cheaper.
The 2007 Texas Legislature had a chance to make a difference in the state with some of the highest electric rates in the nation. A bill creating the “Texas Solar Energy Rebate Program,” similar to 18 other states’ programs, would have established a statewide, one-time rebate offsetting almost half of the cost of a residential solar electric installation. The cost would have been modest — 50 cents per thousand kilowatt-hours per household. However, it died in committee, just as most pro-renewable energy legislation has in past sessions.

That brings me to what I really wanted to talk about:

Over the years, I have had a fair number of my editorial replies published in the Fort Worth Star-Telegram and elsewhere, mostly on topics such as clean air, renewable energy, Joe Barton, concrete plants, and TXU.

Now anyone in the advertising industry understands the influence that advertising dollars have over the print, television, and radio media. When I suggested that TXU’s pumped-up ad spending was affecting the Star-Telegram’s coverage of renewable energy legislation, a veteran reporter there laughed it off.

The reporter also told me that TXU had almost 120 full-time paid lobbyists at the state capitol this session — double what they had when I visited the capitol earlier this year with several dozen others from the renewable energy industry to push for favorable legislation.

So I related to him the experience I had five years ago, while representing a nonprofit renewable energy group applying for donated booth space at Mayfest.

TXU was an underwriter and, as I was informed by an organizing committee member, TXU attempted to block our nonprofit’s access. The attempt was overruled by others who better understood the spirit of the event and the educational value of our presence. Thus our group was invited back over the next four years to promote solar and wind energy to as many as would listen.

I hope that will help folks understand why most North Texans won’t see lower electric rates any time soon, if ever, and why there will be no significant legislation that will rein in TXU and its sociopathic rampage to generate profits only on its own terms. And why you will find that generating your own clean electric power from free and abundant sunlight will, for the near future, still be just a bit more expensive than electricity from coal-burners.

Jim Duncan is the owner of North Texas Renewable Energy, Inc.

This is only one of several "worth reading" articles in the Fort Worth Weekly

Sunday, June 24, 2007

Feds plan to boost ozone standards

By SCOTT STREATER - Fort Worth Star-Telgram - Thu, Jun. 21, 2007

The federal government announced Thursday that it plans to significantly strengthen ozone regulations, concluding that the current health-based standard fails to protect the public from the damaging effects of the lung-scarring pollutant.

Regional leaders have warned that a substantially stricter federal ozone standard could force them to take dramatic steps to lower pollution, including adopting restrictions on driving activity in North Texas, as well as placing additional restrictions on industrial operations.

But just how significant those restrictions could be won’t be known until the standard is finalized in March. That’s because the Environmental Protection Agency has proposed a range of alternatives, from substantially lowering the acceptable threshold of ozone that’s considered safe to breathe, to only a modest revision of the existing standard.

The EPA will conduct a series of public hearings across the country during the next few months to gather feedback before setting the new standard.

The new standard would not go into effect before June 2010.

The current standard mandates that average daily ozone levels cannot exceed 85 parts per billion over any eight-hour period.

But the agency’s own science advisory committee last year recommended the acceptable threshold for ozone be lowered to no more than 70 parts per billion, arguing that recent studies show the existing standard fails to protect those most sensitive to ozone pollution: children, older adults, people who work outdoors and people with respiratory problems.

The EPA’s proposal calls for lowering the ozone threshold to between 70-75 parts per billion.

"I have concluded that the current standard is insufficient to protect public health,” said EPA Administrator Stephen Johnson during a teleconference early Thursday with reporters. “I do not believe there is scientific evidence for retaining the current standard.”

Last year, air monitors in Dallas-Fort Worth measured ozone concentrations of 70 parts per billion or greater 642 times over 73 days, a review of state ozone data shows.
Setting the standard at 70 parts per billion could reduce exposures that produce health problems nationwide by as much as 90 percent, said Lydia Wegman, director of the EPA’s health and environmental impacts division.

In the Dallas-Fort Worth area, which does not meet the existing ozone standard, regional leaders warn that dramatic new steps may be needed to lower pollution, such as restricting the number of days people could drive their cars, limiting when construction equipment could be operated and possibly shutting down drive-through windows during peak ozone season, state and regional leaders said.
In addition, further steps would need to be taken to lower ozone-forming pollutants from industrial sources, such as local cement kilns as well as power plants in East Texas. Even if dramatic steps are taken locally, however, that might be enough. Steps would have to be taken in other states to lower pollution emissions that blow into North Texas each day and that impact regional air quality. Ozone review

The federal Environmental Protection Agency is under a federal court mandate to review the ozone standard to ensure it adequately protects public health and the environment.
The American Lung Association and other groups threatened to sue the EPA in 2003, saying the ozone standard set in 1997 is no longer sufficient to protect children, older adults, people with respiratory ailments and people who work outside.

To resolve that case, the EPA agreed to review the standard in light of new research that indicates that ozone concentrations can be well below the health-based standard and still trigger asthma attacks and inflame the conditions of those suffering from a host of other respiratory ailments.

What’s next

The EPA will hold a series of public hearings across the country beginning in August to discuss the proposal. The only public hearing in Texas will be Sept. 5 in Houston, which has the state’s most severe ozone problem.

By June 2009, Texas and other states will recommend to the EPA which areas cannot meet the new standard.
The new standard would take effect by June 2010.

Source: Environmental Protection Agency Ground-level ozone

The federal government regulates ozone levels as a health concern.

At high concentrations, ozone can trigger asthma attacks, stunt lung development in children and aggravate bronchitis, emphysema and other respiratory problems.

There are nine counties in the Dallas-Fort Worth nonattainment area: Collin, Dallas, Denton, Ellis, Johnson, Kaufman, Parker, Rockwall and Tarrant.

Ozone, the main ingredient in smog, needs lots of sunlight and heat to form. For that reason, ozone season in Dallas-Fort Worth runs from May through October.

Ozone is produced when nitrogen oxides mix with volatile organic compounds. Those come mostly from automobile exhaust and industry smokestacks. Trees also produce the organic compounds as part of photosynthesis.

Source: Environmental Protection Agency

Thursday, June 21, 2007

Austin plug-in car initiative gains speed in Congress

Doggett bill providing incentives gets committee approval
By Allison Becker - Austin American-Statesman Washington Bureau - Thursday, June 21, 2007

WASHINGTON — An Austin-based effort to popularize plug-in hybrid vehicles got a boost from Congress on Wednesday when a House committee approved a bill introduced by Rep. Lloyd Doggett, D-Austin, to provide tax incentives for buyers.

The measure would offer tax credits of $4,000 to $6,000 to purchasers of new plug-ins.
The vehicles carry batteries that can be charged in ordinary electrical outlets and gasoline engines for use when the batteries run down.

Plug-ins are set to hit the U.S. market in 2009 when GM plans to introduce a plug-in Saturn Vue.

The vehicles can go up to 40 miles before switching to gasoline-powered engines.

The legislation, which Doggett introduced March 6, was incorporated by the tax-writing Ways and Means Committee into a bill to encourage conservation and use of renewable energy. It is the first plug-in legislation to receive committee approval, by a vote of 24-16.
"Incentives can be critically important to speeding up the timetable for when plug-ins will be commercially available," said Austin Mayor Will Wynn in a statement.

Austin's Plug-in Partners initiative, a national movement backed by Austin Energy, seeks to persuade automakers to manufacture electric cars.

More than 500 consumer groups and a majority of the 50 largest cities have committed to the effort, said Roger Duncan, deputy general manager of Austin Energy.

More than 11,000 people and organizations have expressed interest in purchasing the vehicles when they reach the market, Duncan said.

Plug-in advocates say it takes less than $1 to purchase the electricity required to power a plug-in vehicle as far as it would go on a gallon of gasoline. "This bill takes decisive action to make the next generation of hybrid vehicles widely accessible to consumers," Doggett said in a statement.
"It will help us move from fossilized ideas of our energy past to the renewable promise of our energy future."

The bill would provide a $4,000 tax credit for any plug-in. The credit could be increased by up to $2,000 for a larger battery.

Plug-ins would not qualify for the $2,000 Clean Fuel Vehicle tax credit available to buyers of the Toyota Prius, Honda Insight and other vehicles that have gasoline engines and electric motors operating on generator-charged batteries.

Skeptics say plug-ins could harm the environment, arguing that sulfur dioxide and mercury emissions would increase the burden on electric power plants.
Read more

Council Waives Water Cleanup in Three Districts

tBy Mike Lee - Fort Worth Star-Telegram, Texas - Wednesday, 20 June 2007

FORT WORTH -- Despite residents' fears that the Trinity River could be tainted by contaminated groundwater, the City Council approved three special environmental districts for contaminated land in far east Fort Worth.

The special districts, known as municipal setting designations, would cover about 100 acres near the intersection of Farm Road 157 and Calloway Cemetery Road, near the Fort Worth-Euless border.

The districts will restrict the use of groundwater in the area, allowing property owners to sidestep requirements that the water be cleaned to drinkable standards. The districts are designed to speed redevelopment of polluted areas as long as they don't pose a risk to a drinking-water source.

Environmental officials say the groundwater in the targeted areas is contaminated with trichloromethane, or TCE, a potentially cancer-causing solvent, and that the contamination has spread to neighboring properties.

"The groundwater is not going to be contained," said Chester Wiley, a Euless resident who lives within a half-mile of the site. "If we're going to err, we should err on the side of caution."
Representatives of three companies -- B.F. Goodrich, Sun Coast Resources and Direct Fuels -- said there's no danger to the neighborhoods and said the contaminated water will dissipate once it reaches a nearby pond.
"The solution to pollution is dilution," said Steven George, an environmental consultant for Goodrich.

The council approved two of the districts unanimously. Mayor Pro Tem Kathleen Hicks voted against one of the districts, saying she thought it was too close to a neighborhood and private school.
The Texas Commission on Environmental Quality must still approve the three districts, which would bring to 12 the number of districts in Fort Worth.

Read more

Wednesday, June 20, 2007

Oil, Gas, Coal & Policies

Eco-friendly Policies may become the wave of the future, as we see more environmental degradation. Federal Policy tends to follow that which was proposed at the G 8 meeting in Germany -- voluntary reductions, a failed policy incorporated in Texas by the current White House Occupant. (For merely one example, North Central Texas will likely lose all Federal Highway funds for failure to reduce airborne pollutants by 2010.)

One particular magazine has taken a decisive step in furthering the discussion about the effect of man made pollution and global warming. Rolling Stone magazine, (Issue 1029, June 28, 2007) presents three article of particular interest to anyone who cares about environmental issues.

The typical audience for Rolling Stone is rather young and wants to learn more about music and celebrities than about science and technology. However, the Editors have chosen to regularly include at least one in-depth article every issue, which may be political, environmental, social issues, etc.

In the current issue Eric Bates and Jeff Goodell interview Al Gore and discuss his hopes for a worldwide awakening about Global Warming and how much of the situation will need political solutions (for a part of the interview, check out www.rollingstone.com/algore ). "Six Years of Deceit, by Tim Dickinson, uses interviews with former White House Insiders to discuss the discordance between Promises made and Realities. Robert F. Kennedy, Jr. wrote "What Must Be Done," an article which details some actions that can not only stop all oil dependence in America, but also create a bumper crop of jobs -- and a booming economy.

Any honest discussion about such problems as Global Warming, Oil Imports, fuel efficient vehicles, etc. should be welcomed. And any discussion that can involve the youth of the nation can also help to shape what form that future might become.

Monday, June 18, 2007

Under Pressure from Citizens, EPA to Provide Water for Oil and Gas-polluted Rural Community

East Texas Environmental Justice Hero Wins Long Battle for a Clean Drink of Water
By Donna Hoffman - The Sierra Club - June 15, 2007
East Texas Environmental Justice Hero Wins Long Battle for a Clean Drink of Water

(Austin/DeBerry, TX) - The citizens living on County Road 329 near the Louisiana border in Panola County, Texas can finally, reasonably expect a drink of clean water after Reverend David Hudson won a big victory yesterday in his four-year battle to help his community recover from oil and gas waste disposal.

Documentation of complaints from community members date back to 1996 and span through recent years when Reverend Hudson's claim of negligence by one company, Basic Energy Services, was dismissed by the Texas Rail Road Commission and Texas Commission on Environmental Quality.

"After four years of bureaucratic nightmares, Reverend David Hudson's application of law is finally going to pay off," said Donna Hoffman with the Lone Star Chapter of the Sierra Club. "There are many cases all over Texas where oil and gas companies are causing environmental ruin through irresponsible waste disposal. Reverend Hudson has led the defense and wins the prize for never being silent."

Hudson, a participant in the Sierra Club's Environmental Justice program, has communicated with the Lone Star Chapter since 2005.

Read more

Sunday, June 17, 2007

Small East Texas community finally will get clean drinking water

By Vickie Welborn - June 15, 2007
BETHANY, Texas — Clean drinking water is finally on its way to residents of a small east Texas community.

It's news that's a long time coming and puts sighs of relief to a more than four-year journey that's been fraught with a mountain of paperwork and a bureaucratic battle through every level of government. Leading the charge for himself and his neighbors has been the Rev. David Hudson, who refused to take no for an answer.

His dogged determination to bring a reliable water source to the community that's been plagued by contamination from an abandoned saltwater well injection disposal site was noted Thursday as officials with the U.S. Environmental Protection Agency's Region 6 gathered with Hudson, his neighbors and other concerned citizens in Church of the Living God near Bethany to announce the EPA will pay to have a main water line installed.
EPA officials confirmed the groundwater in the area is indeed contaminated and unsafe to drink.

"I'm elated," Hudson said after the EPA's announcement.
"It's been a long tedious process but we did find someone with in a federal agency, particularly the EPA, that is compassionate and concerned about this community without clean drinking water for years.
"It gives me confidence that the system does work if political interference is not present such as the outside interference from lobbyist for these oil and gas waste disposal companies. This demonstrates that perseverance on the part of citizens yields positive results, and we're grateful to the EPA Super Fund division for their assistance and help."

The seven families living on County Road 329 that juts just off of the Texas-Louisiana line between Bethany and DeBerry, Texas, will get immediate relief from the water line.

About 30 households on neighboring County Road 330 also are interested in tying into the line, Hudson said.

The residents will have to bear the cost of linking their homes to the water main. Hudson has secured a $10,000 grant from the Sabine River Authority of Texas to help with that expense. And Harold Hunter, development management specialist with the Community Resource Group, a rural community assistance program with offices nationwide, said he is standing by to help locate other revenue sources.

But it's the residents of County Road 329 who've been waging most of the war on their own. Frank Roberson has letters detailing complaints on the well site dating to 1996.

It wasn't until 2003 that the EPA deemed groundwater along the road unsafe to drink after high levels of hazardous chemicals such as barium, mercury, arsenic, showed up in various samplings. The EPA started providing bottled water at no charge in August 2005, and will continue to do so until clean water is flowing.

Hudson and his neighbors filed a civil lawsuit against Basic Energy Services, the last user of the disposal site known as the former R.B. Mitchell lease that was shut down in early 2005. The lawsuit was settled out of court in June 2006.

In November, Hudson filed an assessment petition with the EPA, requesting the agency conduct a preliminary assessment of the groundwater contamination. He also sought a source of clean drinking water and wants EPA to go after the responsible party.

A multitude of water samples taken by a number of agencies over the years from the private water wells, natural springs and the host of monitoring wells spread across the neighborhood resulted in a laundry list of contaminants being detected. But Jon Rinehart, EPA Region 6 site assessment manager, said Thursday that the varying tests results could be impacted by the time of the year and weather conditions under which the tests were performed.

In February, the EPA did what Rinehart described as the most comprehensive testing to date. Samples were studied by labs across the country without bias.

The findings determined that the private water wells only tested positive for fecal coliform; however, the natural springs and monitoring wells are contaminated with metals and radionuclides that exceed levels considered safe for drinking water. The radionuclides include materials such as barium, cadmium and beryllium, which are by-products of oil and gas production.
"I feel the contamination is probably from surface water spills," Rinehart said. "It appears the surface water carried the contaminates from the site."

As a result, the EPA has been authorized to pay for the water line, said Richard Franklin, EPA Region 6 on-scene coordinator.

He anticipates putting the project out to bids, with a hope that the work could be done by late summer or early fall. Franklin pledged to work with the Panola-Bethany Water System, which was represented by a few board members in the audience.

The news caught those unidentified men by surprise, and after a few quick questions to Franklin, the men left the church.

That reaction is what still keeps Roberson somewhat hesitant to get too excited about the proposed water line. Intermittent talks over the past two years with the Panola-Bethany Water System about bring water service to the affected community failed to get results.

"I just hope it really happens this time," Roberson said. "We've been through so much and we've been told we're going to get this and that. But it sounds really good this time. I really hope it happens."

Adding support to the County Road 329 residents were Texas residents Lionel Milberger, of Robertson County, and Bill Gordon, of Erath County.

Milberger and his wife can relate to what the residents of Bethany are going through this week. They, too, have been driven from their homes by gas well blowouts.

"I think the testing is not fully indicative of what these people have been drinking," Milberger said in urging the EPA to expand its testing. "The Railroad Commission (of Texas) will tell you it is saltwater. I will tell you it is that and much more."

Gordon said problems in Erath County have not risen to Panola County's level, but he is concerned the Railroad Commission, which has the authority to regulate the oil and gas industry in Texas, is not following its own regulations.

"We don't want Erath County to become a Panola County. "» We have sympathy for these people," Gordon said. "Someone needs to be overseeing the Railroad Commission."

Others such as Longview, Texas, attorney Greg Love had even more questions about the injection well site and possible casing leaks and the impact of that on the water supply. Love is representing the Ervin family, original owners of the land on which the saltwater injection disposal well was located, who have relocated from County Road 329 to Shreveport. Several family members have cancer and Love is investigating a possible connection to the contamination.

Hudson and Roberson have maintained that run-off from waste spills and leaching from corrosive pipes seeped into the ground and contaminated the water supply which the County Road 329 families ingested for years prior to any testing.

Hudson still wants someone held responsible. He's filed a federal lawsuit claiming the railroad commission violated the community's civil rights by denying clean drinking water while having full knowledge of the violations. Hudson likens the actions to environmental racism.

Read more

Read New York Times July 6, 2006 article

Read Texas Observer May 19, 2006 Article: What Lies Beneath - The threat from oilfield waste injection wells by Rusty Middleton

Wednesday, June 13, 2007

Investigation: Drilling Boom Brings Water Worries

by Paul Adrian - Investigative Reporter - Fox4News - Tuesday, 12 Jun 2007
Spring rains have filled lakes and ended the recent drought but have not squelched water worries in North Texas as we head into summer.

FOX 4’s Paul Adrian investigates why the state and homeowners in North Texas fear a shortage of future water supplies.

“You just don’t have city water out here,” said Lance Norman, who lives right on the Tarrant/Parker County border.

After 18 years, Norman’s water well went dry last summer.

“Within a couple of days I went from having water to pumping mud,” Norman told FOX 4.

The same thing happened to Parker County resident, Steve Bales.

“Initially I noticed with the water sprinkler. The water just kind of quit coming out of the hose,” Bales explained to FOX 4.

Tom Haydon also lives in Parker County. Haydon says he encountered the same problems with his water well last spring.

“It cost me $3,000.00 for the well and then $1,500.00 more to get it dropped 80 feet,” Haydon told FOX 4.

“It just makes me mad.”

Norman, Bales, and Haydon all had to spend thousands of dollars to drill deeper water wells at their rural homes west of Fort Worth. While they cannot prove why their wells went dry, they point to one huge water user, the natural gas industry.

“They’re given carte-blanche,” said Wise County Resident, Tracy Smith.

“They can do whatever they want. They can use as much as they want,” Smith told FOX 4.

Natural gas drilling companies rely on a process known as “fracking,” which involves pumping thousands of gallons per minute down newly drilled gas wells to break-up the Barnett Shale rock and allows for the flow of natural gas back up the well.

FOX 4 spoke with Steve Campbell of Chesapeake Energy about the process.

You’re probably looking at 50 – 70,000 barrels, per well…which is a little over three million gallons,” Campbell explained to FOX 4. And that 50,000 to 70,000 barrels of water per well is just to get gas production started. Campbell says it’s not so much.

“The oil and gas industries combined will use less than one percent of the water consumption in the Fort Worth vicinity,” Campbell told FOX 4’s Paul Adrian.

The Texas Water Development Board agrees that if you combine the water used in 20 counties in North Texas including Dallas and Tarrant Counties from all water sources, it is true to say "less than one percent" is used by the gas drilling industry. But the water usage story changes when you look at individual, rural counties where private water wells are going dry.

According to the state, in 2005 one out of every twenty five gallons of water used in Parker County went to natural gas production. But by 2010, if demand stays high, the state predicts the industry will use one out of every three gallons of Parker County’s water, which largely comes from groundwater sources.

"There’s no other source of water so, that’s part of the problem,” said Tom Haydon.

“I think the drilling activity has certainly hurt the water situation.”

Parker County is not alone. By 2010 the Texas Water Development Board estimates substantial portions of the water supply in seven counties of the Barnett Shale region will go to natural gas production. The state projects: right percent in Hill County; nine percent in Wise County; ten percent in Hamilton County; 16 percent in Johnson County; 18 percent in Hood County; 33 percent in Parker County; 52 percent in Jack County.

“To me, in the end, nobody’s going to care if I have to pay a little bit more for gas, but if I don’t have any water, we’re going to really have a problem,” said Haydon.

Although the natural gas industry uses a profound amount of water to get new gas wells started, once those wells are producing not so much water is needed. So as the industry moves it focus from county to county, the water usage surges and drops off like a wave.

The Texas Water Development Board predicts that by 2015 the wave will hit Palo Pinto, Erath, Hamilton, Bosque, Hill, and Jack Counties. By that year, the natural gas industry will account for between 14 percent and 55 percent of all the water used in those counties.

By 2020, the wave goes through Hill, Coryell, Jack, Montague, Palo Pinto, and Hamilton Counties, where the state believes between 15 percent and 76 percent of the water will be used for Barnett Shale drilling. To reemphasize, the state predicts three out of every four gallons of water in Hamilton County in 2020 will be used by the natural gas industry.

But industry representatives argue that one must consider other ways the industry impacts rural areas.

“I think the impact you look at in those rural counties where there’s a lot of natural gas operations taking place is the increase in jobs and tax base and the amount of income we bring to the county,” said Adam Haynes, of the Texas Independent Producers and Royalty Owners Association.

Haynes argues against looking at the industry’s impact on water supply on a county-by-county basis.

“The best way to manage the resource is on an aquifer-wide basis,” Haynes told FOX 4.

However, the Texas Water Development Board found a decidedly local impact in North Texas counties with the most natural gas drilling activity.

“We’re not seeing an aquifer-wide decline in water levels, but people are having trouble with their wells, which suggests that there are more local effects happening from this pumping,” said Robert Mace, the director of the state’s groundwater resources division.

Local government leaders noticed the industry’s impact.

Four counties in the area, Parker, Hood, Montague, and Wise are trying to create a new water conservation district to protect homeowners living off of water wells. Water districts set rules to make sure one person’s well does not make another person’s well go dry. But local politicians say Texas law does not allow them to require permits for natural gas producers.

“They’re not bound right now by any groundwater district,” Wise County Commissioner Kevin Burns told FOX 4. “They’re totally exempt from that.”

Industry representatives, like Adam Haynes say the industry will work within the confines set by local districts. But Haynes also says the industry needs water to produce natural gas and will do everything possible to ensure access to it.

Homeowners like Tom Haydon hope their thirst will be quenched as well.

“We got a problem in this whole area with water,” said Haydon. “If we don’t all kind of work together on it, we’re going to really suffer.”

Read more

Tuesday, June 12, 2007

Autism and air quality - transportation planning and health risk implications

by Faith Chatham
Beth Dawson, a resident of Red Oak, penned a letter to the editor of the Waxahachie Daily Light. Her letter is the second one which has come to me this week mentioning the link between autism and air pollution in this region.
I recommend that Mr. Pitts and his colleagues consider fining the coal plants that populate our county for every carcinogen and pollutant they have contaminated our air and water sources with. These fines can be used to fund the increase in special education teachers that the public schools need. It is a well known fact that the mercury produced as a by-product of coal, deposited into our main water source through relaxed regulations and fines, and consumed by U.S., is directly related to the exponential increase in autism we have seen in the Central Texas area. These fines would hopefully also serve to reduce the contaminants released into our water system, freeing up more potable water.If these fines were comparable to the damage these plants have done to our health,they would be in the hundreds of millions of dollars.
Read more

Environmental writer, Steve Blair sent me an message last week after he attended the NCTCOG's RTC public meeting in Arlington. Steve is one of the most stimulating, intellectual deep thinkers I know. When there is a room of folks discussing policy, invariably Steve will identify a very important element which has totally escaped the rest of us. Last week most of us spoke of toll fees, public access to the planning process and the need for rail to help curtail air pollution in this region. Several speakers at the RTC public meeting stated that pouring more concrete to put more cars on the road will not solve our air quality problems.

Steve Blair listened and took it a step farther. He wrote:
As you know, I tend to think in more holistic terms. Who else might see a relation between the Toll Roads and Autism? And I understand that such a relationship is still years from practical impact (especially since there are two sources of the pollutants which might cause autism -- fixed site and mobile site).

What is particularly frustrating for me personally on these issues is the lag between scientific research and the theory that is likely to evolve. But such a lag has antecedents in many fields, e.g. aerodynamics, physics, optics, architecture, even painting, etc.

Beth Dawson and Steve Blair are looking beneath the immediate delimma and identifying links which current policy needs to address. Even though the science may be less than perfect on linking the problems, the impact is still taking delibating toll on increasing numbers of individuals and their entire familes.

This region is not expected to reach EPA air quality attainment standards by 2010. Current plans for 675 miles of new toll roads in the region, attraction of thousands of visitors to events in the region, and escalation of gas drilling with no environmental restrictions on the emmissions their generators pump into our already polluted air are not moving us closer to reaching satisfactory air quality.

Highway engineers have controlled the transportation dollars and plans in Texas much too long. Witness after witness testified in Austin this spring at Transportation Committee Meetings, presenting evidence of TXDOT being out of control. That agency comes before Sunset Review when the Legislature convenes for the next session. This is an ideal opportunity to rethink transportation in Texas, decide what skill set we need for transportation planners, and truly get serious about creating a workable transportation plan for this state.

Legislators need to stop pandering to the public with offers of three month suspension of the gas tax and use some of the tools the state has to check run-away price gouging energy producers. Instead of shifting funding of vital transportation (and air quality) infrastructure into toll roads, they must get serious about solving this states transportation funding crisis. Tolls are merely a less inflammatory way to say tax. Tolls or taxes, we have to pay for necessary upgrades to existing infrastructure and vitally needed new transportation projects some way. It is important that politicians stop avoiding responsiblity by calling tolls user fees while bragging about lowering taxes.

In the DFW region there are plans to add managed lanes to existing state highways instead of increasing capacity with gas tax and bond money. However, that is a misleading statement. When we examine the funding of many CDA (Private public partnerships) and NTTA toll projects, we discover that enormous amounts of gas tax and other state and federal and county and city tax money are going into these projects. Cintra, if allowed to build SH121 will benefit from over 700 million dollars in Texas tax funding, over $700 million in Federal TEA 21 funding, and $6.2 billlion in federal tax exempt bonds!

We must hold our elected officials accountable for failing to honestly address transportation funding. Toll roads are the most expensive way to build public infrastructure. Private partnerships for toll road construction is the most expensive way to build toll roads. Using surplus toll revenue to fund other transportation projects means that the citizens will pay higher than necessary toll fees to travel on state owned infrastructure.

We must pay for building roads and bridges and other transportation systems and because of rising costs, we'll have to pay more today than we did a decade or so ago. Policy makers must be held accountable for decisions which require taxpayers to pay more than is avoidable for access to public infrastructure. We also need solutions which will move people between work and home without requiring them to drive personal automobiles. We pay too much in loss of health, impaired cognitive ability, and medical costs plus loss of Federal funding through sanctions imposed for failing to meet clean air standards for a delay to be reasonable.

Travel to other worlds ... UTA Planetarium

Immersive full-dome 3-D Digital planetarium show narrated by Ewan McGregor (Obi wan Kepobi from Star Wars) - Astronaut takes you exporing the worlds of inner and outer space. The movie is projected all around you. You recline in specially constructed chairs which enables you to comfortably view the immersive full-dome planetarium show. Astronaut! (produced from the National Space Centre in England) goes beyond the stereotypical space movie. Experience a rocket launch from inside the body of the astronaut. Float around the international Space Station moving thorugh the microscopic regions of the human body! Discover the beauty and perils as "Chad", the test astronaut experiences everything thrown at him.

Summer Schedule (June 2-August 26):


shows at the UTA Planetarium.

Wed. through Saturdays at 11 a.m.
and Thursday at 7:00 p.m.

Cosmic CSI

shows at the UTA Planetarium 3-D Digital Dome.

Wed. through Saturdays at 2 p.m.

Rock Hall of Fame 1 (The Original)

shows at the UTA Planetarium.

Thursday at 8:00 p.m.

Read more (Warning their flat dull website doesn't give much of a glimmer of the multi-dimensional experience you'll have once you enter the dome of the UTA Planetarium!)

Admission: Adults: $5.00

Seniors, Students, Children: $4.00

UTA Faculty, Staff & Alumni (with ID): $3.00

UTA Studens (with ID): $2.00

Groups of 10 or more with reservation: $3.00

Call 817 272-1183 or e-mail planetarium@uta.edu