Oct 19 - McClatchy-Tribune Business News Formerly Knight Ridder/Tribune Business News - Randy Lee Loftis The Dallas Morning News

TXU's effort to build 11 coal-fired power plants in Texas received a boost Wednesday when the state's environmental agency issued draft permits for six plants.

The action by the Texas Commission on Environmental Quality starts a public review process that is certain to result in formal state hearings and is likely to wind up in court. Gov. Rick Perry and business groups are backing the plants as vital to Texas' energy supplies, while the mayors of Dallas, Houston and other cities, plus environmental and health groups and all three of Mr. Perry's gubernatorial challengers oppose them as sources of air pollution.

Dallas-based TXU, the state's biggest electricity generator, called the draft permits part of the company's promise to reduce overall emissions by 20 percent while doubling its use of coal.

"These draft permits will help establish some of the most stringent limits you've ever seen," said spokesman Tom Kleckner.

Dallas Mayor Laura Miller, who has helped to rally opposition to TXU's plans, said she welcomed the chance to force TXU to justify its plans to burn more coal, the dirtiest fossil fuel for making electricity.

Critics say the new coal plants would worsen urban smog, increase emissions of toxic mercury and compound global warming with carbon dioxide emissions.

"The fact that this has happened means there will now be a formal process for the utility companies to explain why these plants will not harm our state's air and for those of us who fear it will make our pollution worse to put on our own evidence," Ms. Miller said. "The public debate formally starts now, and we will be ready to engage in that important debate."

Texas' environmental regulators now have given preliminary approval to nine of the 11 new coal-burning units that Dallas-based TXU wants to build, among 16 that electric companies have proposed in the state. Texas has more new coal units planned than any other state. Two companies, TXU and NRG Energy, also say they are considering building more nuclear power plants in Texas.

The TXU coal plants' draft permits propose annual emissions limits on 11 regulated pollutants. For most, the environmental agency staff accepted the annual emissions levels that TXU requested.

Those include nitrogen oxides and volatile organic compounds, which are components of urban ozone or smog; the toxic metals lead and mercury; sulfur dioxide, responsible for acid rain; particulate matter, or soot; and ammonia.

Three pollutants are due for emissions levels lower than TXU requested. They are carbon monoxide, hydrogen fluoride and sulfuric acid.

Carbon dioxide, the chief manmade cause of global warming, is not regulated under Texas or federal law.

After official notices on the draft permits are published in local newspapers near the proposed plants later this week, the public will have 30 days to file comments. Then the case on each draft permit will go to the State Office of Administrative Hearings for a formal hearing.

Each hearing is conducted like a trial, with TXU and opponents presenting testimony and evidence. Statewide environmental groups, local opponents and a consortium of local governments formed by Ms. Miller and Houston Mayor Bill White are likely to be among those challenging the permits in the hearings.

Under Mr. Perry's executive order mandating fast-track permitting for new coal plants, which cuts the timetable for the hearing process from around a year to six months, the hearings would be finished around May 2007. State hearing officers would then recommend that the three environmental commissioners -- all Perry appointees -- either grant or deny the permits. After the commissioners vote, the losing side can challenge the decision in state district court.

The draft permits issued Wednesday are for TXU's Big Brown plant in Freestone County; the Lake Creek and Tradinghouse plants in McLennan County; Martin Lake in Rusk County; and Monticello in Titus County. Each plant would have one new coal-burning unit except Tradinghouse, which would have two.

Draft permits are still due for TXU's Morgan Creek plant in Mitchell County and the Valley plant in Fannin County.

TXU's two-unit Oak Grove plant in Robertson County faces a final permit decision by the three environmental commissioners, but no vote is likely before theelection. Two state hearing officers recommended against the Oak Grove permit on, concluding that the plant would not meet the emissions limits in its draft permit. The environmental commission's executive director favors the Oak Grove permit.

Another proposed unit, at TXU's existing Sandow plant in Milam County, is the subject of a federal lawsuit between environmental groups and Alcoa, which would be the unit's primary customer.

Staff writer Dave Levinthal contributed to this report.

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