Jun. 6--TXU CORP. -- already under scrutiny for alleged price gouging -- is in hot water again.

The Dallas-based energy giant has agreed to pay the Texas Public Utility Commission a $5 million fine to resolve allegations that it broke state law by signing up thousands of businesses to new one-year electric contracts without obtaining their explici consent, according to a 10-page settlement agreement. The settlement must be approved by the PUC, possibly as early as next week. At issue is whether TXU Energy broke the letter of the law when it renewed contracts for about 4,000 small commercial customers. The settlement agreement says TXU sent notices to the customers beginning in 2005 saying their service would be renewed for 2 months unless they contacted TXU or changed plans to move to another provider.

PUC regulations cap automatic renewals at 31 days, said agency spokesman Terry Hadley in Austin. TXU -- which is in the middle of a $45 billion buyout to private-equity firms Kohlberg Kravis Roberts & Co. and TPG -- says it agreed to the settlement in an effort to put the issue to rest. "It's important to note that we want to demonstrate our desire to work with the PUC," said Lisa Singleton, a company spokeswoman. "So we're going to agree to disagree on this point, and we're going to move on." Singleton notes that when TXU officials were notified by the PUC in October that the renewals violated state rules they stopped the practice immediately.

TXU already faces allegations that it jacked up electric prices in the summer of 2005 by selling power at inflated prices. The PUC in March proposed a record $210 million penalty against TXU Wholesale for allegedly manipulating the Texas power market two years ago. The company is contesting the fine. The latest fine comes after the Legislature failed to pass legislation that would have given regulators more tools to combat market power abuses by big power companies like TXU. The Legislature's failure has left some advocates fearful that proper controls are not in place to regulate the company.

"Every time you turn around, TXU management is being investigated," said Tom "Smitty" Smith, director of the Texas chapter of Public Citizen in Austin. "It speaks of what we can expect to see in the future." ------ Scott Streater, 817-390-7657 sstreater@star-telegram.com