Would-be TXU buyers say they plan to build two IGCC plants

Washington (Platts)--9Mar2007

Texas Energy Future Holdings, the holding company formed by Kohlberg
Kravis Roberts & Co. and Texas Pacific Group to buy Dallas-based energy
company TXU Friday said it had begun the planning process for two
integrated gasification combined-cycle commercial demonstration plants in
Texas.

"The project is further evidence of TXU's new commitment to move forward
immediately to develop the next generation of low-cost, clean-burning
technologies," Mike Childers, CEO of TXU Generation Development, said in a
statement.

Along with this plan, Texas Energy said TXU will issue a request for
proposal for companies offering coal gasification technologies with carbon
dioxide capture. The RFP represents the first stage of TXU and Texas Energy
Future's "new commitment, per the recently announced merger agreement, to
explore the potential of IGCC technology to meet Texas' energy reliability
requirements."

From the proposals received in the RFP, TXU will select two or more
competing IGCC technologies that can be developed and commecially deployed
with carbon dioxide capture in power plants using Powder River Basin and
lignite coals as the primary fuel source, Texas Energy Futures said.

Selected partner companies will be focused on two major objectives:
research and development aimed at improving efficiency, cost profile and
environmental performance of gasification technologies and front-end
engineering and development for IGCC units at existing sites originally
reserved for the now-suspended pulverized coal units. One facility will use
PRB coal and the other will use lignite, making it among the first lignite
IGCC power plants in the country, the companies said.

In announcing their planned $45-billion purchase of TXU late last month,
KKR and Texas Pacific Group said they were scrapping plans to build 8 of 11
coal-fired power plants the utility proposed last year.

--Valarie Jackson, valarie_jackson@platts.com