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10/31/2012

Texas grid operator says Luminant can idle two coal-fired units

Luminant will proceed with previously announced plans to mothball two of three coal-fired units at its Monticello power plant south of Mt. Pleasant in northeast Texas after the Electric Reliability Council of Texas determined the units were not needed for the state's biggest power grid to maintain reliability. ERCOT can order a generator to keep a facility in operation if it's needed to meet demand or to maintain an acceptable power supply. That program is called "reliability must run," and includes compensation to the generator.

ERCOT said in September it was studying whether to require the two units to remain in service. Doing so would have meant ERCOT would have to make payments to Luminant. The issue is of particular interest because  Luminant's parent, Dallas-based Energy Future Holdings, is losing hundreds of millions of dollars each quarter. EFH is still carrying more than $40 billion in debt from its 2007 leveraged buyout of its corporate predecessor, TXU Inc., but its revenues have declined as wholesale electricity prices in Texas are kept low by cheap natural gas-fired power. There were concerns that gaining reliability-must-run status for the Monticello units would in effect be a subsidy to Luminant to help EFH pay its bills. Now, the two units will go off-line on Dec. 1, the company said.

-- Jim Fuquay

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