Further environmental concessions – in the form of $30 million toward reducing air pollution in central Texas – have been offered by Kohlberg Kravis Roberts and TPG in the consortium’s latest attempt to sweeten the largest-ever proposed buyout, its $45 billion (€34 billion) bid for utility company TXU.
The firms would invest $6 million per year over five years toward air pollution reduction in central Texas, on the condition that local Texas officials green light existing plans for TXU to build three coal-fired power plants that the mayors of Dallas and Houston have said will worsen pollution, the Associated Press reported.
KKR and TPG have already promised not to build eight of 11 coal-fired power plants that were in TXU’s pipeline, one of several environmental concessions that won the private equity firms the endorsement of environmental advocacy groups Natural Resource Defense Center and Environmental Defense.
The environmental groups said at the time that abandoning development plans for the eight plants, coupled with a turnaround of TXU policies toward global warming, warranted their support, but did note that the three plants TXU’s proposed new owners would build are some of the “dirtiest” of the 11 plants for which the utility company had announced plans.
KKR and TPG have repeatedly taken measures to allay concerns raised by various stakeholders regarding their bid for TXU.
In March, KKR co-founder Henry Kravis and TPG co-founder David Bonderman appeared before the Texas House Committee on Regulated Industries in an attempt to assuage legislators’ fears that Texas consumers would be harmed via eventual rate increases, allocation of debt used to finance the deal, and the short-term ownership associated with private equity portfolio companies.
In April, the firms gained the support of the International Brotherhood of Electrical Workers union when it promised to terminate TXU’s existing, 10-year labour subcontracting agreement valued at $8.7 billion.
And in May, the firms upped to 15 percent a previously announced 10 percent price cut for TXU consumers. They also announced the creation of a TXU Energy Access, a programme to assist eligible low-income customers.
The firms have also recruited political heavyweights to act as advisors, ambassadors and or board members. The line-up includes former US Environmental Protection Agency head William Reilly, former US Secretary of State James Baker, former US Commerce Secretary Donald Evans, and former US Ambassador to Sweden Lyndon Olson.
Texas Energy Future, the holding company created by TPG and KKR to acquire TXU, also has an extensive website that lists why the firms feel the buyout would benefit Texans and notes groups in support of the transaction.