Panel Advises Against TXU Plant
NEW YORK -- Shares of Texas energy company TXU Corp. fell in Thursday
midday trading, a day after a panel of judges recommended state
regulators deny the company a permit to build the Oak Grove power
On Wednesday, a panel of administrative law judges at the Texas Office
of Administrative Hearings recommended the Commission on Environmental
Quality deny TXU an air permit to build two steam builders burning
lignite to generate electricity.
The panel said the company failed to prove it could control pollutants
from the facility, which TXU hopes to complete by 2009.
Shares of TXU Corp. fell $1.94, or 3 percent, to $63.30 in midday
trading on the New York Stock Exchange. The shares have traded in a
range of $44.01 and $66.43 in the past year.
Merrill Lynch analyst Steve Fleishman said in a note to clients
Thursday the recommendation is "clearly a setback", as current earnings
estimates imply contributions from Oak Grove of about 85 cents per
share in 2010.
If the Oak Grove project were eliminated entirely, the stock would lose
about $5, Fleishman said.
Daniele M. Seitz, an analyst with Dahlman Rose, said the risk is the
company may have to delay construction and run into contractual
problems and cost overruns.
"It creates a little bit of a question mark, because everyone knows the
only area the company cannot control is the time it takes to get the
air permit, and whether they get the permit," she said. "Everybody is
already counting on this massive growth margin coming to the company
(from the new facilities), but everybody is also watching to make sure
the program stays on budget and on time."
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