Utility’s bankruptcy wouldn’t cut customers’ lights

HOUSTON — Dallas-based Energy Future Holdings is hovering on the brink of bankruptcy. But should it tumble, the lights will continue to shine for Houston customers.

Ballooning debt of more than $40 billion could push the Texas power company into bankruptcy restructuring, but it would allow the company to keep its operations intact, according to Allan Koenig, vice president of corporate communications for Energy Future Holdings. That includes its retail branch, TXU Energy, which is a major power provider to residents across Houston and the state.

“Any potential bankruptcy filing would be a reorganization of our debt, not our operations,” Koenig said. “There would be zero change to TXU customers in the event of a bankruptcy filing.”

The bankruptcy would be one of the largest non-financial corporate bankruptcies in the U.S. since the 1980s, according to Moody’s — a list that also includes Enron, WorldCom and Chrysler. It would be structured as a Chapter 11 bankruptcy, in which the debt is restructured but the company continues its normal operations. The holding company is estimated to have more than $41 billion in debt on its books.

Energy Future Holdings owns a range of assets, including several nuclear energy and coal-fired power plants through its Luminant division and a power transmission business through Oncor Electric Delivery.

But the course of the bankruptcy could force an evaluation of some of the power generation assets, according to Jim Hempstead, an analyst with Moody’s.

“All of the Luminant assets are going to get scrutinized as to what is economical and what is not,” Hempstead said. “There may be a plant or two that is shut down or mothballed or otherwise taken out of the stack.”

The company was formed in 2009 through a Wall Street consortium deal that included Goldman Sachs, KKR and TPG Capital. The group paid $45 billion for what is now known as Energy Future Holdings, banking that the then high price of natural gas would continue to rise, ensuring a profit. Instead, the rise of shale gas plays helped gut natural gas prices, leaving the company with a crippling debt level.


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