Wednesday, May 30, 2007

TXU to cut rates by 15%

By Pegasus News wire

DALLAS — Texas Energy Future Holdings Limited Partnership (TEF) -- the holding company formed by Kohlberg Kravis Roberts & Co. (KKR), Texas Pacific Group (TPG) and TXU Corp., today announced that upon close of the transaction, TXU Energy will deliver an unprecedented price cut totaling 15 percent for most residential customers compared to the prices in effect when the merger was announced. The companies claim tha this price cut will lead to a combined savings of approximately $400 million annually or $395 per typical single-family household.

"This issue was debated during the 80th session of the Texas legislature that ended yesterday. We listened closely and we understand that the driving force behind the legislation was the desire of elected officials to lower prices for residential customers," said Michael MacDougall, a partner with Texas Pacific Group.

As a result of the transaction, TXU Energy will provide most customers in its traditional service area, over one million customers, a 15 percent price reduction as compared to prices in effect when the merger was announced. This unprecedented price reduction applies to residential customers in TXU Energy's traditional service area who have not already selected one of TXU Energy's other retail plans. In addition to this price cut, TXU Energy customers who were eligible to receive the $100 appreciation bonus will still receive the final $25 installment of the bonus.

TEF and TXU Energy had previously announced a total price cut of 10 percent. Of that rate cut, six percent was delivered in March and four percent was to be delivered upon the close of the merger, which is expected late this year. Instead, these residential customers will now receive the full 10 percent price cut in early June and receive an additional 5 percent when the transaction closes, bringing the total price cut to 15 percent.

In addition to the price cut, upon the merger closing, these customers will receive price protection at the 15 percent discounted level through December 2008 -- protection against price increases due to changing energy market conditions.

Source: TXU

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• Economics > Mergers & Acquisitions > TXU Buyout
• Oil and Energy

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