The State of Texas has started to connect its wind farms to the largest cities of the state. This results in cheap electricity in Energy Future Holdings Corp.’s service areas. This is bad news for the holders of the power company’s $32 billion debt, the most sizeable leverage buyout ever.
What started as a power trickle to Austin and Dallas from the windmills of competitors in West Texas has become a deluge flooding the market. Power is delivered with the use of new transmission cables stretched over 5,800 kilometers nor 3,600 miles across Texas in a project to be completed in December of this year. The project costs $ 6.8 billion.
Wind power that’s subsidized alongside natural gas that’s in abundance from shale drilling is cutting back profits of the coal-fed and atomic power plants of Energy Future. This is making the company less attractive to investors and banks if and when it declares bankruptcy. There is a possibility that creditors will fight over the dwindling profits of the company which was privatized for $48 billion.
In a telephone interview with an analyst at Credit Sights, Inc., Andy DeVries, he said that the transmissions that will bring wind power to the population centers of the state are already in Texas and it’s going to be disastrous for Energy Future.
American and European long-established power companies are fighting to compete in wholesale markets with the latest generators that supply subsidized solar and wind energy. Wind power in Texas has more than doubled during the last six years. It now comprises 13 per cent of the generation capacity of Texas.