The Dallas Morning News
To the dealmakers at private equity firms KKR and TPG, the more than century-old TXU Corp. looked like a sure thing.
It was the largest power company in one of the fastest-growing states in the country. Power prices in Texas had increased rapidly since the market was deregulated in 2002, and the common thinking was that they were poised to go higher.
As Marc Lipschultz, a partner with KKR, told a newspaper reporter in early 2007, “We think when we step back and look at a vibrant company in Texas, we’ll have an even better company five or 10 years from now, and that’s how we make money.”
Seven years later, the renamed Energy Future Holdings is poised to file for bankruptcy, a coda on a $45 billion bet that is the largest leveraged buyout in U.S. history. But behind the big-dollar losses and clash of Wall Street titans is a U.S. power industry that has struggled to come to grips with a natural gas shale boom that has brought power prices in Texas and across the country crashing down.
Since January 2008, the stock value of the five largest publicly traded power generators in Texas, which include national companies like NRG Energy and Exelon, are down more than 20 percent collectively. Over the same period, the S&P 500 stock index is up more than 30 percent.