With coordination that would make an NCAA coach proud, these groups sought to block the coal power plants from the opening tip-off. RAN led the way by tackling Wall Street’s financing for construction of the power plants. How? By reminding lenders of their CSR commitments.
Citigroup, Merrill Lynch and Morgan Stanley — the lead banks arranging TXU’s loans — were targeted. “We want banks to shift their investments away from dirty and dangerous technologies and towards funding the future,” said a RAN spokesperson.
This left the banks caught in a crossfire between their CSR policies and their business goals. CSR policies at many banks commit them to work to reduce their greenhouse gas emissions, and some go further by subjecting loans to potential clients on conditions of emissions reductions.
In the TXU case, pressure tactics included letters to bank CEOs and protests outside company offices nationwide. These groups also whipped up local resistance, claiming health concerns related to coal emissions.
Citigroup’s CEO Chuck Prince, RAN’s favorite whipping boy, was an inviting target. According to the Wall Street Journal, RAN’s executive director “put Mr. Prince on notice that his organization plans to begin agitating against the company if the TXU project goes forward with the banks involvement.”
KKR and TPG, seeing TXU in trouble and looking for a fast-break buy-out, began negotiating with the energy pimps in secret. According to the New York Times , the raiders bluntly asked them “what would it take” to get their support. To buy peace, they agreed to stop construction of the eight coal power plants and committed TXU to supporting federal regulations on carbon dioxide emissions.
Empowered by having successfully influenced a major Wall Street deal, the energy pimps will undoubtedly continue their hustle. For shareholders, the costs are beginning to add up. According to its recent report to the Securities and Exchange Commission, TXU expects a loss of $ 1.1 billion due to the plant cancellations. In addition, bank shareholders lost revenue from the proposed financing of the now-cancelled energy plants.
The biggest loser, however, will be consumers who will pay higher utility bills because access to cheap energy supplies was denied. This victory also puts a target on the proposed construction of approximately 150 coal plants nationwide.
But there’s still time on the clock. The TXU buy-out must still gain the approval of the Texas legislature. These elected officials need to assert their authority and recognize the danger of allowing utility prices and economic growth to be hustled by special interests.
For the sake of consumers and the free market, the Texas legislature must stand tall and throw both the TXU deal and the energy pimps out of the game.