TXU Energy

TXU EnergyTXU Energy has been the monopoly electric company in Texas for decades but they were not known as TXU Energy back when they were the monopoly as they were three separate divisions depending on the area of the state that operated in. In the West Central Texas area they were known as Texas Power and Light and were called TP&L.

In the Dallas area they were referred to as Dallas Power & Light and many called them DP&L when talking about their light company. In the areas surrounding Fort Worth they were called Texas Electric Service Company and many simply called them TESCO.

Video – TXU Energy History in Texas

In 1945 TXU Energy was called Texas Utilities which was a holding company for DP&L, TP&L and TESCO. The holding company for TXU Energy today is called Energy Future Holdings and was known as TXU Energy until being bought in the largest US leveraged buyout in history. Once the purchase was complete in 2007 the holding company name changed to Energy Future Holdings with the retail division of the electric company being called TXU Energy.

The two other divisions of Energy Future Holdings are Luminate which is the power generation side of the business and Oncor Electric Delivery which is the pole and wires company. When you choose an alternate electric company in North Texas that is not TXU you will still call Oncor for any power outages and in this way TXU will always be your utility electric company in some form or fashion.

The difference between choosing a new electric company to service your energy such as Bounce Energy is simply that you will achieve a different price fo the service and will be billed by the new company. Hopefully you will choose a new electric company and price that is cheaper than what TXU Energy’s price is if you do decide to switch light companies.

The private equity companies that own TXU Energy and the holding company Energy Future Holdings are KKR (Kohlberg Kravis Roberts), TPG Capital (Texas Pacific Group) and Goldman Sachs. On September 25, 2008, one of TPG Capital’s billion dollar investments, Washington Mutual was taken over by the government costing TPG a 1.35 billion dollar investment.

As with any large leveraged buyout especially when it is the largest in US history there are business risks associated with it to make sure that the investor does not become upside down on their investment. Although the TXU investment is a large one it is safe in that people will always need electricity.

Elizabeth Souder with Energy and Environment Blog on February 18 2011 said that, “Energy Future Holdings brought in less revenue in the fourth quarter as the company sold less electricity to fewer customers.”

Apparently TXU Energy is still trying to payoff about 35 billion dollars in debt. TXU’s forth quarter revenue dropped 33 % to $1.6 billion. TXU acknowledged that they are losing customers which has had an effect on the decline in revenue.

Much of the blame for loss of customers has to do with the 70 % increase in new retail electric providers that have come into Texas to compete against TXU and other large providers like Reliant Energy.

TXU and Reliant had historical natural energy monopolies in the state but when Texas deregulated in 2002 they must now work to differentiate themselves from the ever increasing amount of alternate electricity providers trying to win away their customers through price and creative electric rate plans.

For those who get TXU Energy confused with the pole and wires company it is important to note that when you have a power outage you call Oncor Electric Delivery and not TXU Energy. Both Oncor Luminant and TXU Energy are owned by the parent holding company Energy Future Holdings but you must call the right division based on your needs. TXU is now the retail electric provider and Luminant is the company that owns the power generation facilities so you will likely never have a reason to call Luminant. Learn more in the video below.

TXU Overview Part 1

TXU Overview Part 2