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US BID FOR UK ENERGY GROUP SLAMMED - Bad for Environment, Bad for Consumers, Says Friends of the Earth

25 Mar 1998

The planned US takeover of The Energy Group (which includes Eastern Electricity) will be bad for the environment and bad for the consumer, Friends of the Earth warned today. FOE is urging shareholders of The Energy Group to reject takeover bids by US power giants Texas Utilities and PacifiCorp, whose record on the environment FOE describes as“appalling”. FOE has also written to Margaret Beckett and the Electricity Regulator asking them to oppose the merger.

FOE believes that neither company will continue the renewable energy schemes recently launched by Eastern Electricity and supported by Friends of the Earth. Eastern Electricity is leading the UK electricity sector with its commitment to action to help tackle the threat of climate change and has set a target of 10% of electricity from renewables and combined heat and power by 2010.

Key facts on PacifiCorp and Texas Utilities are:

• PacifiCorp's energy system is three fifths based on coal. If it is successful in its bid for The Energy Group, it will also buy Peabody Holding Co, the world's biggest private coal producer. It will then own 10 per cent of the world's entire supply of coal.
• PacifiCorp's Centralia coal-fired plant in Washington is the single largest contributor to greenhouse gas emissions in the US Pacific Northwest. Two government studies have linked particulates and SOX emissions from the plant to the deaths of around 100 local residents every year.
• North West Environmental Advocates in the US is suing the US Environmental Protection Agency and the Washington Department of Ecology to force a clean up of the sulphur emissions from the Centralia plant.
• It has been alleged that PacifiCorp overestimated the economic impact on the company of fitting pollution abatement equipment to the plant, threatening to close down the plant with huge job losses. According to a study by the EPA, quoted in the Cascadia Times (December 1997), after receiving $130 million in tax benefits from the US Government to finance the retrofit, PacifiCorp will in fact make a $260 million profit from the plant.
• PacifiCorp's coal-fired plants in Wyoming are the largest emitters of nitrogen and sulphur in the state, and their operations in Utah and Colorado have been the subject of criticism from environmental and community groups.
• According to the University of Texas at Austin (cited in The Guardian, 5.3.98), Texas Utilities' Big Brown power plant is possibly the largest single source of pollution in Dallas.
• According to the Texas Natural Resource Commission, Texas Utilities operates the first, fourth and fifth most polluting industrial plants in Texas, the most polluting state in US.

FOE believes that shareholders of the Energy Group should consider the economic sense of increased investment in coal, which is increasingly the target of environmental regulation and of future taxation. As the financial costs of climate change become more apparent,those companies who invest in the energy sources of the future will increasingly gain a competitive edge. This is good for shareholders, customers and the environment.

FOE energy campaigner Anna Stanford said today:

“If the Government is serious about meeting its target of cutting CO2 emissions by 2010 it must not let the Energy Group be swallowed up by big, dirty American power companies with an appalling record on the environment. Shareholders of The Energy Group should recognise that long-term profitability does not rest with coal,but with the cleaner fuel sources of the future. This is a test of The Energy Group's true commitment to renewable energy - if they're serious, they must reject these bids.”

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