Energy Future Holdings' debt rating is downgraded


By Jack Z. Smith
Fort Worth Star-Telegram

Moody's Investors Service downgraded much of the $44 billion debt load of Dallas-based Energy Future Holdings Corp. on Monday, a move that could raise the electric utility's cost of borrowing and make it harder to secure credit.

Moody's concluded that the utility's "capital structure is untenable and will likely prompt the company to pursue some form of restructuring activity."

Subsidiaries of the former TXU Corp. include Luminant, a large electric power provider with coal, natural gas and nuclear generating facilities; Oncor Electric Delivery, an electricity transmission and distribution company that is about 80 percent owned by Energy Future Holdings; and TXU Energy, a large retail electric provider in Texas' deregulated market.

Oncor operates under a "ring-fencing" agreement that legally separates it from liability for its parent's debt, Oncor officials have emphasized. Moody's said Monday that "the rating outlook for Oncor remains stable."

Lisa Singleton, a spokeswoman for Energy Future Holdings, said the company is "looking at all of our available options to improve our financial flexibility," including seeking amendments to credit agreements. But she stressed that the company has no significant debt maturities until 2014.

Asked what the impact of Moody's downgrade might be, Singleton said: "I don't know that there will be any impact to EFH as a result. . . . There are other ratings agencies as well."

On how it might affect the company's prospects of building two more generation units at the Comanche Peak nuclear power plant, 45 miles southwest of Fort Worth, Singleton responded, "We are still so far off at this point from looking at financing Comanche Peak that's pretty much a moot point."

She said the company is still considering whether to proceed with expansion of the two-unit plant near Glen Rose.

Luminant, the generation subsidiary, has estimated that two 1,700-megawatt units could cost $15 billion.

Energy Future Holdings was formed when an investor group led by Kohlberg Kravis Roberts & Co. and TPG acquired TXU Corp. in 2007 in a leveraged buyout valued at $45 billion.

The utility will report second-quarter financial results today.

Jack Z. Smith, 817-390-7724

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