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Jack Z. Smith
Fort Worth Star-Telegram

Energy Future Holdings, the owner of Dallas-based power generator Luminant, said Wednesday that a new federal rule aimed at reducing air pollution from power plants will likely cause it to mothball some operations and experience "material revenue decreases" from reduced generation and wholesale power sales.

The biggest impact is expected to be felt at Luminant’s East and Central Texas plants that burn lignite coal and at its lignite-mining operations, EFH said in a Securities and Exchange Commission filing.

The parent company also said Luminant will likely incur "material" capital outlays and higher operating costs as a result of measures taken to reduce emissions, including "installing and operating dry sorbent injection systems for sulfur dioxide emission reductions."

In addition, EFH predicted a noncash impairment charge of about $400 million in the third quarter.

This reflects the reduction in value of sulfur dioxide emissions allowances that it has on its books as intangible assets. The writedown will be taken because the emissions allowances cannot be used after Jan. 1, the date for compliance with the new Environmental Protection Agency rule, EFH spokeswoman Lisa Singleton told the Star-Telegram.

The EPA last week issued its new Cross-State Air Pollution Rule designed to curb emissions of nitrogen oxides and sulfur dioxide at power plants in 27 states. The rule’s focus is to curb emissions from crossing borders into neighboring states, but the resulting reduced emissions would also lower air pollution within Texas.

EFH said Luminant won’t have time to go through the permitting, engineering, purchase and construction of new pollution-control equipment prior to the Jan. 1 compliance date for the tougher emissions requirements. Therefore, it will likely have to take shorter-term measures, such as scaling back generation and perhaps mothballing some operations, the SEC filing said.

Singleton stressed that by "mothballing" facilities, EFH doesn’t mean permanent shutdowns.

"They could be brought back on," she said.

But "there’s no way we can be in compliance by Jan. 1," the spokeswoman said regarding the new rule.

EFH declined to project any specific dollar amounts of revenue reductions or increased costs resulting from the new rule.

Singleton said the parent company doesn’t yet know how many plants might be affected or whether employee layoffs might result.

Jack Z. Smith, 817-390-7724

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