Welcome! Roger Gale, Elizabeth Souder and Randy Lee Loftis are now taking your questions.

Andy77: Good afternoon, Elizabeth, I was curious, how much did the Morning News pay for the GF Energy report?

Elizabeth Souder: Hello Andy, Our publisher gave us resources to spend on learning how this buyout may impact consumers. We would have published the results no matter what Roger concluded.

Monday: What will happen to retiree's benefits after the buyout?

Roger Gale: Hello Monday. What happens to retiree benefits is up to the buyers.

NativeTexan: Hello--I don’t understand the timing of a report that makes significant regulatory and statutory suggestions after the end of the legislative session. If your intent is serving your readers, why wait this long to make suggestions that no one can act on?

Randy Lee Loftis: Hi Native Texan. The timing was just a function of the time the buyout announcement was made and the complexity of the issues. The Legislature didn't anticipate this happening at this time, either. It took a while to get the analysis together. It's certainly our hope that whatever the timing, people will take the trouble to read the report in full.

cp1101: Roger just out of curiosity what is the average kwh rate that our friends in Houston are paying for say 1500 compared to us here in the metroplex?

Roger Gale: CP1101-Sorry, i don't have the answer to your question available right now.

News Chunkie: Hello. In offering recommendations by a consultant hired by the DMN, doesn’t this blur the line between reporting and editorializing? Also, how does this report differ from what that DMN has said in its past editorial?

Elizabeth Souder: Hi Chunkie, We commissioned an independent report on a topic we felt would be very important to our readers. We didn't write the report or instruct Roger what to conclude. There was no "editorializing" on the part of The News. We were committed to publishing the results, no matter what. And we sought the opinion of TXU, the buyers and other outside experts.

texfarmbob: I am a longtime TXU employee (25+ yrs) who thinks the company has been a good corporate partner and one of the largest employers in north Texas for many years. Instead of noting how TXU has more than met both state and federal pollution guidelines the News has continuously bashed the company first for wanting to build power plants and now, per the study, for potential price increases in the future based on demand and tight power resources because more plants are not being built. At this point TXU can't win. Can you comment?

Randy Lee Loftis: Hello texfarmbob: Thanks for the question. Complying with state and federal pollution standards isn't a choice for TXU, any other company, or anyone who drives a car. Far from bashing TXU for wanting to build coal plants, we've raised questions that many people were asking. We've also given a lot of consideration to Texas' power needs. The decision to cancel eight proposed coal plants was the prospective buyers' own decision. I assume that they will propose other methods of meeting the state's electricity demand.

dallasbob: Mr. Gale, in your assessment of the proposed buyout, why did you neglect to mention support the new TXU has received from environmental, consumer, labor, business and political leaders from across Texas?

Roger Gale: DallasBob: We didn't neglect mentioning that, that has been widely reported. Our purpose was to make an independent assessment, not to report on what others have said.

Hazel Gilmore: In most everything I read on the subject, you folks seem to be biased against TXU. Are you?

Elizabeth Souder: Hazel, We aren't biased against TXU or the buyers. We are taking a hard look at a news event that could have big consequences for Texas. We always, always, always ask TXU and the buyers to comment on anything we write about them. Sometimes they choose not to, and that's their right.

Andy77: So, how much did you spend on the report? I appreciate that you would have published these results, but would you mind answering the question?

Roger Gale: Andy77: not enough

Hazel Gilmore: In most everything I read on the subject, you folks seem to be biased against TXU. Are you?

Randy Lee Loftis: HI Hazel. It's our job to ask questions and publish what we find out, not to seek any particular outcome. Often people, institutions, or organizations don't like having those questions asked in the first place.

shawn80: Elizabeth, doesn’t a study like this veer wildly into journalistic advocacy? How are we expected to trust the coverage by the Dallas Morning News, with biased reports on current topics? Is there no need for objective journalism?

Elizabeth Souder: Dear Shawn, Often companies or lobbyists hire outside consultants to write reports that reach a particular conclusion, and throw those reports away if they do not. We took a much different appraoch. we hired a consultant to write an independent report, and we were committed to publishing the results. Further, there is no such thing as absolute objectivity in journalism. Never has been. We can only aspire to be fair, honest and transparent, which has certainly been our approach to this project.

From E-mail: From Kate Holody: Mr. Gale, how do you respond to the investor's response that ultimately the overall conclusions reached by your report are consistent with their commitments and consumers will and have already benefited from this proposed transaction?

Roger Gale: Kate Holody: As we say in the report, our goal was to analyze and recommend what we think constitutes an acceptable outcome for the customer. I assume the buyers would agree with us on many of the key points.

From E-mail: From Jay: Why is it TXU’s responsibility to ensure that Texas has adequate power supplies? Doesn’t Texas’ free market provide an opportunity for all other generators to fill this gap if TXU is unwilling

Elizabeth Souder: Jay, TXU has switched its position on that question. Now, the company says it has no responsibility to ensure reliability. But last year, when TXU wanted to build 11 plants, it said it wanted to do so to ensure reliability. To the TXU folks on the chat: Which is it?

mollie83: Do you all have a list of the companies you know who have guaranteed not to raise their prices until 2009?

Elizabeth Souder: Mollie, I have a list of companies that already charge a lower price than the 12.75 cents the buyers will offer if the deal closes. You can find that list at www.powertochoose.org.

From E-mail: From Jay: Why is it TXU’s responsibility to ensure that Texas has adequate power supplies? Doesn’t Texas’ free market provide an opportunity for all other generators to fill this gap if TXU is unwilling

Roger Gale: Jay: The perfect situation would be one in which we could be confident that market forces would assure that enough generation was built. I'm a strong supporter of competitive markets and want them to flourish because market-based decisions are usually better than ones made by fiat by governments. Unfortunately, large baseload coal and nuclear plants require very long lead times, extensive permitting and are often opposed, so there is a need for TXU to provide adequate assurances, alternatives and commitments to meet supply requirements.

From E-mail: From Jim Epperson: Doesn't your report fundamentally misunderstand the role of the PUC by suggesting they secure commitments on TXU's generation strategy? Shouldn't an agency like the TCEQ retain its authority to determine what types of plants are best for the air quality in Texas?

Randy Lee Loftis: HI Jim. As you probably know, the TCEQ specifically disavows having any authority or interest whatsoever in determining the mix of power generation in Texas. As far as the TCEQ is concerned, their job is to judge whatever permit application that comes in strictly on its own merits. The PUC is the only agency with utility oversight, whatever its form might be.

GTL: Roger, could you comment on the positives that could come from an LBO transaction in this case? Are there any examples of LBOs where both the sponsors and the target have benefitted from the transaction?

Roger Gale: GTL: As we say in the report, further consolidation in the electricity industry is needed and many LBOs of sick companies have been very productive.

From E-mail: From Andy Schonert: Mr. Gale, the article describes you as a "proponent of competition" but several years ago you referred to the competitive market as "a mess." How is this report a not-so-subtle call for re-regulation of the market?

Roger Gale: Andy--Sorry i hit the enter bar by mistake-Competition is a mess, its always a mess, its like democracy--competition and democracy always work best.

From E-mail: From David A. Lethe: Implementing cost cuts and new standards for efficiency can not account for the new debt required to pay for the buyout. How will funding be obtained, if not from raising rates?

Elizabeth Souder: David, excellent question. Roger points out in his report that the buyout crew might come up with innovative products to boost revenue. Or, they might raise rates. The point is, the buyers haven't said how they'll make this deal work financially. We are certainly curious.

texfarmbob: The decision to cancel the 8 more reliable, more efficient, less polluting Texas lignite burning units that would have employed thousands of Texans for many years to come was in doubt before the takover ever hit the radar. Our esteemed mayor and the DMN condemned the projects from the start rather than working with TXU to make sure all new pollution rules would be met. Now we still have a state dominated by very high priced natural gas and your own report recognizes power will be short in just a few years. I don't believe I've seen any other buyout or company covered by so much negative attention in this paper on a day-to-day basis as with your treatment of TXU. It's too pat for you to simply say you're simply responding to people's questions.

From E-mail: From Fran Jordan: I would like to know what provisions are made for retireee benefits in the sale of TXU. The only thing we have heard is that there will be no changes before the end of 2008. Will the new owners continue to honor TXU's commitment for benefits?

Elizabeth Souder: Fran, the buyers' filing with the PUC doesn't make any promises about continuing retiree benefits after 2008. TXU's retiree benefit fund is underfunded by hundreds of millions of dollars. How the company deals with that situation is entirely up to the buyers.

Roger Gale: LeMont: My bio is on the GF Energy website at www.gfenergy.com. Texas has done a better job than any other state in moving competition forward but Texas is still in a transition state and there needs to be significant market oversight re major decisions and consumer protections.

mollie83: Thanks for the link Elizabeth, my specific question is do you know of companies who have guaranteed to not raise their prices until 2009?

Elizabeth Souder: Mollie, such products are standard in this industry. Only TXU has agreed to keep its rice-to-beat rate stable until 2009. Of course, customers can sign up for cheaper, long-term pricing plans with TXU or others that offer a stable rate for a certain number of years.

Elizabeth Souder: Thank you, TexFarmBob for letting chatters know about your employment. Anyone that works for TXU or the buyers, please identify yourself in your question.

silver: I would like to know why folks who are still receiving a bill from TXU energy are willing to continue to do so, considering that there is competition and that all TXU energy has done is raise the rates by 85%, from june of 02 till the begining of 06.For the exact same service they could be paying much less, and sending a message that in order to keep customers, they need to maintain a fair price.

Hazel Gilmore: Your lead sentences on the subject of future prices of electricity to the consumer always say the price "could" (my emphasis) be greater. Of course it could and by definition it could also be less. Why not mention that?

Elizabeth Souder: Dear Ms. Gilmore, when the buyers said they would cut rates, we wrote it. When our independent consultant said the buyers might raise rates later, we wrote that. Our readers tend to be very, very sensitive to rate hikes.

peter: silver - i once read a statistic that only 30-40% of Texans bothered switching, i guess it goes back to us being creatures of habit, it still blows my mind that more people don't take the initiative to change providers

Elizabeth Souder: Peter, it's true that about 38 percent of Texans have switched from the former utility monopoly to a different provider. Some people have switched to competitive pricing plans offered by TXU. And the buyers have promised to cut prices for those customers still on the standard, formerly-regulated rate, which is about 1 million customers.

From E-mail: From Richard Adams: Mr. Gale, how can you say that the PUC should secure commitments for TXU to build new power plants? Why do you believe the PUC has that legal authority?

Roger Gale: Dick Adams: Thanks. I think I've seen your name in the margins commenting on Mike McCall's email to me on this same subject. We didn't say that the PUC has legal authority but that the PUC needs to protection the public interest by addressing the issue of supply adequacy and that TXU, like many utilities in many states, needs to layout a detailed generation plan, what is often call an Integrated Resource Plan. At the annual Edison Electric Institute annual meeting last week in Dallas, the four CEOs and COOs on the panel I chaired all agreed that their utility needs to have a generation plan committing them to a specific development program.

texfarmbob: There's an excellent point! TXU's prices are expensive and if you go to the website mentioned you can significantly lower your monthly electric bill. There are 22 electric providers other than TXU with multiple plans that are cheaper than TXU's. And yet the majority of people have not exercised this option but prefer to complain about TXU's high prices. On top of that they forget that TXU's prices were set by our illustrious state officials and TXU was not allowed to compete until 2007. If enough folks change to other plans TXU will be forced to react. By the way, employees don't get discounts on their electricity.

From E-mail: From Richard Adams: The report says that the significant consumer benefits "could be offered by TXU today just as easily." Also, it states that there is "reason to believe" TXU would have offered the same concessions. What FACTS support this key conclusion -- or are you just speculating about what TXU may have done, but did NOT do during the first two months of the legislative session?

Roger Gale: Dick Adams, our conclusion is that TXU is a healthy company unlike most of the companies involved in buy-outs. There is nothing that says that TXU will become all that much healthier if it is bought out. Based on that judgment, it is only the buyers incentive to sweeten the pot that has resulted in the offers made so far--nothing inherent in the buy-out enables these offers.

ralph: Isn't Integrated Resource Planning something that's done in a regulated environment?

Roger Gale: Ralph: IRG has always been done in a regulated environment because that is the only environment we had until now. A lot of it has been a huge waste of time but if done right it can be a valuable tool.

bsf: The report was panned by a professor from UNT. If he developed a series of articles pointing out the errors in the report, would the DMN run the story as a series on the front page. And why won't you reveal the cost of the report?

Elizabeth Souder: bsf: Dr. Weinstein sent us an email with his thoughts on the report, which we posted on the web site. We've been open to hearing all opinions about the report, and we would consider each letter for publication. What goes on the front page is a matter far above my pay grade. As for revealing costs, we would like to know more financial data behind the buyout plan.

Roger Gale: LeMont: Constellation, like TXU, is a very pro-competition company, so what's the point?

silver: The simple solution would be for customers to find a supplier that offers the best plan available. Meaning price, term, customer service, etc... If folks stay with TXU, all they are saying is we don't care how much you charge us, we will cry and whine about it, but still send you a check. That is how TXU made record profits last year, and will continue to see no point in changing their pricing strategy.

GTL: What actions do you advocate your readers to take regarding the TXU transaction and the conclusions of this report? Asking the state government to get involved seems like a step backwards to me since that would send a bad signal to Wall St.(and the world) on the true nature of competition in Texas and its friendliness to willing investors.

Elizabeth Souder: GTL, of course we don't advocate any action by readers. That's the business of the editorial page. We try to give readers the most accurate, fair and honest picture that we can, based on the data we have about the buyout deal. It's true that this deal has brought global attention to Texas, and that attention could be helpful in some ways and harmful in others. The coal plant plan also attracted global attention.

peter: i see threads of 'competition' throughout this chat, could any of the moderators elaborate on why you think 'competition' has not taken off in TX like once thought? from what i've read, TX has some of the highest KWH prices in thecountry depsite it being a 'competative' market

Roger Gale: Peter: Competition has taken off more aggressively in Texas than any other state. Nobody--at least nobody I know--predicted that natural gas prices would go up so much, and when fuel costs are passed through to the customer--as they are in Texas, the result is much higher customer prices. Texas isn't the only state with this problem. there is a 72% rate increase in Baltimore, for example.

From E-mail: From Sarah: How did you determine that TXU would have been "forced…to offer most of the same 'concessions?" Aren't the new TXU's commitments such as cutting rates already benefiting consumers?

Elizabeth Souder: Sarah, the report concludes that TXU may have been forced to cut prices to keep customers. Before the buyout, TXU was already offering bonuses and developing new pricing plans to retain customers. Therefore, the buyer are likely taking an action that TXU would have taken itself, according to the report. So that particular commitment doesn't provide a net gain; it's something customers were already getting.

mollie83: Do you all have a list of the companies you know who have guaranteed not to raise their prices until 2009?

Randy Lee Loftis: Hi everyone. Thanks for a stimulating round of questions. You can read the GF Energy report itself, as well as responses from TXU and others, and the news stories it generated, at www.dallasnews.com.

Business Chat Moderator: That's all we have time for today. Thanks, Elizabeth, Randy and Roger, and thanks to everyone who participated.