New Interesting About TXU Energy
TXU Energy is a company that started providing electricity to Texas dwellers in 1882 and has been providing innovative power plans and products at low prices. It is now a subsidiary of the Energy Future Holdings Corp, which is also based in Dallas.
TXU Energy has managed to offer innovative solutions such as TXU Energy MyEnergy Dashboard and TXU Energy mobile solutions as energy saving solutions. Customers are able to benefit from competitive power pricing options, customer assistance and support. It has also invested millions into community support through organizations such as The TXU Energy Urban Tree Farm and United Way, among others.
TXU energy became part of EFH in 2007 but was latter affected by falling market price of natural gas that came as a result of explosion of related fracking technology. Since natural gas prices have a large impact on wholesale electricity prices, the buying of TXU Corp in 2007 did not work out later. The result was the company’s deterioration in revenues, and now it struggles to pay large amounts of debt.
EFH has managed to convince lenders to allow more time for payment of their debts, as well as managed to buy back billions of debts. However, it is speculated that it might not be possible to borrow enough money to buy the accumulated debts in the next few years. According to professional analysis, the company would require increased prices for natural gas and power prices to manage the refinancing of the debt.
According to this analysis, the company would require natural gas price increase of between $6 and $8 per million British thermal units to allow its restructuring. Problems of low prices of natural gas are likely to affect the company after 2014 because it has no insurance cover bought against volatile gas prices after 2014. In fact, the current insurance covers 58% of the total gas generated in 2013 and 31% of total gas generated in 2014. Thus, a default is likely because low prices are likely to continue into the refinance period.
Expertise speculations indicate that EFH intends to put Texas Competitive Electric Holdings through bankruptcy. This is the company’s unit that owns TXU Energy. Already, TXU Energy has recorded massive losses since 2009, which could be the reason the bankruptcy declaration is eminent. Paul Keglevic, the chief financial officer has indicated possibility that the company could sell assets to raise money and then lease the assets back. Other options include asking for lenders to allow more time and filing for bankruptcy.
Amid speculations, the most important question among customers is whether they will be affected negatively and continue to receive electricity. According to analysts, customers are likely not to be affected by the bankruptcy and are likely to continue receiving electricity for their businesses and homes. Allen Nye, the chief counsel of Oncor has said that this subsidiary of EFH will remain intact even if EFH files for bankruptcy. This could be true because Oncor still owns some resources in EFH.
However, analysis show that customers might have to pay more for electricity following bankruptcy because of likely increase of trading costs and the bids put on the grid by Luminent, the other subsidiary of EFH. Other areas through which customers would be affected includes customer service if customer service related units were involved in expenses cut offs, and service interruptions.