Texas Localities’ Revenue at Risk After Bankruptcy, Moody’s Says

Energy Future Holdings Corp.’s bankruptcy could put tax revenue in some Texas municipalities at risk should the company’s coal-fired generating plants be closed, Moody’s Investors Service said.

The power plants account for 23 percent to 50 percent of the tax base in some Texas localities, the credit-rating company said yesterday in a report. The Dallas-based electricity provider filed for bankruptcy April 29 and no decisions have been made about whether to close facilities.

Moody’s said it “wouldn’t rule out the potential for an early retirement of a coal fired generating plant” during or after the company’s bankruptcy.

In Titus County, in northeast Texas, a power plant provides 38 percent of the tax base. In Rusk County, in east Texas, 23 percent of the assessed value of its property-tax base is from the company’s Martin Lake plant, Moody’s said. The Franklin Independent School District in south-central Texas gets about half its property-tax collections from the Oak Grove plant, Moody’s said.

Energy Future Holdings was taken private seven years ago by Henry Kravis and David Bonderman in a record leveraged buyout.

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