TXU Corp. chief executive John Wilder plans to increase the amount of power the company generates in Texas by as much as 50 percent by using coal.

FILE 2004/Staff photoTXU chief executive John Wilder is focused on coal because it is cheaper than natural gas, so coal generation plants offer a wider profit margin than natural gas plants.

So far, TXU has announced plans for two coal projects, amounting to about 25 percent more power, Mr. Wilder said in a presentation to Wall Street analysts on Wednesday.

Now that TXU has finished repairing its balance sheet and cutting costs to become profitable, the company has entered a growth phase, and growth for Mr. Wilder means coal.

He also expects TXU's operational earnings per share to rise this year, as the growth phase begins, to a range of $5.50 to $5.75 from $3.33 last year.

Mr. Wilder considered three strategies: boosting production at existing facilities, creating a standard design to expand and renovate TXU facilities, or building new plants from scratch.

Electricity generation expansion may be critical for Texas because experts say demand for power will push supply to the limit by 2009, unless more generators are built.

Mr. Wilder is focused on coal because it is cheaper than natural gas and offers a wider profit margin than natural gas plants. Half of the electricity in Texas comes from natural gas power plants, and power prices tend to track natural gas prices.

Next, Mr. Wilder said, he'll consider which of TXU's three other coal plants could be expanded, and which of the 14 natural gas plants could be converted to coal.

"We've just done a full inventory of all our sites, and we think we have projects - again, they don't look quite as good as our Oak Grove project, but they look about as good," he said.

He named three examples of gas plants that could be converted to coal: Valley in Fannin County, Tradinghouse in McLennan County, and Stryker Creek in Cherokee County. Those plants are relatively close to TXU's coal mines.

As TXU considers those projects during the next year, Mr. Wilder wants to develop a standard design and process for coal plant expansions. By applying the standard to multiple facilities, TXU can grow more cheaply and efficiently.

And he said TXU Electric Delivery, the transmission and delivery arm, is for sale for the right price, though he didn't indicate whether a sale is imminent.

In the past, Mr. Wilder has said he would make a decision on selling TXU Electric Delivery in 2007, and there have been recent news reports that two companies are bidding.

"It's all going to be capital-market-dependent," he said. "It just has to do with: Is there a capital provider willing to accept a lower return than what we think it embedded in that business today?"

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