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We are also leveraging high-performance techniques and structural advantages to pursue two new growth opportunities in the expanding Texas market, where yearly demand growth is roughly equivalent to the capacity of a new 1,500-megawatt power plant. The Oak Grove coal plant, a 1,720-megawatt facility in Robertson County, will use the site of a previous TXU generating project. Sandow 5, a 630-megawatt unit, will join our Sandow 4 facility in Central Texas to provide power to a nearby aluminum plant and to Texas businesses and residents.
Superior Investment Thesis
We are confident that the combination of access to low-cost, secure lignite and the ability to drive advantaged construction costs, superior operations, and a compressed schedule creates a superior investment thesis, turning a sub-par return for a competitor into a superior return for TXU.
When Sandow 5 and Oak Grove are operational, — targeted for 2008 and 2009 — they will deliver reliable energy for Texas in an environmentally responsible way. The facilities will also help improve the fuel diversity of the state's electric generation.
Texas Investment
What's more, TXU is leading a massive investment in the Texas economy. In this decade, we expect to invest $13.5 billion to deliver a more reliable electric grid, more efficient power resources, and innovative new products. This level represents a significant economic boost for the state. Our $2.1 billion expected average annual capital investment over the next three years equals projections for the state's entire refinery industry investment and is twice the predicted investments of the micro-electronics and basic chemicals industries. Our total investment is expected to generate long-term benefits, including up to a $20 billion increase in the gross state product and over 5,700 permanent jobs. TXU is continuing its tradition as one of the state's largest corporate investors as it enters a third century of investing in Texas.
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Texas Restructuring:
A Success Story
The Texas electricity market, the world's 11th largest, is the only one with true wholesale and retail competition in the U.S. The market structure in the Electric Reliability Council of Texas, Texas's main power grid, was designed so that customers could capture the benefits of open markets and competition, while ensuring reliable electricity and customer protections. Restructuring has also spurred massive generation investment, more than $15 billion, in efficient new capacity. Even with historically high natural gas prices in 2005, customers
are benefiting from access to electricity prices that are lower than they would have been under regulation. Competition is robust, and customers are eagerly embracing choice as they participate in the Texas success story.
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