The Wall Street Journal (subscription):

For years, cash-rich buyout firms have tried to break into the electricity business only to be rebuffed by wary regulators, consumer groups and environmentalists. Now, in what would be the biggest leveraged-buyout ever, an investor group is hoping it has cracked the code.

A total of six firms — led by Kohlberg, Kravis, Roberts & Co., Texas Pacific Group and Goldman Sachs Group — have signed a deal to buy utility powerhouse TXU Corp. for $32 billion plus more than $12 billion in TXU debt, according to people familiar with the matter. TXU directors last night voted to recommend that shareholders approve the deal.

In a creative twist, the firms have moved quickly to pre-empt opposition from powerful environmental groups while seeking support from various regulators and politicians. Already, the potential buyers have promised to cancel plans to build all but three of the company’s proposed 11 coal-fired plants. And they are planning to placate consumers with rate reductions.

The deal marks a quantum leap in the political sophistication of the buyout world, and may signal a broader remaking of private equity’s image in the utility industry. Buyout firms have generally received a chilly reception from utility regulators because they’re seen as temporary, profit-driven caretakers not answerable to public shareholders or sensitive to consumers. If the prospective TXU buyers can overcome that perception, they could potentially open the door for more private-equity investors.