Texas voters to decide if billions are needed for more plants

The largest power grid operator in Texas has barely kept up during this scorching hot summer, breaking records more than ten times and warning Texans to conserve energy so power demand doesn't overtake the supply.

This November Texas voters will decide whether the state government should set up a multi-billion dollar program to encourage the construction of more traditional power plants.

The most crucial days for the ERCOT power grid are low-wind days when the sun goes down, reducing the supply of two key power sources: solar power and wind power facilities. Four times in the past week, the grid operator sent out a "conservation appeal" to Texans, the last major step before they start limiting the supply of power to certain customers.

That situation spurred ERCOT CEO, Pablo Vegas, to tell NBC 5 that the state needs more natural gas-supplied power plants.

"That is something that's important for an overall balanced grid. So, I do think we need to ensure everything we're doing is incentivizing more of those," said Vegas, "There's a need to build traditional power plants in conjunction with renewables that are developing on the grid.

The crux of it is federal incentives and some market forces are driving investment dollars to renewable energy facilities: batteries, wind, and solar power. For some investors and producers, putting money towards more traditional facilities is not a good investment.

In order to help make the economics work, state lawmakers passed Senate Bill 2627. If approved by voters this Fall, it will create the Texas Energy Fund under the control of the Public Utilities Commission. The fund will include $7.2 billion dedicated to 3 percent interest loans to companies to build new power-generating facilities. According to the bill analysis, the loans can only pay for up to 60 percent of a project. It will also include $1.8 billion to build up ERCOT's backup supply of power and $1 billion for projects outside of ERCOT's operating region: the northern parts of the panhandle, Beaumont, parts of East Texas, and El Paso.

Covering politics throughout the state of Texas.

The proposal was a key part of reforms state lawmakers supported after the deadly Winter Storm Uri which left much of the state without power for days. The Texas Energy Fund will be listed as Proposition 7 this November.

"The constitutional amendment providing for the creation of the Texas energy fund to support the construction, maintenance, modernization, and operation of electric generating facilities," reads proposition seven.

However, the bill analysis of SB 2627 specifies that loans and money can only be used for facilities that "can be controlled primarily by forces under human control." That means mostly natural gas projects, maybe some coal or nuclear projects, but not wind or solar projects.

"We welcome those new technologies, but we know what's occurring. What's occurring is that natural gas is the backbone of the Texas electric grid," said Todd Staples, president of the Texas Oil and Gas Association.

Now, more than half of the power generated every day for ERCOT comes from natural gas, according to the non-profit's data. Staples supports the continued development of renewable energy facilities but argues they aren't as reliable and powerful as older forms of energy.

While Federal incentives help boost renewable energy, investment dollars moving away from natural gas plants. Staples tells NBC 5 that this recent heat wave showed the state still needs more natural gas to keep the grid up stable and reliable.

"Wind has just not generated the level that ERCOT's forecast has hoped that they would," said Staples.

There are skeptics, however, who believe companies and investors still won't put money into gas facilities because they're viewed as older technology.

"Just by offering a low-interest loan doesn't guarantee that a company will that that offering," said Sandie Haverlah, president of the Texas Consumer Association.

Haverlah argues companies aren't building more gas plants because the free market is in the process of moving on. She believes it may be hard to find companies to pick up the other 40 percent of the project over the twenty-year loan.

"Adding another subsidy program still doesn't guarantee companies take advantage of it and build in the state of Texas. It's really just the state of Texas putting their thumb on the scale for certain types of energy," said Haverlah.

Some voters also have environmental concerns with building new traditional power generators.

The bill was passed overwhelmingly, with many Democrats joining the Republican-led effort. However, some conservatives grumbled the state was intruding on the free market by using state power to offer private companies perks. The fate of the Texas Energy Fund will be up to voters this Fall.

If approved, the would-be law will require the Public Utilities Commission to begin accepting loan applications by June 1, 2024, and they must approve or deny each loan and start distributing the money by December 31, 2025.