Texas regulators approve $5.4 billion in loan applications for natural gas power plants

AUSTIN — Texas electricity regulators picked 17 companies Thursday that will move forward with government-financed natural gas power plants.
Public utility commissioners approved the proposals for fossil fuel power plants capable of generating enough electricity to power 2.4 million homes. If the companies prove their projects are viable, they will receive 3% loans from the taxpayer-funded Texas Energy Fund.
The Texas Legislature created the fund in 2023 to finance about 10 gigawatts of electric generation capacity to shore up the ERCOT power grid. It is one of a myriad of legislative directives since the power blackouts of the 2021 winter storm killed more than 200 Texans.
The fund currently includes $5 billion. Gov. Greg Abbott and Lt. Gov. Dan Patrick have pledged to double funding ― a likelihood because the bill creating the energy fund was always planned to reach $10 billion.
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Commissioners approved loan applications amounting to about $5.4 billion. Public Utility Commission spokesperson Ellie Breed said accrued earnings on the initial $5 billion of funding will let the agency fund all the projects if they are ultimately approved.
“Today’s action to advance a set of applications to due diligence does not guarantee that those applicants will enter into a loan agreement,” Breed said in an email.
Business interest in the program has remained high since the Public Utility Commission of Texas opened it up to proposals. The commission received 72 applications for $24.4 billion to finance 38 gigawatts of power generation. Texas’ all-time record for peak power demand is 85.6 gigawatts.
Republican lawmakers, in response to the 2021 winter storm, have prioritized encouraging the construction of new, non-weather-dependent power plants. They created eligibility criteria for the program that favored natural gas-fueled power plants. Large-scale batteries, a rapidly emerging technology on the Texas grid, were prohibited from applying.
The projects include proposed power plants from Irving-based Vistra Corp. as well as NRG and Calpine. The proposed sites are across Texas.
Cyrus Reed, conservation director of the Lone Star Chapter of the Sierra Club, said Thursday’s action was “a taxpayer handout to large fossil fuel companies.”
“They’re prioritizing, really, pollution and getting those plants built over people,” he said.
The loans, which at 3% interest are nearly half the rate of the average 30-year fixed mortgage in Dallas, according to Texas United Mortgage, can fund up to 60% of a power plant’s cost to build. Lawmakers aim to encourage the creation of 10 gigawatts of new natural gas power for the ERCOT power grid, which encompasses the vast majority of Texas.
Public Utility Commission Executive Director Connie Corona said regulators favored proposed power plants that can be completed quickly, are spread throughout the state and reduce strain on Texas’ electricity transmission network of power lines.
After the PUC determines the projects are viable and the applicants are fiscally solvent, loans will be distributed in 2025, Corona said.
“The awardee must complete a rigorous due diligence phase, wherein they provide documentation similar to, you know, when you apply for a mortgage,” Corona said this week while providing an update on the Texas Energy Fund to the Senate Business and Commerce Committee.
The low-interest loan program is one component of the Texas Energy Fund. The program also includes a completion bonus program that could use taxpayer money to defray about 10% of a power plant’s construction costs if certain deadlines are met.
The fund also includes cash for power infrastructure for areas of Texas that are outside of the ERCOT grid, such as El Paso. The fund also set aside money for the Texas Power Promise, a backup energy program for critical infrastructure such as hospitals that was spearheaded by state Sen. Nathan Johnson, D-Dallas.