August 29, 2024—The Public Utility Commission of Texas (PUCT) has selected 17 projects, including the Kerrville Public Utility Board (KPUB), to advance to the next phase of the Texas Energy Fund (TEF) In-ERCOT Loan Program application review process. KPUB is the only municipally-owned organization among the 17 selected from a pool of 72 applications. Collectively, these projects represent 9,781 megawatts (MW) of proposed new dispatchable power generation, with a total requested loan amount of $5.38 billion.
The TEF In-ERCOT Generation Loan Program was established by the Texas Legislature and the PUCT to offer low-interest loans for building or upgrading dispatchable electric generating facilities within the ERCOT region. The TEF is a key part of Texas’s strategy to enhance grid reliability by promoting the development of natural gas-fired power plants, aiming to add up to 10,000 MW of new generation capacity to the state’s power supply.
Applications were assessed based on the applicant’s experience, financial stability, and the technical and financial merits of the proposed projects. The PUCT commissioners prioritized projects that offered diversity among applicant types, location, speed to market, ability to alleviate transmission constraints and diversity of generation resources.
“To be one of the 17 selected gives KPUB additional confidence in the viability of the project we have been evaluating,” said KPUB General Manager & CEO, Mike Wittler. “We submitted extensive information in our application, including preliminary designs, major equipment specifications, construction costs, pro forma financial statements and an independent engineer’s report.”
One of KPUB’s largest power supply contracts, which supplies a significant portion of our current power supply portfolio, will expire in the next few years. The project is part of KPUB’s strategic plan to explore the possibility of owning its own generation. This initiative is aimed at maintaining stable rates for customers amid a rapidly changing and increasingly volatile energy market. Advancing in the Texas Energy Fund process supports KPUB’s ongoing commitment and mission of providing safe and reliable utility service at the lowest responsible price.
While this power generation project would not remove KPUB from the ERCOT market, it would, in combination with a revised hedging program, offer customers additional—but not complete—financial protection from volatile market rate prices during extreme weather events, such as the February 2021 Winter Storm Uri. The project also supports Texas’ plan to enhance grid reliability by adding new dispatchable power generation. ERCOT has projected that the state’s power grid will need to supply nearly double the current amount of power by 2030. Additionally, this project would enable KPUB to offer more innovative services through advanced technology.
“A frequent project question we’ve been getting is where the power generation facility would be located,” Wittler added. “This project will operate in the competitive ERCOT market, so certain project details must remain confidential for now. Although we can’t reveal the exact location of the facility at this time, we can confirm that it will be built outside of KPUB’s service area due to our area’s inadequate natural gas pipeline infrastructure.”
KPUB has been actively engaging with the community as it explores the future of its power sources. Its proposed generation project is for a natural gas-fired reciprocating internal combustion engine (RICE) generation plant that would generate up to 122 MW at peak. RICE plants are highly efficient, use virtually no water and can continue operating at full capacity during extremely hot or cold weather. Detailed project information, presentation recordings, and a FAQ section are available on KPUB’s website at kpub.com/power.
The other applicants selected to advance and their projected generation capacity sizes are:
Howard Power Generation, LLC (271 MW)
NRG Energy, Inc. (456 MW)
Hunt Energy Network, LLC; John Hancock Life Insurance Company (U.S.A).; Manualife Infrastructure III AIV Holdings B.L.P. (132 MW)
Competitive Power Ventures (CPV Group LP), GE Vernova (1,350 MW)
Rayburn County Electric Cooperative, Inc., Rayburn Energy Station LLC (570 MW)
Frontier Group of Companies (Lonestar Industrial Park, LLC) (162 MW)
Calpine Corporation (460 MW)
LS Power Equity Advisors, LLC (490 MW)
EmberClear Management, Jupiter Island Capital (900 MW)
Constellation Energy Generation, LLC (300 MW)
NextEra and Aegle Power (1,292 MW)
Hull Street Energy through wholly owned subsidiary MPH Bastrop Peakers, LLC (1,080 MW)
Kerrville Public Utility Board Public Facility Corporation (122 MW)
WattBridge Energy IPP Holdings, LLC (600 MW)
Mercuria Investments US, Inc., Reliability Design and Development, LLC (226 MW)
ENGIE Flexible Generation NA LLC (930 MW)
Vistra Corp (440 MW)
Total Capacity (9,781 MW)
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