KPUB’s Board of Trustees pictured at its November 20, 2024, board meeting, L to R: Glenn Andrew, Secretary; Vice Chairman, Bill Thomas; Chairman, Larry Howard; Treasurer, Rachel Johnston; and Mayor of Kerrville, Joe Herring.
November 20, 2024—At Kerrville Public Utility Board’s (KPUB) monthly November board meeting, its board of trustees passed and approved a monumental resolution for the community-owned electric utility. The resolution no. 24-19 directed KPUB’s management to pursue the construction of a natural gas-fired power generation plant. KPUB currently purchases power through multiple power purchase agreements, and the largest of these agreements ends December 2026. Options for replacing this power include securing a replacement power purchasing agreement or owning generation.
The idea of KPUB owning its own power generation facility has been a long-term consideration since the utility’s inception. The decision for the utility to pursue owning its own power generation is driven by the increasing volatility of the Texas energy market, with rising power costs, extreme weather conditions and higher energy demand all impacting rates. By owning its own generation, KPUB aims to provide customers with more stable rates and greater protection from market fluctuations in the years ahead.
The KPUB Board of Trustees, alongside its management team, has dedicated significant effort and extensive research to analyze and advance this power generation project. This process has involved collaborating with multiple consultants and industry experts to develop financial models, conduct risk assessments and thoroughly analyze the project’s alignment with KPUB’s mission and strategic power supply goals. The initiative also includes significant public outreach, such as a customer power supply survey, a dedicated project webpage with FAQs, social media campaigns and 17 presentations to local community groups to gather input and foster transparency.
“This is a rent-versus-own situation, and the data clearly shows that owning our own power generation is our best long-term financial strategy,” said Mike Wittler, KPUB general manager and CEO. “Our mission has always been to provide reliable, low-cost power, and this project aligns perfectly with that goal.”
In addition, KPUB’s power generation project proposal was selected as one of the finalists in the Texas Energy Fund (TEF) In-ERCOT Loan Program. The TEF was established by the Texas voters in 2023 and provides low-interest loans for selected power generation projects for the ERCOT region. This initiative is a critical part of Texas’s strategy to enhance grid reliability by encouraging the construction of natural gas-fired facilities, with the goal of adding up to 10,000 megawatts (MW) of new generation capacity to the state’s energy supply.
Out of 72 applicants, only 16 projects were advanced to the next review phase by the Public Utility Commission of Texas (PUCT), and KPUB was the only municipal proposal to progress forward. KPUB’s application included extensive information, such as preliminary designs, major equipment specifications, construction costs, pro forma financial statements and an independent engineer’s report.
KPUB’s 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. The highly efficient RICE plant is designed to operate reliably in extreme weather and will be located outside KPUB’s service area due to limited local natural gas infrastructure. The power generation at the plant is dispatchable, meaning it can be turned on and off quickly, and isn’t reliant on the sun shining or the wind blowing. It’s a power source that’s ready for use when the market is in need.
Detailed project information, presentation recordings and a FAQ section about KPUB’s power generation project are available on KPUB’s website at kpub.com/power.
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To view resolution no. 24-19, click here.