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Governor Abbott Announces First Texas Energy Fund Loan To 122 MW Natural Gas Facility

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~ In a move to strengthen the state's power grid, Governor Greg Abbott has announced the approval of a 122 megawatt (MW) natural gas power plant in Texas. This project, known as the Rock Island Generation Project, will be funded through the first loan agreement of the Texas Energy Fund (TEF), executed by the Public Utility Commission of Texas (PUC).

According to Governor Abbott, this investment in power capabilities is crucial as Texas continues to experience rapid growth. He stated, "Today, Texas made a 122 megawatt investment in power capabilities of the grid to ensure that Texans have access to affordable and reliable power." The new natural gas power plant will be located near one of the Electric Reliability Council of Texas (ERCOT) region's largest electricity demand centers.

PUC Chairman Thomas Gleeson also expressed his satisfaction with this milestone achievement. He said, "The goal of the Texas Energy Fund has always been clear: secure reliable, affordable power that will serve the state for decades to come." He added that this new facility will benefit all Texans by ensuring continued electric reliability and supporting the state's economic growth.

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The Kerrville Public Utility Board (KPUB) is responsible for developing and sponsoring this project, which is expected to begin operations by June 1, 2027. The loan agreement between PUC and KPUB is part of TEF's In-ERCOT Generation Loan Program, which provides low-interest loans for projects that add new dispatchable power to the ERCOT region.

Under this agreement, total project costs are not to exceed $175 million, with PUC providing a 20-year TEF loan of up to $105 million at a 3% interest rate. The facility will be located in Colorado County and will interconnect with South Texas Electric Cooperative Rock Island substation in ERCOT South Load Zone. This area is adjacent to ERCOT's Houston Load Zone, which includes Houston, Pasadena, and the Woodlands, making it the fifth largest metropolitan area in the United States.

KPUB General Manager & CEO Mike Wittler expressed his gratitude for the funding and praised the TEF team for their rigorous due diligence. He stated, "With this funding secured...we're proudly powering forward with a long-term strategic initiative that will not only help shield our ratepayers from future market volatility but enhance grid reliability for all Texans."

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As part of the loan agreement, the facility must meet minimum performance standards outlined in program rules. This is just one of 18 active applications currently being reviewed by TEF's In-ERCOT Generation Loan Program. Together, these projects represent an additional 9,102 MW of proposed new dispatchable generation for the ERCOT grid.

More information about TEF and its programs can be found on PUC's website. With this first loan agreement in place and more projects in the pipeline, Texas is taking significant steps towards securing reliable and affordable power for its residents.

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