Texas voters will finish casting their ballots Tuesday on Proposition 7, a constitutional amendment that would create a nearly $10 billion state fund for dispatchable energy that opponents say amounts to a handout for the natural gas industry.
A result of legislation passed earlier this year, the Texas Energy Fund is a $7.2 billion low-interest loan program intended for the development of up to 10 GW of natural gas plants. Some $5 billion will be set aside for 20-year, 3% interest loans to build new generation with at least 100 MW of fully dispatchable capacity. Power plants that come online before June 29 are eligible for bonus payments.
Another $2.8 billion will be dedicated to grants for infrastructure improvements in non-ERCOT regions and for grants to strengthen resiliency at hospitals, fire stations and other critical facilities through microgrids.
ERCOT considers energy storage as a dispatchable resource, but it is restricted from the program.
Prop 7 is supported by gas heavyweights such as ConocoPhillips, Koch Companies and Valero Energy, along with industrial users. They say the amendment will stabilize a creaky ERCOT grid that has struggled to meet growing demand since the 2021 winter storm.
The opposition, primarily environmental and consumer groups, object to what they call a “cleverly disguised handout to Texas gas companies that are already making record profits.”
“Proposition 7 is the key to building a stronger and more resilient energy infrastructure, ensuring that we always have the electricity we need, when we need it,” state Sen. Charles Schwertner, who guided Senate Bill 2627 through the Legislature, said on X, the social media platform formerly known as Twitter.
“We don’t need to subsidize power plants in a private market with taxpayer funds,” the Sierra Club’s Cyrus Reed countered on X.
During debate over the bill this spring, several generators came out against SB2627. The Association of Electric Companies of Texas said it was concerned about government intervention in the competitive wholesale market. Other company representatives said the loans are similar to other regional programs that create market distortions.
“If you’re a gas power plant developer, why would you ever develop another power plant in Texas without a grant and a low-interest loan? Do Texans need to put up billions more the next time we need more energy?” Stoic Energy CEO Doug Lewin said, while admitting “there’s virtually no chance” Prop 7 will fail.
The amendment enjoys wide public support, according to a poll released last month by the University of Houston and Texas Southern University. The survey found 68% of voters favor the amendment, with 15% opposed and 17% undecided, despite its costs filtering down to ratepayers.
ERCOT called numerous conservation alerts and a Level 2 energy emergency alert during a record-breaking summer this year. The grid operator set 10 records for peak demand this summer, topping out at 85.46 GW after just exceeding the 80 GW threshold in 2022. Four years ago, peak demand was 74.82 GW. (See ERCOT Voltage Drop Leads to EEA Level 2.)
The fund would be endowed with $10 billion taken from the state’s general revenue fund. More money from the revenue fund could be transferred into the Energy Fund.
Early voting began in Texas on Oct. 23.
