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

Governor Greg Abbott today announced that the first Texas Energy Fund (TEF) loan agreement will fund a 122 megawatt (MW) natural gas power plant in Texas. With the TEF executed by the Public Utility Commission of Texas (PUC), the Rock Island Generation Project will provide new reliable, dispatchable power generation near one of the Electric Reliability Council of Texas (ERCOT) region’s largest electricity demand centers. 
 
"As Texas continues to rapidly grow, we must further fortify the state power grid," said Governor Abbott. "Today, Texas made a 122 megawatt investment in power capabilities of the grid to ensure that Texans have access to affordable and reliable power. This natural gas power plant will help bear the load of the largest electricity demand area in the state as we continue our mission to add more power to the grid and power more homes." 
 
“The goal of the Texas Energy Fund has always been clear: secure reliable, affordable power that will serve the state for decades to come,” said PUC Chairman Thomas Gleeson. “Today, we achieved a major milestone in that effort and are one step closer to bringing new power online. This new facility will benefit every Texan by helping us ensure continued electric reliability and support Texas’ incredible economic growth.”
 
“This marks a historic milestone for our utility and is the result of the dedication, vision, and countless hours of hard work from our board, staff, and partners,” said Mike Wittler, KPUB General Manager & CEO. “With this funding secured—and thanks to the rigorous due diligence of the TEF team —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.” 
 
The Kerrville Public Utility Board (KPUB) is the sponsor of the project and will develop the facility, which is projected to begin operations by June 1, 2027. The loan agreement between the PUC and KPUB is the first finalized under the TEF’s In-ERCOT Generation Loan Program, which provides low-interest loans for projects that add new, dispatchable power to the ERCOT region.
 
Under the loan agreement, which is subject to customary financial closing procedures, total project costs are not to exceed $175 million, with the PUC providing a 20-year TEF loan of up to $105 million at a 3% interest rate. The facility, which will be located in Colorado County, approximately 10 miles south of Columbus, will interconnect to the South Texas Electric Cooperative Rock Island substation in the ERCOT South Load Zone. This area sits adjacent to ERCOT’s Houston Load Zone, which is one of the largest electricity demand centers in Texas, encompassing Houston, Pasadena, and the Woodlands, which make up the fifth largest metropolitan area in the United States.
 
As part of the loan agreement, the facility must meet minimum performance standards, as outlined in program rules.
 
In addition to the loan agreement signed this week, there are currently 18 applications to the TEF In-ERCOT Generation Loan Program that are active and moving through a due diligence review process. Together, they represent an additional 9,102 MW of proposed new dispatchable generation for the ERCOT grid.
 
Additional information about the TEF and the In-ERCOT Generation Loan Program is available on the PUC website.