Texas’s Plan to Avoid Deadly Blackouts Could Cost $18 Billion

(Bloomberg) -- A fleet of new natural gas-fired power plants in Texas may cost $18 billion, much more than an earlier estimate, as lawmakers attempt to improve the state’s electric grid after its deadly failure in 2021.

If implemented, the new plants — which would only be used in emergency situations — would be built in two phases over a decade given permitting and supply chain constraints, according to slides of a new study shared by the Lower Colorado River Authority. The potential cost risks derailing Republicans’ plans to overhaul a grid increasingly reliant on renewable energy with fossil fuel plants.

A proposal to build as much as 10 gigawatts for backup generation that is weatherized and has on-site fuel equivalent to 10 nuclear reactors was approved by Texas senators Wednesday in a 22-to-9 vote. It would create an energy insurance fund using taxpayer money and builders of the facilities would be assured returns of up to 10%. 

“While LCRA did not initiate this effort, we are committed to working with the legislature and the executive branch in any way they direct us to help,” the agency said in an emailed statement. 

LCRA is a nonprofit transmission and power plant owner established by the state legislature in 1934 and would be eligible to build some or all of these resources.

It’s unclear how many senators were aware of the proposal’s costs before voting on the bill, which now needs to pass the Texas House of Representatives. After the 2021 disaster, a similar Berkshire Hathaway Inc. proposal that carried an eventual price tag of $10.8 billion had been rejected by lawmakers.  

Because the plants are mostly going to sit idle, critics say a regulated rate of return for these plants could dampen private investment in the Texas grid.

Some senators said Wednesday the proposal wouldn’t interfere with the market because of the plants’ limited operations and that citizens would not be happy if Texas’ budget surplus this year is not spent in part to help prevent another power crisis in the self-proclaimed energy capital of the world.

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