Texas House advances plan to subsidize power plant weatherization

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A plan to help finance what will likely become mandatory power plant upgrades to withstand more extreme weather in the wake of the February power crisis received preliminary approval in the Texas House on Monday.

The failure of power plants to produce power during very cold temperatures was a major cause of the February power outages in Texas that left more than 4.8 million customers without electricity for days and caused more than 100 deaths. Natural gas plants shutting down or reducing electricity production due to cold weather was the most significant source of outages, according to an analysis by the Electric Reliability Council of Texas, which manages the grid that covers much of the state.

House members voted 126-18 in favor of a $2 billion program that would be created by House Bill 2000 by state Rep. Dan Huberty, R-Houston.

“We are looking forward to make sure these things don’t happen again,” Huberty said. “We can’t shut the Texas economy down by losing power and losing lives. That can never happen again.”

Modeled after the state’s water infrastructure fund, House Bill 2000 and the corresponding House Joint Resolution 2 would allocate $2 billion of state funds to help finance what could be expensive — and likely mandatory — upgrades to power plants in Texas to withstand more extreme weather conditions by providing electricity generators with access to grants and low-cost loans for the projects. House Joint Resolution 2 was also advanced in a 126-18 vote.

Most power plants in Texas are not built to withstand very cold weather and experts have said that retrofitting plants will be more costly and difficult than building weatherized plants in the first place. Still, it is technically and economically possible, energy experts have told the Tribune, depending on the type of weatherization the state may eventually mandate.

Concerned that a mandate to upgrade would cause companies or municipalities to shut down power plants and further reduce the state’s available power supply, lawmakers sought a way to provide a financial boost to the effort.

A State Utilities Reliability Fund (SURF) and the State Utilities Reliability Revenue Fund — modeled after the state’s existing funds for water infrastructure projects — would be created by Huberty’s proposed constitutional amendment and corresponding bill. The plan would need to be approved by voters in November if passed by two-thirds of the Texas House and Senate because it alters the state’s constitution.

In 2013, the Legislature created the State Water Implementation Fund for Texas, known as SWIFT, by allocating $2 billion from Texas’ economic stabilization fund, better known as the “rainy day” fund. It offers subsidies and help with low-cost loans for municipal water infrastructure projects, said Rebecca Trevino, chief financial officer of the Texas Water Development Board, which is charged with managing the fund.

The “SURF” fund would function similarly, but instead of offering the low-cost loans and grants to municipalities, the fund would also offer those financing tools to for-profit power generation companies and others to upgrade plants to withstand more extreme weather conditions.

An amendment by Rep. Erin Zwiener, D-Driftwood, which was adopted, would allow the fund to be used for projects that also reduce electricity demand on the grid. For example, she said, a grocery chain could apply for money to make upgrades that would allow it to shut down all power except for freezers in the event of an emergency.

“We need to guarantee that the state will support projects to weatherize facilities,” Huberty said during a discussion on the plan in the House State Affairs Committee on March 23. He complained that lawmakers should have created something like this a decade ago, when a similar winter storm put the state’s electric grid in crisis. “This is something we had an opportunity to address in 2011 and we just didn’t.”

But some Democrats opposed giving public money to private companies. State Rep. Jon Rosenthal, D-Houston, called it a “giveaway of public money” and proposed an amendment that would have limited the aid to loans instead of grants. That amendment failed.

The bill was amended on the House floor on Monday to prevent power companies from using the fund to build additional power plants, despite early support for that idea in committee.

But with Berkshire Hathaway Energy’s $8.3 billion plan to build 10 new natural gas power plants across the state facing growing criticism from energy companies and lawmakers alike, a proposal to use public funds to finance new power plants has faced increasing opposition for what critics say would undermine Texas’ deregulated electricity market.

“This bill has nothing to do with generation,” Huberty said. “This money is not available for somebody to come in to try to raid a fund for profit. We’re trying to protect our grid is what we’re trying to do.”