On Tuesday, November 7th, Texas voters decisively endorsed Proposition 7, overwhelmingly supporting establishing a one-billion-dollar state-managed energy fund to enhance the infrastructure of natural gas power plants. The primary objective of this fund is to fortify the infrastructure of natural gas power plants throughout the state.
The voting outcome, with Proposition 7 securing a 65% to 35% mandate, witnessed an impressive turnout, surpassing 2.5 million cast ballots, per the latest Texas Secretary of State office data. This electoral triumph marks the culmination of legislative efforts, notably Senate Bill 2627, signed into law by Governor Greg Abbott in July. Proposition 7 allocates a substantial $5 billion to facilitate low-interest loans to support new dispatchable power generation within the state.
While the energy industry celebrated this victory, environmental opposition was notable. The President of the Texas Oil & Gas Association, Todd Staples, expressed satisfaction with the broad support from voters, emphasizing their commitment to preserving Texas as a premier destination for residence, employment, recreation, and family life.
Staples underscored that Proposition 7 transcends mere financial considerations; it represents a strategic initiative to enhance the electric grid’s reliability under diverse weather conditions. The measure aspires to augment the overall electricity supply by incentivizing additional power generation.
According to the legislation, loans financed by the Texas Energy Fund must have a 20-year term and a 3% interest rate. These funds are directed towards upgrading existing dispatchable power generation or constructing new power generation, both with a minimum capacity of 100 MW. For context, a 100 MW natural gas power plant can supply electricity to tens of thousands of households.
The impetus behind incentivizing natural gas power generation stems from apprehensions that the state’s power sector needs more expeditious dispatchability during peak emergencies. Former Public Utility Commission Chair Peter Lake underscored that while Texas’ dispatchable power supply experienced a meager 1.5% growth between 2008 and 2020, the state’s population surged by 24%. This disturbing trend underscores a growing demand-supply gap, exacerbated by the increasing reliance on intermittent green energy sources such as wind and solar. Pablo Vegas, current President and CEO of the Electric Reliability Council of Texas (ERCOT), stressed the pressing need for electric market reforms to incentivize dispatchable generation. Despite Texas’ dominance in wind energy, contributing 26% of all U.S. wind-generated electricity in 2022, natural gas remains the predominant contributor to the state’s electricity generation.
Proposition 7 garnered support from influential entities, including ConocoPhillips, the Texas Association of Manufacturers, the Texas Pipeline Association, and Valero Energy Corporation. Conversely, the Sierra Club, Environment Texas, Texas Advanced Energy Business Alliance, and Texas Consumer Association voiced their opposition.
Luke Metzger, Executive Director of Environment Texas, lamented the legislative oversight of cleaner energy solutions, underscoring the imperative for increased investment in wind, solar energy, battery storage, energy efficiency, and grid interconnection. The dichotomy between traditional and cleaner energy sources continues to unfold in the complex energy landscape of the Lone Star State.