The Texas Vitality Fund (TEF), a flagship mortgage program designed to spice up the state’s dispatchable era, confronted its first setback on Sept. 4 when the Public Utility Fee of Texas (PUCT) denied Aegle Energy’s mortgage utility for a 1,292-MW mixed cycle producing facility in Harlingen.
The PUCT mentioned Aegle Energy’s utility, filed on Might 28, failed the due diligence part of the Texas Vitality Fund (TEF) In-ERCOT Mortgage Program utility course of, rendering it ineligible to obtain TEF funding.
Initially, the PUCT listed NextEra as a co-sponsor of the Harlingen mission because it unveiled its shortlist of 17 TEF tasks that may proceed to the due diligence part on Aug. 29. Nonetheless, in a Sept. 3 letter, Mitchell Ross, NextEra’s vice chairman and normal counsel, knowledgeable the fee that “NextEra’s identify was submitted within the Aegle utility with out NextEra’s information or consent.” NextEra is “not looking for funding as a part of the TEF Program, will not be taking part within the mission for which NextEra was named, and hereby requests that NextEra be instantly faraway from PUCT data as a sponsor for the Aegle Energy mission,” he wrote.
In an announcement on Wednesday, the PUCT additionally famous it will pursue a “minimal” 10% discount in a contract cost quantity, which the company owes to Deloitte, a TEF contractor that performed the primary spherical of utility evaluation.
The setback has ramped up issues amongst some Texas legislators, who now seem like scrutinizing the TEF program’s utility course of extra intently. In a joint assertion posted on X on Wednesday, state Sen. Charles Schwertner and state Rep. David Spiller, co-chairs of the Texas Vitality Fund advisory committee, mentioned they have been involved concerning the oversight and due diligence being utilized to this system.
“The Senate and Home have despatched clear messages to the Public Utility Fee reemphasizing the significance of a deliberate, clear, and prudent evaluation course of for Texas Vitality Fund tasks and that solely probably the most certified, aggressive tasks obtain public funding. Adherence to these aims is essential,” they wrote.
“On Tuesday, we discovered that the Public Utility Fee and its contracted program supervisor, Deloitte LLP, superior a problematic and unqualified utility submitted by an vitality govt who was publicly convicted of fraud in our state. The safety and stewardship of taxpayer cash should be the very best precedence.” The legislators have mentioned they are going to work to deal with these issues on the committee’s first listening to on Oct. 8.
Sixteen Tasks Stay in Due Diligence Evaluate
The PUCT’s denial of Aegle Energy’s utility means 16 gas-fired energy tasks—a mixed 8,489 MW—stay on the regulator’s shortlist to advance to the TEF due diligence part. When the PUCT unveiled its 17 choices on Aug. 29, it mentioned these have been whittled down from 72 mortgage functions—representing 38 GW of proposed new dispatchable era that sought greater than $24 billion in funding. The PUCT’s 17 unique choices amounted to a requested mortgage complete of $5.38 billion.
As POWER has reported, the remaining 16 tasks are an assorted assortment of fuel vegetation. They embrace large-scale services just like the 1,350-MW CPV Basin Ranch proposed by Aggressive Energy Ventures and GE Vernova, smaller peaking services, and different tasks poised to serve rising demand or present reliability.
| SPONSOR NAME | CAPACITY (MW) |
|---|---|
| Aggressive Energy Ventures (CPV Group LP), GE Vernova (Mixed cycle, Reeves County) | 1,350 |
| Hull Road Vitality by wholly owned subsidiary MPH Bastrop Peakers, LLC (Peaking, Cedar Creek) | 1,080 |
| EmberClear Administration; Jupiter Island Capital | 900 |
| ENGIE Versatile Era NA LLC (Peaking energy, Denton County) | 930 |
| Rayburn County Electrical Cooperative, Inc., Rayburn Vitality Station LLC (Peaking, Sherman) | 570 |
| WattBridge Vitality IPP Holdings, LLC (Angelina County) | 600 |
| LS Energy Fairness Advisors, LLC (Jack County) | 490 |
| Calpine Corp. (Peaking, Freestone County) | 460 |
| NRG Vitality, Inc. (Peaking, Houston) | 456 |
| Vistra Corp. (Permian Basin) | 440 |
| Howard Energy Era, LLC (Fuel residue, Corpus Christi) | 271 |
| Constellation Vitality Era, LLC (Peaking, eight items, Hood County) | 300 |
| Mercuria Investments US, Inc; Reliability Design and Growth, LLC | 226 |
| Frontier Group of Firms/Lonestar Industrial Park LLC (Two items, Morris County) | 162 |
| Hunt Vitality Community, LLC.; John Hancock Life Insurance coverage Firm (USA); Manualife Infrastructure III AIV Holdings B, L.P. | 132 |
| Kerrville Public Utility Board Public Facility Company; Kerrville Public Utility Board (Kerr County) | 122 |
| TOTAL | 8,489 |
Desk: Whereas the Public Utility Fee of Texas (PUCT) on Aug. 29 chosen 17 tasks (representing a complete of 9,781 MW of proposed new gas-fired dispatchable energy era tasks), it denied one utility on Sept. 4. This desk reveals the 16 tasks that stay shortlisted as of Sept. 4. Supply: PUCT/POWER
The choices marked a big step for the TEF In-ERCOT Mortgage Program. Established by a constitutional modification accredited by Texas voters on Nov. 7, 2023, the mortgage program goals to shore up dispatchable era—primarily new pure fuel vegetation—to make sure it’ll have dependable era to fulfill hovering demand projections. Senate Invoice 2627, the Powering Texas Ahead Act, funds the TEF with as much as $5 billion in funding.
The TEF loans, which will need to have a time period of 20 years with an rate of interest of three%, could also be used to both finance upgrades to current dispatchable era services that improve capability by no less than 100 MW or fund the development of recent dispatchable era tasks with a minimal capability of 100 MW. Eligible new tasks, notably, additionally qualify for a completion bonus grant of as much as $120,000 per MW if interconnected by June 1, 2026, or as much as $80,000 per MW if interconnected earlier than June 1, 2029.
PUCT Stories Rigorous Choice for TEF Loans
Because it unveiled its choices, the PUCT final week underscored that employees and the TEF administrator had assessed every of the functions individually, based mostly on standards outlined within the Public Utility Regulatory Act (PURA) and the PUCT’s guidelines. It mentioned functions have been evaluated “based mostly on the applicant’s expertise and energy of financing in addition to the proposed mission’s technical and monetary attributes.”
As well as, commissioners outlined 5 priorities for creating its mortgage portfolio, together with tasks slated to advance to the subsequent part of the evaluation course of. These embrace: “range amongst applicant varieties, range in siting location, velocity to market, capability to alleviate transmission constraints, and variety of era useful resource kind,” it mentioned.
“PUCT employees’s evaluation of every of the 72 functions was offered to the Commissioners. Employees additionally offered a really helpful portfolio of functions that addressed the Commissioners’ 5 core priorities for development to due diligence,” it added.
In the course of the “due diligence” part, which is scheduled to span between 4 to eight months, the PUCT mentioned its employees and Deloitte employees will “confirm every mission’s particulars, together with, however not restricted to taking part firms, monetary viability, development plans, interconnection capabilities, capability to finish the mission and talent to pay again the mortgage.” If profitable, the fee will enter right into a mortgage settlement with profitable candidates. Preliminary mortgage disbursements could possibly be awarded by Dec. 31, 2025, based on the PUCT.
Nonetheless, “an utility could also be denied at any level within the due diligence course of,” the PUCT underscored. “An applicant can also select to withdraw their mission. These functions will then be faraway from consideration by Fee order.” The PUCT famous that a number of tasks from the pool of remaining functions may exchange these which are faraway from consideration.
On Wednesday, PUCT Govt Director Connie Corona advised far more work stays. “We’re nonetheless a good distance from deciding on any firm to obtain a Texas Vitality Fund mortgage. Proposed tasks which have reached this stage have solely met the preliminary necessities for functions,” she mentioned. “We’ve a multi-stage utility and verification course of that will get extra rigorous at each step to make sure solely financially sound candidates with viable tasks obtain these loans.”
—Sonal Patel is a POWER senior editor (@sonalcpatel, @POWERmagazine).
