Meeting Summary – 08/27/24 Business and Commerce – Texas Energy Fund

Texas Energy Fund

2 – Connie Corona, Executive Director, PUCT

• Connie Corona provided an update on the four Texas Energy Fund programs.
• In-ERCOT-Loan program.
  • The PUC will soon decide on which projects to fund through the ERCOT loan program; they received 72 applications totaling over $24 billion in requested funding, in more than 38,000 MW of dispatchable generation.
  • A competitive and transparent review process is underway. Staff’s portfolio of projects will focus on diversity among applicant types, diversity of citing, speed to market, ability to relieve transmission constraints, and diversity of technology types.
  • After the 8/29/2024 meeting, selected projects will undergo a rigorous due diligence phase before finalizing loan agreements, with disbursements starting before the statutory deadline in late 2025.
• The Back Up Power Package
  • PUC has finalized a contract with a research entity for developing backup power specifications
  • Advisory committee has been meeting since early this year for next steps
  • Reports from both will be received this fall to help inform design of the program. 
• Outside ERCOT Grant Program
  • Draft of the program will be out this fall for public comment to help inform project design, considering what type of projects should be funded.
  • Adoption of rule anticipated in Spring of 2025
• Completion bonus grant.
  •  Will pay out bonuses over ten years for new facilities that meet performance standards.Currently building out structure for grant administration, with application opening January 1.
  • The TEF aims to stabilize and strengthen the grid, focusing on current and projected needs.
• Senator Johnson raised questions about the purpose of the TEF being administered to address the needs of the next giant load or to stabilize the grid we have today.
  • Director Corona confirms the TEF was created in 2023 to strengthen and stabilize the grid as it existed at that time and today, and the projects that will be selected are focused on that goal.
• Senator Johnson asks if it is certain awardees proceed with construction.
  • Director Corona explains that there is a rigorous due diligence process for awardees, and if a project drops out, replacements will be considered based on timing and portfolio needs.
• Senator Birdwell asks if any of the applicants are nuclear.
  • Director Corona confirmed no nuclear-based applications were received, with most being gas generation projects.

2 – Cheryl Shattan – Wolf Hollow 2 Power Plant – Testimony

• Wolf Hollow seeks a low-interest loan from the Texas Energy Fund to expand with a third gas power plant, adding eight more turbines.
• They have also requested a permit from the Texas Commission on Environmental Quality (TCEQ) to increase air pollution.
• Concerns were raised about visible gas clouds and noxious odors from the existing turbines over the past year.
• Shattan described several explosions in the past year that released large clouds of pollutants and caused significant disturbances.
• Wolf Hollow has leased land to cryptocurrency mine Marathon Digital, causing the plant to operate at 99% capacity.
• Shattan claims the crypto mine expansion would result in increased air and noise pollution, harming local residents and wildlife.
• She argued that Wolf Hollow does not deserve a low-interest loan due to irresponsible practices and environmental impact.
• Shattan urged the committee to support companies that are responsible and good neighbors.

2  Shannon Wolf – Wolf Hollow 2 Power Plant – Testimony

• Constellation Energy’s Wolf Hollow Two power plant is located in her precinct.
• The area around the plant includes ranches, farms, homes, and churches; it is not an industrial area.
• Residents are suffering from illnesses related to pollution from a cryptocurrency mine on the property.
• Wolf Hollow has applied to the Texas Energy Fund to expand their facility from two to ten stacks and has applied to the TCEQ to increase air pollution emissions.
• The expansions would include pollutants like particulate matter and mercury, worsening the already compromised health of the community.
• Granbury, known as the celebration capital of Texas, risks damage to its farmland, citizens’ health, and Lake Granbury from the expansion
• Local leaders, including the commissioner, county judge, and Granbury mayor, do not support the expansion.
• Dr. Wolf asks to deny Wolf Hollow Two’s application for funding to prevent further harm to the community.

2 – Daniel Lakey – Wolf Hollow 2 Power Plant – Testimony

• Lakey claims the facility violates state noise pollution laws daily and negatively impacts the community’s health.
• Issues cited include heart conditions, heart arrhythmia, hearing loss, headaches, loss of sleep, loss of appetite, anxiety, and weight loss.
• Lakey moved his family due to the unlivable conditions caused by the pollution.
• He argues data centers like Wolf Hollow and Marathon Data Center are harmful to the community.
• Lakey urged not to allow Constellation to build another plant or expand until they improve their practices.

2 – Cyrus Reed, Sierra Club, 

• Cyrus Reed from the Sierra Club mentioned four new programs following the passage of legislative measures SB2627 and Proposition 7.
• PUC has approved rules for the first two of these new programs, but rules for the other two, which focus on backup power and resilience outside of ERCOT, have yet to be approved
• Reed emphasized the need for funding and rulemaking for the remaining programs as the new legislative session approaches.
• Reed proposed the creation of a public portal on the PUC’s website to allow public input on applications, to ensure local community support and avoid misuse of taxpayer funds.
• Brief mention of future discussions surrounding SB624 and concerns of environmental impacts of clear cutting land for solar projects.

2 – Larry Linenschmidt – TEF

• TCEQ asked Texans in Dallas and Houston to avoid driving due to poor air quality.
• Highlighted that five largest MSAs in Texas are noncompliant with EPA air quality standards and that four Texas cities are in the American Lung Association’s top 25 for ozone pollution.
• Stated that electric generation from natural gas or fossil gas significantly contributes to ground-level ozone and particulate matter pollution in Texas.
• Urged for the use of the latest emissions technology and carbon capture for gas plants.
• Recommended preventing new fossil gas plants from being located within 3 miles of housing.
• Requested the inclusion of batteries in the funding programs.
• Suggested giving counties the power to veto the siting of plants within their boundaries.
• Proposed employing an experienced lender to oversee the program and charge borrowers for administration.
• Asked for parent companies of borrowers to guarantee the loans due to high risk of assets becoming uncompetitive.
• Advocated for loans to be fully amortized within 15 years to limit the financial and environmental impact.
• Warned against socializing the cost of additional subsidies to the oil and gas industry and transitioning the state into owning fossil gas plants.
• Testimony concluded with a call for questions, reminder of the next interim hearing on October 1, and adjournment of the committee meeting.