Proposition 7 would provide billions in incentives for new power plants in Texas

A lot of the proposed constitutional amendments on this year’s ballot ask voters what to do with big piles of state money. But none deals with more money than Proposition 7, which would take $10 billion and use most of it to subsidize building more power plants in Texas.

Of course, you wouldn't know that from reading the ballot language.

On the ballot, Proposition 7 asks voters whether they want to create a “Texas energy fund ... to support the construction, maintenance, modernization, and operation of electric generating facilities.”

If approved, it would empower the Public Utility Commission of Texas to oversee that fund, doling out the $10 billion lawmakers have already allocated to it.

Where would the money go?

The biggest chunk of that money, $7.2 billion, would go into low interest loans and incentives to power companies to build natural gas power plants.

The plan was proposed by lawmakers as a way to improve Texas' electric grid by increasing what they call “dispatchable” energy sources. That’s a power plant you can turn on when needed — one that’s not dependent on wind or sun to generate electricity.

The way the proposal is written suggests the loans could go toward the construction of nuclear power plants, coal power plants — most things with an on/off switch. But for all intents and purposes, the money would likely fund the construction of gas plants.

In fact, some of the lawmakers who championed the proposal said their goal is to put the brakes on renewables and subsidize natural gas power plants.

It’s worth noting that money from the Texas Energy Fund is prohibited from funding big battery storage projects, like grid scale batteries. Those batteries, often located near wind and solar facilities, also have on/off switches.

The plan is supported by many power and oil and gas industry groups, as well as the head of the Electric Reliability Council of Texas, who says it will help bolster the grid by incentivizing more power plants.

On the other side, you have people who say that’s a bad way to spend public money.

Some market advocates say the plan amounts to a giveaway to energy companies and the oil and gas industry. Environmental groups point out that these new plants would run for decades, locking in dependency on fossil fuels at a time when the grid should be going green to fight climate change.

What about the grid?

While ERCOT's CEO has said the Texas Energy Fund would help bolster the state grid, many independent analysts are skeptical.

For one thing they are not sure it will lead to any new power plants being built.

Doug Lewin, an energy consultant who writes the Texas Energy and Power Newsletter, says the fund aims to subsidize the building of new power plants at nearly the same rate as they're already being constructed.

“It does kind of beg a question,” he says. “Are we putting money toward things that probably would have come into the market anyway?”

Some, like Lewin, say there are cheaper and cleaner ways to improve the grid with energy-efficiency programs and increased battery storage tech.

Finally, many have pointed out that natural gas plants breaking down was a key cause of the last big blackout. So gas plants and the gas supply aren’t as reliable as the gas industry and its supporters in the state Legislature would suggest.

The rest of the money

Out of the $10 billion put into the Texas Energy Fund, $1.8 billion would be set aside for energy resilience projects at critical facilities. That means backup power or microgrids at places like hospitals or police stations.

This part of the proposal has been far less controversial. Ever since the 2021 blackout, there has been a general consensus that hospitals and other Texas critical facilities need more protection.

It’s also possible that giving these facilities their own added backup power could help free up more energy for the rest of the grid in the event of rolling blackouts.

The remaining $1 billion of the plan’s price tag would go specifically to fund energy projects in Texas outside of the state's grid. About 90% of Texans are on the grid run by ERCOT, but people in the panhandle, parts of East Texas and El Paso are not.