A month after the state suffered devastating blackouts, Warren Buffett’s Berkshire Hathaway is “pitching Texas lawmakers on a plan to spend $8.3 billion to build power plants that would run during electricity emergencies,” according to a recent article in The Wall Street Journal.
Berkshire’s Chris Brown said the company could build 10 large natural-gas plants to operate only operate during times of extreme need (and not otherwise compete in the state’s power market), and the plants could be operational by November 2023. He described the program as a “break-the-glass-in-case-of-emergency plan” that would serve as a reliable source of backup power generation to protect residents and businesses. During a severe cold snap in February, half of the state’s power plants failed, “forcing the grid operator to institute widespread blackouts that lasted for four days.”
Brown said that Berkshire would hope to receive a 9.3% rate of return on the investment, similar to that of the state’s regulated electric companies.
Some of the state’s power generators are unhappy with the proposal, arguing that it presents a potentially unfair situation for existing power plants in the state’s competitive power market, known as Ercot. Chris Moser of NRG Energy, one of Texas’ largest power generators, said, “In a competitive market, the companies are supposed to bear the risk, not the consumer. This flips that on its head and guarantees profits to one of the world’s richest men.” But state Senator Nathan Johnson (D) reportedly said the proposal would allow the state to preserve its competitive market design: “It gives us the reliability that we want without altering the market. We can keep our clean energy and be able to turn the lights on in the cold and the heat.”