Texas Governor Greg Abbott announced this week the state’s first-ever Texas Energy Fund (TEF) loan agreement, which will support the development of a 122-megawatt natural gas power plant in Colorado County. The Rock Island Generation Project, sponsored by the Kerrville Public Utility Board (KPUB), is set to supply dispatchable electricity near the Houston metropolitan area, one of the Electric Reliability Council of Texas (ERCOT)’s highest-demand regions.
“As Texas continues to rapidly grow, we must further fortify the state power grid,” Governor Abbott said in a press release. “This natural gas power plant will help bear the load of the largest electricity demand area in the state.”
The project represents the first finalized loan under TEF’s In-ERCOT Generation Loan Program, designed to promote reliable and affordable power generation. According to Public Utility Commission (PUC) Chairman Thomas Gleeson, this milestone brings Texas “one step closer to bringing new power online.” Gleeson emphasized the long-term goal of the fund: ensuring energy reliability to support the state’s population growth and economic expansion.
The loan terms include a 20-year TEF loan of up to $105 million at a 3% interest rate, helping cover project costs not to exceed $175 million. The facility will interconnect with the South Texas Electric Cooperative’s Rock Island substation in the ERCOT South Load Zone, placing it in strategic proximity to the Houston Load Zone. KPUB General Manager & CEO Mike Wittler highlighted the importance of the project, calling it “a historic milestone” that will “enhance grid reliability for all Texans” while shielding local ratepayers from future price volatility.
Slated to begin operations by June 1, 2027, the natural gas facility must meet specific performance criteria outlined in TEF rules. Meanwhile, the TEF program is evaluating 18 other active loan applications that could collectively add more than 9,100 MW of dispatchable power to the ERCOT system. This expansion effort underscores Texas’ commitment to strengthening its energy infrastructure.
