A Post-Legislative Session Update on the Texas Energy Fund
By Kamil Cook
Public Citizen was opposed to the Texas Energy Fund (TEF), approved by lawmakers in 2023. It might come with a name that sounds nice and beneficial. Still, the details tell a different story, one of a state government intent on using tax dollars to prop up the fossil fuel industry in its losing battle against renewable energy.
The Texas Energy Fund is composed of three different tranches totaling $10 billion: $7.2 billion for gas plants, $1.8 billion for backup power, and $1 billion for system upgrades within Texas but outside of the state grid, which covers most of Texas and is managed by ERCOT.
Up until the end of this year’s legislative session, which ended this past summer, the only tranche that had been funded was the $5 billion allocation to build new power plants that run by burning methane gas. Since the end of this summer, the subsequent $5 billion was allocated, which gave more funding to the gas plants effort and the other two tranches of the TEF. While we do not support funneling taxpayer dollars into the pockets of fossil fuel companies, we support upgrading aging infrastructure and backup power—two things that actually save Texans money and provides energy reliability.
While the funding for modernization projects outside of ERCOT has already begun, there have only been three disbursements of TEF funds to gas plant projects across Texas. These have totaled $883 million for all three projects, with the earliest project planning to come online in the summer of 2026. If a goal of the TEF is to improve the reliability of the Texas grid, investing more money in gas power plants that will take years to build is one of the least effective ways to provide enough energy supply to a state that keeps needing more.
More effective ways to improve reliability on the grid quickly, and for the average ratepayer, come from the other two aspects of the Texas Energy Fund: funding backup power and modernizing equipment outside of ERCOT but within Texas.
The next largest tranche of the Texas Energy Fund focuses on funding backup power. Implementation of these funds is still being worked on, but it will generally focus on creating microgrids, and battery and gas backups at grocery stores, hospitals, nursing homes, water treatment plants, and other critical facilities across the state.
Texans will notice the addition of these funds once they begin because it will mean more community spaces will be cooling (or warming) centers during extreme weather events or when there are power outages or the threat of them. These will provide people reprieve in a way that a gas plant cannot during an emergency.
The last section of the Texas Energy Fund, the modernization projects outside of ERCOT but within Texas, has begun, with millions of dollars being allocated to fund the modernizing of aging infrastructure. This is an effective use of taxpayer dollars because this is not locking in fossil fuel production for decades to come, like it does when funding a new gas plant
Repairing aging equipment and improving monitoring saves money and can even save lives. In February 2024, the Smokehouse Creek fire in the Texas Panhandle burned over one million acres, killed three people and 15,000 heads of cattle, and likely caused an economic loss of over $1 billion. The investigative report from the Texas House of Representatives found that the fire was likely caused by “electric power poles and lines that had not been effectively maintained or replaced by a utility provider and an oil and gas operator.” In other words, aging energy infrastructure broke, fell on extremely dry brush and sparked the largest wildfires in the state’s recorded history.
Projects being funded right now are prioritizing improving grid monitoring and aging transmission lines. These improvements are more likely to be felt by the average ratepayer who should have fewer outages as a result—and hopefully fewer disasters like the Smokehouse Creek fire. Most reliability issues that a ratepayer experiences in the US occur on the distribution and transmission side of the grid, not from generation issues.
All in all, the Texas Energy Fund is a mixed bag. Over $7 billion for funding new gas plants would be disappointing even if it didn’t take so long to get off the ground. The modernization and backup power program funding allocations are more promising because they will be more immediately felt by Texans who will save more money and be safer as a result. Hopefully this can be a lesson for future elected officials in Texas.
Cook is a climate and clean energy associate with the Texas office of Public Citizen