March 26, 2021 Read More →

Buffett pitches controversial plan to build more Texas gas plants

S&P Global Market Intelligence:

Billionaire Warren Buffett’s Berkshire Hathaway Energy is pitching Texas lawmakers on an $8.3 billion proposal to build 10 new gas-fired power plants across the state to help avert another energy crisis like the one last month that left millions of customers without electricity.

The Berkshire Hathaway Inc. subsidiary’s proposal would require new legislation to create a regulated utility, the Texas Emergency Power Reserve, that would own 10 GW of new generating capacity and run that generation only when demand outstrips supply, according to Chris Brown, CEO of affiliate Berkshire Hathaway Energy Infrastructure.

Dennis Wamsted, an analyst at the Institute for Energy Economics and Financial Analysis, was less kind, calling the proposal a backdoor attempt at creating a monopoly capacity market.

Operated by the Electric Reliability Council Of Texas Inc., Texas’ wholesale power market relies on sky-high scarcity pricing to ensure generators are online when they are needed instead of a mandatory capacity market such as those operated by the PJM Interconnection, ISO New England and New York ISO.

Wamsted said instead of creating a new capacity market, Texas should ensure that existing installed generating capacity can withstand the sporadic winter storms that roll through the state, including through mandatory weatherization standards currently under consideration by the state legislature. “Fix that, and you don’t need this reserve,” the analyst said. 

[Zack Hale and Garrett Hering]

More: Warren Buffett’s $8.3B plan to avert Texas blackouts raises eyebrows

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