Breaking News: Kerrville City Council approves KPUB’s power plant financing

The Kerrville City Council voted unanimously Tuesday night to approve financing for a new natural gas power plant proposed by the Kerrville Public Utility Board (KPUB), marking a significant step toward securing the community’s energy future.

The $181 million project will be funded through a combination of a Texas Energy Fund loan and open market bonds, with construction scheduled to begin next year and the plant expected to be operational by June 2027.

“You all have done a great job,” Councilmember Kent McKinney said during the meeting, praising KPUB’s thorough planning and presentation.

KPUB CEO and General Manager Mike Wittler explained that the reciprocating internal combustion engine (RICE) plant is designed to provide reliable power during peak demand periods, with the ability to start up in under 10 minutes.

The timing is crucial, as the Electric Reliability Council of Texas (ERCOT) predicts the state’s energy demand could nearly double by 2030, with potential supply shortfalls beginning as early as summer 2026.

Chief Financial Officer Amy Dozier outlined the financing structure: 60% ($105.3 million) will come from the Texas Energy Fund at a 3% interest rate, with KPUB being the only municipal entity selected for this program. The remaining 40% ($75.9 million) will be raised through open market bonds with a maximum interest rate of 6.5%.

Three key factors drove the decision to build the plant: the expiration of a major power contract at the end of 2026, increasing energy scarcity driving up market prices, and the opportunity provided by the Texas Energy Fund’s low-interest financing.

The plant aligns with Governor Greg Abbott’s “All of the Above” energy strategy, which encourages development of diverse power generation sources to meet Texas’ growing needs. It will operate approximately 20-25% of the time, creating what Wittler described as a “price ceiling” on market energy costs.

Construction will follow a detailed timeline with bond closing and funding in May 2025, full notice to proceed in June 2025, construction mobilization in summer 2025, engine delivery in September 2026, substation completion in December 2026, first synchronization with the grid in March 2027, and commercial operations beginning in June 2027.

The project represents the latest step in Kerrville’s efforts to secure reliable essential services, comparable to the community’s successful approach to water resource management.