Dive Brief:
- Aegle Power’s application for a Texas Energy Fund loan to develop a 1,292 MW gas-fired power plant was denied by the Public Utility Commission of Texas on Wednesday for failure to “meet due diligence requirements.” The rejection comes less than a week after regulators included the project in an almost 10 GW portfolio of resources preliminarily selected for loans.
- The PUCT listed the project as “Application 162 - NextEra and Aegle Power.” NextEra, however, on Tuesday told regulators it was not involved in the project and its name was added “without NextEra's knowledge or consent.”
- Aegle Managing Partner and CEO Kathleen Smith declined to comment, citing the confidentiality of TEF applications, but in an email before the PUCT’s denial said, “the project is moving forward. It is critical for the [Rio Grande Valley].”
Dive Insight:
Smith filed a notice of intent to apply for a TEF loan in May, describing a “combined cycle generating facility known as the Aegle Power Generation Station located in Harlingen, Texas.”
Aegle’s one-page notice of intent did not mention NextEra.
A NextEra spokesperson said the company’s name “was submitted without our knowledge as part of a July application seeking funding.”
The company told the PUCT that NextEra “is not seeking funding as part of the TEF Program, is not participating in the project for which NextEra was named, and hereby requests that NextEra be immediately removed from PUCT records as a sponsor for the Aegle Power project.”
Voters approved the TEF loan program last year and regulators appropriated $5 billion, largely to incentivize development of new gas-fired generation. Texas Gov. Greg Abbott, R, has said he wants to expand the program to $10 billion “to build more new plants as soon as possible.”
The PUCT received 72 loan applications representing more than 38 GW in the Electric Reliability Council of Texas system. An initial 17 were tapped for a round of due diligence, before loans would be finalized.
There are now 16 applications remaining in a due diligence review, which is expected to take up to eight months to complete, the PUCT said Wednesday. That review will include verifying project details, financial viability, construction plans, interconnection capabilities and developers’ ability to complete the project and repay the loan.
“We’re still a long way from selecting any company to receive a Texas Energy Fund loan. Proposed projects that have reached this stage have only met the initial requirements for applications,” PUCT Executive Director Connie Corona said in a statement. “We have a multi-stage application and verification process that gets more rigorous at every step to ensure only financially sound applicants with viable projects receive these loans.”
In addition to denying Aegle’s application, the PUCT said it will pursue a minimum 10% reduction in the contract payment amount owed to the agency’s TEF contractor Deloitte, which conducted the first round of application review.
Lawmakers have indicated they will investigate how Aegle’s application advanced. Sen. Charles Schwertner and Rep. David Spiller, Republican co-chairs of the Texas Energy Fund Advisory Committee, said they will “address these concerns” at an Oct. 8 hearing.
The PUCT and Deloitte “advanced a problematic and unqualified application by an energy executive who was publicly convicted of fraud in our state,” the lawmakers said in a joint statement. “The protection and stewardhsip of taxpayer money must be the highest priority.”
Smith pled guilty in 2017 to embezzling “a significant amount of money from Chase Power” according to the U.S. Attorney's Office, Southern District of Texas.
The PUCT’s denial of Aegle’s project “is not subject to motions for rehearing or appeal,” according to the order.
