By Russell Gold
Warren Buffett's Berkshire Hathaway Inc. is pitching Texas lawmakers on a plan to spend $8.3 billion to build power plants that would run during electricity emergencies, a month after the state suffered devastating blackouts.
Chris Brown, the chief executive of Berkshire Hathaway Energy Infrastructure, said it could build 10 large natural-gas plants that would only operate during times of extreme need, and not otherwise compete in the state's power market. He said the plants could be operational by November 2023.
"The state and its residents should have a reliable source of backup power generation during emergencies to protect residents and businesses, " said Mr. Brown. "This is a break-the-glass-in-case-of-emergency plan."
In February, half of the state's power plants failed during a severe cold snap, forcing the grid operator to institute widespread blackouts that lasted for four days.
The Texas legislature would need to approve changes to its laws to allow for a new regulated utility to provide emergency backup power.
Mr. Brown said he hoped to receive a 9.3% rate of return on the investment, the same as regulated electric companies that operate a portion of the grid such as Sempra Energy unit Oncor and CenterPoint Energy Inc.
He said Berkshire Hathaway would create a $4 billion financial guarantee the state would receive if the plants didn't operate when needed. They would have a week's supply of liquefied natural gas on site, fixing the problem of the state's gas supply infrastructure freezing up.
Berkshire officials have met with state leaders in recent days.
Kelly Hancock, a Republican who chairs the state senate's business-and-infrastructure committee, said he was lukewarm on the idea.
"We need to make sure the events that occurred don't ever occur again, so you don't take anything off the table," he said. But he added that "I have not heard a lot of receptivity toward moving in this direction."
Berkshire has been interested in the Texas power market for several years. In 2017, it attempted to purchase Oncor for $9 billion, but was outbid by Sempra.
Write to Russell Gold at firstname.lastname@example.org
(END) Dow Jones Newswires
March 25, 2021 16:14 ET (20:14 GMT)Copyright (c) 2021 Dow Jones & Company, Inc.