Rayburn Prepares For The Future, Buys 758 MW Gas Plant

Three important changes are on the horizon for Texas’ electric utilities. They are the relentless growth in demand, as the state continues to attract new residents and businesses; a new design for ERCOT, the statewide grid; and the imminent arrival of new loads from electric vehicles and the general electrification of everything.

Things are changing rapidly, and the state’s many utilities are getting the message. Rayburn Electric Cooperative, based in Rockwall, is one of these and it is out front in its preparations for the future.

Rayburn, with a load of around 1,200 MW, is small; it has four distribution companies in its service territory northeast of Dallas. And it is feeling all the pressures that are bearing down on the entire Texas system.

David Naylor, president and CEO, announced on April 18 that the utility is making its largest purchase since its creation in 1979. It is buying the 758 MW, natural gas combined-cycle Panda Sherman plant from the private equity firm that built it. The plant will be renamed Rayburn Energy Station.

Open-Bidding Buy

The purchase was made through open bidding, and the price hasn’t been disclosed. But Naylor told me the deal “will push us to just over $1 billion in assets. We’re at $600 million now.”

He also told me that buying the plant will enable the utility to have a secure supply of electricity going forward. It is served by two gas pipelines. The utility’s other generation holding is 25-percent ownership in a Calpine
CPN
combined-cycle unit. “It is a big step for us because we have never owned a generating plant in its entirety. But this will put us in the driver’s seat,” he said.

Rayburn Energy Station is a Siemens plant and is very efficient. High efficiency mitigates, to some extent, the greenhouse gasses that gas-fired plants emit. The higher the efficiency, the greater the conversion of fuel to power and fewer emissions.

With the plant and its complement of 27 employees, Naylor explained, Rayburn will be more independent of power purchase contracts — although it still buys wind, solar and hydro power to fill out its power needs.

Naylor has been an early and categorical supporter of distributed energy resources and he says they have had a substantial and beneficial impact on the utility’s load during peak periods in the evening. This, interestingly, as 90 percent of Rayburn’s customers are residential in the Dallas metroplex area.

ERCOT Redesign Expected

Naylor, like other Texas utility chiefs, is expecting the redesign of the ERCOT market to be felt, but how much depends on how revolutionary the redesign, which is taking place now under the watch of the Texas State Legislature and the Public Service Commission.

Observers believe that it will include some form of market adjustment to provide for reliability and regular forward-pricing, although Texas will remain wedded, at least in word, to its unique energy-only market which worked well until devastating Winter Storm Uri plunged the state into five days of chaos in February 2021.

It is unclear how fast electric vehicle penetration will occur in Texas with its traditional commitment to the internal combustion engine.

Utility executives I have spoken to believe that there will be “clusters” of EV users in liberal cities, like Austin, but they won’t be adopted at the same speed as they have elsewhere. Also, gasoline is cheaper in Texas than elsewhere in the nation, which may delay the switchover.

The big driving force in Texas is the rate at which the state continues to grow and to need additional power. Between 2000 and 2022, the population of the state grew by over 9 million. It now stands at just over 30 million and is still growing.

No utility in the state can ignore that, and Rayburn certainly isn’t.