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April 23 (Reuters) - Investment firm Starwood Energy Group on Friday proposed spending $8 billion to build 11 natural-gas fired power plants in Texas, the company said, a plan that would compete with a similar proposal from Berkshire Hathaway Inc .
Starwood, in a letter to the Public Utility Commission of Texas (PUCT), said its proposal would help solve reliability problems that came to a head after nearly half the state’s power generation was knocked out during a February freeze.
The storm killed more than a 100 people, left about 4.5 million Texans without power for days, and sent wholesale electricity prices soaring. At least three companies declared bankruptcy as a result and many others are suing over the unexpected price spikes.
Starwood proposed building new natural-gas fired power plants generating a total of 11 gigawatts, enough to power 2.2 million Texas homes on a hot summer day, according to a Reuters analysis.
It would finance the project by creating a new regulated company to hold the assets and recover a rate of return on the investment approved by the PUCT. The firm requested the rate of return not exceed 9%, according to the letter, which was also sent to the state’s grid operator, the Electric Reliability Council of Texas (ERCOT).
“Starwood Energy believes its plan will create a single point of accountability to manage emergency issues in ERCOT in a cost effective and transparent manner,” said Starwood CEO Himanshu Saxena in a letter to ERCOT and the Texas PUC.
A representative for the Texas PUC had not yet seen the proposal.
Billionaire Warren Buffett’s Berkshire Hathaway earlier pitched a plan to spend $8 billion to build 10 new natural gas-powered plants in the state.
Starwood proposed that revenues generated in excess of the fuel and operating costs of the plants when they were running would be returned to ERCOT for distribution to its customers. ERCOT would have full rights to dispatch the facilities as necessary, the letter said. (Reporting by Liz Hampton in Denver; Additional reporting by Scott DiSavino in New York; Editing by Chris Reese)