Whether it is Donald Trump, Greg Abbott, or John Whitmire, the cycle of taking money from the poor to hand it to the rich never stops.
NRG Energy’s new Greens Bayou power plant is expected to create about 14 permanent full-time jobs.
To help make that happen, NRG is receiving or pursuing a public-support package that touches roughly $419 million: up to $370 million in a low-interest state loan, about $21.1 million in Galena Park ISD tax savings, a proposed $11.28 million City of Houston tax abatement, and an estimated $16.7 million in value from a state completion-bonus grant. (Texas.gov)
That does not mean taxpayers are handing NRG a $419 million check. The $370 million is a loan that NRG must repay. But it is no ordinary commercial loan. The Texas Energy Fund is lending the company up to 60% of the plant’s cost for 20 years at a fixed 3% interest rate. NRG itself estimated that favorable financing would be worth about $90.6 million in present-value savings. (Texas.gov)
Meanwhile, ordinary Houston homeowners have just begun paying a new $5 monthly garbage fee because City Hall says it needs more money to maintain reliable trash collection and balance its finances. The fee was approved as part of Mayor John Whitmire’s $7.5 billion budget. (City of Houston)
Houston Controller Chris Hollins put the problem plainly during the budget fight: the $5 fee, he argued, would fall hardest on poor residents while the city continued subsidizing people with far more money. (KPRC)
Now City Council is preparing to consider another corporate tax break.
Fourteen Permanent Jobs
The project, called Greens Bayou 6 or “Project Moonshot,” would add a 455-megawatt natural-gas generating unit at NRG’s existing Greens Bayou complex.
Houston’s own presentation estimates about 250 construction jobs at the peak of construction.
When construction is over, however, the new plant is expected to employ only about 14 new full-time workers. (City of Houston)
The plant itself is substantial. Recent state estimates put its total cost at as much as $617 million, and it is scheduled to begin generating electricity in 2028. (Texas.gov)
The public incentives are substantial too.
$370 Million From the State
Texas voters created the Texas Energy Fund after Winter Storm Uri to encourage construction of new dispatchable power plants.
Under that program, the Public Utility Commission agreed to provide NRG with a 20-year loan of up to $370 million at 3% interest, covering as much as 60% of the Greens Bayou project cost. (Texas.gov)
NRG calculated the economic value of that below-market financing at approximately $90.6 million in present-value savings. (City of Houston)
There is also a Texas Energy Fund completion bonus tied to how quickly the plant begins operating. NRG estimated the present value of that potential grant at about $16.7 million. (City of Houston)
Galena Park ISD Gives Up $21 Million
Then there is the school district.
NRG received an agreement under Texas’ Jobs, Energy, Technology and Innovation Act — JETI — limiting the taxable value of the project for Galena Park ISD’s maintenance-and-operations taxes.
The Texas Comptroller calculates that without the limitation, NRG would owe approximately $61.6 million in school M&O taxes over the relevant period.
With the limitation, it is projected to pay about $40.5 million.
The difference — NRG’s estimated gross school-tax benefit — is $21,144,185. (Texas Comptroller of Public Accounts)
There is another unusual detail.
The JETI program normally contains job requirements for subsidized projects.
But Texas law specifically exempts qualifying electric-generation facilities from the minimum-job requirement. The Comptroller’s own paperwork lists NRG’s required number of jobs as “N/A.” (Texas Comptroller of Public Accounts)
So Galena Park ISD can give a $21 million tax break to a project creating 14 permanent jobs without running afoul of the state program.
Now Houston Is Asked for Another $11.3 Million
NRG is also asking the City of Houston to abate approximately $11,281,651 in city property taxes over ten years.
The first-year abatement is estimated at about $1.07 million, with an average annual abatement of about $1.13 million. (City of Houston)
Measured solely against the 14 permanent jobs, Houston’s proposed tax break comes to roughly:
$806,000 in city tax relief for each permanent job.
Again, that is not literally what Houston is paying per employee. NRG and the city argue that the plant provides benefits beyond employment, particularly more electric generating capacity and greater grid reliability.
But job creation is explicitly one of the purposes listed in Houston’s economic-development tax-abatement program. (City of Houston)
And this project requires Houston to bend some of its own rules.
NRG Wants Two Rules Waived
Houston’s tax-abatement ordinance normally excludes improvements used to generate electricity that will not be consumed by the facility itself.
That is obviously a problem for a commercial power plant whose purpose is to generate electricity and sell it onto the grid.
So NRG is asking Houston for a variance making that normally ineligible property eligible for the tax break. (City of Houston)
There is another rule.
Because Greens Bayou sits inside an enterprise zone, Houston’s ordinance ordinarily requires a qualifying project to create at least five permanent jobs for people who either live in the enterprise zone or are economically disadvantaged.
NRG is asking Houston to waive that requirement too. (City of Houston)
That is striking when the entire project is expected to create only 14 permanent jobs.
Houston is not merely being asked to subsidize the plant.
It is being asked to waive a rule intended to make sure economically disadvantaged Houstonians receive at least some of the employment benefit.
Meanwhile, Houston Wants $5 From Everybody Else
Only weeks ago, Houston City Council approved its first monthly residential garbage fee.
Single-family households are being charged $5 a month, generally through their water bills. City officials say the money will provide dedicated funding for garbage and recycling collection and improve reliability. (City of Houston)
That is $60 a year.
Five dollars does not mean much to NRG.
It can mean something to a family choosing between groceries, medicine, electricity and gasoline.
City Council recognized that problem after approving the fee. It subsequently expanded Houston’s donation-funded WATER assistance program so low-income residents, seniors and people with disabilities can request help paying it. More than one-fifth of Houstonians live below the poverty line, according to figures cited when the relief ordinance was adopted. (Community Impact Newspaper)
Think about the contrast.
Houston says it needs $5 more every month from homeowners because providing basic city services costs money.
At the same time, Houston is considering allowing one corporation to keep $11.3 million in city property taxes.
And that $11.3 million is only one layer.
Add the Galena Park ISD tax break and local property-tax relief reaches about $32.4 million.
Add the estimated value of the completion bonus, and it approaches $49 million.
Then there is the state’s $370 million low-interest loan, whose favorable terms NRG itself valued at another $90.6 million. (Texas Comptroller of Public Accounts)
All for a project expected to leave behind 14 permanent jobs.
NRG Has an Answer
There is a legitimate argument on the other side.
The company is not presenting Greens Bayou primarily as a jobs project.
It is presenting it as an electricity project.
Houston and Texas are consuming more power. Extreme weather puts additional pressure on the grid. Intermittent renewable generation sometimes needs fast-start natural-gas generation behind it. And huge new electricity users — particularly data centers and artificial-intelligence infrastructure — are driving forecasts of dramatically higher power demand. Houston’s own economic-development presentation cites those factors in support of Greens Bayou. (City of Houston)
NRG says the plant will provide controllable generation during periods of high demand, strengthen grid reliability and produce tax revenue for decades.
Those are real public-policy considerations.
But they do not eliminate another public-policy question:
How much public subsidy does a $617 million energy company project actually need?
And if Houston can afford to surrender $11.3 million in taxes from NRG, why was another $5 a month from Houston families so essential?
The Hearing Is Wednesday
Houston City Council scheduled a public hearing on the proposed NRG tax-abatement agreement for 9 a.m. Wednesday, August 12. (City of Houston)
Council members should ask more than whether Houston needs another power plant.
They should ask what taxpayers are buying.
Fourteen permanent jobs.
A $370 million subsidized loan.
More than $21 million in school-tax relief.
Another $11.3 million proposed city tax break.
A potential state completion bonus.
And waivers from Houston requirements intended to ensure that some of the benefits reach economically disadvantaged residents.
Houston apparently has no problem finding millions when a corporation comes to City Hall with a development project.
For everybody else, City Hall found five dollars in their garbage bill.