Texas Awards Xcel’s Southwestern Public Service a $113 Million Grant to Harden the Panhandle and South Plains Grid

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Marin Holt
July 21, 2026
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6 minutes read

Grant amount: $113 million
Utility poles inspected by drone: 273,000
Customers served: 167,000
Program: Texas Energy Fund Outside ERCOT

Texas Governor Greg Abbott and the Public Utility Commission of Texas on June 30, 2026 awarded Southwestern Public Service Company, a subsidiary of Xcel Energy, a $113 million grant to strengthen electric distribution across the Texas Panhandle and South Plains. The award comes from the Texas Energy Fund Outside ERCOT Grant Program and funds three grid-hardening projects that serve more than 167,000 customers in a region that sits outside the state’s main grid operator.

The largest project funds a drone-based inspection program that will assess more than 273,000 utility poles across the SPS Texas territory, flagging deteriorating equipment before it fails. A second project installs pole-mounted sensors for real-time monitoring of distribution lines, and a third covers equipment upgrades and pole replacement in higher-risk areas.

Southwestern Public Service operates outside ERCOT on the Southwest Power Pool, so its Panhandle and South Plains customers do not draw from the grid that covers most of Texas. The Outside ERCOT Grant Program targets exactly those utilities, and the Public Utility Commission of Texas administers the money. Abbott announced two smaller awards in the same round: $30 million for Rita Blanca Electric Cooperative and nearly $9 million for Lamb County Electric Cooperative.

“From substations and poles in the ground to the wires overhead delivering power to homes and businesses, this grant program is helping make every step in the process stronger for Texans,” PUCT Chairman Thomas Gleeson said. Xcel Energy-Texas Interim President Brad Baldridge said the funds “will advance the resiliency of our grid and minimize costs.”

Why It Matters

The Texas Energy Fund has committed more than $4 billion since voters approved it, with roughly $3.65 billion routed to new ERCOT gas capacity. The Outside ERCOT program is far smaller, near $650 million for weatherization and grid hardening, so the $113 million SPS award represents a large share of that pool. For ratepayers in the Panhandle and South Plains, the grant shifts the cost of distribution upgrades onto the state fund instead of local bills. The drone and sensor work also signals where utilities outside ERCOT put reliability dollars first: inspecting aging poles and adding line monitoring, rather than building generation. Utilities in similar rural, wind-exposed territories now have a funded template for hardening distribution ahead of severe weather and wildfire risk.

Critical Perspective

The $113 million award covers drone inspection of more than 273,000 poles, pole-mounted sensors, and equipment upgrades across a territory serving 167,000 customers outside ERCOT. Inspection and monitoring find failing hardware but do not replace it, and this grant sits inside an Outside ERCOT pool of roughly $650 million while the Texas Energy Fund has routed about $3.65 billion to new ERCOT gas capacity. PG&E inspected hundreds of thousands of transmission and distribution structures under its Wildfire Safety Inspection Program after the 2018 Camp Fire and surfaced a repair backlog that took years and billions of dollars to work down. If the drone sweep flags tens of thousands of deteriorating poles across the Panhandle, which budget replaces them once the $113 million is spent?