Manufacturers: Dual Reports Should End Discussion Of Electric Tax Proposal

  • ERCOT and Brattle Show Texas Has Plenty of Capacity
  • Release Date: February 5, 2014

The following can be attributed to Tony Bennett, president of the Texas Association of Manufacturers:

Recent reports issued by the Electric Reliability Council of Texas (ERCOT) and the Brattle Group ought to end the discussion of changing the electric market and establishing a costly electricity tax, according to the Texas Association of Manufacturers. ERCOT’s new Load Forecast, issued on January 22, shows that ERCOT has plenty of electricity to serve the state’s needs. And then this week, the Public Utility Commission (PUC) of Texas released the Brattle Report, which shows that ERCOT not only has plenty of reserves, but that the market will continue to produce those reserves into the future.

Despite these facts, a group called “Texans for Reliable Power,” which is made up of some of the largest generation companies in the state, issued a statement that attempts to use these recent documents to support the adoption of its capacity market proposal, which has been widely reported to add potentially $4 billion per year onto Texas consumers’ electric bills. The public and policymakers should not be fooled by this group’s scare tactics intended to create more subsidies for power generators.

The Brattle Report identifies the level of reserves that makes the most sense for ERCOT, and establishes that the ERCOT market is providing those reserves without the need for additional taxes or subsidies. This squares entirely with the latest data from ERCOT, which shows the market working to keep Texas’ power affordable and reliable into the foreseeable future. Still, generators are urging the PUC to abandon a system that is clearly working well and to switch to an East-Coast style government program that the Dallas Morning News has called a “subsidy” and “a tax on everyone with an electric meter.”

And those billions of dollars in extra payments to generators won’t ensure that the lights stay on. Despite capacity payments exceeding $50 billion, the PJM market on the East Coast continues to experience significant power shortages. Such a failed and burdensome policy should have no place in Texas.

Texans for Reliable Power is touting low-balled capacity market cost numbers, which even the Brattle Report estimates to be $400,000,000 per year and expects us to believe that there will be lower electric energy prices under this new regulation and tax system. But when have you ever seen a new tax actually lower your bill for something? That’s just not credible. A capacity market will cost Texas consumers billions.

The Commission should preserve the Texas energy market, which is working to provide affordable and reliable power for all Texans.

Media contact: Gretchen Fox, gfox@gfoxconsulting.com, 512-694-4326