“Proposed capacity mandates would fundamentally alter the ERCOT market construct and would impose substantial costs with uncertain resulting effects on reliability.”

AUSTIN – The proposed Performance Credit Mechanism (PCM) being considered among ERCOT market reform options “would entail billions in costs for customers without a meaningful improvement in reliability,” according to the final results of an Assessment of ERCOT Market Reform Alternatives, prepared by Bates White Economic Consulting, a firm with 25-years of experience in providing advanced economic, financial, and econometric analyses to law firms, companies, and government agencies.

Texas electricity consumers have expressed serious concerns with the Public Utility Commission’s (PUC) adopted PCM and are urging the Legislature to implement a meaningful firm cap on the PCM’s costs that provides real protections for consumers against potential exposure. Fundamentally, the PCM will provide billions in profits to the very generators who failed Texans during Winter Storm Uri.

“The PCM is a costly, unnecessary tool that will allow the PUC to guarantee profits for generators on the back of Texas customers. This is a regulated approach, but without the customer protections and spending oversight that go hand-in-hand with regulation. This unproven model has the potential to add billions to the market, and without a firm cost cap, it threatens to significantly increase prices on all consumers without meaningfully improving reliability,” said Tony Bennett, president & CEO of the Texas Association of Manufacturers (TAM). “Future job growth, company location, and investment decisions depend upon the Legislature charting the right course before the legislative session ends.” Read more.

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

“Manufacturers applaud the Texas House for passing Chairman Hunter’s Texas Jobs & Security Act (HB 5), which will help Texas bolster our state’s economic security by helping to reestablish our global manufacturing dominance, reshore our supply chain, and ensure electric grid reliability. The limited, temporary, school M&O property tax discounts included in the economic development program HB 5 creates are imperative to attract new capital investment and the long-term benefits they bring. Participating companies must still pay all I&S tax (debt service), sales and use, franchise, inventory, payroll and other taxes. The legislation includes provisions that protect the interests of the state and participating school districts. Projects must be clear ‘wins’ for Texas as the comptroller must find that the project will generate more tax dollars than the amount that will be discounted during the incentive period.

Even at the reduced value, the taxable value of the property will be higher than it was prior to the investment, creating a net gain under every circumstance. Companies must also demonstrate the incentive is a determining factor in their decision to invest here. That is, without the incentive, these properties would remain undeveloped. The program also includes strong accountability provisions that require a company to return any tax savings should the project not meet the terms of the agreement. For example, with the exception of electric grid reliability projects, there are mandatory job creation requirements in every agreement. Schools are protected because school finance formulas guarantee the district will receive the same amount of revenue per student with the project and agreement as it would have without. The bill also contains a provision whereby the industry project shares a portion of its tax savings through an incentive formula with the school district. This will ensure that districts are better off financially with the project. As a part of the application fee, the project will pay for a school district to hire school finance experts to do a financial impact statement prior to approval so the district will know ahead of time if it is in its best interest to approve the agreement.

HB 5 is a winning proposal for Texas taxpayers, our schools, and our economy. We appreciate Speaker Phelan and Chairman Hunter’s leadership and joint authors Representatives Morgan Meyer, Dustin Burrows, Hugh Shine and Oscar Longoria for their efforts to keep Texas globally competitive and the best place to do business.”

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

"The House State Affairs Committee will hear testimony tomorrow, April 19th, on CSSB 2012, related to the electricity market and performance penalties. The Texas Association of Manufacturers (TAM) and its members have grave concerns about the Public Utility Commission’s proposed Performance Credit Mechanism (PCM), an unproven plan that will require consumers to pay billions in additional costs every year to existing generators. Any implementation of PCM must include strong guardrails to ensure reliability and cost efficiency standards for both business and residential customers, provisions that are included in Chairman Todd Hunter’s more robust version of SB 2012 being heard in committee tomorrow.

While TAM opposes the PCM, we support the emphasis on strong performance penalties, a requirement that reliability must be measured and balanced against cost, and an annual cap of $500 million on performance credits for generators across the ERCOT market.

We appreciate Chairman Hunter’s leadership and the Committee’s attention to these critical issues."

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

“Chairman Hunter’s CSHB 5 will help Texas bolster our state’s economic security by helping to reestablish our global manufacturing dominance, reshore our supply chain, and ensure electric grid reliability. The limited, temporary, school M&O property tax discounts included in the economic development program CSHB 5 creates are imperative to attract new capital investment and the long-term benefits they bring. Participating companies must still pay all I&S tax (debt service), sales and use, franchise, inventory, payroll and other taxes. The legislation includes provisions that protect the interests of the state and participating school districts. Projects must be clear “wins” for Texas as the comptroller must find that the project will generate more tax dollars than the amount that will be discounted during the incentive period.

Even at the reduced value, the taxable value of the property will be higher than it was prior to the investment, creating a net gain under every circumstance. Companies must also demonstrate the incentive is a determining factor in their decision to invest here. That is, without the incentive, these properties would remain undeveloped. The program also includes strong accountability provisions that require a company to return any tax savings should the project not meet the terms of the agreement. For example, with the exception of electric grid reliability projects, there are mandatory job creation requirements in every agreement. Schools are protected because school finance formulas guarantee the district will receive the same amount of revenue per student with the project and agreement as it would have without. On top of that guaranteed funding, the bill contains a provision whereby the industry project shares a portion of its tax savings through an incentive formula with the school district. This will ensure that districts are better off financially with the project. As a part of the application fee, the project will pay for a school district to hire school finance experts to do a financial impact statement prior to approval so the district will know ahead of time if it is in its best interest to approve the agreement. CSHB 5 is a winning proposal, and we appreciate Chairman Hunter’s leadership in keeping Texas globally competitive and the best place to do business.”

Austin, TX — Over 200 chambers of commerce, economic development councils, and business organizations applaud Speaker Dade Phelan (R-Beaumont) and Chairman Todd Hunter (R-Corpus Christi) for announcing the Texas Jobs and Security Act. This legislation will create a new, modern, and transparent economic development program to ensure Texas’ economic security, promote technological and manufacturing independence from foreign nations, and create new capital investments in our communities, giving our children greater opportunities and local schools additional resources. Read more.

AUSTIN -- The proposed Performance Credit Mechanism being considered among ERCOT market reform options, “would entail billions in costs for customers without a meaningful improvement in reliability,” according to an Assessment of ERCOT Market Reform Alternatives, prepared by Bates White Economic Consulting, a firm with 25-years of experience in providing advanced economic, financial, and econometric analyses to law firms, companies, and government agencies. The firm has consulted with or testified widely regarding electric issues, including on behalf of Texas Public Utility Commission staff in a utility merger case and on behalf of competitive generators in design of the PJM Capacity Market.

The Texas Association of Manufacturers (TAM), the Texas Oil & Gas Association (TXOGA), the Texas Chemical Council (TCC), and the Texas Industrial Energy Consumers (TIEC) engaged Bates White to evaluate proposed modifications to the ERCOT electricity market intended to support reliability of the system, with specific reference to the results of the market reforms assessment conducted by Energy and Environmental Economics, Inc. (E3 Report). Bates White reviewed E3’s evaluation of the ERCOT market reform options, including the Performance Credit Mechanism (PCM) proposal, and also performed preliminary analysis of two modifications to the ERCOT markets that would support system reliability while also retaining the essential features of the energy-only construct: (1) a Dispatchable Reliability Reserve Service (DRRS), a new ancillary reliability service similar to the uncertainty product recommended by ERCOT’s Independent Market Monitor (IMM), and (2) a Direct Procurement mechanism that could be implemented as a last resort if a shortfall of dispatchable resources is identified in the future.

“ERCOT market design reform will be among the most consequential decisions the Legislature will make and we wanted an expert review of the leading options on the table to ensure that any redesign will be consumer-focused, actually enhance reliability and maintain competitive cost structures,” said Tony Bennett, president and CEO of TAM. “Future job growth, company location and investment decisions depend upon the Legislature charting the right course, so this evaluation of options is essential.” Read more.

Bennett: “Policy that keeps us competitive is imperative.”

AUSTIN — The Texas Association of Manufacturers (TAM) and its members gathered at the State Capitol today to celebrate Manufacturers Day, impressing upon lawmakers that #ManufacturingMatters to the state’s economy and jobs. Industry leaders urged state leaders to embrace legislation that would advance Texas’ competitiveness, encourage economic development, prioritize reliability and affordability in the state’s electricity market design, and direct more funding for workforce skills programs at community colleges and state technical colleges.

“Competition for major manufacturing projects is fierce and global. And it’s no wonder. Manufacturing investments grow local economies, create high-paying jobs, and generate millions of dollars in tax revenue,” said Tony Bennett, president and CEO of TAM. “Attracting and keeping large-scale manufacturing projects in Texas also strengthens our national supply chain security and protects our leadership in emerging technologies and advanced manufacturing. Policy that keeps us competitive is imperative.” Read more.

Many thanks to Senate Finance Chair Joan Huffman and House Manufacturing Caucus Chair Ed Thompson for their leadership in keeping the manufacturing sector strong in Texas.

Senate Resolution No. 185 (By Huffman)

House Resolution No. 237 (By Thompson)

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

The Texas Association of Manufacturers (TAM) appreciates the diligent work by the Public Utility Commission (PUC) to make progress on its electricity market redesign. However, TAM is concerned with today’s action by the PUC to approve a novel proposal that is not well understood, and has not been modeled, but appears to be designed to ensure a certain profit level for existing generation. We remain committed to market design changes that will preserve our competitive market while improving incentives for additional dispatchable generation. We are hopeful that a version of the performance credit mechanism can be crafted that would encourage this type of new investment and provide enhanced reliability for consumers without excessive costs.

Manufacturers have supported a comprehensive approach that includes (1) providing additional low-cost state-backed financing for dispatchable development, (2) creating temporary and limited property tax discounts for new or modernized dispatchable generation facilities, and (3) developing a new reliability service that directly rewards new, flexible, reliable and dispatchable electric generation for being available to address unexpected variations in demand and generation availability every day. Specifically, we support proposals that ensure market revenues would remain performance-based, consistent with the current deregulated market design, and would avoid a government-mandated capacity market or other similar electricity taxes or fees to support incumbent generators.

We will continue to promote positive and commonsense reforms to the Texas electric market, and stand ready to work with the PUC, the Legislature, and industry stakeholders.

Bennett: “Smart policy is key to attracting manufacturers and strengthening national, supply chain security.”

The Texas Association of Manufacturers (TAM) today released its “TAM Top Ten,” which details the Association’s policy priorities for the 88th Legislature in 2023.

“Global competition to attract manufacturing projects is fierce and our priorities are aligned with keeping Texas as the number one state to do business and the number one state for exported manufactured goods,” said Tony Bennett, president and CEO of TAM. “Smart policies related to economic development, taxes, transportation, electricity and workforce development are key to attracting and keeping large-scale manufacturing projects in Texas. Those projects will strengthen our national and supply chain security, as well as protect Texas’ leadership in emerging technologies and advanced manufacturing.”

TAM’s Top Ten policy priorities include:

1. Preserve Authority to Offer Limited, Temporary Property Tax Discounts
2. Equality in Business Taxation
3. Business Personal Property Tax Reform
4. Transportation & Critical Infrastructure
5. Maintain a Reliable, Cost-Effective, and Competitive Wholesale Electricity Market
6. Ensure that Monopoly Utility Rates are Transparent and Fair to Customers
7. Career and Workforce Readiness
8. Continue TCEQ, Support Commonsense Regulations and Sufficient Funding for Operations
9. School and Workplace Health
10. Tax Structures that Promote Economic Growth

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The Texas Association of Manufacturers (TAM) announced Kyle Bush as the Association’s new Government Affairs Specialist. Bush will assist TAM leadership with legislative and regulatory advocacy, political analysis, association operations, and representation on all matters affecting TAM members and the manufacturing industry in Texas.

Prior to joining TAM, Bush was a financial controller at Murphy Nasica & Associates, served as a field director and campaign manager for Texas House and city council races, and has held various leadership positions in manufacturing, including management, sales, and operations in the private sector.

“Kyle brings a wealth of experience from the public and private sectors that will serve our members well,” said Tony Bennett, president of TAM. “He’ll be a strong voice for Texas manufacturers and a great resource for lawmakers and staff.”

Bush holds a Master of Business Administration from Baylor University's Hankamer School of Business and graduated Phi Beta Kappa with Liberal Arts Honors from the University of Texas at Austin.