TAM Statement on PUC's Recommendation to Create a Performance Credit Mechanism
January 19, 2023
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.
The Texas Association of Manufacturers (TAM) actively represents the interests and priorities of more than 600 member companies in Austin and in Washington, D.C. Manufacturers in Texas account for 11.9 percent of the total output in the state – more than $226.95 billion in 2021 – and employ more than 897,000 Texans in jobs that pay an average compensation of over $93,000 annually. On average, each manufacturing job created also provides 5 additional jobs in our communities. For more than two decades, Texas remains the number one exporting state for manufactured goods in the United States.