Comptroller Susan Combs Releases Energy Report

AUSTIN, September 23, 2014 - With booming economic and population growth fueling a growing demand for electricity, Texas Comptroller Susan Combs today released a report urging policymakers and elected officials to discontinue costly subsidies and tax breaks driving development of new electricity generation and allow a more market-driven approach to providing reliable power to millions of Texas consumers when they need it most.

In Texas Power Challenge: Getting the Most From Your Energy Dollars, Combs challenges the wind energy industry to ensure taxpayers and ratepayers are not double-burdened with infrastructure costs and tax subsidies for power sources that are intermittent.

"It's time for wind to stand on its own two feet," Combs said. "Billions of dollars of tax credits and property tax limitations on new generation helped grow the industry, but today they give it an unfair market advantage over other power sources."

In 2005, the Texas Legislature approved Competitive Renewable Energy Zones (CREZ) to carry mostly wind energy generated in West Texas and the Panhandle to high-demand cities. The project was forecast to cost less than $5 billion, but ballooned to more than $6.9 billion to build nearly 3,600 miles of transmission lines and dozens of substations. The Public Utility Commission of Texas (PUC) estimates that the CREZ projects will cost the average household $70 to $100 annually for 15 to 20 years until the outlay is recouped.

Heavy investment in Texas wind generation, directly subsidized by large federal tax credits and school property tax exemptions, has produced thousands of megawatts of West Texas wind capacity that generates plenty of power at night when demand is lowest. Those turbines, however, produce little energy when Texans need it most, during hot summer afternoons. Because of this, wind generation must be backed up by flexible natural gas generation that can be ramped-up quickly when light winds fail to align with peak demand. State policy has encouraged this wind development and provided a transmission system that is underutilized much of the time.

For example during the summer of 2014, even though Texas had more than 11,000 megawatts of total wind capacity, the Electric Reliability Council of Texas (ERCOT) counted on just 963 megawatts of wind generation being available. The lack of wind generation during summer peak demand means energy planners, such as ERCOT, must ensure flexible natural gas generation is available to meet the reserve margin.

This report highlights the costs associated with supporting generation and underlines the importance of reliable power to meet the industrial, business and residential needs of the ratepayers and taxpayers who ultimately pay the retail cost and support the subsidies. After years of lopsided support for renewables, this report suggests that Texas policymakers should rein in these policies and subsidies.

"Renewable generators have been given a major helping hand to develop their industry, but it is now virtually a mature segment," Combs said. "Developing technology to store renewable energy, so that it can provide reserve capacity available to the grid during peak demand, should be part of the renewable industry's responsibility before it adds additional generation that is still intermittent."

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