Texans Paying Billions to Enrich Electric Generators
The Electricity “Tax” on Texans totaled about $3.6 billion in 2019
AUSTIN, TX (08/12/20) — The Energy Alliance today released Texas’ $3.6 Billion Electricity Tax. The report examines the cost of artificial price increases imposed on Texans by the Public Utility Commission of Texas in response to the harm caused by renewable energy subsidies.
“Texans are paying generators an extra $3.6 billion for electricity because Texas policymakers won’t stand up to the renewable energy lobby,” said Bill Peacock, the author of the report and policy director of the Energy Alliance. “Rather than eliminate renewable energy subsidies to restore the reliability of the grid, regulators decided to heap one subsidy on top of another at the expense of Texans.”
More than $19 billion of renewable energy subsidies in Texas since 2006 have significantly harmed the reliability of Texas’ electric grid. Commissioners at the Public Utility Commission of Texas responded to the reliability challenges by creating another subsidy in the form of an electricity “tax” on Texans through an administrative price adder known as the Operating Reserve Demand Curve (ORDC). The money from the ORDC goes straight to generators, whether renewable, fossil fuel or nuclear. The cost of the ORDC in 2019 was about $3.6 billion, but could go higher this year after a PUC-ordered increase was implemented this spring.
“Letting the market work by eliminating all subsidies is the only way to improve the reliability and affordability of the Texas electric grid,” Peacock added.
The ORDC harms Texas consumers without addressing the cause of the market’s reliability problems, renewable energy subsidies. Texas policymakers should eliminate the ORDC and state and local renewable energy subsidies and require renewable energy generators—rather than Texas consumers—to pay for the costs imposed on the system because of federal subsidies.
The report can be downloaded here.
The Energy Alliance is a project of the Texas Business Coalition to raise awareness of issues about the energy market that matter most to consumers: Reliability, Affordability, and Efficiency.