{"id":32984,"date":"2013-12-03T13:39:42","date_gmt":"2013-12-03T19:39:42","guid":{"rendered":"http:\/\/stateimpact.npr.org\/texas\/?p=32984"},"modified":"2013-12-03T13:39:42","modified_gmt":"2013-12-03T19:39:42","slug":"the-4-billion-texas-electric-bill","status":"publish","type":"post","link":"https:\/\/stateimpact.npr.org\/texas\/2013\/12\/03\/the-4-billion-texas-electric-bill\/","title":{"rendered":"The $4 Billion Texas Electric Bill"},"content":{"rendered":"
\"NRG

Photo by Dave Fehling<\/p>

NRG Limestone Electric Generating Station in Limestone County<\/p><\/div>\n

When it comes to spectator sports, it might not rank with college football in Texas. But when a state senate committee held a hearing last week to figure out if something\u00a0 is wrong with the state\u2019s deregulated market for electricity, people far from Texas were glued to their computers, watching the hearing live over the internet.<\/p>\n

\u201cIn all my experience, I\u2019ve never really seen anything in which the Texas Public Utility Commission\u2019s officials have been taken to task in such an aggressive manner by a state legislative hearing,\u201d said Paul Patterson, a New York-based investment analyst who watched the hearing.<\/p>\n

Patterson and others who keep close tabs on the nation\u2019s electricity industry are eager to see how Texas handles a problem also facing other states: is there a risk of power shortages if more power plants aren\u2019t built? And if the risk is real, who will foot the gigantic bill?\u00a0<\/p>\n

\u2018A massive subsidy\u2019?<\/strong><\/p>\n

One idea under consideration in Texas is already being tried elsewhere. It\u2019s called a \u201ccapacity market\u201d and involves a state-regulated subsidy that would go to big energy companies to fund new power plants. It\u2019s idea that has drawn strong critics in New Jersey.<\/p>\n

\u201cIt\u2019s a massive subsidy. And if you added up the subsidies for three plants it\u2019s over $3 billion dollars in 15 years from ratepayers. It\u2019s obscene,\u201d said Jeff Tittel, director of the Sierra Club\u2019s New Jersey chapter.<\/p>\n

Tittel isn\u2019t alone in his criticism. In October, a federal judge in New Jersey struck down the subsidy in a ruling in which he said it conflicted with federal regulation of wholesale power. New Jersey has since filed an appeal.<\/p>\n

While there are differences in how the two\u00a0state\u2019s power grids<\/a>\u00a0are set up (Texas has its own market called ERCOT, New Jersey is one of 13 states in the PJM electric region) they may face similar futures says Patterson, the analyst in New York.<\/p>\n

\u201cCapacity markets around the country have been the source of litigation and conflict for some time. And I think it would be remarkable if that did not happen in Texas.\u201d<\/p>\n

Senators: Don\u2019t Mess with Texas\u2019 Electricity Market<\/strong><\/p>\n

A key assumption for setting up a subsidy is that new power plants are needed. In Texas, some of the senators at the hearing last week in Austin weren\u2019t so sure that\u2019s true. And compared to New Jersey, the stakes appear even more costly.<\/p>\n

\u201dPotentially we could be talking about passing as much as $4 billion per year in additional costs and we\u2019ve got to determine is that really warranted,\u201d said Troy Frasier, the Republican chair of the Senate Committee on Natural Resources.<\/p>\n

In a pointed exchange with the three members of the Public Utility Commission who were called before the committee, Fraser made it clear he had serious doubts Texas is running out of electricity.<\/p>\n

\u201cIt\u2019s nice for us to project the sky is falling but we have to look at the reality we have. The market continues to work pretty well,\u201d Fraser told the commission members.<\/p>\n

PUC Chair Donna Nelson countered: \u201cI\u2019m not trying to project the sky is falling.\u201d<\/p>\n

When Sen. Fraser alleged the PUC was stepping beyond its authority by considering the use of a capacity market which his Democratic colleague Sen. Leticia Van de Putte likened to a \u201csocialized system rather than a free market\u201d, Nelson said: \u201c I believe one, it\u2019s not a total redesign. And two, I believe a capacity market is still a market.\u201d<\/p>\n

Cost-benefit<\/strong><\/p>\n

\u201cSo who\u2019s going to give us numbers on who\u2019s going to pay for this? It\u2019s the retail customers that\u2019re going to pay for it,\u201d said Sen. Van de Putte.<\/p>\n

Nelson responded that \u201cthe end bill impact would be 1.4 percent\u201d which she indicated was another way of expressing the $4 billion a year estimate for the subsidy\u2019s total cost.<\/p>\n

Nelson said the PUC had not looked at the \u201ccost impact to retail customers\u201d but would do further analysis. She said the PUC will be discussing this more at a meeting next month.<\/p>\n

\u201cWhatever we do, we will do it only if it makes sense from a cost-benefit standpoint. It is not my goal to over-procure electricity,\u201d Nelson told the committee.<\/p>\n","protected":false},"excerpt":{"rendered":"

When it comes to spectator sports, it might not rank with college football in Texas. But when a state senate committee held a hearing last week to figure out if something\u00a0 is wrong with the state\u2019s deregulated market for electricity, people far from Texas were glued to their computers, watching the hearing live over the […]<\/p>\n","protected":false},"author":53,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[60],"tags":[14,41,310],"acf":[],"_links":{"self":[{"href":"https:\/\/stateimpact.npr.org\/texas\/wp-json\/wp\/v2\/posts\/32984"}],"collection":[{"href":"https:\/\/stateimpact.npr.org\/texas\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/stateimpact.npr.org\/texas\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/stateimpact.npr.org\/texas\/wp-json\/wp\/v2\/users\/53"}],"replies":[{"embeddable":true,"href":"https:\/\/stateimpact.npr.org\/texas\/wp-json\/wp\/v2\/comments?post=32984"}],"version-history":[{"count":3,"href":"https:\/\/stateimpact.npr.org\/texas\/wp-json\/wp\/v2\/posts\/32984\/revisions"}],"predecessor-version":[{"id":32989,"href":"https:\/\/stateimpact.npr.org\/texas\/wp-json\/wp\/v2\/posts\/32984\/revisions\/32989"}],"wp:attachment":[{"href":"https:\/\/stateimpact.npr.org\/texas\/wp-json\/wp\/v2\/media?parent=32984"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stateimpact.npr.org\/texas\/wp-json\/wp\/v2\/categories?post=32984"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stateimpact.npr.org\/texas\/wp-json\/wp\/v2\/tags?post=32984"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}