Tax abatements are good for business owners in the renewable energy industries – but not for taxpayers and special districts, said Bill Peacock, policy director of The Energy Alliance.
In a July 20 opinion piece for the Dallas Morning News, Peacock claims that it’s time to end the $4.3 billion electricity tax that falls on Texas residents.
Extreme heat is expected throughout Texas, and while consumers in the state likely aren’t surprised by that, they could be surprised when their energy bill increases faster than the summer heat.
“Last August, wholesale electricity prices in the region overseen by the Electric Reliability Council of Texas (which covers more than 80% of the state) averaged close to $130 per megawatt hour, or 13 cents per kilowatt hour, while prices in several other regions averaged around $30 or less, or 3 cents per kilowatt hour. The average homeowner uses around 1,000 kilowatt hours per month, and the bill includes a number of fees beyond the cost of electricity,” Peacock wrote in his column.
The rise of the electricity prices that year came from what he calls two administrative price adders – one of which, Operating Reserve Demand Curve, created tax revenue that “went mostly to electric generators like NRG and Vistra,” he wrote.
In the last 14 years, Texas residents and taxpayers have contributed $19 billion-plus to renewable energy generators in the state. Last year, Peacock said, revenue and government-sponsored benefits to Texas wind and solar farms totaled almost $5.5 billion. However, their sales brought in just $3.1 billion. The shortfall was recovered primarily through government subsidies and tax credits, he claims.
“The higher prices greatly benefited generators. They helped NRG ‘convert a $72 million third-quarter loss in 2018 into a $372 million profit for the same period in 2019; and Vistra Energy’s third-quarter income from generation increased $226 million in Texas before taxes and other factors, off-setting lower generation prices in other markets,” Peacock wrote.
Peacock suggests a path to address reliability problems, such as “policymakers could increase reliability by eliminating the ORDC and property tax abatements for renewable generation.”
The way to fix this problem is simple, writes Peacock: let Texas residents choose the electricity they want to purchase in Texas’ competitive market by eliminating subsidies for all generators.