Renewable energy developers receive federal subsidies to build solar farms and wind farms, incentives that have helped spur so much wind development over the past few years that abundant wind energy from West Texas has made Texas among the cheapest states for power.
Texans paid 8.4 cents per kilowatt hour last year for electricity, according to the Energy Department. Only six states paid less for power.
The Texas Legislature recently took a step to eliminate the cost advantage in renewable energy by passing similar bills out of the Senate Committee on Business & Commerce and the House Committee on State Affairs that would require state regulators to determine how to either eliminate federal tax credits for developers in Texas or compensate fossil fuel competitors for market distortions caused by incentives.
Subsidies for wind and other alternative energy were established in 1978 by Congress to reduce reliance on foreign oil, following the Arab oil embargo that sent energy costs skyrocketing.
Both the Senate and House bills direct the Public Utility Commission and the state’s grid manager Electric Reliability Council of Texas to study how to change the market design to compensate for low prices coming from renewable energy sources, including whether Texas should change the way transmission and distribution costs are allocated.
The bills also ask regulates to examine how to compensate fossil fuel generators when the wind is blowing so hard and producing so much electricity that buyers are paid to take power from wind energy. Businesses and households have come to rely on those times of negative pricing – usually in the middle of the night – to run their manufacturing operations and turn on their swimming pool pumps.
Neither bill has been considered by either the full Texas Senate or Texas House.