Texas should end handouts to wind power — comptroller

Source: Edward Klump, E&E reporter • Posted: Thursday, September 25, 2014

Texas’ comptroller says it’s time for the state to change how it approaches electricity — including additions to its large portfolio of wind energy.

Susan Combs, Texas’ comptroller of public accounts, said the state needs to take a more market-based view of electricity and focus on making it reliable and affordable. Her office issued a¬†report¬†yesterday on Texas power that called for an end to tax breaks and subsidies for certain new generation.

“It’s time for wind to stand on its own two feet,” Combs said in a statement. “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.”

The comptroller’s comments came as Texas prepares for a regular legislative session in 2015. Combs’ office noted that in 2005, Texas lawmakers approved a plan that led to the creation of Competitive Renewable Energy Zones (CREZs) to help transport wind from West Texas and the Panhandle region to cities that need power.

The price tag for a project that includes almost 3,600 miles of transmission lines and numerous substations was more than $6.9 billion, compared with an earlier project forecast of less than $5 billion, according to the comptroller’s office. The result, the report said: CREZ projects may cost the average household $70 to $100 a year for 15 to 20 years.

Texas has more than 12,000 megawatts of installed wind capacity, ranking it first among U.S. states, according to the American Wind Energy Association’s website.

Combs’ office said thousands of megawatts of wind capacity in West Texas can create power when demand is lower at night, but such turbines don’t necessarily generate a lot of power during hot summer afternoons. That means natural gas units are used as backups. Building more transmission in Texas has been discussed.

“State policy has encouraged this wind development and provided a transmission system that is underutilized much of the time,” the comptroller’s office said in its news release, also noting the role of federal tax credits as well as school property tax exemptions.

Combs said developing technology to store renewable energy for reserves during periods of high demand should be part of the industry’s responsibility before more intermittent generation is added.

“The renewable sector has benefitted most from the $6.9 billion CREZ transmission infrastructure that is already in place,” the comptroller’s office said in the report. “It should not proceed with future investments that would require significant additional infrastructure development over opportunities to maximize the existing grid, especially if these investments require tax abatements or other subsidies to be financially viable.”

‘Hit piece’

The American Wind Energy Association (AWEA), meanwhile, said the report wasn’t credible.

Other studies that have examined Texas wind have shown that it’s saving consumers money while the investment in transmission is improving reliability, said Michael Goggin, director of research at AWEA.

“This study doesn’t contain any new analysis that refutes any of that,” Goggin said in an interview. “It just seems to be a hit piece on renewable energy without any substance.”

Goggin also said other energy sources have received billions of dollars in incentives over decades.

Tom “Smitty” Smith, director of the Texas office of Public Citizen, said in an email that the comptroller’s report “insults” the Texas Legislature and its steps to develop renewable energy that can create jobs, lower pollution and work without relying on water for cooling.

He said the report ignores that wind and solar would be the cheapest energy sources in the future, and he called those sources “far less risky than investing in more highly volatile natural gas plants.” While the West Texas wind may blow strongly at night, Smith said, solar and coastal wind projects can help balance the system at other times. He said storage is beginning to be developed.

“This report needs to be sent back to the editing room for a fairness check,” Smith said.

The discussion of Texas electricity is expected to continue with the 2015 legislative session as well as U.S. EPA’s proposed Clean Power Plan, which would curb carbon dioxide emissions at existing power plants in the future. Regulators and advocacy groups have been debating whether market changes are needed to ensure that Texas has enough power to serve a growing population.

Donna Nelson, chairwoman of the Public Utility Commission of Texas, in May asked for a review of planning and system costs related to renewable resources, which she said could pose challenges to the electric grid (EnergyWire, May 30). A docket related to that topic has garnered a number of comments, and a commission workshop is set for Oct. 30.

Combs, in a letter included in the newly released power report, said electric companies face challenges to remain competitive, reliable and affordable. She said a “light regulatory hand” can help ensure that environmental goals don’t create excessive burdens for Texas customers.

“When taxpayers are asked to foot the bill for energy policy choices, we need to be sure they are the right choices,” Combs said in the letter. “Adding generation is expensive no matter the source, but as policymakers and elected officials, we must ascertain if we have chosen correctly or if changes are both good and necessary.”