Summary: Last year pressure from both progressives and conservatives resulted in the Texas Legislature failing to renew Chapter 313 - Texas' corporate-welfare clause. Yet many politicians, led by House Speaker Dade Phelan, are partnering with big business to bring the program back to life when the Legislature convenes next year. [In addition] Mandating higher prices won't increase the reliability of the grid.
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20 September 2022
Houston Daily
Excerpts
Last year pressure from both progressives and conservatives resulted in the Texas Legislature failing to renew Chapter 313 - Texas' corporate-welfare clause. It will expire at the end of this year. Yet many politicians, led by House Speaker Dade Phelan, are partnering with big business to bring the program back to life when the Legislature convenes next year.
First, without Chapter 313, the problem of Texas’ high property tax rates becomes more transparent. Texas homeowners face a stacked rate in Texas’ five largest cities of 2.49%. Though the effective rate will be lower because of the homestead exemption, entities like WalletHub rank Texas’ effective rate about 6th highest in the nation.
The average effective property tax rate for businesses in Texas is 2.25%. This is compared to an average rate in other states of 1.88%. The rate of three of Texas’ largest economic competitors are far lower: California’s rate is 1.38% and North Carolina’s is 1.07%. And the rate in Florida, which like Texas does not have an income tax, is only 1.93%. Without relief from Chapter 313, businesses will be forced to shed more light Texas’ excessive property taxes.
Second, without Chapter 313, the reliability of Texas’ electric grid will improve. Since 2005, schools have provided Chapter 313 property tax breaks of at least $1.5 billion to wind and solar generators. This has been a major factor in the rapid growth of unreliable renewable generation in Texas. Renewables have grown from 3% of generation in 2006 to 34% today. And grid stability is getting worse.
Third, without Chapter 313, we will start down the path of reducing the costs that renewables are imposing of Texas consumers. The cost of subsidies and benefits baked into Texans’ electricity and property tax bills could run as high as $4 billion this year. These include property tax abatements, congestion costs, and regulatory price hikes. The Legislature has for years refused to address the cost and reliability problems caused by renewables; not replacing Chapter 313 would be a great place to start.
Austin Journal, 21 September 2022, Excerpts
A new report by energy expert Robert Bryce estimates that Texas consumers will have to cover at least $10.5 billion of costs from Winter Storm Uri through higher electricity and natural gas bills while critics contend that the higher prices don’t come with increased reliability, according to Forbes.
The prices of energy skyrocketed because the Public Utility Commission (PUC) of Texas unilaterally increased prices to $9,000 per MWh. According to research from the Energy Alliance, this price was over four times higher than the actual estimated market price at the time (about $2,000) due to the shortage.
The debt from Uri and the higher prices today fall in line with the directive from Gov. Abbott to 'streamline incentives' in the Texas electricity market. What that really means is that Abbott and many members of the Legislature want to increase profits for generators by increasing the price of electricity for Texas consumers. But mandating higher prices won't increase the reliability of the grid," Energy Alliance Policy Director Bill Peacock said in a statement.
Texas consumers and numerous businesses must now foot the bill for the total value of electricity during that week, which the Electric Reliability Council of Texas (ERCOT) market monitor Potomac Economics put at $59 billion – more than market costs had totaled over the previous two years combined.
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