WASHINGTON (March 29, 2017) – Well-functioning competitive energy markets are the best option for innovation, consumers and the environment, while industrial policies subvert competition and contribute to mounting public debt, R Street Electricity Policy Manager Devin Hartman said in testimony today  before the U.S. House Subcommittee on Energy.

“Government interventions, including tax preferences, have sometimes helped address market shortcomings, but often result in costly unintended consequences that leave society worse-off,” Hartman told subcommittee members during a hearing on energy-related tax policy and its effects on markets, prices and consumers. “This underscores the importance of limiting government’s role to correcting market shortcomings efficiently, with an underlying objective to enhance market performance.”

In energy policy, the tax code’s tendency to pick winners and losers serves to reduce emissions only modestly and at high cost; to distort energy markets; and to deepen political tensions over which are the “right” technologies, Hartman said. Government expenditures in energy also tend to emphasize late-stage technological development and deployment, while the greatest benefits from public spending would come in basic research and development, he added.

“What we need are wholesale-electricity-market reforms that enhance competition, reduce unnecessary regulatory burdens, tighten and improve public energy expenditures and phase out distortionary tax preferences. Only with these improvements will the United States find itself on a more fiscally responsible, sustainable pathway,” Hartman said.

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