R Street Institute
Testimony

Testimony in Opposition to Allowing Texas Utilities to Own Generation

by Beth Garza
April 11, 2023
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issues: Electricity Policy, Energy and Environment, Energy Regulatory Reform, State Policy, Texas

Testimony from:
Beth Garza, Senior Fellow, R Street Institute

In OPPOSITION to SB 1075

April 11, 2023

Senate Committee on Business and Commerce

Chair and members of the committee,

My name is Beth Garza. I have previously had the opportunity to testify before this committee a few years ago when I served as the independent market monitor for the ERCOT market. I am here today speaking as a senior fellow with the R Street Institute. The R Street Institute is a nonprofit, nonpartisan, public policy research organization, whose mission is to engage in policy research and outreach to promote free markets and limited, effective government. I am testifying against SB 1075.

SB 1075 is an unfettered giveaway to regulated distribution utilities, and has the potential to cause harm to both the competitive wholesale and retail markets. Although the committee substitute introduces several considerations that may drive the need for distribution utilities to own generation, these considerations would only be included in a distribution utility’s assessment every five years. They would not be used as the basis for whether this type of generation is a reasonable or prudent addition to the utility’s rate base. This is inappropriate. In exchange for guaranteed cost recovery and rates of return, regulated entities should be subject to deliberate regulatory oversight to ensure customers’ money is being appropriately spent. 

Further, I suggest that if regulated distribution utilities are to own generation, this should only be considered if it is a part of a utility’s “resiliency plan” as proposed in SB 1111, and that such as resiliency plan including generation, should include a description of how fuel will be accessed.[1]

Thank you for the opportunity to say my piece. I am happy to respond to any questions.

Beth Garza
Senior Fellow
R Street Institute
[email protected]

[1] S.B. 1111, “AN ACT relating to transmission and distribution system resiliency planning by and cost recovery for electric utilities,” Texas Legislature.