March 25, 2019

House Committee on State Affairs

My name is Josiah Neeley, and I am a
Senior Fellow in Energy Policy and the Texas Director for the R Street
Institute. R Street is a nonprofit, nonpartisan public policy research
organization with a mission to engage in policy research and outreach to
promote free markets and limited, effective government. I am here today to
testify against HB 2908.

R Street has long been opposed to
subsidies for all types of energy. At the federal level we have actively worked
to end the tax credits for renewable electricity such as the PTC and ITC, so we
share the frustration that lies behind this legislation. However, HB 2908
attempts to deal with this issue in a way that would itself be highly damaging
to the Texas electricity market.

Texas’ competitive electricity market
has been a great boon to the state. It has helped save Texas consumers billions
of dollars on their electricity bills. Over the last decade, electricity prices
in Texas have fallen faster than in any other state. One of the keys of the
state’s success is that we have largely resisted the temptation to have
government put its thumb on the scale to “correct” for perceived problems in
the market.

HB 2908 would undermine the
competitive electric market that has served the state so well. While it is billed
as a way to “compensate” for federal subsidies, the bill would empower ERCOT to
interfere with the competitive market based on what some bureaucrats think the
market prices “should” be.

Federal tax credits for renewable
electricity are a bad deal for taxpayers, but they do not pose the same risk to
the market. The Texas electrical system is reliable, and the reserve margin has
been near or above the economically efficient ten percent margin. The right way
to deal with subsidies is to eliminate them, not to add another layer of
government distortion on top of them.

I would be happy to answer any

Josiah Neeley

Texas Director

R Street Institute

[email protected]

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