Renewable energy isn’t causing Texas power prices to rise

Recently, The Wall Street Journal published an editorial that concluded renewable energy subsidies are distorting the electricity market, raising prices and putting the nation’s grid at risk.

Nowhere in the editorial did we find concerns about generous fossil fuel subsidies, like the $10 billion Texas Energy Fund for gas power plants. But that’s a different story.

What really bothered those of us who know the facts about renewable energy’s impact in Texas was the way rising energy prices in our state were laid at the feet of renewable power subsidies. That’s just untrue.

The Journal concluded:

“Renewables also cause price spikes when there are power shortages, and they require more transmission investments to balance fluctuations in loads and frequencies.

“All of this is why Texas’s residential power prices have risen some 40% over the last seven years. The renewable lobby says the financial benefits of the tax credits are passed onto electric customers, which may be true when state-regulated utilities build projects. But the credits usually pad the profits of independent generators.”

Our organization, Texas Consumer Association, as well as Texans who understand the energy market, know that attribution of price increases to renewable energy is incorrect. Multiple sources demonstrate that, historically, wholesale prices in Texas are lowest when renewable energy is at its peak performance. The truth is that residential bills have increased because electric delivery utilities have increased their rates about 40% over the last seven years, including return on equity.

Here is the data to prove it.

Let’s start with the Independent Market Monitor 2024 State of the Market Report, specifically page IV of the executive summary. The graphic shows how over three years, renewable energy sources lowered prices in Texas during high-demand periods and reduced the number of opportunities for thermal (gas) to bid into the market because prices were too low.

And the number of times additional costs were added to compensate for renewable reliability concerns decreased over that period. The market monitor’s report also stated that this downward pressure on wholesale generation prices will persist for years. Renewable subsidies were irrelevant to the broad calculations.

None of the increases experienced by customers since 2021 have gone to support renewables or improve their reliability, according to dozens of filings by the utilities and the Electric Reliability Council of Texas. For example, the recently approved Permian Basin Plan is an approximately $13 billion transmission infrastructure buildout to help support the oil and gas industry in producing more energy in Texas. According to ERCOT, more than half of the construction in the Permian Basin is driven by the needs of oil and gas.

ERCOT also has a second plan for East Texas called the Strategic Transmission Expansion Plan (STEP), which costs about $14 billion. Again, this isn’t about supporting renewables but rather the state “facilitating” economic growth in the largest Texas cities, officials say. Regardless, residential customers’ bills will increase, and the cost increases aren’t because of renewable energy. It’s to cover the cost of the necessary new transmission.

There are securitized costs of about $3 billion from the 2021 winter storm that customers are currently paying for and will continue to pay for over 25 years. Wind, solar and batteries didn’t get any of that money. Let’s be clear, that was a subsidy from market manipulation during the storm that Texas residential customers are paying due to predatory pricing by companies who took advantage of the gas shortage and charged outrageous prices.

Oncor, Texas’ largest energy delivery company, recently informed investors that it knows it will invest $36 to $48 billion, and potentially invest an an additional $78 billion, over the next five years. Of that all $126 billion in planned and potential investment, nowhere is support for renewables listed as a reason. Economic growth is repeatedly cited as the primary driver of increased investment.

Again, discussing the value and appropriateness of subsidies should happen, but one data point incorrectly applied does not accurately capture the extent to which Texans are subsidizing the energy market.

The bottom line: Customer bills are increasing because utilities like Oncor are asking for it and the Legislature has made it easy for them to ask and get approval from the Public Utility Commission.

Texans need the facts – not misdirection – to understand the cause of rising electric prices.

Sandra Haverlah is the president of Texas Consumer Association, a statewide organization representing individual and small-business consumers on pocketbook issues.

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