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Musings on Economic Freedom from the Texas Public Policy Foundation’s
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Yesterday we released A Q&A on the Texas Electricity Market, an Energy Brief that provides an overview of the Texas electricity market and the current debate over whether Texas should abandon its world-class competitive market and move to a capacity market that would provide subsidies for electricity generators.
The subsidies in a capacity market could cost Texas consumers $4 billion a year through higher electricity prices. That’s a high price to pay in a market that has provided a reliable supply of electricity to consumers for over a decade.
Concerns over reliability are overstated. For instance, recent projections of future shortages have overestimated demand and underestimated supply. To the extent the Texas market is experiencing challenges, it is largely because of increased intervention in the market pushed by regulators and special interests—who now seem bent on creating more problems with a capacity market. While Texas does need to act to improve the market, we should do so by moving away from, not toward, more regulation and intervention.
This paper is the first in a series of weekly papers the Center for Economic Freedom will produce examining the debate over the reliability of Texas’ electricity market. You can also click here to see other recent articles and papers on the Texas electricity market.
Bill
Bill Peacock
Vice President of Research
Director, Center for Economic Freedom
Texas Public Policy Foundation
o: (512) 472-2700
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