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May 24, 2019

Renewable energy legislation narrows

by Wendell Bell,
Source – Grid Monitor
Posted 05/24/2019

The Texas Legislature debated several measures aimed at restricting renewable energy development, particularly wind farms, but it appears that nothing detrimental to the industry will pass.  

Time has all but run out legislation dealing with the effects of federal subsidies for wind power; the ability to grant local tax abatements for wind and solar projects was preserved; and a compromise bill dealing with decommissioning of wind projects has passed both houses.

Senate Bill 2232 by Sen.Kelly Hancock (R-North Richland Hills) would direct the Public Utility Commission of Texas (PUC) to study and identify the effects that renewable energy subsidies have on the ERCOT market.  The bill is supported by the conservative think tank Texas Public Policy Foundation, the Texas Association of Manufacturers, and Texas Competitive Power Advocates, which represents power generation companies, among others. 

Supporters of measure are particularly concerned about the federal Production Tax Credit for wind energy that sometimes results in offers into the market at zero or even negative prices, regardless of whether or not the market signals a need for that energy or generation capacity.  They say that the increased presence of wind energy causes price volatility and reliability concerns by “crowding out” dispatchable generation.

The bill calls for the PUC study to identify a range of potential actions to mitigate or offset the impacts of subsidies for renewables. 

Opponents, including American Wind Energy Association, Advanced Power Alliance, and the Lone Star Chapter of the Sierra Club, say that the study unfairly targets one segment of the market while ignoring subsidies provided to others.  

The study bill passed the Senate 25-6 on April 24, but was left pending in the House State Affairs Committee after a May 8 public hearing.  However, the committee approved a similar measure in April, House Bill 2908 by Rep. Jared Patterson (R-Frisco).  It would require the PUC and ERCOT to conduct a study of “potential rules, procedures and protocols to eliminate or compensate for market distortions caused by certain federal tax credits.”  House Bill 2908 was never scheduled for floor debate.

Demonstrating that “dead” bills can sometimes be resurrected as amendments to other bills still in play late in the session, there was an attempt to add a version of the study as a House amendment to a Senate bill aimed at revising or repealing certain statutory reporting requirements by state agencies.  In fact, the amendment was adopted on the May 21 second reading of Senate Bill 241 by Sen. Jane Nelson (R-Flower Mound), but then removed the next day before taking up the otherwise noncontroversial bill on third reading.  The failed amendment called for the PUC to include an assessment of the effects of subsidies for renewables in its biennial Scope of Competition Report.

In addition to federal tax policies, wind power developers often benefit from local tax abatements including those authorized under Chapter 312 of the state Tax Code, which is set to expire this September.  House Bill 3143 by Rep. Jim Murphy (R-Houston) would reauthorize the Property Tax Redevelopment and Tax Abatement Act and also impose additional public notice, hearing, and reporting requirements for certain tax abatement agreements. 

When the full Senate considered the reauthorization bill on May 20, Sen. Bob Hall (R-Edgewood) offered an amendment that would have prohibited tax abatements on properties involved in renewable energy projects.  It was essentially the text of Hall’s Senate Bill 1617, which never got a hearing in committee.  The amendment failed by a vote of 10-20.  Joining all 12 Senate Democrats in voting against the amendment were 8 Republicans, some with significant amounts of wind power in their districts.  

The Senate adopted other amendments to House Bill 3143 dealing with procedural requirements for local government  tax abatement agreements.  The House concurred with those changes on May 23, preserving this important tool for renewable energy as well as other industries.

A wind decommissioning bill initially opposed by wind power advocates passed both houses of the legislature with compromise language.  HB 2845, authored by Rep. Terry Canales (D-Edinburg) and sponsored by Sen. Brandon Creighton (R-Conroe) would require wind power development agreements to address removal of turbines and related facilities at the end of their useful lives.  

Compromise language was worked out in the House, and the bill passed the Senate on the uncontested calendar on May 23.  It is on its way to the governor’s desk.

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