AUSTIN – Texas should continue down its successful path of enabling competition in its electricity and telecommunications markets, according to a report released today by the Texas Public Policy Foundation.

“Texas has the most competitive electricity market in the U.S., if not the world. Its telecommunications market is equally successful,” says Bill Peacock, the report’s author. “Both have brought tremendous economic benefit to the state through billions of dollars of investment, lower prices, increased efficiencies, and helping to make Texas the best state in the country for working and doing business.”

The report, “A Tale of Two Markets: Telecommunications and Electricity,” was presented at today’s meeting of the Sunset Advisory Commission, which focused on changes proposed by Sunset staff to the structure and operations of the Public Utility Commission of Texas.

While the report affirms the highly competitive nature of the electricity market, it makes recommendations that are structured around TPPF’s four findings that the regulatory structure overseeing the market could be improved:

1) Regulatory efforts to micromanage competition in the electricity market reduce competition, raise prices, and increase budgets, harming consumers and taxpayers;

2) Fuel and energy efficiency mandates increase costs and reduce consumer welfare;

3) High and/or inequitable taxes and fees assessed in the electricity and telecommunications markets increase consumer prices and reduce consumer welfare; and

4) Current statute governing the Texas telecommunications market restricts competition, increases consumer prices, and reduces consumer welfare.

Peacock highlighted the Sunset staff report’s conflicting treatment of competition between the telecommunications and electricity markets.

“While the Sunset staff report generally praises the results of Texas’ telecommunications restructuring, it recommends the imposition of significant new regulations on the electricity market, which is a reversal of 15 years of Texas policy direction,” Peacock says. “While the details of the transitions to competition for the telecommunications and electricity markets differ, the timeline and the results are remarkably similar. There are no functional, economic, or political reasons to treat them differently.”

“Recent proposals to protect against supposed anti-competitive behavior in the electricity market are solutions in search of a problem,” Peacock said. “The data clearly shows that they are unneeded – Texas retail and wholesale electricity markets are the most competitive in the world.”

Among the key recommendations of the Foundation’s report:

– Streamline the regulation of electricity rates, operations, and services at the Public Utility Commission;

– Eliminate price caps and market-share caps in the wholesale market;

– Eliminate fuel and energy efficiency mandates that increase the cost of electricity; and

– Eliminate or modify discriminatory and excessive telecommunications taxes and fees.

Bill Peacock is Vice President of Research and Director of the Center for Economic Freedom at the Texas Public Policy Foundation.

The Texas Public Policy Foundation is a non-profit free-market research institute based in Austin.

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