The Facts

* Texans use about 360 million megawatt hours of electricity each year; reliability issues involves perhaps only 1.3 million megawatt hours, 0.36% of annual use.

* Peak use is slowing, diverging from economic growth because of market innovation in demand response.

* Texas’ competitive market is already maintaining resource adequacy and improving reliability, both on the supply and demand sides.

* Proponents of a capacity market are asking Texas consumers to pay to assuage the fears of generators and policymakers.

* There is no evidence that capacity markets boosts capacity; from 2007-2011, capacity payments in PJM (the mid-Atlantic grid) funded only about a 4% increase in generation while generation in Texas’ energy-only market grew about 12%.

* A capacity market in Texas would result in an “electricity tax” on Texas consumers of about $3.2 billion annually.

* Payments from consumers through the electricity tax would mainly be used to increase the profitability of electricity generators and Wall Street investment firms, not to fund new generation.

* The path to improved reliability lies through increased market efficiency and decreased government intervention.


* The PUC should eliminate the high system-wide offer cap.

* The PUC and ERCOT should more closely evaluate the ability of current and potential market driven demand response to handle peak load strains on the system.

* The Texas Legislature should prohibit a capacity market in statute. 

* The Texas Legislature should reevaluate both the broad structure of ERCOT and the PUC’s reach into ERCOT’s operations.

* The Texas Legislature should reorient/eliminate the Independent Market Monitor and the regulation of market power abuse.

* The Texas Legislature should reduce the PUC’s excessive regulatory authority.

* The Texas Legislature should eliminate the Texas Renewable Portfolio Standard.

* Texas policymakers should oppose the reinstatement of the federal Production Tax Credit.