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Lessons from the Texas PTC

By: Barbara Vergetis Lundin |

While the industry volleys for an extension to the Production Tax Credit on renewable energy, a new report analyzing the PTC in Texas says an extension could produce negative ramifications, including decreased job growth, despite all arguments to the contrary.

The Texas Public Policy Foundation, a non-profit free-market research institute based in Austin, analyzed the cost of the federal PTC and other renewable energy subsidies in Texas.

According to the report, the PTC’s current annual cost in Texas is approximately $567 million. If continued, the cost of the Texas PTC would run about $4.1 billion through the 10 years ending in 2015.

“The continuation of the Production Tax Credit will cause more disruption in electricity markets and impose higher costs on consumers and taxpayers,” said Bill Peacock, the Texas Public Policy Foundation’s vice president of research and director of the center for economic freedom. “The negative consequences of the Production Tax Credit are even more apparent in Texas, as it has more wind-generated electricity than any other state.”

Despite the mature nature of the wind industry, the cost of renewable subsidies in Texas is on the rise as are the costs imposed on the Texas electricity market, the analysts contend.

“Texas is undergoing a major debate over whether price signals are adequate to maintain resource adequacy,” said Josiah Neeley, policy analyst for the Foundation’s Armstrong Center for Energy and the Environment. “A significant portion of the problem with price signals can be directly attributed to the subsidies for wind generation, particularly the Production Tax Credit.”