Why Invite Any Federal Meddling in Texas' Successful Electric System?

There's a legislative debate at the Texas Capitol that could have serious impact on Texas businesses and consumers who enjoy some of the most affordable and reliable electricity in the country. A few companies and hedge funds are attempting to upend the system by proposing that Texas adopt a so-called "competitive process" for new transmission line development. In reality, this proposal is not competition. Worse, the adoption of competitive transmission would be a Pandora's box, opening up the state to federal regulation of our power industry by ceding jurisdiction over electric transmission infrastructure to bureaucrats in Washington. That's why the state's major employers and largest users of electricity agree that any such move to change the Texas model must be averted. It's important to know that the proposed change stems from a federal mandate known as FERC Order 1000. If imposed on Texas, this federal dictate for how transmission lines should be built could threaten the integrity and reliability of our electric system, layer in unnecessary bureaucracy and drive up costs for ratepayers.In practice, this proposal would inefficiently fragment the transmission grid, duplicate costs and facilities, and delay infrastructure. In fact, not a single project is yet in service under Order 1000, which has been in place since President Barack Obama's first term. For example, one project under this competitive scheme in the mid-Atlantic has seen costs rise from $281 million to $421 million. New York in particular finds itself so mistrustful of new bidders' ability to succeed in the transmission construction that they reserve the right to force the public to pay for duplicate projects to ensure the reliability of their system.When the Texas electric market was restructured 20 years ago, state legislators and regulators intentionally kept the transmission network — the poles-and-wires companies — regulated to serve as the backbone of a successful competitive electric market. Maintaining smart regulation of a common carrier such as the transmission system makes perfect sense.For these reasons, the Texas Legislature must preserve the reliability and affordability of the Texas model by passing legislation that turns decades of proven and efficient practice in our state into law.Senate Bill 1938 by Sen. Kelly Hancock, R-North Richland Hills, and House Bill 3995 by Rep. Dade Phelan, R-Beaumont, will accomplish this worthy goal. Their legislation will provide regulatory certainty, maintain the stability of transmission planning in Texas and continue to allow Texans to benefit from an electric market that is already one of the most competitive and successful in the country.Without question, affordable and reliable power has been a key factor drawing companies to Texas from across the country and around the world. Let's not be seduced by the claim that so-called competition in transmission line development will mean a better deal for households and businesses. It won't.Bernard L. Weinstein is associate director of the Maguire Energy Institute and an adjunct professor of business economics at Southern Methodist University. He wrote this column for The Dallas Morning News.   Continue reading...