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Relating to the establishment of rates for certain non-ERCOT
No significant fiscal implication to the State is anticipated.
As a state with a rapidly growing population, Texas needs to expand electricity generation capacity to meet increased demand. Ultimately the best way to achieve that goal is through reduced regulation and increased competition in a free market environment that operates with the lightest possible regulatory touch. Under such a system, the normal laws of supply and demand would apply and the amount of generation capacity would match the willingness of consumers to pay for it.
Unfortunately, our electric utilities do not operate in anything remotely approaching a true free market environment so the normal laws of supply and demand do not apply. We do not have a basis to determine whether the solution proposed by this legislation is a good way to encourage generation investment in the current overregulated environment. For this reason we remain neutral on HB 1397 but we do encourage the legislature to consider ways to bring lighten the regulatory environment in the electricity industry.