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No Surprise: Texas and Its Energy-Only Market Lead Two Business Attractiveness Rankings, Capacity Market States Largely Absent Texas, with its energy-only market serving the vast majority of the state, continues to be named the most attractive state for businesses by numerous metrics, while capacity market states are largely absent from the same rankings.
Specifically, more than 700 top CEOs around the nation ranked Texas as the best state to do business for the ninth year in a row in Chief Executive magazine's annual Best and Worst States survey.
Additionally, Texas has taken the top spot in another of Site Selection Magazine's annual rankings -- this time in the magazine's ranking of the most competitive states in 2012. Earlier this year, Texas was awarded Site Selection's 2012 Governor's Cup for the most new and expanded corporate facilities announced over the year.
As can be seen below in the top 10 lists of the rankings, capacity market states are largely absent -- particularly those that exclusively rely on capacity auctions for capacity, rather than various opt-out mechanisms or rate-based utility generation.
Yes, Ohio is included in the rankings, and while three-fourths of its major utilities are either currently in, or have been approved to move to participation in, the RPM capacity auction, only the FirstEnergy utilities participated in the capacity auction for the current delivery year; Duke Energy Ohio and AEP Ohio are still operating under Fixed Resource Requirement plans, which is a capacity auction opt-out, with respect to current service.
Michigan and Virginia are also included in the Top 10s, and while they operate in capacity market RTOs, the incumbent utilities in each state largely rely on ratebased assets to meet capacity needs.
The latest rankings are not novel, Matters had previously culled a number of rankings and found that the top states for business do not rely on capacity markets
This is not to argue that Texas is ranked first in large part due to its energy-only market, but rather to rebut claims that current concerns over resource adequacy, and specifically the lack of a mandated reserve margin and/or capacity market, are negatively impacting the business climate. While certainly resource adequacy is a concern for businesses in determining where to locate, rates and competitiveness are equally a concern. The multiple affirmations that Texas has struck the right balance, as reflected in its #1 ranking in numerous lists, should silence attempts to spin the Texas business climate as at-risk due to the energy-only market design.
Note: Site Selection's website with the top 10 rankings appears to be offline temporarily at publication time. The top five states were Texas, Indiana, Georgia, Tennessee, and North Carolina. From a prior viewing, Matters believes Ohio and Michigan were included in the second half of the top-10 (and Virginia may have been as well), but avers that no states exclusively reliant on a capacity auction made the top 10.
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May 8, 2013
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Copyright 2010-13 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
Chief Executive's Top Best States for Business
1. Texas
2. Florida
3. North Carolina
4. Tennessee
5. Indiana
6. Arizona
7. Virginia
8. South Carolina
9. Nevada
10. Georgia
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