Reliability Scare-Mongering Fails: Texas Ranked "Best Business Climate" by Business Facilities Despite (Or Because of?) Energy-Only Market August 28, 2013 Email This Story Copyright 2010-13 EnergyChoiceMatters.com
Reporting by Paul Ring • email@example.com
Another independent publication has ranked Texas as among the best climates for business, despite the narrative that "reliability" problems caused by the energy-only market and forecasts of declining reserve margins are going to keep businesses away.
"Employers across the country know the Texas model works. Our low taxes, smart regulations, skilled workforce and fair courts have created an economy that offers businesses the best chance at success," Gov. Perry said.
Of particular note, especially with yesterday's release of an NRG Energy-commissioned study on the claimed outage-driven economic losses from relying on an energy-only market (see related story today), is that Texas placed in the top 10 for data centers (at No. 2)
The CRA study cites data centers as one of the businesses likely to be lost by Texas unless it adds a capacity market.
Business Facilities disagrees, finding that Texas, as the state is currently constituted (meaning including the energy-only market), is ranked second in Data Center Leaders
Business Facilities had previously named Texas the 2013 State of the Year in January. Matters has previously detailed (click here) how Texas, with its energy-only market, consistently ranks among the top states for business and industry across numerous publications (CNBC, Forbes, Business Facilities, Site Selection, Chief Executive), while capacity market states consistently lag outside the top 10.
No states which rely on a capacity market for resource adequacy made Business Facilities' Top 10 Best Business Climate list. Some states within RTOs with capacity markets made the Top 10 (Virginia, Indiana), but these states rely on vertically integrated utilities with cost-based, utility-owned generation to meet any reserve margin, not a capacity market.
The Business Facilities Top 10 Best Business Climates are:
8. South Carolina
10. North Carolina
Business Facilities added a category this year for lowest industrial electric rates. Texas' ranking here is concerning, especially as it relates to a capacity market. Texas did not crack the top 10 in lowest industrial electric rates, and adding a capacity market, now estimated by Charles Rivers Associates to cost $4.7 billion annually, would only make Texas less attractive to business. One state, with only a single utility in an area with a forward, centralized capacity market, cracked the Top 10 rankings for lowest industrial electric rates -- Illinois (at No. 10). In Illinois only ComEd is in a forward capacity market (and on the unconstrained side of PJM); the rest of the state is in MISO which does not have a forward capacity market or obligation, though it runs an annual auction, on essentially a non-forward basis (only 2 months forward), for the prompt capacity delivery year.