A Balanced Portfolio Keeps Reliability Up & Costs Down
Texas’ diversified energy portfolio ensures that market forces work to keep energy costs down through competition and helps weather the swings of volatile energy and fuel markets. Diversity is also essential to incorporating intermittent renewable power resources into the power supply mix in a cost effective manner.
Energy is a basic need, and studies have consistently shown that regulations that increase energy costs act as a regressive tax, consuming the after-tax household incomes of working families – money that would otherwise be spent on food, housing and healthcare. Lower-income families are more vulnerable to energy costs than higher-income families because energy represents a larger portion of their household budgets. A 2015 study found that the 4.4 million Texas households earning less than $50,000 annually, representing 47% of Texas’ families, devote an estimated average of 16% of their after-tax incomes to their energy bill. Texas’ Hispanic and senior citizens are among the most vulnerable to energy price increases. Shrinking incomes across the U.S. are serving to further magnify the impacts of rising energy costs on family budgets.
ERCOT Generation by Fuel Type
(January 2017 Data. Totals are Rounded. Hydro, Biomass and Solar Combine to 1%.)
A Diversified Portfolio Lowers Costs
A diversified portfolio of power supply, as we have in Texas, lowers the cost of generating electricity and makes monthly power bills more predictable. Electricity markets and generators must be able to respond quickly to changes in the affordability or availability of fuels caused by changes in the global economy, world politics, and the regulatory environment. Having a diverse energy portfolio provides the flexibility to respond to changes in fuel prices and allows the substitution of lower-cost resources in place of more expensive resources. For example, the current diversified portfolio of U.S. power supply lowers the cost of generating electricity by more than $93 billion per year.
The Energy Information Administration’s “Levelized Cost of Electricity Generating Technologies” illustrates how existing generation is generally more affordable, especially when comparing renewables to coal.
An “all of the above” market-based energy approach keeps Texas’ electricity affordable, reliable, and flexible for consumers.