Economic Impact of AECT Member Companies

Testimony Before the House Committee on !Economic & Small Business Development!

January 26, 2012!

Legislative advertising paid for by: John W. Fainter, Jr. • President and CEO Association of Electric Companies of Texas, Inc. 1005 Congress, Suite 600 • Austin, TX 78701 • phone 512-474-6725 • fax 512-474-9670 • www.aect.net

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AECT Principles!

• AECT is an advocacy group composed of member companies committed to:

- Ensuring a modern, reliable infrastructure for the supply & delivery of electricity.

- Supporting efficient competitive markets that are fair to customers and market participants.

- Supporting consistent and predictable oversight and regulation that will promote investment and ensure the stability of Texas’ electric industry.

- Promoting an economically strong and environmentally healthy future for Texas, including conservation and efficient use of available resources.

• AECT member companies remain dedicated to providing Texas customers with reliable service and are committed to the highest standards of integrity.

The Association of Electric Companies of Texas, Inc. (AECT) is a trade organization of investor-owned electric companies in Texas. Organized in 1978, AECT provides a forum for member company representatives to exchange information about public policy, and to communicate with government officials and the public. For more information, visit www.aect.net.

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AECT Companies!Within ERCOT!

Generation Companies

Transmission and Distribution Utilities

Retail Electric Providers

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AECT Companies!Outside of ERCOT!

Western Electricity Coordinating Council (WECC)

Southwest Power Pool (SPP)

SERC Reliability Corporation

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Electric Grids in Texas!

• The majority of Texas is covered within the Electric Reliability Council of Texas (ERCOT), which is separate from other grids, which typically span multiple states.

• Portions of Texas are also covered by:

- SERC Reliability Corporation; - Southwest Power Pool (SPP) -  Western Electricity Coordinating Council (WECC)

FERC

NERC

(ERCOT)

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ERCOT Restructuring Spurred !Massive Generation Investment!

•  The competitive market has steadily added new generation and greater efficiency to the wholesale market.

•  Generators in the competitive market shoulder the risk of building new power plants, bringing efficient, cost-effective generation to consumers.

Sources: Energy Velocity, NERC, PUC

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AECT Member Companies

•  Over 19,000 Employees

•  Over 38,000 MW of Generation:

–  38 Natural Gas Plants –  17 Coal Plants –  2 Nuclear Plants –  7 Wind Projects –  1 Hydro Plant

•  11 Lignite Mines

Overall Economic Impact!

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2009 Taxes Paid by AECT Member Companies $ in millions

•  Taxes Paid on Company Assets and Activity –  State Taxes* $586 –  Local Taxes** $1,051

•  Additional Taxes Collected and Remitted –  State Sales Tax $209 –  Local Sales Taxes $134

•  TOTAL $1,980

*State taxes include sales, franchise, state gross receipts tax, PUC gross receipts assessment and the System Benefit Fund fee

**Local taxes include property, sales and franchise fees

Taxes Paid, Collected and Remitted!

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•  8,800 MW of new nuclear power in Texas has been proposed

–  Comanche Peak Units 3 & 4 (3,400 MW) –  South Texas Project Units 3 & 4 (2,700 MW) –  Exelon Victoria Station (2,700 MW)

•  Nuclear plants bring high-paying jobs and positive economic impacts to local economies.

•  Extending Chapter 313 of the Texas Economic Development Act would help these plants become a reality

Impact of Proposed Nuclear Investment!

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Coal

•  Property Taxes: AECT member companies pay an average of $9,154/MW in annual property taxes on coal-fired generation.

•  Production Taxes: Wyoming imposes a 7% severance tax on surface coal production and 3.75% severance tax on underground coal production.

Taxes by Fuel Type!

Natural Gas

•  Property Taxes: AECT member companies pay an average of $598/MW in annual property taxes on natural gas-fired generation

•  Production Taxes: Texas imposes a 7.5% tax on natural gas production, regardless of its final use or destination

Nuclear

•  Property Taxes: AECT member companies pay an average of $16,929/MW in annual property tax on nuclear-powered generation. Uranium mines are also subject to property tax.

Wind

•  Property Taxes: AECT member companies pay an average of $10,123/MW in annual property taxes on wind-powered generation.

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Web: AECT.net

Blog: AECTnet.wordpress.com

Twitter: twitter.com/AECTnet

Facebook: AECT Advocacy

Email: info@aect.net