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House Interim Committee on Energy Resources
Charge

Study ways to increase energy production in Texas.
Background

Texas has been a major oil and gas producer. Our economy has benefited much since during the early 1980s severance taxes from oil and gas production provided the state with one-fourth of its revenue. Presently, though, with the decline in the price of oil and gas, severance tax revenue only provides the state with five percent of its revenue. This trend has caused Texas to become an energy importer rather than a energy exporter. The situation need to be reversed and this subcommittee will look at approaches to resolve the trend.
Recommendations

  • Continue enhanced oil recovery severance tax exemption.

  • Continue severance tax break for wells brought back after inactivity.

  • Continue sliding scale costing under the 10-year severance tax exemption.

  • Continue the Texas Experimental Research Recovery Act program.

  • Enact legislation to encourage the development of new technologies and alternative fuels.

  • Study the potential benefits of state-assisted unitization.

  • Increase energy conservation measures in the state.

  • Diversify energy production, including renewable energy technologies.
    Charge

    Study the issue of "environmental externalities" when granting permits.
    Background

    The issue of environmental externalities (EE) came to the fore during the 74th Legislature when H.B. 1060 effectively prohibited it from being considered when determining the cost of power generation or rates. Environmental externalities are the social costs and benefits of any production activity that are not recognized in the cost structure of the product or recovered in the product price from the consumers, yet are carried or enjoyed by society.

    The power generation industry has been the focus of attention on this issue. Proponents of EE say that certain pollution costs are present, but excluded in the cost calculation of the electric utilities. Opponents of EE say that consideration of it would force a shift to more expensive and less reliable forms of energy production.
    Recommendation

  • Consider a mix of sources in the production of energy.
    Charge

    Study the effectiveness of severance tax incentives to promote oil and gas production activities.
    Background

    Texas has enjoyed considerable growth due to energy production, yet the 1980s saw a decline in world prices while Texas energy resources and production diminished. To counter the effects, tax incentives were introduced.
    Recommendations

  • Extend the Enhanced Recovery Project.

  • Continue severance tax break for wells brought back after inactivity.
    Charge

    Conduct active oversight of agencies under the committee's jurisdiction.
    Background

    House Rule 3, Section 11, gives the Texas House of Representatives Energy Resources Committee jurisdiction over the following agencies:

    The Railroad Commission of Texas

    The Office of the Interstate Oil Compact Commissioner for Texas

    The Office of Interstate Mining Compact Commissioner for Texas

    The Texas Energy Coordination Council

    The Texas Committee on Energy Policy

    The Office of Southern State Energy Board Member for Texas

    Recommendation

  • Consider imparting specific legislative intent for the Texas Energy Coordination Council.