State & Regional

Future of Lubbock's Power Lies in Hands of State Panel

AUSTIN (Nexstar) - The hearings to pave the way for Lubbock Power and Light to shift 70 percent of its electric customers to the Electric Reliability Council of Texas concluded with no decision on the proposal.

The final decision will be made by the Texas Public Utility Commission (PUC) after considering all of the verbal and written testimony provided over a series of hearings.

Thursday’s testimony continued with members of the energy and electric community discussing how different groups calculated LP&L’s possible exit fees and studies performed to determine the impact on customers.

William Grant, the director of strategic planning for Southwestern Public Service Company (the company that provides electricity to LP&L through Xcel Energy), testified that LP&L's move would mean SPS would save on fuel costs, but would also lose revenue, so "net would be zero."

Related: Plan to Move Lubbock Electric Customers Could Have Statewide Ramifications

SPS complained to the Federal Energy Regulatory Commission in 2016 after LP&L's proposal was unveiled, asking for $88.7 million dollars for an "interconnection switching fee," but the filing was dismissed.

All of the parties recognized on Thursday that LP&L ought to pay some sort of "exit fee," though that was questioned by Commissioner Arthur D'Andrea.

"We don't usually compensate seller for losing customers, right? Like usually we encourage a purchaser, like Lubbock, to look around in the marketplace, find the best deal, and move around efficiently in that direction," he said.

Chair DeAnn Walker, who said she had not made up her mind on what her decision would be, expressed her concern using a hypothetical scenario of Lubbock deciding down the road that officials wanted to change back or switch to a different system than ERCOT, saying that she wanted the parties to come up with "some type of limits." She also said the parties needed to address a plan for service that customers could rely on between when the current contract expires in 2019 and when the new service would be ready to engage some time around 2021.

"I'm not there yet," Walker said of the proposal, explaining that she did not want the public to think she had approved the deal in her mind. She said "there is no moving forward" if some of her concerns were not addressed.

Commissioner Brandy Marquez said PUC has "a lot to decide here." She said she was not settled on the issues at play, and was concerned about splitting up Lubbock's market 70 percent to 30, leaving some customers on the current system.

The commissioners agreed they had hesitations approving the plan, without knowing what exactly the future impact could be on citizens being treated differently.

ERCOT's counsel, Erika Kane, said at some point ERCOT and the other groups would have to factor Lubbock's shift into transmission planning, and she said one of the outstanding questions on the table was who would be responsible for building transmission facilities.

Walker urged all of the parties to make a deal beyond the agreement reached in principle over the weekend, saying she "felt strongly" that other ratepayers in the state are not impacted by something that is "a clear benefit to Lubbock."

LP&L counsel Lambeth Townsend, when presented with testimony from LP&L director of electric utilities David McCalla, said that LP&L and the city would be on the hook for connectivity costs and not ERCOT.

After the hearing, Lubbock Mayor Dan Pope said that the move creates a competitive market.

"This is about competition, it's about joining the effective, most competitive retail market in the country, and that's where we want to be for [the people of Lubbock] and we're going to do whatever we can to get [Lubbock residents] there," he told EverythingLubbock.com.

LP&L spokesperson Matt Rose released a statement following the hearing on Thursday.

“This week, Lubbock Power & Light continued its efforts to move the majority of its customers closer to the competitive ERCOT market.  This move is a process rather than a single event and this week’s proceedings move the process forward.   There are both savings and costs associated with this change and we believe that the near and long-term outlook shows a net savings to our ratepayers.  Lubbock is appreciative of the commissioners of the Public Utility Commission for their time and interest in this vital matter for Lubbock.”

The commissioners said they hoped to make a decision by Jan. 25, once more documentation was provided outlining specific information PUC requested.

To watch Thursday's two-part hearing, click here.

To watch Wednesday's three-part hearing, click here.


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