Lubbock City Council Votes Against Postponing Lubbock Power and Light Electric Rate Increase
At a special meeting of the Lubbock City Council Tuesday evening, a number of people turned out to hear the Council discuss Lubbock Power and Light’s 9.7 percent electric rate increase and the impact on the utility and citizens.
The Council had six items on the agenda Tuesday evening to consider, which included a resolution that would amend LP&L’s $30 fee to set up a payment plan in person as opposed to using their online or phone payment setup systems, action to rescind, delay, or otherwise amend the electric rate changes adopted by the City Council on May 9th, 2013, and more.
The measure to amend LP&L’s $30 fee to set up a payment plan in person would have given an exemption to anyone setting up a payment plan in the instance of a billing error. It failed 4 to 3, with some Council members preferring to allow the City’s Electric Utility Board address the issue.
The Council also had the option to discuss the Lubbock Power and Light 2012-13 budget, but they chose to put off that discussion until Thursday, August 1st when the Council will meet to hold a budget work session.
Joe Mancinelli, who represented J. Stowe and Co., LP&L’s consultants, gave a presentation regarding the rate increase.
Mancinelli said that the cost of purchasing power from Xcel continues to rise, with the June Purchasing Power Recovery Factor increasing 11 percent from May. Also, 44,704 people were underbilled by the utility for June 2013, which will be made up over the coming months.
Mancinelli also said repeatedly that the new residential electric rate is working as designed for the utility, which was met with some slight heckling from the attendees of the meeting.
According to the presentation, the residential rate consists of three components; the customer charge, which recovers the cost of billing, collection, and customer service; the energy charge, which recovers the cost of distribution, local production, transmission, and other financial obligations; and the purchased power cost recovery factor, which recovers all of Xcel purchased power costs.
The customer charge went up from $5.60 to $6.50 per month, and the summer energy charge dropped slightly per kilowatt-hour, but the purchased power rate increased.
Mancinelli continued, saying that if LP&L returned to the prior rate structure, it would not meet the utility’s cost of service, the bond rating could be adjusted downward, and LP&L would not be able to recover all Xcel purchased power costs, leaving the utility in financial distress.
In June 2013, if LP&L had stayed with the prior rate structure, their revenue would have been just over $6.2 million, but under the new rate structure, their revenue for the month went up to about $7.34 million.
The presentation continued, and addressed the possibility of LP&L going back to matching Xcel’s residential rate minus a discount of 0.26 percent as they have done in the past. Mancinelli said that the average customer would save around $1.47 per month. Also, he pointed out that the LP&L rates include fees for municipal street lighting, while Xcel rates do not.
Mayor Glen Robertson weighed in, saying that the bond rating agencies were expecting the rate increase in October, rather than June.
He continued discussion of the utility’s finances.
“We’ve also got to realize that we’re spending ourselves into a hole. LP&L has lost money one year. They lost $3.2 million last year. You need to understand that their payroll went up $3.157 million last year, and that was with one extra employee,” Robertson said.
Robertson also had some harsh words for Mancinelli.
“We also said tonight that all debts were being financed at LP&L now, and that’s another untruth. Well, I’ll say what it is; it’s an absolute lie,” said Robertson. “The budget we have in front of us is calling for $10.8 million in capital cash funding this coming year, and I know we were in excess of that this year.”
You can listen to more of Robertson’s comments below.
Mobile Podcast Download Link: Glen Robertson Discusses Utility 7-30-13.
District One Lubbock City Councilman Victor Hernandez made a motion to rescind the rate increase until October. The motion failed 5-2, with only Robertson and District Five Councilwoman Karen Gibson voting in favor of the postponement.
The Electric Utility Board will meet in open session at 3 p.m. on Wednesday, July 31st at the LP&L offices at 1301 Broadway Avenue to discuss generation unit costs, proposals and strategies for system improvements, generation additions, or sales, bidding and pricing information for purchased power, generation, and fuel, and matters related to power pricing information and customer billing.
The Lubbock City Council will meet again on Thursday at 1 p.m. for a budget work session in Committee Room 103 at City Hall, located at 1625 13th Street. During that meeting, the Council will discuss the upcoming 2013-14 fiscal year budget, as well as LP&L’s budget.
You can find the Council’s agendas for recent and upcoming meetings here.