Lubbock City Council Declines Proposed Lubbock Power and Light Rate Increases

At the first meeting chaired by Mayor Glen Robertson, the Lubbock City Council chose to take no action on a proposed rate increase for Lubbock Power and Light.

LP&L officials emphasized that the utility currently has to dip into the $47.3 million required reserve, and asked the City Council to raise electric rates nearly across the board.

For the average home using 1,000 kilowatt-hours, the full proposed increase would have added $6.94 as of July 1^st, and another increase of $2.51 as of October 1^st.

All together, the increase has been estimated to be an 11 percent increase for average residential customers, and 5 percent for business and municipal customers. LP&L has 12 different rate structures, and the increases would have affected all users except for their contract with Texas Tech University, which is the utility’s largest customer.

The $9.45 increase would have provided an estimated 7 percent increase in revenue to LP&L, which utility officials say would keep them from dipping into the reserve and would allow them to avoid financing capital projects, for which they have an existing estimated reserve of around $14 million.

The entire utility is valued between $350 to 400 million, and LP&L’s bonded indebtedness is about $130 million.

LP&L purchases its energy from Xcel Energy, which is reportedly planning a wholesale rate increase in July, which does not require approval from the Public Utility Commission. Xcel is also believed to have plans to raise their retail rates in February of next year, which will require PUC approval.

District 5 Councilwoman Karen Gibson weighed in on raising the rates, saying “I know eventually it’s coming, and we have to do it, because we have a future to look towards. We also have citizens we have to look out for, and households, and some of these are crazy,” describing her view of some of the rate structure increases.

“Instead of having it stepped up gradually over time, we’re going to have happen in the LP&L electric rate what happened in the water rate, and that is a huge increase all at one time, which for my constituents, is going to be a lot harder to absorb all at one time as opposed to a little bit over time,” said District 1 Councilman Victor Hernandez.

Robertson, who served on the Electric Utility Board prior to his election as mayor, offered an opposing viewpoint regarding the rate increases immediately. “A year ago in September, we were given very similar numbers. At that point, I was told as a board member, that we were projected to lose $4.5 million and we needed to raise rates. I fought for a rate increase, and as a matter of fact, sent every councilperson an email.”

“The problem was, once we got audited numbers, that $4.5 million projected loss turned into a $1.3 million gain…my concern has been since that point, that I can’t make a decision on rates based on budgets and forecasts, whether they be financial forecasts or weather forecasts. I think it is prudent business for us to set rates after the end of the fiscal year…The reason I am so rigid on this point is I literally felt like I got burned a year and a half ago,” Robertson elaborated.

Hernandez twice attempted to make a motion to implement the full rate increases, but failed to get a second on his motion.

The Council will likely review possible rate increases again at some point after October 1^st.