On the heels of Xcel Energy seeking to reduce monthly fuel cost charges for their electrical customers by making a filing with the Public Utility Commission of Texas, Lubbock Power and Light announced similar action Tuesday afternoon.

LP&L will reduce the Purchased Power Recovery Factor on customer’s electrical bill starting February 1st

For a typical customer using 1,000 kilowatt hours of electricity per month, the cost of electricity will decline from $100 per month to $89.21 per month.

Lubbock Power & Light is able to reduce the Purchased Power Recovery Factor due to lower costs in purchasing wholesale power. Again, the decline will go into effect on February 1st.

After Tuesday's Electric Utility Board meeting, LP&L issued the following bullet-points:

  • LP&L's purchased power recovery factor (PPRF) is designed to recover the cost of all power purchased from our wholesale provider Xcel Energy. PPRF revenues of LP&L equal the purchased power costs for LP&L.
  • LP&L's rates are comprised of two parts:
    • Base Rate (Energy Charge): Covers all budgeted expenses and capital improvements plans for the utility; all expenses controlled by LP&L. The base rate is adjusted by City Council vote. Standard residential customer base rate for non-summer months: $0.02509 per kWh.
    • Purchase Power Recovery Factor (PPRF) : Covers the cost of purchasing and transporting wholesale power to our customers. Standard residential customer PPRF for current season: $0.06858 per kWh.
  • PPRF rates are adjusted seasonally (October 1 and June 1) and account for approximately 70 percent of LP&L customers' total electric rate since 70 percent of our cost comes from our wholesale energy provider.
  • Rate stabilization was put in place December 2013 to eliminate volatility of purchased power costs on customers' monthly statements. Before December 2013, LP&L used a monthly "true-up" which caused customers' PPRF rate to fluctuate from month to month. Volatility is now absorbed by LP&L rather than the customer.
  • For LP&L's standard residential customer, the PPRF rate was set at $0.06858 per kWh in October 2015. This rate would normally have been set until June 1, 2016. LP&L is adjusting the rate down mid-season. The new PPRF rate will be $0.05685 per kWh.
  • What does this mean for our typical customer who uses 1 000 kWh a month? Our typical customer's cost of electricity will drop from $100.94 today [January 19] to $89.21 starting on February 1.
  • LP&L closely monitors natural gas pricing and projections from the U.S. Energy information Administration (EIA). Information provided by the EIA plays a role in setting the PPRF seasonally. The price of natural gas was lower than the EIA's original projections and therefore LP&L has the ability to lower the pass-through rate for purchased power.
  • The new PPRF rate will go into effect February 1, 2016.

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