The City of Lubbock's Lubbock Power and Light (LP&L) is currently a member of the Southwest Power Pool (SPP) by virtue of LP&L purchasing electricity from Southwestern Public Service (SPS), a wholly owned subsidiary of Xcel Energy.

On Wednesday, the first of two days of hearings was conducted in Austin at the Public Utility Commission of Texas (PUC), concerning LP&L's application to leave the SPP and join ERCOT, the Electric Reliability Council of Texas.

The first theme to emerge from Wednesday's hearing, if LP&L wants to leave the SPP, then 'go ahead'. An SPS spokesman said, "SPS is not opposed [to] Lubbock's proposal to move part of it's (electrical) load to ERCOT. What we want to do is to make sure that our customers are not forced to subsidize Lubbock's move." One caveat to LP&L's ERCOT application; is that it doesn't cover its whole service area and electrical load, but rather a large portion of it (about 70,000 customers). Specifically, 470 MW (megawatts), of the approximate 600+ MW of LP&L's electrical load is covered in the current application.

The second theme from Wednesday's testimony? ERCOT, the Southwest Power Pool and Southwestern Public Service all want to be “held harmless” financially because of LP&L’s proposed move to ERCOT.

Testimony from an SPP spokeswoman, "LP&L's exit from SPP and transition to ERCOT will shift transmission costs to all remaining customers throughout the SPP region, and for this reason SPP requests that if the commission (PUC) adopts a 'hold harmless' provision, that the provision apply to all SPP (electrical) rate-payers, not just rate-payers in Texas."

She continued, "As you can tell from our testimony, LP&L's request to interconnect with ERCOT has also caused SPP to incur costs associated with the exit study that was performed. We are pleased that LP&L has agreed to reimburse SPP for the costs of that exit study." No cost was stated for the exit study.

Attorney Phillip Oldham spoke on behalf of the Texas Industrial Energy Consumers (TIEC), "From our perspective, infrastructure investment was made in the SPP to reliably, and adequately, serve Lubbock Power & Light. And it is unfair for them to pull out of that system without having any responsibility for those costs that were made on their behalf."

The third theme? LP&L's move to ERCOT will cost the utility additional money.

A spokeswoman from the Office of Public Utility Counsel (OPUC) said concerning LP&L's potential joining of ERCOT, "[It would] result in existing ERCOT load-serving entities paying an additional $48 million per year in net annual T cost charges."

She continued, "It was because of this cost concern that OPUC filed testimony recommending that the commission (PUC) require, as a condition of approval, that LP&L hold ERCOT customers harmless from the costs of integration, in order to ensure that the proposal is in the public interest. OPUC has now entered into an agreement in principal with LP&L, the staff, and TIEC to resolve these ERCOT issues. As a result of the agreement, LP&L has agreed to pay $22 million each year, for five years, to ERCOT wholesale transition customers, to hold those customers harmless."

In addition, OPUC asked the PUC to, "Require as a condition of approval, that LP&L hold Texas SPP customers harmless for the net increase in transmission costs due to LP&L's requested transfer of its 470 MW into ERCOT." The OPUC spokeswoman did not state a proposed cost to LP&L.

On Thursday, the second of two days of testimony will conclude at the PUC. LP&L lawyers will get the chance to cross-examine the officials and spokesmen who have already spoken in front of the PUC. Lubbock Mayor Dan Pope, and the rest of the city council, is in attendance in Austin for the hearings. There's no word on when the PUC would issue a ruling concerning LP&L's application.

If LP&L's application to join ERCOT is accepted, the 470 MW of electricity would transition to ERCOT on June 1, 2021. SPS' wholesale contract to sell that amount of power to LP&L expires on May 31, 2021. A second SPS wholesale contract with LP&L for 170 MW of electricity expires in 2044, and that could be switched over to ERCOT at any time between 2021 and 2044.

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