LUBBOCK, TX (KCBD) - Lubbock Power & Light buys out its competition which will leave most Lubbockites with only one choice in electric utility provider. It's a deal that's been in the works for about a year.
LP&L will buy out Xcel Energy's assets inside the City of Lubbock for $87 million. LP&L will borrow the money in the form of revenue bonds. The deal is expected to impact 30 to 35 Xcel jobs. It could take nine months for regulatory approval. The city's electric company says there is no need for any rate hike and they say it will actually lead to a more efficient operation. Money from the new business will pay back the bonds.
Even though this deal has been in the works for a year and a half Wednesday's announcement came as a surprise to the public. LP&L will buy miles of power lines and meters Excel's 24,000 customers inside city limits use. City officials, LP&L and Xcel energy executives outlined a case for why reducing your choices is a good thing.
Currently most of Xcel's customers inside city limits are businesses and they account for one-third of the power the city uses. With the money LP&L expects these new customers to bring in the bonds will be paid for in seven to 12 years. They city says the product of this deal will be a more efficient operation.
Mayor Tom Martin and others stressed that rates will not go up as a result of this deal. He says the agreement puts Lubbock in a good position to have long-term power. "I cannot think of one single negative thing for this transaction. It makes so much sense on an operational level for both companies and the financial operations of both companies," says Mayor Martin.
City officials say two sets of power lines will no longer be needed which has been an expensive obstacle to revitalizing the downtown area.
David Eaves, president and CEO of Southwestern Public Service Company, an Xcel Energy company, says some of the 150 Lubbock based employees will be impacted.
"There could be as many as 30-35 positions reduced. We are going to work hard. We haven't had chance to determine exactly what the impacts will be," says Eaves. He adds that the company will work to create new opportunities for those employees.
Excel Energy also announced it will donate the downtown office to Texas Tech University. Chancellor Kent Hance says the donated space will allow the university to grow.
Federal regulatory agencies must approve the deal. If everything goes according to schedule Xcel customers inside city limits will be switched to LP&L's system October 2010.
Coming up tonight on NewsChannel 11 at ten we hear from an economist and teacher who tells us the other side of the issue and how citizens and taxpayers could be affected.
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