LUBBOCK, TX (KCBD) - Since 1917, Lubbock electric customers have had two choices, but it looks like that is about to change. The city announced plans to purchase miles of power lines and meters from its competition, Xcel Energy.
LP&L will absorb the company's 24,000 customers inside city limits. Money from the new business would be used to make payments on the $87 million loan.
The deal has been in the works for the last year and a half. Mayor Tom Martin says this deal is all about efficiency and preparing Lubbock for the future. It also means if you want electricity inside city limits LP&L is your only option.
The city announced Wednesday morning plans to purchase Xcel Energy's power lines. "This transaction will have no affect on people's rates in Lubbock," says Mayor Tom Martin.
Just six years ago, LP&L faced a $35 million deficit and on the verge of bankruptcy. LP&L then split from city hall and currently has $50 million in reserves and plans to issue $87 million in revenue bonds to acquire Xcel's city electric system.
As part of the deal LP&L will absorb Xcel's city customers. Xcel serves 24,000 customers inside city limits, but most are businesses which consume more power.
Revenue received from new customers will go to pay off $87 million loan. "I can't see one negative thing about this deal. It makes so much sense on an operational level and financial level," says Mayor Martin.
"To have everything in one hand is scary to some," says former stock broker and Lubbock High School AP economics teacher Kay Spikes Moore. She says this deal is all about efficiency.
"But what we do know is this type of monopoly is present in almost every city in America. It is so expensive to build infrastructure of electric company that it's best to put it one place," adds Moore.
David Eves, President and CEO of Southwestern Public Service an Excel Energy Company, says the biggest change will be the elimination of two sets of power lines. "It's a very unique situation in the country even competition that exists amongst electricity providers is usually over one set of lines," adds Eves.
He says the acquisition will benefit customers, but anticipates 30-35 Xcel jobs will be lost.
Texas Tech University also fits into the deal. Xcel announced it will donate its downtown office to the university. Chancellor Kent Hance says this will help the institution grow.
This deal is going to take time. It could take nine months before the deal is approved by federal regulatory agencies. If everything follows schedule, Xcel customers can expect to be switched to LP&L's system sometime in October of 2010.
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