Leaders explain benefits of Xcel buyout by LP&L - KCBD NewsChannel 11 Lubbock

2/22/10

Leaders explain benefits of Xcel buyout by LP&L

Updated:

By Ben Lawson  - bio | email

LUBBOCK, TX (KCBD) - As state and federal regulators review the purchase of Xcel Energy's Lubbock assets by Lubbock Power and Light, we take a closer look at how it will affect you. Some people still have a lot of questions, so KCBD NewsChannel 11's Ben Lawson dug through the documents and spoke with both sides to get answers.

Lubbock city leaders and representatives from Southwestern Public Service, a subsidiary of Xcel Energy announced the buyout plan in November. Now, they're waiting for federal and state regulators to determine if the purchase is in the public interest and sign off on the plans.  "We expect all of that to be completed on or about October 1st of this year," Lubbock Mayor Tom Martin said.

As Martin explains, one of the most noticeable changes would be the elimination of some power lines in Lubbock. "It will probably take every bit of 20-years to make the transition, but overtime we will assess on a block by block basis which of the two company's lines are in the best shape," Martin said. 

He says the first priority will be downtown. The goal is to remove overhead lines and replace them with underground utilities. "It makes it almost impossible to rehab any buildings, because of the danger of those exposed wires," Martin said. 

The mayor tells us discussions on downtown redevelopment really got the ball rolling; he says they learned trying to bury two sets of lines would be cost prohibitive, and that's when he says Xcel suggested the city buy them out.  "It really doesn't make sense to duplicate basic infrastructure," Martin said. 

Combined, the companies have more than 1,700 miles of line running through Lubbock. Xcel says it costs nearly double to power their Lubbock customers, though, because while their lines cover the entire city, they only serve about 24% of residents. "You're paying insurance, taxes, operations, maintenance, everything associated with keeping that system going on a 24% customer base, so you see real quickly that drives the price up," Xcel Energy Regional Community Manager Steve Deaton said. 

Deaton says taking that expense out of the rate base will benefit the rest of their Texas customers. "Immediately it's probably going to drop $150 to $200 a year for the average customer," Deaton said.

He added that Xcel customers also benefit from a long term agreement with the city for cooling water at one of their plants. "It keeps us from having to do certain things to the plants and keeps everything rolling and keeps the costs low, and that's really what we want to do," Deaton said. 

To guarantee no one is left in the dark, part of the deal includes a long-term agreement between LP&L and Xcel for power to cover new customer demands through summer of 2044. Both companies agreed to a billing schedule that will ensure customers don't receive two partial bills when the transition happens, and LP&L says Xcel customers will receive full credit for their Xcel deposits.  In addition, both companies are beefing up customer service to deal with transition questions.

"LP&L now has the lowest rates in the state, bar none; we're also giving a 1% rebate back to customers at the end of the year," Martin said.  He suggests changes to city government that would help keep LP&L bills as low as possible. "The most critical issue in my mind is limiting in the charter the ability of city councils to take money out of the electric system for other municipal purposes," Martin said. 

Martin recommends LP&L continue to pay the city franchise fees as other utilities do, plus 1% of gross revenue in lieu of property taxes, since LP&L is tax exempt and other utilities such as gas, telephone, and cable are not.

"I think that's reasonable, and if LP&L is extremely profitable in the future, there's two great options, number one to cut the rates to the rate payers or number two rebates to the rate payers. Either way, the rate payers come out ahead of the city bureaucracy," Martin said.

(Click Here) to read documents filed with the Public Utility Commission of Texas by Xcel Energy.

(Click Here) to read documents filed with the Public Utility Commission of Texas by the city of Lubbock.

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