Lubbock City Council on Thursday approved the first reading of an ordinance which tightens the requirements on Lubbock Power & Light to turn over money to the City Council and eases the requirement that customers get a yearly refund.
The current ordinance says, "… any net operating revenues remaining shall be refunded to the ratepayers…"
The new ordinance, if approved a second time, will instead say, "… any General Reserve may be refunded to the ratepayers…"
During a break in the council meeting, Mayor Tom Martin told KCBD NewsChannel 11 that yes refunds are going away but the plan is to keep rates low. He says the purpose of the rebates was to keep LP&L competitive and Lubbockites pay less than other cities in West Texas.
"The competitive advantage is not in a rebate, it's in having a low rate and that applies across the board throughout the year and not just in a one time payment," Martin said.
The requirement to have a refund was created in 2004 after LP&L began to recover from a late 2002 major financial meltdown.
In the years prior to the crisis, LP&L was made to pay for street lights; salaries of secretaries for the City Manager and the director of Market Lubbock Inc.; the one time purchase of a fleet of trucks for the city; travel expenses of at least one council member; and free utility hookups for developers of new subdivisions.
LP&L went from nearly $40 million in reserves to $18 million in the red. Layoffs & emergency cut backs at both city hall and LP&L were the result. In 2003, the city had to announce the layoffs of 126 employees, mostly from LP&L.
At the time of the reforms, including the requirement for a yearly customer rebate, LP&L Board Member John Zwiacher was quoted as saying LP&L had been used as a "cash cow."
In 2004 LP&L had Xcel Energy as a competitor. As of October 2010, LP&L bought out Xcel's assets inside the city limits.
"At the time we were still in a competitive situation with Xcel Energy for electric sales in the community and so that was a way for LP&L to have a competitive advantage with our competitor Xcel Energy," Martin said.
After buying out Xcel Energy's territory in the city limits, LP&L became the only provider in the area. Therefore, making it a monopoly.
Councilman Paul Beane tells KCBD NewsChannel 11 by phone that many voters in his district have mocked the refunds as being small and silly. He says the better policy is simply keep the rates low so that there's no need for a refund. He also says a big refund means LP&L kept customers' money, interest free, throughout the year
All seven members of the City Council voted in favor of the proposal.
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TMartin@mail.ci.lubbock.tx.us FPrice@mail.ci.lubbock.tx.us VHernandez@mail.ci.lubbock.tx.us TKlein@mail.ci.lubbock.tx.us PBeane@mail.ci.lubbock.tx.us KGibson@mail.ci.lubbock.tx.us JGilbreath@mail.ci.lubbock.tx.us
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