City Councilman Victor Hernandez says it was his idea to get rid of mandatory customer rebates at LP&L. Under a proposal approved by City Council last week on first reading, Lubbock Power and Light's excess revenue "may" be paid back to the customers instead of "shall" be paid back.
In a written statement to the media on Tuesday evening, Hernandez says in part, "I included the ‘may' change in language."
Hernandez says he had three reasons to put the change into the ordinance that he sponsored.
He says it will provide LP&L greater flexibility to manage assets and debts. Hernandez also says the LP&L board backed his idea, "because they have a preference to use these monies to pay off existing debt."
Hernandez says the rebates unjustly benefit commercial customers at the expense of residential customers. He says commercial rate payers receive the biggest rebates even though they already get the lowest price.
"The average rebate for residential customers was $11.24 in 2011 as compared to the average rebate for commercial customers of $23,255.40."
And he says other members of the City Council are fiscally irresponsible. "There are those on the current City Council who are opposing an electric rate hike before the elections but will be the first to propose one, once they get re-elected."
The municipal election is May 12.
Hernandez accurately points out that LP&L has been selling electricity below cost ever since Xcel Energy raised wholesale power prices. Customers have thus far escaped $16 million in higher costs. But due to the extreme heat last summer, LP&L made a profit of nearly $15 million for 2011.
"The way the proposed ordinance is written, a rebate could be approved," Hernandez said in his written statement. In order to become official, the elimination of mandatory rebates must pass a second reading by the City Council.
Mandatory rebates were part of sweeping reforms of LP&L in 2004 as the city-owned utility was recovering from a financial meltdown. There was a concerted effort by the City Council and other community leaders to never treat LP&L as a "cash cow" ever again.
As part of those same reforms in 2004 there was a requirement that major changes to LP&L must be preceded by a public hearing.
In April of last year, Mayor Tom Martin said it was Councilman Hernandez who sponsored a failed attempt to do away with the requirement for public hearings concerning major changes to LP&L. At that time, Councilman Beane was quoted as saying, "It appears to me that this item was spirited onto the agenda late Friday so as to not draw any attention over the weekend… "
UPDATE: LP&L Board Chairman Mike Davis says the change from "shall" to "may" did not come from Hernandez but instead came as a recommendation from an LP&L subcommittee to the City Council. Davis says the full board also approved.
The following is the full text of Hernandez statement.
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