LP&L rate hike: behind the scenes power struggle - KCBD NewsChannel 11 Lubbock

LP&L rate hike: behind the scenes power struggle

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LUBBOCK, TX (KCBD) -

A possible rate hike from Lubbock Power & Light very much depends upon a behind-the-scenes struggle between the LP&L Board and Lubbock's city staff.  Or at least, it was behind-the-scenes until certain public records were posted in the last few days to the city's website.

It was reported earlier this year that the LP&L Board proposed a rate hike.  The Board said at the time the city-owned utility would lose $5 million or more in the current fiscal year - with more losses coming in the next fiscal year.

City Council publicly balked at the idea back in May and again in July.  Mayor Glen Robertson said the decision on a rate hike could wait.  "I think it is prudent to set rates … after we have final numbers on exactly how much we made or lost." 

So now, city staff is not taking the Board's budget for granted but instead making its own proposal.  The staff recommends no rate hike through December and maybe no rate hike at all.  It refinances $5.6 million of debt at a lower interest rate to save money.  And it maintains LP&L's required reserve at roughly $50 million.   

The staff's counter-proposal cuts roughly $14 million in electric revenue as compared with the Board's budget proposal.  It also reduces reimbursements from other city departments paid to LP&L.   

So if the City Council chooses not to raise rates, where will it find the money to cover the anticipated shortfall?  The counter-proposal calls for a reduction of LP&L's various payments in lieu of taxes to the city by almost $1 million.  On the city's website, public records say, "… there was an error in the original calculation."

The counter-proposal also calls for borrowing money to pay for $10.5 million in capital projects.  By contrast, the LP&L Board proposal is to "pay-as-you-go" with cash.

KCBD NewsChannel 11 was able to obtain the outline of the counter-proposal too late in the evening on Sunday to contact LP&L Chairman Mike Davis.  However, earlier this year Davis objected to borrowing money.  He said, "We could be borrowing money to operate and I can tell you I hate that. I am not a fan."

As final numbers for the 2011/2012 budget become available in December, the City Council can revisit the issue of rates.  Every year, the LP&L Board proposes a budget, but City Council has the final say. 

Related Story: Councilman questions legality of LP&L budget

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