How can Lubbock Power & Light set electric rates for residential, commercial, non-profits, and industrial customers if it has no rate model? For many years LP&L simply relied on Xcel Energy's rate model but over the course of time the city-owned utility moved further and further from Xcel's model for setting rates.
"LP&L has not had a rate study," says a recent request for qualifications. So, now LP&L has neither Xcel's rate model nor one of its own.
The RFQ is an invitation for a professional firm to be hired, "to guide [city] personnel through the process … to prepare future rate studies independently."
Some of the items LP&L needs to learn are financial planning, cost of service, and rate design.
Former Mayor Marc McDougal is on the Lubbock Power & Light Board of Directors. He says, "We have asked for a study on rate models."
It's not the LP&L Board, but City Council that has final say on the rates. McDougal was once on the City Council and he wants the elected officials to feel confident about LP&L's numbers.
He also wants LP&L fully prepared for a big problem coming up in about seven years. Xcel Energy will, for the most part, stop selling wholesale electricity to LP&L.
"We have a group that's helping us with our generation problem in 2019," McDougal says. That might mean finding new wholesale partners or it might mean building power plants. LP&L has three such generation facilities but they're not nearly enough to power the entire city.
For now LP&L has some of the lowest electric rates in Texas. McDougal says, "We're 17 % below the Texas average." He also says LP&L is "36% below the regional average." Regional in this case means the greater Lubbock area.
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