INVESTIGATES: Causes behind the increase in LP&L bills

Published: Aug. 5, 2021 at 7:00 PM CDT
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LUBBOCK, Texas (KCBD) - It’s a common complaint during the hottest months of the year for LP&L customers, as costs soar when the temperatures rise.

That’s because keeping cool on the hot days can really rack up the kilowatts.

“If it’s 100 degrees outside, or if it’s 95 degrees outside, and you want the temperature inside your home to be 72 degrees, your AC unit is going to have to do a lot of work. And it’s going to consume a lot of electricity to make that happen,” LP&L spokesman Matt Rose said.

In June 2021, there were 17 days above average and five in the triple digits. Plus the unusual humidity on the South Plains sucking even more energy.

June felt more summer-like with 17 days of above-average highs and five hitting triple digits....
June felt more summer-like with 17 days of above-average highs and five hitting triple digits. This is a contributing factor to the high utility bills last month.(KCBD)

“Most summers we’re talking strictly about consumption,” Rose said.

But this year, it’s a little more complicated. Not only did usage increase, as expected, but so did the power cost recovery factor (PCRF).

It went from .02726 to .05567 in this last billing cycle.

“Or as I refer to it as the ‘pass through.’ It is literally just us passing through what it costs us to make or buy electricity that we provide to our customers,” Rose said. “Natural gas is the primary driver of that cost.”

That’s because LP&L is now purchasing natural gas at three times what it was for it two summers ago. In 2019 it was about $0.73 and now it’s $2.93.

The company sets these fixed seasonal rates usually 6 to 12 months in advance, using federal projections.

“The rate on your bill for the natural gas and for the power pass through, has returned to where it normally historically is. If you look back to 2016, 2017, 2018, it’s just been the last two summers that have been a low pricing scenario,” he said. “We always wish to see that, but that’s not always the case.”

Finally, to complicate matters further, we are also still feeling the effects of February’s winter storm, but maybe not in the way you might expect.

Normally LP&L has a nice cushion to subsidize rates during the summer, intending to give customers a break when bills are expected to be higher.

In summer 2019 and 2020 that was the case.

“So, the last two summers, in lowering our rate we were able to give back over $12 million to customers,” Rose said.

But it took just one week of frigid temps and skyrocketing natural gas prices to drain that resource.

“The cost to us was over $100 million for that weekly event,” he said. “Gas prices are normally, as we budget them, somewhere around the $2 per MMBtu range. We saw them coming in at $1,300.”

KCBD is advised that the higher bills are not associated with the integration with ERCOT.

Both Xcel and SPEC, neither on the ERCOT grid, also have customers seeing larger bills. They have pointed at similar reasons as LP&L: high temperatures and humidity plus a higher cost to produce energy this year.

Xcel customers also began paying a temporary surcharge in April to pay for the winter storm. This will show on a bill as the “base rate true-up.”

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