TTU internal audit claims LP&L owes $2.8 million in unpaid rebates
LUBBOCK, TX (KCBD) - Documents obtained late Friday by KCBD's Investigates team reveal that an internal audit report performed by Texas Tech claims that the university is owed $2,848,260 by Lubbock Power & Light.
The report was presented to the Texas Tech Board of Regents in closed session this week.
The audit describes a dispute revolving around an annual price adjustment called for in the contract between the two entities. The contract contains a provision to compare the price Texas Tech paid during each fiscal year to the average price that LP&L charged its large commercial customers under its rate structure.
According to the report, that group, called Rate 16, has changed in the years since the 2005 contract was put in place. The rate class originally included only 45 customers, but grew to include over 3,500 customers by 2011. Tech's assertion is that the group is no longer representative of the original customer group anticipated by the contract.
Tech's audit report claims "this expansion had the effect of significantly raising the average price per kilowatt hour for the rate class." It further claims that had the annual price adjustment been based on the average paid by the members of the rate class in years 2010 through 2014, then the total adjustment (refund) would have been $2,906,449 instead of the $58,189 adjustment made by LP&L.
KCBD asked LP&L for a comment on the audit and received this statement from spokesman Matthew Rose:
The power contract between Texas Tech University and Lubbock Power & Light (LP&L) establishes the manner by which electric service is provided and billed to Texas Tech from the City of Lubbock's municipal electric provider. Texas Tech, the City, and LP&L have operated under this contract for the past 11 years and all parties allowed the contract to automatically renew in July 2014 for an additional five year term.
Shortly after the renewal of the contract, Texas Tech University initiated an audit as authorized by contract terms. LP&L is fully aware of the internal audit conducted and has worked with Texas Tech staff providing all requested information necessary for the University to complete their work. There are ongoing discussions between Texas Tech University, the City, and LP&L as it relates to one specific aspect of the contract but we are confident a mutual agreement will be reached in the near term.
Texas Tech University plays a vital role in our community and LP&L is committed to maintaining a strong relationship with Texas Tech for many years to come.
Texas Tech released a statement from Chancellor Duncan which said:
"We have been working together with representatives of the city and LP&L to find the best solution possible for both parties. We appreciate their commitment to work with us, and we look forward to continued discussion and a final resolution."
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