Xcel wants to charge LP&L $88.7M to disconnect from transmission system
LUBBOCK, TX (KCBD) - Xcel Energy is seeking approval to charge a nearly $90 million switching fee to Lubbock Power and Light.
Xcel Energy filed a request with the Federal Energy Regulatory Commission (FERC) asking for approval of an interconnection switching fee in the event Lubbock Power & Light disconnects from the Xcel Energy transmission system and Southwest Power Pool regional power grid to interconnect a portion of the city's system with the Electric Reliability Council of Texas (ERCOT).
The interconnection switching fee is estimated at $88.7 million if paid as a one-time fee, based on 2015 costs.
Xcel says this switching fee would recover the costs that Xcel Energy has accumulated since the 1980s to deliver wholesale power to LP&L.
LP&L is looking to join the ERCOT grid in 2019 when their deal with Xcel expires. The city owned utility just released a statement saying it will vigorously defend against today's filing.
The actual amount Xcel Energy would recover through the interconnection switching fee would be determined at a future date based on costs in the final year before LP&L leaves the SPP regional grid.
LP&L released the following statement regarding today's filing:
On September 24, 2015, Lubbock Power & Light (LP&L) announced its intention to seek entry to the Electric Reliability Council of Texas (ERCOT). The announcement came after an extensive public request for proposal process (RFP) and comprehensive study by LP&L regarding the best path forward for its customers beyond the June 2019 expiration of the utility's current full requirements power contract with Xcel Energy.
LP&L is not currently, nor has it ever been, a member of the Southwest Power Pool (SPP). LP&L is merely a customer of Minneapolis-based Xcel Energy. The current power contract under which LP&L is operating was signed in 2004 with a set expiration date of May 31, 2019. On that date, LP&L will have fully honored all contractual obligations set forth under the 2004 power contract with Xcel Energy.
The much publicized RFP process undertaken by LP&L to find a solution for long-term power in 2015 successfully solicited many proposals from both the SPP and ERCOT power markets. It is notable to mention that Xcel Energy did not participate in this process. After extensive study and review, it was determined by the LP&L Electric Utility Board and the Lubbock City Council that entry to the ERCOT market was in the best long-term interest of the LP&L ratepayers.
LP&L has engaged in a process with the Public Utility Commission of Texas (PUC) and ERCOT to thoroughly study all aspects of this proposed transition since the original announcement in September of 2015. This process is still underway and LP&L is committed to work with the PUC and ERCOT to find the best way to successfully integrate the majority of its retail electric load to ERCOT.
Seeking interconnection to the ERCOT transmission system after the expiration the current full requirements contract with Xcel Energy is a long-term decision. LP&L will vigorously defend against the filing today by Xcel Energy seeking compensation for infrastructure built to serve customers throughout its multi-state territory but at this time does not believe that Lubbock ratepayers should be responsible for investments made by Xcel Energy or its subsidiary company beyond the conclusion of the current power agreement.
Xcel Energy requests that FERC act on the filing by September 2016.
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