Public Utility Commission sets path for Lubbock’s entry into ERCOT system
Provided by LP&L
The Public Utility Commission of Texas (PUCT) has set the path for the successful entry of Lubbock Power & Light to the Electric Reliability Council of Texas (ERCOT). The commissioners of the PUCT gave instruction to PUCT staff to return at the March 8th open meeting to present a final order for their approval. If approved by the PUCT, it is anticipated that integration of Lubbock's system could take place as early as June 2021 pending the completion of electrical lines required to make the transition.
"Today's direction by the commissioners of the Public Utility Commission of Texas constitutes the most important milestone to date in our case to join ERCOT and we sincerely appreciate the diligence shown by the commissioners in this vital matter for Lubbock," said LP&L Director David McCalla. "Moving to ERCOT accomplishes the long-term goals we set forth when we began this process over two years ago. It provides our customers a diversified portfolio of reliable and affordable Texas power for generations to come."
LP&L submitted its application to integrate approximately 70 percent of its system into ERCOT on September 1, 2017, and last month, the PUCT conducted a Hearing on the Merits to deliberate on whether Lubbock's application was in the public interest of all Texas ratepayers. Part of the commissioners' discussion revolved around LP&L reaching an agreement with stakeholders in ERCOT and SPP related to the cost of Lubbock's integration. This past week, the Lubbock City Council and the LP&L Electric Utility Board voted unanimously to approve a stipulated agreement between LP&L and interested parties in ERCOT and SPP, and the agreement was then presented for PUCT review.
The agreement, discussed by the PUCT commissioners today, sets Lubbock on the best possible path forward saving its ratepayers money and opening the door to retail electric competition in Lubbock. Based on third-party studies, the anticipated annual savings achieved by moving the majority of LP&L's system to ERCOT exceeds the agreed-upon payments.
According to the terms of the agreement, upon integration to ERCOT on June 1, 2021, LP&L will pay $22 million each year for the first five years, which will be credited to ERCOT wholesale transmission customers to mitigate integration costs. Also upon integration, LP&L will make a one-time payment of $24 million to SPS (Xcel Energy) for SPS's retail and wholesale transmission customers.
From the beginning of this process, LP&L identified the advantages to Lubbock ratepayers of joining ERCOT:
Delivers affordable power:
- Eliminates the need to build an expensive power plant with estimated costs ranging from $350 to $700 million
- Provides access to 550 generation units and more than 1,100 active market participants that generate, move, buy, sell or use wholesale electricity
- Allows Lubbock access to the most cost-effective power from the market
- Reduces wholesale power costs significantly by eliminating expensive fixed capacity charges
Assures diversified energy portfolio from Texas-based power plants:
- Provides full access to West Texas wind energy and a mix of conventional and renewable electric generation fueled by natural gas, solar and coal
- Provides stability through access to 550 different generation units across Texas, avoiding dependence on a single generation source
- Allows access to the most competitive market available
“I am excited about today’s meeting of the Public Utility Commission,” said Lubbock Mayor Pro-Tem Latrelle Joy. “This is a major step forward in the integration of LP&L into the ERCOT system and we look forward to the entry of the final Commission order on March 8. I want to thank the members of the Public Utility Commission, LP&L Director David McCalla and his staff, and the members of the Lubbock City Council for their assistance and support in this important matter.”