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AI# 10473
Regular City Council Meeting
8.5.
02/22/2022:
Information
Agenda Item
Resolution - Lubbock Power & Light:
Consider an irrevocable resolution opting into competition for retail electric service in Lubbock Power & Light’s certificated area, as provided by the Texas Utilities Code Chapter 40, subject to the occurrence of certain conditions precedent outlined therein.
Item Summary
On September 24, 2015, LP&L announced its desire to become a member of ERCOT. After extensive engineering studies and regulatory processes, the Public Utility Commission of Texas (“PUC”) approved the integration of 70% of LP&L’s load into ERCOT in March 2018. LP&L reached agreement with Sharyland for cost-sharing and responsibilities for construction and ownership of the necessary integration facilities. Oncor assumed Sharyland’s obligations in late 2018. Facilities were constructed and integration was successfully completed on May 30, 2021.
During the integration case before the PUC, Mayor Dan Pope filed rebuttal testimony that described the history of electric competition in Lubbock, requests that he had received from citizens to bring back competition, the principles of competition, economic development advantages, and his intent to pursue retail competition to provide citizens with the opportunity for choice. Mayor Pope filed supplemental testimony that included certified resolutions passed on January 11, 2018, by the Electric Utility Board (“EUB”) and the City Council that expressed the intention of the governing bodies to provide customer choice upon completion of due diligence activities to identify and describe the feasibility and requirements of providing customer choice.
Following PUC approval of integration, Navigant consulting firm was retained to perform a detailed analysis of the feasibility and requirements of providing customer choice. One of Navigant’s key findings was that it was impractical to offer retail choice until 100% of LP&L’s load was in ERCOT. Importantly, LP&L reached an agreement with Southwestern Public Service (SPS) in May 2021, to early terminate the partial requirements contract with SPS, to facilitate moving the remainder of LP&L’s load into ERCOT to allow for retail choice. Activities are now underway to construct necessary infrastructure, perform engineering studies, and achieve regulatory approval to move the remaining LP&L load into ERCOT.
Presentations have been made to the EUB and the City Council over the last five months, that described the advantages and disadvantages of retail choice—for example, customers will have choice, but will also have an obligation to exercise that choice. The governing bodies have had extensive discussions and deliberations regarding this decision. Staff has responded to numerous follow-up questions posed by governing bodies.
Fiscal Impact
From LP&L’s perspective, joining the retail market will result in LP&L becoming a Transmission Distribution Utility exclusively, without an ongoing power supply responsibility. This change significantly reduces operational risk for LP&L and allows the entity to focus on electric system reliability and transmission and distribution system improvement.
Staff/Board Recommending
David McCalla, Director of Electric Utilities
Electric Utility Board
Attachments
Resolution - LPandL Opt-in
EUB Opt In Resolution
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