Last week, the City of Lubbock reviewed the fees that Lubbock Power & Light will charge retail electricity providers, which will be passed directly to consumers without markup.
Rates have not been set, so the discussion was a work session of the Lubbock City Council. A final decision on the rates is expected to be on April 11, 2023, upon approval from the Electric Utility Board.
The Lubbock City Council heard from Lubbock Power & Light management staff about the distribution rates it will charge after the transition to the retail electric market. The fees, which are standard for all electricity customers across the state deregulated or not are expected to ebb and flow a bit in the first few months of transition.
Lubbock Power & Light will likely send its last bill directly to customers in Fall 2023 after the remaining electricity customers in Lubbock are switched to the ERCOT grid. Residents and commercial businesses will be open to selecting a new electric provider this coming summer.
LP&L will then become a wires company, which will be in charge of electric infrastructure and distributing the power, not billing, service, rates, or customer service. Lubbock Power & Light will control the delivery of your electricity, not not generations and electricity/energy usage you are charged. For most residents and small business who use just 1,000 kWh per month, LP&L’s fees will account for just 1/3 of the total bill. These delivery charges will be outlined in the bill you receive from your new electricity provider.
Reason for Ebb & Flow of Delivery Fees
When most of the state has steady year-round deliver charges, why will Lubbock consumers see the fees bounce around a bit?
It will be due to the debt service from the Southwestern Public Service partial requirement settlement. In the later part of 2023, that cost as well as an existing purchase power agreement with a wind project will be another $17 million a year cost that carries over. The second legacy debt is the hold harmless payment. LP&L had a $110 million agreement to go into ERCOT. It was $110 million spent over five years or $22 million a year. That’s an additional cost to be with LP&L through January 2027.
Eventually those temporary costs will go away and all electricity prices should continue to decline.