Lubbock Power & Light Confirms Customer Rates Not Subject to Short-Term Fluctuations
Electric utility responds to customer concerns over weather-related electric billing impacts
Lubbock Power & Light (LP&L) is aware of statewide media reports regarding unusually high electric bills due to the winter storm. Due to how LP&L rates are structured and approved by the Lubbock City Council, LP&L customers are not subject to the short-term fluctuations in electric rates referenced by media reports in other regions of the state.
The customers impacted by major bill spikes typically have variable price billing, and are therefore vulnerable to sudden price swings from the wholesale energy market, both increases and decreases. In contrast, LP&L rates are fixed within winter and summer seasons and the applicable governing bodies must authorize any changes after a thorough rate review process.
Residential customers are billed for their actual energy usage, measured in kilowatt hours (kWh), recorded from their electric meter. Anyone without power during a storm event will have no electric use recorded while electricity is not flowing through the meter. LP&L customers are only charged for the power they consume and will be charged at the existing rates as approved in the October 2020 rate tariff. LP&L rates do not fluctuate based off high or low usage patterns. If a customer consumed higher than average kWh, their electric bill will be higher than a normal month since they purchased more. If a customer consumed less than their average kWh, their bill will be less than a normal month since they consumed less. The last time there was an adjustment to customers’ base electric rates was in October 2017, when rates increased five percent in order to invest in the reliability of LP&L’s locally controlled electric grid. Given the severity of last week’s storm, LP&L’s grid performed well, with new lines and substations in service to handle the surge in usage on the system. The bulk of outages experienced by LP&L customers came from the controlled rotating outages on Monday and Tuesday as required by the Southwest Power Pool.
The largest portion of LP&L’s monthly charges is a Power Cost Recovery Factor (PCRF) or “pass-through rate.” LP&L charges customers what it costs to purchase or make power for the community with no mark-up. LP&L purchases power through carefully negotiated power contracts with wholesale providers, with events such as last week’s storm in mind. These power contracts are in place today and provide protections against sudden swings in wholesale power market costs.
LP&L reviews and adjusts the PCRF every October and June. Since 2017, LP&L lowered the PCRF six separate times including the past two summers. LP&L lowered the PCRF this past summer from June through September by nearly 20 percent, returning over six million dollars to electric customers over the summer months. LP&L will evaluate the long-term impacts stemming from the events of the past week. The electric utility will then have a better indication of the long-term impact, if any, on the PCRF and make recommendations to the LP&L Electric Utility Board. LP&L has controls in place to protect against unforeseen costs and will continue to work to avoid rate impacts from storm events like this one. Customers with questions about their account may email CustomerFirst@CityofLubbockUtilities.com or call (806) 775-2509.
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