The ERCOT Solution
On March 8, 2018, the Public Utility Commission of Texas (PUCT) approved LP&L’s application to join the Electric Reliability Council of Texas (ERCOT). Read the full release here.
Advantages of Joining ERCOT
PROVIDES AFFORDABLE POWER
- Eliminates the need to build an expensive power plant with estimated debt costs ranging from $350 to $700 million.
- Cuts our wholesale power costs by eliminating expensive fixed capacity charges.
- Creates a revenue stream for Lubbock ratepayers through new transmission lines connecting Lubbock to the ERCOT system.
ASSURES A DIVERSIFIED ENERGY PORTFOLIO
- Provides full access to West Texas wind and a mix of conventional and renewable electric generation such as natural gas, solar and coal.
- Provides stability through access to 570 Texas-based generation units, avoiding dependence on one unit.
SIMPLIFIES THE REGULATORY ENVIRONMENT
- Avoids primary regulation by the Federal Government (Federal Energy Regulatory Commission or “FERC”).
- Involves regulation by the Public Utility Commission of Texas and our Texas Legislature.
UNITES LUBBOCK WITH THE STATE OF TEXAS
- Provides access to Texas power plants and over 1,800 active market participants that generate, sell, or transmit wholesale electricity.
- Opens the door to retail electric competition in Lubbock.
Projected Cost Savings for Lubbock
As part of the final agreement for Lubbock’s entry to ERCOT, Lubbock City Council and the LP&L Electric Utility Board approved an agreement between LP&L and interested parties in ERCOT and Southwest Power Pool (SPP).
The PUCT considered the agreement in adjusting their Order approving the integration into ERCOT. The Order sets Lubbock on the best possible path forward, saving ratepayers money and opening the door to retail electric competition in Lubbock.
According to the Order, 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.
Based on third-party studies, projected savings achieved by moving the majority of LP&L’s system to ERCOT exceed the agreed-upon payments.
Comparison of Monthly LP&L Residential Customer Bills*
Including payments, Lubbock ratepayers are projected to achieve cost savings:
* All projections based off 2017 economic conditions and forecasts
Lubbock ratepayers are projected to realize the full cost savings of integration to ERCOT after the fifth year.
To read the full cost-benefit analysis of Lubbock’s transition to ERCOT, click here.
We anticipate integration to take place in June 2021 pending the completion of transmission lines and substations required to make the transition.