Enter your meter number using the tool on our homepage to see if you are included in the May 29-30 connection to ERCOT. You can find the meter number on your monthly City of Lubbock Utilities statement.
Note: The information provided is for estimating purposes only, and is subject to change based on the progress of the project. LP&L is not able to provide real-time updates to the schedule during the weekend of May 29-30.
Like all electric infrastructure across the country, LP&L customer meters are part of a complex circuit and grid system. It is not possible to pick and choose individual meters for connecting to the larger power systems.
While 70% of LP&L’s system and customers will connect to ERCOT this year, the goal is for the remaining 30% of LP&L’s system and customers to connect to ERCOT in the future.
We understand and share the concerns our customers have after the February winter storm. The well-being of our customers is always at the forefront of all decision making.
We began the process to join ERCOT in September of 2015. The original benefits of joining ERCOT still remain today. LP&L is on track to transfer approximately 70% of the electrical grid to the ERCOT market by June of this year.
However, it is clear that moving forward, serious decisions must be made to fix the problems in the ERCOT market. The root causes of ERCOT’s operational issues need to be fully investigated and solutions must be found. Legislative hearings will continue over the coming weeks and months, and LP&L will track this process very carefully.
Connecting to ERCOT is the first step in opening the door to retail electric competition in Lubbock. LP&L is working closely with the Electric Utility Board and Lubbock City Council to conduct a thorough analysis and develop a responsible and fair path forward for our customers.
ERCOT manages the flow of electric power to 24 million Texas customers - representing about 90 percent of the state’s electric load. As the independent system operator for the region, ERCOT schedules power on an electric grid that connects more than 46,500 miles of transmission lines and 570 generation units. ERCOT’s members include consumers, cooperatives, generators, power marketers, retail electric providers, investor-owned electric utilities, transmission and distribution providers and municipally owned electric utilities.
ERCOT is a membership-based 501(c)(4) nonprofit corporation, governed by a board of directors and subject to oversight by the Public Utility Commission of Texas and the Texas Legislature.
The ERCOT Solution included an initial review of 19 different studies conducted by expert consultants and LP&L staff. Subsequently, independent experts conducted a full cost/benefit analysis of Lubbock’s transition to the ERCOT market during the course of the public interest hearing before the Public Utility Commission of Texas (PUCT) and concluded that Lubbock ratepayers would achieve costs savings both in the short and long-term. To view the full cost/benefit analysis performed on Lubbock’s migration to the ERCOT market, click here.
We are eliminating the need to build an expensive power plant with estimated costs ranging from $350 to $700 million. We are also saving millions of dollars on future operation and maintenance costs of a new power plant.
The ERCOT Solution requires building new transmission lines and substations to connect Lubbock to the ERCOT grid. The building of this infrastructure comes with an initial total investment estimated at approximately $364 million, but LP&L will only be responsible for a portion of the construction and associated costs. The cost of the transmission lines and substations built by LP&L will be covered by a transmission rate from the ERCOT market that will provide a new annual revenue stream that compensates LP&L for principal, interest and a portion of operating costs of those transmission lines and substations.
Finally, the dramatic changes occurring in power generation, including the uncertainty of federal environmental regulations and rapidly declining costs for wind and solar further justify us to avoid major financial commitments that lock us into a specific generation technology and long term commitments.
The ERCOT solution displaces the need to build a $350 to $700 million generation unit. The net effect is a reduction in depreciation and maintenance costs.
LP&L expects to construct a portion of the transmission interconnection lines; however, those final decisions will be made by the PUCT. The PUCT approves a network transmission service rate that would provide a new revenue stream for LP&L that not only would recover the cost of any new transmission line construction but would also support affordable rates. Therefore, the new revenue stream would cover the debt service incurred by any bonds issued to pay for needed transmission lines.
An additional financial benefit of joining ERCOT would be the expected savings of power costs for LP&L ratepayers. Currently, a healthy portion of our power costs are related to capacity charges that are not required in ERCOT. The absence of a capacity charge is one of the drivers of our decision to seek entry to the ERCOT market.
Reliability of service is important. In a state like Texas with high swings in temperature, the electric grid must be able to handle the cold winters and extremely hot summers. With a move to ERCOT, is reliability a concern for Lubbock?
ERCOT puts a strong emphasis on reliability, and as their market has strengthened in recent years, large investments have been made in the state of the power grid to meet the electric load growth.
In 2016 alone there was over $2.1 billion in transmission development added and much more is on the way with $5.6 billion under development over the next five years.
ERCOT has 17,000 MW of installed wind capacity, the most of any state in the nation. Also, 556 MW of utility scale installed solar capacity exists as of January 2017 with 2,722 MW in the queue. To put this level of future development into context, 1 MW has the capability of powering 200 residential homes on a hot summer afternoon.
ERCOT anticipates having sufficient generation in the foreseeable future, based on normal operating conditions. However, if reserve margins do retract, ERCOT has a variety of operational tools to address scarcity conditions. The retirement of older generation followed by new investments is a natural behavior in the ERCOT market, and ERCOT does plan for, and expect, new generation coming online in the coming years.
As an explanation, ERCOT is expecting record-breaking peak usage this summer. To help with this demand, almost 3,800 MW of new generation resources began operating in 2017. However, the anticipated high demand combined with a decrease in overall projected generation capacity for summer 2018 is expected to result in tight reserves this summer.
ERCOT’s focus this summer will be on performance, and expects this will be the same for anyone participating in the ERCOT market. At this time, based on normal operating conditions, ERCOT anticipates there will be sufficient generation to meet demand.
However, please recall that Lubbock anticipates integration to the ERCOT market in June 2021. Planning models show an abundance of generation resources coming online in the next three years to provide additional reliability within the market.
New transmission lines will be the primary investment. These lines will connect Lubbock to the ERCOT grid, allowing LP&L to access power from all 570 generation units throughout the state. The citizens of Lubbock will not be burdened with these costs. Even though the City will issue bonds to pay for the transmission lines, the PUCT is expected to approve a network transmission service right to assist in recovering the costs associated with new transmission lines.
LP&L is expected to be able to provide savings to our customers through affordable power in an open and accessible market.
Expected to provide a diversified energy portfolio from Texas-based power plants with access to West Texas wind and natural gas, solar and coal from across the state. We avoid the need to build an expensive power plant with estimated costs ranging from $350 to 700 million while providing stability through having access to 570 generating units across Texas.
Simplifies the regulatory environment. The Public Utility Commission of Texas regulates the ERCOT Regional Transmission Organization. This is a stark change from SPP, which is regulated by FERC. This solution would unite Lubbock with the State of Texas though the statewide transmission system and ensure Texas leaders have input into our long-term prosperity.
By entering into a market solution in ERCOT, we would eliminate the need to build an expensive power plant with estimated costs ranging from $350 to $700 million. We would also save millions of dollars on future operation and maintenance costs of a new power plant that may run on an intermittent basis.
We have eliminated the need to build an expensive power plant with estimated costs ranging from $350 to $700 million. This capital expenditure would have been debt funded, and those costs would have been passed to LP&L customers. Alternatively, while there will be a need to build new transmission lines to connect with the ERCOT power grid and bonds will be issued to pay for the transmission lines, a new revenue stream from the Texas network transmission service rate is expected to cover the annual debt service on those bonds and provide an additional return on those assets.
No, in fact the solution was chosen due to its long-term rate stabilization effect, providing predictable and stable pricing for our customers. To view the full benefits of Lubbock’s transition to the ERCOT market, visit LPandL.com/ERCOT.