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City-owned utility in Lubbock, Texas, to absorb 24,000 retail customers from Xcel Energy Page 1 of 2
<br />City-owned utility in Lubbock, Texas, to absorb 24,000 retail
<br />customers from Xcel Energy
<br />For nearly a century, two electric utilities have strung power lines side by side and have fought over the
<br />right to sell electricity to the people and businesses of Lubbock, a city in northwestern Texas with a
<br />population of 225,000. Since the eazly 1900s, the privately owned Xcel Energy and its predecessors
<br />have had one set of poles and wires running down one side of the street, while the city-owned Lubbock
<br />Power and Light has had a second set along the other side of the street. Occasionally, over the yeazs, the
<br />two utilities have sparred, threatening to buy each other out, and more often than not, it was the private
<br />utility threatening to acquire the municipal one. Now, in this tale of two utilities, it looks as though the
<br />municipal utility is emerging as the victor.
<br />Late last year, after more than a yeaz of talks, the investor-owned utility agreed to turn over its retail
<br />customers in Lubbock to the municipal utility. Lubbock Power and Light will pay Xcel Energy $87
<br />million to buy the private utility's distribution system within the city limits. LP&L said it will gain about
<br />24,000 new customers. The municipal utility plans to issue revenue bonds to finance the buyout.
<br />LP&L cleazed another hurdle July 30 when the Public Utility Commission of Texas approved the
<br />proposed sale. Lubbock is still awaiting approval from the New Mexico Public Regulation Commission;
<br />that decision is expected by the end of September. The sale, announced in November 2009, is scheduled
<br />to close in late October.
<br />Lubbock Mayor Tom Martin, who led the negotiations, said the deal makes sense. "It's natural for
<br />LP&L to pick up the Xcel retail electric service, since the city of Lubbock already provides utility
<br />service to all the properties in Lubbock," he said.
<br />The municipal utility currently has approximately 76,000 customers, so adding the Xcel customers will
<br />bring the total to 100,000, Martin said.
<br />"This represents the lazgest transfer of electricity customers to a municipal utility in recent history," said
<br />APPA President and CEO Mazk Crisson. "The city of Lubbock should be proud, as this move reflects
<br />the strong confidence the community has in Lubbock Power & Light's current operation and the value
<br />public power brings to Lubbock residents."
<br />Mayor Martin said there have been two sets of power lines running down every street and alley in
<br />Lubbock since 1916, when residents approved bonds to build their own electric system. A private
<br />electric company already had built a distribution system in the city, but the people were not happy
<br />because the company shut down the power at 5 p.m. every day, he said. So the city built a competing
<br />system in Lubbock, which covered one squaze mile, he said. Today, the city covers 140 squaze miles. In
<br />some areas of the city, there are three utilities competing for business: Xcel Energy, Lubbock Power and
<br />Light, and the South Plains Electric Cooperative. (The rural electric co-op continues to serve customers
<br />in areas that were designated as the co-op's service territory many yeazs ago, when those areas were
<br />rural.)
<br />"Down every alley run two sets of lines, with gobs of transformers," Martin said. "It is a rat's nest of
<br />lines."
<br />The city has been planning to renovate its downtown, and wanted to put the lines underground, but it
<br />does not make sense to put two sets of lines underground, he said.
<br />http://www.naylometwork.com/app-ppd/articles/print-V2.asp?aid=122627 8/2/2010
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