ERCOT welcomed 70% of Lubbock Power & Light’s load to its system over the weekend, a culmination of six years of engineering work and regulatory approvals.
The Texas grid operator said the transition was completed without issues at 12:22 p.m. Sunday. Staff worked closely with LP&L and Oncor personnel to transfer about 470 MW of load from SPP, the largest single transfer of customers in its history.
ERCOT promised a smooth transition and minimal effects for customers, outside of short outages when the actual switch occurred.
“This is a historic day and weekend for our entire community,” David McCalla, LP&L’s executive director, said in a statement. “It’s been a massive undertaking,” he added, thanking employees, city staff, local authorities and “everyone that worked together to ensure a safe and smooth transition.”
The move gives LP&L access to ERCOT’s competitive market and its 1,800 participants and opens the door to retail competition, goals of the effort that began in 2015. (See Integrated System to Join SPP Market Oct. 1.)
The utility said the move eliminates the need to spend up to $700 million on a power plant and cuts wholesale power costs by eliminating fixed capacity charges. It also pointed out that the move avoids primary regulation by the “federal government” (FERC) and brings in oversight from Texas’ Public Utility Commission and legislature.
The PUC approved the transition in 2018. (See Texas PUC OKs Sempra-Oncor Deal, LP&L Transfer.)
The other 30% of LP&L’s load could follow by the summer of 2023. The City Council and Utility Board last week approved early termination of LP&L’s partial requirements contract with Southwestern Public Service that would have cost the utility more than $17 million a year through 2044.
LP&L agreed to pay $77.5 million upfront to escape the contract; it will recoup that payment through 30-year bonds at about $4 million/year. The contract, signed in 2010 to provide 30% of the city’s electric needs for 25 years beginning in 2019, will now end in May 2023.
Lubbock Mayor Dan Pope said in a statement that the agreement’s approval allows the city to “fully pursue its stated goal of migrating 100% of customers to ERCOT” and to become the state’s first municipal utility in Texas to voluntarily opt-in to the retail competitive market since its creation in 1999.
LP&L customers have already seen six rate decreases in the past 36 months. Lubbock’s Electric Utility Board in April voted to lower the rates’ power cost recovery factor portion for the summer. When Standard & Poor’s in May raised LP&L’s bond rating to A+, in line with its ratings by Moody’s and Fitch, it cited the utility’s financial position as among the reasons for the upgrade.
LP&L crews connected 17 substations to ERCOT with an average outage time of 16.6 minutes. Oncor built multiple switching stations and several new 345-kV and 115-kV transmission lines that connect Lubbock to the ERCOT system and also increase available transmission capacity for generation resources in the Panhandle.
Three LP&L-owned gas-fired resources, totaling 120 MW, are now incorporated into ERCOT and are already included in its capacity, demand and reserves report.
