Federal Regulatory Holdup Could Stall Lubbock Power & Light’s Shift to Retail Electric Choice
June 23, 2023
Lubbock Power & Light (LP&L) and the Electric Reliability Council of Texas (ERCOT) might be forced to postpone the projected integration of LP&L into the retail competition market due to a recent decision by the Federal Energy Regulatory Commission (FERC). The two entities jointly updated the Texas Public Utility Commission (PUC) about the potential delay, but they could not provide a concrete estimate of the extent of the delay due to ongoing uncertainties.
The full integration of LP&L's remaining customer base into ERCOT, a move pending approval from FERC, has been delayed because of an agreement reached between LP&L and the Southwestern Public Service Company (SPS) on May 27, 2021. This agreement, which was submitted for FERC's approval in the ER23-1144 docket, addresses certain issues linked to LP&L's complete incorporation into ERCOT.
However, the FERC issued a suspension order on April 21, 2023, on SPS's request. This led to the establishment of hearing and settlement judge procedures to scrutinize the propositions put forth by intervening parties. As a result, LP&L and ERCOT are evaluating the potential impact of the FERC's order on their integration and transition timelines.
In response to the FERC's decision, LP&L stated,
"We will continue collaborating with ERCOT and other Market Participants to complete the necessary preparations for integration and transition to retail competition as swiftly as possible, once all required regulatory approvals are obtained."
In relation to the Partial Requirements Agreement (PRA) between SPS and LP&L, FERC is reviewing proposed revisions. Some cooperatives have filed objections at FERC regarding the revenue allocation from SPS under the settlement. They are also seeking certain "hold harmless" provisions.
As LP&L attempts to complete its transition from the Eastern Interconnection into ERCOT, the power company has urged the Commission to accept the SPS filing unconditionally. Despite this, FERC's suspension order highlighted preliminary analysis results that suggest the revisions proposed by SPS to the PR Agreement might be unfair, discriminatory, or unlawful.
Further, the Electric Utility Board of Lubbock has been informed of potential delays due to federal regulatory impediments. Despite not having any changes in the target "go-live" dates, LP&L has been preparing for potential delays of several months.
The initial plan was to shift the remaining 30% of customers to ERCOT by the end of this month and allow customers to choose their provider and plan by late summer before issuing final city bills in October. Now, however, the final transfer is expected to occur in late September or October, with the transition completion likely to be pushed to 2024.
These delays are linked to protests from several Texas and New Mexico power co-ops against a $77.5 million settlement between LP&L and Xcel Energy over a long-term power agreement termination. Despite the Public Utility Commission of Texas approving the settlement in early March, the co-ops argue that the settlement fails to sufficiently shield them from the financial fallout of the transition.
LP&L continues to uphold its commitment to migrating all customers to the competitive retail market in ERCOT simultaneously, subject to all regulatory approvals. In the meantime, LP&L continues to make headway on infrastructure projects and legislative matters related to the transition.