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Transitioning Lubbock Power & Light into the competitive market came with a $100 million price tag. But Chief Public Affairs Officer Matt Rose said if the utility hadn’t had an aging, small fleet of power plants, it could’ve been higher.\u00a0<\/p>\n
Matt Rose <\/p>\n
Gov. Greg Abbott is promising to reduce Texans\u2019 bills through a plan to break up what he calls \u201ccity monopolies\u201d<\/a> like those held by CPS Energy<\/a>, Austin Energy<\/a> and other municipal utilities.<\/p>\n In a surprise announcement in San Antonio, Abbott claimed his plan would reduce San Antonio bills by 13%, though he could not say how he arrived at that figure.\u00a0<\/p>\n Article continues below this ad<\/p>\n After transitioning into the competitive market,\u00a0Lubbock Power & Light stepped down from being an electricity provider to become a transmission and distribution utility. It owns and operates\u00a0the local power lines.\u00a0<\/p>\n Matt Rose Matt Rose, chief public affairs officer for Lubbock Power & Light, speaks to local residents in spring 2024 about transitioning the municipally-owned utility into the competitive market.\u00a0<\/p>\n Matt Rose<\/p>\n Another\u00a0city\u2019s experience suggests it\u2019s unlikely the move would accomplish such savings.<\/p>\n Lubbock Power & Light<\/a>, a municipal utility that entered the competitive market in 2024, offers a glimpse into what\u00a0ratepayers\u00a0can expect after transitioning from one provider to having more options.<\/p>\n \u201cIt gives you the ability to theoretically get a lower rate if you know what you\u2019re looking for,\u201d said Matt Rose, chief public affairs officer for Lubbock Power & Light. \u201cBut it\u2019s not going to cut your bill in half overnight\u00a0\u2014 and nobody should promise that.\u201d<\/p>\n Article continues below this ad<\/p>\n San Antonio Express News Logo<\/p>\n Make us a Preferred Source on Google to see more of us when you search.<\/p>\n <\/p>\n Add Preferred Source<\/p>\n <\/a><\/p>\n RELATED: Abbott wants to break up CPS Energy. San Antonio business leaders are rattled.<\/a><\/p>\n Abbott said more than 5 million Texans live in areas with a single municipal power provider, with 60% of those customers living in San Antonio and Austin. His proposal is largely aimed at those two cities, but the plan he said he\u2019ll ask the Legislature to approve could have wide-ranging implications for more than 70 city-owned utilities across the state.<\/p>\n In Lubbock, the transition came with a bill of more than $100 million as the utility prepared about 110,000 customers to enter the competitive market.<\/p>\n Article continues below this ad<\/p>\n Matt Rose, chief public affairs officer for Lubbock Power & Light, speaks to local residents in spring 2024 about transitioning the municipally-owned utility into the competitive market.\u00a0<\/p>\n Matt Rose <\/p>\n Most of that was a $77 million fee to terminate a power contract that provided 187 megawatts to help power its overall 650-megawatt load. It cost another $20 million to $22 million, Rose said, to put in the advanced metering infrastructure, or smart meters, needed in a market with multiple providers. For smaller utilities, he said, such costs could be insurmountable.\u00a0<\/p>\n CPS Energy, though, is the largest municipally owned energy utility in the nation. It serves more than 1.36 million electric and gas customers in San Antonio and parts of seven additional counties. While it has more cash to absorb such transition costs, Rose said \u201ctheir costs are going to be astronomically higher than a midrange utility or smaller utility just because of their scale.\u201d<\/p>\n \u201cThat\u2019s going to come with a huge price tag, and that needs to be taken into account,\u201d he said. \u201cUltimately these costs don\u2019t just get evaporated up into the ether. They\u2019re always going to be borne by customers.\u201d\u00a0<\/p>\n Article continues below this ad<\/p>\n Rates about the same<\/p>\n When Lubbock opened up its market in spring 2024, less than 70% of its customers chose a provider, despite a rigorous education campaign. About 30% of residents ended up with one of three default providers \u2014\u00a0Reliant<\/a>, TXU Energy<\/a> and Octopus Energy<\/a>\u00a0\u2014 and received a steady default rate for three months before being transferred to a month-to-month rate.\u00a0<\/p>\n Customers can save money if they sit down and shop for a rate, but if they skip the process or don\u2019t fully understand it, they can end up with a rate of 22 cents per kilowatt-hour in the summertime. Companies may advertise a low rate that is available only at a specified level of usage or offer a rate that doesn\u2019t include fees.\u00a0<\/p>\n \u201cYou can find yourself on a pretty bad sliding scale going into summertime, where your consumption is going up two to three times, but so is your rate because it\u2019s not locked in,\u201d Rose said.\u00a0<\/p>\n Article continues below this ad<\/p>\n RELATED:\u00a0Abbott wants to break up CPS Energy. San Antonio business leaders are rattled.<\/a><\/p>\n If Lubbock hadn\u2019t entered the competitive market, its summer 2024 rate would have been slightly less than 17 cents per kilowatt-hour. Two years into the open market, the larger providers in the\u00a0city now offer rates ranging from about 15 cents per kilowatt-hour to 17 cents per kilowatt-hour.\u00a0<\/p>\n After transitioning into the competitive market,\u00a0Lubbock Power & Light stepped down from being an electricity provider to become a transmission and distribution utility. It owns and operates\u00a0the local power lines.\u00a0<\/p>\n Matt Rose<\/p>\n CPS Energy\u2019s average rate was 13.1 cents per kilowatt-hour in the 12 months through April, with the average residential customer bill totaling $191.77. In his pitch, Abbott pointed to what he said were lower rates in cities like Houston that are in the competitive market, but CPS bills are already well below Houston\u2019s average residential bill of $224.68.\u00a0<\/p>\n Article continues below this ad<\/p>\n That didn\u2019t surprise Rose.<\/p>\n \u201cWe all have the same types of costs. We\u2019re all having to buy transformers. We\u2019re all having to buy the same types of equipment,\u201d he said. \u201cOne company may be a little bit cheaper because they\u2019ve got an economy of scale, but we\u2019re all buying the same stuff and so there\u2019s no magic wand out there.\u201d<\/p>\n There\u2019s also the concern of assets and debt. For Lubbock\u2019s aging, small fleet, that wasn\u2019t a problem.\u00a0<\/p>\n But CPS Energy is facing about $10 billion in debt, with much of that coming from its generation fleet. If the utility lost customers to competitors, its revenue could decline while much of its debt and fixed costs remained.\u00a0<\/p>\n Article continues below this ad<\/p>\n READ MORE:\u00a0Abbott\u2019s move against CPS is about subverting local control, not affordability<\/a><\/p>\n While Lubbock was still burdened by a \u201ctremendous amount of work, cost and effort,\u201d Rose said the utility was uniquely situated to move into the competitive market. That was partially because its residents had a choice for decades\u00a0\u2014 but only between two providers.<\/p>\n Lubbock\u2019s choices<\/p>\n Lubbock Power & Light and\u00a0Xcel Energy<\/a> were previously the sole providers of power to Lubbock, offering residents an \u201cinefficient form of competition,\u201d Rose said.<\/p>\n Article continues below this ad<\/p>\n The city\u2019s system was connected to the Southwest Power Pool<\/a>, which runs from Lubbock to Canada, rather than to the grid managed by the Electric Reliability Council of Texas<\/a>, which manages 90% of the state\u2019s electric load.<\/p>\n In 2010, Lubbock\u2019s municipally owned utility purchased\u00a0Xcel Energy\u2019s infrastructure and became the sole provider of energy to the area. But because it was part of the Southwest Power Pool and at the southern end of its coverage area, the only company it could buy power from was Xcel Energy. That drove the decision to move the system over to ERCOT.\u00a0<\/p>\n Lubbock residents attended an informational session\u00a0in spring 2024 about transitioning the municipally-owned Lubbock Power & Light into the competitive market.\u00a0<\/p>\n Matt Rose <\/p>\n<\/p>\n
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