A few years ago Lubbock’s municipal electric utility was in a tight financial spot that threatened to put it and the city into bankruptcy. When the utility pushed through a rate increase, customers started switching to competing electric utility Xcel. The dwindling customer base forced the municipal utility to find another way out of their difficulties. The utility reorganized management, negotiated some complex deals to reduce wholesale power costs, and made their rates competitive again. It worked, Lubbock Power & Light is financially secure today and still offering competitive rates.
Austin Energy, the municipal utility for the Texas capital, foresees tough times ahead and the need to either “significantly raise electric rates” or “start losing millions by 2011.” Fortunately for the utility, Austin Energy is a monopoly and its customers cannot escape rate increases so easily. (See Marty Toohy’s article, “Electric utility proposes major rate increase,” in the Austin American-Statesman.)