Are monopoly municipal electric utilities supposed to be treated like piggy banks by city councils? For over 90 years Lubbock Texas has had two electric utilities serving the town – one regional state-regulated investor-owned utility (Xcel) and a municipal utility (LP&L). Both ran wires throughout the city and most customers could switch between the competing utilities on a few days notice. For the most part LP&L stayed competitive by charging a slightly lower rate as Xcel. The LP&L website once trumpeted the benefits to consumers from the competition. Not any more.
Last November the city and the announced that city-owned LP&L would buy out Xcel’s distribution service and customer accounts in the city, making LP&L the monopoly electric power provider in town. The deal is expected to be completed in October.
Already the city council is beginning to treat the utility budget like a basketful of unattended Halloween candy. The deal is not even done, but the current city budget proposal for next year has LP&L customers picking up the $3 million tab for street light power and maintenance costs. The budget also tags LP&L with a $1.46 million payment in lieu of property taxes. (Not clear from the news story but I think LP&L already pays a percentage of gross revenue into the city budget.) One of two council members objecting to the plan said LP&L customers ought not to be tapped to support city-provided services.
Council members supporting the transfer assure us that “it was not council’s intent to tap the utility for more than the street light program it once supported.” Slippery slope arguments are overblown, they say. Sure the city council drained funds from LP&L in the past, almost pushing the utility into bankruptcy when it got caught by rising fuel costs a decade ago. “None of us on this dais would do that again — would start putting them into any kind of financial trouble again,” a city councilman said. “That is not what we’re after. That is not what we want to do in any way.”
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