Lubbock Power and Light on Tuesday announced a rate reduction related to lower wholesale electricity costs.
“For our customer that uses 1,000 kWh per month, their cost of electricity will go from approximately $100 to $89. So, it’s a sizeable decrease in terms of cost,” said Matt Rose, spokesperson for LP&L.
LP&L issued the following statement:
- LP&L’s purchased power recovery factor (PPRF) is designed to recover the cost of all power purchased from our wholesale provider Xcel Energy. PPRF revenues of LP&L equal the purchased power costs for LP&L.
- LP&L’s rates are comprised of two parts:
- Base Rate (Energy Charge): Covers all budgeted expenses and capital improvements plans for the utility; all expenses controlled by LP&L. The base rate is adjusted by City Council vote. Standard residential customer base rate for non-summer months: $0.02509 per kWh.
- Purchase Power Recovery Factor (PPRF) : Covers the cost of purchasing and transporting wholesale power to our customers. Standard residential customer PPRF for current season: $0.06858 per kWh.
- PPRF rates are adjusted seasonally (October 1 and June 1) and account for approximately 70 percent of LP&L customers’ total electric rate since 70 percent of our cost comes from our wholesale energy provider.
- Rate stabilization was put in place December 2013 to eliminate volatility of purchased power costs on customers’ monthly statements. Before December 2013, LP&L used a monthly “true-up” which caused customers’ PPRF rate to fluctuate from month to month. Volatility is now absorbed by LP&L rather than the customer.
- For LP&L’s standard residential customer, the PPRF rate was set at $0.06858 per kWh in October 2015. This rate would normally have been set until June 1, 2016. LP&L is adjusting the rate down mid-season. The new PPRF rate will be $0.05685 per kWh.
- What does this mean for our typical customer who uses 1 000 kWh a month? Our typical customer’s cost of electricity will drop from $100.94 today [January 19] to $89.21 starting on February 1.
- LP&L closely monitors natural gas pricing and projections from the U.S. Energy information Administration (EIA). Information provided by the EIA plays a role in setting the PPRF seasonally. The price of natural gas was lower than the EIA’s original projections and therefore LP&L has the ability to lower the pass-through rate for purchased power.
- The new PPRF rate will go into effect February 1, 2016.
