Xcel Energy requests nearly $90 million switching fee if LP&L joins ERCOT
Xcel Energy is seeking an interconnection switching fee estimated to cost $88.7 million if Lubbock Power & Light proceeds with its plan to disconnect from Xcel’s system to join the Electric Reliability Council of Texas in 2019.
Xcel filed a request with the Federal Energy Regulatory Commission (FERC) on Tuesday asking the agency to approve the switching fee. The energy company requested FERC act on the filing by September.
LP&L in response said it intends to vigorously defend against the filing and officials at the municipal utility do not believe Lubbock ratepayers should be responsible for investments made by Xcel beyond the conclusion of the current power agreement.
The fee Xcel is requesting, according to Xcel spokesman Wes Reeves, will cover the cost of transmission infrastructure Xcel has constructed since the 1980s to deliver wholesale power to LP&L, Lubbock’s municipal power company.
In a news release, Xcel officials said: “The company has invested tens of millions of dollars in high-voltage transmission infrastructure, and will be investing in significant additional transmission infrastructure through 2019, in order to provide reliable transmission service to LP&L, with the reasonable expectation of collecting transmission service revenue from moving power to LP&L.”
Matt Rose, a spokesman for LP&L, said the utility currently pays a transmission rate to Xcel that covers the cost of these types of investments.
Reeves said there’s no specific project he can point to that’s the basis for this recovery cost, but rather, he said when Lubbock connected with the system in the early 1980s the entire network has been designed and planned around having the city in the mix.
The cost of Xcel’s projects are shared across the company’s customer base, so when Lubbock leaves the grid, Reeves said, the end result will be those costs being shifted to neighboring customers.
“What we’re trying to do with this fee is cushion that blow so customers don’t see that impact,” Reeves said. “For us, it’s a matter of fairness to our existing customers so they’re not saddled with higher costs.”
LP&L wrote in a news release that the current power contract under which LP&L is operating expires in May 2019, and on that date LP&L will have fully honored all contractual obligations set forth under the power contract with Xcel Energy.
Rose said LP&L will thoroughly vet and research the filing to argue against it.