LP&L to begin paying the city in multi-million dollar transfers

By Elliott Blackburn | AVALANCHE-JOURNAL

Friday, November 21, 2008
Story last updated at 11/21/2008 - 1:28 am

 The city-owned power company will resume automatic, multi-million dollar transfers to offset taxes next fiscal year.

 On Thursday morning, the City Council completed revisions to city ordinances that had blocked city leaders from tapping Lubbock Power & Light for budget help.

 LP&L will transfer $5 million to city road and general funds this year - equal to five cents on the tax rate. The council also approved a formula that will calculate the millions more that the company will transfer each following year.

 "The whole motive in this entire project was to get LP&L on sound footing," utilities board chairman W.R. Collier said. "The citizens and the city of Lubbock will both benefit as a result of having owned LP&L."

As a publicly-owned company, LP&L does not pay taxes or the fees Lubbock charges other utilities to bury or stretch lines across city property. 

It can be an unfair advantage that leaves some residents out in the cold. All Lubbock taxpayers own the company, but not all purchase power through LP&L.

 Municipal power companies routinely make payments roughly equivalent to their competitors to compensate taxpayers for the use of public property.

 But council members halted LP&L's payments in 2003 when a natural gas price spike revealed that city officials had drained the company's reserves.

 All of Lubbock's electrical generators used natural gas for fuel. When officials needed reserves in 2003 to pay for the unexpected costs, they discovered empty coffers.

 Councils had for years raided the resource to fund extra projects without raising taxes. The power company, vulnerable without the strength to pay the bills, sent the city teetering toward bankruptcy.

 The council blocked the company from automatically transferring money to the city until LP&L reserves reached $50 million. The company remains $10 million short of that goal, but officials said it was ready to ease in to the contributions.

 LP&L transferred $1 million to the city last fall and gave customers a $1 million rebate in 2007.