We have initiated the process to formally join the Texas state electric grid. The decision to seek ERCOT interconnection is a dynamic choice aligning our interests with the interests of Texas.
LP&L will apply to be connected to the ERCOT grid. ERCOT would provide three major advantages:
Provides affordable power.
- Eliminates the need to build an expensive power plant with estimated costs ranging from $350 to $700 million.
- Provides access to 550 generation units and over 1,100 active market participants that generate, sell, or transmit wholesale electricity.
- Allows us to buy the most cost effective power from the grid.
- Cuts our wholesale power costs by eliminating expensive fixed capacity charges
Assures diversified energy portfolio from Texas-based power plants.
- Provides full access to West Texas wind and a mix of conventional and renewable electric generation such as natural gas, solar and coal.
- Provides stability through having access to 550 generation units across Texas, avoiding dependence on one unit.
Simplifies the regulatory environment.
- Avoids regulation by the Federal Government (Federal Energy Regulatory Commission or “FERC”).
- Involves regulation by the Public Utility Commission of Texas and our Texas Legislature, not federal authorities.
- Unites Lubbock with the State of Texas through our connection to the statewide transmission system.
This solution is a departure from past thinking. We’re anticipating future demand. Growth requires a more effective and efficient power structure. This is a 21st century utility solution - we are creating our future in an innovative way.
How Did We Get Here?
LP&L’s Electric Utility Board and senior management utilized the following goals to guide the 2019 Solution.Goal 1: Provide predictable and stable pricing for our customers
Goal 2: Enhance flexibility and diversification of our energy supply while conserving local water resources
Goal 3: Limit the issuance of additional debt – debt sensitive
Goal 4: Maximize LP&L’s existing generation assets
Goal 5: Achieve a simplified regulatory environment
Our customers expected us to manage a methodical and purposeful examination of our options to ensure we make the best possible decision and secure affordable, reliable power for generations to come. The studies, along with the knowledge gained from the RFP, shaped the solution for our future power needs.
ERCOT manages the flow of electric power to 24 million Texas customers - representing about 90 percent of the state's electric load. As the independent system operator for the region, ERCOT schedules power on an electric grid that connects more than 43,000 miles of transmission lines and 550 generation units. ERCOT also performs financial settlement for the competitive wholesale bulk-power market. ERCOT is a membership-based 501(c)(4) nonprofit corporation, governed by a board of directors and subject to oversight by the Public Utility Commission of Texas and the Texas Legislature. ERCOT's members include consumers, cooperatives, generators, power marketers, retail electric providers, investor-owned electric utilities (transmission and distribution providers,) and municipal-owned electric utilities.
Where Do We Go From Here?
LP&L has initiated the process to formally join the Texas state electric grid. In the coming weeks, a full transmission study will be submitted to ERCOT for their approval. This study was conducted by our expert engineering consultants, working in close consultation with LP&L staff.
Over the next year, there will be additional studies conducted by the PUC, ERCOT and LP&L looking closely at every technical component of the future transition. LP&L researched and deliberated on all aspects of the decision to formally initiate a request to transition to the ERCOT market but more work must be undertaken to make sure the implementation of a move is conducted in an efficient manner.
If authorized by the PUC, over the next four years additional infrastructure will be constructed in order to connect the LP&L system to the ERCOT power grid in 2019. In many instances this infrastructure is already a part of LP&L’s existing long-term capital improvement plan. Many of the projects undertaken over the past two years related to reliability will cover what needs to be in place before the final transition. Additional areas of construction needed, such as new transmission lines and substations, will be studied and decided upon as part of the official review to take place through the Public Utility Commission and ERCOT.
LP&L Leadership VideosGreg Taylor - Why joining ERCOT is the best solution for LP&L customers and Lubbock
David McCalla - Advantages to joining ERCOT, decision making process
Andy Burcham - Financial benefits to LP&L joining ERCOT