EUB Secretary’s comments raise questions about LP&L agreement with TTU

“Texas Tech is our biggest customer and it is paying more than it has to,” said Secretary of the Electric Utilities Board James Conwright in the most recent EUB meeting. The context was an EUB discussion of the marketing agreement with Texas Tech.

Let’s start with some underlying assumptions.

First, Texas Tech wants the very best deal possible. It’s job is to aggressively seek the best possible deal. Anyone who has negotiated with the Chancellor knows he does exactly that.

Second, LP&L expects to comply with the law.

“Texas Tech is our biggest customer and it is paying more than it has to.” –James Conwright

Third, the ratepayers have no desire to underwrite non-profit organizations or state supported institutions however worthwhile the cause.

We go into this with those presuppositions.

Back to our thesis: “Texas Tech is our biggest customer and it is paying more than it has to.”

That is an intriguing statement. And it jarred memories of the LP&L education given by former Mayor Tom Martin over the years. One of those lessons is the fact that certain rates are set by statute.

The Texas Utilities Code, Title 2, Subtitle B, Chapter 36, Subchapter H, “Rates for Governmental Entities” offers the following:

Sec. 36.351.  DISCOUNTED RATES FOR CERTAIN INSTITUTIONS OF HIGHER EDUCATION.
(a)  Notwithstanding any other provision of this title, each electric utility and municipally owned utility shall discount charges for electric service provided to a facility of a four-year state university, upper-level institution, Texas State Technical College, or college.

(b)  The discount is a 20-percent reduction of the utility’s base rates that would otherwise be paid under the applicable tariffed rate.

It is important to note here that understanding the law is rarely as simple as reading one portion of one statute. But it is just as important to point out the “shall” in this particular statute. “Shall” is usually an imperative command, i.e., it compels.

Why is it necessary for Tech to launder state funds through LP&L? Do those dollars spend differently?

We asked EUB Secretary James Conwright about his statement but he was reluctant to comment citing confidentiality issues. Conwright said that what he meant to say was that Texas Tech was LP&L’s biggest consumer of electricity and that they had options, i.e., they could go elsewhere.

That’s true, but that’s not what Conwright said. And Tech’s options are limited when you consider the fact that LP&L owns the electrical infrastructure on the campus.

We decided to shine our own light on the matter so we poked around a little.

The Sandstorm Scholar confirmed with two independent sources that LP&L staff statements support Conwright’s assertion that Texas Tech is “paying more than it has to.” Tech may be the biggest customer of LP&L but it does not pay the lowest rates.

But that doesn’t really answer any questions, it only raises more.

  1. Is LP&L compelled to comply with the statute regarding rates for Texas Tech University? Alternately, does the LP&L contract have a “Good Neighbor” agreement guaranteeing the biggest customer the best rate?
  2. If the answer to #1 is yes, why would Texas Tech pay more than necessary for electrical power? There are probably more factors negotiated than just the price of power and an advertising rebate but rather than speculate it would be helpful to have those explained.
  3. Regardless of the statute, why is it necessary for Tech to launder state funds through LP&L only to receive them back to the institution in the form of advertising dollars? Do those dollars spend differently? Perhaps there are fewer restrictions on that type of money?
  4. Why not instead give Texas Tech the lowest rate anticipated by the statute and let TTU shuffle its own dollars as it pleases? Why have a contract that involves a money swap?
  5. And where is LP&L’s own over-priced general counsel, Todd Kimbrough aka Captain Coverup, in all of this? Shouldn’t he know the law? What is his explanation?

It is safe to assume that as Secretary of the EUB James Conwright knows what he is talking about. He’d just left an extended closed session discussion of the purchase power agreement with Texas Tech. We appreciate him tipping off the public to the possibilities even if he felt he could not give a plausible explanation.

This highlights the problem with confidential agreements and trying to do the public’s business under the cloak of secrecy.

Perhaps it was intentional faux pas hoping to alert the public to what we ought to be able to know in the first place. Or maybe it was unintentional the result of having just been briefed in closed session. Either way it is helpful.

This highlights the problem with confidential agreements and trying to do the public’s business under the cloak of secrecy. We have a department of the city of Lubbock that is at an all-time low in consumer confidence that is asking us to trust it to do the right thing while it keeps us in the dark about what it is doing.

It is time someone at LP&L turned on the lights and started answering some questions.

Perhaps they’d like to borrow one of the Sandstorm Scholar’s flashlights.