Lubbock residents have long dreamed of cheaper electricity. Will Texas’ open market deliver?

Years in the making, the transition from a municipal electric company to an open market has left some residents unsure.

By Jayme Lozano-Carver, Texas TribuneFebruary 14, 2024 9:45 amEnergy & Environment, Partner Organizations, The Texas Tribune

Trace Thomas for The Texas Tribune

A Lubbock Power & Light electrical substation on July 14, 2022.

From the Texas Tribune:

LUBBOCK — For nearly 25 years, much of Texas’ population have lived in a city that participates in the state’s open energy marketplace. But not the residents of Lubbock, who have been serviced exclusively by one electric company — Lubbock Power & Light, the city’s municipal provider.

For more than a decade, residents have desperately wanted an open market, sharing their dissatisfaction with their bills.

Residents now have what they long wished for — Lubbock’s electric market is open.

For several weeks leading up to the switch, which takes place Thursday, provider fairs have become the manifestation of the state’s energy marketplace. The city has hosted rows and rows of energy companies at the Lubbock Civic Center. With each one, dozens of smiling salespeople greeted residents with brochures, sweepstake prizes and promises of free nights of electricity and other deals to save big bucks.

However, with more than 30 companies to choose from, the process has been daunting, residents say. And the dream of finding a new low rate might not be fulfilled.

“It’s surprising how many there are. Where did they all come from?” asked Brenda King on her second trip to the electric fair. “It feels like all the people from out of town and state are swarming us.”

The switch from a single municipal provider to the state’s open marketplace has been several years in making. Last year, the municipal electric company completed its integration into the state power grid managed by the Electric Reliability Council of Texas, often referred to as ERCOT.

Texans have been critical of ERCOT and the stability of the grid since the 2021 winter storm that left millions without power. Many Texans are still paying more each month for electricity because of the storm — and will for many more years.

“Consumers in Lubbock are now facing the same thing consumers for the rest of ERCOT are facing,” said Ed Hirs, an energy economics professor at the University of Houston.

Texas established its open market in 1999. The market allows homeowners and renters to shop for energy like they do a cell phone plan — with many, many more options.

At the time the market opened, Lubbock was in the Southwest Power Pool, a grid operator governed by the Federal Energy Regulatory Commission. City leaders in 2015 sought to join the ERCOT grid when their contract with Xcel Energy expired, with one big benefit — the move would eliminate the need to build a $700 million power plant to stay with SPP. Then in 2018, the City Council agreed to have the city join the state’s open marketplace.

In the wake of the winter storm, some Lubbock residents expressed concern about the city joining the state’s independent power grid.

By then, however, the city had invested millions of dollars into the move since 2015, which was also the key to bringing competition to Lubbock. Lubbock became the first major city to join the ERCOT market in nearly 25 years, and was the largest single transfer of customers in the organization’s history.

There have been costly hurdles along the way, including resolving their contract with Xcel and shutting down their usage on the SPP grid. But Matt Rose, LP&L’s chief public affairs officer, said Lubbock could be used as a test case for other cities that might want to do the same.

“Lubbock was uniquely situated to make this move,” Rose said. “For a city ready and willing to do this, it can be done. But if you were not in that position, from our opinion, it would be next to impossible.”

To prepare for the switch, residents have gotten creative in researching their options, trying to find the best deal. Aside from the information at fairs, Lubbock residents started sharing and comparing what they were hearing from companies in social media groups.

Some retailers have also taken to local television with flashy commercials — some that star a flexing armadillo — and targeted ads to grab attention. Nicholas Bergfeld, a Lubbock resident and public policy adviser, said it’s hard for people to grasp because the marketplace, and its retailers, are well established.

“The way they advertise and how they engage are things Lubbock citizens have never seen,” Bergfeld said.

Bergfeld said residents should read between the lines when signing their contracts. He said there are providers with enticing incentives that draw consumers away from fixed rates, which could cost more in the end. For example, one company offers a plan where the two highest-usage days a week are free. In that plan, consumers would be charged a higher rate than if they chose a fixed rate plan without extra perks.

The average residential price per kilowatt-hour in Texas last November was 14.61 cents, according to the U.S. Energy Information Administration. LP&L’s current rate is in the same range, but has fluctuated in recent years.

As of Tuesday, about 45% of customers had chosen their provider, according to Lubbock Power & Light. Residents must choose a new electric provider by Thursday. If a resident doesn’t choose by then, they will be randomly assigned one from three providers — Reliant Energy, TXU Energy, or Octopus Energy at mid-market rates for the next 90 days.

Regardless of who customers choose, Rose stressed that people can change providers at the end of their terms if they aren’t satisfied.

“If you don’t have a good experience with who you chose, you have the ability to choose another one when that contract expires,” Rose said.

With the deadline approaching, Chuck Greenslade is another Lubbock resident trying to narrow down his options in time. More choices are refreshing, he said, particularly after having high bills since moving to Lubbock from Denton in 2022.

Greenslade and his wife tried to lower their electricity usage to drive down their bill. They would change the temperature for the house and adjust the light settings. They eventually switched to a window unit for their bedroom to regulate temperatures without driving up the bill.

It didn’t make much of a difference.

“I’ve lived in a variety of places in Texas,” Greenslade said. “The cost of energy in Lubbock was the highest of anywhere I’ve ever lived.”

Greenslade started to track some providers and their plans in a spreadsheet. He’s drawn toward the providers that offer some form of free energy hours, either on some nights or a weekend each month. He’ll likely choose Reliant, a provider he’s used in the past.

“I like the perks, like bill averaging to prevent overly large bills month to month,” Greenslade said.

Disclosure: Octopus Energy and University of Houston have been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune’s journalism. Find a complete list of them here.