CPS Energy ratepayers are one step closer to seeing their utility bills go up this spring.
The CPS Energy board of trustees unanimously approved a 4.25% base rate increase Monday, although not without trustees voicing concerns. The rate increase will need a stamp of approval from the San Antonio City Council before it can go into effect in the spring, with the council set to vote on Thursday.
The increase would generate an additional estimated $85 million in revenue per year, money CPS Energy says it will require to keep pace with San Antonio’s growing power needs: to improve and build new electricity and gas infrastructure, hire employees and replace its 25-year-old computer system.
“We are experiencing continuing growth in our community, as well as shifts in new technologies across virtually every aspect of our business,” Chief Strategy Officer Elaina Ball told trustees before the vote.
Officials from several local chambers of commerce lined up at the board’s special meeting to voice support for the rate increase, which would apply to both residential and commercial customers. A single resident spoke during the public comment period in opposition to the increase.
The 4.25% base rate increase would apply to the portion of the bill that doesn’t apply to fuel and regulatory charges. Residents who have an average monthly bill of $181.10 would see their bills go up roughly $4.45 a month starting in March, following the start of the utility’s fiscal year on Feb. 1. Those on the utility’s Affordability Discount Program would see their average bill of $168 increase by roughly $2.42 per month.
CPS Energy currently has roughly 200,478 customers who are past due on their bills, owing a total of about $175.5 million as of Oct. 31. Of those, nearly 193,000 are residential customers.
Prior to the vote, CPS Energy’s five trustees discussed the rate increase at length.
Trustee John Steen said he was voting for the rate increase only because of the utility’s various needs, despite his concerns about the utility’s overall financial health.
“I’m disappointed with the intractable customer debts situation,” Steen said. “… I began sounding the alarm about this in early 2022, and despite our CEO’s optimistic assurances at that time that it would soon be cleared up, we’re worse off today than we were then.”
Steen criticized the utility’s latest iteration of its energy efficiency program or STEP, which he said puts additional financial pressure on customers because it adds about $3.50 to residential customer’s bills each month. As he has previously, he took issue with CPS Energy’s latest financial targets, which he said are easier to reach and equate to CPS Energy accepting “mediocrity.”
“Begrudgingly, I’m going to go ahead and support the base rate increase before us, as my responsibility as a trustee to make sure provisions are made so the bills get paid must outweigh my misgivings about the direction this company has been taken in the past few years,” he said.
Mayor Ron Nirenberg responded to Steen’s comments by arguing that community members who were part of the utility’s former rate advisory committee pushed for a new STEP program. He also added he favored the rate increase because it supports CPS Energy’s clean energy and growth goals.
Trustee Francine Romero voiced concerns about the utility’s poorest customers, although she said she is pleased to see the utility continues to invest in cleaner energy.
“Clearly the cost of this will have an impact on many customers, but the costs represented by this rate case are only one sliver of costs and potential costs,” she said. “Furthermore, the benefit that those costs support cannot be left out of the equation.”
CPS Energy and City Council last approved a rate increase for utility ratepayers in January 2022. That 3.85% rate increase was the utility’s first in eight years.
When the utility sought its last rate increase, CPS Energy officials noted regular rate increases would have to become the norm for the electric utility. A multi-year plan unveiled by the utility showed CPS Energy would require at least two 5.5% rate increases — one approved in 2023 and one in 2025 — to keep up with growth costs. It showed the utility also would likely need rate increases every two years through at least 2030.
CPS Energy officials were able to reduce the rate increase proposed for this year from 5.5% to 4.25% due to increased revenue from selling excess power on the wholesale market this summer.
During a special city council meeting last week, city Chief Financial Officer Ben Gorzell said staff recommends the approval of both the 4.25% rate increase for this upcoming fiscal year and the preapproval of an additional increase up to 5.5% in two years. Gorzell added the next increase could be less, but by preapproving the rate for up to 5.5%, the utility would not need another City Council vote to raise rates in two years.
CPS Energy would still need to submit a rate case to the city, go through its board approval process and collect input from city staff, he said.
CPS Energy is a financial supporter of the San Antonio Report. For a full list of business members, click here.
