This article has been updated.
The San Antonio City Council may decide not only to approve CPS Energy’s proposed 4.25% rate increase next week but also preapprove an additional rate increase of up to 5.5% in two years.
During a special City Council session Thursday, city Chief Financial Officer Ben Gorzell recommended the approval of CPS Energy’s proposed rate increase for the municipally owned utility’s next fiscal year, which starts Feb. 1, 2024.
CPS Energy’s board of trustees is set to vote on the 4.25% increase for the utility’s ratepayers on Monday. Pending the board’s approval, City Council will sign off three days later.
With the 4.25% base rate increase, residents who have an average monthly bill of $181.10 would see their bills go up roughly $4.45 starting in March.
CPS Energy said it needs to raise rates in order to hire additional employees, improve and build new electricity and gas infrastructure, replace its 25-year-old computer system and fill out its recently approved generation portfolio plan.
Gorzell also proposed that during its vote next week the City Council could preapprove a rate increase of up to 5.5% that would be set to go into effect in spring 2026. This would give CPS Energy more financial predictability as it moves forward, Gorzell said.
“We think that that 5.5% number is a good projection [for the next rate increase] based on where we are right now,” Gorzell said. He clarified that 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.
Gorzell said 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. “It could simply be able to go into effect” from there, he said.
Outside of the council chambers, DeeDee Belmares, a clean energy advocate with Public Citizen’s Texas office and former member of the rate advisory committee, told the San Antonio Report that preapproving a future rate increase for up to 5.5% would be taking away the decision from a future city council, which seemed odd.
“A lot changes in two years,” Belmares said. “The technologies are changing drastically right now.”
Following the meeting Thursday, Gorzell told reporters the idea for a preapproval came from discussions between the mayor and staff held last week that referenced back to times the San Antonio Water System had done so to help it secure new sources of water.
Several City Council members voiced support for the idea, including Mayor Ron Nirenberg, Melissa Cabello Havrda (D6) and Marina Alderete Gavito (D7).
“Nothing happens in this community if we can’t affordably keep the power going,” said Nirenberg, who sits on the CPS Energy board of trustees in his official capacity. “Know that I do support us going forward with the proposed rate increase, and I also support us providing authority for the second adjustment as well in [CPS Energy’s fiscal year] 2027.”
CPS Energy’s President and CEO Rudy Garza likened the preapproval to being able to go to the store and buy all the ingredients needed for a meal.
“One council person was talking about, ‘Oh, we’ll give you 1% this year, 2% next year.’ That’s like going to H-E-B one ingredient at a time to make a good caldo,” Garza said. “‘I’m going to buy the zucchini now, and I’m going to buy the calabaza next, and I’m going to buy the rice next, and I’m gonna buy the chicken broth — and I’ll wait a couple of years to go and get the meat for it.’ We’ve got to make the whole thing,” he said.
Garza added the preapproval will help boost the utility’s credit ratings. The three rating agencies measure the risk associated with lending to an entity such as CPS Energy, affecting interest rates on the utility’s debt.
“I think our rating agencies would react positively to the two-for-one concept, primarily because one of the things that they ding us on is how hard it is to get a rate increase improved here,” Garza said.
CPS Energy Chief Financial Officer Cory Kuchinsky agreed, adding the up to 5.5% rate increase for fiscal year 2027 was already a part of the utility’s multiyear plan. Having a multiyear plan helps the utility build a runway from which to launch plans for growth, reliability and stability, he said.
CPS Energy is a financial supporter of the San Antonio Report. For a full list of business members, click here.
