Members of the City Council are balking over a proposed CPS Energy budget that assumes a rate increase in the coming year — potentially as high as 4% — without seeking their permission.
As a city-owned utility, the council has final authority over how and when CPS Energy raises rates.
But at a Feb. 23 board meeting, the utility pitched a fiscal year 2027 budget that suggested a rate increase could be used to make up for a $50 million shortfall.
“You can’t just stick a 4% [increase] in your budget and us not have any questions about that,” said Councilman Edward Mungia (D4), one of five members who wrote a letter to CPS Energy CEO Rudy Garza on Wednesday to protest the move.
Despite its purview over increases, the council doesn’t have to approve CPS Energy’s full budget, and Garza said in the February board meeting that some of the newly elected members still “needed to get their feet on the ground” before confronting that discussion.
As such, the utility planned to take the unusual step of approving a budget that already assumes a rate increase, and then bring a more specific proposal back to the council this fall.
The board was so taken aback by the last-minute information that it delayed voting that day. Meanwhile, Mayor Gina Ortiz Jones, who represents the council on that panel, hauled CPS Energy leaders before council to explain their plans to the rest of the members.
“Given the economic environment we’re in and just out of good practice, our city-owned utilities should not assume myself nor the City Council will vote to approve a rate increase,” Jones said Wednesday.
Facing the full council last week, CPS Energy’s Chief Financial Officer Cory Kuchinsky explained that the utility had planned to wait until the end of summer to see what kind of increase was needed.
Even in that March 4 presentation, he declined to share a percentage estimate for a possible rate increase, instead referring back to slides referencing a budget gap that could grow or shrink in the coming months.
In a letter to following up on the meeting, the council members thanked Jones for bringing the matter to their attention.
“We do not believe in taking up formal conversations around rate increases until robust discussions are had with the community,” they said.
Mungia added that the council was looking at a long list of rate and fee increases for residents in the coming year, and didn’t want to be blindsided by utility increases on top of that.
As it stands, federal grants are uncertain, SAWS is looking at a big rate increase to pay for delayed maintenance, the council is considering raising residents’ stormwater fee to fund drainage projects, and a property tax increase could be needed if they want to have money for both bond projects and downtown developments like Project Marvel.
“Every time you look at something, it’s a very incremental increase,” Mungia said. “But we need to put them all together and look at the larger picture.”
CPS Energy has long projected that a series of incremental rate increases would be necessary, potentially every other year until 2030 to help fund its long list of capital projects. But when its leaders came before the council in November, members stressed that they wanted a clear explanation of where the money was going before they’d approve one.
On Wednesday, CPS Energy Spokeswoman Melissa Sorola responded to council’s letter, saying, “We have a lot of work to do this year, and in future years, to continue serving this community reliably and affordably and we are committed to doing so collaboratively and transparently.”
