CPS Energy’s five trustees unanimously approved the electric and gas utility’s requested 3.85% base rate increase during a special meeting Monday.

The board of trustees also approved adding a monthly fee to customer bills for the next 25 years to recover fuel costs from February’s winter storm.

The San Antonio City Council will vote on the rate increase and fee on Thursday; approval seems likely but could be close.

Since May, utility staff has discussed the need for a rate increase with CPS Energy’s trustees, the city council and the public. And while the utility endured pandemic and winter storm-related financial hardships it could not have foreseen, it has also suffered self-inflicted wounds over the past year, including poor communication during the storm, profligate spending by some executives, accusations of mismanagement and a steady exodus of top leaders.

Given these difficulties, CPS Energy has struggled to find strong support among some elected leaders and customers. But on Monday, it crossed the penultimate hurdle to raising an additional $73 million to meet its immediate financial needs.

If approved by the council, this will be CPS Energy’s first rate increase since 2014. The utility has said that starting in March, customers with an average monthly bill of $152 will pay an additional $5.10 — a $3.84 increase to the base rate, plus about $1.26 in the form of a pass-through fee. Those with higher monthly bills will pay more.

That fee will be created through board and council approval of a regulatory asset — a line-item cost on a budget that is deferred on a company’s budget sheet over time.

CPS Energy board Vice Chair Janie Gonzalez said supporting the rate increase does not signal “everything is great” at CPS Energy but at the end of the day, the board understands it has a commitment to the community.

“Our job is not to always be popular,” Gonzalez said. “Our job is to do right and be responsible with the funds that we do receive.”

Prior to the board’s vote Monday, CPS Energy interim CEO Rudy Garza reiterated that the increase will help CPS Energy meet immediate financial needs, such as replacing retiring technology, addressing an employee shortage and addressing city growth.

“We’ve worked with [city staff] for months as they reviewed our budgets and our business-need to arrive at what we believe is a reasonable and necessary request,” Garza said. “The timing is never right for these asks, but if we don’t do this now, there’s a greater opportunity for negative economic impact in the future.”

The pandemic and the effects of Winter Storm Uri have hurt the utility’s finances, Garza said. It is still owed roughly $146 million from outstanding customer account balances. It has paid, and is working to recover from customers through the new fee $418 million in undisputed energy costs from Uri, and is currently fighting in the courts to keep from paying more than half a billion in what it calls “illegitimate” costs from the storm.

Chief Financial Officer Cory Kuchinsky told trustees that approval of the increase and the regulatory asset is essential to ensuring the utility’s near-term financial stability and credit rating.

Approval will also help CPS Energy stabilize its staffing and give it enough security to have the generation portfolio discussions members of the community have been demanding, Kuchinsky said. He added that the utility plans to have more frequent rate increases from now on, to address more long-term issues.

CPS Energy is a financial supporter of the San Antonio Report. For a full list of business members, click here.

Lindsey Carnett

Lindsey Carnett is the Science & Utilities reporter for the San Antonio Report.