San Antonio’s electric and natural gas utility is bracing for a financial blow of up to $100 million this fiscal year because of the coronavirus pandemic, utility officials said this week.
The utility could see its profits come in at $65 million to $100 million lower than expected in its 2021 fiscal year, Vice President Gary Gold said at CPS Energy’s April board meeting. The fiscal year runs from February 2020 through January 2021.
The expected loss of revenue is driven in part by a projected drop of $206 million to $275 million in electric sales compared to its budget, Gold told board members. That includes power sold to San Antonio-area customers and onto the Texas grid.
Overall, demand for power is down with businesses shuttered to prevent the virus’s spread. Gold said the utility is projecting a 6 percent drop in retail electric sales to its local customers.
“We’ve seen some increase in residential as more people are staying home, but we’ve seen a larger decrease in usage by commercial and industrial customers,” Gold said.
The utility also upped its projections of bad debt, or bills unpaid by customers, from $8 million to $20 million. That estimate is 50 percent higher than the level of bad debt the utility saw after the 2008 recession, Gold said.
CPS Energy also has revised down its expected income from selling power onto the Texas electric grid. Its initial 2021 budget anticipated $194 million in such income; projections now call for that to drop to $40 million or less.
Since restrictions on operating businesses began in March, the state’s electric grid operator has seen demand across Texas drop. The Electric Reliability Council of Texas’s latest analysis of the period from April 19 to April 25 found weekly energy usage was 4 percent to 5 percent lower than expected. Daily usage spikes, when electricity prices are highest, are also 4 percent to 5 percent lower than anticipated.
The decline in revenue not only affects CPS Energy, but its owner, the City of San Antonio, which gets roughly one third of its budget from the utility.
Already reeling from a steep decline in sales and occupancy taxes, the City could see its payment from the utility drop from an expected $365 million to a range of $320 million to $336 million.
Gold’s presentation to the board emphasized the uncertainty in predicting the economic effects of an unprecedented pandemic.
“We are still only about a quarter of the way into our fiscal year,” Gold said. “There’s things that are happening around this in the economy that are going to have long-term impacts that are very hard to estimate.”
On Monday, the utility’s board voted unanimously to waive late fees as a relief measure for residents who have lost income in the economic downtown driven by the virus. Early on, utility officials said they would stop shutting off customers’ electricity and gas for lack of payment during the crisis.
Residents still must contact the utility and agree to a payment plan to avoid late fees, according to the resolution.
CPS Energy trustee Ed Kelley said at the meeting that he had gone through the utility’s list of past-due accounts and seen only a small increase of accounts more than 270 days past due. The increase went from approximately 11 percent to 14 percent, he said.
“That amount has increased, but not materially,” Kelley said.
At the meeting, the board also approved the addition to its Citizens Advisory Committee of Raquel Zapata, senior program manager for defense contractor Dawson, and John Kelly, a retired former Texas Department of Transportation district engineer. Zapata was nominated by Councilwoman Melissa Cabello Havrda (D6). Councilman Manny Pelaez (D8) selected Kelly.
