CPS Energy staff assured the utility’s board of trustees Monday that the municipal utility is in a stronger financial position than it was this time last year, and said halting disconnections on this season’s hottest days shouldn’t have a significant impact on its improving bottom line.
The utility has whittled its customers’ past-due balances from $207.6 million in October to $189 million at the end of April, said DeAnna Hardwick, CPS Energy’s executive vice president of customer strategy. As of April, CPS Energy has enrolled 74,000 past-due accounts in installment plans, representing $101 million to come from half of its customers in arrears.
The money owed CPS Energy by customers behind in paying their bills rose sharply during the pandemic, when the utility paused disconnections, and continued during extreme weather periods that followed.
Despite assurances from CPS Energy staff that the utility is heading in the right financial direction, Trustee John Steen voiced concerns during Monday’s board meeting about how quickly the utility is recouping past-due balances.
“At our Sept. 26, 2022, board meeting 10 months ago, you were talking about making substantial progress, and I don’t feel like we’re making substantial progress,” Steen said, addressing CPS Energy President and CEO Rudy Garza.
Steen pointed out that almost 20% of the utility’s ratepayers are still behind on their bills. “Are you just keep on keeping on, or do you have other thoughts in mind about what to do about this?”
For months, Steen has voiced concerns about the utility’s financial health, often being the only member of the utility’s five-member board to do so. His biggest concern is what the utility’s rating agencies will think of the millions the utility is owed.
If the utility’s balance sheet is viewed unfavorably by the three credit agencies that rate it regularly, rating downgrades would increase the utility’s borrowing costs, which would ultimately be borne by customers.
Earlier this month, Steen criticized the utility for shifting how it will gauge its financial metrics, saying CPS Energy’s “goalposts are simply being moved closer.”
However, utility officials seem to feel optimistic about the direction of their bottom line. Chief Financial Officer Cory Kuchinsky and Garza both told reporters following Monday’s board meeting that CPS Energy is making steady progress to recoup the past-due debt.
“It took us a couple of years to get here,” Kuchinsky said. “It’s going to take a couple of years to work our way through it.”
Kuchinsky told the San Antonio Report earlier this month that the utility’s credit rating agencies realize many of the challenges the utility is facing are common throughout the industry.
Overall, CPS Energy’s financial position is “strong in the state and strong in the industry,” Kuchinsky said. Staying that way will mean enacting rate increases CPS Energy has said will become routine, he added.
Historically, the utility sees the total owed to it in past-due accounts rise during the summer as residents crank up the A/C try to stay cool. CPS Energy halts disconnections when there is a severe weather alert — such as a heat advisory — for up to two days after.
The cycle is expected, Kuchinsky said.
“From a trend perspective, last year, we trended $70 million in past-due expenses; this year, we set a target of about $30 million, and we’re trending slightly below that,” Kuchinsky said.
CPS Energy board Chairwoman Janie Gonzalez said the utility focuses on the people it is serving, which is why it halts disconnections during extreme weather events.
“As you can see, we have a balance on our books that for two years has been a point of contention,” Gonzalez said of the utility’s past-due total. “[But pausing disconnections for weather is] just another example that we care about people first.”
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