CPS Energy appears to be reducing even further the size of the rate hike it will seek, to 3.85%, based on projections it will present Wednesday to San Antonio’s City Council.

That’s down from an initial high-end projection of 10.6% the utility discussed in August and a more recent trimmed down amount of 8% projected in October. Utility officials have always maintained that those figures were preliminary, while at the same time trying to clearly lay out the need for additional revenue.

On Wednesday, City Council will receive a briefing by city finance and CPS Energy officials on the utility’s need for a proposed base rate increase, and on the creation of a mechanism to repay fuel costs incurred during the 2021 winter storm. This briefing will include a discussion of a proposed rate increase of 3.85%, CPS Energy spokeswoman Christine Patmon confirmed Monday.

A 3.85% increase would generate about $73 million in additional revenue, according to a similar presentation CPS Energy Chief Financial Officer Cory Kuchinsky will give to the utility’s rate advisory commission the following day, Dec. 2.

“After listening to feedback and input, we have revised our rate request to meet immediate financial needs,” CPS Energy states in the presentation. If approved, the increase would go into effect March 1, 2022, the presentation shows.

An “average” resident with a $152 monthly bill would pay an additional $3.84 plus another $1.26 in pass-through fees that will help CPS Energy pay back roughly $418 million in fuel costs from Winter Storm Uri over 25 years.

“The plan is to go before City Council in the B session on Wednesday, and so that will be the first time we’ll talk about the [lower] rate with them,” Patmon said. “We’ve been working a lot with the city; this is all part of our rate process. It’s a continuation of what we started months ago.”

CPS Energy President and CEO Paula Gold-Williams, who is leaving the utility in early 2022 and has already handed off some of her leadership duties to interim CEO Rudy Garza, sat down with reporters in May to discuss the utility’s need for a rate increase, saying the utility was in dire need of more revenue and calling the rate increase “an inevitability.”

However, the utility has faced increasing pressure from the City of San Antonio, the rate advisory committee, and its residential ratepayers to lower any rate increase. With many residents struggling to resume paying their utility bills due to economic disruptions caused by the coronavirus pandemic, community advocates have been vocal about their opposition to a rate increase this year. The utility is owed about $141 million in delinquent accounts after it suspended disconnections for nonpayment from March 2020 to October of this year.

During CPS Energy’s regularly scheduled board of trustees meeting in August, the utility’s top officials broke down the multitude of issues driving CPS Energy’s need for a rate increase. Included on that list was a need for technology and security improvements, a need to invest in the utility’s shrinking workforce, continuing city growth, and an obligation to replace aging infrastructure. These necessities were further magnified by the coronavirus pandemic and winter storm, Kuchinsky said at the time.

“We’ve always been refining the number to make sure everything we need covered is taken care of and that we can support customers,” Patmon said. “It’s an ongoing process. We said at the beginning what we would do is give everyone the high number, and we’ve been refining that since.”

Any rate increase would need first to be approved by CPS Energy’s board of trustees and then by the City Council to go into effect for the utility’s next fiscal year. CPS Energy’s unusual fiscal year runs from Feb. 1 to Jan. 31. Its $2.7 billion budget for fiscal year 2022 was approved by trustees in July with an unspecified provisional rate increase written in.

Wednesday’s briefing before City Council also is expected to detail how CPS Energy plans to pay back the $418 million in “legitimate costs” it doled out to pay for fuel costs from February’s freeze, Patmon confirmed.

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.