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CPS Energy did not request a rate increase for its customers Monday during its regularly scheduled board meeting, but it “is an inevitability,” CEO Paula Gold-Williams told reporters before the meeting. She said the increase could come as soon as this fall.
According to options being considered by CPS Energy, customers could see their monthly bills go up between 6.5% and 9.5%. That would be $9.70-$14.60 per month for the average customer. CPS Energy’s board of trustees and City Council would have to approve the city-owned utility’s increase before it took effect. Should CPS Energy decide to implement a rate increase, it would be the first such request since 2013, when City Council approved a 4.25% hike.
Still struggling with the financial ramifications of the coronavirus pandemic and the historic winter storm that greatly impacted the state’s power grid in February, the utility is “trying to optimize [existing] revenues” to save money, Gold-Williams said.
CPS Energy’s efforts to keep costs and rates down have included refinancing debt, which Gold-Williams claimed has saved CPS Energy hundreds of millions of dollars over the last five years. Gold-Williams said the utility will continue to seek other options before requesting a rate increase and that CPS Energy is aware that the timing is not ideal for many San Antonians.
“We understand the gravity of the situation – here we are in a very difficult year trying to come out of the pandemic,” she said. “Storm Uri [has complicated] the issues. I think the economy is just wanting to come back, but we’re not there yet. It’s … poor, poor timing.”
Following the onset of the coronavirus pandemic in March of last year, CPS Energy stopped shutting off customers’ accounts for nonpayment, which has resulted in about $100 million in delinquent accounts, Gold-Williams said. With record high temperatures expected in Texas this summer, CPS Energy plans to continue its disconnection moratorium for now, Gold-Williams said.
What’s the rationale for a rate increase?
Drivers behind the potential rate increase include San Antonio’s exploding growth and the increasing total of past-due bills, according to a presentation Monday by CPS Energy’s new Chief Financial Officer Cory Kuchinsky.
An increase of 1% to 2% would stem from the gathering expenses from these past-due bills, and another 4 to 4.5 percentage points would come from CPS Energy’s operations and maintenance costs as San Antonio continues to grow, according to the presentation.
Winter storm Uri could account for an additional 1.5% to 3% increase, according to the presentation, although Mayor Ron Nirenberg told his fellow trustees Monday that he wants to see that projection at zero.
“I certainly want to send a message to the community that we’re going to be working through that to make sure that [cost] is not saddled on CPS and therefore saddled on us,” Nirenberg said.
In March, CPS Energy filed a lawsuit against the Electric Reliability Council of Texas (ERCOT), accusing the grid operator of charging excessive and illegal prices during the storm. The utility also filed suit against 16 natural gas suppliers, which it similarly accused of “opportunistic price gouging” after prices spiked roughly 16,000%.
Those prices, which have cost the utility more than $1 billion, were charged when CPS Energy bought power from ERCOT after its own power plants failed to perform in the cold conditions.
Even before the impacts of the winter storm, CPS Energy’s need for a rate increase had been building, Kuchinsky said. CPS Energy leaders have been foreshadowing the need to raise rates for the past three years but haven’t yet made a case to City Council.
“Eventually, it is an inevitability that [we] have to [increase rates] to sustain operations,” Gold-Williams said. “You can’t go to the grocery store and always pay the exact same prices as you did seven years ago.”
Protesters have their say
Earlier Monday, about a dozen protesters stood outside of CPS Energy’s new headquarters in downtown San Antonio.
Three of the protesters unfurled a large “no rate hikes” banner from a parking garage skywalk. The protesters below chanted the same, hoping to catch the attention of any CPS Energy trustees as they walked into the building for their meeting.
After beating down an empty piñata shaped like a coal power plant, the protesters, including advocates from MOVE Texas, the Tenants Union of San Antonio, the Southwest Workers Union, and Public Citizen, took to a microphone one by one to air their grievances surrounding rate increases, the resumption of disconnections, and CPS Energy’s continued use of the J.K. Spruce coal plant.
“We’re here because each of us owns a part of CPS Energy,” said Lexi Garcia, a Texas Rising organizer. “However, as residential community ratepayers, we are being used to subsidize the rates of the city’s biggest polluters, and all the while our families, neighbors, and the working poor of San Antonio are faced with the threat of disconnections for nonpayment.”
“We have to continue to push back and make sure that CPS hears us and does not continue with disconnection,” said Erica Alvarado, a member of the Tenants Union of San Antonio.
Discussions around the possibility of a rate hike Monday were for the sake of transparency, rather than to start the formal increase process, Gold-Williams told reporters.
“What we are trying to do is be transparent and tell people what we see,” she said.
CPS Energy is a financial supporter of the San Antonio Report. For a full list of business members, click here.