CPS Energy had enough financial flexibility to push its rate increase down the road, the public utility’s staff told its board at meeting Monday, after $170 million in incentives and other savings helped close its budget gap.
“We had unexpected favorable circumstances this year that allowed us to navigate this year without a rate request, but we expect that we will need to have that conversation for next year,” Chief Financial Officer Debra Wainscott told the utility’s board.
CPS Energy received a $115 million nuclear production incentive from the federal government. Shifting the timeline for a study of transmission cost of service could have a roughly $50 million positive impact on CPS Energy’s transmission revenue. The utility is also expecting to save $5 million on debt payments because of lower-than-expected interest and premiums.
That’s balanced against financial headwinds that have hit CPS Energy this year. The utility is already expecting a shortfall of at least $50 million.
Milder weather this year led to a $40 million shortfall in retail energy sales and a $100 million shortfall in wholesale revenue. Meanwhile, storms and outages added $20 million to $30 million in extra costs.
The idea of a rate increase has loomed since CPS Energy presented a budget with a $50 million shortfall in March. That set off discussions in the community and with the City of San Antonio, which owns the utility, on whether rates should be increased.
CPS Energy officials put the issue to bed earlier this month, when the utility announced it would not change rates.
In a press release, officials cited affordability pressures on residents as the reason.
CPS Energy originally planned to request rate increases every other year beginning in 2021, but it hadn’t implemented a request since 2024.
Mayor Gina Ortiz Jones serves on CPS Energy’s board. She confirmed the utility’s infrastructure needs did not necessitate a rate increase.
“If the infrastructure needed it, CPS would have asked for it. Correct?” Jones asked.
“We were able to get to a point where we do not need it this year,” confirmed Interim CEO Frank Almaraz.
Wainscott said CPS Energy uses a variety of metrics to track its budget and decide when it needs to ask for a rate increase. Large utilities like CPS Energy often need to borrow money for large projects and need to show good financial standing to borrow enough money at lower interest rates.
“The fact that we didn’t go for a rate request is still putting pressure on our metrics,”
Wainscott said. “We’re pushing the top of that range here. So it’s still very, very challenging.”
