With the utility under severe financial stress due to mounting operational costs, CPS Energy trustees voted last week to perform an analysis on its Save for Tomorrow Energy Plan (STEP), which has come under increasing scrutiny from trustee Ed Kelley over the past several months for costing the utility money.
While STEP is slated to continue through July 2022, this analysis may spell the beginning of the end for the utility’s energy-saving program, which has cost the utility about $70 million annually since it kicked off in 2009. STEP, which aims to save the utility energy by incentivizing CPS Energy customers to invest in greener technologies, has conserved roughly 926 megawatts since its launch. One megawatt is enough to power about 200 Texas homes on a hot summer day.
The original goal of STEP was to reduce the city’s electricity demands by 771 megawatts by 2020 — the amount needed to avoid building another local power plant. The program met its goal early in 2019 and moved its target to 845 megawatts in total energy savings.
“It’s not that I don’t think it hasn’t done some good work, but I think it’s served its purpose,” Kelley said. “It was put in place [about] 12 years ago … with a specific set of parameters in terms of what it would cost, how many kilowatts it would save, etc. … and all of the objectives of the program have been fulfilled.”
In January 2020 CPS Energy extended STEP, renaming it STEP Bridge and adding an additional year and 75-megawatt savings goal. This past January, STEP Bridge was extended until July 2022 to give the program time to overcome COVID-19-related impacts. But does CPS Energy need to keep putting raterpayers’ funds into STEP, even after CPS Energy met its original goals? Kelley said his intention behind asking for the analysis is to answer that very question.
Staff have begun planning the analysis and hope to bring the results forward to the board of trustees by the end of 2021, said Chief Customer Engagement Officer Rudy Garza. The analysis will include a history of STEP, a breakdown of the programs under it, and a return-on-investment analysis, Garza said.
CPS Energy will utilize its own employees and possibly a third party to help with the analysis, Garza said. Garza said in-house work will be led by Rick Luna, director of technology and product innovation, who helps manage the programs under STEP.
“We’re going to show how the programs that we put together have really worked to change customer behavior,” Garza said. “Programs [under STEP] have changed over time as the market has changed, as customer behavior has changed, so we’ve got to show [the board] … the [return on investment] on the programs that we’ve sponsored.”
Programs under STEP include rebates for weatherization, appliances, and even energy-efficient light bulbs. Roughly one out of four CPS Energy customers has utilized a STEP program since it launched, Garza said.
Over the past several CPS Energy board meetings, dialogue surrounding STEP has grown more contentious as the utility prepares to announce a rate increase. In July, Kelley called the program “stupid” and equated it to charity funds unknowingly taken from ratepayers.
In the estimated 9.6% to 10.6% rate increase CPS Energy is considering, 1.7% of that is funding is for STEP. Because City Council approved extending STEP through next July, those funds are already locked in CPS Energy’s annual budget, Garza said.
Garza said he’s aware this analysis may lead to the end of STEP “as we know it” but that he and others at CPS Energy are dedicated to helping San Antonio become more energy-efficient in the future. There are long-term benefits to becoming more energy-efficient, and while it might look like STEP is costing CPS Energy money in rebate programs, those programs are saving the utility from needing to provide more megawatts, which saves it money, Luna said.
“You have to distinguish between the short-term costs and the long-term benefits, so I think Mr. Kelley is pointing out that if we didn’t do STEP it would lower the bill impact,” Luna said. “But the benefits come over time, and take time to materialize, and everyone gets the benefits of that.”
Mayor Ron Nirenberg told the San Antonio Report that while he’s interested in the results of the analysis, STEP is a “proven cost-saver.”
“STEP reduces energy demand and emissions while benefiting lower-income residents in particular,” he said. “I have supported STEP since I was a council member and still do.”
Since its inception, City Council District 2 has seen the largest return on investment from STEP. Councilman Jalen McKee-Rodriguez said he is supportive of continuing STEP and believes the program has “provided necessary, much-needed conservation incentives for the District 2 community.” Out of the roughly $340.3 million returned to the community through programs under STEP between fiscal years 2009 and 2021, $41.6 million of that was put back into District 2, according to CPS Energy data.
With his second five-year term up in January 2022, Kelley said he understands the program might be renewed after he’s left the board and that the analysis is so his successors can see if STEP is worth the costs.
“I’m not trying to make something happen overnight,” he said. “I’d be OK with it running through the end of its current term. What I’m calling for is a plain piece of paper where we would sit down and ask ourselves, ‘Why are we doing this? Do we need to keep doing it? Is there a better way to do it?’ I think it’s time for the program to now be exposed to a bright light and see if it’s something we need to continue to do.”
Disclosure: CPS Energy is a financial supporter of the San Antonio Report.