The next CEO of CPS Energy, unlike departing CEO Paula Gold-Williams , will not come from inside the organization. Wanted instead: a capable, willing outsider who can rebuild the depleted executive team, win back public confidence, and navigate the storm of major challenges confronting the energy utility.
Who among the truly qualified will want the job?
Gold-Williams’ planned departure in early 2022 was made public in a Wednesday press release that did not specify a date, but she likely will leave around the time longtime trustee Ed Kelley completes his final term on the board at the end of January. Kelley will be replaced by University of Texas at San Antonio professor and department chair Francine Romero, assuming City Council ratifies her selection at its meeting Thursday.
Romero was narrowly chosen from a pool of four finalists by a 3-2 vote of the trustees earlier this month. That divided vote was emblematic of the discord and defensiveness that has characterized executive and board operations for some time now.
The near-failure of the state’s electrical grid during the February winter storm and the executive team’s lack of public presence at a time when San Antonio residents were left freezing at home has rattled public confidence in the utility, evident in the most recent BexarFacts/KSAT/San Antonio Report poll.
The utility is litigating hundreds of millions of dollars in energy costs from the Electric Reliability Council of Texas (ERCOT), the operator of the state’s power grid, and natural gas suppliers during and after the storm, beyond the estimated $450 million in “legitimate” charges that will be passed along to customers. While the outcome is unknown, everyone I’ve spoken to believes the best-case scenario could add hundreds of million of dollars in liabilities to the utility’s books.
As the pandemic ebbs, 118,000 residential accounts are past due, with 76,000 eligible for disconnection as of Oct. 1. Service interruptions as colder weather approaches will prove to be very unpopular. A significant write-down of bad debt seems inevitable.
Utility officials, meanwhile, have been discussing a 10.6% rate increase in 2022 after eight years without one. City Council, in my view, is unlikely to approve such a request in the space of a single year. The utility, at least on paper, faces an eventual budget deficit.
The executive team, at least what is left of it, is in shambles.
Only four months after Gold-Williams promoted him to become the utility’s second highest executive, Chief Operating Officer Fred Bonewell resigned last week after being put on administrative leave for lavish spending and making a racially disparaging remark in a meeting about “Mexicans.”
Gold-Williams reportedly had “direct conversations” with Bonewell about the substantiated complaints, but that appears to be the extent of his punishment. That in-house scolding proved to be inadequate. What was Gold-Williams thinking when she promoted him, knowing his expense account profligacy had been a media topic for at least two years?
Months earlier, in June, Carolyn Shellman, the utility’s chief legal officer and general counsel, and her two key deputies, abruptly resigned. The municipal utility has been the target of open-government advocates for its lack of transparency and no explanation was offered by Gold-Williams for the departures.
Logic would suggest internal discord, with the departing lawyers allegedly lodging complaints against Gold-Williams in the wake of the winter storm. The utility’s lack of transparency leaves much to still be learned here.
In March, the utility’s previous chief operations officer, Cris Eugster, left to become CEO of a national power generator located in Washington state. His resignation left the utility without its most seasoned executive responsible for the utility’s diversification into renewable energy sources.
In his 12 years at CPS Energy, Eugster served as a force for clean energy, significantly expanding the utility’s solar products and energy efficiency programs. He spearheaded its FlexPower Bundle, a plan to replace aging natural gas power plants with solar and batteries.
Since his departure, CPS Energy has seemed less focused on expanding renewables and accelerating its move away from coal.
CPS Energy is on the defensive. There is no overstating its importance. Its operations are essential to providing the San Antonio region with reliable, affordable energy, and its revenues are crucial to the city of San Antonio’s annual general fund. The necessity to respond to global warming and climate change should take on a sense of urgency that has been lacking.
Finding the right new leader will be crucial, but it won’t be easy.