One of the most powerful unelected positions in the public service realm is CPS Energy trustee. The importance of that job has been magnified by the extended pandemic, Winter Storm Uri in February, and the incontrovertible challenges posed by climate change.
Retired USAA Real Estate executive Ed Kelley, the Quadrant 1 trustee, will complete his second five-year term at the end of January 2022 and is term-limited. CPS Energy, the biggest municipally owned natural gas and electric company in the country, is a very different enterprise now than the one Kelley first joined a decade ago.
How Kelley’s successor is chosen in the next 30 to 60 days from a pool of 26 qualified applicants is of considerable community interest. It presents an opportunity to test leadership’s commitment to greater transparency and to ask whether the process itself is the best possible way to identify and select individuals for leadership positions.
As the outgoing trustee, Kelley presides over a two-person nominations committee, along with Quadrant 3 trustee Willis Mackey, a retired educator. The two trustees will review the applications and reduce the list of candidates to a lesser number. The board of trustees will then interview the finalists in an executive session closed to the public.
Mayor Ron Nirenberg, as a voting trustee, will take the name of the sole finalist to City Council for approval. The new trustee will be eligible to serve for two five-year terms. The trustee can be removed only by a vote of the other trustees.
“I think we have a pretty good cross-section of candidates, whereas in the past, to be honest, it’s been difficult to get many applicants,” Kelley told me Wednesday. “One time in the past we had to extend the application period to get candidates, so from my perspective I am happy with 20 or so applicants. That’s a pretty good pool, some more qualified than others. It’s a good process, it’s a fair process.”
Most of us don’t get a big say in who replaces us, which makes the nominations committee headed by an outgoing trustee unusual. CPS Energy has released the names of the applicants, so the public can now assess the candidates, but that transparency should carry through the entire selection process. The board interviews with finalists should be open to the public.
I asked Nirenberg to comment on how he views the traditional selection process, and whether he wants to change it.
“I am focused on getting the best qualified community representative possible on the CPS Energy board,” Nirenberg said in a statement. “The process to select the next board member already is underway, and in fact, the application period has concluded. A debate on process changes would distract us from the job at hand. That discussion would be more appropriate at a time when it would not impede an ongoing appointment.”
Setting aside the contentious issue of climate change and the utility’s difficult choices associated with the city’s Climate Action and Adaptation Plan approved in 2019, the immediate financial challenges are formidable.
As Lindsey Carnett reported in an Aug. 30 article, the utility faces about $110 million in past-due bills after more than one year of suspended service cutoffs during the pandemic. It faces $1 billion in fuel costs from Winter Storm Uri, costs the utility is contesting in a lawsuit that contends for-profit energy providers forced utilities to pay catastrophic sums for power during the crisis. The best outcome there might be a negotiated settlement, one that will still come at considerable cost to ratepayers.
The utility’s monthly rate increase could range from 9.6% to 10.6%, meaning the average customer would face a monthly increase of $10 to $15, according to CPS Energy Chief Financial Officer Cory Kuchinsky. The utility’s last rate increase of 4.25% went into effect in 2014.
“We’ve had a decade … of cost control, but at this point, a rate request is going to be critical to supporting our daily operations,” Kuchinsky said. “Recognize we are continuing to work [that] down best we can.”
Even with a rate increase of, say, 10%, the utility will have to cut operating costs to break even next year. The utility’s 2021 budget calls for $365 million in payments into the City of San Antonio’s general fund, about 30% of the total. The utility’s welfare impacts the entire city’s welfare.
Serving as a trustee is thankless work, with deeply divided interest groups pushing from all sides. It’s also very important work. That makes the choice to replace Kelley a critical one.