For the first time in eight years, CPS Energy ratepayers will see their electricity bills go up after the San Antonio City Council approved a 3.85% rate increase and the creation of a new monthly fee for the utility Thursday in a split vote.
The council voted 8-3 to OK the 3.85% base rate increase and 9-2 to institute the new fee.
Council members Mario Bravo (D1), Phyllis Viagran (D3), Adriana Rocha Garcia (D4), Melissa Cabello Havrda (D6), Ana Sandoval (D7), Manny Pelaez (D8), John Courage (D9) and Mayor Ron Nirenberg voted in favor of the base rate increase while Jalen McKee-Rodriguez (D2), Teri Castillo (D5) and Clayton Perry (D10) voted no. Perry was the sole council member who flipped his vote when it came to the pass-through fee.
Commercial and residential ratepayers of the municipally owned utility will see the higher rate and monthly fee on their bills starting in March after the CPS Energy board of trustees’ unanimously approved the increase during a special meeting Monday. The last rate increase of 4.25% came in 2014.
Customers with an average bill of $150 will pay roughly $5.10 more each month — $3.84 in base cost, plus a $1.26 pass-through fee. The pass-through fee will help CPS Energy recover $418 million it has already paid in fuel costs from the winter storm in February 2021.
“Today’s vote culminates an exhaustive process arriving at what the utility truly needs. This request covers the basics and does not add any extras,” Nirenberg said. “Through the city’s partnership with CPS, we are ushering in a new era of accountability. … We don’t make this decision lightly.”
Prior to Thursday’s vote, the city’s chief financial officer, Ben Gorzell, reiterated that the increase will help CPS Energy meet immediate financial needs, such as replacing aging technology, addressing an employee shortage and keeping pace with city growth.
CPS Energy interim CEO Rudy Garza told council members he understands the timing is never right for a rate increase, “but if we don’t do this, now there’ll be greater negative impacts in the future.” The move will help CPS Energy raise $73 million next year to begin addressing its urgent needs, Garza added.
The rate increase comes as the utility is seeking a new CEO following the departure of Paula Gold-Williams and faces lingering questions about preparedness for another severe weather event, poor communication during last year’s storm, profligate spending by some executives, and a steady exodus of executive-level personnel.
Since May, CPS Energy has discussed the need for a rate increase with its trustees, City Council and the public. Over the past two years, the utility has endured pandemic and winter storm-related financial hardships; it is still owed roughly $146 million from outstanding customer account balances. While CPS Energy seeks to recover the $418 million in energy costs from Winter Storm Uri from customers through the new fee over the next 25 years, the utility is fighting in the courts to keep from paying gas and fuel providers more than half a billion dollars in what it calls “illegitimate” costs from the storm.
The utility also was given a negative outlook in October by ratings agency S&P Global, in part based on statewide uncertainty stemming from the winter storm.
Courage, the chairman of the council’s Municipal Utilities Committee, and Nirenberg both expressed strong support for the increase. Courage said noted the utility has low-income programs in place that it has expanded in recent months.
“We need to have a stable, safe and reliable source of energy for all of us,” Courage said. “We need to provide this financial shot in the arm so CPS will continue to meet our energy expectations.”
Last week, McKee-Rodriguez told the San Antonio Report he cannot support asking his constituents to pay more when they are struggling financially, and that he feels CPS Energy’s public outreach efforts have not been sufficient.
“My constituents make less than 5% of [a CPS Energy executive],” he said Thursday. “There is a shortage of people on this dais listening to constituents and saying, ‘I’m going to vote on behalf of people making $18,000 a year.'”
Perry said he feels now is the worst time for a rate increase.
“There are better times than right now,” Perry said. “We have COVID, we have rising inflation, we have rising property taxes, a loss of jobs and wages — all of this is really impacting a major sector of SA. We are one of the poorest large cities in the U.S. and yet we keep piling on these increases on people that can’t afford it.”
A motion made by Castillo to delay the rate increase by one year failed in a 3-8 vote. Rodriguez, Castillo and Perry voted in favor of the delay.
Before the vote, a dozen protesters gathered outside council chambers Thursday morning with posters and a bullhorn to express their opposition to the rate increase, arguing the utility did not give the public sufficient time to voice opposition. Several of these protesters also spoke directly to the council during the meeting’s public comment period.
“Right now, this increase is being presented as a solution to things like infrastructure resiliency and growth,” said Aaron Arguello, MOVE Texas Bexar advocacy organizer. “But we should be clear that the current rate structure is the problem, not the solution. To put it plainly, they should not be raising rates right now. Rather they should be reforming the deeply inequitable rate structure that currently exists.”
Bravo and Cabello-Havrda voted for the rate increase but had said their support was conditional. Bravo said he’s spoken with CPS Energy’s Garza and has been reaching out to the utility’s trustees about launching an independent study by a third party into CPS Energy’s affairs. Last week, Havrda formally requested the utility conduct a third-party audit examining the organization’s finances and management practices. Members of the local chambers of commerce also said during the public comment period they supported the rate increase, hinging on a third-party investigation.
Garza assured council members that he and CPS Energy would welcome a third-party investigation and more oversight and accountability from the city.
CPS Energy officials have said approval of the rate increase will allow it to stabilize its staffing needs and give it enough security to start having more discussions about its power generation portfolio, something members of the community have been demanding. They have signaled the utility plans to have more frequent rate increases from now on, to address more long-term issues.
Now that the rate increase has passed, community advocates will demand with more fervor that the utility takes a look at its rate structure before any future increases, said Dee Dee Belmares, a San Antonio-based climate organizer with Public Citizen, and a member of the utility’s Rate Advisory Committee, which was formed last spring and voted in favor of supporting the rate increase last month.
“As a [Rate Advisory Committee] member, I take my role seriously and to heart, and with a 12-for, six-against, and two-abstaining vote, that’s hardly a mandate for the creation of this increase,” Belmares said of the committee vote. “However, I’m hopeful as the [Rate Advisory Committee] moves forward that we will look at the rate design and find a way to shut down the Spruce coal plant.”
CPS Energy is a financial supporter of the San Antonio Report. For a full list of business members, click here.