CPS Energy’s new proposed rate increase is just over a third of the original amount floated by officials over the summer, but if approved, it will only bring in enough new money to cover the utility’s most immediate needs.
That means customers could see additional rate increases more often, CPS Energy’s interim CEO told the San Antonio City Council on Wednesday as part of a briefing on the lower proposed increase and the creation of a regulatory asset to pay for more than $400 million in Winter Storm Uri costs.
The council’s approval of that asset will allow CPS Energy to pass those costs along to customers over the next 25 years, in the form of a $1.26 monthly fee on monthly bills.
The council will officially consider the rate increase and asset creation request in January.
Despite officials’ in-depth presentation explaining the utility’s needs, at least two council members were resistant to the idea of any rate increase at all next year.
Councilman Jalen McKee-Rodriguez (D2) raised concerns about customers who can’t afford their utility bills now, much less with the addition of an estimated $5.10 — the amount CPS Energy has said the “average” customer with a $150 monthly bill would face if the rate increase and winter storm fee are approved.
Councilman Clayton Perry (D10) protested the timeline, stating council needed more time to understand the rate case.
“It’s going to take a heck of a lot of explaining to my district,” Perry said. “I don’t know about the other districts, but to get this done in a month’s time, in a little over a month? No, I’m not going to accept that.”
But others, such as Councilwoman Adriana Rocha Garcia (D4), and Councilman Mario Bravo (D1) said they understood where the utility was coming from after not seeking a rate increase for almost a decade.
The trimmed-down increase will generate roughly $73 million and will cover weatherization investments through 2023, the $418 million it’s already paid in “legitimate” costs from Winter Storm Uri, hiring needs and a new software system, interim CEO Rudy Garza told the council.
“This is a pared-down version of where we started,” Garza said. “It really includes the investments that we have to make [now].”
Hiring is one of those immediate needs. The utility is facing the largest gap it’s ever had between the number of customers it serves and the number of employees to serve them. Over the next five years, CPS Energy could lose up to half of its 3,000-member workforce, with one out of every two employees becoming eligible to retire by 2026.
“We need 3,300 employees to manage our system. We’re down around 2,900, and we’re losing folks today because we’re not competitive in the market,” Garza said. “The market has passed us by … [and I’m not] talking about the executive team, we’re talking about the folks who operate our system.”
The rate increase will also fund an upgrade to its 22-year-old enterprise resource planning software, which allows the utility to organize its in-house communications, data, and tracking functions.
It’s no secret San Antonio’s population is growing, Garza said. An estimated 20,000 new customers come online each year, and with the city’s ongoing sprawl, investments into infrastructure have to be made, Garza said.
Not covered by the increase would be the disputed $580 million in winter storm fuel costs CPS Energy is fighting in court, the cost of future decisions around CPS Energy’s generation portfolio, nor any rate design changes, Garza told council members.
Putting these needs on hold will also give CPS Energy time to collect more public input from its Rate Advisory Committee and residents, CPS Energy’s Chief Finacial Officer Cory Kuchinsky told reporters Tuesday.
To cover these other costs plus normal market inflation, CPS Energy will likely make smaller annual or biannual rate increases the norm in the future, Garza said.
“I think that’s the path we’re going to try to put the company on,” Garza said.
In response to Perry’s timeline critique, Garza said the utility must keep moving forward.
We’re going to do everything we can to do our part to get there,” Garza said.
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