CPS Energy will create its first committee to meet in public to examine its electric and gas rate structure and make recommendations to the utility’s board.
At their December meeting Monday, CPS Energy board members approved a 21-member Rate Advisory Committee (RAC). It will include 11 people appointed by the CPS Energy board (including Mayor Ron Nirenberg) and one from each of the 10 City Council districts. The utility expects to spend nearly $1 million on the effort over this year through early 2022.
“This allows us to examine how rates are built to ensure that we are being accountable to the public’s priorities, such as affordability, environmental stewardship, and reliability,” Nirenberg said.
The creation of the RAC comes ahead of a likely request by CPS Energy officials in 2021 for the utility’s first rate increase since 2013, when City Council approved a 4.25 percent hike. CPS Energy has struggled with declining revenues and a ballooning number of customers behind on payments due to the coronavirus pandemic.
The committee also reflects the fight over the future of energy and climate action in San Antonio. City Council voted in October 2019 to effectively abandon fossil fuels by 2050, though CPS Energy officials warn of rolling blackouts and rate spikes if they close the utility’s coal and natural gas plants too early.
The 4-1 vote concludes a yearlong standoff between Nirenberg and trustee Ed Kelley, who voted against the RAC on Monday and has opposed it since the mayor first began pushing for the committee in January. At the meeting, Kelley said the RAC will increase the “bureaucratization and politicization of this company, which leads to mediocrity.”
Kelley has characterized the RAC as a “Trojan horse” for activists campaigning for the utility to speed its transition away from fossil fuels. Environmentalists have long been pushing for such a public committee, in contrast to the utility’s Citizen’s Advisory Committee, which meets privately.
Meanwhile, a smaller group of activists is gathering signatures for the Recall CPS petition, which would eliminate the utility’s board of trustees and replace it with direct City Council oversight, among other reforms.
“We have people who are standing on the sidelines, who have never played in the game at all, trying to tell us how to run the utility,” Kelley said Monday.
According to the committee’s bylaws, RAC members will represent the following categories:
- San Antonio city council districts within the CPS Energy service area
- Areas outside the San Antonio city limits but within the CPS Energy service area
- Each CPS Energy customer class, including residential, commercial, government, and industrial
- Neighborhood associations
- Multifamily residential customers
- Major manufacturers, large businesses, small businesses, medical providers, and land developers
- Professional planning, economic development, environmentalist, conservation, and community advocacy groups
A technical advisory committee involving utility staff, consultants, and other experts would guide the committee through complex issues and compare CPS Energy’s rates to those of other similar utilities, Carolyn Shellman, CPS Energy’s general counsel and the top staffer in charge of the RAC process, said Monday.
“Using a rate consultant, at least in the initial year or so of this committee, would give us someone with knowledge of rate structures all across the country,” Shellman said.
Shellman, her colleagues, and City officials designed the structure to be similar to the San Antonio Water System’s Rate Advisory Committee, which meets roughly every five years to examine water and sewer rates. CPS Energy’s RAC will meet at least four times a year on an ongoing basis, with volunteers serving up to three two-year terms.
One controversy over the past several months has been the cost of three consultants CPS Energy staff say they need for the RAC. The utility plans to spend a total of $150,000 for one consultant to organize and broadcast the virtual meetings, $102,500 for another with a familiarity with San Antonio to lead the discussions themselves, and $199,860 for a rate consultant with utility experience.
CPS Energy received responses from 11 consultants in response to its request for proposals, a list it has narrowed to five, according to Shellman. The utility listed the 11 respondents in its December meeting documents, though not the five finalists.
“If you vote in favor of [the RAC] today, we will go ahead and select a rate consultant, Shellman said.
Including other costs such as advertising buys and CPS Energy staff hours, utility officials plan to spend nearly $1 million on the RAC over its current fiscal year, which ends in January, and its next, which extends from February 2021 to January 2022. CPS Energy President and CEO Paula Gold-Williams told board members that the utility’s staff needs the resources to make the RAC successful.
“This is a monthly commitment of multiple hours that has to be done,” Gold-Williams told board members. “The organization is already under a tremendous amount of stress trying to handle [COVID-19], trying to stay on top of other things, and we need help.”
Officials have not yet released some of the finer details about the application and appointment process. During the meeting Monday, trustee Willis Mackey asked how he and his colleagues will be able to choose members.
“The way the board does it is up to the board,” Shellman said, adding that the utility would “advertise broadly to encourage people to apply.”
Also on Monday, the board unanimously approved a nomination of Chair John Steen, who represents the northeast quadrants of CPS Energy’s service territory, for a second five-year term. Steen, an attorney and former Texas secretary of state, began serving on the CPS Energy board in February 2016, with his first term ending Jan. 31.
Steen’s appointment now heads to City Council, where a vote to confirm him has not yet been scheduled.
Disclosure: CPS Energy is a financial supporter of the San Antonio Report. For a full list of business members, click here.