San Antonio Water System will be paying millions more than it originally estimated for backup generators aimed at fortifying its system against major power outages, such as those seen during the February 2021 freeze, staff told the utility’s board of trustees Tuesday.

The water utility’s five trustees unanimously approved a contract for roughly $155 million to Wampole-Miller Inc. for the installation of natural gas generators at critical pump stations.

In 2022, SAWS and CPS Energy announced they would be partnering to connect SAWS’ most critical pump stations to backup generators. This would ensure the utility has enough power to keep water running during a major power outage, such as those seen during Winter Storm Uri, which saw pipes across the city freeze and limited residents’ access to water.

Following state orders that utilities fortify their systems against severe weather conditions, SAWS was tasked with procuring and installing backup generators, which its staff estimated would cost $97 million in 2022, and $137 million earlier this year. However, SAWS staff told its trustees the new bid price will be closer to $155 million — a 12.4% increase from the engineer’s latest estimated construction cost.

The reason that estimate has swollen over the past year and a half is due to a couple of different factors, said Andrea Huizar Beymer, SAWS’ chief operating officer. Beymer pointed to the rising costs of construction materials and the complexity of the project.

“The cost of materials is up, particularly for electrical components,” she said.

Because this project mixes the construction of utility-sized electricity and water systems, it’s extremely complicated, which also meant SAWS received only two bidders interested in actually constructing the project, Beymer added. Less competition means a higher cost, she explained.

“The reason we’re having to do this is because the grid was at capacity during Uri,” said David McGee, one of SAWS’ trustees and the CEO of Amegy Bank for the Central Texas region. “It nearly failed, and we had to take some of our pump stations offline. So this is a business continuity move to protect ourselves against those types of events in the future.”

To do so, SAWS proposed two projects. The first project would be to connect 15 of SAWS’ 36 critical pump stations to natural gas backup generators. The other 21 will later be connected to diesel-run backup generators.

Earlier this year, SAWS’ board approved purchasing the natural gas generators and electrical equipment from Enchanted Rock Electric for $62 million. SAWS issued a request for proposals in September looking for a contractor to install the generators and equipment and selected local utility construction company Wampole-Miller, known as Miller Bros. The installation costs will be roughly $93 million, said Saqib Shiraz, SAWS’ manager of operations support engineering.

Shiraz added the project’s design engineer will be the global engineering company Black & Veatch and construction will take one to two years. CPS Energy will be responsible for operating and maintaining the generators, which will allow the electric utility to operate the generators at any time it deems it beneficial. CPS Energy plans to sell the energy generated back to the grid to help SAWS pay for the generators.

SAWS officials said they are still calculating exactly how much of the project’s cost they expect to recover.

Trustee Eduardo Parra said he is hopeful SAWS can get back funds from the deal with CPS Energy to help the utility keep its spending low. He said this deal is an example of the benefits there are to a city owning both its water and electric utilities.

“I don’t think there is a deal put together like this in Texas,” Parra said. “This is a state mandate that we had to react to, and [SAWS and CPS Energy] did it in the most cost-efficient way for our taxpayers. They did it in such a manner that we’re … spending this money, but we can get money back from CPS [Energy] while using it.”

CPS Energy is a financial supporter of the San Antonio Report. For a full list of business members, click here.