One of San Antonio’s true strengths is the performance and stability of its municipally owned energy utility, CPS Energy. That’s why city officials have rushed to battle the potentially “catastrophic” Senate Bill 1110, authored by Sen. Charles Schwertner (R-Georgetown), who chairs the powerful Senate Committee on Business and Commerce.
The bill is yet another attempt by state legislators to limit the authority of home rule cities to self-govern. In this case, the proposed legislation would limit or block energy utilities from contributing funding to municipal general budgets. It’s a bill that pretends to address a problem that does not exist.
Schwertner’s Tuesday committee hearing on the bill drew a strong warning from Ben Gorzell, the City of San Antonio’s respected chief financial officer, who testified, “SB 1110 would cause a catastrophic loss in revenue that would negatively impact services to our community, the city’s bond credit ratings and capital programs.”
Dave Peterson, the interim president and CEO of the San Antonio Chamber of Commerce, also testified at the hearing in defense of the city-owned energy utility, which has served San Antonio well since its acquisition in 1942.
Click here to view the committee’s hearing. The discussion of SB 1110 begins at the 0:18:45 mark.
CPS Energy not only provides a diverse portfolio of energy at a cost below what ratepayers experience in most other Texas cities, it also contributes up to 14% of its annual revenues to its shareholders, the citizens of San Antonio, in the form of a direct contribution to the city’s $1.5 billion general fund budget.
For more than 80 years now, the utility has bolstered a city budget otherwise limited by San Antonio’s high rate of poverty, allowing the delivery of city services that would be seriously curtailed without the annual funding.
To put that contribution in context, for the current fiscal 2023 year, the city will get 25.9% of its general funds from CPS Energy, while sales taxes contribute 25.6% and property taxes account for 28.8%. The utility’s contribution of $391 million to this budget, if blocked or curtailed subject to state control, would be impossible to replace.
One of Texas’s true weaknesses is its vulnerable energy grid and the absence of true regulatory oversight, which led to widespread blackouts during Winter Storm Uri in February 2021 that cost the lives of hundreds of Texans. That perfect storm left CPS Energy and other energy utilities around the state saddled with billions of dollars in debt from astronomical natural gas and electricity charges incurred during and after the storm.
CPS Energy is a leading plaintiff in one of many post-Uri lawsuits filed against the nonprofit Electric Reliability Council of Texas (ERCOT), the state-controlled power grid operator, which argues it should enjoy “sovereign immunity” granted to state agencies, despite the fact it is not part of state government. The matter is now before the Texas Supreme Court.
Meanwhile, the state’s Public Utility Commission (PUC), which oversees ERCOT, suffered a surprising, Uri-related setback last week when the Austin-based Third Court of Appeals ruled that the PUC exceeded its authority during the height of the storm, when large sectors of the state lost electrical power, by raising the price of electricity to the maximum $9,000 per megawatt-hour.
Billions of dollars in costs to the state’s energy utilities resulted, much of which will be passed on to ratepayers in the coming decades. Whether utilities and ratepayers ever realize any relief depends on how the case is handled as it returns to a lower court, and in all likelihood, eventually is appealed to the Texas Supreme Court.
Lt. Gov. Dan Patrick has tasked Schwertner and Sen. Phil King (R-Weatherford) with overseeing legislation this session intended to redesign and strengthen the state’s power grid. That’s an enormous challenge for Schwertner, an orthopedic surgeon with no experience in such governance.
With such an urgent task before him, it seems odd that Schwertner would author a bill targeting well-run municipal utilities. At present there is no effort on the House side to match his bill and Tuesday’s hearing appeared to dissuade him from pushing for the bill’s authority to outright block financial contributions to municipal general funds.
Schwertner also is a politician distracted yet again by personal issues that call into question his suitability for important public leadership positions. The Georgetown Republican was arrested and charged with driving while intoxicated in the early morning hours of Feb. 7. Following his release later that day by the Travis County Sheriff’s Department, he told reporters, “I’m deeply sorry, apologetic to my citizens and my family. I made a mistake.”
His latest legal troubles come four years after a 2018 investigation into Schwertner’s conduct after a University of Texas at Austin graduate student reported receiving unwanted sexually explicit texts and a photo from the senator. Schwertner’s attorney said the senator shared his login and passwords with an unidentified third party to an app called Hushed that “allows a user to purchase one or more private phone numbers to communicate via cell phone without revealing the user’s actual cell phone number or revealing that a text or call was sent through the Hushed app.”
The university investigation concluded that Schwertner, who was uncooperative, did not violate UT policy or the federal gender equity law Title IX, yet he voluntarily resigned his chairmanship of the Senate’s Health and Human Services Committee, he said at the time, to focus more on his family.
In both the current DWI charge and the 2018 investigation Patrick said he was closely monitoring the outcomes, yet prior to this session he named Schwertner to his current chairmanship and his leading role in addressing the faulty power grid.
Well-connected Republicans in San Antonio should use their access to powerful state elected leaders to spell out exactly how well CPS Energy has performed over the years and continues to perform, and how ill-advised Schwertner’s proposed legislation is this session.