The San Antonio City Council could vote on a CPS Energy rate increase of up to 10.6% by mid-November, according to a potential 60-day timeline presented Thursday to members of CPS Energy’s rate advisory committee (RAC). But some committee members and utility officials suggested the timeline is questionable.
RAC Chair Reed Williams called the timetable “very aggressive” and told the San Antonio Report that, because CPS Energy needs to collect more public input before requesting a rate increase, he doubts it will happen within 60 days.
CPS Energy spokeswoman Christine Patmon told the San Antonio Report the timeline is preliminary and agreed that “60 [days] would be a stretch.”
A major driver behind the abbreviated timeline is CPS Energy’s relationship with its rating agencies, said Chad Hoopingarner, the utility’s interim vice president of strategic pricing and enterprise risk management solutions.
CPS Energy wants to show its creditors as soon as possible that it has the support of its regulator — the city, Hoopingarner said.
The three major rating agencies review CPS Energy’s creditworthiness annually; a higher rating means better access to credit. Part of what these rating agencies look at to determine the utility’s ratings is how quickly it is able to implement a rate increase, Hoopingarner said.
“They don’t want to see a process that drags on for two, three, four months, because that’s to them that suggests that we’re not as aligned with our regulator as we should be,” Hoopingarner said.
The agencies’ reviews are published in October.
CPS Energy maintained its existing high bond ratings last year, although Fitch Ratings downgraded its outlook for CPS Energy from “stable” to “negative,” in part because of environmentalists targeting the utility’s management structure.
The RAC will play a vital role in the upcoming weeks as CPS Energy moves to gain public input and get a rate increase approved by its board of trustees and then by the City Council, Hoopingarner said.
“We’ve spent the last three months teaching and sharing [with RAC members] because we absolutely anticipate that the RAC will be a component of our next two months of conversations,” Hoopingarner said. “Our approach over the next two months is to be as transparent as humanly possible and share all the rationale and backup support for why we’re doing a rate request.”
The utility listed issues behind the need for a rate increase at last week’s board meeting. CPS Energy plans to make a formal announcement of a more concrete timeline to its board by the end of September, said CPS Energy Chief Financial Officer Cory Kuchinsky.
Once the firmer timeline goes before the board, the community input process will begin, which will include two presentations to the City Council around CPS Energy’s revenue requirements and its need for a rate redesign, Hoopingarner said. After these two meetings and “many meetings” with the local community, staff will go back to the board to ask for its approval to request a rate increase, Hoopingarner said.
After the board’s approval, staff will go before the council to further explain the need for an increase, which will likely take place over two more City Council meetings, Hoopingarner said. Only then will CPS Energy be able to ask City Council for a vote on the request, he said.
The process of collecting public input will likely be more time-consuming than CPS Energy is currently estimating, Williams said. The timeline likely will expand during the process of getting the rate fully approved, he said.
“Taking something to council before Christmas, I couldn’t see it,” Williams said. “I think this has got to be a very contemplative process, and while I know that everyone is watching for cooperation, they also want a steady study of this that is not rushed.”
With disconnections resuming in October, the utility looking for a new board member, and CPS Energy fighting the $1 billion price tag for buying power through the Electric Reliability Council of Texas, the electrical grid operator, during the Feb. 15-19 winter storm, the timing of a rate request is less than ideal, she said. “I hope that council uses their authority and does its due diligence to pause the rush.”
Disclosure: CPS Energy is a financial supporter of the San Antonio Report. For a full list of business members, click here.