CPS Energy Rate Hike Comes Amid “Crisis of Confidence,” Utilities Board Warns

San Antonio – As CPS Energy officials made their plea for a rate hike in city council on Wednesday, council members warned that it likely would not be well received.

“You’re in the throes of a crisis of confidence right now, aren’t you?” Said District 8 City Councilor Manny Pelaez. “The audience right now, whether you agree with him or not, has a delicate relationship with you guys. It’s a bit brittle.

The utility needs the support of city council to put in place a two-pronged approach to increasing customer bills: a 3.85% increase in base fares and an increase in fuel adjustment charges. Together, CPS officials say the changes would increase the average residential customer’s bill by about 3.3%, or $ 5.10 per month.

Slide of CPS Energy’s presentation on December 1 to City Council. The utility’s rate hike proposal includes both a 3.85% base rate hike and an increase in your fuel adjustment fee, which is supposed to cover the costs of the February freeze. (CPS Energy)
Slide of CPS Energy’s presentation on December 1 to City Council. While the average homeowner will see a 3.3% impact on their bill, CPS says that will vary based on usage. (CPS Energy)
Slide of CPS Energy’s presentation on December 1 to City Council. CPS Energy’s commercial customers would see an increase in their monthly bills greater than the 3.3% impact of the average residential customer. (CPS Energy)

While the base rate increase would go to CPS Energy’s normal operations, the fuel adjustment fee hike would cover – over 25 years – the $ 418 million the utility has already paid for fuel costs incurred during winter frost.

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CPS is still struggling with an additional $ 587 million in freeze-related costs, which is not included in the rate adjustment calculations.

The hike is much smaller than it originally proposed in a rate demand draft in September, said Ben Gorzell, the city’s chief financial officer and utilities supervisor.

The original plan would have increased the average residential customer’s bill by 11.1%, Gorzell told city council, but city staff recommended a different approach and worked “collaboratively” with the utility to develop the new proposal.

“It is focused on the financial stability of CPS Energy. It focuses on “what do we know today? It doesn’t try to solve everything, and it doesn’t try to solve the areas where there is still a large amount of uncertainty related to certain things like pandemic bad debts or litigation charges that still remain tied to the storm. winter Uri, ”Gorzell said. .

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But an increase is an increase, and Pelaez and other board members have mentioned the burden that even a few extra dollars could place on some of the poorest residents.

“What this pay rate hike can mean is that more residents are, you know, running errands on credit cards, taking payday loans to pay for their utilities. You know, $ 5 is two school meals, ”District 5 Councilor Teri Castillo said.

CPS Energy interim CEO Rudy Garza admitted that a tariff increase would be unpopular.

“If we put this to a vote with a public vote for a fare increase, I don’t know anyone – I wouldn’t vote for a fare increase, would I?” Garza said. “But if you ask me, ‘Rudy, do you want, you know, a reliable utility, you know? I would say, “Damn, yeah, I want a reliable utility.” And it’s our job to figure out how to do it in a way that’s affordable. “

As part of its rate requests, CFO and Treasurer Cory Kuchinsky said CPS Energy is proposing both to expand its affordability program to an additional 14,000 customers – up to 65,000 customers in total – and to expand its affordability program to an additional 14,000 customers. ” Increase the rebate that customers receive enough to offset – on average – the base rate portion of the tax hike.

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The rate proposal does not take into account the costs of any changes to its power generation plans – such as shutting down or converting Spruce’s coal power plan, and does not make any changes to the rate structure.

CPS Energy officials say the utility tariff advisory committee, made up of 21 CPS board members and city council appointees, will have more time to consider these issues later.

District 1 city councilor Mario Bravo said council needed some commitments from the utility before approving a rate increase.

“So it’s a difficult time for us to ask for a price increase, to make promises on the things that you are going to do in the future. Law? I think what we are ready to see is that we have to show our constituents that there are changes in behavior, ”Bravo said, noting that he had already requested an independent study of the culture of the country. company of CPS.

Council is due to vote on the rate hike on Jan. 13, but Councilor Clayton Perry says it’s far too early.

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“I just think we’re rushing this through the system,” Perry said. “I know you have to do this very quickly. But again, I don’t think that’s enough time.

If the board approves the increase, it would take effect on March 1.

CPS Energy officials also said they plan to come back more often than in the past for rate increases – about every two years, instead of the eight years since the previous one.

“We need to come more frequently,” Garza said after the meeting. “Even though in two years, if the financial situation changes and we maybe don’t need a rate hike, you know, we have to come and tell them that’s the case and why and what the projection in the future. “

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