San Antonio – Power may have been scarce this week for CPS customers, but it’s likely to also end up being expensive.
Now that the electricity reliability crisis is over, CPS Energy CEO Paula Gold-Williams says affordability issues are looming because of the high fuel costs during the cold weather. The utility is still trying to calculate the cost of the event, Gold-Williams said, but “it’s going to be huge,” and they are trying to minimize the impact on customers’ bills by spreading the cost out over a decade or more.
“I will say we understand that it would be unacceptable to just have customers bear the cost on their monthly bill and as if anybody could pay for that,” Gold-Williams said. “So we are working diligently - the financial services team is working diligently, trying to figure out ways to truly spread that cost, potentially maybe, you know 15 - I mean, 10 years or longer to try to make it affordable. We don’t have that fully assessed.”
Gold-Williams told reporters during a Monday briefing that supply and demand was at work in a big way during the cold weather that knocked many generating units offline around the state and froze natural gas wellheads. CPS uses natural gas for both heating and electricity generation.
“We could see from the beginning of this event - even before the Monday issues - that the price of power and the supply of power shot the prices up,” Gold-Williams said. “Again, I’ll quote that natural gas I saw go up 7,000 percent, go up 10,000 percent. I stopped counting at 16,000 percent.”
Part of your CPS bill is based on a “Fuel Adjustment Charge,” which covers the fuel costs of associated with CPS generating power, the purchase of renewable power, and purchases from the open energy market. So what CPS pays up front for fuel, eventually gets shouldered by rate-payers.
Typically, these fuel costs roll into bills over a 45 to 60 day period, but CPS is trying to find a way to spread the cost out over a longer period.
Though the final effect on your bill isn’t clear yet, CPS officials stressed it has not been disconnecting customers since March.
The utility is going to have to use “a good portion” of its cash to get through the immediate demands of paying for the fuel it had, and also using some of its credit, Gold-Williams said. Ultimately, a bond might be necessary to help spread the costs.
The plans will require discussion with the CPS board, the city council, and answering questions from the community, the CPS CEO said, but she estimated they have about 60 to 120 days to work it out, or it could affect the utility’s ability to buy fuel in the market now.
Mayor Ron Nirenberg has already expressed a disinclination for passing the cost to customers. When asked during the Friday night COVID-19 update if he thought the idea to spread the cost over 10 years to make it more affordable was an acceptable outcome, Nirenberg said “absolutely not.”
“Residents of this city, the people who have been suffering through this crisis, should not bear the cost of what has happened. And, you know, as far as I’m concerned, they should send the bill to ERCOT, and we’ll have those conversations.”