SAN ANTONIO – On Thursday, the San Antonio City Council gave CPS Energy the go-ahead to borrow up to $500 million through short-term financing should the utility need it to deal with the enormous costs related to last month’s power crisis.
The $500 million line of credit is part of a multifaceted strategic plan intended to protect customers from high costs. CPS Energy officials will be seeking federal and state financial and policy assistance, regulatory intervention and other avenues, such as negotiations.
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CPS Energy says it’s facing charges of more than $1 billion for the power and natural gas it purchased during the February winter storm when prices for both skyrocketed.
However, the utility, which has already sued the state’s power grid manager over the energy prices, says it plans to challenge “any unlawful, unconscionable or illegitimate costs.”
“We’re only going to pay -- even though we’re estimating the maximum cost of a billion dollars -- we’re only going to be looking to pay what we consider to be legitimate and justified costs,” said Gary Gold, CFO and treasurer of CPS Energy.
There was little discussion during the meeting about how the financing would eventually affect CPS Energy customers.
“The utility will only utilize this line of credit when it is needed and, if utilized, the debt will have no negative financial impact on the City or customers’ bills, and can be accommodated within CPS Energy’s existing financial plan,” CPS Energy said in a news release.
The utility company has talked about possibly spreading the cost out over a decade or more in the past.