San Antonio – It has barely been a year since CPS Energy raised its gas and electric rates for the first time in eight years, but the utility is already looking ahead to do it again.
It’s not clear how big the rate hike proposal, which CPS Energy hopes to have in place by February 2024, will be, but CFO Cory Kuchinsky said both it and another increase in early 2026 remain part of the utility’s plans.
Officials had previously used 5.5% as a “placeholder” for both increases, though Kuchinsky would not say how accurate that figure may end up being.
“So right now, we are having our team spend the spring and summer redoing the forecast, and we’ll come back with a sharper estimate,” he told KSAT.
With the approval of its board of trustees and the San Antonio City Council, CPS Energy raised its base rates by 3.85% on Mar. 1, 2022. At the same time, it increased customers’ fuel adjustment charges to cover the costs of the February 2021 freeze.
The 2022 base rate hike was meant to cover infrastructure, improved technology and staffing requirements, and Kuchinsky expects similar issues to be part of the discussion for a 2024 rate proposal.
“I mean, we’re in a high investment era of both -- because we’re in a transitional space in terms of technology from a generation perspective and because our city continues to grow,” Kuchinsky said. “And that’s just not new growth. That’s about infrastructure maintenance and repairing a lot of the older equipment we have, and then also investing in our people.”
The utility had predicted the March 2022 rate hike and increased fuel charges would only raise the average residential bill by a little more than $5.
And while customers saw skyrocketing bills this past year, the utility says that was primarily due to increased natural gas costs, from which it does not profit.
So even though CPS Energy pulled in $511 million more in revenue than it had expected during its 2023 fiscal year (February 2022-January 2023), Kuchinsky says most of it went straight out the door to cover the fuel costs.
The utility is also dealing with a mountain of overdue customer bills, which could also affect the rate hike conversation. Although the utility says it’s making progress in collecting the money, now tallied at $196 million, a portion will likely end up written off.
Kuchinsky said the utility would try to keep managing the financial effect of the unpaid bills through other means, but they could become part of the rate hike calculations if they affect the utility’s cash flow too drastically.
ALSO ON KSAT.COM
What’s changed since February 2021 to prevent another power grid failure? KSAT Explains