SAN ANTONIO – Continuing with its promise — or warning — of pursuing rate increases more regularly, CPS Energy requested a new rate hike on Wednesday, a little less than two years since the last one passed.
The city-owned gas and electric utility laid out its proposal to increase its gas and electric base rates by 4.25% in a pair of meetings Wednesday before the CPS Energy Board of Trustees and San Antonio City Council. The utility says the proposed increase would raise the average residential customer’s bills by less than $5.
The basics
The requested 4.25% increase is lower than the 5.5% utility had originally been forecasting, but CPS Energy officials say they plan to continue coming back for at least a conversation about rate increases every two years through 2030.
For the current rate proposal, the utility hopes to get board and City Council approval in early December. If both bodies approve the change, the new rates would take effect on Feb. 1, 2024.
The utility’s proposed increase would raise the average residential customer’s monthly gas and electric bill by about $4.45. Small commercial customers would see their electric bills increase by about $18, and their gas bills go up by $7 every month.
Larger businesses could see their monthly electric bills increase by hundreds — or even thousands of dollars — at a change of about 3%, according to the same presentation.
The utility expects the increase would bring in another $85 million every year. Its plans for the money include replacing aging technology, more tree trimming, grid upgrades, and planning for a wave of pending retirements.
Asked what would happen if the rate increase doesn’t pass, CPS Energy President and CEO Rudy Garza told KSAT that things the community has said it wants, possibly including the utility’s divestment of coal power, could be delayed.
Avoiding a rate increase now, Garza said, would just mean a larger increase later on.
“There’s no scenario under which the rates that we’re at today, which are the lowest in the state, by the way, are static,” he said.
The utility also plans to increase its affordability discount program to offset about half of the average bill impact for residential customers.
2022 rate increase
CPS trustees and the San Antonio City Council last approved a rate increase in January 2022, which took effect March 1, 2022.
That increase was a two-part proposition: a 3.85% increase to the gas and electric base rates and the establishment of a “regulatory asset” that showed up as an increase to customers’ fuel adjustment charge. At the time, the utility estimated a combined $5.10 impact on the average residential bill.
At the time, the council voted 9-2 to approve the increase to the fuel charge and 8-3 on the base rate increase.
Councilwoman Teri Castillo (D5) and Councilman Jalen McKee-Rodriguez (D2) voted no on both, and Councilman Clayton Perry (D10) joined them in voting no for the base rate.
Mayor Ron Nirenberg, Councilman Mario Bravo (D1), Councilwoman Rebecca Viagran (D3), Councilwoman Adriana Rocha Garcia (D4), Councilwoman Melissa Cabello Havrda (D6), Councilwoman Ana Sandoval (D7), Councilman Manny Pelaez (D8), and Councilman John Courage (D9) all voted to approve both the fuel charge and rate increase.
Bravo, Sandoval, and Perry are no longer on the council.
Their successors have not yet voted on a CPS Energy rate: Councilwoman Sukh Kaur (D1), Councilwoman Marina Alderete Gavito (D7), and Councilman Marc Whyte (D10).
Reaction
Nirenberg, who sits on both the CPS Board of Trustees and the City Council, staked out a position clearly supporting the rate increase proposal.
“You can be in a situation where you’re not where you want to be, but also things are getting better and that’s where we are. Both of those things are true,” he said during the council meeting.
Other city council members had their reservations, though.
Whyte has supported the city taking a smaller cut of CPS Energy revenues each year in order to reduce the size of a rate increase and repeated that sentiment Wednesday.
“We never even took the time to look at what it would look like if we decided to, let’s say, spend $40 million less,” he said.
McKee-Rodriguez said he would likely vote against a rate increase again if the proposal goes before council as it’s scheduled to on Dec. 7. He believes the city or CPS should hire a consumer advocate - “someone whose role is to advocate for our most vulnerable, not those of corporate interests” - and the utility should have a plan for restructuring its rates to a tiered system.
CPS Energy officials say a tiered rate structure, which would charge customers more as they use more energy, would only be possible after the utility updates antiquated software.
More increases incoming
Before the March 2022 increase, the utility’s rates had stayed the same since February 2014 -- just over eight years.
But the utility has said it plans to pursue more regular increases as it tries to improve its infrastructure, replace aging technology, and keep its systems growing along with the city.
Even during the 2022 rate increase discussions, the utility tentatively planned rate increases in its 2025 and 2027 fiscal years, which run from February through January.
CPS Energy’s presentation on Wednesday indicated an estimated 5.5% increase in FY 2027, and Chief Financial Officer Cory Kuchinsky told reporters he expects the utility will come back every two years through 2030 to at least hold a discussion about a possible rate increase.
The size of those future increases is not set in stone. For example, the current proposal being considered is already lower than the 5.5% the utility had used as a “placeholder” during conversations about the last increase. That was partly helped by the extra $130 million it raked in this year selling excess power to the rest of the Texas grid.
More information
CPS Energy has its own website with frequently asked questions about the rate proposal and a list of meetings beginning Nov. 8. The site also includes a bill estimator to calculate the effect on your specific utility bill.
You can also see the utility’s presentation below.