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Author: Don Obrien

CPS Energy CEO says utility under intense financial pressure, needs rate increase


If CPS Energy doesn’t enact a rate increase in the coming months, the utility could experience a financial crunch in 2022 and beyond, utility officials said Monday.

With nearly 1 in 10 CPS customers past due on their electricity and gas bills and costs for labor and materials up sharply this year — on top of about $1 billion in charges related to the February winter storm — city-owned CPS is under intense pressure, CEO Paula Gold-Williams said.

The utility is seeking to raise customers’ bills by 10 to 15 percent.

On ExpressNews.com: San Antonio business leaders say CPS is probably overdue for increase

Past-due bills represent more than $100 million in missing revenue.

“For us to not be able to recover over $100 million in costs, that’s our challenge,” Gold-Williams said. “Here we are with these pressures, and the continual pressure of trying to handle the maintenance, handle the growth — those are the challenges.”

CPS also needs more revenue for upgrades to its infrastructure and technology systems, as well as to safeguard its power plants against weather-related disasters, Chief Financial Officer Cory Kuchinsky said during CPS’ board of trustees meeting Monday.

CEO Paula Gold-Williams said CPS Energy is under intense pressure, partly because of customers' past-due bills.

CEO Paula Gold-Williams said CPS Energy is under intense pressure, partly because of customers’ past-due bills.

Kin Man Hui /Staff photographer

“We’ve been investing in our community and our assets at today’s costs, and the pricing that we have in our rates is 2013 pricing,” Kuchinsky said.

CPS’ last rate hike, increasing monthly bills by 4.25 percent, was approved in late 2013 and went into effect in 2014. Since then, CPS has added 125,000 electric customers and lost 300 employees.

The utility is currently projecting a loss of nearly $24 million in the current fiscal year, which ends Jan. 31 — even if CPS trustees and the City Council approve a rate increase.

Without the rate hike, the losses this year would top $47 million, Kuchinsky said.

On ExpressNews.com: CPS Energy customers could see rate increase of up to $15 per month

If the council OKs the rate increase later this fall, it will likely go into effect early next year, Gold-Williams said.

Without the rate hike, CPS would expect to lose $82 million in 2022. Kuchinsky said the utility would have to borrow more cash to fund operations and would face higher interest expenses.

Environmental organizers critical of CPS say the utility’s rationale for a rate hike request makes sense. But instead of rubber-stamping the increase, organizers want City Council members to extract concessions from CPS in exchange for approving the hike — such as the utility’s commitment to shutter the Spruce coal-fired power plant by 2030.

The Rate Advisory Committee convened by CPS and Mayor Ron Nirenberg will examine the utility’s rate structure ahead of the rate increase and make recommendations. Gold-Williams said the utility may ultimately tweak how it bills ratepayers.

One change could be to the “fixed” part of ratepayers’ bills, which is a flat $8.75 monthly fee charged to residential customers for electric service. The rest of the bill is subject to change, depending on how much power the customer uses.

Gold-Williams said CPS could potentially increase the fixed charge and reduce the variable costs on bills.

“We want to keep having the expertise of the (Rate Advisory Committee) to help us, over time, figure out the right way to get a good balance between fixed and variable costs,” she said.

Environmental organizers have also called on CPS to shift more of the burden of the rate increase to businesses and industrial customers and away from residential customers.

Valerie Morales (center), an organizer with Climate Collective, joins a small group of residents concerned with the possibility of a rate hike by CPS Energy as officials meet for the utility's monthly board meeting on Monday, Sept. 27, 2021.

Valerie Morales (center), an organizer with Climate Collective, joins a small group of residents concerned with the possibility of a rate hike by CPS Energy as officials meet for the utility’s monthly board meeting on Monday, Sept. 27, 2021.

Photos by Kin Man Hui / Staff photographer



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