RATE HIKE TO KINDLE UTILITIES CPS Energy estimates it will generate $73 million annually from the 3.85% base rate increase, with plans to spend the new revenue on four key initiatives. $73 MILLION from the increase will be spent on the following: $14MILLION GROWTH Adding substations and meters; rerouting electric lines for new construction $15MILLION TECHNOLOGY Assessing and modernizing the software system $31 MILLION INFRASTRUCTURE RESILIENCY Improvements in customer communications and freeze protection at power plants; alternative fuel sources
$13MILLION PEOPLE
Enhanced sta recruiting and retention
SOURCE: CPS ENERGY COMMUNITY IMPACT NEWSPAPER
enhanced customer communica- tions, an improved experience during controlled outages, upgraded freeze protection at power plants and alter- native fuel sources for generation. The utility’s plan also calls for rate hike revenues to help upgrade CPS Energy’s software and hardware systems; add more equipment to accommodate new residential and commercial construction; and raise the hourly minimum wage to $18 in an e ort to ll about 400 vacant positions. “Without this rate increase, it will be di cult to meet the reliability needs of this community,” Garza said. O cials, residents have reservations Local chambers of commerce and other civic organizations endorsed CPS Energy’s rate hike and new fee. San Antonio Mayor Ron Nirenberg and several council members said they understood the utility’s aim to keep pace with the city’s growing population, which reached 1.43 mil- lion in the 2020 U.S. Census. The utility reports it has more than 800,000 electric and 343,000 gas customers. However, local leaders also voiced worries over CPS Energy’s revenue growth plan, saying many custom- ers are grappling with job loss or fur- loughs as a result of the pandemic, as well as rising average costs of goods and services nationwide. The U.S. Bureau of Labor Statistics said the national in ation rate reached 7% in December—the highest in ation rate since June 1982. Nirenberg said he and City Council did not take their decision lightly. “This request covers the basics and does not add any extras. Through the city’s partnership with CPS [Energy], we are ushering in a new era of accountability,” Nirenberg said. North Side council members Manny Pelaez of District 8 and JohnCourage of District 9 both approved the base rate hike and the pass-through fuel charge. Pelaez said nobody wants to see higher bills, especially in what he called a tough economic time, but
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WHERE THEMONEY COMES FROM ANDWHERE IT IS GOING CPS Energy proposes a total revenue budget of $2.95 billion for scal year 2022-23 and projects its spending. The budget is based on new revenues from an approximate 3.85% base rate hike, the new $1.26 fee and recovery of projected debt service requirements on February 2021 storm fuel costs paid.
employees. The new pass-through fee will yield $24 million more in annual revenue, according to CPS Energy. O cials with the utility said the agency has paid $418 million in fuel and other costs related to the 2021 winter storm, which included nearly one week of sub-freezing tempera- tures, snow and prolonged power outages that a ected hundreds of thousands of residents. Another $500 million in charges by natural gas providers are still in dispute, according to o cials. During and immediately following the storm, CPS Energy weathered criticism from city o cials and cus- tomers who questioned the utility’s ability to communicate and function during extreme weather events. Additionally, civic leaders and res- idents in recent years have accused CPS Energy executives of misman- agement and extravagant spending, and criticized the utility for discon- necting customers who were unable to pay their bills due to job loss or furloughs caused by the pandemic, according to reports. In October, Paula Gold-Williams announced she would be departing as CPS Energy’s president and CEO in early 2022. Her departure is attributed to fallout from the winter storm. She had been CPS’s CEO since 2015. The utility’s board promoted Rudy Garza to the top job with an interim tag. Garza and other CPS o cials have said delaying any rate hike and new fee could lead to negative nancial conse- quences for the utility in its attempts to address future community needs. CPS Energy considered a 13% rate hike, but city sta and the utility’s Rate Advisory Committee both urged them to pitch a smaller increase. “After listening to feedback and input, we have revised our rate request to meet immediate nancial needs,” utility o cials wrote in their December presentation. According to CPS Energy’s plan, revenues from the rate hike will fund
FY2022-23 sources of funds
7.67%
$2.262 billion: electric revenue $227 million: gas revenue $254 million: state power grid transmission cost of service $156 million: o -system sales $60 million: other sources
8.58%
5.27% 2.02%
76.4%
$2.958 BILLION TOTAL
FY 2022-23 uses of funds
$869 million: electric fuel purchase $730 million: regular operations and maintenance $435 million: debt service $388 million: annual payment to city of San Antonio $345 million: equipment repair and replacement
24.6%
29.3%
14.7%
13.1% 11.6%
$110 million: gas resale $81 million: other uses $2.958 BILLION TOTAL
3.71%
2.73%
CPS Energy’s projected FY 2022-23 budget contains how the utility tentatively plans to use some of its new revenue to recruit and retain employees. CPS Energy has about 400 vacant sta positions to ll.
Total compensation changes FY 2023 $23.2M Pay categories $8.0 million: hard-to- ll positions $6.7 million: merit & general wage increase $6.5 million: other $2.0 million: entry wage
28.8%
34.4%
28%
8.62%
SOURCE: CPS ENERGY COMMUNITY IMPACT NEWSPAPER
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COMMUNITY IMPACT NEWSPAPER • COMMUNITYIMPACT.COM
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