The City of San Antonio is sending a $25.9 million revenue surplus CPS Energy generated in off-system energy sales back to the publicly-owned energy utility.
The San Antonio City Council has a policy in place that all surplus off-system energy sales funds go back to CPS to help offset or mitigate future rate hikes, but some council members are trying to walk that back for future surpluses.
Off-system sales revenue comes from CPS selling energy to customers outside of its San Antonio area market. Unlike the revenue it generates from residential and commercial customers, it’s difficult to predict how much CPS will make off of these sales in any given year.
CPS made $46.1 million from off-system sales in 2024, $27.7 million in 2023, and just $8.2 million in 2022.
After the council contentiously approved two separate rate hikes in 2021 and 2023, it decided to institute a new financial policy that would send all surplus revenues from these off-system sales back to CPS to help mitigate or offset future rate hikes.
CPS has been open about their intention to come back for additional rate hikes in the next several years, which it says are necessary to continue operations and improve reliability as San Antonio grows in size.
But District 3 Councilmember Phyllis Viagran said on Tuesday that she’s not sure sending the money back to CPS is a good idea if the utility can’t give the council a clear idea of how the money will actually impact their next rate hike request.
“What I need is more honesty in terms of like, ‘We’re gonna come, [the rate hike request is] gonna be up to 5%, and if you give us this $25 million or if we do [off-system] sales at this rate, it could possibly be 4%,’” Viagran said. “Because that makes it easier for me to go out to my residents and tell them this is what’s happening.”
CPS and city officials said it’s impossible to give an accurate estimate about how the one-time payment from the surplus off-system sales will impact future rate hike needs because it is not a recurring payment like customer revenue is.
CPS Energy CEO Rudy Garza said the additional funds would be meaningful for the utility even if it can’t offer details right now.
“We’re gonna have a pretty specific ask when we believe we need it, but every dollar counts, and it does create flexibility for us for when we’re going to come in and ask for it and what that ask is gonna be,” he said.
CPS staff said the nearly $26 million from this last year’s off-system sales would be used to support the utility’s power plant reliability investments and its reclosers program — an effort to avoid service disruptions.
District 10 Councilmember Marc Whyte said the council needs to stick by its policy because it’s one of the best ways they have to mitigate future rate hikes. Whyte voted against the last rate hike request in 2023.
“To do anything but wholeheartedly stick with that policy today simply would be undisciplined and foolish,” he said about the current financial policy. “We need to send this money back to CPS.”
City Manager Erik Walsh said he’ll work with CPS to regularly inform the council about how CPS is using the money the city is returning to it.
Several council members made clear the conversation about the financial policy of handing CPS back its surplus revenues was not over; a future vote second-guessing that policy is possible.
