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CPS Energy's proposed 3.85% rate increase is less than half its original estimate — but more increases could come later

The new CPS Energy headquarters near McCollough Ave and Broadway
Joey Palacios
The new CPS Energy headquarters near McCollough Ave and Broadway

CPS Energy is expected to suggest a 3.85% rate increase that the San Antonio City Council will vote on next month.

The increase would generate about $73 million per year for the utility which officials said would go towards weatherization, technology, staffing, and growth for the utility. It’s a substantial decrease from more than 10% proposed earlier this year. The initial higher amount was proposed in the fall to cope with the devastating winter storm causing natural gas prices to skyrocket.

CPS Energy’s interim president and CEO Rudy Garza told San Antonio City Council members a rate increase is necessary for the utility’s operations.

“It really includes the investments that we have to make in our weatherization, our infrastructure resiliency, we’re investing a lot of money in our power generation units to make sure that they’re capable, and ready to run during the coldest times of the year in January and February,” Garza said.

The utility is also weighing a separate increase of 0.8% to deal with the high costs of the winter storm. CPS Energy was charged over $1 billion during the winter storm for increased rates on natural gas from numerous providers. The utility has paid about $418 million of that so far with nearly $500 million in dispute and in the courts.

The 0.8% increase would be part of a regulatory asset that goes on a customer’s natural gas cost which would pay for the fuel costs. It would be assessed on monthly bills for the next 25 years.

The increase could be one of several expected over the next few years. A second increase of 5.5% could be proposed in two years, and an identical increase two years after that according to CPS Energy projections disclosed to the City Council on Wednesday.

Getting support from several council members for the rate increase could be an uphill battle. District 2 Councilman Jalen McKee Rodriguez said he would not support a rate increase when people are struggling to pay their bills.

“it's very, very, very difficult for me to consider raising rates any further, especially when residents in my district can barely afford their electricity bills at the current rate, much less at the projected higher rate,” he said.

District 8 Councilman Manny Palaez told Garza the public has a delicate relationship with CPS Energy right now.

“You're asking us to consider a rate increase during a trust crisis, right? In a city where we've got the poorest census districts who are now even further into the grips of crisis in society and and hopelessness,” he said.

Palaez added he wouldn’t support a rate increase without there being adequate communication to the public before the council vote next month.

Garza acknowledged there is lacking trust from the public over the utility but that part of his job as the interim CEO is to restore that.

“What we're going to do to hopefully is try to rebuild the trust with our customers one positive neighborhood meeting at a time,” he said.

Another challenge for the utility is more than $130 million owed from customers who fell behind on their bills since the start of the pandemic. In March 2020, the average balance for a residential customer who was more than 30 days past due was $210. As of the end of October, that has ballooned to an average of $693 per residential account.

The city council will have several more meetings on the proposed rate increase before its vote on Jan 13. If it passes, it would go into effect in March.

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Joey Palacios can be reached atJoey@TPR.org and on Twitter at @Joeycules