SAN ANTONIO – CPS Energy officials are prepared to pursue a far smaller rate hike than originally expected, though it will likely be only the first in a series of requests.
The utility will ask City Council on Wednesday to consider a 3.85% increase to the base rate - far below the 10% hike that former CEO Paula Gold-Williams had previously said CPS Energy was considering.
CPS Energy will also suggest a separate item meant to recover the fuel and energy costs the utility has already paid out in relation to the February freeze.
Chief Financial Officer Cory Kuchinsky told KSAT the utility is focusing on what it needs “in the near term to shore up our financials and make the immediate investments.”
“Then a lot of the things that were part of that larger request were future investments into other critical things, such as what our future generation sources may look like, things of that nature. And we really wanted to give time for the advisory committee, our board of trustees and the broader community to talk to those decisions, understand the full cost impacts of this,” Kuchinsky said.
He said this new strategy includes an understanding that CPS Energy will be coming back to council more often with requests to increase rates.
The last time the City Council approved a rate hike was November 2013 with a 4.25% bump to the electric and gas base rates that took effect February 2014.
“It won’t be another eight years. What you’ll see tomorrow is a look at maybe going every couple of years with more modest requests. So a more incremental approach with more dialogue,” Kuchinsky said.
The proposed 3.85% rate increase does not include the energy or fuel costs related to the February freeze. Though the utility is still disputing close to $590 million worth of charges, it has already paid out $418 million, Kuchinsky said.
“A separate item” utility officials will propose on Wednesday would seek to recoup that money over roughly 25 years, which Kuchinsky said would amount to approximately less than 1% of bill impact on customers - about$1.30 per month for the average residential customer.
City Council is expected to vote on the rate increase at its Jan. 13 meeting.