CPS Energy used bogus data to improve diversity spending score

Figures exaggerated how much utility spent with minority-owned businesses in 2017, improved score from an ‘F’ to a ‘D’

SAN ANTONIO – CPS Energy used false data when submitting a diversity spending report and utility officials have recently been unable to rule out whether the miscalculations were done intentionally, a KSAT 12 Defenders investigation revealed.

The mistakes, which took place during the submission of data to the Fair Contracting Coalition for its 2017 report card, exaggerated how much the utility spent to procure goods and services from minority-owned businesses and caused it to erroneously get a ‘D’ instead of an ‘F’ that year.

“I’m not going to dispute it looks like a hot mess. I completely agree,” said CPS Energy Chief Administrative Officer Lisa Lewis, whose purview includes the supply chain department.

Lewis said utility officials became aware of the record keeping errors earlier this year, after the Defenders began asking questions about how it compiled its data.

The Fair Contracting Coalition (FCC) is a San Antonio volunteer group mostly made up of small business owners who push for large public entities in the San Antonio area to spend money locally and with companies that are small or owned by women, veterans or minorities.

CPS Energy routinely scores near the bottom of the annual list of organizations that respond, FCC data shows.

Rich Acosta, the FCC’s chief operations officer, created the current matrix used to rate these entities and assign a letter grade.

Fair Contracting Coalition Chief Operations Officer Rich Acosta. (KSAT)

“These entities can elect to choose small businesses or go towards the larger, national (businesses) to look for their purchases. And so what we’re trying to do is push them to purchase and use our local businesses in San Antonio, because the way we see it, small businesses take care of the majority of the workforce in San Antonio,” said Acosta.

“The whole point of this report card is transparency”

A review of internal CPS Energy records shows that staff erroneously included Native American-owned businesses in its total for Hispanic-owned businesses and that someone took the total for “unknown” businesses, divided it in half and added that to the tally as well.

CPS Energy officials now admit certain non-profits and subcontractors were included, causing its score to improve one letter grade that year.

Excel records show Native American-owned businesses were included by CPS Energy when calculating its Hispanic spend total. (KSAT)

An internal ethics complaint filed by a CPS Energy employee in late October claimed that staff falsified company records and that management was “involved in this lie” of adding three separate numbers to the Hispanic spend total that should not have been included, boasting its total that year to $12.8 million.

The name of the employee who filed the ethics complaint was redacted from the copy turned over to the Defenders. In it, that employee claims they alerted management to the errors as early as 2020, while compiling figures for more recent FCC report cards.

“This was clearly intentional and not a mistake. No one has apologized, no one has been reprimanded, and as far as I know, no one has even discussed this outside of these few meetings,” the complaint states.

Lewis, who said the materials used for 2017 report were poorly prepared and did not include an audit trail, conceded that its ethics team could not determine whether false figures were given to the FCC on purpose.

CPS Energy Chief Administrative Officer Lisa Lewis. (KSAT)

Lewis said that six of the 12 staff members who “put hands” on the 2017 figures are no longer employed with the utility, which made it more difficult to determine what went wrong.

“I’m exceptionally disappointed. That is not how we want that to work. I can tell you that it’s not acceptable and we will not allow that to happen again,” said Lewis, who added that accounting safeguards have now been put in place and that an auditing team is reviewing its past diversity reports.

“The whole point of this report card is for transparency toward the public, and it’s just sad that somebody had to lie to fluff up their numbers for a couple percentage. Lied to the public basically, and that’s what they did is they lied to the public,” said Acosta.

He said he was also disappointed to learn about the miscalculations from the Defenders, instead of from CPS Energy officials.

Lewis said last month the utility was waiting to touch base with the advocacy group until it completed its ethics review of the incident, but was now in the process of reaching out to correct its figures with the FCC.

Acosta recalled the figures that resulted in CPS Energy being awarded a 63 were the utility’s second attempt at supplying data for that year’s spending, after at first being given a score of 59.

Acosta said a CPS Energy official who later attended an FCC meeting took issue with the FCC listing scores under 65 as an ‘F.’

“One of the CPS representatives put their hand up and said, ‘well isn’t a 63 a ‘D’?’ And we’re like, we looked around the room and we’re like, ‘I mean, when I was in school 65 and below was an ‘F’,” said Acosta.

FCC officials later agreed to label CPS Energy’s 2017 score a ‘D.’

The following year, in 2018, CPS Energy scored a 42, the second lowest score of the entities that responded.

In 2019 the utility’s score improved to a 52, which was still a failing grade.

FCC officials are scheduled to present its 2020 report card in late January.

Lewis said the FCC report card does not tell the whole story of CPS Energy’s efforts to engage with local and small providers of goods and services.

“We feel very strongly about reinforcing and reinvesting in this community, and we are going to continue,” said Lewis.

Lewis used an example of steel transmission poles to describe why it is sometimes difficult for the utility to spend money locally. The poles, which cost around $10,000 apiece, are not available locally but instead come from a large provider who is also out of the utility’s service territory.

Read more:

‘Ratepayer scandal:’ $700 steak dinners, 100+ brunch trips and the downfall of a CPS Energy executive

CPS Energy COO resigns days after Defenders exposed insensitive comment, corporate purchasing complaints

‘Texas Power Grid Failure: What Went Wrong,’ a KSAT 12 investigative special


About the Authors:

Emmy-award winning reporter Dillon Collier joined KSAT Investigates in September 2016. Dillon's investigative stories air weeknights on the Nightbeat and on the Six O'Clock News. Dillon is a two-time Houston Press Club Journalist of the Year and a Texas Associated Press Broadcasters Reporter of the Year.

Joshua Saunders is an Emmy award-winning photographer/editor who has worked in the San Antonio market for the past 20 years. Joshua works in the Defenders unit, covering crime and corruption throughout the city.