San Antonio City Council split on what to do with extra CPS Energy money in windfall years

City’s current practice is to set aside any CPS Energy revenue surpluses more than 10% above budget for the council to consider how to spend

SAN ANTONIO – San Antonio City Council members are split on the best way to spend unexpected windfalls of CPS Energy money in future years.

As the owner of CPS Energy, the City of San Antonio gets 14% of its gross revenues as a payment in lieu of taxes (PILOT) -- one of its single, largest funding sources. In FY 2024 alone, the city expects to collect $421 million from the gas and electric utility.

Those payments have brought the city much more money than it had initially expected in each of the past two years. At the same time, the city is bracing itself for another increase to gas and electric rates.

Shortly before the city council voted on the FY 2024 budget in September, Councilwoman Melissa Cabello Havrda (D6) floated an idea to take only 11% or 12% of CPS revenues, meaning foregoing roughly $60 million or $90 million each year.

In a subsequent council consideration request, she suggested that the utility could improve its resiliency, and a rate increase could be avoided for at least five years.

City staff dismissed the idea, though. While it wouldn’t prevent a rate increase, they said, it would definitely blow a hole in the city’s budget.

Instead, they worked with Cabello Havrda on an alternative plan that was presented to the Governance Committee on Oct. 18.

In years when the PILOT payments are 10% or higher than the city originally budgeted -- as has happened the past two budget years -- the city would split the extra money above the 10% mark between CPS Energy and itself.

The majority of those windfall funds, 80%, would go toward CPS Energy resiliency and reliability projects, and the other 20% would be put into the city’s Resiliency, Energy Efficiency, & Sustainability (REES) fund.

The city’s current practice is to set aside any CPS Energy revenue surpluses more than 10% above budget for the council to consider how to spend.

When the city council considered the new, proposed policy on Wednesday, though, there was no clear consensus on how to proceed.

Some, like Mayor Ron Nirenberg, approved of the proposed policy as a way to prepare the city and the utility for future extreme weather.

Councilman Marc Whyte (D10) suggested the city council take the opportunity to consider where they could get $60 million from the city’s budget. Barring that, Whyte said he supported the proposal.

But other council members, like Councilwoman Phyllis Viagran (D3), suggested it would be better for the city to keep a larger portion of any surplus and spend it on the city’s needs. She questioned whether the South Side district she represents would benefit as much from the money if it went to CPS Energy projects rather than city projects.

And while Cabello Havrda and city staff have said the proposed policy might help reduce future rate increases, CPS Energy officials confirmed they would not guarantee a delay in planned increases.

City Manager Erik Walsh said the council would discuss what policy they want to put in place during a budget work session in April.

About the Authors:

Garrett Brnger is a reporter with KSAT 12.

Luis Cienfuegos is a photographer at KSAT 12.