4 things to know about proposed CPS Energy rate hike

CPS Board approved proposal Monday; San Antonio City Council to vote on Dec. 7

SAN ANTONIO – For the second time in as many years, CPS Energy is pushing for an increase to its gas and electric rates.

The city-owned utility got the approval from its own Board of Trustees on Monday. The San Antonio City Council will vote on Thursday.

If the council approves it, the new rates will take effect on Feb. 1, 2024.

1. HOW MUCH IS IT?

The utility wants to increase the base electric and gas rates for all its customers by 4.25%.

For the average residential customer with gas and electric service, that would amount to about $4.45 a month. Small commercial customers would see their electric bills increase by about $18, and their gas bills go up by $7 every month.

Larger businesses could see their monthly electric bills increase by hundreds — or even thousands of dollars — at a change of about 3%.

The utility has made a bill estimation tool so homeowners and businesses can calculate get an idea of how much their individual bill could go up.

A slide from CPS Energy's Nov. 8 presentation to its Board of Trustees shows the average monthly bill impact to each customer class (CPS Energy)

2. WHAT’S IT FOR?

The utility expects the increase would bring in another $85 million every year.

Its plans for the money include replacing aging technology, more tree trimming, grid upgrades, and planning for a wave of pending retirements.

Although the city received a windfall from CPS Energy twice in the past two years, the utility says that doesn’t completely offset its need for rate increases.

The extra money in the city’s 2022 fiscal year came from high fuel prices, which is a pass-through charge for the utility. So, even though the city, which gets 14% of the utility’s revenues, got a cut of it that month, the utility did not.

CPS Energy did, however, profit from large wholesale market this summer. Though that helped lower the current rate request from the 5.5% they were originally considering, utility officials say they can’t rely on budget surpluses like that every year.

A slide from CPS Energy's Nov. 8 presentation to the Board of Trustees lays out its plans for spending the additional $85M a rate increase would bring in annually (CPS Energy)

3. IT WON’T BE THE LAST

CPS Energy officials have made it clear they plan to return every two years for possible increases as it continues to invest in its system, including a divestment from coal power.

The 3.85% increase in March 2022 was the utility’s first rate increase in just over eight years. CPS Energy had originally considered a double-digit rate increase for 2022, but ended up pursuing smaller increases at regular intervals.

Assuming the current increase is approved, the next request is expected to be roughly 5.5% in the utility’s 2027 fiscal year - likely in early 2026.

In a Nov. 30 briefing, San Antonio Chief Financial Officer Ben Gorzell even raised the possibility of the city council approving a future increase of “up to 5.5%” when it votes on the current 4.25% request. The city has taken a similar approach in the past with rates for the San Antonio Water System, which is also city-owned, he said.

However, the idea is not currently included in the proposed ordinance for the council’s Dec. 7 vote.

4. CPS CLAIMS DELAY WILL JUST MAKE IT MORE EXPENSIVE

Asked what would happen if the rate increase doesn’t pass, CPS Energy President and CEO Rudy Garza told KSAT last month that could mean delaying things the community has said it wants, possibly including the utility’s divestment of coal power.

Avoiding a rate increase now, he said, would just mean a larger increase later on.

“There’s no scenario under which the rates that we’re at today - which are the lowest in the state, by the way - are static,” Garza said.

MORE INFORMATION

CPS Energy has created a web page to make its case for raising its rates. You can check it out HERE.


About the Author:

Garrett Brnger is a reporter with KSAT 12.