Nov 16, 2023 - News

CPS Energy seeks second rate increase in two years

Illustration of an electricity pylon with a dollar sign at the top.

Illustration: Gabriella Turrisi/Axios

Power bills could rise in San Antonio again next year, as CPS Energy seeks its second rate hike from the City Council in two years.

What's happening: The city-owned utility wants to raise rates by 4.25% as it aims to replace aging technology and meet the power needs of a quickly growing city, among other upgrades.

Why it matters: CPS has been under pressure from advocates to reduce its carbon emissions and offer reliable energy sources amid a Texas power grid that has been stressed by both extreme heat and cold.

What they're saying: CPS's ability to continue its move away from coal-fired power is "absolutely impacted by our ability to get the support we need on our resources," CPS CEO Rudy Garza told trustees last week.

  • "Nobody likes to increase rates," Mayor Ron Nirenberg, a CPS board member, said. "We've gotta have a really good justification for that, because our customers are also our owners."

How it works: The city owns CPS, but the utility operates independently with its own Board of Trustees. The mayor sits on the board.

  • Rate increases are one of the few ways in which the City Council exercises direct control over CPS, as the utility needs the council's approval.

By the numbers: A 4.25% rate increase would bring in an extra $85 million annually for CPS, per the utility.

  • Residential gas and electric customers would see their bills rise by $4.45 per month.
  • Commercial electric customers would see an increase of anywhere from $18 to $17,127 per month, depending on their size.

Details: Of the $85 million, CPS would spend $26 million on reliability and resiliency efforts, $25 million on technology and security, $13 million on growth and $21 million on people. That means:

  • Reliability and resiliency: Invest in new-generation technologies, reduce the impact of outages and prepare for increased material costs.
  • Technology and security: Replace 20-year-old technology, protect against cybersecurity threats and enhance customer communication.
  • Growth: Upgrade or replace aging service areas to meet population growth and update the grid.
  • People: Hire and train new employees.

Flashback: In January 2022, the City Council approved a 3.85% rate increase for CPS, then the utility's first rate hike in eight years.

  • The utility initially considered a 10% increase at the time but later scaled it back.

Zoom in: CPS is now on track to seek smaller increases every two years, in part to reduce the impact of a single larger increase.

  • In another two years, CPS will seek an estimated 5.5% increase.

What's next: CPS's Board of Trustees is slated to vote on the rate hike on Dec. 4. If it's approved then, it will head to the City Council for a final vote on Dec. 7.

  • The rate increase, if passed, will take effect Feb. 1.

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