CPS facing $1B in charges after storm
Mayor: Officials don’t want ‘burden’ of cost on residents
CPS Energy on Monday said it racked up $1 billion in bills during last month’s winter storm as it bought wholesale electricity and fuel for its power plants amid the historic freeze.
Its customers, many of whom spent hours or days in the cold and dark because of power outages, could have to pay the tab.
CPS owes about $800 million to natural gas suppliers that sold the fuel to the utility during the storm at sky-high prices.
The utility is also on the hook for $200 million in charges from the Electric Reliability Council of Texas, the state grid operator. ERCOT ordered CPS and other Texas utilities to conduct “rolling outages” beginning early Feb. 15 to prevent the statewide power grid from failing.
In the storm’s wake, CPS officials have pledged to spare customers from bearing the brunt of the cost.
“We are attacking that (debt) with every tool that we have, both from a policy standpoint and a regulatory standpoint,” CPS Chief Executive Officer Paula Gold-williams said during a special board meeting Monday. “We’re going to negotiate ... to get that down.”
CPS likely will contest gas suppliers’ charges.
“We should not pay anything that we don’t go through and prudently challenge,” she said.
With temperatures plunging at times into the single digits, frozen pipelines and icy roads choked off supplies of natural gas to power plants. That scarcity — and utilities’ desperate hunt for gas on the spot market — drove up the fuel’s price several thousand percent.
City and state officials “are on the same page with regard to protection of our ratepayers, and making sure the folks that have been suffering through the mess of the last couple of weeks are not also bearing the burden of the cost,” said Mayor Ron Nirenberg, a member of CPS’ board of trustees.
Gold-williams said CPS will ask the federal and state governments for funding to alleviate the $1 billion debt.
In the meantime, the utility’s five-member board approved a plan late Monday to seek a $500 million bank loan to pay off half the bills and spread the cost over several years.
Before the storm, CPS had been developing a plan to shutter several of its coal- and natural gasfired power plants and invest
more in solar power and hightech energy storage. CPS estimates the clean energy initiative would cost ratepayers on average as much as $12 a month extra on their monthly bills.
Last week, Gold-williams said it would be “challenging” after the storm to seek a rate increase to pay for the shift to green energy while also asking customers to pay off the hefty gas bill.
To make matters worse, CPS has seen the number of past-due balances rise in recent months as it continues to hold off on disconnecting power to customers who haven’t paid their bills. The utility suspended disconnects last year during the onset of the coronavirus pandemic.
As of January, CPS customers owed $93 million in past-due bills, interim Chief Financial Officer Gary Gold said. In January 2020, prior to the pandemic, customers owed $38.6 million in late bills.
“That is what we call a reduction in, basically, incoming cash,” Gold said. “The impact of COVID is still being felt in the community.”
The utility has not set a date for resuming disconnections.
Gold-williams said CPS is considering a bill credit to customers who were affected by the power outages, but she didn’t provide additional details.
CPS trustees also voted Monday to approve an independent investigation of the utility’s handling of the storm. The review will be separate from the city’s investigation into CPS and the San Antonio Water System, which Nirenberg initiated last week.