CPS needs rate hike to better serve public
The past two years have been challenging for the San Antonio community. The impact of the COVID pandemic and the trauma of the February storm had profound consequences for all of us.
Municipally owned CPS Energy — and our almost 3,000 employees — are part of this community. We know from our extended families, friends and neighbors the difficulties so many are facing. That’s one of the reasons CPS Energy suspended disconnections for more than a year and a half. It’s also why we have been reluctant to bring forward a rate request.
A rate increase hits the bottom line of everyone’s budget every month. The last time we asked for a rate increase was in 2013. Since then, we’ve experienced cost increases and significant growth in the number of customers served, and face much-needed improvements to our infrastructure. For these reasons and others, we are asking for a rate increase.
CPS Energy is a community asset that returns up to 14 percent of its total revenues — about $300 million per year — to the city of San Antonio. These funds do triple duty: Customers receive a service for their payment; the funds are reinvested in valuable services such as police, fire, parks and libraries; and we are an economic engine employing and buying locally those things we can.
We know we have work to do to rebuild trust. That is my focus as the leader of your community asset. It is my commitment to you that we will be a transparent organization that takes a closer look at our culture of accountability while increasing our community conversations.
In 2022, we will launch open, public discussions about rate design and how electricity is generated for our region, including the future of our coal plants. Our team is committed to excelling while keeping rates affordable. And we must be realistic that without this rate increase, we may not be able to meet the reliability needs of our community.
We must accelerate investments in weatherization, alternative fuel sources and managed outage capabilities. We must improve direct communication with customers and provide near real-time, personalized information so our community is better able to respond and recover when an unexpected weather incident happens.
Since our last rate increase, the number of electric customers has increased by 17 percent, and the number of natural gas customers has increased by 12 percent. Our metropolitan area is expected to add more than 1 million residents by 2050.
This tremendous growth, along with aging infrastructure, requires more investment to improve reliability, resiliency and safety. As an example, 63 percent of our wooden utility poles are 40 years or older. By maintaining and upgrading our infrastructure, we decrease the frequency and length of customer outages.
We must also upgrade our technology to meet customer expectations. Our customer service software is more than 22 years old. Updating this technology will give us more flexibility and efficiency in customer service and management.
Hackers never sleep, and we combat thousands of attempts to infiltrate our systems every day. We must stay ahead of bad actors by protecting our digital assets, critical infrastructure and the personal information of our customers.
Finally, like many employers, we are adapting to rising labor costs and remote working. Since 2006, the number of CPS Energy customers has grown by 33 percent while the number of CPS Energy employees has declined by 25 percent. In the next five years, more than one-third of our team is likely to retire. In this competitive labor market, we must retain and recruit the best and brightest in our community to serve our customers.
We are waging a legal battle over $587 million in unfair costs, including charges by some natural gas suppliers that we believe price-gouged CPS Energy customers during the storm. While we continue the fight against some suppliers, there are still $418 million in reasonable, validated fuel costs we have paid and must recover from our customers. We are planning to spread these costs over a 25-year period to reduce the impact on monthly bills.
There is never a good time for a rate increase. We know this is among the worst of times. But this increase is about doing our best to provide our customers with the service they expect and deserve now, and it is needed.