Trustees clash over CPS’ finances
Tensions come as utility works to overhaul power generation, shutters Braunig plants
CPS Energy this year will start to shutter the aging gasfired generators at its Braunig Power Station, build new natural gas plants to provide supply during peak-demand periods and secure more solar, wind and battery capacity after its board Monday approved its budget for the coming year.
The lone “no” vote on the $1.8 billion spending plan was cast by trustee John Steen, often the harshest voice of criticism regarding the city-owned utility’s operations and financial health.
The budget, which represents a 15% increase in operating costs, was approved on a 3-1 vote with one trustee absent.
The way CPS grades itself became the focus of debate, with Steen taking direct jabs at board Chairperson Janie Gonzalez.
“The board leadership is not merely enabling this process of redefining success,” Steen said of the board’s shifting metrics for the utility. “It’s driving it.”
The utility was discussing the latest iteration of its “scorecard” to track its enterprise and business targets through the fiscal year, which began Thursday and continues to the end of January 2025.
Gonzalez said she wasn’t “lowering the bar” but being responsive to what the community wants to know.
Steen offered similar criticisms last year, when he said the utility was “moving the goalposts” with revisions to metrics already set in place.
Fewer measurements
CPS met 10 of the 16 targets it set last year. The latest scorecard reduces to eight the number of metrics CPS uses for its public-facing grades. They cover factors like average duration of power outages, power plant availability, fiscal resiliency and customer perception. To Steen, that means less public accountability.
CEO Rudy Garza said the other metrics are still being charted, but the utility picked out the ones that would be easiest for the public to understand and care about, such as the average customer power outage being under an hour.
“Anything over 10 is too much,” Garza said after the meeting. He said the scaledback measurements will make it easier for the public to engage and discuss the utility’s performance.
Steen also voiced concerns over the utility’s debt, the bulk of which stems from unpaid bills through the pandemic that are still outstanding. The utility’s debt ratio for the last fiscal year was 62.6% and is forecast to drop another percentage
point by the end of the current fiscal year.
Director of Budgeting Analysis Geronimo Gonzalez said a lot of that total is dependent upon how much money in capital loans were taken out to cover new generation spending.
“We can’t just look at these numbers as the all-magic thing,” said trustee Francine Romero, making clear she didn’t agree with Steen. “There’s a whole story behind them and that story is how we’re expanding to meet the needs of our customers.”
Trustee Willis Mackey said he wanted to see CPS take a stronger approach to collecting unpaid bills, but mostly agreed CPS was successfully navigating the challenges of creating new power sources as demand soars.
Garza said after the meeting that the utility’s old plants will continue operating in overlap with new plants being built to eventually replace them, which is also contributing to the debt. He said the rating agencies are well aware of that. CPS has the second-highest rating out of 30 comparable co-op or municipal utilities in the state, he said.
That agency rating indicates CPS’ financial health and its ability to pay a bond’s principal with interest.
Rates increasing
One revenue source was approved last year by City Council: a 4.25% rate increase. Customers will begin seeing that increase’s impact in this month’s bills. It’s helping to fund the 15% increase in operating costs, which is the highest one-time annual increase in CPS’ operations and maintenance budget in the utility’s history.
Steen took issue that deeper budgetary breakdowns were not included in the information package provided ahead of Monday’s vote. Garza said that the information hadn’t changed since trustees approved the rate hike that supported those budgetary needs.
Steen approved the rate hike with reservations in December.
“Everything we have been doing has been in full view of the board,” Garza said after the meeting.
Director of Planning and Performance John Soltau said the utility would soon notify the statewide grid operators of its plans to retire the aging Braunig plants, which produce up to 859 megawatts of power, while also working to establish its increasing portfolio of solar and wind generation and battery storage.
The utility also plans on creating new gas peaker plants, which can power up quickly during grid emergencies, with efforts ramping up in the spring.
By the fall, CPS says it will begin to execute its plans to turn coal-burning Spruce 2 unit of its Spruce Power Plant into a natural gas plant. The power generation overhauls will be ongoing projects, lasting at least to 2028.
Garza said he hoped to have the Braunig plants offline sooner rather than later. CPS’ current goal is for them to be shuttered by 2027.
“Those plants are just getting more and more expensive to run,” Garza said. “And I want to get them off.”