CPS Energy will be active as legislature tackles energy, water issues

By on January 14, 2013

by Tracy Idell Hamilton

With the bang of a gavel last Tuesday, the 83rd session of the Texas Legislature convened in Austin – and CPS Energy was there.  

For the next 140 days, veteran and neophyte lawmakers have one mandated job: to pass a budget. But they’ll also consider thousands of additional bills, on everything from education, transportation, energy, health care, redistricting, water, voter ID and immigration.

As San Antonio’s city-owned utility, CPS Energy will track many of those bills, weighing in on those that could affect the utility and its customers.

This session, water and resource adequacy – making sure enough new power plants are built in Texas to meet growing demand – will likely be the two largest issues facing the legislature that could affect CPS Energy.

Lawmakers may also take action on energy efficiency, smart meters, natural gas drilling and renewables this session.

Other bills that don’t directly deal with CPS Energy’s core business, such as pension or tax reform, but could still affect the utility, are also closely tracked.

The numbers tell part of the story: in the last session two years ago, nearly 6,000 bills were introduced, and of those approximately 1,380 passed. CPS Energy tracked 749 bills, of which 130 passed.

“CPS Energy takes a very robust, active role in the public policy process, as we should,” said Rudy Garza, vice-president of external relations. “CPS Energy shares our legislative agenda with community stakeholders, like the city of San Antonio, as well as local chambers of commerce, all of whom will support that agenda in Austin.”

Concerns about whether Texas will see enough power plants built in the coming years to keep enough of a reserve cushion to keep the lights on during the hottest or coldest days of the year has been percolating for some time.

Last year, the Public Utility Commission increased the cap on wholesale power prices in an effort to incentivize new construction, but that was seen as just a first step in tackling the issue.

CPS Energy currently enjoys excess capacity, thanks to the recent purchase of the 800 MW Rio Nogales natural gas plant, which will replace the power lost when the utility shutters its oldest coal units in 2018. But that additional power won¿t shield CPS Energy customers if the electrical grid experiences shortages.

During the summer of 2011, the Electrical Reliability Council of Texas, or ERCOT, which manages much of the state’s grid, narrowly avoided rotating outages because of the extreme heat and drought.  The long-term forecast shows ERCOT’s reserve margin shrinking below optimum levels. 

Garza said CPS Energy would prefer that the Public Utility Commission of Texas, which regulates the industry, continue to address the issue, but that if the legislature takes it up, CPS will be ready to work with lawmakers.

“We buy and sell (power) every day to serve our customers and we would like to continue to do so,” Garza said. “We want to, and plan to be, a resource for the state as it works on this issue.”

While most of the state’s energy industry has been deregulated, CPS Energy and Austin Energy are still regulated, owned by their respective cities. Keeping that local control is always a priority, Garza said, since the needs of every community are different.

“San Antonio made a decision to purchase CPS Energy more than 70 years ago to provide the city and surrounding communities with utility service,” he said. “We continue to advocate that decisions related to our municipally owned utility be made locally.”
As Texas moves into the second year of severe drought, water is shaping up to be a statewide priority – most notably, how to fund the state¿s water plan.

Already, San Antonio’s Rep. Lyle Larson has filed a bill that would draw $1 billion from the state’s Rainy Day Fund to help finance water projects, and Rep. Alan Ritter (R-Nederland), Chairman of the House Natural Resources Committee, has filed a bill suggesting $2 billion be used; the idea has drawn support from Lt. Gov. David Dewhurst and Speaker Joe Straus.

As the state weighs its options for dealing with resource adequacy and electric reliability, water management adds an extra layer of complexity to the challenge.  Electric generation needs water for reliable operations and grid reliability. 

As with power, CPS Energy finds itself in relatively good shape regarding water use – 82 percent of the water CPS uses to cool its plants is recycled water from SAWS, which means it has avoided using roughly 300 billion gallons of Edwards water since 1965 – but CPS Energy leadership understands the necessity of a state water plan, and will be closely tracking those efforts.

Lawmakers started filing bills in November, and they’ll keep it up through the filing deadline in March. Analyzing those bills begins in CPS Energy’s Austin office. If they are determined to impact CPS Energy – positively or negatively – they’re passed on to a staff attorney and someone within the company with subject matter expertise for further review.

“Those analysts give us vital feedback in their review of bills,” said Kathy Garcia, director of federal and state relations, “providing insight on operational and financial impacts.  We take those comments and, working with the senior leadership team, use them to formulate our positions.”

Tracking bills isn’t the only job of CPS Energy’s external relations team. This session, 43 of the 150 House members are new, as are 5 of the 31 Senators. San Antonio is represented by several legislators new to Austin, including state Sen. Donna Campbell, who unseated Jeff Wentworth, and two former San Antonio City Councilmen, Justin Rodriguez and Philip Cortez.

External Relations staff will work to educate those new members on public power and CPS Energy.

“It’s not a difficult job,” said Garza, “since we have such a good story to tell.” 

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