PROPOSED FINANCIAL PLAN TRANSPARENTLY ADDRESSES NEED FOR INVESTMENT, IMPACTS OF PANDEMIC, AND WINTER STORM URI
No rate increase announced at this time.
(San Antonio) — May 24, 2021 — CPS Energy leadership laid out to its Board of Trustees a financial plan for Fiscal Year (FY) 2022 that addresses the impacts of the ongoing financial pressures impacting core services as well as the sustained financial impacts of the COVID-19 pandemic and Winter Storm Uri.
The financially sustainable plan balances customer affordability while enabling the utility to continue providing core services to a rapidly growing community. CPS Energy’s finance team discussed a provisional, or “placeholder,” rate increase within the plan presented to the Board during its regular May meeting. While the utility continues to seek ways to reduce spending without negatively impacting service to its customers, underlying financial pressures such as the pandemic and operations will require some form of rate support in the future.
Though the FY 2022 financial plan presented today to the Board includes a provisional rate increase, the utility’s leadership stated they are not making a formal request for an increase at this time. When necessary and announced publicly, such a request, when formally declared in the future, would be presented for approval by the Board of Trustees and then to be considered and voted on by the San Antonio City Council, before taking effect.
“We continually evaluate the need for rate support on an ongoing basis,” said Cory Kuchinsky, Chief Financial Officer for CPS Energy. “Through our prudent financial stewardship, we effectively managed our operations well even though the last increase was seven years ago (2014). The conversation with our Trustees today was to give a first look at the financial landscape, present the Fiscal Year 2022 financial plan, and present the impacts of moving forward with and without a provisional rate increase.”
The projects in the financial plan that were presented to the Board will allow CPS Energy to maintain safe and reliable operations, meet customer growth and demand, replace and modernize aging infrastructure, and provide the level of service customers expect and deserve. A rate increase is likely needed later in the year to support these core services in our rapidly growing service area that now powers 2 million residents. The primary operational drivers for growth in the utility’s capital plan are needed to ensure reliable services, meeting customer growth, making investments in aging infrastructure and maintaining customer service.
CPS Energy continually seeks ways to control operating costs for the benefit of our community and we would only come to the community for a rate increase when absolutely necessary to maintain our financial health. Proving our commitment to keep customer bills affordable, since 2018 we have identified ~$604 million in current & future savings. These savings have provided direct benefits to our customers, enabling the avoidance of previously planned rate increases.
The utility’s response to and support of customers during the pandemic included suspending disconnections due to nonpayment of monthly bills, which has resulted in more than $100 million uncollected customer balances. It is important to note that the amounts presented at today’s Board meeting are based on what is known at this time. The utility will revisit this plan in the Fall and will look at various factors to update these estimates before deciding on next steps.
“Every decision we make at CPS Energy is based on our commitment to being one of the nation’s best managed and most Financially Responsible utilities,” said Paula Gold-Williams, President & CEO of CPS Energy. “We continue to work through the extraordinary implications of COVID-19 by balancing our financial obligations and helping our customers and community recover while we continue to fight against the egregious pricing we experienced from ERCOT and certain gas suppliers during Winter Storm Uri.”
CPS Energy continues to fight for its customers against the extraordinarily high charges incurred because of Winter Storm Uri. We estimate customers may eventually see a portion of the increase that will not be an increase to base rates but a pass-through cost in the fuel adjustment charge since those costs were directly related to the costs of buying electricity and natural gas during a declared state and federal natural disaster. However, our customers are not seeing the impact of those fuel costs at this time because we have temporarily suspended the recovery of those costs while we currently dispute amounts and contemplate alternative recovery strategies. The utility continues to challenge the unreasonable and illegal costs charged by ERCOT and certain natural gas suppliers and will include these costs only after all legal and negotiating options to reduce or eliminate the costs have been exhausted.
“Our more than 3,000 employees are financial stewards of our customers’ money, and we are always seeking ways to reduce our costs while providing Reliable, Customer Affordable and Safe electric and gas services, and that includes fighting for our customers through legal action,” Gold-Williams said. “Keeping bills affordable will always be a priority for us.”
To learn more about how CPS Energy is fighting for its customers please visit our website.