San Antonio City Council on Dec. 7 approved CPS Energy’s base rate hike request by an 8-3 vote.

What happened

The council’s vote followed a Dec. 4 CPS Energy board meeting where trustees for the city-owned utility approved a 4.25% base rate increase, which will go into effect Feb. 1, 2024.

During a nearly three-hour discussion Dec. 7, CPS Energy President and CEO Rudy Garza said the hike will generate funds needed to boost the utility’s multiyear plan designed to address aging infrastructure and cybersecurity systems and workforce planning in an expanding community.

The background

According to CPS Energy officials, the newly adopted rate hike would raise the average resident’s electric and gas bill $4.45 per month. Small commercial customers would see a rise of $17.80 for their average electric bill, or an increase of $24.40 for those with combined gas and electric service.

CPS Energy officials said they will work to promote initiatives, such as the utility’s Affordability Discount Program, to aid qualified customers and lessen the impact of the new rates on their bills. The new monthly discount will go up from $16.14 to $18.36.

Digging deeper

Business leaders and some council members said, while a utility rate hike is unattractive during a time of inflation and economic uncertainty, the increase is necessary to bolster CPS Energy’s resiliency and future plans. The utility is eyeing another rate hike in 2027.

Business groups such as the North San Antonio Chamber of Commerce and the Greater San Antonio Chamber of Commerce issued position statements supporting CPS Energy’s planned rate hike, saying it will help to improve the utility in many ways.

Council members such as District 10’s Marc Whyte suggested CPS Energy reduce its rate hike proposal to 2.25% and asked if some of the city’s fiscal year 2023-24 budget could help to cover the difference in the new revenue that the utility projected under a 4.5% increase.

Whyte and other council members said the utility should seek ways to tighten its belt fiscally, adding that many CPS Energy customers are already under financial stress due to rising expenses.

Several speakers at the council meeting asked the city’s elected leaders to reject the rate hike plan and push CPS Energy to create a system to advocate for customers, especially financially vulnerable ratepayers.

“It’s easy to sit up here and say how hard this is and we don't want to do increases, but doing something hard is often a right way to do it,” Whyte said of his proposal.

The council narrowly defeated Whyte’s proposal by a 6-5 vote. The council then voted to approve the original rate hike plan.

Mayor Ron Nirenberg said local officials have reviewed the city’s budget and that of CPS Energy, looking for ways to improve cost efficiencies, but that the new rate hike is the best path toward enhancing what he called an underfunded utility.

“I think [the rate increase] is appropriate, measured and conscious of the challenges we’re facing,” he added.