TEXAS VIEW: This is hard to say, but CPS needs that rate hike

THE POINT: Rejecting the rate increase will only make current challenges worse with long-term negative consequences.

We don’t want to support a rate increase for CPS Energy.

Several members of the Editorial Board lived through CPS Energy’s botched rolling brownouts during Winter Storm Uri last year. What’s worse than having no power for days in frigid temperatures? Hearing little from the utility about it, and then paying a monthly fee to cover the cost of the power you didn’t receive.

We’ve been shocked by some of the executive turnover at CPS Energy — which culminated with the recent departure of President and CEO Paula Gold-Williams — and see a city-owned utility that must ingratiate itself with the public it serves.

We see a utility that can’t seem to chart a clear way forward with the coal-fired Spruce 2 power unit, and we see a utility that is in a precarious financial position, fighting over some $580 million in Uri-related debt and weighed down by about $140 million in unpaid bills due to the pandemic.

So, no, we don’t want to support the proposed 3.85 percent rate increase for CPS Energy. Because like many ratepayers, we have had enough. But here is why we strongly support the rate increase even though we don’t want to: Rejecting the rate increase will only make these challenges worse. It would be a short-term political move with long-term negative consequences.

We wonder what it would signal to potential executives to have City Council balk at a modest rate increase. CPS Energy desperately needs a visionary change agent at its helm, but rejecting a rate increase would point to a fickle council that is afraid to invest in the present, let alone the future.

Beyond this, it would cost ratepayers. As Express-News staff writer Diego Mendoza-Moyers outlined in November, credit agencies are threatening a downgrade if CPS Energy doesn’t move forward with a rate increase. A credit downgrade would mean higher borrowing costs, which would only deepen CPS Energy’s financial pain.

Finally, CPS Energy interim CEO Rudy Garza, who has been a welcome breath of fresh air, has made a strong case in regard to need. It’s been eight years since CPS Energy last had a rate increase. This proposed rate increase of 3.85 percent would raise monthly bills about $5 on average and generate about $73 million a year in revenue.

These funds could be used to update information technology, hire staff and meet the needs of a growing city. And, of course, it should help avoid the dreaded credit downgrade.

Ideally, City Council would approve this rate increase and then hire a new CEO, who would then make the case for a series of gradual rate increases over the next five years. This would be similar to what we have seen with the San Antonio Water System and a way to avoid rate shock while ensuring financial strength.

But such a case can only be made with strong public trust, and CPS Energy has a long way to go on that front. This would be a welcome opportunity to earn back the public’s trust.

While we think the vote should be unanimous (it won’t be), there is one member of City Council who should sit this one out. We’re looking at you, District 9 City Councilman John Courage.

As Express-News Metro columnist Gilbert Garcia reported, Courage’s wife, Zada True-Courage, works as a financial analyst with CPS Energy. City officials have said there is no conflict as the rate increase does not have a direct impact on Courage’s wife.

“If council, for example, had to approve pay raises for (CPS) employees at a certain level, that would clearly be a direct conflict,” City Attorney Andy Segovia said.

Point taken. But seriously? This is how the public loses faith in government. Courage should recuse himself on this vote, and the council should pass the rate increase, even if many members don’t want to.

San Antonio Express-News