CPS Energy's Rate Increase and Bond Request Approved
San Antonio City Council has approved CPS Energy’s request for electric (7.5%) and gas (8.5%) rate increases as well as a request for $379 million in bonds to meet operating and capital budget requirements.
Why Was a Rate Increase Needed?
CPS Energy is challenged to provide the same reliable and affordable power we have for years to a customer base that continues to experience significant growth. We are accomplishing this task today. However, we’re doing so with: aging infrastructure – the average age of our plants is 26 years; a reduced workforce – we have cut 500 jobs in the past 8 years and currently have a hiring freeze; and a reduced budget – we have cut $30 million by deferring projects and reducing our vehicle fleet. We must complete power plant projects already in progress while we maintain the integrity of the current energy system. This must be accomplished despite the current economy, and we must be prepared for the new challenges a robust economy will likely present in the future.
Additional revenues will be used for strategic priorities including:
New electrical generation infrastructure, including completion of the Spruce 2 coal unit and four new gas peaking units at Braunig Power Station
Installation of required environmental upgrades
Critical maintenance at existing generating units to ensure system reliability
Operational costs such as service connections for new customers, underground or overhead services, compliance with state and federal infrastructure security, and pole inspection and replacement.
Beginning with your March bill, CPS Energy customers will see an electric base rate increase of 7.5% and an 8.5% increase in the natural gas base rate. When Spruce 2 comes on line later this year, customers’ Fuel Adjustment charges will go down, and over all, residential customers will see an average increase of 4.2 percent (or $5.57) per month in the average combined gas and electric bill. When averaged over a year, our customers’ average use of electricity is 1,138 kilowatt hours per month, and natural gas use is about 30 ccf (hundred cubic feet) per month.
What is the “Base Rate?”
CPS Energy’s "base rate" for electricity is derived from a formula that combines the Service Availability Charge, the Energy Charge and the Peak Capacity Charge (listed on the back of a customer's bill). For the natural gas rate, it includes the Service Availability Charge and the Energy Charge.
See our Fact Sheet for a more detailed explanation.
Why Are Bonds Needed?
City Council approved $379 million in bonds that will be used by CPS Energy over the next two years to fund important capital construction projects. Bond proceeds are repaid over time with interest at rates determined by our current credit rating.
Bond proceeds will support the completion of the Spruce 2 coal unit; electric transmission and distribution projects; gas distribution and associated civic requirements; and environmental improvements at our power plants.
