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>> MAYOR NIRENBERG: GOOD AFTERNOON, EVERYONE. WELCOME TO OUR CITY COUNCIL SPECIAL SESSION. BEFORE I OPEN OUR SPECIAL SESSION, CITY COUNCIL HAS RECONVENED FROM ITS EXECUTIVE SESSION AT 1:05 P.M. ON THE 30TH DAY OF NOVEMBER 2023.
OUR A SESSION IS NOW ADJOURNED. WE'LL CALL OUR SPECIAL MEETING TO ORDER AT 10:5 P.M. MADAME CLERK, CAN YOU READ THE ROLL?
>> CLERK: MAYOR, WE HAVE A QUORUM. >> MAYOR NIRENBERG: ALL RIGHT. GOOD AFTERNOON, EVERYBODY. WELCOME TO OUR CITY COUNCIL SESSION. WE ARE GOING TO HEAR A BRIEFING FROM OUR PUBLIC UTILITIES SUPERVISORS. LET ME TURN IT OVER TO CITY MANAGER ERIK WALSH TO GET US
STARTED. >> WALSH: THANK YOU, MAYOR. THIS IS OUR SECOND MEETING REGARDING OUR RATE ANALYSIS PROCESS AND THE REQUEST FROM CPS ENERGY.
AS YOU WILL RECALL, SEVERAL WEEKS AGO RUDY AND HIS TEAM HAD A WORK SESSION WITH THE COUNCIL WHICH LAID OUT THE REVENUE AND EXPENSE NEEDS AS IT RELATES TO THEIR BUSINESS CASE REQUEST.
AND WHAT HAD BEEN APPROVED BY THE BOARD OVER AT CPS. TODAY, BEN GORZELL, THE PUBLIC UTILITIES SUPERVISOR, WILL PROVIDE A REPORT -- HAS PROVIDED A REPORT TO COUNCIL EARLIER IN THE WEEK, AND WILL WALK THROUGH A PRESENTATION OF THE CITY'S ANALYSIS OF THE REQUEST. IT'S A LOT OF INFORMATION, A LOT OF DETAIL.
AND THEN, AS YOU CAN SEE FROM THE RIGHT-HAND SIDE OF THE CHAMBERS, AN ARMY OF CPS FOLKS HERE WITH RUDY TO MAKE SURE WE'RE PREPARED TO ANSWER ANY FOLLOW-UP QUESTIONS.
I'LL TURN IT OVER TO BEN TO KICK US OFF. >> GOOD AFTERNOON, MAYOR AND COUNCIL MEMBERS. AS THE CITY MANAGER POINTED OUT, TODAY I WILL BE GIVING YOU A BRIEFING FROM THE PUBLIC UTILITIES STAFF RECOMMENDATION ON THE PROPOSED RATE INCREASE THAT HAS BEEN REQUESTED FROM CPS ENERGY . AS WE BRING THE PRESENTATION UP, I WANT TO GIVE YOU A LITTLE BIT OF BACKGROUND AGAIN IN TERMS OF KIND OF HOW WE GOT HERE TODAY. AND I'M GOING TO GO BACK TO JUST BRIEFLY THE LAST RATE CASE AND WHERE WE WERE AT THAT POINT IN TIME. SO THE LAST RATE INCREASE WAS APPROVED IN JANUARY OF 2022. THAT WAS A 3.85% BASE RATE INCREASE PLUS A PASS-THROUGH FOR SOME WINTER STORM URI FUEL COSTS. AT THAT TIME THE APPROACH WAS REALLY TO FOCUS ON THE IMMEDIATE FINANCIAL PRESSURES OF CPS ENERGY.
IT WAS REALLY TO ALLOW TIME FOR KEY DIALOGUE ON SOME REALLY IMPORTANT ISSUES LIKE THE GENERATION PLAN AND WHERE CPS ENERGY WAS GOING TO GO FORWARD WITH THAT.
AND THEN IT WAS REALLY TO GIVE TIME FOR SOME ISSUES TO GAIN MORE CLARITY.
THERE WAS A LOT OF UNCERTAINTY AROUND THINGS LIKE THE PANDEMIC IMPACT ON BAD DEBT.
FUEL COSTS ASSOCIATED WITH WINTER STORM URI, SOME TECHNOLOGY PROJECT COSTS, AND THEN THE WORKFORCE STAFFING LEVELS. AND WHILE THERE CERTAINLY IS SOME UNCERTAINTY STILL TODAY, WE HAVE A LOT MORE CLARITY THAN WE DID TWO YEARS AGO.
AND ALL OF THAT WAS TAKEN INTO CONSIDERATION ALONG WITH THE FINANCIAL REQUIREMENTS FROM CPS ENERGY TO COME FORWARD WITH THIS RATE REQUEST. THE TEAM ON OUR SIDE HAS WORKED WITH CPS ENERGY OVER THE PAST SEVERAL MONTHS. THAT WORK HAS CULMINATED IN THE PROPOSED 4.25% RATE REQUEST THAT YOU HAVE BEFORE YOU. THAT REQUEST IS TO SUPPORT THE OPERATION AND MAINTENANCE PLAN AND ASSOCIATED PLANS FOR CPS ENERGY AND TO ESTABLISH A REGULATORY ASSET. THIS IS REALLY A GOVERNMENTAL ACCOUNTING STANDARDS TOWARDS PENSION ISSUE. IT'S A NON-CASH ISSUE AND I'LL DESCRIBE IT IN MORE DETAIL ON SOME SUBSEQUENT SLIDES. SO JUST A QUICK LOOK ON THE RATE PLAN ITSELF.
SO THIS IS THEIR 2025 FISCAL YEAR BEGINS FEBRUARY 1. THEY ARE REQUESTING A 4.25% BASE RATE INCREASE. THE BILL IMPACT, WHEN YOU CONSIDER FUEL AND EVERYTHING, IS ABOUT 2.7%. AND THEN THE REVENUE THAT WOULD BE RAISED OFF OF THAT IS $85 MILLION. IN THE PLAN, BASED ON WHAT WE HAVE IN PLACE TODAY, CAPITAL
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PLANS, O&M PLANS, THERE IS A PROJECTED 5.5% BASE RATE INCREASE IN 2027.THAT WOULD BE A BILL IMPACT OF 3.8% OR $110 MILLION. THERE'S ALSO ONE POTENTIALLY IN 2029. BUT I'LL CAVEAT SAYING THAT OBVIOUSLY THESE PLANS GET UPDATED ALL THE TIME. THEY'RE GOING TO LOOK AT THEIR REQUIREMENTS TO LINE THOSE UP WITH HOW THEIR BUDGETS AND PLANS EVOLVE GOING FORWARD AND THEN YOU ADJUST ACCORDINGLY.
THOSE ADJUSTMENTS LOOK AT WHAT'S HAPPENING WITH THE ECONOMY, TECHNOLOGICAL ADVANCES, FINANCIAL ENVIRONMENTS, AND MANY OTHER THINGS.
MAYOR, AT THE LAST SESSION YOU ASKED ME WHAT A -- I'M GOING TO CALL IT A TWO-STEP PROCESS WOULD LOOK LIKE. IF YOU WERE TO LOOK AT APPROVING A RATE PLAN WHAT WOULD BE INVOLVED IN THAT. WE'VE DONE THIS RATE PLAN APPROVAL WITH SAWS A COUPLE OF DIFFERENT TIMES. SO THIS SLIDE KIND OF SUMMARIZES THAT.
IF YOU ARE TO WANT TO APPROVE MORE THAN JUST THIS FIRST YEAR'S INCREASE AND LOOK AT THE SECOND YEAR, YOU WOULD BE APPROVING THE TO 25 RATE AT 4.25%.
YOU WOULD HAVE AN ORDINANCE ESTABLISHING A NOT TO EXCEED RATE OF 5.5% FOR 2027.
THE PROCESS AROUND THAT RATE REVIEW WOULD BE EXACTLY AS IT IS TODAY.
THEY WOULD STILL SUBMIT THAT CASE OVER TO THE CITY. WE WOULD REVIEW IT.
AND WE WOULD STILL MAKE A RECOMMENDATION TO THE CITY MANAGER AND TO YOU ALL ON THAT RATE CASE. IT WOULD STILL GO TO THEIR BOARD AND IT WOULD STILL GO THROUGH THE PROCESS THAT IT'S ESSENTIALLY GOING THROUGH TODAY WITH ONE EXCEPTION.
WE WOULD BRIEF YOU AT THE END IN A B SESSION, COMBINED BRIEFING WITH CPS ENERGY, MAKING THOSE RECOMMENDATIONS TO YOU. AND THERE WOULD BE NO REQUIRED FURTHER ACTION FROM YOU AT THAT POINT IN TIME. SO IF YOU WERE GOOD WITH THE RECOMMENDATION, WE BRIEF YOU, THE ORDINANCE WOULD BE IN PLACE, AND AS LONG AS WE WERE AT OR UNDER THE 5.5%, IT WOULD THEN GO INTO EFFECT. THIS SLIDE JUST SUMMARIZES THE REVIEW THAT THE STAFF CONDUCTS ON OUR SIDE, HITTING ALL OF THESE MAJOR AREAS THAT YOU SEE LISTED HERE ON THE SLIDE. I'M NOT GOING TO GO THROUGH ALL OF THOSE BUT THESE ARE THE AREAS THAT WE TRY TO FOCUS ON. I DO WANT TO TAKE A MOMENT, BEFORE I JUMP INTO THE REST OF THE PRESENTATION, THAT AS ERIK MENTIONED, I'M ABOUT TO GO THROUGH A LOT OF DETAIL WITH YOU. AS WE GET INTO BUDGETS, THEIR CAPITAL PLANS, WE'RE GOING TO GO THROUGH A FAIR AMOUNT OF DETAIL WITH YOU. SO THIS PRESENTATION IS NOT MEANT TO BE THE HIGH-LEVEL SUMMARY OR THE TALKING POINTS. THIS IS REALLY TRYING TO MEET THE REQUIREMENT OR MEETING THE REQUIREMENT OF THE CHARTER IN TALKING TO YOU ABOUT THE BUSINESS CASE THAT WE LOOKED AT AND WHY WE'RE RECOMMENDING SUPPORT FOR THE 4.25% RATE CASE. AS WE GO THROUGH THIS, WE'LL TALK ABOUT WHAT HAS CHANGED OVER THE PAST COUPLE OF YEARS, WHERE CPS ENERGY HAS INVESTED, AND WHERE THINGS HAVE EVOLVED IN THE TERMS OF PLANS, PARTICULARLY ON THE CAPITAL SIDE.
AND SO I'M NOT GOING TO FOCUS ON JUST WHAT THE RATE INCREASE GENERATES AND WHAT THEY WOULD USE THE FUNDS FOR OR INVEST IT IN, I'M GOING TO STEP BACK AND LOOK AT WHAT'S CHANGED FROM 2021, THE LAST TIME WE WENT THROUGH THIS PROCESS, AND WHERE THOSE KEY INVESTMENTS HAVE BEEN MADE BY CPS ENERGY OVER THE PAST SEVERAL YEARS. WE DID GIVE YOU A DRAFT WRITTEN REPORT ON TUESDAY OF THIS WEEK. WE'LL FINALIZE THAT AND ATTACH THAT TO THE AGENDA ITEM FOR THE ITEM NEXT WEEK. AS YOU CONSIDER THE ORDINANCE THAT WOULD APPROVE THE RATE INCREASE. SO I'M JUST GOING TO START WITH THE ECONOMIC RATE MODEL. THERE'S A LOT BUILT INTO THIS. CASH FLOWS, THE FLOW OF FUNDS UNDER THE BOND INDENTURE CREDIT RATING AND KEY FINANCIAL TARGETS.
I'LL START WITH JUST THE RATE MODEL ITSELF AND JUST THE KEY POINT HERE IS THAT WHEN WE BEGIN THIS PROCESS, WE'RE STARTING FROM A SET OF AUDITED NUMBERS.
IN THIS CASE IT WAS FY2023 SO THESE MODELS PICK UP THOSE AUDITED NUMBERS, RUN THEM INTO THE MODEL, YOU DO A REESTIMATE FOR THE CURRENT YEAR, WHICH WOULD BE 2024, THEN YOU GET INTO THE PROPOSED BUDGET FOR TO 25 AND PROJECTIONS BEYOND THAT.
THE MODEL GOES OUT 25 YEARS . BUT IT GIVES AN IDEA FROM A PLANNING PERSPECTIVE OF WHAT'S HAPPENING WITH THE UTILITY. THE REST IS LISTED THERE IN TERMS OF THE THINGS WE LOOKED AT, ALL OF THOSE THINGS WERE PART OF THE REVIEW. THE FLOW OF BUNDS IN THE BOND INDENTURE IS HERE. IT FOCUSES FIRST WITH DOLLARS GOING INTO OPERATION FUND AND MAINTENANCE EXPENSES, THEN INTO DEBT SERVICE. THAT'S TO HELP FUND THEIR CAPITAL BUDGET, CAPITAL PLANS. UTILITIES ARE CAPITAL INTENSIVE BUSINESSES .
CITY PAYMENT, THE PAYMENT OVER TO THE CITY, AND THEN ANY DOLLARS LEFT OVER GO INTO THAT
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REPAIR AND REPLACEMENT ACCOUNT. IF IT MAKES IT ALL THE WAY THROUGH THIS FLOW IT HITS THAT LAST BUCKET AND GOES INTO THE R&R.THAT IS DEPLOYED IN FUTURE YEARS TO SUPPORT THEIR CAPITAL PLAN.
IN ORDER FOR CPS TO MAINTAIN ITS STRONG FINANCIAL RATINGS, DOLLARS HAVE TO BE FLOWING INTO THAT LAST BUCKET. IF THEY'RE NOT HITTING THAT LAST BUCKET, IF NOTHING IS HITTING THAT, THEY'RE NOT GOING TO MEET THEIR COVERAGE REQUIREMENTS FROM A DEBT PERSPECTIVE. A QUICK REMINDER OF THE CREDIT RATINGS ARE LISTED HERE.
MOODY'S, FITCH, AND S&P. THAT COMING OFF OF WINTER STORM URI, A LOT OF THAT DEALING WITH ERCOT AND ENERGY MARKET HERE IN TEXAS. CERTAINLY THE CREDIT RATINGS ARE IMPORTANT. THE HIGHER THE CREDIT RATING, THE LOWER THE INTEREST COSTS ON CPS ENERGY'S DEBT. GIVEN THE SIZE OF THE CAPITAL PLAN, THE AMOUNT OF DEBT THAT COULD POTENTIALLY BE ISSUED, THEIR CREDIT RATINGS ARE AN IMPORTANT PART OF THAT IN TRYING TO LOWER THAT COST OF BORROWING AS WE GO FORWARD AND AS THEY ENTER INTO THIS HIGH PERIOD OF CAPITAL INVESTMENT. THIS SLIDE LISTS A COUPLE OF KEY METRICS THAT WE TEND TO FOCUS ON. THERE ARE A LOT OF FINANCIAL METRICS THAT CPS MONITORS.
THESE ARE THE THREE THAT YOU HAVE HEARD US TALK THE MOST ABOUT.
THE BOTTOM TWO THERE, DEBT SERVICE COVERAGE. HOW MANY TIMES IS YOUR DEBT SERVICE COVERED BY TOTAL REVENUES? THERE'S NOT A LOT OF ROOM IN THAT TARGET. DAY'S CASH ON HAND AT 150. AGAIN, NOT A LOT OF ROOM THERE. LIQUIDITY MEASURE, HOW MANY DAYS OF OPERATING EXPENSES CAN I COVER? THE ONE I WOULD PROBABLY FOCUS ON THE MOST IS THE DEBT TO EQUITY RATIO. IT'S TARGETED TO BE AROUND 60% MEANING THEY HAVE ABOUT 60% CUMULATIVELY OF DEBT ISSUED AGAINST THEIR EQUITY. SO 60/40 SPLIT.
GIVEN THE SIZE OF THE CAPITAL PLAN, THAT METRIC WILL CONTINUE TO GO UP EVEN WITH THOSE RATE INCREASES, JUST GIVEN THE SIZE OF THE CAPITAL PLAN. THEY HAVE REVISED THAT TARGET, WHICH I THINK MAKES SENSE GIVING THAT CAPITAL INVESTMENT.
I THINK RATING AGENCIES, OTHER FINANCIAL MARKETS WILL TAKE THAT INTO CONSIDERATION BUT THIS IS AN AREA THEY HAVE TO REALLY WORK ON AND MANAGE AND THAT'S TO TRY TO KEEP THAT DEBT RATIO IN THAT 65 TO 70% RANGE, WHICH YOU SEE LISTED THERE ON THE SLIDE.
I'M GOING TO SWITCH GEARS HERE A LITTLE BIT AND ON THIS SLIDE TALK ABOUT COST OF SERVICE.
THIS WAS SOME INFORMATION THAT WAS SHARED WITH THE RATES ADVISORY COMMITTEE, ALSO WITH THE CPS ENERGY WORKING GROUP. AND LET ME TALK A LITTLE BIT ABOUT WHAT A COST OF SERVICE STUDY IS FIRST. IT'S CONDUCTED BY UTILITIES TO ALLOCATE THE UTILITIES COST OF PROVIDING SERVICES TO DIFFERENT RATE GROUPS. AND IT USES A RATIONAL BASIS FOR DISTRIBUTION OF THE TOTAL COST OF THE UTILITY BASED ON WHAT DRIVES THAT COST.
WHAT'S DRIVING THAT COST. WHAT'S CAUSING THAT TO BE INCURRED.
AND IT ALLOCATES THOSE COSTS BACK TO THESE RATE GROUPS. IT'S REALLY IMPORTANT WHEN YOU'RE DOING RATE DESIGN, WHEN YOU'RE CHANGING HOW YOU RECOVER DOLLARS FROM CUSTOMER GROUPS.
AND WE'RE NOT DOING THAT IN THIS CASE. THEY'RE NOT PROPOSING ANY RATE DESIGN CHANGES. THE RATES ARE STAYING IMPACT. INTACT.
WE'RE TALKING ABOUT A SYSTEM-WIDE INCREASE SO THAT 4.25 GETS APPLIED ACROSS THE BOARD. IT'S PART OF HOW YOU DEFEND THAT YOUR RATES ARE JUST AND REASONABLE, ARE KIND OF THE TERMS THAT GET THROWN AROUND A LOT, AND THEY WOULDN'T BE DEEMED UNREASONABLY DISCRIMINATORY. CPS ENERGY ENGAGED THE BRATTLE GROUP. THEY DO THESE KINDS OF STUDIES ALL OVER THE COUNTRY , TO CONDUCT A COST OF SERVICE STUDY. THEY USED DATA FROM CPS ENERGY'S FISCAL YEAR 2022 THAT ADHERE TO INDUSTRY-ACCEPTED STANDARDS IN TERMS OF HOW THESE COST OF SERVICE STUDIES ARE DONE AND THEY LOOKED AT THE GUIDANCE FROM THE PUBLIC UTILITY COMMISSION OF TEXAS WHICH REGULATES FOR PRIVATE UTILITIES, RATES FOR THEM.
THE GRAPHS ARE EXCERPTED FROM A PRESENTATION THAT BRATTLE DID ON THE RESULTS OF THAT STUDY.
THAT FULL PRESENTATION IS AVAILABLE ON THE CPS ENERGY WEBSITE.
SO HOW TO LOOK AT THIS SLIDE. YOU SEE THE ONE THERE WITH THE DARKER LINE GOING ACROSS THE GRAPHIC. IT'S BASICALLY REFLECTING FOR EVERY DOLLAR OF COST THAT I HAVE, THAT I'M ALLOCATING TO THAT RATE GROUP, HOW MUCH REVENUE AM I GETTING BACK.
AND SO THE TWO ON THE LEFT ARE YOUR RESIDENTIAL TARIFFS. AND WHAT IT'S SAYING IS THAT FOR EVERY DOLLAR OF COST THAT I ALLOCATE TO THAT RESIDENTIAL GROUP, I'M GETTING 93 CENTS
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BACK, ESSENTIALLY. THE BARS TO THE RIGHT OF THAT ARE YOUR COMMERCIAL CUSTOMERS.GOING FROM SMALL TO LARGEST. YOU CAN SEE THAT THEY'RE ALL AT THE 103 TO 1.11.
SO THE TAKEAWAY FROM THIS SLIDE IS THAT WE'RE REALLY UNDERRECOVERING FROM THE RESIDENTIAL GROUP AND WE'RE OVER RECOVERING FROM BUSINESSES.
IN ESSENCE, BUSINESSES ARE PAYING MORE THAN THEIR ALLOCATED COST OF SHARE OF SERVICE. I'LL SAY THAT, MY UNDERSTANDING IS WHEN WE LOOK AT THESE COST OF SERVICE STUDIES, IT'S TYPICAL TO SEE THE RESIDENTIAL COMING IN UNDER AND BEING UNDER THE ONE AND BEING A LITTLE BIT UNDERRECOVERED AND SEEING BUSINESSES OVER RECOVERED BUT OBVIOUSLY IT'S SOMETHING WE NEED TO PAY CLOSE ATTENTION TO BECAUSE IT GOES BACK TO MAKING SURE OUR RATES STAY IN A JUST AND REASONABLE POSITION. SOMETHING THAT IS DEFENSIBLE AND THE COST OF SERVICE STUDY CERTAINLY INFORMS THAT DECISION.
BUT I WANTED TO ADDRESS THAT BECAUSE I THINK SOMETIMES, BECAUSE OF THE WAY THE TARIFFS ARE WRITTEN AND YOU LOOK AT FIXED CHARGES VERSUS ENERGY CHARGES, I THINK SOMETIMES THERE'S A MISCONCEPTION THAT BUSINESSES ARE GETTING A BREAK BECAUSE THE ENERGY CHARGES.
THE TARIFFS ARE STRUCTURED DIFFERENT. THIS IS REALLY TAKING ALL OF THAT INTO ACCOUNT AND SAYING WHO'S PAYING WHAT IN TERMS OF THAT SHARE OF COST AND REALLY THE TAKEAWAY HERE IS THAT BUSINESSES ARE PAYING A LITTLE BIT MORE THAN THEIR ALLOCATED SHARE OF COST UNDER A COST OF SERVICE STUDY. THIS NEXT SLIDE AUDIO] THIS IS THE GAS SYSTEM. THERE'S ONE TARIFF THERE THAT YOU SEE TO THE FAR LEFT.
IT'S AT THE .94, SO SIMILAR STORY. UNDERRECOVERY ON THE RESIDENTIAL SIDE. OVER RECOVERY ON THE COMMERCIAL TARIFFS THAT YOU SEE LISTED THERE. GOING INTO THEIR FY2025 PROPOSED BUDGETED, ON THIS SLIDE, ON THE LEFT SIDE YOU'VE GOT THE FUNDS LISTED THERE. THE USE MATCHES THAT.
THE SOURCES OF FUNDS INCLUDE THE ELECTRIC REVENUES, WHICH INCLUDE THE FUEL PASS THROUGH.
AS CPS BUYS FUEL FOR PURPOSES OF RUNNING THE GENERATION PLANTS, BUT ALSO PROVIDING THAT FOR DISTRIBUTION PURPOSES ON A NATURAL GAS SYSTEM, THAT PASSES THROUGH CUSTOMER BILLS, THAT IS THE BULK OF THE REVENUES THAT CPS ENERGY GETS. YOU HAVE SOME ERCOT FEES THERE. THE ERCOT PIECE OF THAT IS JUST A PORTION OF SHARING THE TRANSMISSION GRID IN TEXAS. AND THEN COST RELATED TO ISO FEES FOR ERCOT.
YOU HAVE WHOLESALE REVENUES THAT WE TALKED ABOUT BEFORE AND THEN SOME OTHER MISCELLANEOUS.
ON THE RIGHT YOU SEE THE ELECTRIC FUEL PURCHASED BY CPS OR PROJECTED TO BE PURCHASED.
RESALE GAS. THE WHOLESALE FUEL. EVERY TIME THEY DO WHOLESALE PURCHASES THERE'S AN ALLOCATION OF FUEL. THE O&M BUDGET IS BROKEN UP INTO TWO CATEGORIES. THE CPS NON-FUEL IS $715 MILLION PROPOSED FOR 2025. AND $175 MILLION FOR STP. SO CPS ENERGY OWNS 40% OF THE STP NUCLEAR POWER PLANT SO THEY HAVE TO PAY FOR A PROPORTIONATE SHARE OF THE OPERATING EXPENSES AND THAT IS PROJECTED AT $175 MILLION. AND THEN YOU SEE SOME OTHER REGULATORY CHARGES, DEBT SERVICE, CITY PAYMENT, AND THEN I MENTIONED THAT REPAIR AND REPLACEMENT ACCOUNT WHICH REALLY HAS A REQUIRED CONTRIBUTION TO IT BUT ANYTHING EXCESS GOES INTO THAT ACCOUNT AS WELL. THIS SLIDE GIVES YOU SOME HISTORY AND A PROJECTION OF THE OPERATIONS AND MAINTENANCE EXPENSES OF THE UTILITY.
TO THE FAR LEFT I HAVE GIVEN YOU HISTORICAL FROM 2022 TO 2023.
THOSE ARE ACTUALS. THE 2024 IS THEIR LATEST ESTIMATE.
TO THE RIGHT YOU HAVE THE PROPOSED FOR 2025. AND SOME PROJECTIONS FROM 2026 THROUGH 2029. A COUPLE OF TAKEAWAYS HERE IS THAT THE LATEST ESTIMATE IN 2024 INCLUDES $23 MILLION OF ONE-TIME EXPENSES FUNDED FROM SOME OF THE WHOLESALE REVENUES THAT CPS ENERGY EARNED THIS PAST SUMMER. AND ANOTHER $12 MILLION THAT WAS ALLOCATED IN 2025. THOSE ARE GOING TO VEGETATION MANAGEMENT, PLANT MAINTENANCE, AND THE RESIDENTIAL ENERGY ASSISTANCE PROGRAM. I'LL COME BACK AND TALK ABOUT THAT IN A SECOND. IF YOU EXCLUDE THE ONE TIME, YOU CAN SEE THERE'S AN INCREASE IN 2023 AND INTO 2024. GOING FROM 2023 TO 2024, IT'S ABOUT A $97 MILLION.
MOST OF THAT IS ATTRIBUTABLE TO FILLING VACANCIES. THE STP PART OF THAT CHART,
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WHICH IS THE VERY TOP PART OF IT, YOU CAN SEE IN 2025 GOES UP QUITE A BIT BY ABOUT $46 MILLION AND YOU SEE THIS BUMP EVERY THREE YEARS. THAT IS THE REFUELING OF THOSE UNITS. OF BOTH UNITS ONE AND TWO WILL BE DOWN NEXT FISCAL YEAR FOR REFUELING AND THAT CAUSES THE OPERATIONAL EXPENSES TO BE UP FOR BOTH OF THOSE.I'M GOING TO GO A LITTLE BIT DEEPER INTO THE O&M BUDGET AND TALK ABOUT AUTHORIZED POSITIONS. I MENTIONED I'LL TALK ABOUT WHAT CHANGED FROM THE LAST RATE CASE TO THIS ONE AND HOW THINGS HAVE EVOLVED. THE LAST RATE CASE HAD AUTHORIZED POSITIONS OF 3,370. IT KEPT THEM FLAT. THAT'S WHAT WE WERE LOOKING AT THAT POINT IN TIME. WE KNEW, WHEN WE WERE LOOKING AT THIS TWO YEARS AGO, THAT THAT WOULD PROBABLY CHANGE. AND THAT IT WAS GOING TO TAKE SOME TIME FOR THEM TO WORK THROUGH SOME OF THE IMPACTS THAT THE PANDEMIC HAD ON WORKFORCE STAFFING LEVELS, NOT ONLY FOR CPS ENERGY BUT FOR EVERYBODY, INCLUDING US. SO AT THAT POINT IN TIME THEY HAD ABOUT 400 POSITIONS VACANT. AND THIS PART OF THE STRATEGY WAS TO WORK ON FILLING THOSE VACANCIES AND IDENTIFY, GOING FORWARD, WHAT DID THEY NEED FROM A WORKFORCE PERSPECTIVE. IN ADDITION TO THAT, THERE IS THE OPERATION EFFICIENCY AUDIT. THERE WERE SEVERAL COUNCIL MEMBERS, WHEN WE WERE DOING THIS RATE REQUEST TWO YEARS AGO THAT ASKED FOR KIND OF AN INDEPENDENT REVIEW OF CPS ENERGY. THE BOARD AGREED TO DO THAT. THEY ENGAGED DAYMARK ENERGY ADVISERS TO DO THAT. DAYMARK REFERENCED THE NEED TO LOOK AT SOME AREAS OF STAFFING WITHIN CPS ENERGY AND TO ADDRESS SOME OF THOSE AREAS. SO THEY'VE ADDED POSITIONS TO ADDRESS THE KEY STAFFING REQUIREMENTS AND SOME ANTICIPATED RETIREMENTS.
I'M GOING TO WALK THROUGH THE TABLES REAL QUICKLY ON THE BOTTOM.
WE WERE AT 3370. THEY HAVE INCREASED THE NUMBER OF POSITIONS IN THEIR CURRENT FISCAL YEAR, ARE IN THE PROCESS OF FILLING THOSE AND HAVE EXCEEDED THE 3370.
THEY MADE GREAT PROGRESS IN TERMS OF ADDRESSING A LOT OF THEIR VACANCIES.
AND THEN YOU SEE THE INCREASE TO 3,726 LISTED THERE FOR 2025.
FROM THE LAST RATE CASE TO NOW, IT'S 356 POSITIONS THAT ARE BEING ADDED.
AND THEN YOU SEE IT DROP IN '27 AND IN '28. AND PART OF IT INCLUDES SOME OVER HIRE. IF YOU LOOK AT THE CHART ON THE RIGHT, IT WILL WALK YOU FROM THE 3,370 AUTHORIZED POSITIONS THERE BEFORE, THEY'RE ADDING IN 356 NEW POSITIONS THIS YEAR AND INTO NEXT FISCAL YEAR IN TOTAL. THAT INCLUDES OVER HIRES.
I'LL TALK ABOUT WHY THEY WANT TO DO SOME OVER HIRES AND HOW THEY'RE BRINGING THAT BACK DOWN. AND THEN IT INCLUDES THE CONVERSION OF 81 CONTRACT EMPLOYEES TO CPS ENERGY EMPLOYEES. THE BULK OF THOSE ARE IN THEIR EVOLVED ERP PROJECT WHERE THEY ARE ENERGY. SO WHEN YOU LOOK AT THE FAR LEFT, AGAIN, WHY IT'S DROPPING IN '27 AND '28, IT'S THE EFFECT OF THE OVER HIRES. THEY OVER HIRE IN THE SHORT TERM TO ADDRESS ANTICIPATED RETIREMENTS. THEY'RE GOING TO DROP THAT BY 50 IN 2027 AND BY ANOTHER 50 IN 2028 AS THOSE RETIREMENTS HAPPEN.
REALLY, FROM A RATE CASE PERSPECTIVE THE NET IMPACT OF WHAT THEY'VE DONE HERE FROM A WORKFORCE PLANNING PERSPECTIVE IS, FROM A WORKFORCE CAPACITY PERSPECTIVE, ABOUT 175 FULL-TIME EQUIVALENTS. CONTRACTORS WERE ALREADY THERE.
THEY'RE JUST BEING CONVERTED TO EMPLOYEES AND THEN WE HAVE THE OVER HIRE ISSUE.
YOU TAKE THOSE THINGS OUT AND YOU GET A NET IMPACT NOT KNOWING EXACTLY HOW THESE RETIREMENTS ARE GOING TO HAPPEN, IT'S HARD TO LOOK AT WHAT THE FUTURE STATE WILL BE EXACT BY IN 2028, SO THE NEXT COUPLE OF SLIDES ARE GOING TO WALK THROUGH THE 356 POSITIONS AND I'LL TOUCH ON SOME OF THE CATEGORIES.
81 OF THOSE ARE RELATED TO THE EVOLVE PROJECT. THESE ARE CONVERSIONS OF CONTRACT EMPLOYEES THAT THEY ARE PAYING FOR TODAY THAT THEY ARE CONVERTING TO FULL-TIME EMPLOYEES. THE COST OF THE O&M BUDGET IS FAIRLY NEUTRAL BECAUSE THEY ARE ALREADY BUILT INTO THE JUST MOVING THEM FROM CONTRACT TO FULL-TIME EMPLOYEES. AND THE ENTRY-LEVEL SKILL CRAFT AND ENGINEERING DESIGN ARE PROBABLY THE TWO AREAS SEEING THE MOST IMPACT FROM OVER HIRING.
THEY HAVE A NUMBER OF JOURNEY MEN, FOREMEN THAT ARE IN POSITION WHERE THEY CAN RETIRE, AND CPS ENERGY CAN'T JUST HIRE A JOURNEYMAN.
YOU MOVE UP TO A JOURNEYMAN. THAT PROCESS CAN TAKE UP TO THREE YEARS IN SOME CASES.
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IT ALSO BASED ON TENURE AND THE COLLECTIVE BARGAINING, SO THEY WANT TO MAKE SURE THEY HAVE ENOUGH EMPLOYEES IN THAT PIPELINE TO ADDRESS IF A SIGNIFICANT NUMBER ARE RETIRING. THEY ALSO ARE GOING TO ADD 19 CREWS, SIX ON THE ELECTRIC, ON THE BACK SIDE. WORK ON BACK ORDER.BACKLOG OF WORK ORDERS. DEALING WITH A NUMBER OF COMPLEXITY AND INCREASED NUMBER OF PROJECTS THAT THEY ARE HAVING TO WORK ON FROM A DESIGN PERSPECTIVE AND GROWTH IN THE SYSTEM. ON THE BACKLOG OF WORK ORDERS THAT I MENTIONED, THERE ARE REALLY A NUMBER OF THINGS THAT GO INTO THOSE BUCKETS.
WHEN WE TALK ABOUT THE CREWS, THOSE ARE THE ENTRY-LEVEL SKILL CRAFT GROUP, WHEN WE LOOK AT WORK ORDERS FROM 2019 TO 2023, THEY HAVE GROWN PRETTY SIGNIFICANTLY, SO THEY ARE NOT CLEARING AS MANY AS ARE COMING IN OR PUTTING IN.
SO PART OF THIS WILL ADDRESS SOME OF THAT BACKLOG. BUT THE WORK ORDERS AREN'T JUST NEW SERVICE, THEY ARE THE CURRENT SYSTEM SO THEY INVOLVE GAS LEAK REPAIR, CHECKING TRANSFORMERS, CUSTOMER SIDE INSPECTIONS, VOLTAGE COMPLAINTS, THERE ARE A NUMBER OF DIFFERENT ISSUES AND CPS HAS TO PRIORITIZE ON WHAT THEY CAN GET DONE AND CLEAR. ON THE ENGINEERING SIDE, EVERYTHING FROM POLE REPLACEMENT, METER MAINTENANCE, CORROSION INSPECTION AND REPAIR AND DESIGN OVER CLOSURES. SYSTEM OPERATIONS, THEY ARE ADDING 28 POSITIONS INTO THAT GROUP. AS THEY INCREASE THE AMOUNT OF AUTOMATION WITHIN THE SYSTEM, THIS IS ALSO CREATING SOME GAPS IN TERMS OF THEIR OPERATIONS.
YOU MAY RECALL THAT ELAINA BALL MENTIONED ABOUT SELF-HEALING GRIDS AND THAT'S THE FUTURE STATE WHERE YOU WANT TO GET TO WHERE THESE THINGS AUTOMATICALLY HEAL. THIS IS THE IN-BETWEEN STUFF.
THEY STILL NEED QUITE A BIT OF HUMAN INTERVENTION. ENERGY ADVISERS INCLUDING ADDING 28. THIS IS REALLY TO HELP ON THE CALL CENTER, TO IMPROVE THEIR SPEED TO ANSWER A CALL, ABANDONMENT RATES, NINE PEOPLE IN A CUSTOMER SERVICE AND RESOLUTION GROUP. THAT CAME OUT OF THE CEP RECOMMENDATIONS AND WINTER STORM URI. THIS GROUP FOCUSES ON SITUATIONAL AWARENESS FOR PLANNED AND UNPLANNED OUTAGES.
THEY ARE HELPING MAKE SURE THE MESSAGE IS GETTING OUT TO CUSTOMERS.
SUPPLY CHAIN, AS PROJECTS HAVE INCREASED, THEY ARE PROCURING MORE ITEMS. AND THEY ARE WORKING TO -- INFLATION. TO WORK ON OPERATIONAL SAFETY PROGRAMS ACROSS THE ORGANIZATION. ON THE NEXT SLIDE HERE IS HUMAN RESOURCES, THEY ARE FOCUSED ON REALLY ATTRACTING, SUSTAINING AND ONE OF THE THINGS DAYMARK TALKED ABOUT WAS UP SCALING STAFF.
THEY ARE GOING TO BE RUNNING THE SAME TYPES OF PLANTS NECESSARILY IN THE FUTURE, UTILITY CONTINUES TO EVOLVE FROM A TECHNOLOGY PERSPECTIVE, IT CHANGES THE SKILL SET. THEY'VE ADDED SOME PEOPLE INTO THE HUMAN RESOURCES SIDE TO WORK ON THESE PROGRAMS THAT WOULD SUPPORT THESE EFFORTS, TRAINING EFFORTS AND REALLY FOCUSING ON UP SCALING STAFF. CYBERSECURITY, OBVIOUSLY CONTINUES TO BE A CHALLENGE TORE AN ISSUE FOR EVERYONE. SOMETHING WE WANT TO PAY ATTENTION TO. THEY ARE ADDING RESOURCES INTO THAT AREA.
PHYSICAL SECURITY, ADDING SOME RESOURCES TO PROTECT THEIR ASSETS.
ASSETS ARE THE DISTRIBUTION SUBSTATIONS AS SEEN INCIDENCES OF THEFT.
THOSE ARE MEANT TO HELP WITH THOSE ISSUES SO THAT DOESN'T AFFECT RELIABILITY GOING FORWARD. THERE'S SOME POSITIONS BEING ADDED TO HELP THEM MANAGE SOME OF THEIR HEDGING IN CREDIT OVERSIGHT AS WELL AS ORGANIZATIONAL INTERNAL CONTROL ISSUES THEY WANT TO ADDRESS. THE EVOLVE RP PROJECT IS THE LARGE SYSTEM REPLACEMENT, ADDING SEVEN POSITIONS THERE.
COMPLIANCE RELATED TO INCREASED REQUIREMENTS COMING FROM THE NORTH AMERICAN ELECTRICAL RELIABILITY CORPORATION OR N ERC, E.R. ROT AND THE RAILROAD COMMISSION TO NAME A FEW. THESE ARE A FEW POSITIONS TO HELP WITH COMPLIANCE BUT PLAN FOR COMPLIANCE. AS RULES CHANGE, HOW DOES UTILITY COME INTO COMPLIANCE AS THESE NEW RULES AND REQUIREMENTS COME INTO EFFECT. THERE ARE A FEW POSITIONS THERE, SEVEN THAT WE
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CATEGORIZE AS OTHERS BUT ARE THERE TO SUPPORT CUSTOMER COMMUNICATIONS AND CUSTOMER SERVICE. IN TOTAL WHAT I JUST WENT OVER THE LAST TWO SLIDES IS THE 356 POSITIONS. AGAIN, KEEP IN MIND 81 ARE CONTRACTOR CONVERSIONS AND THAT WILL COME DOWN OVER THE NEXT TWO YEARS. IN TERMS OF COMPENSATION WITHIN THE PLAN, IS ENTRY WAGE REMAINS AT $18 WITHIN THE PLAN AND THE PROFORMA ASSUMES 4% ANNUAL INCREASE. BOTH ON THE MERIT SIDE AND GENERAL WAGE INCREASE SIDE FOR THE NEXT FIVE YEARS INSIDE OF THE RATE MODELS AND INSIDE THE PROFORMA.SPEND A LITTLE TIME TALKING ABOUT MATERIALS AND OUTSIDE SERVICES.
THESE ARE JUST HIGHLIGHTS IN TERMS OF INCREASES OVER WHAT WE SAW IN THE PRIOR PLAN IN TERMS OF WHAT WAS PROJECTED FOR 2025. WHERE WERE THEY INVESTING MORE DOLLARS, WHY ARE THEY INVESTING MORE DOLLARS. THE FIRST WAS MATERIALS, WE SAW A BIG INCREASE OF $11.2 MILLION. THAT'S RELATED TO ADDITIONAL MAINTENANCE SO THEY ARE DOING MORE WORK IN THOSE AREAS, BUT ALSO THE COST OF MATERIALS HAS INCREASED BOTH IN TERMS OF SUPPLY CHAIN ISSUES AS WELL AS INFLATION.
THE EVOLVE ERP PROJECT AT $19.6 MILLION, THAT IS NOT AN INCREASE.
WHEN WE DID THE LAST RATE CASE, THEY WERE VERY EARLY IN THE PLANNING STAGES FOR EVOLVE ERP. THAT LAST RATE CASE JUST FUNDED THE FIRST TWO YEARS OF THE PROJECT. THAT WAS THEIR FY23 AND 24. WE KNEW THIS WAS COMING BACK IN. WE WANTED THEM TO HAVE TIME TO GO OUT AND GET TO AN RFP STAGE, GET A BETTER VIEW OF COSTS, LOOK AT HOW WORKFORCE STAFFING EVOLVED, ARE THEY GOING TO FILL THOSE VACANCIES, MAKE SURE THEY ARE IN A POSITION TO LAUNCH INTO A PROJECT THIS BIG. AND THEN REALLY ASSIST RESCUE.
THEY'VE DONE ALL OF THAT WORK AND THEY ARE POSITIONED TO MOVE FORWARD WITH THAT VERY LARGE COMPLEX PROJECT. PLAN MAINTENANCE YOU SEE AN INCREASE HERE OF ABOUT $8 MILLION OVER THE LAST RATE INCREASE. IF YOU LOOK AT IT GOING BACK TO 2022, THEY'VE ACTUALLY INCREASED THEIR SPEND OF -- TO TUNE OF ABOUT 15 TO $20 MILLION AND THEY ARE REALLY INVESTING MORE INTO THEIR PLANS FROM A MAINTENANCE PERSPECTIVE. THOSE UNITS HAVE TO BE PREPARED TO RUN LONGER AND IN MORE EXTREME CONDITIONS. THE PAST TWO SUMMERS BEING EVIDENCE OF THE CONDITIONS THAT THOSE PLANTS MAY HAVE TO OPERATE IN. THERE IS ALSO SOME ONE-TIME FUNDING THEY ARE DOING IN 2024 OF 10 MILLION, ANOTHER 5 MILLION IN 2025.
AGAIN, TRYING TO MAKE SURE THOSE PLANTS ARE IN A POSITION AS MUCH AS THEY CAN TO BE ABLE TO RUN WHEN THEY NEED THEM TO RUN PARTICULARLY IN THE SUMMER MONTHS WHICH POSITIONS THE UTILITY TO BE ABLE TO SELL EXTRA POWER IN THE MARKET IF THEY HAPPEN TO BE IN THE MARKET, AND TRYING TO PREVENT THE SITUATION YOU HAVE TO BUY POWER IN A TIGHT MARKET WHICH IS GOING TO GET PASSED ON TO THE CUSTOMER.
VEGETATION MANAGEMENT. YOU SEE 3.5 INCREASE HERE. IT HAS DOUBLED, ABOUT $7 MILLION IS WHAT THE TYPICAL SPEND WAS. STARTING IN 2025 GOING FORWARD, IT'S ABOUT $14 MILLION, SO DOUBLING THAT SPEND.
THEY HAVE A VERY LARGE DISTRIBUTION SYSTEM. I THINK OVER 8600 OR 8200 MILES OF OVERHEAD LINES. THEY ARE USING A NUMBER OF DIFFERENT WAYS TO TRY TO PRIORITIZE HOW THEY DO SIEGE TAKINGS MANAGEMENT.
THEY CAN'T GET TO ALL THOSE MILES IN ONE YEAR SO THEY ARE PUTTING THEM ON A CYCLE.
BUT THEY ARE USING THINGS LIKE ASSESSING HOW CIRCUITS PERFORM AND THEN THEY ARE USING THINGS LIKE IMAGING SOFTWARE WHICH IS THE LIDAR TECHNOLOGY THAT ALLOWS THEM TO ASSESS WHERE VEGETATION MAY BE ENCROACHING MORE ON THESE LINES AND TRYING TO ADDRESS THAT PROACTIVELY. FUTURE STAGE GOING FORWARD, LOOKING AT USING SATELLITE, DRONES TO INFORM THEM HOW THEY CAN BEST USE THE DOLLARS THEY HAVE TO DEPLOY THOSE, DO THE VEGETATION MANAGEMENT AND TRY TO IMPROVE OR SUSTAIN RELIABILITY WITHIN THE SYSTEM PARTICULARLY ON THE OVERHEAD LINE SIDE.
SECURITY CONTRACT IS UP 4.1 MILLION FROM BEFORE. WE WENT OUT WITH A NEW CONTRACT, CAME BACK WITH HIGHER COSTS AND THEY HAVE MORE PERSONNEL ASSIGNED TO VARIOUS FACILITIES UNDER THAT CONTRACT. I.T. SYSTEMS, MAINTENANCE, THIS COVERS THE COST OF SOFTWARE MAINTENANCE AND THEY ARE MIGRATING A NUMBER OF PLATFORMS TO CLOUD SO THAT IS INCREASING COSTS. YOU SAW SOME OF THAT WITH OUR OWN I.T. SPEND. THE LAST CATEGORY, ELECTRIC AND GAS LINE MAINTENANCE, THERE HAS BEEN INCREASED MAINTENANCE ON OVERHEAD AND UNDERGROUND LINES, STREET
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LIGHTS, CIRCUITS, GAS LEAK DETEST AND REPAIR AND CORROSION REPAIR.THAT IS ABOUT 7.1 MILLION. SO A LOT OF WHAT YOU SEE LISTED HERE IS EITHER GOING TOWARDS THE EVOLVE ERP PROJECT OR INVESTING IN KEY AREAS TO HELP SUPPORT RELIABILITY OF THE UTILITY OVERALL. SWITCHING GEARS OVER TO THE CAPITAL PLAN, THIS GIVES YOU SOME HISTORY AS WELL AS PROJECTION.
THE LAST FIVE YEARS IT'S ABOUT $3.8 BILLION IN SPEND. SO ROUGHLY 650, $700 MILLION A YEAR. YOU CAN SEE THE LARGE INCREASE GOING OVER THE NEXT FIVE YEARS, THE TOTAL PLAN BUDGET, THERE IS $6.2 BILLION.
AND I'M GOING TO COVER A COUPLE OF THOSE THAT ARE REALLY DRIVING THE SIGNIFICANT INCREASE FROM THE PRIOR FIVE YEARS TO THIS PERIOD OF HEAVY CAPITAL INVESTMENT. THE FIRST ONE IS A REVISED GENERATION PLAN.
SO MENTIONED DURING THE LAST RATE CASE, WE TALKED ABOUT GIVING THEM TIME TO HAVE THOSE CONVERSATIONS WITH THE RATES ADVISORY COMMITTEE. THEY DID THAT.
THAT LED TO AN APPROVAL OF A GENERATION PLAN BY THE BOARD OF TRUSTEES.
THIS IS THEIR PORTFOLIO ON TOP. THE UNITS WERE ACTUALLY RETIRED IN 2018. AND THEN THE NEXT SET THERE FROM BRAWNING TO THE SUMMERS UNITS, THESE ARE FAIRLY OLD NATURAL GAS PLANTS RANGING IN AGE FROM 49 YEARS TO 57 YEARS. THEY ARE ALL PLANNED TO BE RETIRED IN THE NEXT SEVERAL YEARS. AND THEN GOING TO THE VERY BOTTOM OF THE SLIDE, SPRUCE 1 IS ABOUT 31 YEARS OLD AND IT IS SCHEDULED TO RETIRE IN 2028.
AND JK SPRUCE 2 IS SCHEDULED TO BE REPOWERED TO A NATURAL GAS UNIT BY 2027.
AS PART OF THAT PLAN, THAT WAS APPROVED BY THE BOARD, THE GRAPHIC OR THE CHART ON THE RIGHT SHOWS YOU WHAT THE PLAN CAPACITY ADDITIONS ARE TO REPLACE THE NATURAL GAS THAT'S COMING OFF LINE, THE JK INTRODUCE 1 PLANT THAT IS BEING RETIRED, AS WELL AS MEET THE DEMANDS OF THE SYSTEM AS IT CONTINUES TO GROW, HOW DO WE MEET SAN ANTONIO'S FUTURE ENERGY NEEDS ON THE RIGHT. SOLAR WIND STORAGE.
FOUR PEAKING UNITS. THESE ARE NATURAL GAS PEAKING UNITS, RECIPROCATING RICE UNITS. THEY ARE MORE EFFICIENT IN HOW THEY START UP AND DELIVER POWER DURING PEAK TIMES. THERE'S A NATURAL GAS UNIT PLANNED AND THE JK INTRODUCE REPOWER IS IN THAT WINDOW. IN TERMS OF THE CAPITAL PLAN, SOME OF IT IS BEING DRIVEN BY THOSE FOUR PEAKING UNITS.
THE BEGINNING OF THAT FLEX GAS UNIT THAT YOU SEE LISTED THERE AND THE REPOWER OF THE JK SPRUCE 2 UNIT. I THINK -- REFERRING TO IT AS A COMPUTER SYSTEM UPGRADE, IT'S A LOT MORE THAN THAT. IT'S ESSENTIALLY ALL OF THEIR CORE SYSTEMS OUTSIDE THE SCADA SYSTEMS AND SOME OF THE SYSTEMS THAT INTERFACE WITH ERCOT THAT RUN THE POWER PLANT. IT IS THE CORE PLUS 50 RELATED SYSTEMS. IT'S A SEVEN-YEAR PROGRAM. THE ESTIMATED COST IS $315 MILLION. 98.4 MILLION IS THE OPERATIONS AND MAINTENANCE SPEND, PLUS ANOTHER CAPITAL SPEND OF 217 MILLION. YOU CAN SEE THE 19.6 MILLION IN 2025 IS WHAT I JUST WENT OVER IN THE OUTSIDE SERVICES CATEGORY IN TERMS OF THE OPERATIONS AND MAINTENANCE EXPENSES TO COVER THIS PROJECT.
THIS PROJECT REALLY TIES INTO THE STAFFING AS WELL. I MENTIONED THE CONTRACTOR CONVERSIONS. BUT IT ALSO TALKS A LITTLE ABOUT THE OVER HIGHER AND WHAT THEY ARE -- HIRE AND WHAT THEY ARE DOING FROM WORKFORCE PERSPECTIVE.
THOSE COME WITH A LOT OF RISK. YOU HAVE INSTITUTIONAL KNOWLEDGE OF THE PEOPLE THAT ARE THERE. THAT'S BEEN A KEY PART HOW THEY PUT THEIR WORKFORCE STRATEGY TOGETHER IS MAKING SURE THEY CAN BE IN A POSITION TO MITIGATE THAT RISK AS THEY GO THROUGH REALLY WHAT IS GOING TO BE A SIGNIFICANT TRANSITION TO A NEW ERP PLATFORM THIS IS THE FIVE-YEAR CAPITAL SPEND. AGAIN, THE $6.2 BILLION IT SHOWS YOU THE 2025 SPEND. 2025 PROJECTED BUDGET FOR THESE CATEGORIES.
AND THEN THE CUMULATIVE TOTAL FOR FY 26 THROUGH FY 29.
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POWER GENERATION YOU CAN SEE IS A BIG CHUNK AT ALMOST $2 BILLION.IT INCLUDES THE FOUR PEAKING UNITS THAT I MENTIONED, EACH AT 202 MEGAWATTS EACH, PRIMARILY IN THE 27 TO 29 RANGE. IT STARTS TO BEGIN THE FLEX POWER NATURAL GAS PLANT IN FY 2029, SO THE FULL COST IS NOT IN THIS FIVE-YEAR WINDOW, BUT IT BEGINS THE PLANNING, DESIGN AND SOME OF THE COSTS ASSOCIATE WITH THIS PROJECT ARE IN THIS FIVE-YEAR WINDOW. IT HAS A NUMBER OF SYSTEM UPGRADES, UPGRADES OF SYSTEMS THEY NEED TO DO IN ORDER TO BE ABLE TO PARTICIPATE IN THE ERCOT MARKET AND INCLUDES CAPITAL SPEND DURST RELATED TO THE STP. ON THE RELIABILITY CATEGORY, A LOT OF CIVIC IMPROVEMENTS IN. THERE AS WE CONTINUE TO DO WORK, TEX DOT, ACRE FEET, THAT IMPACTS THE -- BEXAR COUNTY, WE SEE INCREASED COSTS WITH THE CIVIC IMPROVEMENTS OR CIVIC WORK. THEY CONTINUE TO DISTRIBUTE MORE AUTOMATED EQUIPMENT WITHIN THEIR SYSTEMS TO INCLUDE LARGER CONDUCTORS, THERE ARE CLOSURES WE TALKED ABOUT THAT REALLY BREAK THE CIRCUITS DOWN INTO SMALLER COMPONENTS.
AND THEN POLE REPLACEMENTS AND HARDENING AND AUTOMATION OF THE SYSTEM OVERALL.
THERE'S A LOT OF WORK GOING ON IN THAT CATEGORY AT ABOUT 1.2 BILLION.
CUSTOMER GROWTH, SERVICE EXTENSIONS, REPLACEMENT OF GAS MAINS, CONVERSIONS OF STEEL MAINS TO PLASTIC, FOR 6 BILLION. THE TECHNOLOGY ERP SPEND IS BUILT AROUND THAT EVOLVE PROJECT AND SOME OTHER INITIATIVES.
FACILITIES AND FLEET 361.4 MILLION PROJECTED OVER KNIFE YEARS.
THE BULK IS DEALING WITH SERVICE CENTERS THEY INTEND TO REPLACE.
MANY OF THESE WERE CONSTRUCTED FROM THE 1958 TO 1972 RANGE.
THEY CAN'T EVEN ACCOMMODATE SOME OF THE VEHICLES IN TERMS OF BUCKET TRUCKS SO THEY ARE GOING TO BE REBUILDING THESE SERVICE CENTERS, PUTTING THEM IN STRATEGIC AREAS AND THEN STAFFING THEM A LITTLE BIT DIFFERENT SO THEY CAN DEPLOY RESOURCES IN A MORE EFFECTIVE MANNER FROM THESE SERVICE CENTERS.
THEN THE SUBSTATIONS AND TRANSMISSIONS ARE MORE LARGER PROJECTS THAT ARE BUILT AROUND CONNECTING TO THE TRANSMISSION GRID IN TEXAS AS WELL AS SUBSTATIONS. THE FIVE-YEAR PLAN FOR THE CAPITAL PLAN IS LISTED HERE.
YOU HAVE CONTRIBUTIONS IN AID OF CONSTRUCTION WHICH ARE PRIMARILY DEVELOPER-PAID FEES. THAT IS INCREASED IN THIS FIVE-YEAR PERIOD, IF YOU LOOK AT IT IN 2019 AND 2020, IT WAS AROUND 20 MILLION AND COSTS HAVE GONE UP.
YOU SEE ABOUT 102 MILLION UP TO 107 MILLION IN 2029. DEBT AT 4.1 BILLION AND THE EQUITY COMING OUT OF THAT REPAIR AND REPLACEMENT ACCOUNT.
THE DEBTS AND EQUITY PERCENTAGES YOU SEE LISTED ARE FOR EACH YEARS LIST 9 INDIVIDUALLY. WHAT I WENT OVER BEFORE ON THE FINANCIAL SLIDE WAS CUMULATIVE. THIS IS TELLING YOU THAT THEY ARE GOING TO HAVE TO ISSUE MORE DEBT IN ORDER TO ACHIEVE FUNDING CAPITAL PLAN AT THIS SIZE.
THIS IS JUST A QUICK SUMMARY OF THE PLANNED ISSUANCE HERE.
IT'S ABOUT $3.5 BILLION IN LONG-TERM DEBT, THE REST MADE UP IN COMMERCIAL PAPER.
AS THEY ARE CAPITAL PLAN CHANGES, THESE THINGS WILL CHANGE.
AND THEY WILL GET UPDATED EVERY YEAR IF NOT MORE OFTEN, AND THEN YOU ADJUST TO THOSE DECISIONS THAT COME OUT OF THAT. BUT FROM A PLANNING PERSPECTIVE, YOU GOT TO HAVE MORE THAN A ONE-YEAR OR TWO-YEAR PLAN IN PARTICULAR FOR A UTILITY BECAUSE IT TAKES TIME TO PUT THINGS IN PLACE.
SUPPLY CHAIN. I WAS GOING TO HIGHLIGHT A COUPLE OF THINGS IN TERMS OF INFORMATION THEY SHARED WITH US ON INCREASES IN THE COST OF SOME OF THE MATERIALS.
THINGS LIKE WOODEN UTILITY POLES, WIRES, PVC CONDUIT. YOU CAN SEE THE PERCENTAGE INIES FROM JULY 2021 TO JULY 20. PRETTY SIGNIFICANT INCREASES IN SOME OF THE MATERIALS THAT THEY USE ON A DAILY BASIS. IN TERMS OF UTILITY ASSISTANCE, THE CURRENT REAP FUND HAS A BALANCE OF 13 MILLION, PROPOSING TO ADD 10 MILLION OUT OF THEIR WHOLESALE REVENUES TO BRING THAT BALANCE UP TO $23 MILLION. THEN THEY HAVE THE AFFORDABILITY DISCOUNT PROGRAM WHICH GIVES A DISCOUNT ON YOUR BILL IF ELIGIBLE.
YOU MEET THE FOLLOWING CRITERIA, THEY ARE THE SAME FOR REAP AND THE ADP PROGRAM. YOU ARE AT OR BELOW 125% OF THE FEDERAL POVERTY LEVEL AND YOU MEET ONE OF THE CONDITIONS LISTED ON THE SLIDE.
AND THEN THE ONE CHANGE THEY ARE PROPOSING IS ADDING AN ENERGY BURDEN AS QUALIFIER.
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YOU WOULD STILL MEET THE INCOME REQUIREMENT, BUT IF YOU DIDN'T MEET ONE OF THOSE FOUR CATEGORIES LISTED AND YOUR ENERGY BURDEN WAS GREATER THAN 10%, YOU COULD QUALIFY FOR BOTH ADP AND THE REAP PROGRAM. CURRENT FUNDING IS 11.6 MILLION, PROPOSING TO INCRIES BY 4.5 MILLION TO COVER HALF THE COST OF WHAT THE EXPECTED IMPACT IS ON A BILL FOR AN AVERAGE RESIDENTIAL CUSTOMER.THEY ARE ALSO TARGETING INCREASING THE NUMBER OF PARTICIPANTS IN THIS PROGRAM BY ABOUT 15,000. THEY ARE GOING TO DO THAT THROUGH A NUMBER OF DIFFERENT AVENUES AND OUTREACH TO INCLUDE BLOCK WALKING TO TRY TO MAKE SURE THOSE ELIGIBLE GET SIGNED UP. THEY ALSO ARE LOOKING AT IN THE EVENT THEY GET MORE THAN 15,000 SIGNED UP, THEY WOULD CONTINUE TO ENROLL ANYONE WHO IS ELIGIBLE. AND THEN OBVIOUSLY THAT WOULD BE TAKEN INTO CONSIDERATION IN A FUTURE CASE. JUST A QUICK SLIDE ON CUSTOMER OUTSTANDING AMOUNTS. THIS IS JUST LOOKING AT ANY AMOUNTS THAT ARE PAST DUE GREATER THAN 30 DAYS. THE BAR ON THE FAR LEFT SHOWS YOU THAT THERE ARE ABOUT 43.4 MILLION IN INACTIVE PAST DUE ACCOUNTS, THESE ARE CUSTOMERS WHO LONGER ON THE CPS ENERGY SYSTEM.
FROM AN ACCOUNTING PERFECT I HAVE, THESE ARE HAVE ALREADY BEEN RESCUERED, ALREADY TAKEN INTO CONSIDERATION. THE LIKELIHOOD OF COLLECTION ISN'T GREAT DUE TO THE FACT THEY ARE INACTIVE ACCOUNTS. THESE ARE PAST DUE GREATER THAN 30 DAYS AND THEN SOME ELIGIBLE FOR DISCONNECTS AS WELL. THAT TOTALS $131.8 MILLION.
THIS DATA IS AS OF SEPTEMBER 30. OF THOSE -- OF THAT $131.8 MILLION AT THE END OF SEPTEMBER, 63,000, ALMOST 64,000 CUSTOMERS WERE ON PAYMENT PLANS, EQUATING TO $79.6 MILLION. THAT'S ON TOP OF THE GRAPHIC ON THE RIGHT.
SO THOSE ENERGY ADVISOR POSITIONS THEY ARE ADDING IN, AGAIN THAT'S SOME OF THE WORK THEY ARE DOING MAKING SURE THAT -- TRYING TO KEEP CUSTOMERS FROM BEING IN THAT BOX TO THE RIGHT WHERE THEY ARE ELIGIBLE FOR DISCONNECT, TRYING TO GET THEM ON PAYMENT PLANS, TRYING TO MAKE SURE THEY ARE GETTING THE ASSISTANCE THEY NEED FROM A VARIETY OF DIFFERENT PROGRAMS. RESIDENTIAL BILL IMPACT IS LISTED HERE. YOU SAW SOME OF THIS A COUPLE WEEKS AGO SO I WON'T GO THROUGH THAT. THE AVERAGE BILL IS 445 IN TERMS OF AN INCREASE.
THE BILL IMPACT 2.7% ON THE FAR RIGHT. THAT GIVES YOU DIFFERENT USAGE LEVELS. IF YOU ARE LOWER THAN THE AVERAGE, HIGHER THAN THE AVERAGE GIVES YOU A SENSE WHAT THE IMPACT IS. ALSO WHETHER YOU ARE AN A DP CUSTOMER OR NOT, IT GIVES YOU BOTH OF THOSE IN ■THIS GRAPHIC ON SLIDE 31.
32 IS JUST GIVING YOU A COUPLE OF COMMERCIAL BILL IMPACTS OF DIFFERENT USAGE LEVELS. THE TAKEAWAY, 3.1, 3.2% IN TERMS OF BILL IMPACT.
THIS SLIDE IS A COMPARISON ON THE RESIDENTIAL BILL SIDE TO SOME DATA THAT COMES OUT OF OTHER TEXAS CITIES LIKE AUSTIN, EL PASO, CORPUS, HOUSTON AND DALLAS.
CPS ENERGY TRACKS THIS ON A TRAILING 12-MONTH PERIOD WHERE THEY LOOK ACTION VALIDATE SOME OF WHERE THEY WERE PULLING DATA FROM, BUT THIS SHOWS THAT SAN ANTONIO IS AS OF THE 12-MONTH PERIOD ENDING SEPTEMBER 2023 THE LOWEST OF THOSE CITIES LISTED THERE. WE'RE ALSO THE ONLY CITY THAT HAS A UTILITY THAT IS A SINGLE ELECTRIC AND GAS PROVIDER. THE OTHERS DON'T HAVE THAT.
AND THEN, OF COURSE, WHEN WE TALK ABOUT CITIES LIKE HOUSTON AND DALLAS, THOSE ARE DEREGULATED MARKETS SO THEY HAVE THE ABILITY TO CHOOSE FROM DIFFERENT PROVIDERS WHERE THEY FISCAL IMPACT HERE TO US, SO AS WE RECEIVE 14% OF THE REVENUES, THERE'S AN IMPACT TO US IF THIS RATE INCREASE WERE TO GO FORWARD AND BE APPROVED.
FOR THE REMAINDER OF OUR FISCAL YEAR ASSUMING THIS RATE INCREASE WOULD TAKE EFFECT FEBRUARY 1ST, THE IMPACT, PROJECTED IMPACT ON CITY PAYMENT REVENUES WOULD BE ABOUT $8 MILLION. OUR UTILITY BILLS FOR ALL OF OUR FACILITIES, STREET LIGHTS, TRAFFIC SIGNALS EXPECTED TO GO UP ABOUT 800,000 FOR REMAINDER OF THE YEAR. THE NET IMPACT FOR FY24 ABOUT $7.2 MILLION.
IF YOU LOOK AT FY 25 A PHYSICAL YEAR, A PROJECTED $12 MILLION INCREASE IN
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REVENUES OFF SET BY $1.1 MILLION IN INCREASED UTILITY EXPENSES.JUST UNDER -- IN OUR FISCAL YEAR 2025. THE REGULATORY ASSET IS THE SECOND COMPONENT WE'RE ASKING YOU TO APPROVE. WE MADE A RECOMMENDATION DURING THE LAST RATE CASE THEY LOOK AT THIS. GAAP GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, THEY REQUIRE THAT YOU MAKE AND BOOK SOME ADJUSTMENTS RELATED TO THE MARKET VALUE CHANGES IN YOUR PENSION PLANS' INVESTMENTS.
THOSE ARE NON-CASH ACCOUNTING ENTRIES THAT IT DOESN'T MEAN CPS IS GOING TO PAY MORE OR LESS, IT'S AN ACCOUNTING ENTRY. A LITTLE LIKE DEAPPRECIATE AS EXPENSE, ON AN INCOME STATEMENT IS JUST MEASURING HOW AM I USING AN ASSET OVER TIME, BUT I'VE ALREADY PAID FOR THE ASSET. THE RATE MODEL IS REALLY MORE CASH BASED SO THIS MOVES IT -- SOME OF THAT VOLATILITY RELATED TO CHANGES IN MARKET PLAN INVESTMENTS THAT REALLY DON'T HAVE A IMPACT OR SHOULDN'T HAVE AN IMPACT ON THE RATE. THEY LOOKED AT THAT RECOMMENDATION I THINK AS A BEST PRACTICE COMING OUT OF OTHER UTILITIES AND THEY ARE RECOMMENDING THAT THEY MOVE TO UTILIZING THEIR CASH CONTRIBUTIONS IN THE RATE MODEL WHICH WILL MOVE SOME OF THAT VOLATILITY OUT. OUR RECOMMENDATION HERE IS TO APPROVE THE 4.25% SYSTEMWIDE INCREASE IN ELECTRIC AND GAS BASE RATES EFFECTIVE FEBRUARY 1. THAT YOU ESTABLISH THIS PENSION REGULATORY ASSET THAT WOULD DEAL WITH GASB CHANGES FROM YEAR TO YEAR AND PERIODICALLY UPDATE COST OF SERVICE AT LEAST EVERY FIVE YEARS AND THEY CONTINUE TO MONITOR COST RATIOS BY CLASS. THAT WRAPS UP MY PRESENTATION.
WE'RE HAPPY TO ANSWER QUESTIONS AND THE CPS ENERGY TEAM HERE IS ALSO AVAILABLE
FOR QUESTIONS. >> MAYOR NIRENBERG: GREAT. THANK YOU VERY MUCH, BEN, FOR THE PRESENTATION. I ALSO WANT TO ACKNOWLEDGE THE CPS LEADERSHIP TEAM, RUDY GARZA, YOUR LEADERSHIP TEAM, BUT ALSO THE BOARD OF TRUSTEES WHO ARE HERE.
CHAIR GONZALES AS WELL AS VICE CHAIR ROMERO. I DON'T KNOW IF THERE IS ANYBODY ELSE HERE, BUT I APPRECIATE YOUR PRESENCE. WE'LL GO AHEAD AND KICK OFF DISCUSSION. I'LL JUST START WITH A FEW THOUGHTS.
I THINK I'VE MADE MY POINTS ALREADY. BUT JUST TO TAKE A STEP BACK A LITTLE BIT, CITY OF SAN ANTONIO, OUR COMMUNITY OWNS THIS ASSET AND IN DOING SO WE HAVE AN IMPLICIT, I WOULD SAY EXPLICIT PROMISE, OBLIGATION THAT WE'RE GOING TO RUN THIS ORGANIZATION, WE'RE GOING TO DO OUR FIDUCIARY -- WE'RE GOING TO UPHOLD OUR FIDUCIARY RESPONSIBILITY TO THE ORGANIZATION TO ALLOW THEM TO KEEP THE LIGHTS ON. KEEP IT ON EFFICIENTLY AND EFFECTIVELY.
IN DOING SO, WE OFFER SOME BENEFITS. LESS COSTS, AND WE'RE MORE RELIABLY KEEPING THE POWER ON THAN MOST OF THE OTHER MEMBERS OF THE INDUSTRY INCLUDING THE PRIVATE SECTOR. MY GOAL, MY HOPE IS AS WE GO THROUGH IN AND WE DO OUR DUE DILIGENCE THAT WE'LL CONTINUE TO DO THAT AS WE GO FORWARD THROUGH THIS RATE REQUEST. SO AS IT RELATES TO WHAT'S BEFORE US, I THINK, BEN, YOU'VE INDEPENDENTLY ANALYZED THE REQUEST FROM CPS AND I TAKE RECOMMENDATION DILIGENTLY THEIR PRESENTATIONS HAVE BEEN PRETTY SPOT ON IN TERMS OF WHAT'S NEEDED IN ORDER FOR US TO LIVE UP TO OUR RESPONSIBILITY, KEEP THE LIGHTS ON EFFECTIVELY, RESPONSIBLY AT LESS COSTS AND RELIABLY. NOW, WE HAVE SOME KNOWNS. ONE OF THEM IS THE FACT THAT WE HAVE AS A COMMUNITY ADOPTED A GENERATION PLAN THAT REQUIRES SOME SERIOUS INVESTMENTS IN ORDER TO KEEP UP WITH THE CAPACITY DEMANDS OF THIS COMMUNITY.
AND ALSO TO DO THAT IN A MORE EFFECTIVE MANNER RELATED TO OUR POLICY PRIORITIES INCLUDING LOWER EMISSIONS. THE OTHER ASPECT OF THIS IS THAT WE KNOW WE NEED TO INVEST IN OUR ELECTRONIC SYSTEMS OPERATIONALLY AS WELL AS IN OUR SECURITY TO MAKE SURE WE CAN PROTECT THAT ASSET.
THAT'S GOING TO REQUIRE A SERIOUS AMOUNT OF INVESTMENT, ALSO PERSONNEL TO MANAGE THE WHOLE THING. THAT IS NOT A SINGLE YEAR OBLIGATION, IT'S NOT A SINGLE YEAR INVESTMENT, IT'S AN INVESTMENT THAT'S GOING TO OCCUR OVER THE NEXT DECADE. WE KNOW WE HAVE A RUNWAY AND WE KNOW WHAT'S REQUIRED OF US, WHAT'S REQUIRED OF THE ORGANIZATION AND THAT IS IN A STAFF RECOMMENDATION THE PROPOSED 4.25 RATE REQUEST. NOW GOING BACK, I DON'T REMEMBER THE SLIDE, BEN, THAT YOU PRESENTED IN TERMS OF WHAT IS COMING AT US IN THE FUTURE SO NO ONE IS
[00:55:04]
SURPRISED. WE'RE NOT SURPRISED HERE WE ARE AGAIN WITH A RATE REQUEST THIS YEAR. WE KNOW IT'S COMING FORWARD TO US BASED ON THE PLANS AND THE OBLIGATIONS AND THE NEED FOR THIS COMMUNITY TO HAVE A RELIABLE ELECTRIC UTILITY.WE KNOW IT'S COMING AT US IN '27 AND '29 AND PROBABLY IN THE FUTURE AS WELL.
IS THERE A FAIR AMOUNT OF CONFIDENCE THAT THAT'S WHERE WE WILL BE IN 2027 BASED ON
YOUR ANALYSIS? >> ON SLIDE 3, IF WE CAN GO TO THAT, YES, MAYOR, I THINK BASED ON THE WORK WE'VE DONE IN COLLABORATION WITH CPS ENERGY, WE THINK THAT THAT 5.5% NUMBER IS A GOOD PROJECTION BASED ON WHERE WE ARE TODAY.
>> MAYOR NIRENBERG: OKAY. WELL, AGAIN, NOTHING HAPPENS IN THIS COMMUNITY IF WE CAN AFFORDABLY KEEP THE POWER GOING -- CAN'T. KNOWING THAT I DO SUPPORT US GOING FORWARD WITH THE PROPOSED RATE INCREASE. I ALSO SUPPORT US PROVIDING AUTHORITY FOR THE SECOND ADJUSTMENT AS WELL IN 2027, KNOWING THAT YOU ARE GOING TO CONTINUE TO DO YOUR DUE DILIGENCE AND YOU WILL BE BACK IN FRONT OF COUNCIL EXPLAINING HOW ALL THAT IS GOING TO BE INTEGRATED INTO FUTURE BUDGETS.
BUT WE KNOW WHERE WE'RE GOING TO BE, THERE'S NO SURPRISES.
WE KNOW WE HAVE TO MEET OUR REVENUE OBLIGATIONS TO ACCOMPLISH THE -- THE ORGANIZATION AND OUR GOAL OF KEEPING POWER GOING IN SAN ANTONIO.
SO I WOULD SUPPORT THAT AND I'M ANXIOUS TO HEAR MY COUNCIL COLLEAGUES AS WELL.
WE'LL START WITH COUNCILMEMBER ROCHA GARCIA. >> GARCIA: THANK YOU, MAYOR. I'LL START OFF BY SAYING I APPRECIATE THE EXTENSIVE WORK THAT YOU'VE DONE, BEN, AND TO THE ADVISORY GROUPS WHO I HEAR ALL THE COMMUNITY MEETINGS, ALL THE INFORMATION SESSIONS THAT YOU ALL HAVE PARTICIPATED IN. THE RESPONSES TO QUESTIONS THAT CPS STAFF HAS PROVIDED US, I REALLY APPRECIATE IT. I DO WANT TO ACKNOWLEDGE THAT IN THE MATERIALS THAT BEN PROVIDED TO US IN HIS BRIEFING, THERE WAS SOME ADDITIONAL INFORMATION THAT HELPED ME UNDERSTAND, SO THANK YOU FOR BEING SO THOROUGH, BEN.
I KNOW THAT YOUR POSITION IS IN THE CHARTER. AND SO AT A MEETING WITH A MAYOR LAST WEEK AND I MENTIONED TO HIM THAT IN THE CHARTER IT TASTE YOU WILL PROVIDE ANNUAL -- SAYS YOU WILL PROVIDE ANNUAL UPDATES TO CITY COUNCIL.
I FEEL LIKE MAYBE WE'VE MISSED SOME OF THOSE. I DON'T KNOW IF YOU ARE DOING THAT REGULARLY FOR SAWS AS WELL, BUT THERE'S ONLY WHEN WE NEED A RATE INCREASE OR SOMETHING IT COMES UP. I DON'T KNOW IF THERE WAS A REASON AND COVID CHANGED A LOT OF THINGS. THIS IS MY FIFTH YEAR, BUT COULD YOU PUT TOGETHER A STATE OF UTILITIES PRESENTATION ONCE A YEAR OR
DO YOU DO A WRITTEN REPORT MAYBE I'VE MISSED? >> GORZELL: NO, I DON'T DO AN ANNUAL REPORT. OVER TIME IT'S GOING TO CHANGE SO AT TIMES WE'VE DONE B SESSIONS WITH BOTH UTILITIES WHERE WE BRING THEM IN PERIODICALLY THROUGHOUT THE YEAR. WE HAD THE MUNICIPAL UTILITIES COMMITTEE FOR A COUPLE YEARS WHERE UPDATES WERE PROVIDED THERE. IT'S KIND OF CHANGED --
>> GARCIA: THE CHARTER DOESN'T CHANGE UNLESS WE CHANGE IT AND IT'S IN THERE.
I WANT TO MAKE SURE WE REALIZE THAT'S A STIPULATES THAT ASKS YOU SPECIFICALLY TO ASSEMBLE THE FACTS, MAKE RECOMMENDATIONS, COST OF SERVICE AND FIXING REASONABLE RATES. SPECIFICALLY IT'S THOSE REPORTS THAT I'M LOOKING AT.
SO I'M HOPING THAT YOU GET REGULAR REPORTS FROM THE UTILITIES BECAUSE I ASSUME THAT'S HOW YOU CRUNCH ALL YOUR NUMBERS AND MAKE THE CALCULATIONS.
AGAIN, I WOULD JUST LOVE TO SEE THAT AT LEAST ONCE A YEAR SO WE COULD PREPARE.
EVEN IF WE GO OUT AND SHARE THAT WITH THE COMMUNITY AND THE BUSINESS COMMUNITY, THEY COULD AT LEAST BE PREPARED, IN MY OPINION, FOR SOME ADDITIONAL RATE DISCUSSIONS IN THE FUTURE. I DO ACKNOWLEDGE THAT EVERYTHING IS GOING UP.
I DO ACKNOWLEDGE THAT. RUDY AND HIS TEAM HAVE DONE AN INCREDIBLE JOB IN EXPLAINING WHAT THE NEEDS ARE FOR THE FUTURE. OUR COMMUNITY IS GROWING, AND BY THE WAY, I DO HAVE TO SAY I WAS TOLD THAT D4, CPS EMPLOYEES ARE COMPOSED A MAJORITY -- LIVE IN D4. THE EMPLOYEES OF CPS ENERGY ARE MY RESIDENTS AS WELL.
A MAJORITY OF THEM. AND SO THEY LIVE IN THEIR COMMUNITIES, THEY GIVE BACK TO THEIR COMMUNITIES BEYOND WHAT THEY DO ON A DAILY BASIS.
I HAVE SOME QUESTIONS SPECIFICALLY ON THE CREDIT RATINGS.
SINCE THE CAPITAL PLAN SPECIFICALLY RELIES OR EXTENSIVELY, I SHOULD SAY, RELIES ON SOME DEBT, WHAT CAN WE DO TO HELP CPS IMPROVE RATINGS AND MAYBE
REDUCE COSTS OF DEBT, IN YOUR OPINION? >>
[01:00:01]
>> GORZELL: ONE OF THE MOST IMPORTANT THINGS IS THE PROCESS WE'RE GOING THROUGH NOW. GETTING THEM BASED ON A BUSINESS CASE THE REVENUE SUPPORT THAT THEY NEED TO CONTINUE TO MAKE THE INVESTMENTS THAT WE'VE TALKED ABOUT, TO CONTINUE TO MOVE FORWARD WITH THE GENERATION PLAN, LOOK AT RELIABILITY FACTORS. THOSE ARE ALL GOING TO BE THINGS THAT THE RATING
AGENCIES WOULD VIEW POSITIVELY. >> GARCIA: OKAY.
THEN WHAT PART OF THE NEGATIVE RATINGS WOULD YOU SAY WOULD BE OUT OF THEIR CONTROL AND WHY? LIKE EXTERNAL FACTORS THAT ARE BEYOND.
LOOKING AT AN ENVIRONMENTAL SCAN, ENVIRONMENTAL BUSINESS SCAN, WHAT KIND OF FACTORS ARE OUT OF THEIR CONTROL THAT MIGHT HELP WITH NEGATIVE RATINGS?
>> GORZELL: I THINK THE NEGATIVE RATINGS YOU SEE HERE A LOT COME OFF WINTER STORM URI, THE WAY THE ERCOT MARKET FUNCTIONED. I DON'T KNOW THAT WE CAN SAY ALL THE ISSUES WITH THE ERCOT MARKET HAVE BEEN RESOLVED.
SOME OF THOSE EXTERNAL FACTORS ARE OUTSIDE CPS'S ABILITY TO MANAGE.
THEY CAN ONLY CONTROL WHAT THEY CAN CONTROL AND THEY HAVE TO PARTICIPATE IN THE ERCOT MARKET. I THINK THAT'S ONE OF THE THINGS THAT'S AN EXTERNAL
FACTOR THAT WEIGHS HEAVILY ON THEIR RATINGS. >> GARCIA: I ALSO THINK THERE'S AN OPPORTUNITY TO EDUCATE ALL OF US SPECIFICALLY ON ERCOT AND THE GRID, ET CETERA, A LITTLE FURTHER SO WE COULD TALK TO OUR COMMUNITIES.
I SAW A FACEBOOK POST EARLIER THIS YEAR BLAMING ERCOT FOR LOSS OF POWER FOR AN HOUR. IT COULD HAVE BEEN A TRANSFORMER, SOMETHING.
MY PARENTS CALLED ABOUT LOST ELECTRICITY LAST WEEK. IT WILL BE BACK IN A FEW HOURS. CALL ME IF I DOESN'T, COME OVER TO MY HOUSE.
I THINK ANYTHING LIKE THAT, ANYTHING THAT YOU ALL CAN DO TO HELP ME EDUCATE ANY RESIDENTS I THINK WOULD BE CRITICAL. I WAS VERY EXCITED ABOUT THE $30 MILLION AND THE DEPARTMENT OF ENERGY FOR GRID RELIABILITY.
THAT WAS A HUGE WIN I THINK FOR SAN ANTONIO. DO WE HAVE MORE PROPOSALS LIKE THAT IN THE WORKS? LIKE IS THERE ANYTHING ELSE -- WE'RE CROSSING OUR FINGERS. WE HAVE TWO MORE, SOUNDS GOOD.
AND SO I'M LOOKING FORWARD HOPEFULLY TO THAT, I THINK THAT WOULD DEFINITELY HELP.
AND THEN GIVEN THE IN PAYMENT AND THERE WAS AN EXCESS, $85,000, I DO THINK WE STILL NEED AN URGENT STRATEGY TO FIGURE OUT HOW WE KEEP PEOPLE FROM STAYING IN THAT SAME BOAT.
LIKE SO WHAT IS IT THAT WE'RE DOING. AND I KNOW YOU ALL OFFER SOME ADDITIONAL SERVICES AND SUPPORT, BUT AGAIN ANYTHING THAT YOU ALL CAN SHARE WITH MY OFFICE SO THAT I COULD HELP THEM HELP THEMSELVES. SO BEYOND WHAT REAP DOES.
YOUR PEOPLE ARE INCREDIBLE WHEN THEY GO OUT THERE. ON SLIDE 8, THE FLOW OF FUNDS, HELP ME UNDERSTAND THIS. 6%REPAIR AND REPLACEMENT.
IS THAT A BOND ISSUE REQUIREMENT? HELP ME UNDERSTAND THAT 6%.
>> GORZELL: THAT COMES OUT OF THE BOND INDENTURE SO THAT IS A REQUIREMENT.
>> GARCIA: I FEEL LIKE WE SHOULD LOOK SPECIFICALLY AT SOME OF THE ITEMS LIKE THERE IS A COMMUNITY AND CUSTOMER GROWTH. I HAVE A RESIDENT AND COULD BEY IS HERE, A RESTRICTIVE COVENANT OF D4, ONE OF THE CONCERNS I HEAR FROM NEIGHBORS IS SPECIFICALLY LOOKING AT SOME OF THESE COSTS.
FOR INSTANCE, THERE'S A BULLET POINT THAT SAID -- NOT IN YOUR PRESENTATION, ANOTHER ONE, THAT WE WERE GOING TO REROUTE ELECTRICAL LINES TO ACCOMMODATE NEW CONSTRUCTION. WHAT TYPE OF NEW CONSTRUCTION IS THAT AND I KNOW I SAW A SLIDE TODAY THAT TALKS ABOUT DEVELOPERS' FEES.
CAN YOU EXPLAIN THE DIFFERENCE BETWEEN THOSE OR SOMEBODY?
>> GORZELL: LET ME ASK CPS. ON THE REPAIR AND REPLACEMENT, IT GOES TO EQUITY CONTRIBUTION AND MAINTAINING THAT CASH ON
HAND SO LIQUIDITY, SO BOTH OF THOSE. >> GARCIA: OKAY.
>> I'M NOT SURE COUNCILWOMAN WHICH SLIDE, BUT WE DO -- FOR EXAMPLE, TXDOT IS DOING WORK AND WE'RE GOING TO MOVE STUFF THERE. A LOT OF THAT IS IN THAT COST. COSTS WE INCUR FROM DEVELOPERS IS THAT KAYAK LINE AND THOSE DOLLARS HAVE INCREASED THE PAST COUPLE OF YEARS AND THAT'S BENEFICIAL
TO THE CAPITAL PLAN. >> GARCIA: THAT'S SEPARATE IT SOUNDS LIKE.
I JUST WANTED TO MAKE SURE FOR THE BENEFIT OF MY RESIDENTS, THESE ARE QUESTIONS I GOT FROM D4 RESIDENTS. HOW OFTEN ARE WE INVESTING IN COMMUNICATIONS PLATFORMS? BECAUSE IT WOULD SEEM YOU COULD BUY A COMPUTER AND IT'S GOING TO BE OUTDATED IN TWO YEARS. WHAT IS YOUR RETENTION
STRATEGY, I GUESS, FOR TECHNOLOGY? >> COUNCILWOMAN, GREAT QUESTION. PART OF THE CHALLENGE WE'VE HAD WITH OUR EXISTING ENTERPRISE SYSTEM IS WE'VE CUSTOMIZED IT SO MUCH OVER THE YEARS EVENTUALLY YOU
[01:05:05]
CAN'T UPDATE IT. NOW WE'RE GOING TO GO BACK TO THE DRAWING BOARD AND COMPLETELY REIMAGINE WHAT OUR PLATFORMS LOOK LIKE. SO IN THE FUTURE, WE'LL BE, YOU KNOW, QUARTERLY WE'LL BE GETTING UPDATES TO OUR ENTERPRISE SYSTEM WHICH AFFECTS EVERY COMMUNICATION PLATFORM WE HAVE WITH CUSTOMERS.SO WE'VE DONE WHAT WE CAN OVER THE LAST TWO YEARS TO IMPROVE THE COMMUNICATION AS WE DISCUSSED AFTER WINTER STORM URI, BUT AS PART OF OUR TECHNOLOGY PROJECT, WE'RE REALLY GOING TO BE REEMERGENCYING ALL THOSE PLATFORMS -- REIMAGINING ALL
OF THOSE TO BE UPDATED IN REALTIME. >> GARCIA: CAN YOU HELP ME UNDERSTAND SOME OF THE ADDITIONAL ONES, BEYOND COMPUTERS, WHAT TYPE OF
SYSTEMS ARE YOU USING THE PUBLIC WOULD NEVER SEE? >> WE'RE ONE OF THE LARGEST OWNERS OF FIBER IN OUR COMMUNITY. EVERY SMART DEVICE, EVERY SUBSTATION, ALL OUR GENERATION PLANTS, WE HAVE FIBER GOING EVERYWHERE.
WE MAINTAIN A SIGNIFICANT COMMUNICATION PLATFORM JUST TO COMMUNICATE WITH ALL DEVICES IN OUR SYSTEM. WE'VE GOT PRODUCTS THAT ALLOW US TO SEND EMAILS TO CUSTOMERS. THAT'S A PRODUCT THAT WE GO OUT AND BUY TO BE ABLE TO DO THOSE DIRECT COMMUNICATIONS. SO WE'VE GOT A NUMBER OF DIFFERENT SYSTEMS WE USE TO COMMUNICATE WITH OUR CUSTOMERS AND IT'S PRETTY EXTENSIVE.
>> GARCIA: GOT IT. AND I APPRECIATE, I THINK IT WAS BEN THAT REFERENCED THIS EARLIER AND I'VE MENTIONED IT BEFORE, LIKE I FEEL LIKE PREVIOUS COUNCILS PASSED THE BUCK. WE UNFORTUNATELY HAVE TO MAKE THESE REALLY DIFFICULT DECISIONS, BUT I APPRECIATE THE FACT YOU ARE INVESTING IN REAP AND LOOKING TO SEE HOW WE COULD SERVE THOSE ADDITIONAL CUSTOMERS WHO ARE GOING TO NEED THAT ADDITIONAL HELP WHETHER IT BE A 58-CENT INIES OR 4-DOLLAR INCREASE.
WE KNOW THERE'S A LOT OF SENIORS, THERE'S AN ARTICLE THIS MORNING ABOUT THE INCREASE IN THE SENIOR POPULATION IN SAN ANTONIO. AND I'D LIKE TO SEE A MORE FOCUSED APPROACH ON HOW TO DEAL WITH SENIORS AND SENIORS WHO WILL BE ON THIS SPECIFIC INCOME LEVEL ONCE THEY RETIRE. I'M REALLY SCARED WHAT WOULD HAPPEN, A COUPLE YEARS I ASKED CAN WE FREEZE SENIOR RATES AND THE ATTORNEYS WERE
LIKE NO, STOP. >> LET ME GIVE ENTHUSIASM DATA POINT.
REAP IS AS HEALTHY AS IT'S BEEN. WE'VE GOT MORE FUNDS IN REAP THROUGH A CONCERTED EFFORT OF US FOCUSING ON THAT PROGRAM FOR OUR CUSTOMERS.
I FEEL REALLY GOOD THAT AT THE END OF THIS YEAR WE'LL HAVE $23 MILLION IN REAP WHICH WILL GO A LONG WAY HELPING CUSTOMERS WHO NEED IT.
>> GARCIA: THANK YOU. THANK YOU, MAYOR. >> MAYOR NIRENBERG:
COUNCILMEMBER GAVITO. >> GAVITO: THANK YOU FOR THE PRESENTATION AND THANK YOU FOR THE CPS TEAM FOR BEING HERE AND THE PARTNERSHIP IN HOSTING TWO COMMUNITY MEETINGS IN DISTRICT 7 SO OUR RESIDENTS COULD HAVE QUESTIONS AND GIVE INPUT. THANK YOU FOR MAKING YOURSELVES AVAILABLE FOR THAT. I THINK CPS DOES THE GREAT JOBS.
WE HAVE THE LOWEST RATES IN TEXAS AND I BELIEVE THE SECOND LOWEST IN THE NATION, SOMETHING LIKE THAT. AND I AGREE WITH THE MAYOR THAT COLLECTIVELY WE HAVE THE DUTY TO KEEP THE LIGHTS ON FOR RESIDENTS. AND I ALSO DO THINK IT'S A GOOD IDEA FOR A FIVE-YEAR RATE PLAN SO THAT CPS CAN PLAN AND WE'RE NOT HAVING TO DO ALL THESE SHORT-TERM PLANS BUT PROBABLY GET MORE BANG WITH OUR BUCK WITH LONG-TERM PLANNING. WHAT I GET CONCERNED ABOUT STILL IS WITH OUR SENIOR CITIZENS. DR. ROCHA GARCIA AND I WERE TALKING ABOUT THIS, I TRIED TO POKE AND PROD HOW WE CAN GET OUR OLDER ADULTS INTO THE CURRENT RATE STRUCTURE.
IT IS STILL KIND OF WORRYING ME BECAUSE I DO HAVE OUR OLDER ADULTS TELLING ME, PLEASE DON'T VOTE FOR THIS BECAUSE, YOU KNOW, I'M ON A MIXED INCOME BECAUSE I'M AT AN APARTMENT, THEIR APARTMENTS ARE INCREASING THE PRICE.
I ALSO GET CONCERNED ABOUT THE SINGLE MOTHER TRYING TO MAKE THINGS WORK.
I DO WANT US TO THINK CREATIVELY ON HOW WE CAN SUPPORT THEM.
UNFORTUNATELY SAN ANTONIO IS A POOR CITY AND WE AS A COUNCIL ALONG WITH ALL THE ECONOMIC DEVELOPMENT EFFORTS ARE DOING THINGS TO CHANGE THAT TRAJECTORY BUT THOSE THINGS TAKE TIME. I'M WONDERING WHAT WE COULD DO CREATIVELY NOW TO HELP THOSE WHO ARE REALLY GOING TO BE HURT BY THIS. SO WITH THAT I DID HAVE A COUPLE QUESTIONS REGARDING THE REAP FUND. FROM WHAT I FIRST-DEGREE, THE CITY, COUNTY AND CPS PUTS MONEY INTO THE REAP FUND EVERY YEAR.
CORRECT? >> COUNCILWOMAN, YES, IT'S A RELATIONSHIP BETWEEN THE
[01:10:02]
COUNTY, THE CITY AND CPS ENERGY. >> GAVITO: HOW MUCH DOES
CPS CONTRIBUTE? >> IT'S ONE MILLION A YEAR. >> GAVITO: HOW MUCH DOES
THE CITY AND COUNTY CONTRIBUTE? >> WE DON'T MAKE AN ANNUAL CONTRIBUTION TO REAP, BUT FOR EXAMPLE LAST FISCAL YEAR WE PUT IN $7.5 MILLION OF THE CONVERSATION WE HAD WHEN WE CAME IN WELL OVER BUDGET SO WE ALLOCATED -- IT'S BEEN MORE ONE-TIME THINGS WE HAVE DONE IN TERMS OF ALLOCATING DOLLARS.
THE COUNTY I DON'T THINK ADDS DOLLARS IN THERE, DO THEY?
>> I CAN DOUBLE-CHECK. WE CAN GET THE NUMBERS. >>.
>> GAVITO: I WOULD BE CURIOUS WHAT THE COUNTY FUNDS.
>> WE HAVE AN ONGOING CORPUS SO WE DON'T EXHAUST FUNDS EVERY YEAR.
THE MAYOR, THE JUDGE AND -- FOR THE COUNTY AS WELL AS RUDY SIT ON THE REAP BOARD AND REVIEW THE FINANCIAL STABILITY OF THE -- OF REAP TO ENSURE THERE'S ALWAYS
FUNDING. >> GAVITO: SO IT IS SOMETHING WE KEEP A CHUNK
FOR ONGOING PURPOSES. >> YES. >> GAVITO: DOES THE CITY FILE THE APPLICATION WITH THE FEDERAL GOVERNMENT TO INCREASE THE FUNDING THROUGH
LIHEAP, THE LOW-INCOME HOME ENERGY ASSISTANCE PROGRAM? >> COUNCILWOMAN, I BELIEVE THAT IS A COUNTY PROGRAM, SO THE LIHEAP FUNDS GO OVER TO THE COUNTY.
>> GAVITO: BECAUSE LIHEAP IS FEDERAL FUNDS THAT HELP SOME OF OUR POORER CITIZENS,
BUT THAT'S RUN THROUGH THE COUNTY? >> I WILL GIVE YOU MORE INFORMATION ON THAT, BUT I KNOW THE COUNTY GETS QUITE A BIT OF LIHEAP FUNDING, BUT
I'LL GET YOU MORE INFO ON THAT. >> GAVITO: THANK YOU.
FOR CPS WHO ESTABLISHES THE ELIGIBILITY FOR THE AFFORD ABILITY PROGRAMS LIKE ADP
AND STUFF? >> FOR THE INFORMATION REGARDING LIHEAP, WE HAVE RECEIVED ABOUT $28 MILLION IN LIHEAP DOLLARS OVER THE LAST TWO YEARS FROM THE COUNTY AND WE'VE BEEN ABLE TO APPLY CLOSE TO $8 MILLION FROM REAP TO CUSTOMER ACCOUNTS OVER THE LAST TWO YEARS. SO THERE IS NO CONTRIBUTION FROM THE COUNTY. I JUST WANTED TO CONFIRM THAT TO ANSWER THAT
QUESTION, TO THE REAP FUND. >> GAVITO: YOU SAID $28 MILLION --
>> FROM LIHEAP DOLLARS OVER THE LAST TWO YEARS, AND FOR REAP IT'S BEEN OVER
$8 MILLION. >> GAVITO: OKAY. OKAY.
SO I WAS ASKING WHO ESTABLISHES THE ELIGIBILITY FOR THE CPS'S ASSISTANCE
PROGRAMS? >> WE WORK WITH -- IT'S ESTABLISHED BY CPS ENERGY.
IT'S BASED ON WHAT THE -- KIND OF THE FAIRNESS AND EQUITABLE APPROACH.
WE WORK CLOSELY WITH OUR LAWYER TO SAY WHAT WE CAN DO AND HOW WE CAN LEVERAGE WHAT'S BEEN APPROVED WITHIN THE STATE REQUIREMENTS AND KIND OF WHERE THOSE COMPONENTS ARE. THIS YEAR WE WERE ABLE TO INCREASE THAT BY THE INCORPORATING IN AN ENERGY BURDEN CALCULATION. SO HAVING THE INCOME LEVEL AS WELL AS HOW MUCH PEOPLE SPEND ON THEIR ENERGY BILL IS SOMETHING THAT WE COULD
ALSO INCORPORATE. >> GAVITO: FROM WHAT I UNDERSTAND, IT'S A PERSON -- OR A HOUSEHOLD THAT MUST MAKE LESS THAN 125% OF FEDERAL PROFIT GUIDELINES TO
QUALIFY FOR REAP? >> YES. >> GAVITO: SO IT'S LIKE --
IF A HOUSEHOLD OF FOUR -- WOULD BE LIKE 43,000. >> YES, MA'AM.
>> GAVITO: ALSO FOR A SENIOR CITIZEN, AN ELDERLY RESIDENT, IF THEY RECEIVE $1,600 IN FIXED INCOME, THEY WOULD NOT BE ABLE TO QUALIFY FOR REAP.
>> THEY WOULD NOT BE ABLE TO QUALIFY FOR REAP, BUT WE DO HAVE ADDITIONAL ASSISTANCE PROGRAMS FOR SENIOR CITIZENS. ANYBODY OVER THE AGE OF 60 YEARS CAN GET ON OUR SENIOR CITIZEN BILLING PROGRAM AND THAT PROGRAM DOES ALLOW FOR ADDITIONAL TIME TO PAY YOUR BILL OVER THE STANDARD TIMING THAT A CUSTOMER WILL RECEIVE. ADDITIONALLY, WE HAVE THE BUDGET PAYMENT PROGRAM WHICH ALLOWS US TO -- WE LOOK AT THE LAST 12 MONTHS OF USAGE AND SAY WE CAN PREDICT USAGE WILL BE THIS MUCH OVER THE COMING YEAR AND WE'LL AVERAGE THAT OUT SO YOU CAN PREDICT HOW MUCH YOU ARE GOING TO PAY EACH MONTH. ON TOP OF THAT WE DO A FREE ENERGY AUDIT SO WE CAN HELP SENIOR CITIZENS OR REALLY ANYBODY FIND WAYS TO SAVE ON
THEIR BILL AND NOT HAVE TO PAY AS MUCH. >> GAVITO: BUT WITH THAT, THOUGH, LIKE A SINGLE MOTHER, IF SHE WAS MAKING 31,500 A YEAR AND SUPPORTING
TWO CHILDREN, SHE WOULD NOT BE ABLE TO QUALIFY FOR REAP. >> NOT AT THIS TIME, NO,
[01:15:05]
MA'AM. >> GAVITO: UNDER LIHEAP, THE MAXIMUM WE COULD DO IS UP TO 150% OF THE FEDERAL POVERTY GUIDELINES. IS THERE A REASON WHY WE
HAVEN'T GONE TO THAT 150%? >> I'M NOT FAMILIAR BUT WE CAN FOLLOW UP.
>> GAVITO: I'M WONDERING IF THAT WOULD ALLOW MORE CUSTOMERS STRUGGLING TO PAY
TO BE ABLE TO QUALIFY FOR THESE -- >> THE PRIMARY CHALLENGE IS GOING TO BE FUNDING. THERE'S A BUCKET OF FUNDING THAT ALL OTHER CUSTOMERS PAY TO FUND THAT ACCOUNTABILITY PROGRAM. IF YOU CHANGE THE GUIDELINES TO MAKE MORE PEOPLE ELIGIBLE AND YOU KEEP THAT FUNDING NUMBER THE SAME, YOU ARE GOODING TO HAVE TO BRING DOWN THE BENEFIT. IT ALL MATTERS HOW MUCH WE CAN JUSTIFY PUTTING IN THE PROGRAM THAT OTHER CUSTOMERS FUND AND TRY TO MAXIMIZE THE HELP YOU CAN GET TO THOSE WHO NEED IT THE MOST.
IT KIND OF ALL HAS TO FIT TOGETHER. IT'S NOT JUST ABOUT INCREASING THE ELIGIBILITY REQUIREMENT BECAUSE YOU GOT TO PUT DOLLARS TO IT TO FUND THAT EXTRA AMOUNT. SO, YOU KNOW, I WOULD POINT OUT IT ALL WORKS TOGETHER.
>> GAVITO: FOR LIHEAP, IF IT IS FEDERAL FUNDING, WHAT WE COULD DO MORE TO KIND OF
TAKE ADVANTAGE OF THAT. >> IT IS IN OUR -- THAT IS IN OUR LEGISLATIVE AGENDA EVERY YEAR, TO GO TO D.C. AS PART OF THE PUBLIC POWER WORLD AND LOBBY CONGRESS FOR MORE FEDERAL DOLLARS FOR LIHEAP. A LOT OF THE THE LIHEAP DOLLARS DOLLARS GO TO -- IT'S A FOCUSED PROGRAM. TEXAS DOESN'T NECESSARILY GET QUITE AS MUCH DOLLAR BANG FOR THE BUCK TO GO THROUGH LIHEAP DOLLARS, BUT WE'RE ADVOCATING FOR IT AND IT'S SOMETHING WE PUSH EVERY YEAR.
>> GAVITO: I UNDERSTAND WHAT YOU ARE SAYING ABOUT HOW WE HAVE TO KIND OF OFFSET ALL THOSE COSTS TO MAKE THINGS WORK FOR OUR CITY AS A UNIT, BUT I'M WONDERING IF WE NEED TO TAKE A STRONGER PUSH AT THE FEDERAL LEVEL BECAUSE, YES, I LIVED IN CHICAGO, I UNDERSTAND THEY HAVE THE
BE JUST AS DANGEROUS. >> WE'RE ABSOLUTELY COMMITTED TO THAT.
>> GAVITO: THANK YOU SO MUCH. THAT'S ALL, MAYOR.
THANKS. >> MAYOR NIRENBERG: THANK YOU, COUNCILMEMBER ALDERETE GAVITO. COUNCILMEMBER CABELLO HAVRDA.
>> HAVRDA: THANK YOU, MAYOR. THANK YOU FOR THE PRESENTATION, BEN. THE CASH FLOW MODEL IS KIND OF A ROAD MAP TO SHOW US WHERE AN ORGANIZATION IS GOING. I THINK I UNDERSTAND FROM THE PRESENTATION, ABOUT OUT THIS MODEL WENT OUT TO 2029? IS THAT CORRECT?
>> YES, IT GOES OUT -- THE MODEL GOES OUT 25 YEARS. WE KIND OF FOCUS ON THE
FIRST FIVE. >> HAVRDA: THAT WAS MY SECOND QUESTION IF WE WERE GOING TO BE ON '29. THEN THE FOURTH SLIDE, TO BE CLEAR, STAFF RECOMMENDATION IS TO ADOPT THE 4.25% FOR 2025, BUT ALSO TO VOTE FOR 2027 NOT TO GO ABOVE 4.5.
YOU'RE NOT RECOMMENDING WE VOTE ON BOTH NOW. >> OUR RECOMMENDATION IS ON APPROVAL OF THE 2025 RATE AT 4.25%. THERE WAS A QUESTION AT THE LAST SESSION ABOUT HOW WOULD THAT WORK OF THE WE'VE DONE SIMILAR RATE PLANS WITH SAWS. HOW WOULD WE PUT SOMETHING IN PLACE HERE.
SLIDE 4 TALKS ABOUT IF YOU ALL WANTED TO DO THAT SECOND RATE INCREASE IN 2027, SORRY, I GOT TO GET THEIR FISCAL YEARS AND OURS, 2027, IT WOULD BE A NOT TO EXCEED 5.5%. THE MAYOR ASKED EARLIER IF I WAS COMFORTABLE BASED ON THE WORK WE'VE DONE. I'M COMFORTABLE TWO YEARS FROM NOW IT WOULD BE 5.5 OR UNDER THAT BASED ON WHAT WE KNOW TODAY. YOU WOULD BE APPROVING THAT
AND THIS IS THE PROCESS WE WOULD FOLLOW. >> HAVRDA: THAT IS SOMETHING WE SHOULD CONSIDER. WE SHOULD CONSIDER THIS VOTE BEING FOR ABOUT '25 AND '27. I KNOW ONE OF THE MAIN ISSUES THAT THE BOND AGENCIES LOVE THAT CERTAINTY AND WE WANT TO GIVE THEM THAT CERTAINTY IF POSSIBLE.
ALSO I FEEL LIKE IT GIVES US MORE TIME TO PLAN, GIVES OUR COMMUNITY MORE TIME TO PLAN.
I THINK I WOULD LIKE TO SEE US CONSIDER THAT RECOMMENDATION MOVING FORWARD. ON SLIDE 15, JUST A POINT OF CLARIFICATION, THIS IS SHOWING PROGRESS IN THE LAST RATE INCREASE. IT'S NOT A PROPOSAL FOR -- MAYBE IT WAS 16, SORRY. YEAH, THAT'S IT, THE STAFFING.
THIS IS SHOWING WHAT WE GOT FOR THE LAST RATE INCREASE. WE'RE NOT PROPOSING STAFFING
INCREASES OR POSITIONS THIS TIME? >> SO IT DOES.
SO A PORTION OF THIS. SO THE PRIOR RATE CASE HAD 3,370 POSITIONS BUILT INTO
[01:20:04]
IT. AGAIN, THEY HAD OVER 400 VACANCIES AT THAT POINT.THE FOCUS WAS FILLING VACANCIES AND WE KNEW THEY WERE GOING TO HAVE TO REEVALUATE STAFFING. THEY'VE DONE THAT AND THEY'VE HAD GREAT RESULTS IN TERMS OF BEING ABLE TO GET VACANCIES FILLED. AND IN THIS CURRENT FISCAL YEAR, THEIR 2024 FISCAL YEAR, THEY ALSO WENT AND INCREASED POSITIONS BEYOND THAT SO THEY ARE MOVING INTO THE STAFFING MODEL. SO IT'S REALLY CROSSING BOTH
YEARS. >> HAVRDA: OKAY. I THINK FOR THE NEXT PRESENTATION, OR MAYBE BEFORE, I WOULD LIKE TO SEE THAT BREAKDOWN TO BE MORE COMFORTABLE WITH IT. THE 4% INCREASE, IS THAT ACROSS THE BOARD, LIKE EVERY
CPS EMPLOYEE? >> IT IS A POOL OF DOLLARS, YES, 4% FOR YOUR GENERAL
WAGE INCREASE AS WELL AS MERIT. >> HAVRDA: I WOULD LIKE TO SEE A BREAKDOWN IF THAT IS POSSIBLE. SLIDE 19, I'M GOING TO STOP QUOTING SLIDES NOW, BUT THIS IS THE HEART OF IT FOR ME, THESECURITY, THE I.T.
SOFTWARE, SYSTEM MAINTENANCE, ELECTRIC AND GAS LINE MAIN.
THIS IS WHAT I'M TALKING TO MY COMMUNITY ABOUT. THIS IS WHAT SEEMS TO BE GETTING THE BETTER FEEDBACK IS UNDERSTANDING THAT THESE ARE THE THINGS THAT NEED INCREASES. THE STAFFING ISSUES CAUSED ME A LITTLE BIT OF CONCERN, BUT THIS IS FOR ME WHAT THE HEART OF IT IS. I MEAN OBVIOUSLY NOBODY WANTS TO PAY THE HIGHER CPS ENERGY BILL. NO ONE WANTS A REPEAT OF WINTER STORM URI OR BE VULNERABLE TO A FRAGILE ENERGY GRID.
WE SHOULDN'T HAVE TO DEPEND ON THIS GRID AND FOR EVERYONE ELSE, FOR OUR SAFETY AND OUR ENERGY, BUT SELF-SUFFICIENCY MEANS UPGRADING OLD SYSTEMS AND THAT HAS A COST. WE HAVE TO FACE THAT REALITY.
I BROUGHT IDEAS TO THE TABLE TO MAKE OUR ENERGY MORE RELIABLE, AFFORDABLE, THOSE ARE ALWAYS MY FOCUSES, AND LOOKED FOR WAYS TO MAKE US A STRONGER CITY.
A CITY READY TO MEET THE FUTURE WITH MORE PEOPLE. WE KEEP HEARING THESE STATISTICS OF ALL THESE MILLIONS OF PEOPLE MOVING TO SAN ANTONIO IN 2030 AND I KEEP THINKING THAT'S FAR AWAY. I CHECK MY WATCH, IT'S ABOUT SEVEN YEARS AWAY. IT FREAKS ME OUT. THIS WORRIES ME IN A LOT OF WAYS, BUT ESPECIALLY RIGHT NOW ENERGY CONCERNS GIVEN WHAT HAS HAPPENED IN THE LAST COUPLE YEARS. FOR THOSE THAT WILL SAY WE SHOULDN'T HELP CPS, I WANT A QUICK REMINDER WE ARE CPS. THERE'S NOT A US VERSUS THEM, IT'S ALL US.
I ALMOST SEE CPS AND SAWS ANOTHER CITY DEPARTMENT AND THEY'VE BEEN PRETTY SELF-SUFFICIENT FOR THE MOST PART, BUT ALL OF THAT DELAY, ALL OF US KICKING THE CAN DOWN THE ROAD, THEY AGREE WITH ME VERY LOUDLY. ALL OF THAT KICKING THE CAN DOWN THE ROAD HAS GOTTEN US HERE. THAT'S WHY I'M INTERESTED IN MAYBE DOING THE TWO FOR ONE IF WE COULD LOOK AT THAT FOR A POTENTIAL VOTE.
I ALSO WANT TO SAY WE CAN'T JUST SAY NO TO THIS WITHOUT OFFERING A VIABLE SOLUTION.
THIS ISN'T JUST ABOUT KEEPING THE LIGHTS ON TODAY, NEXT YEAR.
I MEAN WE'RE TALKING ABOUT THIS IS A LONG-TERM DECISION.
WE'RE PLAYING A LONG GAME FOR OUR COMMUNITY. NOT JUST THE ONES WE HAVE NOW, THE ONES THAT ARE COMING, FUTURE GENERATIONS, THESE MILLIONS OF PEOPLE THAT ARE COMING. THE COST IS UNDENIABLE. THE QUESTION IS HOW WE'RE PAYING FOR IT. THE SYSTEMS -- AND ALSO I DO THINK IT'S A VERY GOOD CONVERSATION TO BRING UP ABOUT SENIORS. THERE ARE SYSTEMS IN PLACE TO HELP THOSE THAT CAN'T AFFORD THE COSTS. WE HAVE TO ALSO CONSIDER OUR SPECIAL NEEDS COMMUNITY THAT ARE ALSO ON FIXED INCOMES. A NUMBER OF DIFFERENT KINDS OF SAN ANTONIANS THAT NEED THAT HELP. BUT AGAIN, WE HAVE TO COME IN WITH IDEAS. WE HAVE TO FIGURE OUT WAYS TO GET THAT DONE.
IF THOSE PROGRAMS ARE FALLING SHORT, WE NEED TO COME UP WITH THESE IDEAS.
THAT REALLY IS MY FOCUS AT THE END OF THE DAY. IT'S, OF COURSE, RELIABILITY AND AFFORDABILITY, A STRONG FUTURE WHERE OUR FAMILIES AND BUSINESSES CAN THRIVE, AND ALL OF THAT HAS TO HAVE IDEAS TO MAKE IT HAPPEN AND VERY HONESTLY FUNDING.
THOSE ARE REALLY ALL MY QUESTIONS. I WANTED TO MAKE THOSE COMMENTS JUST KIND OF REMINDER I THINK IT WOULD BEHOOVE US TO LOOK INTO THE FUTURE, 2027 AND REALLY CONSIDER IT. THANK YOU, MAYOR.
>> MAYOR NIRENBERG: THANK YOU, COUNCILMEMBER CABELLO HAVRDA.
COUNCILMEMBER WHYTE. >> WHYTE: THANKS, MAYOR. BEN, REAL QUICKLY AND I APOLOGIZE IF I MISSED IT IN THE PRESENTATION, BUT THIS PROPOSED RATE INCREASE, HOW MUCH MONEY DOES THE CITY STAND TO TAKE IN OFF OF THAT RATE INCREASE?
>> GORZELL: PULL UP SLIDE 34, PLEASE. 34.
[01:25:01]
SO COUNCILMEMBER, THIS SLIDE COVERS THAT. SO FOR THE REMAINDER OF OUR CURRENT FISCAL YEAR, 2024, ASSUMING A RATE INCREASE WERE APPROVED AND WENT INTO EFFECT FEBRUARY 1ST, OUR CITY PAYMENT REVENUES WOULD BE PROJECTED TO COME UP BY 8 MILLION. THE NEXT COLUMN IS OUR UTILITY EXPENSES WOULD ALSO GO UP. FOR ALL OF OUR FACILITIES, STREET LIGHTS, TRAFFIC SIGNALS, ET CETERA, PROJECTING ABOUT 800,000. SO THE NET IMPACT TO US OR INCREASE IS ABOUT 7.2 MILLION. WE GAVE YOU A PROJECTION FOR FY 2025 FOR A FULL 12-MONTH PERIOD RIGHT BELOW THAT. AND THAT NET IS -->> WHYTE: 7.2 NET TO OUR GENERAL FUND IN THE FIRST YEAR AND BASICALLY
11 MILLION IN THE SECOND YEAR. >> THAT IS CORRECT.
>> WHYTE: THANK YOU. AND I GUESS THE NEXT QUESTION IS FOR RUDY.
AND GOING TO THE SPRUCE 1 CLOSURE. IT LOOKS LIKE BASED ON THE '25 BUDGET, THERE'S 174 MILLION IN REVENUE COMING FROM WHOLESALE SALES FROM THE NEW GENERATION PLAN. ARE WE GOING TO BE ABLE TO
KEEP UP WITH THAT MOVING FORWARD? >> SO COUNCILMAN, WE WOULD HAVE TO SPEND $200 MILLION TO KEEP SPRUCE 1 OPEN BEYOND THE TIME PERIOD WE PROJECTED WHICH IS ALL VETTED AS PART OF OUR PLAN THROUGH THE RATE ADVISORY COMMITTEE AND THE BOARD. SO WE ARE ACTIVELY SEEKING MEGAWATTS RIGHT NOW THAT WOULD REPLACE THAT CAPACITY SO WE STAY IN THE RIGHT POSITION TO BE ABLE TO SELL POWER INTO THE MARKET. SO OUR GENERATION PLAN WOULD REPLACE THAT CAPACITY IN THE
TIME FRAME WE WOULD BE MOVING AWAY FROM SPRUCE 1. >> WHYTE: ON THAT NOTE LET ME ASK YOU ABOUT IN 2021, YOUR PREDECESSOR WROTE A MEMO, I GUESS IT WAS, YOU KNOW, TALKING ABOUT THE FLEXIBLE SHE STATED THAT -- AND HELP ME UNDERSTAND THIS BECAUSE I WANT TO MAKE SURE I UNDERSTAND IT RIGHT. IT SAYS ACCELERATED DEPRECIATION, AND STRANDED COSTS FOR EARLY RETIREMENT OF THE COAL ASSETS OF 450 MILLION IS INCLUDED IN
THE BILL IMPACT RESULTS. WHAT DOES THAT MEAN? >> YEAH, WELL, SO EVERY YEAR THAT WE RUN THOSE UNITS IS ONE MORE YEAR OF DEPRECIATION THAT WE'RE ABLE TO DEPRECIATE OFF THE BOOKS. YOU DON'T CLOSE ANY PLANT DOWN WITHOUT THERE BEING SOME UNAMORTIZED DEPRECIATION LEFT ON THE BOOKS.
THOSE ARE MAINLY BALANCE SHEET TYPE OF COSTS THAT WE MANAGE FROM A REVENUE STANDPOINT. SO -- SO YOU'RE GOING TO -- I DON'T KNOW, BY 2027 I THINK SPRUCE 2 WILL BE -- SPRUCE 1 WILL BE 30-PLUS YEARS OF USEFUL LIFE.
AND AGAIN, IT IS A DECISION POINT NOT BASED ON THE STRANDED ASSETS, BUT THE AMOUNT OF INVESTMENT YOU WOULD HAVE TO MAKE TO KEEP THAT PLANT RUNNING THAT WOULD MAKE IT VIABLE GOING FORWARD. WHEN YOU LOOK AT THE STRANDED COSTS VERSUS THE INVESTMENT YOU ARE GOING TO HAVE TO MAKE, YOU ARE NOT GOING TO SPEND -- IT'S NOT A GOOD BUSINESS DECISION TO SPEND $200 MILLION ON THAT
COAL PLANT. >> WHYTE: SO THAT LINE IS NOT SAYING THE RATEPAYER IS
BEING NEGATIVELY IMPACTED BASED ON THE STRANDED ASSET? >> WHAT WE'VE DONE IS THE PLAN TO REPOWER SPRUCE 2. THAT IS A SIGNIFICANT PORTION OF THE COST, NEARLY 8% OF THE VALUE OF THE SPRUCE FACILITY. SO WE ARE TAKING AND, YOU KNOW, THE STRATEGY WE PUT FORWARD IS REPOWER THAT AS NATURAL GAS PLANT.
SO YOU ARE NOT HAVING THAT ISSUE ANYMORE. YOU HAVE LESS OF THAT WITH SPRUCE 1. AS RUDY MENTIONED, NEARLY $200 MILLION OF EXPENSE WE WOULD OTHERWISE HAVE TO OUTLAY FOR SPRUCE 1. SO DIFFERENT TIME --
>> WHYTE: BUT IT DOES CONTEMPLATE, IT SAYS GAS CONVERSION SPRUCE 2 AND REPLACING SPRUCE 2 WITH SOLAR WIND AND BESS. WHAT'S BESS?
>> LEADERSHIP, THE CASH FLOW MODEL CONTEMPLATES THE VERSION WE TALKED ABOUT.
>> WHYTE: OUTDATED COMMENT, WE DON'T BELIEVE THIS ANYMORE.
>> OUTDATED COMMENT IN THAT IT'S OUTDATED, YES. >> WHYTE: OKAY.
ALL RIGHT. SO IN THIS 4.25% THAT Y'ALL ARE LOOKING FOR, IS ANY PART OF THAT RELATED TO THE COST OF SHUTTING DOWN THE SPRUCE 1?
[01:30:08]
>> SO JUST LIKE WE DID WITH OUR TECHNOLOGY -- OUR ENTERPRISE SYSTEM PLANNING TO YEARS AGO, WE PUT MONEY TO DO THE ANALYSIS OF WHAT THE REQUIREMENT -- THE PLANNING WORK BASICALLY FOR IMPLEMENTING A NEW PROGRAM. SO IN THIS -- IN THIS BUDGET, I MEAN IN THIS RATE CASE, WHAT WE'RE TALKING ABOUT, WE'VE HIRED AN OWNER'S ENGINEER TO LOOK WHAT IT WOULD TAKE TO CONVERT SPRUCE 2 AND ENGINEERING WORK FOR OTHER RESOURCES WE THINK WE'LL NEED TO REPLACE OUR AGING INFRASTRUCTURE. SO THE PLANNING WORK IS REALLY WHAT IS IN THE NEXT
TWO-YEAR BUDGET. >> WHYTE: OKAY. AND SO DO I TAKE THAT THAT A PART OF THIS RATE INCREASE IS RELATED TO THE CLOSING OF THE PLANT.
>> YES. >> WHYTE: OKAY. ALL RIGHT.
ANOTHER QUESTION RELATED TO SORT OF THIS NEW GENERATION PLAN, ARE WE STILL GOING TO HAVE THE ABILITY TO SELL EXCESS ENERGY AS WE HAVE OVER THE PAST COUPLE OF
YEARS THAT'S BEEN SO PROFITABLE? >> YES.
IF YOU LOOK AT THE COLLECTIVE GENERATION PLAN, AND WE'LL BE GLAD TO SEND YOU ALL THOSE DOCUMENTS. THIS IS ABOUT A YEAR'S WORTH OF EFFORT BY THE RATE ADVISORY COMMITTEE ENDORSED BY THE BOARD. WE'LL ULTIMATELY BUILD 5,000 MEE RADIO SOURCES TO REPLACE THE 2500 WE'VE GOT TO RETIRE -- RESOURCES.
THAT'S WHY WE'VE GOT TO GET EVERY MEGAWATT GOING FORWARD.
WE'VE GOT TO DEAL WITH THE AGING STUFF IN ADDITION TO ADDING CAPACITY FOR THE GROWTH OF THE COMMUNITY. WE'RE TRYING TO DEAL WITH BOTH SIMULTANEOUSLY.
>> WHYTE: OKAY. YOU KNOW, IT'S BEEN MENTIONED BY THE MAYOR, I THINK, IN HIS OPENING COMMENTS TODAY THAT, YOU KNOW, WE TOUT THAT CPS -- WE GOT THE LOWEST ENERGY COSTS OF ANYWHERE IN THE STATE, RIGHT? BUT WHEN YOU LOOK AT THE AVERAGE WAGE RATE THAT THE AVERAGE SAN ANTONIO CITIZEN IS MAKING, HAVE WE DONE A COMPARISON THERE? BECAUSE WHEN I LOOK AT THE NUMBERS, AND YOU COMPARE THE AVERAGE HOURLY WAGE OF A SAN ANTONIO RESIDENT VERSUS WHAT THEY ARE SPENDING ON ENERGY, IT LOOKS TO ME LIKE WE'RE ACTUALLY THE THIRD HIGHEST IN TERMS OF WHAT PERCENTAGE OF PEOPLE'S PAYCHECKS ARE GOING TOWARDS
ENERGY COSTS. >> COUNCILMAN, HERE'S WHAT I WOULD TELL YOU.
IF, YOU KNOW, BACK IN 1999 WHEN THE MARKET WAS DEREGULATED IN THE STATE OF TEXAS, LEGISLATURE GAVE CITIES THAT OWNED UTILITIES BASICALLY THE DISCRETION TO ENTE R INTO COMPETITION OR NOT.
IF CPS ENERGY WAS IN COMPETITION TODAY, THE RETAILERS WOULD BE IN THE 15 TO 16-CENT RANGE WHICH IS WHY WE DO THAT RELATIVELY COMPARISON.
THE WAY YOU DO THE CALCULATION YOU ARE ASKING ABOUT, MOST OF US WHO CAN AFORD OUR BILLS ARE IN THE 3 TO MAYBE 5 TO 6% RANGE. WE'VE DONE AN ANALYSIS BY CENSUS TRACT TO TRY TO IDENTIFY THOSE CUSTOMERS WHO ARE ABOVE 10%.
THAT UTILITY BURDEN CALCULATION IS HOW YOU COMPARE OUR RATE TO THEIR ABILITY TO PAY. AND YES, WE HAVE DONE THAT WORK.
>> WHYTE: OKAY. AND YOUR CHART PROBABLY LOOKS LIKE MINE THEN THAT SHOWS THAT EL PASO AND CORPUS CHRISTI PAY THE MOST -- THE MOST FOR THEIR ENERGY WHEN YOU ARE TAKING INTO ACCOUNT WAGES, WE'RE THIRD.
AND THEN AFTER US DALLAS, HOUSTON AND AUSTIN. AND I THINK THE MAYOR JUST MENTIONED AUSTIN MAY HAVE RAISED THEIR RATES SO I DON'T KNOW IF THIS IS UP TO
DATE. >> WE'RE GLAD TO VALIDATE IT IF YOU WOULD LIKE US TO TAKE
TAKE LOOK. >> WHYTE: THANK YOU, I APPRECIATE THAT AND I'LL
HAVE SOME MORE COMMENTS IN THE SECOND ROUND. >> MAYOR NIRENBERG: THANK
YOU, COUNCILMEMBER WHYTE. COUNCILMEMBER PELÁEZ. >> PELÁEZ: THANKS.
RUDY, A COUPLE OF THINGS. I COME TO THIS CONVERSATION KNOWING FULL WELL WHAT MY JOB IS, RIGHT? ON THE ONE HAND, I AM THE -- I'M THE ELECTED OFFICIAL WHO, YOU KNOW, REPRESENTS THE TAXPAYER AND THE RATEPAYER.
WHEN APPOINTING BOARD MEMBERS. I THINK WE'VE DONE A GREAT
[01:35:03]
JOB. JANIE, IT'S NICE TO SEE YOU AND FRANCINE IS ONE OF THE SMARTEST HUMAN BEINGS THAT WALKS THE EARTH. I THINK WE'RE ALL PROUD OF THE SERVICE WE GET FROM ALL THE BOARD MEMBERS. I'M THE ELECTED OFFICIAL THAT GETS TO EVALUATE WHEN IS THE RIGHT TIME AND HOW MUCH RATES NEED TO BE ADJUSTED UPWARD OR DOWNWARD, RIGHT? AND, YOU KNOW, WE HAVE DISCRETION OVER WHAT TO DO WITH THE FUNDS, THE REVENUES GENERATED FROM CPS AND HOW WE ADMINISTER THOSE. I THINK THAT IN ALL OF THOSE INSTANCES MY ROLE -- I'VE FULFILLED MY OBLIGATIONS. HOWEVER, I ALSO HAVE ANOTHER ROLE AND THAT ROLE IS I AM THE ELECTED CONSUMER ADVOCATE FOR DISTRICT 8. THAT'S MY JOB, RIGHT? I BRING THE VOICE OF THE FRUSTRATED RATEPAYER AND THE FRUSTRATED TAXPAYER UP HERE.INCLUDING THE VOICE OF THE MOST IMPORTANT CONSTITUENT IN DISTRICT 8, MY MOM, RIGHT? SHE -- I'M LITERALLY CONSIDERING WHETHER OR NOT TO RAISE MY MOM'S BILL. THE OTHER MOST IMPORTANT, MY MOTHER-IN-LAW, AND MY SISTER. LITERALLY I HAVE TO HAVE CHRISTMAS DINNER WITH THESE FOLKS IF WE VOTE TO INCREASE THE RATES. I HAVE TO TELL THEM LOOK, I KNOW. NOBODY LIKES THIS, RIGHT? AND I APPROACH THESE TWO JOBS UNDERSTANDING THAT IN THE EYES OF THAT THERE'S SOME SORT OF CONFLICT OF POSITIONS THERE. OR THAT, YOU KNOW, THE -- YOU CANNOT BE ONE WHILE BEING THE OTHER AND I DISAGREE.
I THINK YOU CAN MEET BOTH OF THEM. AND YOU DO THAT BY COMPARING AND UNDERSTANDING WHAT THE PUBLIC WANTS VERSUS WHAT THEY NEED.
AND IT'S NOT JUST ME IMPOSING UPON THEM MY OPINION ABOUT WHAT THEY NEED. WHEN I TALK TO MY MEMBERS OF MY CONSTITUENTS, I IMAGINE THE REST OF THE COUNCILMEMBERS HAVE THE SAME EXPERIENCE.
THEY GET A RESOUNDING NO, WOULD YOU GUYS LIKE US TO RAISE YOUR RATES.
WHO WOULD LIKE THAT? IN FACT, IN 2023 ALMOST EVERY SAN ANTONIAN IS AN EPIDEMIOLOGIST COMING OUT OF COVID, THEY ARE ALL TRAFFIC MANAGEMENT ENGINEERS.
THEY ALSO KNOW HOW TO RUN A UTILITY AND IN THEIR PIN YOU TILTS SHOULD BE FREE AND -- IN THEIR PIN YOU TILTS SHOULD BE. THAT IS WHAT WE HEAR A LOT OF. THAT'S WHAT THEY WANT. BUT WHEN YOU SAY, ALL RIGHT, WOULD YOU GUYS LIKE A GRID THAT SUPPORTS YOUR ABILITY TO CHARGE YOUR NEW EV.
ALL OF THEM SAY YEAH, I WANT THAT. WOULD YOU GUYS LIKE HOSPITALS WHOSE LIGHTS STAY ON ALL THE TIME? YES.
WOULD YOU LIKE A MILITARY USA WHO CAN SUPPORT THE MISSIONS AND BE THE MOST EFFECTIVE CYBERSECURITY USA? OH, YES. WOULD YOU LIKE FACTORS WHERE YOU WORK TO STAY ON AND ENJOY ON-DEMAND, AFFORDABLE ENERGY ALL THE TIME? YES, I WOULD LIKE THAT VERY MUCH. YOUR KIDS' SCHOOLS USE MORE AND MORE ENERGY EVERY SINGLE YEAR. YOUR AIR CONDITIONING, WOULD YOU GUYS LIKE ALL THESE THINGS AND THEY SAY WE COULDN'T JUST LIKE THEM, WE NEED THOSE THINGS. SOMEWHERE IN THE CONVERSATION, THOUGH, THERE IS A SUSPENSION OF REALITY. AND THAT IS WHEN YOU SAY, OKAY, BUT ALL THOSE THINGS COST MONEY AND IT JUST GETS MORE AND MORE EXPENSIVE EVERY YEAR TO PROVIDE THOSE THINGS, DO YOU UNDERSTAND THAT? PEOPLE SAY YEAH, BUT STILL DON'T RAISE MY RATES. CREATING THIS HORRIBLE CHOICE, DO NOTHING, WHICH IS NEVER A STRATEGY, OR ADJUST THE RATES UPWARD AND HAVE A MOB OF VERY ANGRY CONSTITUENTS WHO ARE UNABLE TO CONNECT THOSE TWO DOTS. THAT'S THE JOB.
I'M NOT COMPLAINING ABOUT MY CONSTITUENTS. THAT'S THE REALITY OF BEING IN THE POSITION I'M IN. THAT SAID I WANT WHAT THEY WANT AND I NEED CPS ENERGY NOT TO BE SHUT DOWN GUY VLADIMIR PUTIN OR KIM JONG-UN OR HACKERS FROM ALL OVER THE WORLD. IF YOU GUYS DON'T UPGRADE YOUR CYBERSECURITY INFRASTRUCTURE, WE ARE AT RISK OF LOSING ALL THOSE THINGS THAT I JUST LISTED THAT WE NEED. I WANT YOU GUYS TO BE ABLE TO CONTINUE TO PROVIDE A HEALTHY MIX OF SOLAR, WIND, YOU KNOW, LIQUID NATURAL GAS OR WHATEVER IT IS YOU CALL IT, AND NUCLEAR. I WANT YOU GUYS TO CONTINUE TO DO THAT.
I WANT AND NEED FOR US TO GET CLEANER, MEANER AND CONTINUE TO BE AS
[01:40:03]
COMPETITIVE AS POSSIBLE. AND I WANT THE SMARTEST PEOPLE IN AMERICA WORKING AT CPS ENERGY. AND TO DO THAT YOU'VE GOT TO COMPETE IN THE LABOR MARKET.SO YOU'VE PRESENTED US WITH A DIFFICULT PROBLEM, BUT THAT'S LITERALLY WHY WE WERE ELECTED IS TO HAVE THESE DIFFICULT CONVERSATIONS AND REPRESENT THE BEST INTERESTS OF MY CONSTITUENTS. AND IT'S NOT A MATTER OF, WELL, THEY DON'T MAKE ENOUGH, THEREFORE WE SHOULDN'T RAISE THEIR RATES. IN ORDER TO HAVE A CPS ENERGY -- I'M SORRY. I'M GOING TO STOP FOR A SECOND.
THERE'S BEN GORZELL'S RIDE. [LAUGHTER] IN ORDER TO HAVE A CPS ENERGY THAT'S HEALTHY, THAT MEANS WE ARE MORE COMPETITIVE, ACC STAYS OPEN FOR CLASSES, WE'RE ABLE TO PROVIDE JOBS DAY AND NIGHT AT THE TOYOTA PLANT, THE AND A AND A HALF HAVE A STAR PLANT. WELL, IT'S GOING TO BE EXPENSIVE AND DON'T HAVE THE CONVERSATION ABOUT WHAT CPS MEANS WRIT LARGE FOR EVERYBODY, I THINK THAT'S ALMOST A DISHONEST CONVERSATION.
AND I THINK, YOU KNOW, THE HARD CONVERSATION IS GOING TO BE WITH THE PUBLIC WHEN WE PRESENT TO THEM THE WHOLE SPECTRUM OF POSSIBILITIES OF WHAT HAPPENS WHEN YOU NEGLECT CPS. AND WE CAN'T AFFORD TO NEGLECT YOU GUYS.
4.25, LESS THAN 4.25, WHATEVER THE PERCENTAGE IS, THAT'S THE DEBATE.
THERE'S NO SCENARIO WHERE I WILL EVER VOTE FOR MAKING YOU GUYS WEAKER.
THANK YOU. >> MAYOR NIRENBERG: THANK YOU, COUNCILMEMBER PELÁEZ.
COUNCILMEMBER CASTILLO. >> CASTILLO: THANK YOU, MAYOR, AND THANK YOU BEN FOR THE PRESENTATION AS WELL AS THE CPS TEAM. I FEEL WITH THIS CONVERSATION I WAS WELL EQUIPPED WITH MORE DOCUMENTATION THAN THE LAST ONE. THANKS TO THE TEAM FOR PROVIDING THE RESPONSES TO THE LAST B SESSION ON THIS ITEM. ONE THING THAT I WOULD LIKE TO SEE AND I KNOW IT'S ONLINE, BUT IF SOMEONE COULD SEND ME THE LINK TO THE GENERAL CPS BUDGET. I UNDERSTAND THIS IS A TINY SLITHER WITHIN THE LARGER CPS BUDGET. LOOKING AT THE 2021 AND 2022 RATE INCREASE REQUEST, I SEE THAT THERE'S A COUPLE OF THE METRICS THAT HAVE BEEN CHECKED OFF.
BUT I DO HAVE A FEW QUESTIONS FROM THE LAST INCREASE COMING UP INTO THIS ONE. FOR EXAMPLE, WITH THE LAST RATE INCREASE, THERE IS A REQUEST FOR ROUGHLY 31 MILLION FOR ALTERNATIVE FUEL SOURCES FOR GENERATION.
FROM THE LAST RATE INCREASE THAT COUNCIL APPROVED, WHAT ALTERNATIVE FUEL SOURCES THAT WEREN'T IN OUR PORTFOLIO HAVE WE INVESTED IN?
>> COUNCILWOMAN, WE HAVE -- YOU KNOW, STRATEGY, IF YOU WILL, THAT REALLY SOUGHT TO GAIN 600 MEGAWATTS OF SOLAR, 500 MEGAWATTS OF BATTERY STORAGE. NOT 500, 50 MEGAWATTS OF BATTERY STORAGE. THERE WERE A NUMBER OF THINGS WE WERE TRYING TO ACCOMPLISH IN THAT FLEX POWER BUNDLE. A GOOD MAJORITY OF THAT WORK WAS MORPHED INTO OUR GENERATION PLANT. WE HAVE ADDED, I BELIEVE IT'S SOMEWHERE IN THE NEIGHBORHOOD OF 500 MEGAWATTS, 600 MEGAWATTS OF NEW SOLAR THAT'S BEING BUILT IN THE GROUND NOW. WE'RE WORKING ON 150 MEGAWATTS THAT SHOULD BE WRAPPED UP OF ADDITIONAL SOLAR.
WE GOT THE 50-MEGAWATT STORAGE DONE. WE ALSO WENT OUT AS PART OF THE FLEX POWER BUNDLE, WE'RE ALSO GOING TO PROCURE 500 ADDITIONAL MEGAWATTS OF ADDITIONAL NATURAL GAS CAPACITY. WE HAVE DONE ALL THOSE THINGS WE'VE SAID AND WE STILL HAVE PROJECTS IN PLACE TO CONTINUE TO PUSH THE ENVELOPE. THE OTHER THING WE DO THAT WE DON'T GET A LOT OF HEADLINES FOR IS WE PARTNER WITH SOUTHWEST RESEARCH INSTITUTE, UTSA, EPRY GROUP, AND FOR NEW TECHNOLOGY. SO WE'RE LOOKING INTO HYDROGEN TECHNOLOGY.
WE ARE LOOKING INTO CARBON CAPTURING SEQUESTRATION. JOINED THE TEXAS GEOTHERMAL ALIGNS. WE PARTNER WITH STRATEGIC PARTNERS TO PARTNER WITH -- THAT JUST NEED TO GET TO COMMERCIALIZATION. WE'RE PUSHING THE BALL FORWARD ON ALL FRONTS AS RELATES TO NON-EMITTING TECHNOLOGY, WE'RE OPEN TO
ALL OF IT. >> CASTILLO: AND WITHIN THOSE INCREASES IN THE
PORTFOLIO, DOES THAT INCLUDE AN INCREASE TO COAL? >> NO.
>> CASTILLO: I WOULD LIKE TO SEE THE LARGER BUDGET IS THE TECHNOLOGY PIECE.
[01:45:01]
I THINK OF CITY SERVICES AND WHEN WE SWITCH DIFFERENT TECHNOLOGY OR SOFTWARE, WE'RE SWITCHING. WE'RE NOT ASKING FOR MORE, WE'RE JUST SWAPPING THE VENDOR. I WANT TO UNDERSTAND IF IT'S SOFTWARE, ARE WE INCREASING THE AMOUNT OF SOFTWARE OR SWITCHING VENDORS TO PROTECT WHATEVER THE MECHANISM MAYBE? >> WHAT WE'RE DOING IS MODERNIZING OUR TECHNOLOGY.
SO THINGS THAT WE CAN'T DO TODAY, THE CONSIDERATION OF WHETHER OR NOT WE WANT TO OFFER A TIERED RATE STRUCTURE IN THE FUTURE, WHICH HAS BEEN A BIG SUBJECT OF CONVERSATION, WE CAN'T DO THAT WITH THE CURRENT TECHNOLOGY.
INVESTMENT IN OUR FUNDAMENTAL TECHNOLOGY INFRASTRUCTURE WILL OPEN UP THE DOORS TO ALL KINDS OF CUSTOMER OPTIONS GOING FORWARD THAT WE JUST CAN'T
SUPPORT TODAY. >> CASTILLO: AND ALSO WITH -- IN THIS PROPOSAL AS WELL IS REROUTING ELECTRIC LINES TO ACCOMMODATE NEW CONSTRUCTION.
WHEN I HEAR THAT AND MY CONSTITUENTS HEAR THAT, THEY HEAR THEY ARE SUBSIDIZEING SPRAWL. CAN YOU COMMUNICATE TO MY CONSTITUENTS WHAT DOES CPS MEAN WHEN THEY ARE ASKING FOR AN INIES TO ACCOMMODATE NEW CONSTRUCTION?
>> LET ME GIVE YOU AN EXAMPLE WHY THOSE ARE SYSTEM COSTS.
THE DEVELOPER PAYS THE LAST MILE. WHEN THEY NEED TO CONNECT TO OUR SYSTEM, HANG A TRANSFORMER, BUILD A LINE, SET A METER, THEY ARE PAYING THAT COST ASSOCIATED WITH THAT PARTICULAR PROJECT. BUT IF YOU LOOK AT -- AND I THINK IT'S IN MANNY'S DISTRICT. IF YOU LOOK AT THE SCENIC LOOP AREA, THAT WAS COUNTRY. EIGHT YEARS AGO THAT WAS COUNTRY WITH VERY LITTLE DENSITY. AS THE COMMUNITY GROWS AND THOSE AREAS THAT HAVE BEEN RURAL NOW BECOME MORE URBAN, ALL OF A SUDDEN THAT DENSITY CREATES HIGHER LOAD.
AND WHEN THAT DENSITY CREATES HIGHER LOAD, YOU GOT TO PUT ANOTHER SUBSTATION IN AND REJIGGER THE TRANSMISSION LINES TO MAKE IT ALL WORK.
THERE'S GROWTH THAT HAPPENS ORGANICALLY IN OUR COMMUNITY THAT IS A CPS ENERGY COST
WHICH ULTIMATELY IS BORNE BY ALL CUSTOMERS. >> CASTILLO: WITH THE GROWTH THAT WE'VE SEEN, CAN CPS PROVIDE COUNCIL WITH A TOTAL AMOUNT OF INCENTIVES
THAT WERE PROVIDED TO SOME OF THESE NEW DEVELOPMENTS? >> WE DON'T PROVIDE INCENTIVES. CUSTOMERS PAY, BASED ON THE REVENUE THEY ARE EXAMINED TO PRODUCE, THEY PAY A CONTRIBUTION IN AID OF CONSTRUCTION THAT IS PART OF
THE DEVELOPMENT PROCESS. >> CASTILLO: SO WHAT YOU'RE SAYING THERE ARE ZERO
CPS INCENTIVES TO PROVIDE -- >> WE DON'T PROVIDE THINGS OF THAT NATURE.
>> CASTILLO: WITH THE DOCUMENTATION THAT WAS PROVIDED TO US ON NOVEMBER 28TH, I'M LOOKING AT SOME OF THE LINE ITEMS THAT YOU ALL LAID OUT.
FOR EXAMPLE, 4.1 MILLION FOR A SECURITY CONTRACT. IS THIS AN INCREASE OF 4 MILLION OF ADDITIONAL SECURITY OR -- IT SAYS CPS ENTERED INTO A NEW SECURITY CONTRACT FOR SECURITY GUARDS. HELP ME UNDERSTAND WHY THAT CONTRACT IS NOT FIXED INTO THE SET BUDGET AND WHY THERE'S GOING -- THE JUSTIFICATION FOR THE INCREASE IS 4.1 MILLION FOR SECURITY CONTRACT?
>> WE HAVE TO ADDRESS BOTH CYBERSECURITY FROM A SYSTEM STANDPOINT AND PHYSICAL SECURITY OF OUR INFRASTRUCTURE. CPS ENERGY IS CRITICAL INFRASTRUCTURE. WE GOT FOLKS WHO WANT TO DO BAD THINGS TO TAKE DOWN SUBSTATIONS AND HURT THE MILITARY AND TO DO THINGS THAT WILL TAKE OUR SYSTEM DOWN. SO WE HAVE TO HAVE SECURITY IN PLACE TO ENSURE THAT WE'RE PAYING ATTENTION TO ALL THAT INFRASTRUCTURE. AND QUITE FRANKLY, YOU KNOW, WE DO WHAT WE CAN, BUT THERE'S NO WAY TO SIT ON 150 SUBSTATIONS, RIGHT?
>> CASTILLO: PROVIDE FROM THE LAST RATE INCREASE HOW MANY SUBSTATIONS WE'VE SEEN IN GROWTH IN ADDITION TO SO THAT COULD HELP CONTEXTUALIZE THAT NUMBER.
I ONLY HAVE THREE MINUTES, CAN YOU ANSWER YES OR NO WILL THIS RATE INCREASE FIX
THE TEXAS STATE GRID? >> NO. >> CASTILLO: THANK YOU FOR THAT CLARIFICATION. WHAT I'VE HEARD, COMMENTS OF COLLEAGUES ARE SAYING IT WILL. IF WE DON'T GET THAT INCREASE, WE'RE GOING TO HAVE WINTER STORM URI ALL OVER AGAIN. SETS THE STAGE FOR WHY WE NEED A CONSUMER ADVOCATE. I READ THE BRATTLE SURVEY STUDY, BUT THERE'S A COUPLE FINDINGS I THINK WOULD BENEFIT TO HAVE A CONSUMER ADVOCATE EVALUATE.
THEY FOUND THE BRATTLE ASSESSMENT FOUND THAT HIGHER ENERGY BURDEN TRACKS ARE CLUSTERED IN THE CENTER OF THE COUNTRY. THERE ARE MORE THAN 20 LOW-INCOME CENSUS TRACTS THAT EXPERIENCE -- MORE THAN 25%.
EMPHASIZING THAT THE ENERGY BURDEN IN SAN ANTONIO FOR SOME OF OUR MOST VULNERABLE
[01:50:01]
RANGES FROM 15 TO 92%, THAT'S A HUGE RANGE. AND I ALSO WANT TO EMPHASIZE WHILE IT IS IMPORTANT THAT WE'RE COG ZAN OF FOLKS ON FIXED INCOME, WE HAVE SO MANY DUAL INCOME FAMILIES THAT ARE BUDGETING BY THE DIME BY BECAUSE OF DEBT.THIS ISN'T JUST GOING TO IMPACT A FEW CENSUS TRACTS WITHIN THE EAST AND WEST SIDE, IT'S GOING TO HIT THE WALLETS OF SAN ANTONIO RESIDENTS THROUGHOUT THE CITY. WHAT I WANTED TO EMPHASIS LASTLY IS THE FIXED RATES FOR THE ENERGY, RIGHT. SO FOR EXAMPLE, I APPRECIATE THE PRESENTATION THAT HIGHLIGHTS THAT RESIDENTIAL PAYERS WITHIN THEIR SUBSET ARE PAYING FAIR RATES.
BUT I THINK WHEN WE LOOK AT THE COSTS FOR LOOKING AT THE METERS AND THE BILLING,
THERE ARE DISCREPANCIES ON HOW MUCH FOLKS ARE PAYING. >> I DON'T KNOW THAT I AGREE WITH YOU ON THAT STATEMENT, BUT I WOULD BE HAPPY TO TALK TO YOU ABOUT WHAT YOUR
PERSPECTIVE IS ON THAT. >> CASTILLO: THANK YOU FOR THAT.
I THINK THIS IS HOW -- DEMONSTRATES THE PURPOSE OF A CONSUMER ADVOCATE.
SO THANK YOU, RUDY AND YOUR TEAM.3 >> MAYOR NIRENBERG: THANK
YOU, COUNCILMEMBER CASTILLO. COUNCILMEMBER VIAGRAN. >> VIAGRAN: THANK YOU.
BEN, THESE QUESTIONS ARE FOR YOU. WHY ARE WE DOING THIS NOW? WHY CAN'T WE DO THIS IN JANUARY? AND THEN VOTE ON THE RATE
INCREASE THEN. >> GORZELL: THIS WORK STARTED WITH CPS SEVERAL MONTHS AGO. AS THEY EVALUATED -- THEIR FISCAL YEAR ENDS JANUARY 31ST. THAT PROCESS LED US TO WHERE WE ARE TODAY.
>> VIAGRAN: SO >> VIAGRAN: I HAVE ISSUES WITH THE TIMING BECAUSE I DIDN'T GET A TOWN HALL IN DISTRICT 3. EVERYBODY IS GETTING A TELE-TOWN HALL. I KNOW SOME OF THE CHAMBERS REPRESENTATIVES ARE HERE.
I'M NOT SURE IF HISPANIC CHAMBER, THEIR BUSINESSES GOT BRIEFED ON IT.
I JUST HAVE A PROBLEM WITH THE TIMING BECAUSE I THINK WE DON'T HAVE ENOUGH TIME TO GET THAT PUBLIC INPUT PROCESS. BUT I AM AWARE THAT THERE IS A NEED.
I'M PAINFULLY AWARE THAT THERE'S A NEED FOR TECHNOLOGY. BUT WHAT I WOULD PREFER TO SEE IS DOING THIS ANNUALLY AND TALKING ABOUT MAYBE A 3% THIS YEAR AND APPROVING UP TO A 2% NEXT YEAR BUT COMING BACK TO THE COUNCIL. AND IF MY COUNCIL MEMBERS ARE READY TO HAVE DIFFICULT CONVERSATIONS, WHAT I'D LIKE TO DO IS HAVE YOU COME NEXT YEAR AND TELL US, YES, WE NEED THAT 2% OR THEY NEED ANOTHER 1.25%. AND THEN LOOK AT DOING THAT FOR 2026 AND 2027. BECAUSE WHAT I DON'T LIKE DOING, EVEN THOUGH WE'RE SITTING HERE AND WE LOOK AT THE PAST COUNCILS AND SOME OF MY COUNCIL MEMBERS WHO SAT ON THAT THAT DIDN'T MAKE MOVES FOR CPS WERE ASKING TO KIND OF HONE IN FOR FUTURE COUNCIL MEMBERS TO BE COMMITTED TO THIS 5.5%. AND I THINK, RUDY, YOU AND YOUR TEAM HAVE DONE AN INCREDIBLE JOB IN OUTREACH AND GETTING PEOPLE OUT THERE. BUT THERE IS STILL THIS ISSUE OF BUILDING TRUST. YOU'RE ASSEMBLING A GREAT TEAM.
THE THINGS I'VE ASKED IN TERMS OF GRANTS, OUTREACH, CREW, BEING OUT IN THE MEETINGS YOU HAVE DONE, BUT THERE IS STILL THESE CONVERSATIONS WE NEED TO HAVE, I NEED TO HAVE WITH MY RESIDENTS BECAUSE THEY ARE CONTACTING ME AND SPECIALIZED GROUPS ARE REACHING OUT TO THEM TO CONTACT ME TO TELL ME THAT THIS ISN'T FAIR. AND SO THAT'S WHY I WOULD MUCH RATHER SEE US TALK ABOUT OUR RATE INCREASE ANNUALLY AND GET A LOOK AT JUST HOW MUCH WE NEED. BUT UNDERSTANDING THAT 4.25% IS WHAT YOU NEED IN THE NEXT TWO YEARS. I WANT TO TALK ABOUT MY PRIORITIES, WHICH I'VE ALREADY TALKED ABOUT. MY PRIORITY IS MY RESIDENTS. AND THE ONE THING THAT, THE NUMBERS AREN'T ADDING UP FOR ME, BEN, ARE THE DISCONNECTIONS IN THE SLIDE SHOW YOU PRESENTED. WHAT IS THE ACTUAL AMOUNT OF PAST-DUE ACCOUNTS OVER 30 DAYS? BECAUSE YOU BROKE IT UP INTO THREE LITTLE BOXES AND THEN YOU
[01:55:07]
HAD -- IT'S SLIDE 29. BECAUSE MY MATH HAS OVER 200,000.AND WE HAD A PRESENTATION BY CPS IN AUGUST 31ST, 2023, WHICH WAS 190,000.
SO THE TWO NUMBERS ARE DIFFERENT. >> GORZELL: SO THIS IS AS OF SEPTEMBER 30, 2023. SO THIS HAS BEEN UPDATED FOR THAT.
THIS IS $175.2 MILLION IN BALANCES THAT ARE OVER 30 DAYS PAST DUE.
THE FIRST DARK BLUE BOX, THESE ARE IN ACTIVE ACCOUNTS. THEY'RE GREATER THAN 30 DAYS BUT THEY ARE NO LONGER ON THE CPS SYSTEM . FROM AN ACCOUNTING PERSPECTIVE, THOSE ARE LIKELY TO BE WRITTEN OFF BECAUSE THOSE CUSTOMERS AREN'T ON THE SYSTEM ANYMORE.
THE NEXT TWO ARE THE REMAINING AMOUNT. THAT'S $131.8 MILLION.
OF THAT, YOU GOT $87.3 MILLION OR SO THAT'S GREATER THAN PAST DUE.
THEY'RE ACTIVE ON THE SYSTEM. THEN YOU'VE GOT ANOTHER 44.555 MILLION,000 CUSTOMERS ELIGIBLE TO BE DISCONNECTED AND THAT BOX BREAKS IT DOWN . THOSE CUSTOMERS ARE LARGELY RESIDENTIAL. IT TELLS YOU ALMOST 45,000 ARE NOT ENROLLED IN ADP.
OF THOSE 6400 OF THOSE ARE ENROLLED IN ADP. IT MEANS THEY'RE ELIGIBLE.
THE TEAM IS OUTREACHING, TRYING TO GET THEM ON PAYMENT PLANS AND TRYING TO GET THEM ON OTHER ASSISTANCE. THIS NUMBER IS GOING TO CONTINUE TO CHANGE AND GET
UPDATED. >> VIAGRAN: I NEED THE NUMBER OF PEOPLE WITH OVER 30 DAYS PAST DUE ACCOUNTS THAT ARE ACTIVE. THAT'S THE NUMBER I NEED.
BECAUSE MY CONCERN IS IF -- WITH THIS RATE INCREASE, WHAT SORT OF FINANCIAL BURDEN ARE WE GOING TO PUT ON THE RATEPAYERS THAT ARE SITTING ON THAT BUBBLE OR JUST 30 DAYS OVERDUE.
AND I DON'T KNOW IF Y'ALL HAVE THE ABILITY TO SAY THESE ARE 30 DAYS, THESE ARE 60 DAYS, THESE ARE 90 DAYS. IF WE COULD GET THAT TOO. BECAUSE I WOULD LIKE TO SEE THAT. BECAUSE I THINK THAT'S ONE THING WE NEED TO CONSIDER.
I KNOW IT'S HARD BECAUSE, BEN, YOU WERE ASKED TO PRESENT ONE THING AND, CPS, YOU HAVE YOUR
NUMBERS TOO. IF WE COULD GET THAT NUMBER. >> GORZELL: SURE.
ON THIS SLIDE IT WOULD BE THE 156,000 CUSTOMERS ACTIVE. THEY OWE $131.8 MILLION.
>> VIAGRAN: OKAY. >> GORZELL: WE CAN AGE THAT FOR YOU.
WE CAN BREAK IT DOWN. YES. >> VIAGRAN: BECAUSE WHAT I DON'T WANT TO SEE IS US -- IS THE RESIDENTS FALL INTO BAD HABITS OF NOT PAYING THEIR BILLS OR BEING PAST DUE AND BEING INACTIVE. SO THAT IS THE OTHER PART OF MY PRIORITY. AND I KNOW I CAN'T -- ADRIANA MENTIONED IT ALSO.
I WISH I COULD GET THE LIST OF EVERYBODY WHO OWES Y'ALL MONEY AND I WOULD HELP YOU GUYS GET THEM ON A PROGRAM. BUT I KNOW Y'ALL CAN'T BECAUSE THEY'RE YOUR CUSTOMERS.
BUT I DO WANT TO HELP AND I DO WANT TO GET THE MESSAGE OUT THERE BUT I ALSO WANT TO THINK ABOUT THE PEOPLE. AS COUNCILWOMAN CASTILLO MENTIONED THAT ARE KIND OF ON THAT BUBBLE THAT ARE JUST TRYING TO MAKE EVERY DIME COUNT.
AND TO DO THIS AND TO DO THIS -- AND THIS IS WHY I STRUGGLE WITH THE 4.25 RIGHT OFF THE BAT IS TO DO THAT AND NOT GIVE THEM THE OPTION TO TRY AND BUDGET MAKES IT DIFFICULT, ESPECIALLY THOSE ON FIXED INCOMES AND SPECIFICALLY MY SENIORS.
I DO HAVE ANOTHER QUESTION, BEN, REGARDING STAFFING. NONE OF THAT GOES -- AND WHERE THIS 4.25% IS LOOKED, THAT DOESN'T GO FOR BONUSES, DOES IT, IN THE PAY?
IT JUST GOES TO PROVIDE STAFF. >> GORZELL: THAT'S CORRECT. SO THE BONUS PROGRAM THAT WE TALKED ABOUT DURING THE LAST RATE INCREASE, THAT WAS ELIMINATED.
I DON'T REMEMBER WHAT FISCAL YEAR THAT WAS BUT THAT WAS ELIMINATED IN THAT PROCESS AND
THAT IS NOT BUILT INTO WHAT WE LOOKED AT HERE. >> VIAGRAN: OKAY.
THIS WOULD JUST BE FOR STAFFING, WHICH IS LIKE -- RUDY, YOU CAN COME IN.
IF THE CREW MEMBERS, OUR LINEMEN, THOSE THAT NEED TO DO TECHNOLOGY.
>> GORZELL: ON SLIDE 16 AND 17 LISTS THE STAFFING FOR YOU. THE DOLLARS ASSOCIATED WITH THAT ARE BUILT INTO THEIR BUDGET. GOING FORWARD.
AND THEN COMPENSATION-WISE, THERE IS THAT 4% GENERAL WAGE INCREASE AND MERIT THAT'S BUILT
[02:00:04]
INTO THE FIVE-YEAR PROGRAM AS WELL. >> VIAGRAN: AND THEN, RUDY, SINCE YOU'RE THERE, AND I WANT TO ASK SPECIFICALLY IN TERMS OF STAFFING.
READY TO WORK. I KNOW THAT YOU WERE AT THE TOWN HALL, LIKE ALL OF US, AND
YOU COMMITTED -- >> YOU ANSWERED YES. IS THERE ANY WAY YOU CAN PROVIDE SPECIFICS, I GUESS BY THE NEXT MEETING OR IF CPS COULD, IN TERMS OF WHAT SORT OF PATHWAY YOU'RE PLANNING IN TERMS OF WITH THIS RATE INCREASE WE'RE GOING TO SEE STAFF COME FROM READY TO WORK.
>> YEAH. ALL OF THE STAFFING WE'RE TALKING ABOUT IS ON THE FRONT LINES. LET ME JUST SAY THAT. AND WE'VE BEEN EARLY PARTNERS ON READY TO WORK FROM THE GET-GO. WE'RE PART OF THE INTERNSHIP PROGRAM THAT'S BEEN DEVELOPED TO BRING THOSE FOLKS IN, GIVE AN INTERNSHIP AND A PATHWAY TO A JOB. I THINK ALL OF THE COMPANIES INVOLVED ARE KIND OF IN THE EARLY STAGES OF THAT INTERNSHIP PROGRAM. BUT WE'LL GET YOU SOME
INFORMATION ON WHAT WE'RE DOING. >> VIAGRAN: THANK YOU, RUDY.
THE ONE THING I'M VERY INTERESTED ON THE TOWN HALL -- AND MY TEAM AND I WILL BE LISTENING THIS EVENING. I THINK THE ONE THING IS THE RESIDENTS NOT FEELING LIKE THEY HAVE BEEN HEARD. AND I KNOW THE OTHER REASON I'D LIKE TO MAYBE COME BACK 3% THIS YEAR, 2%. WE CAN APPROVE IT AND SAY IT'S UP TO 2%, BEN, IF YOU COULD DO THAT. AND THEN DO IT IN INCREMENTS YEARLY.
BECAUSE I WOULD LIKE TO COME BACK AND VISIT THE CUSTOMER ADVOCACY.
I FEEL LIKE -- AND SIMILAR TO SOME OF MY COUNCIL COLLEAGUES -- I FEEL LIKE MY TEAM AND MY STAFF ARE DOING CUSTOMER ADVOCACY BUT IF WE'RE NOT DOING IT WELL ENOUGH, I WOULD LIKE TO EXPLORE BRINGING A CUSTOMER ADVOCATE ON IN THE FUTURE.
THAT'S ALL MY QUESTIONS. THANK YOU. >> MAYOR NIRENBERG: THANK
YOU, COUNCILMEMBER VIAGRAN. COUNCILMEMBER COURAGE. >> COURAGE: THANK YOU, MAYOR. I DON'T KNOW IF I'D HAVE RUDY OR MAYBE CORY ANSWER THESE.
EITHER ONE OF YOU. I'M GOING TO GIVE BEN A BREAK. ON SLIDE 3, WE SHOW THE PROJECTIONS OF REVENUE -- OR THE PERCENTAGE INCREASE. AND IT SAYS CPS ENERGY FISCAL YEAR '25 AND CPS ENERGY FISCAL YEAR '27. NOW THAT ACTUALLY MEANS THAT PEOPLE NEXT YEAR, CALENDAR YEAR '24, WILL BE PAYING THESE INCREASES, RIGHT?
>> CORRECT. >> COURAGE: I WANT TO MAKE SURE PEOPLE UNDERSTAND THAT BECAUSE IF THEY'RE WATCHING ON TV, THEY MAY NOT RECOGNIZE. SO THIS RATE INCREASE WOULD GO INTO EFFECT AS SOON AS YOUR CALENDAR YEAR BEGINS, WHICH IS FEBRUARY 1ST?
>> FEBRUARY 1ST, CORRECT. >> COURAGE: OKAY. YOU SHOW THE RESIDENTIAL INCREASE BUT WHAT HAPPENS TO THE RATES FOR COMMERCIAL AND BUSINESSES?
>> I THINK BEN HAD SOME SLIDES IN THERE AS WELL. THOSE RATES WILL GO UP AN AVERAGE TO 2.7 TO 3.1% BILL IMPACT. THE RESIDENTIAL IS 2.7.
THERE'S A SLIDE IN THE BACK AND ONE OF OUR PRESENTATIONS WE HAVE THAT LAID OUT AS WELL WE
CAN CIRCULATE. >> COURAGE: SO THE COMMERCIAL RATE WILL BE SLIGHTLY HIGHER
FOR BOTH OF THOSE TWO-YEAR PERIODS? >> THE 2.7 TO 3.1% IS REFLECTION OF THE TOTAL BILL INCLUSIVE OF FUEL AND REGULATORY COST BUT THE BASE RATE TO THE ENTIRE SYSTEM WILL BE EQUALLY APPLIED TO THE DIFFERENT CUSTOMER GROUPS.
WE WANTED TO PROVIDE A LITTLE EXTRA ACCURACY SO FOLKS COULD KNOW WHAT THAT WOULD FEEL LIKE ON THEIR BILL AND THAT WAS THE PURPOSE OF BREAKING IT OUT IN THAT MANNER.
>> COURAGE: IF YOU COULD SEND IT AGAIN TO ME IN ANOTHER PAPER, IT'S EASIER FOR ME TO
LOOK AT IT BROKEN DOWN LIKE THAT. >> SURE.
>> COURAGE: NOW IN SLIDE 11 WE TALK ABOUT THE DOLLAR COSTS FOR ELECTRICITY.
AND THEN ON SLIDE 12 WE TALK ABOUT THE COST FOR GAS. WHAT FACTORS GO INTO THE DOLLAR
COST FOR RESIDENT AND COMMERCIAL? >> YEAH, BEN DID A GOOD JOB EXPLAINING THIS. THIS IS A VERY MUCH AN INDUSTRY STANDARD TYPE OF ANALYSIS SYSTEM IN ORDER FOR US TO SYSTEMATICALLY APPLY THE APPROPRIATE COSTS ON TO THOSE GROUPS AND RECOVER ACCORDINGLY. IT'S EVERYTHING.
IT'S THE POWER PLANTS. IT'S THE LINES, THE LABOR, EVERYTHING THAT WE TALKED ABOUT TODAY THAT GOES INTO THE CAPITAL O&M BUDGET, ALL OF THOSE COSTS ARE TAKEN INTO ACCOUNT AS PART OF THIS ANALYSIS. I THINK BEN MENTIONED IT, IT'S ON THE SLIDE, THE BRATTLE GROUP WAS THE INDEPENDENT THIRD PARTY WE HIRED TO DO THIS ANALYSIS
FOR US TO FURTHER ENSURE WE HAD THAT THIRD-PARTY VIEW. >> COURAGE: SO EVERY COMPONENT THAT GOES INTO SUPPLYING THE ELECTRICITY GETS DIVIDED BY THE NUMBER OF PEOPLE
[02:05:03]
WHO USE IT, BASICALLY. >> SO TO SPEAK. YEAH, EVERY PIECE OF EQUIPMENT
AND COSTS AND SO FORTH. >> COURAGE: OKAY. THANK YOU.
I WANT TO REITERATE SOMETHING I HEARD FROM COUNCILWOMAN ALDERETE GAVITO MENTION ABOUT THE 125% POVERTY LEVEL BEING THE GUIDELINE WE USE TO PUT PEOPLE INTO THE REAP PROGRAM AND I RECOGNIZE THERE ARE OTHER WAYS, IF THEY'RE A SENIOR OR DISABLED, THERE MAY BE DIFFERENT METHODOLOGIES. BUT PERSONALLY I THINK THAT LEVEL IS TOO LOW.
AND I THINK IT SHOULD BE MORE LIKE 150%. AND I THINK MAYBE THE CITY SHOULD TAKE A LOOK AT HOW WE CAN HELP SUPPORT THAT HIGHER LEVEL OF OPPORTUNITY FOR PEOPLE TO GET DISCOUNTS AND MORE SUPPORT IN THEIR UTILITY BILL. I JUST HOPE THAT'S SOMETHING THAT WE CONTINUE TO CONSIDER. FINALLY -- THANKS, CORY. AFTER THE PANDEMIC AND PEOPLE NOT BEING ABLE TO PAY THEIR BILLS, WHICH WE KNOW WAS OVER $200 MILLION.
AND AFTER WINTER STORM URI, WHICH ACTUALLY DROVE SOME MUNICIPALLY-OWNED UTILITIES INTO BANKRUPTCY. IT SEEMS REASONABLE THAT MANY OF THE UTILITIES HAVE HAD TO IMPLEMENT RATE HIKES. SO WE ARE NOT OUT OF THE ORDINARY.
WHEN CPS OR WE PASSED RECENTLY ACTIONS, WE PASSED A FUEL COST ADJUSTMENT TO EVERYBODY'S BILL. THEN WE PASSED A 3.85, I BELIEVE IT WAS, RATE INCREASE TO ALL OF OUR CUSTOMERS. AND NOW WE'RE LOOKING AT A 4.25% RATE INCREASE.
GRANTED, THE ACTUAL AMOUNT TO A RESIDENTIAL BILL MAY BE A LITTLE BIT LESS THAN THAT BUT I THINK CUMULATIVELY THAT SOUNDS LIKE A LOT TO THE AVERAGE PERSON ON THE STREET, I WOULD THINK. AND OUR STAFF, HOWEVER, AND I THINK CPS STAFF HAVE CONVINCED ME RIGHT NOW THAT THOSE ARE JUSTIFIED. BUT NOW I THINK WE NEED TO MEASURE THE EFFECTS OF ALL OF THOSE ON THE ABILITY OF CPS TO PROVIDE OUR ENERGY AND NEEDS EFFICIENTLY, EFFECTIVELY, AND AFFORDABLY BEFORE I FOR ONE WOULD PREAPPROVE ANOTHER RATE HIKE TWO OR FOUR YEARS DOWN THE LINE. I DON'T BELIEVE IN COMMITTING A FUTURE COUNCIL OR LIMITING A FUTURE COUNCIL'S ABILITY TO MAKE A DECISION ON FUTURE RATE HIKES. MANY MEMBERS OF THE COMMUNITY HAVE ASKED ME TO ASK FOR AN ADVOCATE TO LOOK AT THIS RATE INCREASE BEFORE IT'S APPROVED. AND I DON'T SUPPORT THAT AT THIS TIME. TIME IS OF THE ESSENCE FOR CPS TO MOVE FORWARD TODAY.
BUT I WOULD BE WILLING TO CONSIDER AN INDEPENDENT REVIEW OF HOW ALL OF THESE RATE ADJUSTMENTS HAVE WORKED AND HOW ANY FUTURE ONES MAY IMPACT BOTH THE COMMUNITY AND THE UTILITY.
BUT FOR RIGHT NOW I'M INCLINED TO APPROVE THE RATE HIKE THAT'S BEING REQUESTED.
>> MAYOR NIRENBERG: THANK YOU, COUNCILMEMBER COURAGE. COUNCILMEMBER WHYTE.
>> WHYTE: THANKS, MAYOR. BEN, THANK YOU FOR THE PRESENTATION AND ALL THE WORK THAT YOUR TEAM'S DONE. TO MY TEAM, THANK YOU FOR RAUL, REBECCA, AND EVERYBODY FOR ALL THE GREAT WORK YOU DID IN PREPARATION FOR TODAY. AND, RUDY, YOU AND THE CPS FOLKS. I WANT YOU GUYS TO KNOW THAT MY POSITION ON THIS IS NOT BASED ON ANYTHING THAT I THINK YOU GUYS ARE DOING WRONG. MY POSITION ON THIS IS -- IT'S REALLY BASED ON WHAT I THINK IS RIGHT AND WHAT I THINK IS FAIR AND IT'S ABOUT DOING RIGHT BY THE CITIZENS OF SAN ANTONIO. AND IT IS SIMPLY NOT JUST, IN MY OPINION, TO SAY THAT CPS NEEDS 170 MORE MILLION DOLLARS OVER THE NEXT TWO YEARS AND CITIZENS OF SAN ANTONIO, YOU NEED TO FOOT THE ENTIRE BILL. IT'S JUST NOT RIGHT. I BELIEVE, AS I MENTIONED TO YOU ON THE PHONE THE OTHER DAY, RUDY, THAT YOU DO NEED THE MONEY, OKAY? THE QUESTION THAT IS BEFORE US IS JUST HOW ARE WE GOING TO PAY FOR IT? THIS SHOULD NOT BE
[02:10:08]
ENTIRELY ON THE BACKS OF OUR CITIZENS. I THINK WE NEED TO SPREAD THIS BURDEN ACROSS THE CITY AND I THINK THAT CPS NEEDS TO DO SOME INTERNAL REFLECTION AS WELL AND ASSIST US HERE AND TIGHTEN ITS BELT. I HAD A GREAT CONVERSATION WITH ELENA THE OTHER DAY. I LOVED EVERYTHING YOU SAID ABOUT RUNNING IT LIKE A PRIVATE ENTITY. IN ANY PRIVATE ENTITY AND ANY BIG ORGANIZATION THERE'S ALWAYS FAT THAT CAN BE CUT. WHAT I'M GOING TO ASK FROM US UP HERE, AND FROM YOU, IS THAT CPS FINDS A WAY TO TIGHTEN ITS BELT SLIGHTLY AND THAT WE HERE ON CITY COUNCIL MAKE THE HARD DECISIONS AND REALLY PRIORITIZE HOW WE WANT TO SPEND OUR MONEY.THE ECONOMY RIGHT NOW IS NOT GOOD, RIGHT? INFLATION IS UP, INTEREST RATES ARE UP. WAGES IN SAN ANTONIO ARE BELOW THE NATIONAL AVERAGE.
THEY'RE BELOW THE TEXAS AVERAGE. WAGES HAVE BEEN STAGNANT.
OVER THE LAST YEAR, WAGES ARE UP ONLY 2.4% IN SAN ANTONIO COMPARED WITH 6.1% IN TEXAS AND 4.2% NATIONALLY. THE HOURLY WAGE RATE FOR A SAN ANTONIAN IS ALSO BELOW THE NATIONAL AVERAGE BY 13% AND AS I MENTIONED IN MY INITIAL COMMENTS, WHEN YOU TAKE A LOOK AT THE AVERAGE SAN ANTONIO HOURLY WAGE AND YOU COMPARE THAT WITH WHAT THEY'RE PAYING FOR ENERGY, WE'RE THE THIRD HIGHEST. WE CAN DO BETTER THAN THIS.
WE NEED TO PRIORITIZE HOW WE SPEND OUR MONEY, JUST LIKE EVERY SAN ANTONIO FAMILY OUT THERE HAS TO MAKE THE TOUGH CHOICES ON WHAT THEY'RE GOING TO SPEND THEIR MONEY ON.
I KNOW I'VE TOLD SOME OF YOU THIS STORY OVER THE PAST WEEK BUT IT WAS JUST A COUPLE OF WEEKS AGO THAT I WAS IN AN UBER AND I WAS TALKING ON THE PHONE TO SOMEBODY ABOUT THIS RATE CASE. AND WHEN WE GOT TO WHERE WE WERE GOING AND I HUNG UP, THIS UBER DRIVER TURNED TO ME, BEFORE I GOT OUT OF THE CAR, AND HE SAID, HEY, I WANT YOU TO KNOW I OVERHEARD YOUR CONVERSATION AND THAT I'M DRIVING UBER AS MY SECOND JOB.
HE SAID I'M BARELY MAKING ENDS MEET. AND THAT ADDITIONAL $50 A YEAR THAT YOU'RE SAYING THIS IS GOING TO COST ME IF THIS 4.25% RATE INCREASE GOES THROUGH, THAT'S GOING TO REALLY HURT ME. AND WE SIT IN THIS BUILDING AND THE BUILDING ACROSS THE STREET SO OFTEN AND IN MY OPINION TOO OFTEN WE FORGET ABOUT THOSE PEOPLE. AND WE TALK ALL THE TIME ABOUT WHAT A COMPASSIONATE CITY WE ARE AND WE WANT TO BE, AND NOW WE HAVE A REAL OPPORTUNITY. WE HAVE A REAL OPPORTUNITY TO GET TOGETHER AND FIGURE OUT HOW WE AS A CITY COUNCIL CAN INVEST IN CPS NEXT YEAR TO OFFSET SOME OF THIS RATE INCREASE. AND IT'S MY HOPE THAT OVER THE NEXT WEEK WE'RE GOING TO PUT OUR HEADS TOGETHER AND FIND A WAY TO MAKE THAT HAPPEN. THANK YOU, MAYOR.
>> MAYOR NIRENBERG: THANK YOU, COUNCILMEMBER WHYTE. COUNCILMEMBER CASTILLO.
>> CASTILLO: THANK YOU, MAYOR. I WANTED TO CIRCLE BACK ON A POINT THAT I DIDN'T TEASE OUT CORRECTLY. GOING BACK TO THE SURVEY.
AGAIN, THE REPORT FINDS THAT MUCH OF THE MISALIGNMENT IS ATTRIBUTED TO RESIDENTIAL SERVICES, RESIDENTIAL SERVICE CLASSES HAVING HIGHER FIXED COSTS ON THE EXTRA LARGE AND SUPER LARGE CLASSES. BUT WHEN YOU CONSIDER THE FIXED COSTS, INCLUDING THE METERS AND CUSTOMER SERVICE, THE FACT THAT THERE'S OVER 800,000 CUSTOMERS IN THE RESIDENTIAL CLASS COMPARED TO THE 2,000 CUSTOMERS IN THE LARGE AND INDUSTRIAL SERVICE CLASSES, IT SEEMS CLEAR THAT THERE'S GOING TO BE -- IT'S GOING TO BE MORE EFFICIENT TO SERVE THE 825 FEWER CUSTOMERS. I THINK THE REAL ISSUE IS THAT DESPITE BEING OUTNUMBERED BY RESIDENTIAL CUSTOMERS 9 TO 1, COMMERCIAL USERS STILL USE THE ENERGY AT A HIGHER VOLUME THAN RESIDENTIAL USERS. RIGHT? AND WHEN WE TAKE INTO ACCOUNT
[02:15:04]
BUSINESS HOURS AND PEAK USAGE HOURS COMMERCIAL USERS USE SIGNIFICANTLY MORE ENERGY THAN RESIDENTIAL USERS, ABOUT 10% MORE. SO THAT'S THE POINT THAT I CLOSE WITH BUT I WANT TO BE SURE I TEASED IT OUT BECAUSE I DON'T THINK I DID THAT CORRECTLY OR FULLY, RATHER.BUT I DID WANT TO EXPRESS SUPPORT FOR WHAT COUNCILMAN MARC WHYTE SHARED BECAUSE I THINK IT'S NOT FAIR TO SAN ANTONIO RATEPAYERS. THIS HAS NOTHING TO DO WITH CPS AND LEADERSHIP OR ANYTHING LIKE THAT. IT HAS TO DO WITH HOW ARE WE HAVING FOLKS PAY FOR IT. WHEN WE LOOK AT THE USAGE AND WHO'S PICKING UP THAT TAB, IT'S EVERYDAY RESIDENTIAL USERS. AND I THINK THAT BUNDLING THE 2027 RATE INCREASE IS PASSING THE BUCK. ALL OF US HAVE A RESPONSIBILITY TO ASK QUESTIONS AND MAKE A DECISION BASED OFF OF THE DATA THAT'S GOING TO BE PRESENTED TO THAT COUNCIL IN 2027.
I DON'T THINK IT'S APPROPRIATE TO PASS THE BUCK AND NOT BE IN THE POSITION TO ASK QUESTIONS AND/OR TAKE HEAT IN 2027 WHEN THERE'S ANOTHER RATE PUT IN FRONT OF US.
I THINK IT'S IMPORTANT TO EXPRESS OPPOSITION TO ROLLING IN THE 2027 RATE INCREASE WITH THIS RATE INCREASE WHEN THERE'S OPPORTUNITY FOR SO MUCH MORE TO CHANGE.
THERE'S OPPORTUNITY WITH CITY CONTRACTS FOR US TO INCREASE THE WAGE SO THAT WAY WE INCREASE THE QUALITY OF LIFE FOR SAN ANTONIO RESIDENTS. SO MANY MOVING PIECES THAT I DON'T THINK IT'S APPROPRIATE TO SAN ANTONIO RESIDENTS INCREASE FOLLOWING 2027. I THINK COUNCILMAN WHYTE HIT IT SPOT ON.
THOSE ARE ALL MY COMMENTS. THANK YOU, MAYOR. >> MAYOR NIRENBERG: THANK
YOU, COUNCILMEMBER CASTILLO. COUNCILMEMBER VIAGRAN. >> VIAGRAN: THANK YOU.
I JUST WANTED TO CIRCLE BACK ON THE TECHNOLOGY PIECE THAT WE'RE LOOKING TO INVEST IN.
I DON'T KNOW WHO FROM CPS CAN ANSWER THAT QUESTION. SO TECHNOLOGY PIECE -- RUDY MENTIONED SECURITY BEFORE. BUT I NEED THE COMMUNICATED TECHNOLOGY PIECE FOR THE CONSUMER. WHAT IS THIS RATE GOING TO OFFER THEM?
>> SO TECHNOLOGY REALLY IS GOING TO ENABLE A LOT OF THE THINGS OUR CUSTOMERS ARE ASKING FOR. AS YOU ALL KNOW WE RECENTLY WRAPPED UP OUR RATE ADVISORY COMMITTEE AND ONE OF THE THINGS THAT WE HEARD FROM THEM IS OPTIONALITY.
VARIABLE RATE STRUCTURES, TIME OF USE, OTHER THINGS THAT MAY HELP THEM FROM A PRODUCTS AND SERVICES PERSPECTIVE. TODAY, BECAUSE OF THE AGE AND COMPLEXITY OF OUR CURRENT SYSTEM, WE'RE JUST UNABLE TO DELIVER THOSE THINGS THAT OUR CUSTOMERS ARE ASKING FOR.
THIS TECHNOLOGY INVESTMENT WILL LAY THE FOUNDATION SO WE CAN START OFFERING THOSE PROGRAMS
TO OUR CUSTOMERS. >> VIAGRAN: THANK YOU. WHAT I WOULD LIKE TO SEE IS A TIMELINE FOR IF THIS PASSES, IN SOME SORT OF FORM, WHATEVER PERCENT WE END UP AND BEN PUTS ON THE AGENDA. WHAT DOES THAT LOOK LIKE IN TERMS OF TIMELINE FOR THE CONSUMERS? WHEN CAN WE SEE THIS BEING IMPLEMENTED? WHEN CAN WE SEE THEM START USING THIS? AND WHAT SORT OF TECHNOLOGY WOULD THEY NEED IN ORDER TO DO THAT? SO IF IT'S GOING TO BE AN APP ON THEIR PHONE OR THEY'RE GOING TO NEED INTERNET SERVICE OR WI-FI, I WOULD REALLY LIKE TO SEE THAT ALSO PRESENTED. BECAUSE I THINK THEN THAT GIVES US AN OPPORTUNITY TO MAKE SURE OUR LIBRARIANS HAVE THAT WEBSITE READY TO GO ON OUR COMPUTERS.
THAT WE TEACH PEOPLE HOW TO USE THEIR PHONES TO ACCESS THAT. BECAUSE I DO THINK WE NEED TO STEP INTO THAT REALM. SO IF YOU COULD COMMUNICATE THAT ALSO, I THINK WE NEED TO SEE MORE OF WHAT REALLY IS GOING TO IMPROVE THE LIVES OF THE RATEPAYERS AND THE CUSTOMERS WITH THIS RATE INCREASE. AND BELIEVE ME, I KNOW WE NEED IT ON THAT SIDE OF THE BILL PAYING. THANK YOU.
>> THANK YOU. >> MAYOR NIRENBERG: THANK YOU, COUNCILMEMBER VIAGRAN.
ANY FURTHER DISCUSSION ON THIS? I'LL JUST WRAP UP WITH A FEW COMMENTS. IT'S BEEN A GOOD DISCUSSION. I KNOW IT'S A DIFFICULT TOPIC TO LISTEN TO AS WELL AS TO DISCUSS. I WILL JUST SAY THIS.
WE REAP WHAT WE SOW. I MEAN, A LOT OF THE INVESTMENTS THAT WE ARE MAKING RIGHT NOW HERE AT THE CITY OF SAN ANTONIO ARE A RESULT OF A LACK OF PROPER PERSPECTIVE IN FUNDING IN PREVIOUS TIMES. I OFTEN REMARK ABOUT THE FIRST BUDGET I WALKED INTO HERE IN 2013. WE HAD $34 MILLION GOING INTO STREET MAINTENANCE.
THAT BUDGET ANNUALLY NOW IS $110 MILLION. AND THE REASON WHY IT'S AT 110 AND MANY FOLKS WANT IT TO BE MORE IS THE FACT THAT WE HAVE SO MANY STREETS, 4,000 PLUS MILES OF THEM IN THE CITY THAT ARE FALLING INTO A STATE OF DISREPAIR.
WE'RE ADDING 360 POLICE OFFICERS OVER THE NEXT THREE, POTENTIALLY FIVE YEARS TO
[02:20:05]
PATROL BECAUSE WE WANT TO FLIP THE MODEL OF SERVICE FROM 40% TO 60% PROACTIVE PATROLLING.BECAUSE WE NEED MORE PATROL OFFICERS, THERE'S JUST NO WAY AROUND THAT.
YOU KNOW, WE HAVE HEARD UP ON THIS DAIS MANY TIMES THAT WE HAVE AN UNDERFUNDED PARKS DEPARTMENT. WE NEED MORE MAINTENANCE OF OUR LIBRARY FACILITIES.
THE LIST OF NEEDS AND WANTS FROM THE COMMUNITY IS EVER GROWING.
AND WE HAVE TO BALANCE ALL THOSE THINGS. I AM ALL FOR TRIMMING FAT BUT I WILL TELL YOU OVER THE LAST TEN YEARS I'VE WATCHED FAT BE TRIMMED TO THE POINT WHERE WE'RE HAVING TO MAKE ADDITIONAL INVESTMENTS BECAUSE O THAT. NOW, OVER ON THE CPS LEDGER, SAME THINGS ARE GOING ON WE HADN'T ADJUSTED RATES OVER THE COURSE OF A PREVIOUS DECADE.
WE SAID THAT'S NOT TENABLE. WE OWN THIS UTILITY. WE HAVE A RESPONSIBILITY TO KEEP IT RUNNING BUT 14%, BASED ON OUR CONSUMERS, BASED ON OUR RESIDENTS, IS JUST NOT WORKABLE, ESPECIALLY IN THE MIDDLE OF THE PANDEMIC. SO WE SAID WE'RE GOING TO SMOOTH THAT OUT, DO IT OVER TIME. BUT THE OBLIGATIONS OF US TO INVEST IN THIS UTILITY SO WE CAN DO THE BASIC THINGS LIKE KEEP THE LIGHTS ON AND NOT DISCONNECT FOLKS IN THE MIDDLE OF A HEAT WAVE OR ICE STORM EVENT ARE VERY CLEAR.
THERE'S JUST NO OTHER ALTERNATIVE. SO IF WE CAN FIGURE OUT WHERE TO PULL SOME REVENUE TO REDUCE THE IMPACT FOR RESIDENTS, I'M ALL FOR IT.
IN FACT, I LIKE THE IDEA OF US CONTINUING TO DRILL DOWN ON THE ELIGIBILITY CRITERIA FOR THE AFFORDABILITY PROGRAMS. BUT THIS IS THE REALITY. EVERYBODY IN THIS COMMUNITY, EVERY TAXPAYER PAYS FOR ALL OF IT. IT'S NOT OUR MONEY VERSUS CPS'S MONEY. IT'S EVERYBODY'S RESIDENTS' MONEY.
SO THERE IS GOING TO HAVE TO BE GIVE AND TAKE. AND MY POINT IS WE HAVE TO BE COGNIZANT OF THE REVENUES THAT WE ARE ACCRUING TO PAY FOR COST OF SERVICE.
AND IF WE ARE GOING TO UNDERFUND CERTAIN AREAS, WE ARE GOING TO REAP WHAT WE SOW.
THE REASON WHY THERE'S A BIG PERSONNEL CONTINGENT IN THESE LAST FEW YEARS OF CPS OPERATIONS IS BECAUSE WE HAVE SEVERELY CUT BACK ON PERSONNEL TO MAKE SURE THAT WE DIDN'T COME BACK FOR REVENUE INCREASES. THE REASON WHY WE HAVE TO PAY FOR THIS ERP IS BECAUSE IT'S BEEN 20 YEARS SINCE IT'S BEEN CHANGED AND THAT HAS IMPACTS IN OPERATION, DEMAND MANAGEMENT, AND ALL THE THINGS WE WANT TO HAVE IN TERMS OF RESPONSIVE ENERGY GENERATION THAT WE CAN CONTROL TIME OF USE RATES AND THINGS LIKE THAT.
SO I'M ALL FOR IT. LET'S CONTINUE TO GET MORE EFFICIENT, ET CETERA.
BUT WHEN IT COMES DOWN TO THIS RATE AND WHEN IT COMES TO THE PLAN THAT WE HAVE DECIDED ON FROM A POLICY PERSPECTIVE IN THIS COMMUNITY, WE KNOW WHAT WE KNOW.
AND SO THAT'S WHY I'M SUPPORTIVE. IT'S NOT THAT I LIKE DOING THIS. NOBODY LIKES DOING THIS BUT WE KNOW WHAT WE KNOW AND IF WE DON'T DO WHAT WE KNOW NEEDS TO BE DONE, WE ARE GOING TO SEE THE CONSEQUENCES OF THAT.
PERHAPS NOT IN THE NEXT COUPLE OF YEARS BUT CERTAINLY WE'LL BE SADDLING THAT WITH FUTURE COUNCILS, FUTURE BOARDS AND MOST CERTAINLY THE RESIDENTS OF THIS COMMUNITY.
AND THAT'S WHERE I DRAW THE LINE. SO GREAT DISCUSSION.
I KNOW THERE'S A LOT MORE FOR US TO CONSIDER. WE DO HAVE A VOTE COMING UP IN A COUPLE OF WEEKS BUT, AGAIN, THANK YOU VERY MUCH TO CPS LEADERSHIP, TO MY COLLEAGUES.
GREAT DISCUSSION. THANKS, EVERYBODY. 3:29 P.M. ON THE 30TH DAY OF NOVEMBER 2023. WE ARE ADJOURNED.
* This transcript was compiled from uncorrected Closed Captioning.