No CPS rate hike without Oversight

RE: Concerns over fuel surcharge increase for STEP and lack of accountability within CPS

Dear San Antonio City Council and Mayor:

San Antonio and CPS Energy have made important strides towards a new energy future over the last year. Responding to public outcry over multi-million dollar expenditures for nuclear expansion plans and a complete lack of commitment to the much less costly alternative of efficiency, CPS agreed to aggressively pursue solar and conservation programming. The STEP program is the fruit of that, and as such represents an important and wholly necessary commitment to an energy policy that will ensure long-term sustainability, lower bills, and create much-needed local jobs.

That said, SWU would like to take Thursday’s vote as an opportunity to highlight some important concerns regarding CPS’s commitment to energy efficiency and the STEP program. We all appreciate the huge opportunity that San Antonio’s wasteful energy use presents in terms of future savings, and the goal of 771 MW savings is a good one. However, though the fuel efficiency surcharge to fund STEP is small in magnitude, its structure nonetheless represents a regressive and disproportionate impact on low-income families. It is administered on a household rather than per capita basis, and lower income families often have higher usage because more people are living under one roof. So while higher occupancy is an inherently more efficient and environmentally-friendly lifestyle than that of a two-car, 3,000 square-foot surburban house home to only two, the poor family is impacted more by this fuel charge.

At the same time, while the charge can easily be recovered through the installation of compact fluorescent lightbulbs and other energy-saving technologies, it is important to recognize that the upfront capital costs to purchasing those technologies are a real barrier to low-income families being able to offset the increase on their bills. This is the same reason that rebates are discriminatory, in effect a subsidy to those wealthy enough to afford solar panels and completely excluding those who are living month to month for whom an out-of-pocket expense of $10,000 for a solar array or $600 for a more efficient fridge or washing machine are equally out of reach. Funding rebates through a regressive rate increase effectively transfers wealth from the poorest San Antonion’s to the relatively wealthy.

The only way to salvage the STEP program to truly benefit San Antonio’s low income families currently struggling to meet the challenges of rising energy costs, job losses and increasing cost of living is to make equity and opportunity a pillar of CPS’s bottom line. This has to go far beyond keeping rates low. STEP’s commitment to weatherize 2,000 low-income homes annually is long over due, but doesn’t go nearly far enough in a city with our amount of poor housing stock. Given the average cost of weatherization, more is being allocated for “new home construction,” which could more cost-effectively be achieved through green building codes. In general, the bias towards rebates rather than creative funding mechanisms to overcome upfront cost barriers to efficiency improvements for low-income families is discriminatory and does not leverage the huge “low-hanging fruit” energy savings waiting to be harvested in the homes of poor families across the city.

Beyond STEP, CPS needs to prioritize local solar construction and weatherization programs to create local jobs over nuclear expansion plans that will require regular rate hikes and do nothing to lift up the city. CPS is using the cost of conservation programs as a smokescreen for its pet project: adding two nuclear reactors at the South Texas Project. Last year, a 3.5% rate hike resulted in windfall profits for CPS. Why then were rebate programs de-funded in 2009? Where exactly were those windfall profits invested? CPS continues to find hundreds of millions of dollars to “study” the expansion of the South Texas Nuclear Project while the lower annual costs of efficiency programs must be shouldered by rate hikes and fuel surcharge increases for ratepayers, despite the federal funding San Antonio recently received for school energy efficiency programs. Poor families spend proportionally far more on energy than well off families, and absolutely feel these rate hikes much more keenly. CPS’s attempt to shield the ill-conceived and reckless nuclear investment from public dialogue is insulting and inexcusable and not at all in keeping with transparent and participatory decision-making appropriate for a public utility.

It is also completely unacceptable for CPS to be spending $90,000 of ratepayer money to lobby against federal climate change legislation that San Antonio desperately needs to coordinate a national response to prevent the disastrous impacts of global warming. As a municipal utility, CPS cannot be urging Charlie Gonzalez to water down climate legislation at the same time as the mayor is asking him to support it.

For these reasons, Council should withhold charge and rate increases as long as CPS continues to act with impunity against the interests of San Antonio, and even the position of its mayor. As long as CPS continues to mortgage San Antonio’s future on nuclear, oppose climate change protections, and stall on real, sustainable solutions such as solar and efficiency that prioritize poor families, Council must exercise the one power it has: withholding fee increases and rate hikes.