CPS Energy skips planned rate hike after finding $170 million in unexpected savings

CPS Energy will not raise rates for customers this year, a decision driven by $170 million in financial gains that offset revenue losses from mild weather and storms. The San Antonio utility’s staff told the board on Monday that these favorable conditions allowed the company to avoid filing a rate request in 2026. Chief Financial Officer Debra Wainscott stated that while the company expects to have that conversation for next year, it could navigate the current period without one.

The $170 million in savings comes from three specific sources. The federal government provided a $115 million nuclear production incentive to the utility. Additionally, shifting the timeline for a study on transmission cost of service is expected to create a roughly $50 million positive impact on transmission revenue. CPS Energy also expects to save $5 million on debt payments due to lower-than-expected interest rates and premiums.

These gains counteracted financial headwinds that had threatened the budget. Milder weather this year caused a $40 million shortfall in retail energy sales and a $100 million shortfall in wholesale revenue. Storms and outages added another $20 million to $30 million in extra costs. Despite these issues, the utility is already expecting a shortfall of at least $50 million, a figure that had loomed since the company presented a budget with that gap in March.

The decision to skip the hike ended a period of community discussion and negotiation with the City of San Antonio, which owns the utility. Officials had previously indicated that affordability pressures on residents were a key factor in the announcement made earlier this month. Mayor Gina Ortiz Jones, who serves on the CPS Energy board, confirmed that the utility’s infrastructure needs did not require an immediate rate increase. She asked, “If the infrastructure needed it, CPS would have asked for it. Correct?”

Interim CEO Frank Almaraz agreed, confirming that the company reached a point where it does not need the additional revenue this year. Wainscott explained that CPS Energy uses various metrics to track its budget and determine when to ask for rate increases. Large utilities often need to borrow money for major projects and must maintain good financial standing to access lower interest rates. She noted that skipping the request is still putting pressure on those financial metrics.

Wainscott described the current financial position as challenging. “We’re pushing the top of that range here. So it’s still very, very challenging,” she told the board. The utility had originally planned to request rate increases every other year beginning in 2021, though it had not implemented a request since 2024. The next potential rate conversation is now slated for 2027.