Carlos Guerra: Don't be sold a bill of CPS Energy goods
San Antonio Express-News
You could almost hear the collective groan - peppered with more colorful sounds - Thursday as bleary-eyed San Antonians read the headline: "CPS says get used to rate increases."
Business writer Vicki Vaughan reported that CPS Energy CEO Milton Lee urged City Council to approve a planned 5 percent rate increase that will hike monthly residential bills about $6.
Crude oil prices are now more than $100 per barrel, gasoline is $3-plus per gallon and diesel has surpassed the $4 mark. But this isn't about higher energy costs.
"It has to do with meeting demand," said Mayor and CPS board member Phil Hardberger. "Our needs are increasing, so we have to spend money, else we can't meet the needs."
We don't want brownouts because CPS can't deliver on those 10 to 12 super-hot or super-cold days when too many thermostats are cranked up at the same time. But should we double the size of the church to fit all the Easter worshippers?
There are a couple of other things to consider.
In the last few years, our city-owned utility firm has been aggressively expanding service into far, outlying areas, in effect, encouraging dense development where not long ago, about the only power needed was for well pumps and milking machines.
Is it fair - or wise - to now gouge existing ratepayers to meet demands created by developers who are hurriedly carving up Hill Country ranches to stay one step ahead of an impending housing market collapse?
And Lee clearly stated: "If we continue with the current strategic plan, there could be several rate increases over the next 10 years." His deputy, Steve Bartley, added that without the rate increase: "We'll have to re-evaluate our strategic plan."
What is all that money for?
Some will service CPS long-term debt, which will be 35 percent greater in 2009 than it was in 2006. Part will pay for gas-fired peaking units at Braunig Lake and a coal-fired Calaveras Lake plant. Another $500 million will pay for emission-control upgrades to existing plants, and $96 million will cover the cost of energy efficiency efforts.
But if the council doesn't grant the rate hike, CPS big shots warned, plans for doubling the generating capacity of the South Texas Nuclear Project will probably be dead.
That's right. A princely $206 million is for studies on adding two more nuclear reactors to the South Texas Nuclear Project in which CPS has a 40 percent stake. But wait a minute.
That isn't exactly chump change. Nor has STNP been an exemplary investment or a model of sound fiscal management. Initially estimated to cost $1.1 billion, that nuke ended up costing more than $5 billion when it finally went online - several years behind schedule.
When doubling its capacity was first discussed, the "ballpark" cost was said to be $6 billion to $7 billion. Now, its $8 billion estimate is in question.
Research by the Institute for Energy and Environmental Research's Arjun Makhijani, an expert in such matters, used the same methodology employed to cost out a similar project in Florida and concluded that the expansion will cost between $11 billion and $17 billion. This isn't too different from Moody's Investor Service's projected price of $13.5 billion to $16.2 billion.
CPS won't provide solid cost figures. But its officials warn that if we don't move on it now, San Antonio could lose its place in line for two steel containment vessels to be built by the one company in the world that makes them, and which makes only four each year.
Hmmm. I'm reminded of the salesman who sold me a lemon of a used car - that I, as a kid, really liked - by convincing me that if I didn't take it, another buyer was ready to pounce on it.
So before we drop huge wads of cash on a deal that isn't firmly priced - or fully transparent - let's calmly consider all of the alternatives.
To contact Carlos Guerra, call (210) 250-3545 or e-mail cguerra @ express-news.net.
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