Reporting

CPS Energy Has Spent $1M Fighting the People’s Right to Reform the Utility

Recall CPS canvassers collecting signatures at a polling location during the November 2020 municipal elections. Image: Greg Harman

‘Where the money goes shows us where their priorities are,’ said one reform-minded resident. ‘[City Public Service] is a public utility that has yet to live up to the name.’

Greg Harman

Since the totally preventable and deadly disaster that was this February’s freezing blackout, it’s been widely reported that CPS Energy’s leadership has spent more than $2M on outside attorneys fighting ERCOT and a string of gas companies, ostensibly to avoid passing along hundreds of millions in charges to local ratepayers. While The Houston Chronicle‘s business columnist Chris Tomlinson suggests CPS CEO Paula Gold-Williams may be the unsung hero in this still-unfolding post-disaster drama, unreported until now has been the price tag on the utility leadership’s other legal fight: the fight against the public’s right to petition to reform the utility.

Before one of the Spruce coal units failed to ignite in February as Arctic temps poured across the state … before a communications breakdown led to “cascading” failures that knocked out power to hundreds of thousands in San Antonio … before a string of errors now documented by a lengthy City committee investigation (PDF), there was a public effort to reform the utility by charter amendment known as Recall CPS.

That effort sought to gather enough signatures to put energy reform on the May 2021 ballot. It was Gold-Williams’s existential crisis before the February storm and collapse of operations that has since resulted in at least six wrongful death lawsuits.

The petition, launched in late 2020, aimed to moved the seat of power from the CPS Energy Board of Trustees to the City Council to improve oversight and local control, an arrangement structurally very like the Austin Energy model, including a utility advisory commission. (Reminder: Austin Energy actually made money during Winter Storm Uri.)The Recall effort also would have required the City’s last remaining coal plant—JK Spruce—to close by 2030. And it would have required an increased focus on energy efficiency and a progressive rate structure.

To undermine the petition’s threat to the utility’s existing operating structure, Gold-Williams and the utility’s Board of Trustees deployed a stealth lawsuit and legal arguments deemed “repugnant” and a “kneecapping” by the San Antonio Express-News‘s Greg Jefferson (in very un-Tomlinson-like tone). It was an effective kneecapping.

Former Judge Tim Sulak of the Texas 353rd District Court gave CPS Energy an early (though, perhaps, not definitive) victory. He ruled December 7, 2020, that utility reform cannot be made through amending of the City of San Antonio’s charter through public referendum—a line of reasoning that prizes the rights of bondholders (ie. those loaning CPS Energy money) above the rights of the people to direct the affairs of the utility that they own.

As none of those pursuing the reform of the utility were notified of the case, few knew about CPS’s legal maneuver until after CPS Energy issued a statement a month after Sulak’s ruling, claiming the effort was aimed at protecting ratepayers. (It was to this statement Deceleration was directed when we sought comment from CPS for this story.)

The win didn’t come cheap.

CPS spent nearly $1 million undermining the petition effort, according to the results of an open records request submitted by Deceleration. Between September, 1, 2020, and July 17, 2021, the date on which the request was submitted, CPS paid out $911,120 to three law firms, specifically to fight the petition. Recipients include: Dykema ($355,872), McCall, Parkhurst, & Horton ($155,844), and Norton Rose Fulbright ($399,403). It is not known how much internal staff time or resources were put to the efforts since the paralegal responding to the record request wrote: “We don’t track in-house counsel time.”

Former Recall petitioners were not impressed.

“CPS’s egregious spending against the Recall CPS petition only further proves a driving point of the petition itself, that the energy provider would rather spend on a lawsuit than on clean energy, ” said Isabella Briseño, who collected signatures regularly at UTSA’s main campus during the campaign. “The bottom line is that a fancy new headquarters and shutting down the public’s right to petition is more important to them than protecting our planet and the people that live in this city.”


Briseño speaking during the Recall campaign


The revelation caused Briseño to wonder if the utility’s leadership would use funds derived from any future rate hikes on additional anti-democratic efforts. Gold-Williams began hinting at a coming rate hike request last year and one is expected to come before the San Antonio City Council this fall.

“Where the money goes shows us where their priorities are, and, as I expressed to people while collecting signatures for the Recall campaign, CPS is a public utility that has yet to live up to the name,” she said.

The news comes two weeks after the CPS Energy Board of Trustees approved reviving forced disconnections for nonpayment of utility bills come October 1, 2021. Currently, an estimated 70,288 customers are considered eligible for disconnection, according to CPS data presented at the July 26, 2021, Board Meeting.

Slide CPS Energy Board of Trustees meeting. July 26, 2021.

Darby Riley, a longtime practicing attorney and environmental activist who helped craft the Recall petition language, was recently granted an appeal on Sulak’s ruling before the state’s Third Circuit Court of Appeals. Hearing for the first time of CPS Energy’s heavy legal investment, he wrote Deceleration by email:

“It is shocking that CPS Energy has spent a million dollars of public money (in legal fees) to prevent citizens from attempting to gain more control over CPS Energy by a ballot initiative. This is an abuse of the legal system by CPS Energy. The appeal pending in the Austin Court of Appeals is of great importance to vindicate citizens’ rights under the Texas Constitution to seek home-rule charter amendments to change city policies.”

[RELATED: “CPS Energy vs the People of San Antonio,” a conversation with Darby Riley.]

Riley said that while he has been reimbursed for the legal fees he paid out of pocket to file the appeal ($2,500) he has donated his services to the fight. “I’m doing it pro bono publico for the planet and the community,” he wrote. “Plus, I’m crazy.”

Unless there’s a course change inside CPS and its Board of Trustees, where Mayor Ron Nirenberg enjoys an ex oficio board position, the utility’s contracted attorneys likely won’t be going without. Legal costs associated with the case will only grow over the coming seven weeks.

Oral arguments in the case are scheduled for September 22, 2021 (PDF).

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Deceleration is a member of Climate Action SA, a coalition of organizations working to achieve climate justice in San Antonio that endorsed the Recall petition effort. More about us here.


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