Analysis San Antonio Bioregion

Fossil Fuels Have Swamped CPS Energy’s Rate Advisory Committee

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District 2’s Jalen McKee-Rodriguez questioning acting CPS CEO Rudy Garza last week.

Born from community demands for reform, the Rate Advisory Committee championed by San Antonio Mayor Ron Nirenberg is centering fossil fuel interests, alienating Councilmembers, and just lost its most influential equity voice.

What should be done?

Greg Harman

Responding to years-long community concerns about slowed climate action and unfair utility rates, CPS’s acting CEO and the chair of the utility’s Rate Advisory Committee told Council members last week that they are planning to explore changes to the CPS rate structure and energy generation priorities–but not until after they get a vote from Council in January on a 3.58-percent rate-hike request.

RAC Chair Reed Williams told Council members on the Municipal Utility Committee that the 21-member group he has been leading through hours-long meetings twice a month since June has already refocused their attention exclusively onto the rate request.

“Sure, we would have liked to have dealt with power generation, rate design, energy burden. We would have loved to have dealt with all of those ahead of this rate increase. We didn’t have that choice. CPS doesn’t have that choice. The city doesn’t have that choice.”

For the rate-hike request, however: “The time is now,” he said.

In recent weeks, a rate-bump hustle has swept the City bureaucracy as elected reps, staffers, and department managers react to City-owned CPS Energy’s long-promised rate request—reduced recently from more than 10 percent to about 3.85 percent. (The utility’s earlier proposal “didn’t even have dodo bird wings,” Williams said, and was wound back in conversation with the City Manager’s office.)

It’s a mobilization that has largely sidelined other conversations outside and inside the RAC, namely how CPS Energy’s rates are structured and calls for community-centered planning to move off of fossil fuels while protecting those most exposed to rapidly escalating climate violence driven largely by fossil-fuel use.

That retrenchment isn’t  lost on those Council members who have championed utility reform.

“This is a hard time to be coming to us asking for a rate increase making promises of the things you’re going to do in the future,” District 1’s Mario Bravo told CPS’s acting CEO Rudy Garza during the City Council’s B Session on Wednesday. “We need to show to our constituents that there are changes in behavior.”

Like Bravo, District 2’s Jalen McKee-Rodriguez suggested he may need more than promises to support the rate bump.

“I need to see real impact and relief for those most impacted by the pandemic and by the storm and I need to see a real thorough discussion on our generation sources,” he said. “Until then, I don’t know if I will be able to confidently vote for a rate increase.”

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Even District 10’s Clayton Perry, no friend of talk about retiring coal plants, poured water on the rate-hike pitch. “I want to work with you,” he told Garza, “but right now we’re not there. We’ve got a long way to go.”

But it was clear CPS had made their case on the rounds with Council also.

D3’s Phyllis Viagran spoke of her “10,000 residents pending disconnections” even as she signaled fundamental support for the utility. “It is still a business and they need to still run as a business” she said. She also expressed faith in promised future efforts at the RAC: “I am really looking forward to those [new] rate designs.”

D9’s John Courage, the only Council member to have publicly challenged CPS to close its coal plants by 2030, gave the most impassioned statement in support of the utility’s request. It was couched in appreciation for CPS’s legal fight against ERCOT and the gas companies who, to San Antonio’s detriment, made massive profits off the winter storm during the February freeze that left large portions of San Antonio in the dark for days. His support was also grounded in assumptions about the RAC’s commitments and promised future work.

“They’re going to look at what could be a new mix for San Antonio and how do we move away from coal,” Courage said. “All of that is ongoing through this RAC structure and will continue beyond this particular rate increase we’re talking about.”

The problem is that Courage is reading from a dangerously outdated script. The RAC is neither charged with nor preparing to lead a study on generation with the purpose of finding a cost-effective way to retire Spruce by 2030, as required to meet our climate goals. 

Garza’s response to McKee-Rodriguez’s pointed query about the need to plan for an early retirement of the JK Spruce coal plant should have served as a tip off. There is no planning convergence on the horizon with coal closure as the goal.

“Really it’s not just Spruce. We’ve got to look at the entirety of our generation fleet,” Garza said. “There’s a lot of options available to us [and] we have to have a thoughtful conversation about. I do believe that we can get that conversation on the right track over the next year.”

Though born of reformist impulses and climate concerns, in actuality the RAC’s mission is limited to providing “thoughtful input and perspectives to CPS Energy Management and Board of Trustees on rate structure, rate design, proposed rate increases and generation planning issues. And, in practice, it has done as much to challenge our limited progress on energy efficiency and renewable energy while centering voices that prize CPS’s survival above all else.

RAC Chair Reed Williams at the COSA Municipal Utilities Committee meeting last week.

The Case for Skepticism

Council members tempted to up-vote the rate hike based upon progressive-sounding RAC promises should review the temperature of the committee meetings to date.

In late October, when talk at one RAC meeting shifted to how working-poor families were struggling under unfair levels of energy burden, with those with the least paying the most for home energy, in some areas up to one in five dollars earned, RAC member Jim Berg, a former publisher of military newspapers, sought to course-correct the conversation.

“I think all of us are on the same team,” he said. “And [that] team is the team that in 1942 launched the ownership [with] the citizens of San Antonio of this magnificent gem that we have here [CPS Energy]. We not jeopardize its existence with infighting or taking up segmented portions of the community’s needs.

“What is needed is to maintain the solubility, the credibility to our bondholders, and the profitability or even the cash flow to the organization. That’s the only thing that is important here. This organization must survive.”

This  was followed by another RAC member moments later complaining about the growth of renewable energy.

“It’s been my opinion, and I think it’s pretty obvious, that the policy that CPS has been going down for several years, retiring dispatchable energy plants, rightly or wrongly, and adding renewables, is not working,” said Dana McGinnis, founder of an oil and gas investment firm that specializes in “high net-worth individuals.

McGinnis then asserted, with no supporting documentation: “The system is slowly degrading, and it will degrade more if you close another coal plant, if you add more wind and solar that you can’t rely on.” (The City’s own investigation into the widespread February power outages revealed that CPS Energy’s thermal sources—most critically, coal and nuclear units—bear the largest share of outage blame for failing to power on when needed.)

Simply stated, the RAC feels like a gamble gone wrong, and quickly—an effort packed with members who have zero interest in the sort of structural reforms required to protect and empower working families while doing the basic things required of us by the climate crisis.

By empaneling members two months prior to the most recent Council election, Nirenberg and the CPS Board left one Council member complaining of being disenfranchised and at least two stymied in efforts to appoint new members reflecting their own values or what they describe as the needs of their districts.

“Because of my election, because of what voters said, because of the message that was sent, I don’t think I have to go with whatever recommendation the RAC makes moving forward because the community didn’t get a voice,” District 2 Councilmember Jalen McKee-Rodriguez told Deceleration last month.

District 2 RAC representative and Valero employee Seymour Battle III appointed by soundly dispatched former Councilmember Jada Andrews-Sullivan refused McKee-Rodriguez’s request to step aside. Wrote Battle: “If the Councilman wishes to replace me, he can do so under his authority and I will conform with that decision. However, I will not be submitting a resignation.”

Email from RAC member and Valero employee Seymour Battle III. July 2021.

It turns out Council members don’t have that authority of recall.

District 1’s RAC representative, John Agather, owner of an investment company specializing in oil and gas and an early opponent of the City’s Climate Action and Adaptation Plan, is also still in place in spite of post-election conversations about replacing him. RAC Chair Williams told Deceleration that outgoing CPS CEO Gold-Williams had offered D1 Councilmember Mario Bravo a chance to replace the former D1 Councilmember Roberto Treviño appointee after Bravo was elected but that “the way the bylaws are set up they didn’t have that authority.”

For Bravo, an employee of the Environmental Defense Fund who campaigned on reforming the utility, that can’t sit well.

“John Agather doesn’t fit the profile of who I envisioned to represent my viewpoint on that committee,” he wrote Deceleration. “However, we have found common ground and we have begun what may turn out to be a productive working relationship.”

We reached out to both Battle and Agather to ask about relationships with their respective Council members but received no response. Deceleration reached out to D5 Councilmember Teri Castillo, who also inherited a RAC appointee from a predecessor, but she chose not to participate in this story.

Last week, with RAC members moving into a series of three-hour meetings dedicated to the details of the utility’s rate request, RAC co-chair Eloisa Portillo-Morales, one of the committee’s few consistent voices for justice-driven rate redesign and energy transition, tendered her resignation. Whatever her reasons, it’s hard her departure is a blow to those advocating for (and those Council members expecting) climate justice priorities out of the RAC.

Acting CPS CEO Rudy Garza at the City Council’s B Session last week.

Withering Roots

The origins of the RAC say just as much about how far the committee has strayed from its earliest intentions. Back in 2019, community organizations were meeting regularly with San Antonio Mayor Ron Nirenberg about the need to move away from fossil fuels while protecting low-income residents most at risk from accelerating extreme weather events and the real-world cost of our energy choices. One of the recommendations made by members of the Climate Action SA coalition was for the creation of a rate advisory committee to help reform CPS Energy’s rate structure while helping guide an early retirement of the region’s largest climate polluter, the JK Spruce coal plant. (It’s work I helped advance as an employee of the state Sierra Club, a position I left in September of this year.)

Mayor Nirenberg, who has a seat on the CPS Board of Trustees as an ex officio member, championed the project. Over the course of a year he slowly worked it through a resistant system. In April of 2021, the Board approved the committee after months of on-and-off debate and initial resistance from spokespeople from the local chambers of commerce.

“This is a priority for our mayor, it’s a priority for CPS Energy, to work in a collaborative manner with citizens to find some future solutions and current resolutions and a path moving forward,” said CPS Trustee Janie Gonzalez at the time.

But negotiation failures between community organizations and CPS’s staff over climate progress, and a lack of clarity as to how the slow-moving RAC would or would not be tied to needed energy transition, proved too much for many. A collection of environmental-justice organizations launched a Reform CPS petition in late 2020 to force the closure of Spruce. With that, Nirenberg cut all ties with the climate community and shut down all communication. 

Meanwhile, critical concessions were being made to move the RAC along. It wouldn’t operate under the oversight of the San Antonio City Council, as CASA members proposed. Rather, it would be a CPS Energy project, with 11 of its 21 members selected by the Trustees; the other 10 were Council recommendations requiring CPS Board approval. Language that initially tied the initiative to supporting the utility’s decarbonization trajectory —the so-called “Flexible Path” of outgoing CEO Paula Gold-Williams—was removed, leaving the body officially agnostic on questions of energy generation.

When it came to transparency, the vote on members was anything but inspirational. Several members with histories or active oil and gas interests were approved based upon misleading self-descriptions.

CPS Trustee John Steen only vaguely clued into that fact during the April vote.

“I know that former Councilmember Reed Williams has had a distinguished career in business, but I saw where he self-identified as a ‘grape farmer,’” Steen said of now RAC Chair Williams.

“We thought that was pretty cool,” responded a laughing Garza, then the utility’s head of community engagement.

“And then we also have a musician,” Steen followed, making it clear he appreciated the supposed diversity of the candidates. “Good work on that.”

While Williams did in fact ‘farm grapes’ for a time, he most accurately distills his professional background in referring to himself as “an old pipeliner.” The bulk of his years have been spent with fossil fuel companies such as Tesoro, Diamond Shamrock, and Frontier Oil Corp.

John Agather, the musician Steen referenced, is better known locally as the former head of the San Antonio Hispanic Chamber of Commerce and his long experience with industrial cooling towers and oil and gas investment.

CPS staff listed now-RAC member Seymour Battle III as a real estate investor. While that may be true, it is certainly less germane to an appointment on a CPS committee than his day job at Valero. On LinkedIn Battle lists himself not as an investor but as “SVP Communications, Public Relations & Engagement at Valero Energy Corporation,” the nation’s largest independent refiner of fossil fuels. (Here he is virtually ringing the closing bell of the New York Stock Exchange.)

Another current RAC member, Curtis Anastasio, a former CEO of NuStar Energy and current board chairman of GasLog Services, “a leading global provider of LNG shipping services,” was listed by CPS staff as simply “Public Board Service.” (Here’s the board packet from the meeting; “diversification” slides from the meeting are below.)

In short, the RAC benefits from less ideological diversity (and suffers from far more oil and gas interests) than was apparent at the time of its creation. In a move that would have improved membership transparency, Williams requested at the RAC’s first meeting that members submit photos and biographical information from to be made available to the public on the RAC website. It was a promise never fulfilled. But by our count only three of the 21 members can claim specific expertise in renewable energy systems or climate policy.

Climate Goals Dimming

It’s hard to fully know the mayor’s thoughts about the RAC’s progress as his communications director Bruce Davidson didn’t respond to emailed questions from Deceleration. Nirenberg’s thinking was also less-than-clear during the RAC’s development because he cut off all communication with those who brought the proposal to him during this period. Nirenberg was so incensed by the launch of a “Recall CPS” petition that he severed ties with both the individual activists involved and the memberships of the organizations they served, according to Terry Burns, the former president of the local Sierra Club group, who recalled delivering the petition language in a letter to the mayor’s office. “The mayor basically said he didn’t want to talk to us any more after that,” Burns said. “We were pretty well cut off from everything.”

But with Councilmembers like Courage expecting a guided dialogue from the RAC to lead San Antonio into a post-coal future, folks may come to see the removal of references to CPS’s existing decarbonization path in the RAC’s charge as a critical failure. 

San Antonio Report’s founder, former editor, and now “lead columnist” Bob Rivard nodded approvingly upon the RAC process while delivering a strained critique of the Recall petition, which spun to a close after petitioners realized that CPS Energy had covertly defeated them in court while they were just ramping up their street game. (Best/worst line: “Activists seldom provide workable solutions.”)

“The challenge, of course, is how to improve CPS Energy without destroying CPS Energy,” Rivard wrote. “That probably will only happen through patient, systematic give and take by people working within the system. That’s how a citizens rate advisory committee was established in 2020.”

But Rivard both fails Recent Organizing History and misreads the moment. “Patient, systematic give and take” is an important ingredient of community governance, for sure, but the resistance to substantive change within the system he praises is great. Recall CPS, which Deceleration supported, only launched after years of patient meetings with CPS Energy in which the City-owned utility failed to provide substantive responses to long-requested information, including rudimentary coal-plant modeling data.

Real change, when it happens, requires efforts both inside and outside the system. That’s how we closed our oldest and dirtiest coal plant ahead of schedule in 2018. Similarly, it was both local activism and a lot of time around the table with institutional powers that created the City’s climate plan. But moving CPS Energy to abandon coal by 2030 (while tackling high energy burden and substantive rate reform), which the global scientific community has shown to be the date to beat for massive energy transformation if we are to avoid the worst manifestations of climate disruption, presents a whole new suite of challenges that “improving CPS” barely begins to capture.

San Antonio’s Chief Sustainability Manager Doug Melnick has watched the evolution of the RAC alongside the City’s Municipal Utilities Committee (and the Winter Storm Uri disaster committee before that). Altogether, the efforts have drilled into myriad questions and assumptions about utility practice. However, they have almost completely failed to center the urgent necessity of climate action.

“Nobody is framing this around climate or the emissions,” Melnick told Deceleration back in October. “I think we need to re-center back in why this discussion is so important. It’s not just about rates. It’s not just about reliability. It’s about if we don’t address this [then] these are the ramifications. And I feel like it’s gotten lost.”

Mayor Nirenberg’s efforts on climate could be called patient in an urgent hour. But it’s worth noting that before he got the RAC approved by the Board of Trustees he managed a slightly remarkable feat of securing a unanimous vote from the Trustees in support of the Climate Action and Adaptation Plan that gives CPS Energy’s “flexible” meander into cleaner energy territories distinct decadal carbon-reduction milestones and a net-zero goal of 2050. 

While dogged community engagement, challenge, and attendance moved the Trustees as a whole to act, it is very likely Nirenberg’s unrecorded words to departing Trustee Ed Kelly that coaxed the outlier into the fold at a critical moment. “It’s kind of like spitting in the ocean and expecting it will make any difference in the sea level,” Kelly said moments before voting in support of the CAAP. But he voted yes. And he joined the other four members as they applauded themselves.

Kelly’s objection to the RAC has aged just about as well as his grudging comments about climate action–especially since the February power outages that contributed to more than a dozen deaths in Bexar County and a lingering PTSD deep in the community’s DNA.

Moving Forward

As the RAC wound its way to approval, Trustee Kelly complained: “Until somebody tells me our rates are out of line, our customer service is out of line, our environmental stewardship is out of line, our reliability is out of line, I’m going to tell them we do not need this stupid committee. Let’s move on. Enough said.”

Ed, they are all out of line. And unfortunately the RAC summoned to assist in repairing the utility is out of whack too.

But we agree with members consulted in preparing this analysis who suggested the potential of the committee remains great and shouldn’t be thrown over too quickly. It’s why we advanced the RAC concept in the first place. But what would it require to make the RAC work for the most pressing needs of our utility and city? 

Now that the effort has set sail without any firm charge other than an invitation to offer “input and perspectives,” a clear setting of priorities and agreed-upon values will need to come from among the committee members. It’s current construction makes that a tall order.

The bylaws suggest that Portillo-Morales, as an appointee coming from Council rather than Board selection, must be replaced by fellow RAC members who were also nominated by City Council. Someone equally committed to the principles of energy justice and climate action is imperative. 

If the group truly hopes to restore community faith in CPS, then RAC members serving without the support of, or in direct opposition to, their Council members should be excised by majority vote in keeping with the bylaws. And while the chair has a lot of leeway to create agendas, three members are all that are needed to place new business on an agenda. A statement declaring the group will prioritize the goals and deadlines of the City’s climate plan and the general course of CPS Energy’s Flexible Path will help give the members a clearer sense of purpose as they set their agenda for 2022.

Caught on the phone after last week’s Municipal Utilities meeting, Williams said he was wrong to suggest to the Municipal Utilities Committee members that CPS Energy doesn’t have a choice in seeking the rate increase now. The utility could premise rate adjustment on either or both rate or generation reform. “Maybe I shouldn’t have said they don’t have a choice. They don’t believe they have the choice. That’s really what I meant,” he told Deceleration. “They believe this rate increase needs to be looked at now so that’s what we’re doing; we’re looking at it.”

Presenting to the Utilities Committee earlier in the year, Williams said: “We’re hopeful the 21 members represent accurately the mix of the population. … Not very many of them agree on anything, OK? Much less all of them agreeing on one thing. But that’s good because we get a lot of diversity of opinion and I think that’s healthy for our community.” Without direction on critical questions like decarbonization, however, debate could advance quickly from polarized to paralyzed.

Councilmember McKee-Rodriguez vision of a committee free from special interest should enjoy long and hard consideration. 

“There’s no lack of opportunity for Valero or for chambers of commerce or for the business community,” he told Deceleration. “They’re always going to have a voice. They’re always going to be in Councilmembers’s ears, be in CPS’s ears. They’re always going to have that opportunity.

“But community members, the regular everyday person, advocates who have done research and are going to have a climate-oriented and equity-oriented lens, those people aren’t represented. And I’m going to go in that direction.”

And it’s this direction that the RAC, if it is to gain legitimacy and public support, must follow as well.

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