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An author of Rocky Mountain Institute’s scathing critique of CPS Energy’s 2021 Resource Plan says their neglected report has a lot to offer those charting a pathway off of coal power.
EDITOR’S NOTE: Two weeks ago, Deceleration published a troubling report about CPS Energy’s past planning by a global leader in sustainability research. The report, prepared by a team of analysts at Rocky Mountain Institute, was delivered to Mayor Ron Nirenberg in late 2021 but apparently not shared by his office with anyone—including his fellow CPS Energy Board of Trustees—until May 2022. It was only made publicly available when Deceleration posted it on our website on July 12, 2022. The report alleges a range planning shortcomings and active misrepresentations by CPS’s senior leadership, particularly former CEO Paula Gold-Williams. Our reporting focused on allegations that CPS Energy’s senior staff repeatedly misled the public and CPS Energy’s own Board of Trustees about the utility’s energy efficiency programs known then as Save for Tomorrow Energy Plan (STEP). This seems important to highlight considering our City Council just adopted a modest five-year $350-million expansion of STEP based on the advice of CPS Energy’s Board of Trustees. These same trustees—and many members of CPS Energy’s Rate Advisory Committee and City Council besides—expressed a range of critiques and complaints about STEP while the plan’s replacement program was being developed and ultimately approved.
Would CPS Energy’s trustees have advanced a more ambitious STEP program to Council if they had known their staff has been actively misleading them for months by downplaying the program’s benefits to the community? Would Council have rejected CPS’s modest recommendation, demanding more from the utility to better protect the working families from climate extremes? It seems likely. Yet Mayor Ron Nirenberg, who publicly advocated for a stronger STEP than the board ultimately approved, apparently chose not to share the RMI report with any of them.
The RMI report’s authors called out CPS Energy’s leadership for a range of sins, including misleading communications to the CPS board and public, overly narrow scenario modeling and “sub-optimal” analysis of clean energy market data and natural gas forecasts, “inadequate” financial considerations related to retiring the coal plant, and extremely limited consideration of the impacts of climate change. CPS Board member Francine Romero and RAC Chair Reed Williams have suggested that the RMI report and the CPS Energy 2021 Resource Plan it critiques are of only limited interest since many of CPS’s leadership team have since left the utility. That dodge, however, misses the full import of this neglected report. As leaders in energy-transition planning, RMI is better equipped than most to advise, for example, CPS Energy’s Rate Advisory Committee now working to update the utility’s embarrassing Resource Plan of 2021. The RAC is meeting regularly at the direction of the CPS Energy Board of Trustees to develop recommendations for a pathway off of coal power by 2030 at the latest. It is due by the end of this year.
Deceleration followed up with one of the principal authors of the RMI report to learn more about the group’s recommendations to Mayor Ron Nirenberg regarding CPS’s planning efforts—as well as the report’s relevance for San Antonio moving forward. Matthew Popkin leads RMI’s technical assistance to cities participating in the American Cities Climate Challenge. Launched as an initiative of Bloomberg Philanthropies, the ACCC provides support to more than two dozen US mayors working to reduce climate emissions while making their cities more resilient to strains being caused by global warming. In January of 2019, former NYC mayor Michael Bloomberg announced Bloomberg Philanthropies was delivering around $2.5 million to aid San Antonio’s climate change work. Other RMI report authors include Kevin Brehm, Genevieve Lillis, Jubing Ge, and Aaron Schwartz.
As revealed at the RAC’s July 21 meeting, RMI is being considered by the committee for consulting assistance.
This interview took place on Monday, July 18. May it be useful. — Greg Harman
DECELERATION: My focus clearly has been on the RMI report about the ramifications for the STEP [Save for Tomorrow Energy Plan] program. I was a climate organizer here for five years. I was engaged in a lot of this with the mayor’s office. So it was definitely of interest when this popped up after not being shared and not being accessible to the public. We’ve just been through many months of negotiation over the STEP program, which I think suffered for not having this report made public. It offers a great overview of the issues, some of which we’d raised and not had the satisfaction of being taken seriously. So, I just want to say to start off, to invite you to describe what the report is, maybe what it’s not. And I will just say that folks on the CPS Board of Trustees, the leadership of the CPS Rate Advisory Committee, and others are already kind of, I think maybe on behalf of the mayor—I don’t need to guess their intentions—but they’re saying, “Oh, well, this [CPS Energy Resource Plan] is already old. We’re not using that Resource Plan anymore; we’re doing something different. Let’s put the past behind us.” And so, I do think, though, when I look at this, there’s a lot in this report that they should be paying attention to as the managers of our utility, and the regulators, essentially, as well. I don’t want to lose this report to the politics.
MATTHEW POPKIN: Understood. Maybe I’ll take one step back before getting to that. I know you’re familiar with RMI. We’re a known player in the environmental community and energy community. But, really, for all intents and purposes, RMI is not just a nonprofit dedicated to energy transition, but we’re dedicated to evaluating technical economic strategies and market-based solutions to advance a clean energy transition—and a transition that is resilient, efficient, and affordable. And, for all intents and purposes, our mission aligns with the goals that CPS and the city also state. And a lot of the strategies that we advocate build on a lot of what has happened already. The FlexPOWER Bundle that CPS released being a great example of a market-oriented solution to advance the transition. So, our goal, in general, the technical assistance that we provide to the American Cities Climate Challenge for the last three and a half years to the city was to ensure, as much as possible, that the actions taken to implement the ambitious goals that San Antonio leadership and CPS have committed to can be done efficiently, affordably, and strategically.
So, in that spirit, this was one of our deliverables from the American Cities Climate Challenge intended to inform further planning conversations based on best practices in the energy industry. And so, this is not a piece that is just looking back. Our report focused on constructive recommendations based on critiques to align planning approaches with what would be best practice so that similar mistakes and shortcomings are not repeated in the future. Our understanding is that the process underway [at the CPS Energy Rate Advisory Committee] inherently involves re-evaluating some of these critical long-term assumptions, modeling, and re-making decisions. That’s great. This is exactly the time to ensure that these best practices are embraced for the sake of CPS customers, San Antonio residents, and frankly, CPS itself. So, we hope that this can be useful in this current process because we really did try to analyze and report and view this with the future in mind.
Thank you for setting it up so clearly. Maybe we can look just kind of quickly over some of the bulleted lists of issues or failures of the CPS Energy Resource Plan and some of the recommendations moving forward. But I want to highlight quickly what a dirty energy investor raised [while putting] the RMI report in front of so many people on the City Council, on the RAC, and the CPS board themselves. Gas prices had been way under… I guess undervalued maybe not the right term. But clearly, I think what your graph showed was that [CPS Energy price forecasts] were lower than almost any other forecasted scenario, the numbers that CPS was using. And we’re feeling that now, can you maybe just speak to that quickly so folks catch that?
I can. And I’d love to actually give a little bit more context before going into that. First, in terms of how the report is structured, we’re very clear, I think, on pages one and two that there are five major critiques. And I wouldn’t say one necessarily takes precedence over another. A resource planning process is meant to be comprehensive, and robust, and integrated, really, and I think our report is similarly intended to capture the interconnections between pricing risk assessment, modeling, scenario planning, communication of demand response, and energy efficiency programs, and the consideration of climate-related risks. These are all pieces of the same puzzle. They can’t operate independently, otherwise, it’s incomplete.
So, from a risk exposure standpoint on natural gas, which was our third kind of main critique, we said that CPS has limited analyses of scenarios and forecasts and unnecessarily exposed San Antonio customers, CPS, and [inaudible] to greater operational risks, unanticipated costs and sub-optimal investment and retirement decisions.
CPS Energy will never be able to predict the future, nor can we. But the goal here is to set up enough different [planning] scenarios that you’re able to adjust, adapt, and accommodate changes and fluctuations in the energy market. And that’s where I think our recommendations number two and three kind of go hand in hand where we’re talking about overly narrow scenario modeling and forecasting. That unnecessarily exposes San Antonio customers and CPS to greater operational risk, to sub-optimal analyses of clean energy market data and natural gas price forecasts. Especially given how much CPS depends on natural gas pricing both now and into the future for some of its scenarios it is really essential to do well, and do in alignment with best practices.
I would say just as someone who is trying to listen to and respond to others who are directly impacted by CPS Energy’s decision-making, here’s a case where… I’ll just read [from the RMI report] quickly: ‘Misleading communication, overly narrow scenario modeling, sub-optimal analysis of clean energy market data and natural gas forecasts, inadequate financial considerations when it comes to retiring the coal plant, and limited discussion of the impacts of climate change.’ It’s hard for us, for local residents, I think, to look at this or maybe fully appreciate it because we’re living in reverberating shocks of these extreme heat events right now, and still recovering from blackouts, freezing blackouts from February a year ago. And so, it’s really hard to fathom that even though this was a report, CPS Energy’s original resource report came out the January before the freeze, that they weren’t modeling—two things, I think, stand out—they weren’t modeling to meet the [emission targets of the Climate Action and Adaptation Plan] CAAP, and they weren’t modeling extreme climate events. So, thank you for pointing that out. I think it’s important to point out that you called them on that as well.
I appreciate you saying that. Our goal from the beginning of this, we went into this eyes wide open. And if our report yielded high compliments [of CPS], we would have acknowledged that too. And honestly, we’d love to do that. We’re kind of a removed third party in these conversations, but we’re striving to be honest in the energy transition conversations. So, when things are done well, we will call attention to that. And we do that with CPS on occasion. Many advocates on the ground had noted that CPS didn’t tap just how cost-effective their [STEP] program actually was. We recently wrote a report that was [inaudible]…
You’re cutting out a little bit. You’re saying that you had a report where you cited the CPS Big Sun Community Solar program?
Yeah, the Big Sun Community Solar Program where we highlighted how innovative that was. We are more than willing to compliment CPS and also willing to critique and make sure that there is alignment and best practices when there needs to be. I hope that leadership in the city and CPS recognize that, truly, we’re trying to help have a more accurate, trusted, honest conversation because I think they are too. And it just, it does take a lot of effort. There’s a lot of complexity in this conversation.
How should people in San Antonio, how should the decision makers be looking at this report in terms of putting the best practices into work through the RAC? Through the [CPS] board? Through the city council? Where does it fit, in your opinion? And what are the most important considerations moving forward?
You’ve just broken out these three scenarios for coal retirement [in the CPS Resource Plan], for instance, into 13 [scenarios]. What I think the RAC is going to be delivering is a recommendation to get off coal by 2030 by the end of the year, unless they specifically… and so this is me breaking the fourth wall or whatever it is, speaking to readers: Unless [the RAC is] specifically creating public space and public presentations to bring more information to the public, I think that’s what we’re stuck with. It’s kind of a scenario or a series of scenarios that then goes to other decision makers and kind of skips the public.
I understand where you’re going with that, and let me answer in twofold. First; why should people care about this process in the beginning? And that is: Utilities, including CPS, develop resource plans to inform near-term decision-making and guide longer-term strategic direction. And those decisions impact rates, they impact procurements and resources that come on, they impact jobs, and they impact the equity of the energy system. And so, an effective resource plan, if done well, one that is accurate, aligned with policy targets—and trusted—should increase confidence in the utility’s plans in decision making. Pure and simple. And it should better serve customers and reduce risk given the uncertain future that we are all trying to make sense of.
And so, when we look across other utilities and see the range of scenarios, the range of forecasts that exist, that reduces some of that risk, which is good for everyone involved. And it helps inform that narrowing-down process. And so, on the one hand, yes, this [CPS Resource Plan] was published a year and a half ago. On the other hand, if some of those scenarios are the ones informing this conversation today [at the RAC] and narrowing it down further is based on incomplete modeling and incomplete assumptions as we outlined in the report—that constrains the ability to make a fully informed decisions whether you are the mayor, CPS Board of Trustees, or the Rate Advisory Committee.
You talk about Xcel, Minnesota, Northern Indiana. Fifteen scenarios in one case, eight in the other. Are these being developed in kind of a transparent process that people are able to observe? Do you know?
I can’t speak to each process individually, generally, in saying that some processes are better than others. But, typically, what best practice would suggest, and some of these utilities are following closely, adhering to it, would be a process where the targets are outlined publicly, where the modeling is shared, the results of the models that were agreed upon are shared publicly. And the justification for which pathway seems to make the most sense for the community at that time is also presented publicly. And that’s not to say that there won’t be disagreement, but it’s to try and outline how did we narrow down to this and what did we value both financially and otherwise in this conversation? At the end of the day, there are significant energy decisions to face for CPS and the city, including not just the retirement of Spruce, but the retirement of up to three gigawatts of coal and gas power generation.
There are resilience challenges and other grid stressors—like the heat waves you guys are experiencing right now—and an increasing urgency to reduce emissions.
If there are recommendations from our report that can help inform the conversation, we offer them willingly and hope that the Rate Advisory Committee, CPS Board of Trustees, and City will look through those recommendations and determine which ones apply. … And I think that’s the best way from my perspective on how to use the information in this report. These are constructive recommendations that, if addressed, should reduce risk, and should create a more informed conversation about the very real and very complex decisions that do have to be made.
Can you give me another example? We’ve talked a little bit about better modeling. We talked a little bit about the public process, a public-facing process. But can you give me one or two other examples of what you as a lead author on this report were recommending and how that could inform today the RAC process?
That’s a good question. Let me think about that for a second.
Growth is overlooked. Electrification is pretty much overlooked. What would it mean to do this modeling with those being factored in more real world?
That was one of the observations that we made in this report:
There was no modeling [by CPS] of economy-wide decarbonization targets and electrification scenarios. And the impact that that has is that if those are not accounted for, those trends which we know will come to fruition in one way, shape, or form—we don’t know exactly when, we don’t know exactly to what degree—but those will challenge even the best of CPS’s internal forecasts.
But it’s these types of situations of uncertainty that a utility should be, and many are, analyzing a whole range of potential scenarios. And that’s why the wide range of scenarios is very key. “Hey, do we expect a high electrification future? Do we expect an average number of electric vehicles adopted in our community by 2035?” Those specific kinds of benchmarks can be useful for trying to reduce that risk and uncertainty. And maybe something to bring back Here is that at the end of the day effective planning for coal retirement necessarily involves considering a whole wide range of factors. And it’s not just one plant at one time.
For the RAC’s benefit here, what I would encourage looking at, as our report did, is kind of four main considerations when you’re thinking about coal retirement.
[First]: comprehensive scenario analyses and forecasts to manage uncertainty and risk. Because there are a whole host of resource decisions that have to be made for just one baseload plant. Secondly: Using market-based insights from CPS’s own all-source procurement to the extent possible to inform planning, or at the very least, providing clear justifications of where those resource cost projections are for clean energy, for natural gas, for all resources. Third: Evaluating the financial tools that could offer more flexible asset retirement. But again, that only happens effectively if there are multiple different scenarios that can factor in the different financial futures that may exist. And then, last, but certainly not least, modeling for these other emerging risks, including peak load under extreme forecasts, or other extreme weather events and climate-related risks. If you’re not doing any one of those, it could undermine another. This really is a holistic process and a comprehensive consideration that has to be made. And so, look, I’ve served on committees before locally.
I’ve served on different boards before, and it’s often smoother to try to break out issues into one corner or create a subcommittee to deal with one specific issue. But I think that’s actually a detriment to the effective risk mitigation and affordable planning process that needs to happen here.
And that’s something we try to communicate in our report is that effective resource planning needs to look across the board here, and not just be accurate and align the policy targets and trust it, but it actually has to position the utility for the challenge of transition and the investment decisions needed to meet the goals the community is setting.
It reminds me of after Winter Storm Uri down here, there was a bit of reflection by some City Council members working on a disaster committee. What happened? What should have happened? What did we know? Were we not asking our questions? And it became clear midway through that process that there were kind of disaster modeling documents that FEMA, I believe, was having. I don’t know how many cities but major US cities looking at what could happen with fire? What could happen with storm? What could happen here and how are you prepared? And it became clear that we participated in that process that FEMA, I believe, was helping to fund, but we weren’t keeping that process updated and moving it forward. In the same way building and creating the climate action plan for the City of San Antonio, there’s all these forecasts about everything that could go wrong, and extreme heat just one of them, and yet, the adaptation plans around that [didn’t materialize]. The plans pile up but things aren’t put necessarily into practice. And so, when it comes to extreme weather events, I think you were kind of answering this question, but I would just want to pose it maybe in a more direct way. How do you model for disaster? Does it just mean that you stretch the parameters of what hot looks like? What cold looks like? Or what sudden onset is?
I might have to get back to you on that because it’s a great question. What I can briefly acknowledge here is that there are two things, and we highlighted this in our report, but as you’re starting to think about what do you model for: you first look at what are your operational vulnerabilities. Maybe to no fault of anyone’s here, but just what are you more at risk of, and start to tease out potential scenarios. And then the second thing is just really thinking about the wide range of risks, and the consequences of those risks may have. And so, you’re looking at a combination of economic, regulatory, financial, and technical risks that, again, don’t happen individually in a vacuum. And so, it is, to some degree, about stretching some of the different models and assumptions to see what holds up under what pressures.
If we personalize this for a second, we do that with our own financial budgets, sometimes. When we’re making financial decisions as an individual, saying, “Hey, if I buy this car now, how much do I have left in my bank account if I have a bike accident and break my arm and that costs me money?” We are constantly evaluating the different financial, and physical, and technical risks involved in our own lives, and utilities and governments do the same or need to do the same.
It gets more complicated as climate change exacerbates a lot of the risks that we maybe knew how to plan for before but are evolving. And that’s where we really felt that there was an incomplete discussion of these system risks. And so, thinking about, “Okay, what happened in Winter Storm Uri? What could have happened in Winter Storm Uri, for better or for worse?” And then thinking about right now, San Antonio is facing some record heat, and temperatures there that are impacting the grid, impacting people’s quality of life and health. What range of scenarios would you expect? And what happens if there are intersections of certain technical failures that might exacerbate a different type of economic risk? So, thinking through the frameworks, the scenarios, the forecasts, and the reserve margin, from CPS’s standpoint of what they can accommodate is really essential to creating sound, or as sound as possible, operational and economic decisions.
So the STEP energy efficiency program, you guys did an excellent job kind of bringing forward a lot of the concerns and the complaints that we’ve had here locally, and that I participated in bringing to CPS under the previous CEO and continue to advocate for a more robust citywide housing emergency response when it comes to weatherization efficiency. And yet, while the CPS board didn’t have the benefit of this report, they created three options. And here again, a limited range of scenarios because they have to vote one up, I suppose. … It seems if they had the benefit of this report, they might have framed those numbers quite differently. And I’m just wondering what do you consider a robust energy efficiency program? And considering the moment that we’re in.
It’s a great question. I’m not sure I’m best positioned to answer that question. But the theme throughout this report is this overarching best practice which is: clearly and accurately presenting data and model outputs is essential to creating a transparent [process]. From our perspective, the mayor’s office took this seriously. And we had conversations with them upon delivery of this. But that’s the key for any debate on energy efficiency, on renewable energy, on any part of this clean energy transition. And you certainly want to avoid misleading key stakeholders and decision-makers in this process.
Are folks in San Antonio going to become more familiar with RMI? Do you know if you’re going to be working with the RAC for, instance, in any of their future work?
What I can say right now is that we are here to support conversations based on this report, and help people understand and break apart the complexity of the very real decisions and challenges that do have to be made. If we can be helpful in that conversation we are willing to do so. … Our goal here is to help cities and utilities and many other stakeholders follow best practices.
Was the RMI report requested from the mayor’s office? Or was it something that kind of comes as a part of being a part of American Cities Climate Challenge?
We don’t do this for every single city we work with. We offer it in situations where we think it might be more relevant to some of the community decision-making and resource procurement conversations. Utilities and cities are facing rapid, unprecedented changes in the energy market and due to climate change. The objective of this report from the beginning was to increase awareness of best practices across the energy industry when planning for the future and assess whether it created an effective foundation for future decision-making.
I just wanted to know how closely we can position this in terms of how it was manifested…
I appreciate you reaching out to have the conversation and to try to report on this as honestly and accurately as possible. I think that’s really key in these kinds of conversations because, as you and I both understand, the stakes could not be greater. There’s a lot to be decided that impacts consumers, that impacts CPS, and impacts the city. And so, we recognize that this process is complex and challenging, and requires, frankly, utilities to adapt to changing community priorities and ambitious emissions reduction targets. So we hope that CPS, the RAC, and the city, and other stakeholders recognize that this is a different kind of conversation in transition unlike any in history. And it comes on the heels of a disaster in Texas, in San Antonio, and that doesn’t make it any easier.
I have generally been supportive of our mayor. And I think he’s been a reliable, positive voice on these issues. But I think the game has changed so much, and that the table is tilted so much in just a few years, that it’s clearly local decisions—as I tried to drive home in this last report—is the whole game right now. Things that maybe could have squeaked by before and say, “Oh, that’s good enough.” It’s hard to support that.
Of course. From our perspective, from the interactions that we had, the mayor’s office definitely took this seriously.
Great. Okay. Thank you very much. Hope to talk again.
Reach out anytime.
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