On March 4, the San Antonio City Council received a briefing on CPS Energy’s fiscal year 2026-27 budget. During the briefing, the City Council explored available funding options to take the place of any potential rate increases.
The overview
According to city documents, CPS Energy has an approximate proposed budget of $5.26 billion in FY 2026-27, with an estimated $5.21 billion in revenue. Currently, the proposed budget has a $50 million gap, which is around 1% of CPS’s projected budget. Mayor Gina Ortiz Jones pushed CPS Energy officials to consider treating the shortfall internally instead of raising rates.
“There’s an interest in avoiding a rate increase as much as possible, because when we think of the $50 million over the $5 billion dollar budget, that’s 1% … So 1% seems potentially manageable … [we should look at] tapping into the access to cash and credit … or just eating that via the $5 billion dollar budget … We want to be able to say that we’ve tried to shoulder as much of this as possible,” Jones said.
District 1 council member Sukh Kaur noted that 45% of CPS’s budget is labor costs and stated that one of the council’s priorities when it comes to balancing the budget is to maintain those jobs.
“We want people to be able to continue to stay in those jobs,” Kaur said. “I think we need to continue to figure out ways to collaborate and make sure that we can get ahead of things as much as possible.”
Zooming in
Elaina Ball, CPS chief strategy officer, said the proposed budget for FY 2026-27 expenses is broken into three categories: a capital budget of approximately $1.7 billion, the nonfuel operations and maintenance expenses of approximately $1.1 billion, and the transmission financing structure capital totaling roughly $70 million. She explained that these three infrastructure cost categories fund different aspects of CPS’s services.
“When we have customers connect to our system, there are really three groups of infrastructure …,” Ball said.
Those groups are:
Statewide transmission network, which is shared across the Electric Reliability Council of Texas and is paid through state-level transmission charges. These funds invest in large-scale upgrades, such as wind and solar.Local CPS system, which is paid through CPS retail rates and funds the local grid system, such as distribution lines, poles and transformersCustomer-specified facilities, which are paid by the customer and fund lines that connect directly to a customer
In the presentation, Cory Kuchinsky, CPS chief financial officer, also highlighted how the current budget is shaped by a period of heavy investment and growth, which is due to new businesses and an expanding population. This growth has naturally increased CPS’s budget over the last five years, with new large load customers bringing in around $29 million in on-fuel revenue per year.
“We’re going to at least have a decade of heavy investment,” Kuchinsky said.
Expense drivers include:
Growth of 28,000 new electric and 5,000 new gas customersThe newly acquired East Texas natural gas-powered plantsTransmission projectsPlant maintenance for an aging fleetGas leak and surveying and repairsLaborRevenue drivers include:$18 million resident growth$46 million commercial growth$135 wholesale growthStay tuned
The City Council and CPS Energy are continuing to work through the budget and find potential solutions to the $50 million budget gap.