This story has been updated from the original
CPS Energy has requested San Antonio residents to understand the demands of the marketplace while they increase electric and gas rates a combined 4.75 percent. If it’s approved by city council in October, the proposed fee hike will take effect in February 2014. It will mark the first increase since 2010 and one of three CPS will ask for over the next six years. By 2019, CPS plans to increase rates by a total of 14.5 percent.
“No one likes to think about paying more for a service they cannot live without, but a modest increase is needed to maintain the strong reliability and service our customers deserve,” said CPS CEO Doyle Beneby in a statement.
The public utility contends the increase is needed to generate approximately $65 million annually toward the $500 million reserved to fund capital projects, like modernizing infrastructure and updating the power grid. Which, on its face, sounds like a reasonable plan.
However, CPS’ request falls against the backdrop of questionable meter practices, sizable executive bonuses and employee salary increases, making the case for shelling out the extra dollars a little tougher to swallow for the ordinary citizen.
CPS says the increase will have residents tacking on $5.19 to their average residential monthly bill, pushing the tab from $136.79 to $142.03 for 1,500 kWh of usage a month. But District 7 council member Cris Medina says those calculations are low and underestimate the reality. In a critical newspaper op-ed last week, Medina writes the estimations are tabulated in “minimalist terms,” and argues business owners will actually take a much larger hit.
It wouldn’t be the first time CPS had problems with estimating. Earlier this year, the utility failed to hire meter readers, instead taking estimates rather than precise measurements, leaving some customers in shock with inflated bills reaching up to $400 for a single-bedroom house, by some accounts. CPS admitted to the problem and offered a formal apology.
Customers may be more forgiving of the meter reading debacle if it weren’t for the fact that those in charge are seeing ample incentive pay for doing their job well.
In his editorial, Medina astutely notes the dollar amount the rate increase will produce almost matches employee bonuses: “we cannot ignore that the $60.6 million ($33.6 million in the last two years) in employee bonuses paid since 2008 is nearly the exact amount this rate increase will generate.”
The council member makes a point. For the second year in a row, CPS doled out additional dollars to its employees, totaling $16.2 million this year—a 32 percent bonus—and $17 million in 2012. This year’s data shows all senior level positions earn more than $180,000 before bonuses, according to records obtained by the Current. Beneby’s salary jumped $50,000 in 2011, granting him an increased base salary of $410,000. From a combination of salary and a bonus for meeting ‘performance goals’ the CEO earned $820,000 in 2012. In deferred incentive pay acquired over the past three years, Beneby made out with nearly $1 million this year.
“[A]n executive pay increase of 58 percent over the past two years seems excessive by any objective measure,” Medina writes.*
In the past, CPS diffused the generous incentives by reminding consumers a rate hike wasn’t on the table. But now the game has changed, leaving some citizens incensed.
Bob Martin, president of the Homeowner Taxpayer Association of Bexar County, vigilantly monitors CPS. He calls the rate increase “outrageous” in light of the fat bonuses paid out to top-level employees.
“The bonuses are absurd,” said Martin. “I’d say they should reform this salary looting and then come back and ask me for a rate increase.”
CPS spokesperson Christine Patmon stresses the employee salary increases are a result of retaining a highly skilled workforce. She says Beneby is actually “underpaid” when compared with his CEO counterparts in the private sector—yet, the comparison is somewhat befuddling considering that CPS is a publicly owned utility, not a private company.
“What the community needs to understand is that everything we do in the energy business has high price tags, it’s not small potato stuff. It’s not what we pay for, it’s the price that’s driven by the industry,” said Patmon.
Incidentally, those high price tags also encompass top-level executive salaries.
In defense of its requested bill hike, CPS continually refers to the fact the City of San Antonio’s rates still fall below those of other major cities—and that’s certainly true. But what they don’t factor in is comparable poverty rates. With the exception of El Paso, the income of San Antonio residents fall below the poverty line at a higher percentage, according to recent U.S. Census Bureau stats, than residents in Corpus Christi, Austin, Houston and Dallas—cities CPS uses to justify its rate increase.
“They’re not accounting for how poor some people in San Antonio are compared with those other cities,” said Martin. “We’ve got a lot of people out here struggling to make ends meet, I don’t see how they can afford this.”
* CPS disputed a similar claim made by the Express-News in a May 2, 2013 blog post