San Antonio Making Bureaucracies Accountable – Part 6
On February 22, 2017 CPS President Gold-Williams presented at the City Council B Session a review of CPS operations and strategy documented as, “CPS Energy Breaks with the Past, Exposing a Cash Trap.” This rare look at the hidden CPS prints President Gold-Williams (G-W) quotes in quotation marks, followed by italicized Coalition comments, to flesh out CPS reality.

1. CPS is an unregulated monopoly

2. CPS is a municipally-owned utility

3. CPS is “managed” by an unelected Board of Trustees

4. But who really runs CPS?

5. CPS policy: “renewables-at-any-cost”

6. CPS President Gold-Williams has told us what is wrong with CPS

7. Gold-Williams’ has a “plan” to fix CPS’ problems

8. CPS spends our money as if it does not face a cash squeeze

9. CPS knows their 20-year Smart Grid financial projection is wrong

10. CPS uses Smart Grid data to manage our behavior

11. Is Smart Grid vulnerable to hacking? You bet your life!

1. “The challenge is that solar is an intermittent source. We have installed a high level of capacity… but need storage to be able to use it.” No CPS Smart Grid financial projection released to date makes any reference to a Battery Plant. This is the essence of a Cash Trap. The Smart Grid investment is bleeding cash, so CPS will risk more spending (without cost-justification) to redeem their original investment, along with the reputations of advocates in CPS and City management. CPS failed to communicate among planners, technologists, finance, and general management during the early stages of the Smart Grid project! The intermittency of solar and wind has been an issue from the beginning, but CPS missed its significance until recently! Now G-W must clean up the mess (and we must pay for it).

2. The recently-approved CPS $580.1 million Bond issue includes $300 million designated “New Money Bonds…to finance CPS Energy’s new capital construction and capital improvement projects.” This $300 million clearly replaces unforeseen, unfavorable cash flows accompanying CPS’ green energy efforts. There was no debate around this offering; Council approved the Bonds by consent, without discussion. “People hide things when they have something to hide.”

3. Following are more G-W quotes from her presentation during subject meeting, with negative cash implications in italics: “People (with solar arrays) want to push power back from their homes and businesses to the system, but we were not equipped for that…working on ways to handle 2way power.” CPS has financed an expensive constellation of residential and commercial solar inputs, subsidized by a solar rebate program, that generates power CPS cannot use! Only CPS knows the cash drain they have experienced because of this Smart Grid planning failure. “We continue to focus on solar…another $15 million of funding for solar rebates.” Rebates are subsidies (government payments to encourage economic activity supporting a policy too uneconomic to attract private capital), encouraging even greater solar output CPS cannot use.

Express-News, April 27, 2017 reported, “CPS Energy weighs new rules for solar panel rebate program,” imposing for the first time controls on installers fraudulently representing installation efficiency. And, E-N reported incentives (subsidies) to installers to buy products of local panel producer Mission Solar and inverter manufacturer KACO New Energy, a conflict of interest. CPS is very slow to manage their expenditure of taxpayer funds in pursuit of “renewables-at-any-cost.” “We are about 68% installed on the digital meter side…with completion scheduled for 2018.”

Heavy up-front investments in meters and infrastructure with little or no short-term payback will continue bleeding cash for the next 18 months. “Demand response programs work with customers on a voluntary basis to modulate their thermostats.” This effort reduces the demand for power over time, but short-term, CPS cash is hit with promotional costs, reduced billing and lower short-term cash profits. “‘No money up front’ residential solar.” Who is financing this activity which is obviously cash-intensive? “Working with Southwest Research on energy storage.” No mention of project economics. More short-term hemorrhaging of cash to SWR with no short-term payback in prospect.

This is a phenomenon of CPS’ Cash Trap dilemma. Doyle “Renewables-at-any-Cost” Beneby got us into renewables without knowing project economics. Now Gold-Williams would add storage with an unknown economic profile, thereby compounding our ignorance of new energy economics. This is the Cash Trap in full flower. “We inherited a mess from Doyle Beneby…we are still focused on making major improvements (in customer service).”

Unfortunately, money spent to improve quality of customer services, while commendable, is not redeemed by higher Revenues. As an unregulated monopoly, G-W is draining cash to improve service with no return. (Consumers have no alternative source of power; they can’t take their business elsewhere). G-W was CPS’ Group Executive Vice President – Financial & Administrative Services and Chief Financial Officer & Treasurer prior to her appointment as CPS’ President and CEO, so when she says CPS is in a cash squeeze and validates it with a $300 million cash infusion from a new bond issue, we can believe her and admire her integrity. Next session, we will review the G-W plan to manage CPS’ technology failure and relieve their cash trap.