By this fall, CPS Energy will have distributed the entire $20 million the City of San Antonio gave the utility from its pot of federal coronavirus relief funds to help customers behind on their bills, utility officials said this week.
Despite that infusion, and even though the number of customers in arrears has shrunk, the amount of money owed to the utility from delinquent customers has continued to grow.
That’s due in part to CPS Energy’s policy of suspending disconnections for past due bills, which it generally does over holidays and during extreme weather, like the string of 100-plus degree days San Antonio has experienced since April.
When the pandemic hit, CPS Energy suspended disconnections for more than a year, as the coronavirus wreaked havoc on residents’ lives and finances. When the utility finally started attempting to collect past due amounts in October of 2021, 162,000 customers had racked up close to $130 million in outstanding balances.
Today, the number of customers in arrears is down to 140,000, but the total amount due is up to $160 million. That’s in part, officials said, because CPS Energy has largely suspended disconnections since mid-May because of the heat.
Staff was responding to criticism from trustee John Steen during Monday’s board meeting. Steen said he is concerned that the utility’s bad debt has continued to rise and now represents about 20% of the utility’s customers.
The debt “is trending up — not down,” Steen said.
Debt was one of several key financial measures Steen said he finds concerning: cash on hand, debt service coverage and the utility’s debt-to-capital ratio. CPS Energy is trending below its typical averages in all three of these areas at the moment, he said, putting its credit ratings at risk.
But Cory Kuchinsky, CPS Energy’s chief financial officer, said the utility is financially stable. The utility spent its own $20 million on bill relief, he said, and is on track to be paid back by the city in the fall. That money, plus the recent rate increase, has and will help stabilize the utility’s finances, he said.
The three credit rating agencies that rate CPS Energy — Moody’s Investors Service, Fitch Ratings and S&P Global — understand the seasonality of the metrics that appear to be performing below average, Kuchinsky said.
Extreme heat also brings with it higher energy bills, making it harder for some households to pay the full amount due. That, coupled with suspended disconnections, has helped push the utility’s debt higher.
CPS Energy has been working to connect with struggling customers to help them avoid disconnections and to set them up to receive assistance, said DeAnna Hardwick, the utility’s interim executive vice president for customer strategy. It has hosted utility assistance events, made calls and sent out emails and letters. It contracted with block walkers to leave door hangers and flyers. CPS Energy employees have even knocked on doors to talk to people directly.
But disconnecting customers during extreme weather just to refill the utility’s coffers will never be an option, said interim CEO Rudy Garza.
“I mean, if I gotta be criticized for being too compassionate, OK, I guess I’ll take it,” he said.
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