On motion by Vice Chairman Howard, as seconded by Trustee Hennigan, the following motion was passed by a vote of 5-0:
– By Stephen Heiser –
Official Language From The Corporate Motion:
WHEREAS, CPS Energy is an electric and gas utility with an obligation to provide electric service to all of the customers within its certificated electric service territory; and
WHEREAS, CPS Energy is deeply committed to conservation and energy efficiency and renewable energy supplies, supporting a diverse portfolio of power generation and there is a need to replace our existing fossil fuel baseload generation supply, but CPS Energy staff has determined that conservation and energy efficiency and renewable energy supplies alone cannot reliably meet San Antonio’s (the City’s) growing demand for electricity and therefore, additional baseload generation is needed to bridge the gap to the City’s energy future; and
WHEREAS, the CPS Energy staff due diligence team continues to believe, consistent with our adopted Strategic Energy Plan, that additional nuclear generation is worth pursuing to meet San Antonio’s growing energy needs because nuclear is likely to generate long-term reductions and savings in fuel costs and currently appears to be the most reasonable generation resource among the realistic alternatives; and
WHEREAS, following public hearings throughout San Antonio, CPS Energy has determined that it should retain enough equity in STP Units 3&4 (the Project) to satisfy the projected demand for energy of CPS Energy customers while also maintaining competitive rates; and
WHEREAS, CPS Energy staff is developing alternatives for retaining an interest in the Project, retaining a significant voice in Project governance, and allocating a portion of CPS Energy’s equity position in the Project to third parties in order to broaden the equity base and mitigate development risk; and
WHEREAS, CPS Energy’s participation in and commitment to the Project is dependent on approval of continued funding by the Board and the City Council;
NOW THEREFORE, be it resolved by the Board that:
(1) Even with the conservation and energy efficiency to be achieved by the Save for Tomorrow Energy Plan (STEP) Energy and Efficiency Conservation program, we find the need to meet expected growth in demand for electricity by increasing generation capacity to maintain system reliability;
(2) We authorize CPS Energy management to continue development of the Project on behalf of CPS Energy and we direct CPS Energy staff to pursue alternatives for managing risk with respect to its equity interest in the Project so that the value of its equity interest is optimized for CPS Energy and its customers, while protecting the financial integrity of CPS Energy and the City, and to attempt to divest equity interests in a reasonable and prudent manner, so that after pursuing divestitures and other strategies, CPS Energy retains ownership of approximately 20% to 25% equity interest in the Project;
(3) A copy of the 2009 Estimated Rate Plan is attached to this Resolution and we direct CPS Energy staff throughout development of this Project to annually develop and file with the City an updated ten-year rate plan that will assure the financial integrity of CPS Energy and the City helping to maintain strong credit ratings, while also keeping rates affordable and funding capital plan priorities as approved by the Board. We direct CPS Energy staff to cooperate with the City staff to continue its public process for development of the Project and rates that are reasonable for funding CPS Energy’s capital and operations and maintenance plans; however, the Board acknowledges that future rate filings may deviate from the ten-year rate plan (up or down) to maintain the financial integrity of CPS Energy and the City; and
(4) We approve this resolution today while also resolving to spend at least one third (1/3) of the amount of funds spent annually on development of new nuclear energy resources to be spent on renewable energy resources in furtherance of CPS Energy’s Sustainable Energy Policy Statement.
2009 Ten Year Electric Rate Plan
CPS Energy
Fiscal Year (FY)1 Base Bill Impact
FY11 9.5% 4.7%
FY13 6.4% 5.0%
FY15 6.7% 5.0%
FY17 8.0% 3.1%
FY19 4.6% 3.4%
1 CPS Energy Fiscal Year beginning February 1 of each FY