CPS Energy outlines record FY27 capital and O&M plans and flags placeholder for possible rate increase

Corey, a CPS Energy presenter, told the San Antonio City Council on March 4 that the utility’s proposed fiscal 2027 budget includes $1.7 billion in capital spending and $1.1 billion in operating-and-maintenance costs. The presentation framed the request around three financial guardrails—debt-to-capitalization, adjusted debt-service coverage and liquidity days—that CPS uses to preserve credit strength and limit borrowing costs.

“We set these financial boundaries … so that we can translate financial health into lower borrowing costs,” Corey said, pointing to targets that keep debt-to-capitalization below 70% and maintain roughly 150 days of cash on hand (200 days including available credit).

The capital plan devotes roughly $700 million to reliability work—about $400 million of that for transmission—and another roughly $290 million for customer growth and new connections tied to an expected 28,000 net new electric customers and 5,000 gas customers. Corey said the plan assumes about 80% debt funding and 20% cash funding and noted that recent wholesale asset acquisitions have boosted near-term non-fuel wholesale revenue.

“This budget also assumes a rate increase,” Mayor Jones said during the opening remarks introducing the briefing, reflecting how the proposed plan currently includes a placeholder for covering a planning gap. CPS officials explained the placeholder stems from an estimated planning gap of approximately $50 million; they said a specific percentage increase will be determined after the utility finishes a cost‑of‑service study and finalizes allocations.

Councilmembers pressed CPS for detail. Councilman White and others asked for a breakdown of the largest items in the $700 million reliability bucket and for quantification of savings tied to operational changes such as a reported 40% reduction in nonemergency overtime. Corey and other CPS staff said those workforce and process changes have produced “several million” in annual savings and that they would follow up with precise figures.

Several councilmembers also asked how the budget aligns with San Antonio’s Climate Action and Adaptation Plan. Elena Ball, CPS chief strategy officer, said the budget is consistent with the utility’s generation plan and ongoing RFPs for wind, solar and battery storage; she added CPS expects to reduce its carbon-intensity over the coming decade as newer renewable resources and storage come online.

CPS told the council that the utility uses a suite of tools—wholesale transactions, prepaid commodity purchases, and financing structures—to mitigate customer bill impacts while funding large multiyear investments. Officials also noted safeguards for large-load customers: study fees, contributions in aid of construction and a 10‑year ramp/clawback structure to protect customers from stranded investments if a large customer fails to meet ramp commitments.

Next steps and what to expect: CPS said it will return with the results of its cost‑of‑service study later this year, additional detail on high-ticket capital items, and numerical follow-ups on projected savings and the $50 million planning gap. The mayor and several councilmembers asked for public-facing materials and town halls so residents can better understand potential impacts and timing if a formal rate request is pursued.