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CPS Energy had a bumper year for selling electricity onto the Texas grid and is using that revenue to pay down some of its debts, according to utility officials.
With Texas’ power demand setting new records this summer, the municipally owned electric and gas utility made more than $123.6 million in wholesale revenue, factoring in fuel costs, so far in the 2019 fiscal year, utility officials said at CPS Energy’s November board meeting Monday.
That’s more than double the wholesale revenue generated in the 2018 and 2017 fiscal years – $52.3 million and $42.8 million, respectively. That’s because of high electricity prices on the Texas grid coupled with strong performance by CPS Energy’s power plants.
“I can’t remember a summer going through the whole summer seeing so many units all running, all at the same time,” said CPS Energy Vice President of Energy Supply and Market Operations John Bonnin, who has worked for the utility since 2004.
Typically, CPS Energy has at least one power generating unit offline for some kind of maintenance, Bonnin told the board.
“There’s a tube leak, there’s a pump that’s out, there’s a generator that’s being rewound,” Bonnin continued. “But this summer, it’s like every unit was on, every single day, all day.”
At Monday’s meeting, the CPS Energy board approved a plan to pay down up to $130 million in debt through the end of January, saving its customers in interest charges.
CPS Energy is both a power producer that sells power onto the grid and a utility that delivers electricity and gas to its customers. The utility serves 812,000 electric and 344,000 natural gas customers in the San Antonio area.
CPS Energy operates about 25 power-generating units with enough capacity to make it the third-largest power producer in Texas, Bonnin said.
The utility’s first obligations are to meet the electricity demands of its own customers, officials said. After those needs are met, CPS Energy looks to sell its excess capacity onto the market, especially when prices are as high as they often were this summer.
When prices exceeded $75 per megawatt-hour, which Bonnin said is “generally the threshold for scarcity in the market,” the utility’s gas steam units were available 88 percent of the time. The availability of its coal, gas peaker, and gas combined cycle units were 91 percent, 96 percent, and 100 percent, respectively.
Daily average prices on the Texas grid far exceeded $75 per megawatt-hour much of July and even spiked to $350 and $400 per megawatt-hour at times, according to numbers Bonnin shared from the Electric Reliability Council of Texas, or ERCOT, the state’s grid operator.
ERCOT and CPS Energy both set new electricity demand records in July. CPS Energy Chief Operating Officer Cris Eugster said that’s because of high temperatures and population growth in the state.
“We’ve had an outstanding summer, but not without its challenges,” Eugster told the board. “People continue to come to Texas, and we continue to see record temperatures, so the stakes were very high this summer, and the team performed very well.”
CPS Energy set a new all-time electricity demand record on July 23. At the highest-use hour from 6 p.m. to 7 p.m., 35 percent of the power CPS Energy was generating came from natural gas. Another 33 percent came from coal, with 20 percent from nuclear power. Wind and solar generation accounted for the remaining 12 percent.
During these peak demand periods, the utility also is able to get 140,000 residential and 560 commercial and industrial customers to use less power than they otherwise would through CPS Energy’s voluntary demand-response programs, Eugster said.