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CPS 2003 SUMMER ENERGY OUTLOOK

City Public Service (CPS) strongly urges its customers to practice energy conservation to keep utility bills manageable this summer because of factors significantly affecting the price of electricity . Higher market prices for natural gas, the unavailability of Unit 1 of the South Texas Project (STP) nuclear power plant, which is down for repairs, and a warmer summer than 2002 could cause the average residential electric bill to be 30 percent higher than last summer. 

"We ask customers to be fully aware of this unprecedented summer energy situation and to refocus their attention on conservation to save energy and money," said Steve Bartley, CPS' director of regulatory relations.

The projected cost of natural gas is more than 60 percent higher than last year due to market conditions. In February, gas prices skyrocketed to all-time highs of more than $20 per thousand cubic feet (mcf) because of shortages resulting from bitterly cold weather in the northeastern states, the threat of war in the Middle East and turmoil in Venezuela and other
global locales.  The cost of natural gas has declined since February, but the estimated average market price of $5.75 per mcf for the summer months is more than 60 percent higher than the $3.50 per mcf paid last summer.

Bartley said consumption nationwide has depleted gas in storage to record low levels.  Although plenty of gas exists to meet summer demand, concerns over the supply that will be available next winter has raised the price. 

Even though CPS will use cheaper fuels such as coal and nuclear as much as possible, CPS must operate more natural gas-fired generating units to meet the summer demand, Bartley said.  During the summer billing period (June-September), the Peak Capacity Charge for  energy usage over 600 kilowatt-hours (kwh) covers the costs of operating those additional units.

Bartley noted that gas is a highly efficient, direct-use fuel for commercial and manufacturing applications and for residential thermal uses, however it is not the most cost-effective fuel for electrical generation.

Coupled with the higher cost of gas, CPS will receive only 14 percent of its electricity, or 350 megawatts (mw), from the South Texas Project (STP) nuclear plant, CPS' cheapest source of electricity.  Typically, CPS receives 700 mw from STP, located near Bay City.

One of two units at STP is down for repairs after boric acid residue about half the size of an aspirin was found April 12 on two instrument tubes that penetrate the underside of the reactor vessel. The residue was found during refueling and routine maintenance.  STP officials are aggressively finalizing engineering details for the repair option selected. The Nuclear
Regulatory Commission must approve the repair method before the reactor canbe restarted.  STP officials currently estimate the plant will be back on-line late this summer.  

"An increase in summer bills doesn't mean CPS has raised electric rates," Bartley said.  "In fact, basic electric rates haven't been adjusted since 1991.  What we're facing are higher fuel costs, higher energy usage because of the summer heat and higher regulatory costs imposed by the state, all key factors that CPS unfortunately can't control. We seek to operate as cost-effectively as we possibly can, yet on a typical residential bill, factors beyond our control make up approximately half of the total."

The average residential electric bill for the months of June through September is projected at $158.62, compared to last year's average summer electric bill of $118.89, or an increase of 33 percent. Bills for 2003 and 2002 were based on an estimated 1,692 kwh and 1,558 kwh of usage, respectively. San Antonio residents saw a mild summer last year due to heavy rains, Bartley said. However, temperatures are expected to be warmer than normal this summer, according to the National Weather Service Climate Prediction Center.  In turn, warmer weather is expected to trigger more electric usage for cooling.

"Despite the volatile gas market and other things beyond our control, CPS continues to be in a favorable position as compared to other utilities around the state and nation," Bartley said. "We have an adequate supply of electricity, relatively stable coal and nuclear fuel costs and natural gas price protections that put our customers in an advantageous position. We are
currently restocking fuel oil inventory, another fuel used in natural gas-fired power plant, and purchasing electricity as market conditions warrant to reduce the impact of gas prices. However, with the widespread use of air conditioning, customers need to keep an eye on energy usage to keep bills within reason."

CPS has sufficient power to meet heavy summer demand, Bartley emphasized. Even with STP Unit I temporarily out of service, CPS has approximately 4,677 mw of generating capacity, while the hourly peak demand last summer totaled 3,937 mw, leaving the CPS with an approximate 18 percent margin.

Thanks to the completion of new pipelines and contracts for pipeline transportation and storage, CPS now purchases natural gas from more than 30 competitive suppliers in contrast to just one supplier, which was the case for many years.  Buying gas at the most competitive location, storing it during depressed market conditions and using the stored gas when prices rise has helped control costs, he explained.

In addition, CPS has a natural gas hedging program, allowing CPS to lock in supplies of gas when prices are favorable. This price stabilization program paid off last winter when the market price of gas reached the $20-per-mcf range.

"All in all, San Antonio will continue to have some of the lowest energy costs as compared to other major cities nationwide," Bartley said. "However, we again urge our customers to put energy-saving techniques into practice daily to keep their bills affordable."

Money-Saving Energy Conservation Techniques

Summertime energy-saving recommendations from CPS include:

*       Have cooling system and duct system properly checked by a licensed and properly insured contractor at the start of the cooling season.
*       Set thermostat between 78-80 degrees. For each degree cooler, expect cooling costs to increase 7-10 percent. For added savings, install programmable thermostats.
*       Buy energy-efficient cooling units. The higher the efficiency rating, the more efficient the unit. Purchase a unit with a rating of 12 SEER (Seasonal Energy Efficient Ratio) or better. 
*       Keep a 2- to 3-foot clearance around air conditioning units to ensure proper air circulation.
*       Clean and replace air conditioner filters every two weeks during the summer. 
*       Use window units for single-room cooling rather than central units.
*       For added comfort in occupied rooms, use fans to feel 4 to 8 degrees cooler than the actual room temperature.
*       Install solar screens, solar film or plant trees and shrubs around houses or building to limit direct exposure to the sun.
*       Weather-strip doors leading to garages, patios or any other areas without air conditioning.
*       Caulk around external windows and door frames to reduce air infiltration.

For more tips or to access the on-line energy audit, customers can visit the CPS Web site at www.citypublicservice.com.  CPS also offers free energy audits to help reduce energy usage and provides the homeowner with free weatherization materials. For more information, call 353-2302.

Customers can receive low-interest-rate loans to make homes more energy efficient through the Home Efficiency Loan Program. Loans ranging from $2,500 to $7,500 with interest rates between 5 and 8 percent are available for upgrades including insulation and air conditioning.  CPS will provide a free energy audit to all loan recipients, and certified contractors will
perform the work, plus guarantee it for one year. To apply, call (866) 826-HELP.

For the third consecutive summer, CPS employee volunteers will weatherize 500 inner-city homes belonging to elderly or low-income families with children. The CPS Weatherization Project helps reduce energy usage in selected homes, makes them more comfortable and helps residents save on their utility bills year-round. Work began in April and will continue on
weekends through Sept.20.

CPS also targets older and less energy-efficient, inner-city homes through its Helping Hands program. Thus far, seven inner-city churches are participating in the program that uses community groups as volunteers to weatherize homes of senior citizens, the disabled and low-income families living in single-story, wood-frame dwellings more than 30 years old. They are Corinth Baptist Church, St. Stephen's Church, East St. Paul United Methodist Church, First Baptist Church, St. Philip of Jesus Church, Mt. Zion First Baptist Church and Hot Wells Baptist Church.

CPS provides the project materials, while the partnering organizations provide the volunteer manpower. Volunteers attend a one-time, three-hour training session. Interested persons can call the CPS Community Volunteerism Outreach coordinator at (210) 353-4307.

        Utility Assistance Programs Bartley said that, as a result of anticipated higher utility bills, customers are urged to make timely monthly payments to avoid large past-due balances at the end of the summer.

Customers can find a list of utility assistance programs on the CPS Web site at www.citypublicservice.com.

Economically challenged customers also can apply for utility assistance through the Residential Energy Assistance Partnership (REAP), a foundation established last year to help low-income families pay utility bills and learn about money-saving conservation measures. Eligible CPS customers will receive $100 toward their utility bill.

The City of San Antonio's Community Initiatives Department and the Bexar County Housing and Human Services Department will disburse funds beginning June 2. Interested persons should call the City at 207-7830 Monday through Friday or Bexar County at 335-6770 Tuesdays at 9 a.m. to make an appointment.  Bexar County residents also can request an application by mail from Bexar County Housing and Human Services, 233 N. Pecos # 590, San Antonio, Texas 78207.   CPS is one of the nation's largest publicly owned energy systems, serving over 600,000 electric customers and more than 300,000 natural gas customers. Acquired by the City of San Antonio in 1942, CPS recently observed its 60th anniversary of municipal ownership. Proceeds from CPS remain in San Antonio and account for more than one-fourth of the City's annual operating budget for police and fire protection, street
improvements, parks and other services.  CPS has earned the highest financial rating of any electric utility in the U. S.  More information can be found on the World Wide Web at www.citypublicservice.com.
-- CPS --

Milton E. Randle
Local Government & Community Relations
City Public Service