CPS Energy’s Garza Is Tailor-Made For Challenges Of San Antonio

Rudy Garza, the interim president and CEO of Greater San Antonio’s CPS Energy, is, you might say, the complete package. His career appears bespoke for the challenges of the largest city-owned electric and natural gas utility in the nation.

When the top job opened up last November, the mayor and city council didn’t need to look outside for a qualified person. Garza was there with a resume extraordinarily suited to the needs of the moment at CPS Energy: trained in engineering with political cred.

Like other utilities in the state, it is still dealing with the fallout from the catastrophic Winter Storm Uri in February 2021, when 5 million Texans were without power for days, and 246 people lost their lives by the official count.

Garza earned a bachelor’s degree in electrical engineering from the University of Texas in Austin and a master’s degree in management from the University of Northern Texas.

He is also the first Hispanic to head the utility in a city that is largely Hispanic. He is proud of that, as proud as he is of being through-and-through a Texan.

I have found him to be unassuming and charming. He says his Texas heritage comes out in his affection for hunting and fishing — but it is mostly just being out in nature which appeals to him.

Garza was born in Corpus Christi and started his career in an engineer role with TXU, the big investor-owned utility. He moved from engineering to government affairs in Austin, where he rose to head TXU’s office of legislative affairs.

When TXU was bought by a venture capital consortium, headed by the hedge fund KKR, Garza accepted an offer from the city of Corpus Christi. “It was a big cut in income,” he told me when I sat down with him at CPS Energy headquarters in San Antonio.

Lobbyist in Austin and Washington

Garza’s decision to return to his hometown was influenced by family needs. He settled in, prospered, and became a lobbyist, among other things, for the city which took him back to Austin frequently and to Washington.

Most importantly, he learned the ways of politics and especially the ways of city government. As a result of an unexpected opportunity 12 years ago, his path to leading CPS Energy began. “I had to choose between the city leadership career and utility leadership career. And I chose the latter.”

Garza told me, “My grounding is really on the wire side of the business. I’ve had a pretty good breadth of experience over the whole utility value chain, from getting power plants permitted to working well with the unions.”

But, as he said, his trajectory into leadership came about through his work in Austin and Washington. “I’ve been responsible for passing nearly 40 pieces of utility legislation,” he said.

“For five years at CPS Energy, I led the wire side of the business and things were pretty solid. When I left, our reliability numbers were great, our projects were on time and on budget, and I had great relations with our unions.”

A note on the wires: CPS Energy serves all of Bexar County and parts of seven other counties. Its service area covers 1,566 square miles.

“I left that for the customer side of the business. My expertise is really in how the electricity market works. I’m familiar with the deregulated market — really familiar with ERCOT and how it works,” Garza said, adding, “I’ve been the chief policy person for this utility.”

My impression of Garza is of a man with a cool head who loves the business of making and distributing electricity but has found he is good — maybe better than good — at the policy issues which all utilities face.

While, like other utility executives in Texas, he is appalled at the statewide mismanagement which occurred during the deep freeze in February 2021, Garza is looking beyond recrimination. He told me when we discussed the issues that arose from Uri that he wants ERCOT to have guide rails for future extreme events.

CPS Energy isn’t availing itself of the securitization option – issuing bonds to borrow money in the market and spreading the Uri-derived costs over time. Instead, CPS Energy received approval from San Antonio City County to recover its paid, legitimate fuel costs. The term of art here is “creating a regulatory asset.” Either way, its customers will pay over many years without being hit all at once. But, in the end, the cost to customers will be lower due to CPS Energy’s stellar credit rating that allows it to borrow at lower interest rates than the securitization option.

Largest Solar Utility in Texas

CPS Energy has a diversified portfolio of generation which amounts to about 6,000 MW of baseload: 1,300 MW of coal, 1,100 MW of nuclear, 3,400 MW of gas, and it contracts for 1,050 MW of wind and 550 MW of solar. CPS Energy is about to add 900 MW of solar, taking the utility up to about 1,600 MW of solar, further cementing its current position as the utility with the largest solar portfolio in Texas.

By 2040, the utility plans to achieve 50 percent or more power supplied by renewables and to have shed much of their fossil fuel dependence.

By year’s end, Garza told me, CPS Energy will present its Board of Trustees which manages it with some options on the coal plants, which are still quite young but out-of-step with the environmental needs of today.

San Antonio is one of the Texas cities that is attracting an influx of high-tech companies, including many that have data centers which require large amounts of uninterruptible power. The demands on the utility are growing at 2 percent a year, and it has to grow accordingly. Also, CPS Energy has a responsibility to serve Joint Base San Antonio. It is a giant customer – CPS Energy’s top electric customer.

The growth imperative doesn’t worry Garza. He feels the resources – especially in wind and solar — are there to handle it.

What worries him? Like every other utility CEO I have spoken to, it is cybersecurity.

Except for the bleak days in the middle of Uri, the utility has managed to keep the lights on for more than 160 years and to grow with San Antonio, home of the Alamo. The city is also home to the River Walk, one of the most admired and copied urban renovation projects in America — by chance, a few hundred yards from CPS Energy’s new LEED Gold headquarters.