Electronic job

The interim CEO of CPS Energy is expected to compete for the position

Yes SCSThe five directors “are happy with the work my team and I have done and want me to consider the permanent role I would consider,” he said.

Garza was named interim chief executive in early November following the resignation of then utility CEO Paula Gold-Williams. She quit amid the political and financial fallout from last year’s deadly winter storm and a scandal stemming from then-chief operating officer Fred Bonewell’s personal spending using company money. Gold-Williams had promoted Bonewell a few months earlier.

CPS Energy’s five-member board hired an executive search firm early last month to find potential chief executive candidates.

On ExpressNews.com: Fiduciary turbulence: a battle may be brewing over the search for the next permanent CEO of CPS Energy

Until now, Garza had avoided publicly signaling his desire for the job.

Since last fall, it has been a staple of city meetings and public events – as the city-owned utility develops a master plan to produce cleaner electricity in the coming years and reduce emissions. bills from low-income taxpayers in San Antonio.

Janie Gonzalez, the administrator responsible for CEO search, praised Garza at an event last week.

“I don’t want to be part of such a bureaucratic organization that a CEO thinks he lives in a glass castle and you can’t make yourself available, and I think that’s the stark difference between the previous CEO and the current CEO,” Gonzalez said, referring to Gold-Williams.

“I wouldn’t support (Garza) if I didn’t feel he was an authentic leader who really cares about being available to the community,” she said. “That’s the kind of CEO I want.”

Inside track?

As an internal candidate, Garza likely has an advantage over all other prospects, said Carl Mycoff, a Denver-based consultant who helps utilities hire executives.

Mycoff’s company helped CPS hire former CEO Milton Lee in the 2000s, as well as current Austin Energy chief executive Jackie Sargent. In the search for new leaders, utilities hire internal candidates about 60% of the time, Mycoff said.

“Because familiarity doesn’t breed contempt, it breeds contentment,” he said. “Work the advice will do is to balance the uncertainty of someone they don’t know with someone they know.

The compensation of CPS chief executives has been controversial over the years.

Gold-Williams, an inside candidate hired for the top job in 2016, was making about $1 million a year after factoring in the bonus. His income was less than most CEOs of major utilities earn, but many San Anton residents thought that was excessive pay in a city where poverty was rampant.

At the start of the COVID-19 pandemic, CPS suspended its bounty program. As CEO, Garza earns the same base salary as Gold-Williams – $415,000 – but he does not receive any additional bonuses.

Annual compensation for CEOs of 19 large, investor-owned utilities ranged from $6.5 million to nearly $28 million in 2019, according to the Energy and Policy Institute.

The salary is also substantial in some non-profit public electricity companies.

Meanwhile, the Pedernales Electric Cooperative provides power to more than 370,000 customers throughout the Hill Country and pays its CEO just under $500,000 a year. Bluebonnet Electric, which serves 116,000 electric customers in a service area east of Austin, paid its CEO $630,000 in 2019, according to tax filings.

The CPS has unpublished updated financial information since last October. But in 2020, CPS recorded revenues of around $2.5 billion, and the utility serves more than 870,000 electric customers.

“You take people running co-ops, if that was the size of CPS, they would be making over a million dollars a year,” Mycoff said.

Yet CPS is the largest municipally-owned gas and electric utility in the country, so it’s difficult to compare CPS’s compensation to that paid to investor-owned utilities or power cooperatives. CPS pays about 13% of its revenue to the city each month, a burden most electric and gas utilities don’t face.

Executives looking to work in city-owned utilities “have already decided to go into a lower-paying market,” Mycoff said. “The question is really the ‘less’ relative.”

Former CPS administrator Ed Kelley led a 10-month CEO search in 2015 and 2016 that ended with the board selecting Gold-Williams after an unidentified outside candidate rejected the offer from CPS, claiming the salary was too low.

Kelley, whose 10-year term on the board ended in January, urged CPS to include a performance bonus in the compensation structure for the next CEO. He also said Garza should be considered for the CEO position.

With no bonus to offer, Garza said last month that CPS should offer him or the final candidate a higher base salary, according to the San Antonio report.

“If I did the research, I would put between $500,000 and $1 million” as my salary range, Mycoff said. “You could get someone for $600,000, $700,000 or $450,000. But I would do it in relation to the person and what they bring to the table.

He said the CEO search, which began last month, will likely take about another five months.

Mycoff pointed to the Jacksonville Electric Authority, another city-owned utility that provides electricity to 478,000 customers in the North Florida city. former CEO of JEA was charged in March for conspiring to sell the utility and pocket the money from the transaction.

Amid the scandal, JEA hired a new CEO at the end of 2020 with a salary of $560,000 per year with no bonus.

“CPS is bigger, much more complex. It doesn’t quite have the level of issues that JEA is trying to solve,” Mycoff said. “So (CPS) could make $700,000 for somebody.”

It’s tempting to compare CPS to Austin Energy, which is also a city-owned utility — and it’s usually as hot — or as cold — in Austin as it is in San Antonio. But there are some important differences.

Austin Energy serves about half as many electric customers as CPS, and it’s just an electric utility—unlike CPS, it doesn’t operate a natural gas system in its service area.

Sargent, chief executive of Austin Energy, made about $400,000 in 2020. But her hiring was a one-off, Mycoff said.

Mycoff helped recruit Sargent in 2016. At the time, she was working for a utility in Colorado. Sargent had worked at Austin Energy a few years earlier and she wanted to be near her family in central Texas again, Mycoff said.

“If you were trying to recruit Jackie to go to San Antonio, she probably wouldn’t come because of family considerations. So compensation is irrelevant – location was the driver,” Mycoff said.

“If your search company has someone saying, ‘Yeah, I’ll take $450,000 because I have another reason to be in San Antonio,’ then (CPS) can win,” he said. declared. “If your recruiting agency is doing its job well, it should come back with these types of options.”

On ExpressNews.com: End of San Antonio’s last coal-fired power plant in sight; CPS expected to rely more on natural gas

The green ceiling

The CEO’s salary effectively sets a ceiling for other executives. Thus, underpaying a CEO could make it difficult to retain other executives and managers who might receive higher offers elsewhere.

Garza has tried to stem the flow of employees leaving CPS since the utility suspended bonuses. Earlier this year, utility officials said CPS had up to 400 vacancies. The ability to work remotely during the pandemic has made it harder for the utility to retain employees who have received job offers from higher-paying companies in other cities.

In the top echelon of CPS, each of the nine senior managers listed by CPS in its most recent annual report – released in early 2020 – have left public service, except for Garza and chief information officer Vivian Bouet.

The 10 top executives under Garza earn annual salaries averaging about $290,000, according to CPS. Raising Garza’s current salary would give the laundry room the ability to raise the salaries of other executives to keep them on, Mycoff said.

“If all of a sudden you’re sending the signal to people that ‘we’re going to be wise and foolish with our CEO’, what did you tell the staff?” he said. “You said, ‘Go somewhere else, because you’re not appreciated.'”

Mycoff did not work directly with Garza, but said “his reputation in the business is good.”

As CPS’s executive search resumes, Mycoff said the utility needs to weigh the risk of offering inadequate pay for the next CEO as much as it considers the risk of overpaying someone.

“If you get a CEO who isn’t as strategic, was it worth it?” he said. “I say no.”

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