San Antonio City Council Session B - March 4, 2026

The meeting, held on March 4, 2026, at 2:05 PM, included two main agenda items: a presentation from CPS Energy on its fiscal year 2027 budget and financial health, and a joint update from CPS Energy, SAWS, and the Development Services Department on the growth and regulation of data centers (centros de información) in San Antonio. Council members asked detailed questions about affordability, infrastructure, environmental impacts, and community benefits. No formal votes were taken; the discussions were informational and set the stage for future policy decisions.

Discussion Items

CPS Energy Budget and Financial Health

• CPS Energy presented its FY2027 budget, highlighting a $1.7 billion capital budget, with 80% funded by debt and 20% by cash. The budget assumes a rate increase to cover a $50 million deficit, though CPS emphasized efforts to minimize increases through operational efficiencies (e.g., AI, drone inspections, cloud optimization) and a 40% reduction in non-emergency overtime.
• Key financial metrics: capitalization rate below 70%, debt service coverage ratio, and liquidity of at least 150 days. The utility serves 28,000 new customers (2,600 electric) and projects $200 million in revenue growth from residential, industrial, and wholesale segments.
• Council members expressed strong support for CPS’s transparency and long-term planning but raised concerns about potential rate increases and their impact on vulnerable residents. Councilor Maki Rodríguez asked about the timeline for the Integrated Resource Plan (IRP) and technology investments, noting that a 5-6 year implementation seemed lengthy. Councilor Castillo requested detailed cost breakdowns for each technology item and a strategic plan for properties. Councilor Galván questioned transmission project timelines and carbon intensity (currently 800-900 lbs/MWh, with expected reductions). Councilor Mungía emphasized the need for rate restructuring that protects low-income customers and asked for more frequent community engagement. Councilor Core praised the presentation but called for a simplified version for residents.
• CPS leadership (Corey, Rudy) committed to returning with more detailed reports on technology costs, the cost-of-service study, and a five-year rate plan. They noted that the $50 million deficit is manageable and that rate discussions will occur after summer 2026.

Data Centers (Centros de Información)

• CPS Energy (Elena) reported 59 data center projects in the pipeline: 335 MW under contract (high probability) and 1,700 MW in feasibility stages. For every 100 MW of load, the city receives $8 million in economic benefits. Currently, 21 data centers operate in San Antonio, and the utility is implementing pre-construction deposits ($7,500–$150,000) and long-term agreements to protect smaller customers.
• SAWS (Donovan) detailed water usage: current data centers use 0.1% of potable water and 1.25% of recycled water. The recycled water system has 35,000 acre-feet capacity, with 20,000 currently used. The remaining 15,000 acre-feet can serve near-term growth, but expansion (e.g., Leon Creek plant connection) is needed by 2030. SAWS recommended policies to maximize recycled water use, require backup water storage, and implement impact fees.
• Development Services (Amin Tomás) proposed zoning amendments to limit data centers to industrial zones (C-1, I-1) and add buffers (e.g., 500 feet from residential areas). The current UDC allows data centers in all zones except residential, which has led to land-use conflicts.
• Council members broadly supported the need for data center growth but insisted on safeguards. Councilor Galván (District 6) noted a high concentration of projects and requested community benefits, workforce local hiring, and mitigation of noise, traffic, and light pollution. Councilor Viagran emphasized protecting neighborhoods and ensuring infrastructure investments are equitable. Councilor White highlighted economic benefits (high-paying jobs, property tax revenue) and urged caution not to over-regulate. Councilor Spears asked about water usage and technology options (e.g., liquid cooling). Councilor Maki Rodríguez questioned the impact on schools, parks, and wildlife, and requested proximity buffers. Councilor Castillo asked about the pilot program for behind-the-meter generation (using natural gas, diesel, or batteries) and whether it would accelerate data center arrival. CPS clarified that the pilot would allow up to 15 customers to test self-generation, but it is not the only path for development.
• Councilor Core asked about incentives: only one data center (Microsoft, 2013) received a partial rebate; no other tax incentives have been given. Councilor González sought protections for CPS if large loads later reduce operations or close, noting that 10-year agreements and collateral are in place.
• Councilor Mungía called for a transparent process and minimizing NDAs. Councilor Aldrete de Gabito supported UDC amendments but stressed inclusive public engagement. Councilor Castillo supported the I-1 zoning recommendation and landscape requirements.

Key Outcomes

• Council directed staff to begin the UDC amendment process, with a focus on limiting data centers to industrial zones, adding buffers, and addressing land-use concerns. The timeline will be discussed at the next PCDC (Planning Commission) meeting.
• Council expressed support for continuing collaborative work with CPS Energy and SAWS to develop a comprehensive data center policy, including water use requirements, community benefits agreements, and infrastructure planning.
• CPS Energy will return with a detailed cost-of-service study and an update on the technology investment plan after summer 2026. SAWS will develop a master plan for recycled water expansion by 2030.
• The council requested that CPS and SAWS provide simplified public-facing materials on data center impacts and benefits.
• No formal votes were taken; all actions are informational and preparatory for future ordinances.