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SAN ANTONIO, Texas – September 16, 2025 – On September 15, 2025, CPS Energy and PROENERGY entered into a definitive agreement under which CPS Energy has agreed to acquire four natural gas power generation facilities with an aggregate electric capacity totaling 1,632-megawatts (“MW”) for $1.387 billion, subject to standard net working capital adjustments. The transaction is expected to close in the third quarter of 2025. Located in the Electric Reliability Council of Texas (“ERCOT”) market, the acquired assets include state-of-the-art, recently constructed peaking natural gas plants in Harris, Brazoria, and Galveston Counties. The acquired assets are dual-fuel capable, providing CPS Energy future optionality to transition to a hydrogen fuel blend that would enable reduced carbon emissions.

In addition to the purchase agreement, CPS Energy and PROENERGY have entered into Operations and Maintenance (O&M) and Total Care Services Agreements (TCSA). Under these agreements, PROENERGY will continue to staff, operate, and maintain the acquired units, ensuring safe and reliable operation and maintenance of the power plants.

This purchase is in alignment with CPS Energy’s community-led and board approved generation and resource plan. Pursuing unique opportunities, such as acquiring these new operating assets in ERCOT, presents a lower cost and lower supply chain risk alternative to building new power facilities, and supports CPS Energy’s long-term objectives of providing reliable, affordable, and cleaner energy to its customers and community.

“By acquiring recently constructed, currently operating modern power plants that utilize proven technology already in use by CPS Energy, we avoid higher construction costs, inflationary risk, and long timelines associated with building new facilities – while also enhancing the reliability and affordability of the CPS Energy generation portfolio,” said Rudy D. Garza, President and CEO of CPS Energy. “We are getting the best of both worlds by securing new infrastructure without delay while also strengthening the power supply for our community. This acquisition secures reliable capacity today – at a lower cost – and is a win for the customers of CPS Energy, the city of San Antonio and all the communities we serve by meeting their long-term energy needs. As we add resources to meet the needs of our fast-growing communities, we will continue to look to a diverse balance of energy sources that complement our portfolio, including natural gas, solar, wind, and storage, keeping our community powered and growing.”

J.P. Morgan is acting as the exclusive financial advisor and Dykema Gossett PLLC is acting as legal advisor to CPS Energy with respect to the transaction. CIBC Capital Markets is serving as exclusive financial advisor and Latham & Watkins LLP is serving as legal advisor to PROENERGY.

About CPS Energy  
Established in 1860, CPS Energy is the nation’s largest public power, natural gas, and electric company, providing safe, reliable, and competitively-priced service to more than 950,000 electric and 389,000 natural gas customers in San Antonio and portions of seven adjoining counties. Our customers’ combined energy bills rank among the lowest of the nation’s 20 largest cities – while generating $9.6 billion in revenue for the City of San Antonio for more than 80 years. As a trusted and strong community partner, we continuously focus on job creation, economic development, and educational investment. We are powered by our skilled workforce, whose commitment to the community is demonstrated through our employees’ volunteerism in giving back to our city and programs aimed at bringing value to our customers. CPS Energy is among the top public power wind energy buyers in the nation and the number one utility in Texas for solar generation.

CPS Energy has issued a request for proposal (RFP) to acquire up to 400 megawatts (MW) of wind energy through one or more Power Purchase Agreements (PPAs). This initiative is part of the utility's Vision 2027 generation plan to address the increasing energy needs for the growing community. The RFP marks the first time in over a decade that CPS Energy has specifically sought proposals for wind projects. CPS Energy's target to contract up to 400 MW of wind capacity would bring the utility's total wind generation to 1,467 MW.

"Increasing wind capacity is good for customers and strengthens our diverse and sustainable energy portfolio," said President and CEO of CPS Energy Rudy D. Garza. "While it can't replace baseload sources like natural gas and nuclear, wind energy is crucial to balance our grid demands. This is the reason why we have a comprehensive approach to our generation mix."

CPS Energy currently has approximately 1,067 MW of wind generation in its portfolio, maintaining its position as the second-largest buyer of wind energy in the state. This latest solicitation follows CPS Energy's recent announcement of an agreement with Avangrid to add an additional 160.8 MW of wind to its existing portfolio.

The utility's RFP supports CPS Energy's Vision 2027 plan, which contemplates the retirement of 2,541 MW of older generation capacity before 2030. As part of this future generation plan, since 2023, CPS Energy has added 1,735 MW of natural gas, 113 MW of wind capacity, 480 MW of solar, and 50 MW of energy storage. It has another 254 MW of solar and 470 MW of energy storage under contract.

These efforts also align with CPS Energy's commitment to the City of San Antonio's Climate Action & Adaptation Plan (CAAP), which includes a Board of Trustees resolution to support the CAAP's goal to become carbon neutral by 2050 with interim goals of reducing greenhouse gas 71% by 2040.

CPS Energy will be accepting proposals for projects 20 MW and greater in capacity. The deadline for interested bidders to submit a proposal is Friday, August 29, 2025, by 5 p.m. Central Time.

Submissions must be made using the Power Advocate Portal link.

About CPS Energy

Established in 1860, CPS Energy is the nation's largest public power, natural gas, and electric company, providing safe, reliable, and competitively-priced service to more than 950,000 electric and 389,000 natural gas customers in San Antonio and portions of seven adjoining counties. Our customers' combined energy bills rank among the lowest of the nation's 20 largest cities – while generating $9.6 billion in revenue for the City of San Antonio for 80 years. As a trusted and strong community partner, we continuously focus on job creation, economic development, and educational investment. We are powered by our skilled workforce, whose commitment to the community is demonstrated through our employees' volunteerism in giving back to our city and programs aimed at bringing value to our customers. CPS Energy is among the top public power wind energy buyers in the nation and number one in Texas for solar generation.

July 22, 2025 (SAN ANTONIO) – CPS Energy announced today an agreement with Modern Hydrogen on a new project to explore the potential for increasing grid resiliency and enabling cleaner power generation from natural gas. This project aims to address the growing demand for power resulting from population growth and increasing electricity loads.

CPS Energy will pilot Modern Hydrogen’s technology to convert natural gas into clean hydrogen as an ongoing gas-decarbonization service.  The project represents the first step in a long-term strategic investment in producing reliable, cleaner power at scale, as set forth in CPS Energy’s Vision 2027, which includes a commitment to a diverse power portfolio that incorporates new technologies.

 “We need more energy, including natural gas, to serve our customers’ growing needs,” said President and CEO of CPS Energy Rudy D. Garza. “We are committed to San Antonio’s Climate Action and Adaptation Plan (CAAP). By exploring this innovative opportunity to produce clean hydrogen using our existing natural gas system, we are moving forward on our commitment to deliver reliable, affordable, and cleaner energy for our community.”

CPS Energy will be one of a few utilities in the nation to pilot distributed natural gas pyrolysis technologies and carbon capture. Instead of combusting natural gas and releasing or capturing CO2, Modern Hydrogen uses a process to break down the hydrocarbons that are in natural gas, producing hydrogen and solid carbon. The solid carbon is captured and reused in products like asphalt for infrastructure projects.

“San Antonio is making a smart, Texas-led bet on natural gas and clean power generation,” said CEO of Modern Hydrogen Tony Pan. “San Antonio and CPS Energy are showing the promise of American natural gas, for both clean power generation, and for better materials to build our infrastructure. They’re showing the country what it looks like to lead on reliability, energy security, and affordability.”

“Creating new markets for Texas natural gas is both a good energy policy and a long-term investment in the regional economy,” said Chairman of the Railroad Commission of Texas Jim Wright. “Deployments like this show how innovative technologies can unlock new value from the Eagle Ford and other prolific basins. This is about keeping American energy competitive, reliable, and local—exactly the kind of leadership Texans expect.”

The pilot is intended to be scalable while maintaining reliability and affordability for CPS Energy customers. If successful, future deployments of this technology may benefit regional power hubs, fleet depots, or transit systems in reducing grid strain. “I’ve modeled the limitations of electrification and centralized hydrogen,” said University of Houston Petroleum Engineering Professor Christine Ehlig-Economides. “By tapping methane in the existing US pipeline network, distributed pyrolysis is one of the few pathways that may allow ubiquitous local hydrogen generation without massive disruption.”

About CPS Energy

Established in 1860, CPS Energy is the nation’s largest public power, natural gas, and electric company, providing safe, reliable, and competitively-priced service to more than 950,000 electric and 389,000 natural gas customers in San Antonio and portions of seven adjoining counties. Our customers’ combined energy bills rank among the lowest of the nation’s 20 largest cities – while generating $9.6 billion in revenue for the City of San Antonio for 80 years. As a trusted and strong community partner, we continuously focus on job creation, economic development, and educational investment. We are powered by our skilled workforce, whose commitment to the community is demonstrated through our employees’ volunteerism in giving back to our city and programs aimed at bringing value to our customers. CPS Energy is among the top public power wind energy buyers in the nation and number one in Texas for solar generation. 

About Modern Hydrogen

Modern Hydrogen is an energy & materials company based in Seattle, WA. Modern’s proprietary natural gas pyrolysis technology converts regular pipeline natural gas into high-value hydrogen and produces solid carbon, which is used to strengthen asphalt pavement. By producing hydrogen at the point of use, Modern Hydrogen helps utilities and industry extend the value of their existing energy infrastructure and reduce emissions while maintaining energy security and affordability. Backed by top investors and customers, including Bill Gates, NextEra Energy, National Grid, CPSE, and NW Natural, Modern Hydrogen is redefining how natural gas resources can become more valuable and sustainable within and beyond the energy industry.