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CenterPoint asks to increase natural gas rates

Published August 9, 2017

Last week, CenterPoint Energy asked the Minnesota Public Utilities Commission (PUC) for permission to increase the rates it charges customers for natural gas utility service.

CenterPoint provides natural gas service in much of the Twin Cities metropolitan area and communities in central and southern Minnesota and as far north as Brainerd.

CenterPoint has asked for permission to raise rates to collect an additional $56.5 million from its customers each year, or about 6.4% more than it collects now, as the Star Tribune reported. It’s proposing that residential customers’ rates would increase more than average, about 8%, or $4.50 on the average monthly bill of $56.

The rates that CenterPoint is asking to increase cover the costs of utility service, including pipeline replacements and other projects — but not the cost of the gas itself. The cost of gas is passed directly to customers and varies on an ongoing basis, and it makes up a large portion of most customers’ bills.

In addition, CenterPoint is asking to continue its decoupling program, which “decouples” the utility’s revenue from the amount of its gas customers use. The intention of decoupling programs is to eliminate a utility’s financial incentive to sell more gas. Likewise, with decoupling, it shouldn’t hurt the utility’s bottom line if customers increase their energy efficiency, so the utility won’t have a financial reason to discourage efficiency. CenterPoint customers see a decoupling adjustment as a line on their bills. If CenterPoint customers, as a whole, use more gas than projected, rates are adjusted downward, so the utility doesn’t earn more money than intended. If customers use less gas than projected, rates are increased.

What happens next?

The Public Utilities Commission will open a rate case: a public legal process in which parties (like CUB) can participate to evaluate whether the request is reasonable and how rates should change, if at all. There will be opportunities for customers to formally comment on the proposal. A rate case generally takes at least a year.

More quickly, CenterPoint has asked for an “interim” rate increase of 5.8% starting as early as October 1. Utilities generally ask for — and the PUC often grants — interim rate increases while their full increase request is under consideration. If the final rate increase that’s approved ends up being above the interim increase, rates would go up again at that time. If the final increase is less than the interim rate increase, customers would receive refunds on their bills.

CUB is in the process of reading through the information that CenterPoint has filed with the Public Utilities Commission to understand all of the issues presented and the company’s arguments. We’ll provide updates as this process moves forward.

Author: Annie Levenson-Falk

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