Published November 23, 2022
On September 23, the Minnesota Public Utilities Commission (PUC) accepted and adopted a settlement that established increased rates for CenterPoint Energy Minnesota Gas (CenterPoint) customers. Residential customers will see the interim rate of 3.9 percent which went into effect on January 1, 2022, become permanent. Below is a brief summary and background information about CenterPoint’s new rates, which are expected to go into effect on January 1, 2023. It is important to note that this rate increase is separate from the cost of gas increases we are seeing on natural gas bills. The cost of gas is based on market rates and is passed onto customers without a markup.
In November of last year, CenterPoint filed a request to increase its base revenues from customers by $67.1 million dollars each year, a 6.5 percent increase over its then-current revenues. If you’re looking at a CenterPoint bill, this increase could affect the fixed “basic charge” and the per-therm “delivery charge” for gas. (The cost of the gas itself is passed through to customers separately.) Rate hikes like this must be approved by the PUC. While this request was pending, the PUC approved an interim rate increase of 3.9 percent for residential customers and 5.1 percent for non-residential customers. The case was referred to the Office of Administrative Hearings (OAH), where a judge presided over a contested case hearing, the typical procedure to develop a detailed record regarding whether a utility’s requested rate hike is justified. At the start of 2022, several public hearings were conducted across CenterPoint’s service territory and the parties to the case began negotiations. Eventually, the parties reached a settlement, and the judge recommended approval. While multiple state agencies and organizations participated, CUB was not a party to this case.
The PUC approved the settlement in September 2022. Instead of CenterPoint’s requested $67.1 million increase, the settlement raised revenues by $48.5 million, or 4.2 percent. Residents will see a slightly lower increase than other customers. The settlement kept the residential rate increase at 3.9 percent, the same as the interim rate increase that customers are already paying. Additionally, although residential customers’ delivery charges will increase slightly, their monthly basic charges will stay the same. A one-time charge of approximately $1.00 will be applied to residential customers’ bills to make up for a small under-collection in interim rates. Similar one-time charges will be assessed to other customer classes, such as commercial and industrial customers, based on the difference between interim and final rates. Those classes of customers will also experience rate increases ranging from 3.1 percent to 11.7 percent, with dual fuel transport customers seeing the most significant rate increases at 12.7 to 21.2 percent.
The settlement also set CenterPoint’s return on equity at 9.39 percent, lower than the 10.20 percent that CenterPoint had requested. A reduction in the return on equity is significant because it represents the value that CenterPoint earns on its investments. While a higher return on equity produces more profits for the Company, it also increases rates because Minnesotans cover its cost.
As referenced above, even though base rates won’t change from the past year, the cost of gas itself is continuing to increase. Gas costs are passed straight through to customers, so we anticipate higher heating bills again this season. If you or someone you know would like help reducing your energy costs, we are here to help. You can contact us by calling 651-300-4701 or emailing us at email@example.com.
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