March 17, 2021
CenterPoint Energy is proposing to spread the cost of a colossal natural gas price spike — $354 per household on average — over two years to help cushion the blow to Minnesota consumers and the company itself.
The deep freeze that paralyzed Texas last month ignited U.S. wholesale gas prices, leaving Minnesota’s gas utilities with huge bills that they will pass down to ratepayers. CenterPoint residential customers could see their annual gas bill rise by about 50%.
“That’s astronomical,” said Annie Levenson-Falk, executive director of the Citizens Utility Board of Minnesota, a ratepayer watchdog group.
CenterPoint had a $500 million commodity gas tab in Minnesota over a 10-day period in February, 56% more than it spent during the entire year ending June 30, the company said in a filing with the Minnesota Public Utilities Commission (PUC).
“The February market conditions were extraordinary, and as a result, so were the costs incurred,” CenterPoint said in the filing.
The $500 million in extra costs equates to $354 — without interest — for the average Minnesota household, according to Houston-based CenterPoint. The company, Minnesota’s largest gas provider with 879,000 customers, had earlier estimated an average household cost of $300 to $400.
Since CenterPoint must pay its gas suppliers now — and ratepayers won’t pay until later — the company must borrow money, the filing said. CenterPoint’s own financing costs would then be partly passed down to consumers.
So, the average CenterPoint household would pay an extra $394 including $40 in financing charges. To put that in perspective, CenterPoint said its average customer pays about $672 per year.
About half of that comes from the wholesale cost of gas. CenterPoint and other utilities pass that commodity cost directly to consumers without any markup.
Due to the big freeze last month, Minnesota’s second- and third-largest gas providers — Xcel Energy and MERC — estimated last month that their average residential customer’s bill would rise respectively by $250 to $300 and $225 to $250.
Those companies have yet to file a cost-recovery proposal with the PUC.
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