CenterPoint Energy on Friday requested what would be its largest-ever rate hike in Minnesota, and structured it so that residential customers would face higher payments in the summer, when natural gas bills are lowest.
The Houston-based energy company said it needs a $44 million, or 5 percent, increase in revenue mainly because it has doubled investment in pipelines to enhance safety and reliability.
The company serves 806,000 customers in Minneapolis and 259 other communities in the state.
One key feature of the latest rate hike request is that residential customers likely would see little or no increase in winter months, when heating needs can propel the average monthly bill well over $100, according to data submitted with the filing.
But the average customer would see summertime bills jump by a third, from $18 or $19 per month to $24 to $25. Spring and fall would bring more moderate increases. Overall, the increase for a customer using 879 therms, a natural gas measurement unit used on bills, would be 6.8 percent a year.
The varied monthly effects would result from CenterPoint’s proposed 87 percent increase in the residential basic charge — the amount paid regardless of how much gas is used or conserved — and a 24 percent drop in the per-therm delivery charge. These charges are separate from the cost of the gas, which varies with the market price, and represents 60 percent of customers’ bills.
One effect of the proposed changes is that customers who conserve energy wouldn’t reduce their bills as much as in the past. That has some clean-energy advocates worried.
“We are concerned that the rate filing does signal an effort by the company to create some potential disincentives for energy efficiency,” said Joshua Winters, executive director of the Minnesota Public Interest Research Group.
Winters is on the steering committee of Minneapolis Clean Energy Options, a group that recently signed a deal with CenterPoint to advance conservation efforts in the city. He said CenterPoint still deserves praise for its conservation efforts, and the clean energy group will keep working with the company on conservation.
It’s possible that many CenterPoint customers will like the rate structure, given the reaction three years ago when the company tried a different approach. In 2010, the utility established five escalating rate tiers that forced big energy users to pay significantly more. It provoked such an outcry that CenterPoint dropped it 16 months later, and with regulators’ blessing gave refunds to 370,000 customers.
“Everyone across the footprint is going to see a little increase in their bill,” CenterPoint spokeswoman Rebecca Virden said of Friday’s rate hike request.
The company asked the state Public Utilities Commission to authorize an interim rate hike to take effect Oct. 1. It would be slightly less than the proposed rate hike, and if regulators don’t approve the full request, any excess payments would go back to customers. The PUC review likely will take months, and there is no guarantee the utility will get what it wants.
In CenterPoint’s past three rate hikes — filed in 2004, 2005 and 2008 — the commission slashed the original request by 32 percent to 59 percent, according to PUC data. The biggest approved increase was $40.8 million in the 2008 case. CenterPoint had asked for a record $59 million that year.
Virden said customers are paying significantly lower bills because natural gas is priced well below levels in the early 2000s, thanks to the shale-gas boom that boosted production and cut prices. Since 2008, she said, Minnesota customers have saved $2 billion on lower gas prices. CenterPoint makes no profit on the gas itself, passing on to customers any price changes, up or down.
Joe Vortherms, division vice president of CenterPoint’s regional gas operations, said that capital expenditures to modernize infrastructure “are the primary driver of this rate increase.”
In Minnesota, investments in CenterPoint pipelines and other equipment have grown from $70 million a year to $140 million a year, Virden said. The company set up a website to make its case for the increase.
Under CenterPoint’s plan, the residential basic charge would go from $8 to $15 per month. The delivery charge would go down 24 percent from $0.17127 per therm to $0.12943 per therm.
Commercial and industrial customers would also see increases, averaging $55 per month for those with low gas usage to $788 per month for those with high usage, the rate filing said.