A tiered-pricing experiment meant to encourage conservation was deemed unfair.
Minnesota customers of CenterPoint Energy will get refunds for artificially high natural gas bills that resulted from its 16-month experiment with tiered rates meant to encourage conservation.
The state Public Utilities Commission on Tuesday ordered refunds to customers who paid more because the utility billed them for "monthly" periods that exceeded 32 days.
Longer billing periods happen because utilities don't always read the meter at exactly one-month intervals. For customers paying a flat rate, it's not a problem.
But CenterPoint in 2010 adopted five escalating rates. As customers used more natural gas in a billing period, they paid more for it. If the meter reading stretched to beyond 31 days, some customers got bumped into higher tiers and paid more as a result.
Tiered pricing was suspended last October after critics said it was unfair.
It was not immediately known how many customers will get refunds, or for how much. The customers in line for refunds are those who had extended billing and whose charges were in the two highest-priced tiers.
Ben Wogsland, a spokesman for the Minnesota attorney general, said data obtained from CenterPoint indicate the number of affected customers could be in the hundreds of thousands.
Some of these customers' monthly billing periods exceeded 40 days, said Wogsland, who applauded the PUC order.
"It gets us back to a fair and level playing field, the way it has always been in the past, where the ratepayers pay the cost of the commodity," he said.
CenterPoint, the state's largest natural gas utility, serves nearly 800,000 customers in 369 municipalities, including Minneapolis. Its tiered-rate program, suspended last October, applied to residential and small commercial customers during the 2010-2011 heating season.
Jeff Daugherty, the company's director of regulatory affairs, said in an e-mailed statement that because the PUC ruling was just issued Tuesday, "we do not yet know exactly how much will be refunded to our customers."
"We do plan to communicate information about the refunds to our customers via their customer bill, and we anticipate the refunds to occur in late May or early June," Daugherty said.
The company was the first Minnesota gas utility to try conservation-based rates. But the three-year pilot program quickly ran into opposition. The attorney general's office charged that heating bills soared for some low-income customers who couldn't afford efficiency upgrades and for home-bound people, such as retirees or those with young children, who keep thermostats set higher all day.
CenterPoint and several conservation groups are studying what went wrong, looking for ways to modify the program and possibly revive it in the future. But Wogsland said the attorney general opposes bringing the program back.
"We think it should be terminated," he said.
As for the refunds, the PUC order said they won't come out of CenterPoint's profits. Regulators said the utility will be able to allocate the cost of the refunds proportionally across residential and small-business customers.
David Shaffer 612-673-7090