Have you noticed that your CenterPoint gas bill is up this year? You're not alone. In addition to CenterPoint's rate hike, some of those higher costs are from a five-day period in February 2021 when wholesale fuel prices spiked 4,000%. If the utility prevails, customers will be paying for those five days of fuel costs for the next five years.
As a follow-up to the Star Tribune article from last year ("Xcel, CenterPoint make millions while customers get stuck with bills after February storm") I want to provide more background about why the city of Minneapolis is demanding that the Minnesota Public Utilities Commission (PUC) make CenterPoint Energy share the burden of excess wholesale gas costs from Winter Storm Uri that hit Minnesota and crippled Texas in February last year. After rejecting some costs early on and spreading any remaining costs over 63 months to ease the impact on customers, the PUC plans to decide this summer how much of the $466 million still in question customers will have to pay. Last month the Minnesota Office of Administrative Hearings recommended that customers pay the full amount. Minneapolis disagrees.
Minnesota law requires utilities to charge "just and reasonable" rates and puts the burden on utilities to show that they acted prudently when incurring costs that they want to pass on to customers. Any doubts to the reasonableness of a rate increase must be resolved in favor of the customer. Fossil gas utilities are expected to act prudently and reasonably to protect ratepayers from risk. In this case, CenterPoint did not protect customers, and therefore the increased rates are neither just nor reasonable.
Intense regulatory scrutiny is necessary because Minneapolis gas customers do not have a choice in obtaining service, as CenterPoint is a fossil gas monopoly in our city. In this case, the costs requested by CenterPoint for the February 2021 storm are not justified and will hit our poorest and BIPOC communities the hardest. We rely on utility companies to do everything they can to mitigate the impact of wholesale market volatility. In fact, I believe that as a public utility, CenterPoint's healthy 2021 earnings at 8.5% per share are only possible because of the public it serves as a government-granted regulated monopoly. If this rate increase is not reversed, we run the risk of similar pricing events occurring in the future.
Meanwhile in 2021, as customer bills went up, CenterPoint's CEO enjoyed a raise and total compensation of $38 million, up from $12 million before the pandemic, something the utility's own shareholders objected to.
And, an in-depth report from the Citizens Utility Board of Minnesota reveals how CenterPoint made more than $1 billion from its sale of equity in Energy Transfer, which it had acquired through a merger involving a CenterPoint affiliate. Why does this matter? Because Energy Transfer is a wholesale gas provider accused of price-gouging during Winter Storm Uri and exacerbating the price spike that CenterPoint wants customers to pay for.
During an earnings call with investors in May, CenterPoint's CEO bragged about how "Within four months of the merger … we sold 100% of our common units at a 20% premium to Energy Transfer's unit price when the transaction was announced last February. Not a bad outcome for those shareholders who thought we would never get out of this investment, let alone receive approximately $1.3 billion of net after-tax proceeds from it."
The city of Minneapolis experienced firsthand how CenterPoint could have done more to control costs during Winter Storm Uri. Minneapolis has 16 accounts with "interruptible" gas service, meaning the utility should have asked us to reduce our gas use at these locations when it saw prices spiking out of control, saving the city money and reducing wholesale pricing pressure for all customers. The impact on our city enterprise alone is expected to be $500,000 for those five days — and many millions more for our residents and businesses.
Minneapolis was denied the opportunity to curtail energy use and reduce cost based on pricing information that the utility had access to but the city did not. Further, its decision to ignore interruptible customers and not offer the opportunity to conserve resources is proof that CenterPoint mismanaged the pricing event thus contributing to higher wholesale prices.
These are just a few reasons the excess fuel costs must not simply be assigned to customers and why Minneapolis asked the PUC to hold CenterPoint financially responsible for excess costs related to the February 2021 winter storm.
Without question this is a very complicated issue. But what's not complicated is the fact that climate change is upon us and regulated utilities continue to assert that fossil gas investments are affordable and reliable. This weather event has exposed the risk of relying on an energy source whose costs can swing sharply, whose leadership seems to be more interested in stock price increases than consumer costs and the incredible and undeniable need to decrease reliance on fossil fuel.
If you feel strongly, too, the PUC welcomes comments by e-mail to firstname.lastname@example.org.
Lisa Goodman is a member of the Minneapolis City Council and the Clean Energy Partnership Board.