Higher CenterPoint gas charge wins key approval from judge

Residential customers of Minnesota's largest natural gas company could face a significant increase in the basic monthly charge under a recommendation issued Wednesday by an administrative judge.

CenterPoint Energy's basic charge would go from $8 to $12 per month if Administrative Law Judge LauraSue Schlatter's findings are accepted by the state Public Utilities Commission later this year.

The basic charge is applied to all residential customers regardless of how much gas they use. CenterPoint, which serves 823,000 customers in Minnesota, asked for an even bigger increase in that charge, saying it should more fairly reflect the cost of serving customers.

The 50 percent increase would be offset by a corresponding drop in the metered charge. So the net effect would be higher bills for customers in the summer, when gas usage is lower, and flat or lower bills in winter, when heating costs hit pocketbooks most.

Consumer and environmental groups had complained about CenterPoint's proposal to boost the basic charge to $15 per month, or 87 percent, saying it would produce higher bills overall for customers who use the least natural gas. Those who burned the most gas would benefit from the change.

In her findings, Schlatter said she was "very sensitive" to those concerns. "People who are on fixed incomes and have worked to conserve their gas usage are in a particularly difficult position," she wrote.

Yet some low-income customers, she said, are big gas users who are hurt by the current rate structure.

If the recommended increase is approved by the commission, CenterPoint would have the highest monthly charge of any Minnesota gas company. Xcel Energy, the state's second largest gas utility, charges a $9 monthly rate.

Overall, CenterPoint sought a 5 percent increase in rates, and most customers have been paying nearly that in higher interim rates since October. Schlatter, who held a trial-like review of the rate increase request, recommended paring it back in some places and giving the company's investors a 9.59 percent return on equity, instead of the 10.3 percent that CenterPoint requested.

It was not immediately clear how much those findings would reduce the overall rate increase.

CenterPoint sought the increase largely to increase investments in modernizing its natural gas system, including replacing cast-iron pipe installed before the 1930s.

The rate increase applies only to the cost of delivering natural gas. Natural gas price changes are passed on to customers in a fuel adjustment, and utilities don't earn a profit on the fuel itself. Natural gas prices generally have been lower than the peak year of 2008.