CenterPoint's residential customers would see their bills increase 3.9% in a rate case settlement filed Monday with Minnesota public utility regulators.

Overall, the settlement would raise CenterPoint's ratepayer revenue by 4.7%, or $48.5 million, with commercial customers picking up a larger share of the increase.

The company, Minnesota's largest natural gas provider with around 900,000 customers, had asked for a revenue increase of $67. 1 million — which would have been an increase of about 6.5%.

CenterPoint settled the rate case with the Minnesota Attorney General's Office, the Minnesota Department of Commerce, two clean energy organizations — Fresh Energy and the Minnesota Center for Environmental Advocacy (MCEA)— and the Suburban Rate Authority.

The settlement must be approved by the Minnesota Public Utilities Commission (PUC). The PUC usually approves such settlements.

CenterPoint said its average residential consumer's bill would rise $2.70 a month on an annualized basis. The company says that the average customer now pays $830 annually. CenterPoint's monthly fixed charged for residential service will remain at $9.50 a month.

"This settlement is a result of detailed negotiations between CenterPoint Energy and the parties in the proceeding," the utility said in a statement. "It limits the bill impact on our customers while providing adequate revenue for continued investments in a safe, reliable infrastructure."

The settlement also would decrease the amount of "free gas main footage" allowed to CenterPoint when it extends gas service into new terrain. Now, the first 150 feet of a mainline extension is free to customers that would benefit from the extension, while all ratepayers pick up that cost.

CenterPoint had said it would decrease that to 125 feet, while clean energy groups wanted only 40 feet of free footage. The more footage, the more potential incentive there is to extend to the natural gas system. They settled at 100 feet.

"MCEA is pleased that this settlement moves away from practices that incentivize reliance on increasingly irrelevant and costly fossil fuel gas," said Amelia Vohs, regulatory attorney for the group.

CenterPoint's rate hike request last fall came at the same time other major gas and electric utilities hit the PUC with similar petitions — and as consumers already were reeling from rising energy prices.

Natural gas prices have been trending well above year-ago levels for several months. And those higher commodity gas costs are passed down directly to consumers. Regulated rates apply only to a utility's cost of distributing gas.

Plus, customers of CenterPoint — and other Minnesota gas utilities — last fall began paying a special surcharge stemming from a historic February 2021 storm that ravaged southern gas-producing regions. Commodity gas prices shot up as much as 4,500 % in the Midwest.

CenterPoint customers alone are on the hook for $409 million in surcharges. Based on gas usage, the monthly surcharge will average about $4.86 per month for a residential customer from September 2021 to November 2026, CenterPoint says.

In this high cost environment, the PUC in December took the rare step of not granting CenterPoint the full 5.1 % interim rate increase it had requested. Instead, the PUC allowed a 3.9 % interim rate increase that went into effect Jan. 1.