Who is CenterPoint Energy?
CenterPoint Energy, Inc., headquartered in Houston, Texas, is a domestic energy delivery company that includes electric transmission & distribution, natural gas distribution and competitive natural gas sales and services operations. The company serves more than five million metered customers primarily in Arkansas, Louisiana, Minnesota, Mississippi, Oklahoma, and Texas. The company also owns a 58.3 percent limited partner interest in a midstream partnership it jointly controls with OGE Energy Corp. with operations in major natural gas and liquids-rich producing areas of Oklahoma, Texas, Arkansas and Louisiana. With more than 8,700 employees, CenterPoint and its predecessor companies have been in business for more than 135 years. In Minnesota, CenterPoint Energy is the state’s largest natural gas distribution utility, serving nearly 825,000 customers in 260 communities. For more information, visit the website at CenterPoint Energy.com.
What is a rate case?
A rate case is the regulatory process that public utilities (natural gas, electric and telephone) must follow to formally change their rates. The Minnesota Public Utilities Commission (MPUC) regulates rate changes, and any proposed changes must first go through a review process before receiving a final decision by regulators.
Who is the Minnesota Public Utilities Commission (MPUC)?
The MPUC regulates utility service industries in Minnesota, including electricity, natural gas and telephone. It is responsible for ensuring that vendors of these services provide safe, adequate and reliable service at fair, reasonable rates.
How is the Commission formed?
The MPUC consists of five commissioners appointed by the governor to six-year, staggered terms. By law, no more than three commissioners can be of the same political party and at least one commissioner must reside, at the time of appointment, outside the seven-county metropolitan area. The governor designates one of these commissioners to serve as chair.
What are interim rates?
Interim (temporary) rates are an approved percentage increase on all customer bills that are effective two months after a rate filing. In our 2013 filing, we requested an overall annual interim rate increase of $42.9 million or 4.88 percent. These temporary rates would be collected without any changes to our rate structure. We are allowed to charge interim rates to recover the company's higher cost of providing natural gas service while regulators determine and approve the final rates.
Why are there refunds on interim rates?
State law allows CenterPoint Energy to collect interim (temporary) rates while the MPUC considers its rate case. If final rates are lower than interim rates, CenterPoint Energy will refund customers the difference with interest. If final rates are higher than interim rates, CenterPoint Energy will not charge customers the differences for the period in which interim rates were in effect.
Why did we file to change our rates?
CenterPoint Energy continually engineers significant capital expenditures in the State of Minnesota. In accordance with natural gas pipeline safety and integrity regulation, these capital expenditures are necessary to:
- Maintain a safe and reliable system
- Respond to significant public improvement requirements on our system
- Investment in modernization of infrastructure
When was the last time CNP increased its base rates?
We last filed a rate case in 2008. The MPUC approved an increase of about 3.6 percent of annual revenues, which went into effect in July of 2010. The effect on a typical residential customer was about $1.50 per month.
Does the MPUC have to approve our filing?
No. The MPUC has an obligation to determine "just and reasonable" rates. The MPUC allows a utility company to recover costs that it deems to be reasonable and necessary in providing utility service.
Are the new rates needed to recover changes in wholesale natural gas prices?
No. The wholesale cost of natural gas is passed through to our customers with no mark-up. Currently and over the past year, natural gas prices have remained reasonably low.
Are we planning to increase our rates in another year?
Our focus is on this rate filing, with the goal of recovering our costs.
What are we doing to keep natural gas costs reasonable?
We have the expertise and the experience to buy natural gas at the lowest reasonable prices in order to provide our customers with the best energy value:
- We secured ample supplies for the upcoming heating season.
- We work with about 20 of the largest suppliers in the U.S. and Canada and buy gas on a competitively bid basis.
- We acquire natural gas and fill our storage facilities over the spring and summer to meet customers’ peak heating season requirements, and hedge or fix the costs on a portion of that portfolio.
Our supply portfolio includes contracts with varying terms, conditions and lengths.
Is natural gas still a good value for customers?
Yes! Natural gas is an excellent energy value – a clean, efficient, abundant and affordable fuel for home heating, water heating, and for providing fuel to industry. Natural gas remains your best energy value. And our Budget Plan option is the best way to keep your costs level.
Are there ways to help me manage my bill?
Yes, the Budget Plan. Learn more.
What is decoupling?
Revenue decoupling separates the link between the amount of revenue CenterPoint Energy collects from its customers and changes in the amount of natural gas they use. Revenue decoupling allows CenterPoint Energy to automatically adjust its rates for residential, commercial and small industrial customers once each year. These rate adjustments allow CenterPoint Energy to adjust its rates up or down to make up for any short fall or excess in sales revenue.
The Decoupling Adjustment line item on the invoice is used to assess any shortfall or credit any excess in revenue and is ongoing.
In the 2008 Rate Case, CNP was allowed to implement partial Decoupling, which was a three-year pilot program ending 6/30/2013. In the 2013 Rate Case, CNP has requested full Decoupling.
Do other utilities use similar rate design with a decoupling mechanism?
Yes, similar programs have been approved in 26 other states. In 2007, the Minnesota Legislature passed legislation specifically permitting such a pilot program. Learn more about decoupling legislation in Minnesota at www.leg.state.mn.us/docs/2010/mandated/100581.pdf.
Where can I find out more information?
As the Rate case progresses, customers will receive additional important information via bill inserts or other communication channels. .
Basic Charge: Partially covers the cost of those services we provide every month, regardless of how much gas a customer uses. These fixed costs include maintenance of gas service lines and regulators; gas meters; meter reading; billing; maintaining facilities; and vehicles and equipment.
BTU: British thermal unit
Cost of Gas: Covers the total costs paid to CenterPoint Energy to purchase and transport natural gas to our distribution system. The cost per therm usually varies from month to month as the prices we pay producers and suppliers change, typically increasing in the winter, when demand is high and decreasing in the summer when demand is low.
Delivery Charge: Recovers all the costs not recovered through the Basic Charge, including taxes, salaries, depreciation, interest, etc.
Decoupling: To eliminate the interrelationship of; to SEPARATE utilities revenues from sales.
Interim Rates: Interim rates are a temporarily approved overall percentage increase on all customer bills that are effective two months after a rate filing. These rates are collected without changes to our overall rate design. We are allowed to charge interim rates to recover the company's higher cost of providing natural gas service while regulators use the next year to determine the final rates to approve.
Therm: A therm is a measurement unit for natural gas and is the equivalent of 100,000 BTUs. Our average residential customer uses approximately 879 therms per year.