CenterPoint expected to share the burden of winter storm price spike

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Have you noticed your CenterPoint gas bill is up this year? You’re not alone. In addition to CenterPoint’s rate hike, some of these higher costs stem from a five-day period in February 2021 when wholesale fuel prices soared 4,000%. If the utility wins, customers will pay those five days of fuel costs for the next five years.

Following on from last year’s Star Tribune article (“Xcel, CenterPoint make millions as customers stuck with bills after February storm”), I want to provide more insight into why why the City of Minneapolis is demanding that the Minnesota Public Utilities Commission (PUC) compel CenterPoint Energy to share the burden of excess wholesale gas costs from winter storm Uri that hit Minnesota and crippled Texas in February of the last year. After dismissing some costs early on and spreading the remaining costs over 63 months to mitigate the impact on customers, the PUC expects to decide this summer how much of the remaining $466 million customers will have to pay. Last month, the Minnesota Office of Administrative Hearings recommended customers pay the full amount. Minneapolis disagrees.

Minnesota law requires utilities to charge “just and reasonable” rates and places the onus on utilities to show they have acted prudently when incurring costs they wish to pass on to customers. Any doubts as to the reasonableness of a rate increase shall be resolved in favor of the customer. Fossil gas utilities are expected to act prudently and reasonably to protect customers from risk. In this case, CenterPoint failed to protect customers and therefore the rate increase is neither fair nor reasonable.

A thorough regulatory review is needed because gas customers in Minneapolis have no choice but to get service because 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 all they can to mitigate the impact of wholesale market volatility. In fact, I believe that as a utility, CenterPoint’s healthy earnings in 2021 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 rate events occurring in the future.

Meanwhile, in 2021, as customer bills soared, CenterPoint’s CEO got a raise and total compensation of $38 million, up from $12 million pre-pandemic, to which the utility’s own shareholders objected.

And, an in-depth report from the Citizens Utility Board of Minnesota reveals how CenterPoint made more than $1 billion from its sale of shares in Energy Transfer, which it had acquired through a merger involving a subsidiary of Center Point. Why is this important? Because Energy Transfer is a wholesale gas supplier accused of price gouging during winter storm Uri and exacerbating the spike in prices CenterPoint wants customers to pay.

During a conference call with investors in May, CenterPoint’s CEO bragged that “within four months of the merger…we sold 100% of our common shares at a premium of 20% per compared to the price per unit of Energy Transfer when the transaction was announced last February, a bad outcome for shareholders who thought we would never get out of this investment, let alone make approximately $1.3 billion in net proceeds after tax.”

The City of Minneapolis saw firsthand how CenterPoint could have done more to control costs during winter storm Uri. Minneapolis has 16 accounts with “interruptible” gas service, which means the utility should have asked us to reduce our gas usage at those locations when it saw the prices skyrocket, which allowed the city ​​to save money and reduce wholesale price pressure for all customers. The impact on our municipal business 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 reduce energy use and cut costs based on price information the utility had access to, but not the city. Additionally, its decision to ignore interruptible customers and not provide the ability to conserve resources is evidence that CenterPoint mishandled the pricing event, contributing to higher wholesale prices.

These are just a few reasons why fuel surcharges shouldn’t simply be passed on to customers and why Minneapolis has asked the PUC to hold CenterPoint financially responsible for fuel surcharges related to the February 2021 winter storm.

Undoubtedly, this is a very complicated question. But what’s not complicated is the fact that climate change is upon us and regulated utilities continue to claim that fossil gas investments are affordable and reliable. This climatic event has exposed the risk of depending on a source of energy whose costs can fluctuate greatly, whose leaders seem more interested in rising stock prices than in consumer costs and the incredible and undeniable need for reduce dependence on fossil fuels.

If you also agree, PUC welcomes comments via email to [email protected]

Lisa Bonman is a member of the Minneapolis City Council and the Clean Energy Partnership Board.