Proposed Centerpoint price hike would increase gas bills by 8.7%

The utility says the extra money would be used to invest in its pipeline system.
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Centerpoint Energy gas customers in Minnesota could face a rate hike averaging 8.7 percent in 2020.

The gas utility has applied to the Minnesota Public Utilities Commission (PUC) for the rate hike, which would add an extra $4.80-a-month – or $57.60-a-year – to the average residential bill, bringing monthly payments to $59.80-a-month.

With the PUC unlikely to make a decision until late 2020 or early 2021, Centerpoint is asking for an interim rate hike of 5.8 percent to come into force in January.

Should the PUC eventually approve a smaller rate hike than 5.8 percent, Centerpoint's 860,000-plus Minnesota customers will get a refund for the difference.

This extra cash, Centerpoint says, will be used to "support major investments in the continued safety and reliability of the approximately 14,000-mile pipeline" that serves Minnesota customers.

It claims that even with the increase, monthly bills for the average Minnesota customer will be almost 35 percent lower than 10 years ago, owing to falling natural gas prices.

There's a chance that the PUC doesn't approve a rate hike of 8.7 percent. The last time Centerpoint applied for a rate change was in 2017, when it asked for a 6.8 percent hike. However, the hike approved by the PUC in 2018 added only 27 cents to monthly bills.

As the Star Tribune notes however, the massive difference between what Centerpoint asked for and what the PUC approved owes to the federal tax cut passed by Congress in December 2017, which cut Centerpoint's revenue requirements.

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Overall, Centerpoint is looking for a 6.8 percent increase in revenue when industrial and business customers are taken into account, generating an extra $62 million annually.

This it would use for, among other things, replacing its cast iron and bare steel pipelines, which contribute to methane emissions.

Under the proposal, customers' basic service charge would increase from $9.50 to $12-a-month, with the rest coming from an increase in the gas delivery charge, which together accounts for about half of a customer's bill.

The other half of the bill is the cost of natural gas, which varies monthly depending on market prices and is passed on directly to customers "with no mark-up," with Centerpoint saying it doesn't profit from the sale of natural gas.

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