CenterPoint seeks Minnesota rate hike averaging 8.7%

CenterPoint Energy, Minnesota's largest natural gas utility, proposed a rate increase Monday that would raise its average residential customer's bill by 8.7%.

The rate increase filed with the Minnesota Public Utilities Commission (PUC) would raise CenterPoint's revenue by $62 million from all of its customer classes combined — commercial, industrial and residential. That's a 6.8% jump.

The money would primarily address the "rising costs of infrastructure projects" — such as upgrading and replacing pipelines, according to CenterPoint.

"As with our past three rate cases, safety-related pipeline integrity investments are the primary driver for the company rate increase request," Brad Tutunjian, Minnesota region vice president for CenterPoint, said in a PUC filing.

Revenue from the rate increase would also help the company comply with more stringent federal pipeline regulations, CenterPoint said in a press statement. CenterPoint said, too, that it needs more money to pay for pipeline and equipment relocations due to a "growing number of local road construction and other public works projects."

While the company's rate case is pending, CenterPoint will ask the PUC for an interim rate increase of 5.8%, which would go into effect in January. After public meetings and hearings, the PUC will likely decide on any final rate increase in late 2020 or early 2021.

If the final rate approved by the PUC is lower than the interim price hike, CenterPoint customers will get refunds for the difference, including interest. Houston-based CenterPoint serves more than 860,000 customers in this state, including much of the Twin Cities and a swath of central and southern Minnesota from Brainerd to Blue Earth.

Under CenterPoint's proposal, average monthly bills would rise 6% to 10% for smaller and medium-size businesses, and 4.1% to 4.3% for the company's largest commercial and industrial customers.

The monthly basic service charge for a residential customer would rise from $9.50 to $12. An increase in the "per-therm" gas delivery charge would account for the rest of the rate hike. Those delivery and service charges make up about half of a typical customer's bill.

The other half stems from the wholesale cost of gas, which is passed on directly to customers with no markup, according to CenterPoint.

CenterPoint filed its last rate case in 2017, asking the PUC for a revenue increase of $56.5 million or 6.8%. The PUC in 2018 eventually approved a rate hike of only $3.9 million, with the average residential customer paying 27 cents more per month. CenterPoint agreed to the smaller increase in a settlement with the state.

The dramatic reduction in the 2017-2018 rate case was fueled partly by a federal corporate tax cut in late 2017, which cut CenterPoint's revenue needs by $21 million. Regulated utilities in Minnesota and elsewhere have been required to pass their corporate tax savings along to customers.