CenterPoint Energy and Xcel Energy — Minnesota's largest natural gas providers — asked regulators Wednesday for rate increases of more than 9%.
CenterPoint, Xcel want to raise gas rates by more than 9%
The requests filed with the Minnesota Public Utilities Commission say the higher rates are needed to pay for infrastructure costs and cover inflation.
November 1, 2023 at 6:04PM
The utilities said in filings with the Minnesota Public Utilities Commission (PUC) that the increases are needed to pay for things like infrastructure and because of inflation and supply-chain shortages.
Christe Singleton, CenterPoint's vice president for Minnesota gas, said the company has spent an increasing amount on infrastructure over the past two decades.
"These projects continue to improve the safety and reliability of the system while also bringing long-run environmental benefits," Singleton said in the filing.
The requests drew skepticism from the ratepayer-advocate Citizens Utility Board of Minnesota (CUB). Annie Levenson-Falk, executive director of CUB, said the rate requests come on top of recent increases.
"They're right back again for another one," she said. "Of course we need to maintain the safety of the gas system, but the companies also have a profit motivation to invest more in capital."
CenterPoint, the state's largest provider, split its request over two years, asking for an increase of $84.6 million, roughly 6.5%, in 2024, and another $51.8 million, or 3.7%, in 2025. If both are approved, they would total 10.2%.
The company — with 830,000 residential customers in Minnesota — said the increases would add about $5.91 a month to a typical residential customer's bill in 2024 and an extra $2.58 per month in 2025.
Xcel asked for an increase in 2024 of $59 million, roughly a 9.6% jump. The utility, with 491,000 Minnesota gas customers, said that would result in a typical residential natural gas customer paying an extra $6.93 a month.
Chris Clark, president of Xcel Energy in Minnesota, said the gas rate case represents continued investment in the safety of the company's gas system and efforts to reduce methane leaks.
"We know there's a lot of desire to explore the future of the gas system, but while we have the current system we want to make sure that we're continuing to make the necessary investments in that system and keep it clean," Clark said.
Clark said the company is also hoping to cover rising costs due to inflation and higher employee wages.
Since rate cases take more than a year to sort out, both utilities asked for interim rate increases for the gas operations that would go into effect in January. The PUC usually grants those temporary rate hikes, but if the final decision on a rate increase is lower than the interim increase, customers are refunded the difference.
CenterPoint requested an interim hike of $68.7 million in 2024 and another $33.2 million in 2025. Xcel's temporary request was $51.2 million.
The rate increases don't reflect the cost of gas, which is passed to customers directly and varies with the price of the commodity. The federal government predicts most households in the country will pay less for heating with gas this winter. The U.S. Energy Information Administration forecast natural gas prices will be about 21% lower than last winter.
Clark said Xcel believes gas costs will be down about 15% this winter compared with last year, and that could offset some of the higher bills the utility is asking for. Commodity gas markets can be volatile, but are steadier after "pressure from the Russian invasion of Ukraine and the pressure that Europe was feeling."
Levenson-Falk said she's also anticipating the cost of gas to be down, but she said it's not low when looking over the past decade. She also said the lower cost of gas shouldn't influence debate over whether Xcel's proposal has merit.
Last year, the PUC approved a $48.5 million increase in ratepayer revenue for CenterPoint, though commercial customers picked up a larger share of the increase. CenterPoint had asked for $67.1 million. In March, the PUC approved a $20.9 million natural gas rate increase for Xcel Energy, lower than the $35.6 million Xcel requested in November 2021.
The Xcel rate hike would come on top of higher electricity rates approved by the PUC earlier this year. In June, the five-member commission approved a 9% rate increase worth $306 million for Xcel. That was far less than the $440 million increase Xcel wanted.
Xcel plans to challenge the decision at the Minnesota Court of Appeals.
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