CenterPoint Energy has officially filed a settlement agreement with the Minnesota Public Utilities Commission for its rate case submitted in November 2023, with the objective being an adjustment in natural gas distribution service rates during 2024 and 2025.
This came after the company reached a settlement agreement with all intervening parties including Minnesota Department of Commerce, Minnesota Office of Attorney General – Residential Utilities Division, Citizens Utility Board of Minnesota, International Union of Operating Engineers Local 49, LIUNA of Minnesota and North Dakota, and Suburban Rate Authority.
Assuming the commission now approves it, the stated rate adjustment will make it possible for CenterPoint energy to continue to maintain the safety, resiliency and integrity of its natural gas distribution system for its 920,000 customers in over 260 local Minnesota communities.
Next up, it will allow CenterPoint to keep supporting the advancement of low- and zero-carbon technologies, including recovering certain costs for its innovation plan, approved in July 2024 by the Commission under Minnesota’s Natural Gas Innovation Act, for investments in innovative technologies and low- and zero-carbon energy resources.
Furthermore, this rate adjustment will help the company conduct infrastructure projects to replace or upgrade existing pipelines, provide safe and reliable service, comply with federal pipeline regulations and relocate facilities to enable projects such as roads, bridges, drainage and other infrastructure.
Not just that, it will also empower CenterPoint to accommodate higher investments for operating, maintaining and delivering natural gas through the company’s distribution system.
“From the outset, we were determined to use a collaborative approach with state agencies and all intervenors to reach a settlement agreement that worked for all parties. This agreement prioritizes the safety, reliability and resiliency of the energy system for the benefit of our customers and communities throughout Minnesota,” said Brad Steber, CenterPoint’s Vice President of Minnesota Gas. “The agreement meaningfully plans for current and anticipated near-term future investments to continue to serve our customers’ needs for readily available energy resources.”
Turning our attention towards the given rate adjustment proposal, it effectively requests adjustments to the delivery charge, or the cost to deliver natural gas. While delivery charge accounts for approximately 50% of a typical residential customer’s monthly bill. The other half of a customer’s bill is the cost of natural gas which is passed through at no profit.
To be more specific, CenterPoint has requested an increase of approximately 4.7% or $60.8 million for 2024 and approximately 3.1% or $42.7 million for 2025. The request will add, in essence, $2.70 to the average residential customer’s monthly bill in 2024 and an extra $1.27 to an average residential customer’s monthly bill in 2025.
The development in question delivers a rather interesting follow-up to CenterPoint’s plans to make investments in the safety and resiliency of the company’s natural gas distribution system. These investments will focus on, for starters, replacing natural gas lines using modern construction methods and materials.
They will further enable relocation of natural gas meters inside residential customer’s homes to outside for improved access in case of an emergency, and for enhanced customer safety. Then, there is a plan to deploy smart natural gas meters for residential customers that have enhanced safety and communications features.
On top of that, CenterPoint also hopes to use methane detection vehicles that have a higher level of detection capability to monitor methane emissions and more efficiently conduct leak detection operations, allowing for faster mitigation and repair of natural gas leaks.
Beyond that, the company hopes to leverage vacuum-like technology, also known as cross-compression, during repair, replacement and inspection of a natural gas line to prevent natural gas from going into the air. Instead, the natural gas is temporarily stored or placed in another segment of natural gas line.
Among other things, we must mention that, while the rate case is under consideration, interim rates are in effect. The current interim rates started back in January 2024 billing cycle and added approximately $4 per month to the average residential bill. From January 2025, though, there is an expectation for these rates to be $6.
