The Administration & Regulatory Affairs Department (ARA) recommends that City Council adopt an ordinance denying CenterPoint Energy Resources Corporation d/b/a CenterPoint Energy Entex and CenterPoint Energy Texas Gas’ (CenterPoint or Company) proposed rate increase and maintaining current rates in effect for customers within Houston. CenterPoint provides natural gas distribution service to approximately 1.9 million customers. Of this total, CenterPoint serves approximately 437,564 Houston customers — 412,350 residential, 24,357 small commercial and 857 large volume customers. The City of Houston (City) exercises original jurisdiction over the rates, operations, and services of CenterPoint under the provisions of the Gas Utility Regulatory Act (GURA) for customers inside city limits.
On October 30, 2023, CenterPoint filed a Statement of Intent to Change Rates (Statement of Intent) with the City. CenterPoint filed a parallel case at the Railroad Commission (Commission) for customers receiving service in unincorporated or ‘environs areas,’ as well as other incorporated cities within its Houston, Texas Coast, Beaumont/East Texas and South Texas Divisions. CenterPoint requested an approximate $59 million revenue increase for service to customers in its Houston Division, while proposing rate decreases for its South Texas and Beaumont/East Texas Divisions. In addition to a substantial rate increase, CenterPoint is also proposing to consolidate its Houston, Texas Coast, South Texas and Beaumont/East Texas Divisions into a new single division to be called, simply, the “Texas Division.” The new division would have a single tariff. The City of Houston strongly objects to this consolidation proposal because it imposes rates on Houstonians that do not reflect CenterPoint’s costs to serve Houstonians.
On December 19, 2023, CenterPoint filed an errata to its rate change application, assigning approximately 154.4% of the requested increase to customers in the existing Houston Division. For the average residential Houston customer using 31 CCF monthly, this represents a monthly increase of approximately $5.17 (20.7%) when the cost of gas is included, or 11.9%, excluding the cost of the commodity (see attachment for a summary of the Company’s estimate of the overall impact on the average customer bill for all customer classes and divisions.)
CenterPoint is also requesting a prudency determination for all Houston plant placed in service from October 1, 2016 through September 30, 2023. This represents the capital expenditures made during the interim period between rate cases. Through the Gas Reliability Infrastructure Program (GRIP) interim rate adjustment, CenterPoint was able to recover the cost of new investment made since the last comprehensive rate case. Pursuant to State law governing the GRIP, CenterPoint was required to file a full base rates case five and one-half years after implementation of its first GRIP adjustment, in order to reconcile its GRIP adjustments. As a result, CenterPoint’s GRIP adjustments filed with the City of Houston beginning 2018 through 2023 are subject to a final determination of reasonableness and prudence in this current rate proceeding.
On November 15, 2023, City Council approved Ordinance No. 2023-985 suspending CenterPoint’s proposed rate change for 90 days beyond the Statement of Intent’s proposed effective date, which was December 4, 2023 in the initial filing. Based on the December 19, 2023 amended filing, CenterPoint changed the effective date of the rates to January 27, 2024. As a result, the suspension period was extended to April 26, 2024 (from March 3, 2024). City Council approved the rate suspension to allow the City’s rate experts the time needed to conduct a comprehensive review of the rate request and to assist with the preparation of a final rate recommendation.
During the March 27, 2024 public hearing before City Council, the City’s experts presented a summary of the City’s findings and recommendations related to CenterPoint’s proposed rate increase. CenterPoint also presented its proposal. Based on the recommendations of the City’s experts and outside counsel, ARA, in consultation with the City Attorney’s Office, recommends that City Council adopt an ordinance denying CenterPoint’s Statement of Intent, including the proposed rate increase, and maintaining existing rates in effect for CenterPoint’s Houston customers. City Council must make a final determination regarding the rate request no later than April 26, 2024, otherwise the rate increase will go into effect for Houston customers.
CenterPoint will likely appeal the City’s decision to the Railroad Commission of Texas, where it will be consolidated into the parallel case proceeding at the Commission. The City will continue to fully participate in the Commission proceedings as an intervenor.
Departmental Approval Authority:
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Tina Paez, Director Other Authorization
Administration & Regulatory
Affairs Department