Monthly Archives: August 2010

Cities line up against CenterPoint rate increase

A number of area cities are resisting a proposed $94??million CenterPoint Energy rate hike request that the utility estimates would add about 5 percent to residential utility bills.

The state Public Utility Commission has the final say on the rate request, but votes against it by the governments of cities affected require the PUC to hold hearings, now scheduled for October unless the cities and company reach a settlement before then.

The commission has until Jan. 1 to issue its final order.

Nineteen area cities have voted against the rate increase. Houston has held two hearings for public comment. City officials continue to request and review information from the company and will hear more public comment during a City Council meeting Sept. 29, city spokesman Chris Newport said.

Under the new rates, the city’s own electric bill would increase $7 million for street lights alone, he said.

CenterPoint operates the poles and lines that transmit electricity to more than 2 million Houston-area customers, regardless of what retail company sells them their electricity. The regulated monopoly charges retailers for transmitting power, and they decide how much of it to pass along to customers in the competitive retail electricity market.

CenterPoint’s request would increase monthly bills about 5 percent, or $5.53, for residential consumers using 1,000 kilowatt-hours per month at a retail rate of 11 cents.

The proposed $94 million overall increase includes $76 million for delivering retail power and $18 million for wholesale transmission.

The company says it needs the rate increase to recover its costs.

Since it last changed its rates in 2006, CenterPoint says, it has spent $1.5 billion on new poles and lines to keep up with growth, maintain service and restore power after outages. It has strung more than 1,000 miles of overhead and underground power lines, and added 150,000 customers, spokesman Floyd LeBlanc said.

“So we’ve been spending a lot of money, and Joe and Jane Q. Public don’t think about that,” LeBlanc said.

CenterPoint’s rates have been frozen since a 2006 rate case settlement lowered the base fee it charges to retailers and wholesale customers by $58 million. The settlement called for CenterPoint to file a new rate proposal at the end of four years, which it did June 30.

The rate hike doesn’t account for debt service on bonds the company issued to pay for $643 million in costs it incurred to restore power after Hurricane Ike in 2008. Those expenses are being recovered through a separate monthly charge of $1.04 for 13 years on customer bills, again assuming 1,000 kwh of monthly usage.

The increase also doesn’t include the costs of smart meters and a smart grid that will provide customers and utilities more detailed information about electricity use. A $3.24 monthly surcharge for those upgrades began in February. Next year that charge will drop to $3.05 for four more years.

The surcharge would have continued through 2020, but the company’s recent rate request proposes ending that charge in 2014 because the company received $200 million in federal stimulus funds for the project this year.

A separate rate increase effective today covers fees CenterPoint pays to the Electric Reliability Council of Texas, which operates the state’s transmission grid. The new rate will increase average customer bills for 1,000 kwh by 29 cents a month, according to CenterPoint.

purva.patel@chron.com

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