CenterPoint Energy Strengthens Gas System for Customer Safety and Reliability

On November 25, 2024, CenterPoint Energy submitted a settlement agreement to the Minnesota Public Utilities Commission (MPUC) concerning its rate case filed in November 2023. The rate case aims to adjust natural gas distribution service rates for 2024 and 2025. The company reached this agreement after collaborating with all intervening parties, including the Minnesota Department of Commerce, the 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. The settlement must be approved by the MPUC to take effect.

If approved, the rate adjustment will allow CenterPoint to continue enhancing the safety, reliability, and resilience of its natural gas distribution system, benefiting over 920,000 customers across more than 260 communities in Minnesota. This adjustment also supports the company’s efforts to advance low- and zero-carbon technologies. As part of this, CenterPoint is seeking to recover certain costs related to its innovation plan, which was approved by the MPUC in July 2024 under Minnesota's Natural Gas Innovation Act. This plan includes investments in innovative technologies and low- and zero-carbon energy resources.

The proposed rate adjustment would also fund infrastructure projects to replace or upgrade existing pipelines, ensure safe and reliable service, comply with federal pipeline regulations, and relocate facilities as needed to accommodate government infrastructure projects, such as roads, bridges, and drainage systems.

Brad Steber, CenterPoint’s Vice President of Minnesota Gas, emphasized the collaborative approach taken to reach the settlement agreement, noting that the primary focus was on ensuring the continued safety, reliability, and resilience of the natural gas system for the benefit of Minnesota communities. He further stated that the agreement lays out plans for near-term investments designed to meet customers' energy needs, particularly during the coldest winter days, ensuring customers remain safe and warm.

The MPUC will now review the proposed settlement agreement, with a decision expected in 2025.

The rate case, which is a forward-looking proposal, is aimed at ensuring that the company can continue to meet the evolving energy service needs of its customers. CenterPoint plans to continue investing in its natural gas distribution system by modernizing infrastructure and enhancing safety. This includes replacing aging gas lines with new construction methods and materials, relocating gas meters from inside homes to outside for easier access during emergencies, and deploying smart natural gas meters that improve safety and communication. Additionally, the company plans to use advanced methane detection vehicles to monitor emissions and conduct faster leak detection and repairs. Another proposed initiative is using cross-compression technology to prevent natural gas from being released into the air during repairs, instead temporarily storing it in other segments of the gas line.

The proposed settlement agreement also includes an adjustment to the delivery charge, which accounts for about 50% of a typical residential customer’s monthly bill. The delivery charge covers the cost of maintaining and operating the distribution system, while the remaining 50% of a customer’s bill reflects the cost of the natural gas itself, which is passed through at cost without any profit to CenterPoint.

CenterPoint is requesting a rate increase of approximately 4.7% ($60.8 million) for 2024 and 3.1% ($42.7 million) for 2025. This would result in an increase of $2.70 per month for the average residential customer in 2024, and an additional $1.27 per month in 2025. Interim rates, which began in January 2024, added about $4 per month to the average residential bill, and interim rates for 2025 are expected to add another $2 per month. These interim rates are applied equally across all customer types, and once final rates are approved, any overpayment during the interim period will be refunded to customers based on actual usage, with interest, through a credit on their bills.