CenterPoint cut may leave change jingling in pockets
Utility is complying with regulators’ order to share tax savings
CenterPoint Energy is proposing passing along some of the $1.1 billion in savings from corporate tax changes by reducing average residential bills for natural gas customers by 58 cents each month.
The proposal, developed at the request of state regulators, is scheduled to go before Houston City Council on Wednesday. It comes seven months after federal corporate tax rates were cut from 35 percent to 21 percent, and several states, including Texas, began pressuring utilities to pass along tax savings to ratepayers.
Several attorneys general, including Texas Attorney General Ken Paxton, asked the Federal Energy Regulatory Commission in January to adjust rates to prevent utilities from reaping a windfall from the lower federal corporate income tax rate rate, which for CenterPoint was $1.1 billion. At year-end, CenterPoint reported a profit of $1.8 billion — including the one-time gain of $1.1 billion in federal tax savings — compared with the $432 million it earned the previous year.
This spring, the Texas Railroad Commission, which regulates gas utilities, ordered CenterPoint to come up with a way to pass along the tax savings to customers, said CenterPoint's vice president of rates, Steve Bezecny. CenterPoint is complying with that order, he said.
“It’s really a win for customers,” CenterPoint spokeswoman Alicia Dixon said.
The lower rates will help to ab-
sorb a 70 cents a month surcharge CenterPoint announced in May to recover investments in improving its natural gas distribution system.
The surcharge, which did not have to receive regulatory approval, was calculated to include the lower corporate tax rate; otherwise, the monthly surcharge would have been 75 cents, according to CenterPoint.
If Houston City Council agrees to CenterPoint's proposal, residential customers will see the fixed portion of their bills fall by 50 cents a month to $15.95, which includes the 70-cent surcharge.
It’s the first time the fixed portion has fallen in the decades in which it has been collected. That’s because the fixed portion pays for expanding the distribution system and as the population grows, CenterPoint has raised rates to pay for the expansions. It also spends millions of dollars on system safety and reliability.
The variable portion of the bill, which fluctuates based on consumption of natural gas, will dip an average of 8 cents month for the average residential customer who uses 34 hundred-cubic feet —- or CCF —- each month. CenterPoint provides natural gas distribution services to about 385,000 residential customers in the Houston area.
Small commercial customers such as restaurants and dry cleaners will see their monthly fixed fee decrease 58 cents to $17.67. Larger operations such as hospitals and office buildings will pay $5.68 less each month in fixed natural gas fees, lowering them to $174.32. CenterPoint has about 24,000 small commercial customers in Houston and 1,100 larger ones.
The proposed new rates would have taken effect Sept. 1 under CenterPoint's proposal. The City of Houston, however, will not have enough time to complete a full review and city council is expected to consider an ordinance to adopt CenterPoint's proposed rates on an interim basis so ratepayers can immediately benefit.
CenterPoint has also proposed a one-time refund to natural gas customers to account for the lower tax rate that began in January. The total amount of the proposed refund has not yet been calculated.