Rate Increase

Council vote makes for inherent conflict of interest

The Texarkana, Texas, City Council is expected to vote Monday on a proposed rate increase for customers served by CenterPoint Energy in the Twin Cities and surrounding areas.

The new rate—about 10.1 percent—has already been approved by the Arkansas Public Service Commission. But Texas law gives the city a say.

The new rate will cost residential customers about $7.71 a month on average. It doesn’t sound like much, but all told it would mean more than $1 million a year more for the utility company.

For fiscal year 2016, CenterPoint reported a net income of $432 million. According to tracking site Salary.com, CenterPoint CEO Scott M. Prochazka made more than $6.5 million in total compensation for the year. During the same period the company’s executive chairman pulled in about $2.5 million, and three other executives made between $1.7 million and $1.9 million.

So it doesn’t exactly look like CenterPoint is hurting. But we guess every little bit helps.

Rate increases are a fact of life, and CenterPoint hasn’t had one locally in 10 years or so. So it’s up to the council to decide if the rate is reasonable and then vote yes or no. And we hope they look at all the information and make the best call for the citizens they were elected to serve.

We are troubled, though, by the conflict of interest inherent in approval process. Since the two Texarkanas collect franchise fees based on utility customer billing, the more CenterPoint charges the more revenue the cities take in. Approving the rate increase could mean as much as $27,000 in additional revenue each year for each city.

That’s a tidy and tempting sum. In Arkansas the state makes the call, keeping temptation at arm’s length but also denying the city any say in a rate increase. But in Texas the city get a voice but also an easy path to more revenue. Frankly, we can’t say which method is better.

We’ll know more come Monday. But in the meantime we aren’t betting against the rate increase.