Rate rise of $7.6M agreed to by utility

CenterPoint deal needs PSC’s OK

CenterPoint Energy, the largest natural gas utility in Arkansas, has reached an agreement on a $7.6 million rate increase for its 412,000 customers in the state.

On Thursday, the Arkansas Public Service Commission, which must approve such increases, canceled a hearing in the case that was scheduled for next Wednesday. The panel will consider testimony already filed in the case and has about a month to make its decision.

Under the agreement, the rate increase would be 2.33 percent for residential customers. That means a residential customer with a $100 monthly bill would have a bill of $102.33 if the commission approves the increase. CenterPoint has requested that the increase take effect Oct. 2.

In April, CenterPoint had requested a $9.1 million rate increase, which would have been a 2.48 percent increase for residential customers.

The request was filed under Act 725 of 2015, which allows the state’s utilities to make streamlined adjustments each year to recover costs related to invested capital and expenses without having to file a more time-consuming full rate case.

“This was our first formula rate plan filing [under Act 725], and we are pleased that we were able to reach a unanimous settlement agreement with the Arkansas Public Service Commission staff and all intervening parties,” said Alicia Dixon, a spokesman for

Houston-based CenterPoint.

Under the 2015 law, the filing allows for smaller annual rate adjustments instead of larger adjustments made over several years.

The parties to the case included CenterPoint, the commission’s general staff, the state attorney general’s office, Arkansas Gas Consumers Inc. and the University of Arkansas system.

The attorney general’s office believes that the agreement “establishes just and

reasonable rates for [CenterPoint’s] customers,” Shawn McMurray, assistant attorney general, said in testimony filed with the commission.

The agreement is in the public interest, and the commission should approve it without modification, McMurray said.

“While the parties have all advocated diverse positions, all are willing to accept the agreement as compromise,” McMurray said in his testimony. “The agreement is within the range of reasonable litigation outcomes and represents a reasonable result.”

The portion of CenterPoint’s

monthly bill that covers the cost of natural gas accounts for about 40 percent of the bill, the utility said. The base-rate portion, which is the filing’s focus, makes up the rest of the bill.

Compared with 10 years ago, CenterPoint’s natural gas supply rate is down about 40 percent, Dixon said in April.

Last year, the commission approved a 6.7 percent rate increase for CenterPoint.

Entergy Arkansas, the state’s largest electric utility, and CenterPoint are the only two utilities to file cases under the 2015 law, said John Bethel, executive director of the commission’s

general staff.

In both cases, settlements were reached.

“The formula rate plan, by its design, has a much more limited number of issues than would be confronted in a [full] rate case,” Bethel said. “All of the adjustments that were made in a [full] rate case are made in the formula rate plan filing, so you don’t have to debate those issues. They’ve already been decided.”

So it becomes a matter of confirming whether the additional expenditures that are part of the filing are reasonable, Bethel said.