CenterPoint’s rates are called into question
Chairman of Public Utility Commission wants Houston company to share benefits of corporate tax cuts with its customers
The head of the Public Utility Commission raises concerns about the rates charged by CenterPoint Energy despite the likely windfall from recently enacted corporate tax cuts.
The chairman of the Public Utility Commission expressed concerns about the rates charged by CenterPoint Energy given the likely windfall from recently enacted corporate tax cuts, and called on regulators to begin a comprehensive rate case for the Houston utility.
The commission has long had concerns that part of CenterPoint’s business consistently earns above the approved rate of return. Chairman DeAnn Walker, in a memo filed this week, said that given the challenges after Hurricane Harvey, she initially hesitated in seeking a rate case, an intense process in which regulators review utilities’ finances and the costs of maintaining the electric distribution system.
But, she added, the expected reduction in CenterPoint’s taxes and continued concerns about the utility over-earning changed her mind.
“Although I continue to have concerns about the impacts of Hurricane Harvey,” Walker wrote, “I believe there are too many factors that show there is a need for a rate review at this time.”
The PUC is joining a wave of regulatory agencies around the country that are pushing utilities to share the benefits of corporate tax cuts with customers. In some cases, utilities have said they will reduce their rates of their own volition.
In others, such as in Kentucky,
regulators have required utilities to lower rates and possibly offer rebates.
None of the largest utilities in Texas have offered to use their tax savings to lower rates, and it remains to be seen what action the Public Utility Commission might take.
In response to Walker’s call for a rate case, CenterPoint asked to delay the decision until it could meet with commission staff.
The commission is expected to take up the matter again on Feb. 15.
In the meantime, the PUC has ordered all utilities in the state to begin tracking their revenues under existing rates as well as calculate what their revenues would be if lower federal taxes had been factored into their rates. The PUC also asked all utilities to calculate how much extra money they will have because of the federal income tax cut.
Walker is also likely to reopen recently completed, and complex, rate cases for Dallas-based Oncor, the state’s largest utility, El Paso Electric Co. in West Texas and Southwestern Electric Power Co., which serves the Panhandle region.
“People today are paying something that they shouldn’t be, in my mind,” she said of those utilities’ customers.
CenterPoint has not said what it plans to do with its extra funds provided by the tax cut. Center- Point said in statement that it appreciated the chance to meet with commission staff before a decision is made.
Regardless, CenterPoint is due for a close examination of its rates, said Commissioner Brandy Marty Marquez on Thursday. Since 2011, Texas law has allowed utilities like CenterPoint to raise electricity and gas rates between formal rate cases.
For electricity customers in Houston, CenterPoint has sought three rate hikes since the fall of 2015. But the PUC has not called CenterPoint in for a full-blown rate case since 2010, said Thomas Brocato, a lawyer for the Gulf Coast Coalition of Cities, which advocates on behalf of energy customers in Texas.
Brocato said that for quite a while, CenterPoint’s transmission operations “have had excess earnings. We support the commissioners’ efforts to make sure that the ratepayer see the benefits of this new tax law.”
The PUC has a history of reining in CenterPoint when the company has over-earned — in 2005, the commission found that CenterPoint collected an excess of $105 million from its electric customers in Houston and other Gulf Coast cities.
The PUC reviewed the company’s earnings and ordered CenterPoint to cut its rates by $68 million.
CenterPoint’s natural gas business is regulated by the Railroad Commission, the state’s oil and gas regulator. The Railroad Commission has consistently granted CenterPoint rate hikes even as the company’s earnings rose above the approved rates of return.
The Railroad Commission also announced plans to examine the fairness of gas rates in the wake of tax cuts. In early January, Texas Attorney General Ken Paxton, joining with other state attorneys general, has asked the Federal Energy Regulatory Commission to ensure that utilities pass along savings from the recently enacted tax overhaul to their customers.
But any move by FERC to require utilities to pass on tax benefits would not apply to Texas’ largest utilities — including CenterPoint — which are not regulated by the federal agency.