CLUTE — Brazoria County cities are joining forces to revive the Texas Coast Utilities Coalition and the Gulf Coast Utilities Coalition, both formed around 2009 to advocate cities’ utility interests in Austin, to ask for a review of CenterPoint Energy’s proposed rate increase.
“It’s impossible for every little town and city to have utility rate expert or utility rate attorney at their disposal,” Clute City Manager CJ Snipes said on why the two commissions are returning. Clute is part of the Texas Coast Utilities Coalition.
CenterPoint Energy announced in early April it will increase its delivery rates for customers pending a review by the Public Utility Commission of Texas, the economic regulator of utilities in the state. While consumers have a variety of choices on companies from which to purchase electricity, CenterPoint Energy is the only company tasked with delivering it in the Houston region, including Brazoria County.
There are pockets of customers with co-ops and other providers, but cities largely are unable to create public electric utilities either due to complicated laws and regulations or cost, Snipes said
“The energy market is so dynamic that I’m not sure local communities would be able to provide that cheaper than conglomerations,” Snipes said. “The state government’s reduction in local communities’ ability to reduce rates on their customers is indicative of a larger trend statewide to remove local voice from the local environment in which communities exist and transfer it to centralized authority in Austin.”
A customer notice of interim rate adjustment sent out by CenterPoint Energy states residential base rates would increase $1.15 per month, commercial would increase $1.75 per month and large commercial would increase $43.10 per month. Information the City of Freeport received from CenterPoint Energy states the actual proposed increase to the base rate is 7.21 percent for residential, 9.32 percent for commercial and 21.85 percent for large commercial.
However, an April press release from CenterPoint Energy also estimates the residential impact for a customer using 1,000 kilowatt hours would be an increase of $2.38 per month. Current base rates are $15.96 for residential, $18.77 for commercial and $197.27 for large commercial per month, per customer, the notice states.
A primary reason for the increase is to recover costs incurred from Hurricane Harvey, which caused $64 million in damage to the company’s infrastructure, CenterPoint Energy representatives said. The increased rates will allow them to recover that cost over the next three years in increments of $21 million, rates manager John Durland said.
CenterPoint Energy has an operating income of $831 million, according to its 2018 annual financial report.
“The rate increase will allow the company to address current revenue required efficiency so that we can continue to invest in our system,” spokeswoman Alejandra Diaz said. “Recovering those expenses is not additional money to spend.”
The Houston-based power company also seeks to cover the maintenance cost of its growing customer base, citing 400,000 new customers since it last increased rates in June 2010, the release states. Investments in “innovative technology to enhance customer support and service” and investments in the “safety, reliability and resiliency of the electric grid” are additional reasons listed for the increase.
“It’s called IGSD, an intelligent grid switching device, and we have these all throughout our footprint of electricity,” Brazoria County Service Center Manager Robert Tinnin said. “It minimizes the downtime of power outages and helps to isolate power faults to where...the outage occurred which helps minimize customer impact for outages.”
For example, in Brazoria County, Tinnin said the company has seen about a 25 percent reduction in the number of outages and a 30 percent improvement in duration of those outages. The company is also working on infrastructure upgrades across the Angleton and Freeport area and along part of FM 2004, he said.
“There’s a lot of growth going on in Brazoria County area right now, with the push from the Houston area to the area down here. All of these improvements, a lot of money was invested over time which is why we have this rate case to recover the investment cost,” Tinnin said. “In the past few years, we’ve done recovery, but this but also about going forward to continue doing these upgrades on the system as well.”
CenterPoint’s operating cost as of 2018 is $2.28 billion to serve all 2,403,340 customers, 2,129,773 of which are residential, making up about 88 percent of its customer base as of 2016, according to a fact sheet on its website. That includes serving customers, reading meters, repairs and maintenance to infrastructure and more, Durland said.
The proposed rate increase is subject to refund, according to CenterPoint Energy’s customer notice, and rates can be reduced in the future after the money is recovered. But Durland said that’s rare.
“It’s not impossible to say, but historically, no,” he said.
Local governments have until May 10 to agree to rejoin the coalitions and pass resolutions suspending the proposed rate increase, Snipes said. Then, the groups will separately review the proposed increase in full detail — the reasoning behind the increase, how it will impact residents, whether residents can afford it — then decide whether they’re OK with the increase or want to argue it with the Public Utilities Commission, Freeport City Manager Tim Kelty said.
“It’s just part of being diligent; that’s our responsibility and it’s why legislation gives cities authority to review rates like that because contesting those rates is an important responsibility,” Kelty said. “In this particular case, I don’t know if it’s justified or not — all we asked for is enough time to review and petition.”
From there, the commission will review CenterPoint’s proposal and decide whether to approve it, Snipes said. If the utilities regulator doesn’t approve it, the coalitions will get to propose what they think a fair increase would be and CenterPoint Energy would get to offer a counter.