Charging More and Paying Less
by: Laurie Johnson, November 18, 2009 5:11:26 pm
"All in favor, and voting in favor you're voting to deny the rate increase, signify by saying aye, opposed no. It's unanimous by the city council that we have voted to deny the rate increase."
Houston City Council turned down CenterPoint's request on the grounds that the energy provider is attempting to use a rate increase to fund losses in the company's pension system.
The company concedes they do need to make up losses because of declining assets in their pension fund, but they're not asking to fund pension increases.
Mayor Bill White says CenterPoint wants to raise the base fixed rate for residential customers that everyone pays to have CenterPoint service by about 40 percent. That works out to a four-dollar a month increase.
"They want to change the formula to allocate more of the cost to the residential customers. They want a higher return on equity to their shareholders than we think is appropriate. Ours is about 1.5 percent less or so return on their capital invested than their number is."
But CenterPoint Spokeswoman Alicia Dixon says the rate increase is justified.
"CenterPoint Energy has not increased rates in Houston since January, 2004. And over time, the cost for operating our system, ongoing operations and maintenance, maintaining things, the labor and benefits costs and other expenses have continued to increase. And we've also continued to make substantial capital investments in our gas distribution system."
Because the price of natural gas is down right now, even if the full rate increase goes into effect, many customers will end up with lower gas bills overall.
The two parties will bring their case to the Texas Railroad Commission, which decides the validity of the request and negotiates terms.
"We're certainly going to ask that they review the case and again they do have jurisdiction over rates for customers outside city limits, so since the city has taken this step they will go ahead and decide the rates for customers that live within the city limits and we believe we have a thorough case and we'll see what the outcome is and as I said, we hope that's going to be early next year."
In reality, there probably will be a fixed rate increase, but it likely won't be as high as CenterPoint requested. A final decision will probably come in February.
Laurie Johnson. KUHF-Houston Public Radio News.