Title
Consider and take action on a resolution regarding the application of CenterPoint Energy Resources Corp., Texas Coast Division, to increase rates under the gas reliability infrastructure program; suspending CenterPoint’s proposed effective date for forty-five days; authorizing the city’s continued participation in a coalition of cities known as the "Alliance of CenterPoint Municipalities-TCUC"; determining that the meeting at which the resolution was adopted complied with the Texas Open meetings Act; making such other findings and provisions related to the subject; and declaring an effective date (City Attorney)
Background:
ALLIANCE OF CENTERPOINT MUNICIPALITIES
The City is a member of the Texas Coast Utilities Coalition (“TCUC”) of cities. TCUC was organized by a number of municipalities served by CenterPoint Energy Resources Corp., Texas Coast Division (“CenterPoint”) and has been represented by the law firm of Herrera Law & Associates, PLLC (through Mr. Alfred R. Herrera) to assist in reviewing applications to change rates submitted by CenterPoint.
In CenterPoint’s immediately preceding general rate case, CenterPoint consolidated its four service divisions - the Beaumont/East Texas Division; the South Texas Division; the Houston Division; and the Texas Coast Division - into a single division to which CenterPoint refers as the “Texas Division.” The City intervened in the proceeding at the Railroad Commission as part of the broader Alliance of CenterPoint Municipalities (ACM). ACM is comprised of cities represented by the law firm of Herrera Law & Associates, including the ACM-TCUC cities, served by CenterPoint in what were its prior four divisions, and now consolidated into a single division.
“GRIP” RATE APPLICATION
Under section 104.301 of the Gas Utility Regulatory Act (“GURA”), a gas utility is allowed to request increases in its rates to recover a return on investments it makes between rate cases. This section of GURA is commonly referred to as the “GRIP” statute, that is, the “Gas Reliability Infrastructure Program.”
Under a decision by the Supreme Court of Texas, the Court concluded that a filing made under the GRIP statute permitted gas utilities the opportunity to recover return on capital expenditures made during the interim period between rate cases by applying for interim rate adjustment and that proceedings under the GRIP statute did not contemplate either adjudicative hearings or substantive review of utilities’ filings for interim rate adjustments. Instead, the Court concluded, the GRIP statute provides for a ministerial review of the utility’s filings to ensure compliance with the GRIP statute and the Railroad Commission’s rules, and that it is within the Railroad Commission’s authority to preclude cities from intervening and obtaining a hearing before the Railroad Commission.
CENTERPOINT’S “GRIP” APPLICATION
On or about February 18, 2025 CenterPoint Energy Resources Corp., Texas Division (“CenterPoint”) filed for an increase in gas utility rates under the Gas Reliability Infrastructure Program (“GRIP”). CenterPoint’s application if approved by the Commission will result in an increase in the monthly customer charges as shown below:
CenterPoint’s filing proposes a uniform increase in each customer class’s Customer Charge, as follows:
Residential: $2.88 per month
General Service-Small: $5.14 per month
Gen. Service-Large Vol: $61.20 per month
However, because CenterPoint’s customer charges are not currently uniform across its “Texas Division,” the increase in customer charge per customer class affects customers’ bills differently. The tables below show the current customer charges compared to the proposed customer charges in what were CenterPoint’s four prior divisions. We note that as part of the transition to a single “Texas Division,” the Houston and Texas Coast geographic areas have their own set of uniform customer charges, and the South Texas and Beaumont/East Texas Divisions have their own set of customer charges.
(see attached tables)
CenterPoint presents that its proposed increases in its customer charges produce an increase in annual revenue of about $70.7 million, system wide, in its Texas Division.
REVIEW AND ACTION RECOMMENDED
Although the City’s ability to review and effectuate a change in CenterPoint’s requested increase is limited, the City should exercise due diligence with regard to rate increases of monopoly utilities who operate within its boundaries, including increases requested under the GRIP statute to ensure compliance with the requirements of that law. This includes whether CenterPoint’s current rates produce a rate of return in excess of its authorized rate of return.
To exercise its due diligence, it is necessary to suspend CenterPoint’s proposed effective date of April 19, 2025 for forty-five days, so that the City can evaluate whether the data and calculations in CenterPoint’s rate application are correctly done.
Therefore, ACM-TCUC’s Special Counsel, the law firm of Herrera Law & Associates, PLLC (through Alfred R. Herrera) recommends that the City adopt a resolution suspending CenterPoint’s proposed effective date for 45 days. Assuming a proposed effective date of April 19, 2025, CenterPoint’s proposed effective date is suspended until June 3, 2025.
Attachments:
1. Proposed Resolution
2. Rate Tables
FUNDING
{ } Funds are available from Account #________
{ } Requires Budget Amendment to transfer from Account #______ to Account #______
{x} NOT APPLICABLE
STRATEGIC PLANNING
{ } Addresses Strategic Planning Critical Success Factor # ______ and Initiative # ______
{x} NOT APPLICABLE