Texas regulators mull letting CenterPoint Energy pull rate case because of storm

CenterPoint Energy's work in response to Hurricane Beryl and how it justifies the withdrawal of a major rate case dominated discussion at the Public Utility Commission of Texas meeting Oct. 24, but no action was taken.

CenterPoint Energy Houston Electric came under fire after the July 8 landfall of Hurricane Beryl near Matagorda, Texas, about 100 miles southwest of Houston, resulted in nearly 2.8 million customers losing power across multiple utilities. CenterPoint, at about 2.2 million, was the hardest hit. About 227,000 CenterPoint customers remained offline a week later, drawing criticism from Texas Governor Greg Abbott, legislators, and regulators.

On Oct. 24, CenterPoint Energy cited proceedings related to resolving resiliency issues related to Beryl in arguing for withdrawal of its application to change rates, which had been filed March 6.

“For the past three months, thousands of CenterPoint Energy employees have been laser-focused on transforming our company into the most resilient coastal grid in the country,” said Patrick Peters, CenterPoint Energy vice president and associate general counsel.

These efforts, part of CenterPoint’s Greater Houston Resiliency Initiative, involves three phases:

• Phase I, completed Aug. 28: in which 1,133 storm-resilient utility poles were installed, vegetation from 2,026 miles of power lines was cleared, and 300 automated grid “trip” savers were deployed;
• Phase II, to be complete by June 1, 2025: in which 25,000 storm-resistant utility poles will be installed, 4,500 automated reliability devices will be deployed, 350 intelligent grid switches will be installed, vegetation will be removed from 4,000 miles of distribution lines, 400 miles of power lines will be buried and 100 new weather-monitoring stations will be installed;
• Phase III, to be done between 2026 and 2028: to invest about $5 billion on “a smarter grid of the future," with details set to be released in January.

“In withdrawing this rate case, the company seeks to maintain momentum so that it may complete this important resiliency work,” Peters said. “We will then incorporate the feedback received from our customers, community leaders from the independent after-action review and from the commission's own investigation and report into an updated rate filing to be made in the second quarter of 2025.”

“These truly are extraordinary circumstances, much like those following Winter Storm Uri, when the commission granted a good-cause extension to Oncor’s rate filing deadline,” Peters said.

CenterPoint sought a$60 million increase

In its rate case, CenterPoint Energy sought the following:

• A 10.4% return on equity;
• A base rate increase of about $17 million for retail customers, calculated to increase by $1.25/month the bill for an average residential customer using 1 MWh/month;
• A base rate increase of about $43 million for wholesale transmission service

Gulf Coast Coalition of Cities General Counsel Thomas Brocato argued against allowing CenterPoint Energy to withdraw its rate application. “Customers are being overcharged millions of dollars each month this case gets delayed,” he said.

“You have twice now ruled that CenterPoint’s application should not be delayed. Discovery was conducted, testimony and rebuttal testimony has all been filed. The testimony supports a significant rate decrease, and that is not surprising, given that CenterPoint has filed over 30 piecemeal rate increases since its last base rate case,” he added.

Not only should the combined $60 million rate increase be denied, but existing transmission and distribution rates should be decreased, Brocato said.

Alton Hall, attorney with the Houston Coalition of Cities, emphasized his group is “requesting simply that you maintain the status quo.”

“The CenterPoint rate case was already in abatement,” Hall said. “The parties were engaging in settlement discussions. We’re simply asking that the commission deny the appeal so that we can go back to that. … But if you grant their withdrawal and they come back as their proposing with the cast next year, I think we all know what’s going to happen. That’s going to be a case where with all the things that have happened since 2023, which was a test year for this rate case, CenterPoint will come back in with the case that would, in their minds, justify a rate increase."

'Good points on both sides'

In response, PUC Chairman Thomas Gleeson noted that the commission recently conducted a hearing in Houston to discuss CenterPoint Energy’s performance during Beryl.

“One of the themes we heard was that the citizens of Houston wanted us to be able to evaluate CenterPoint's performance during Beryl,” Gleeson said. “One way to do that is to allow them to withdraw this case and then force them to file sometime in 2025 with a 2024 test year, where we could hear evidence put on about performance during barrel and their infrastructure improvements and all of that. Do you see any benefit to that? And if so, do you think that benefit is just outweighed by the delay?”

Hall said the two options—reviewing performance during Beryl and continuing the rate case—are not “mutually inconsistent.”

“I don't see why continuing settlement discussions on this rate case on a 2023 test year—which is what they filed and what the commission's rules require them to file —would be inconsistent with having them continue to do what they've been instructed to do by the governor and by this commission to look at their resiliency, their restoration efforts and improve those,” Hall said.

Gleeson said he had initially hoped to decide the issue Oct. 24, but after hearing oral arguments, he said, “I think we need to make a decision on this at the next open meeting. I still have some things I need to work through, because I’m still not sure which way to come down on this, honestly, because I think there are really good points on both sides.”