Other Information: |
BACKGROUND
On about November 16, 2017, CenterPoint Energy Resources, Corp. d/b/a CenterPoint
Energy Entex and CenterPoint Energy Texas Gas (CenterPoint or Company) filed a
Statement of Intent to increase its system-wide annual revenue requirement by
approximately $490 thousand and recover through a 12-month surcharge approximately
$676,000 in extraordinary expenses it incurred related to Hurricane Harvey. CenterPoint
filed its application to increase rates with the City and the Railroad Commission of Texas
on the same date.
The City is participating in the proceeding before the Railroad Commission and in its
review of CenterPoint’s application, as part of the Alliance of CenterPoint Municipalities
– South Texas Division (“ACM”). Through ACM, the City engaged special counsel and
rate consultants to review CenterPoint’s application to increase rates. The City earlier
took action on CenterPoint’s Statement of Intent and suspended CenterPoint’s proposed
rate increase to allow its special counsel and rate consultants to review CenterPoint’s
application.
After extensive review the City’s special counsel and rate consultants concluded that a
decrease in CenterPoint’s annual revenue requirement is in order. Their review suggests
that CenterPoint’s rates should be decreased by approximately $5.0 million instead of an
increase of about $1.2 million (including the surcharge for hurricane expenses) as
proposed by CenterPoint. The rate consultants’ suggested decrease is premised on
numerous adjustments to CenterPoint’s cost of service, including the effect of the
reduction in the corporate federal income tax rate (arising from the Tax Cut and Jobs Act
of 2017 (TCJA)), adjustments to its return on equity, its net invested capital (also known
as its “rate base”), customer-service expenses, incentive-compensation expenses, and
expenses related to pension and employee benefits.
If the case were to be litigated at the Railroad Commission of Texas, ACM’s litigating
position would be to seek a decrease of about $5.0 million to CenterPoint’s request. But
as is usually the case, with litigation comes the risk of litigation; and in a rate proceeding,
no party prevails on each issue it presents.
Additional information is available on the attached Agenda Information Sheet. |