CenterPoint Energy continues to invest in the safety, reliability and resiliency of its natural gas system to benefit customers

Rhea-AI Summary

CenterPoint Energy has filed a settlement agreement with the Minnesota Public Utilities Commission for its 2023 rate case, which will adjust natural gas distribution service rates in 2024 and 2025. The agreement, reached with multiple intervening parties, aims to maintain safety and reliability for over 920,000 customers across 260 Minnesota communities. The settlement will enable infrastructure upgrades, support low-carbon technologies, and ensure compliance with federal regulations. The company plans to invest in pipeline replacement, system upgrades, and facility relocations. The Commission's decision is expected in 2025.

Positive

• Settlement agreement reached with all intervening parties, reducing regulatory uncertainty
• Planned infrastructure upgrades to enhance system reliability and safety
• Recovery of costs for innovation plan investments in low-carbon technologies
• Large customer base of 920,000 customers across 260 Minnesota communities

Negative

• Rate adjustment may impact customer costs
• Significant capital expenditure required for infrastructure upgrades
• Final approval from Commission still pending until 2025

Insights

Financial Analyst

The settlement agreement for CenterPoint Energy's Minnesota rate case represents a significant regulatory development with mixed financial implications. The proposed rate adjustments for 2024-2025 will support critical infrastructure investments and system maintenance across their 920,000+ customer network in Minnesota.

The agreement's focus on infrastructure upgrades and compliance with federal regulations suggests steady, regulated returns. However, investments in low-carbon technologies and innovation plans may pressure near-term margins. The collaborative settlement approach with multiple stakeholders increases the likelihood of Commission approval, reducing regulatory uncertainty.

The timing of revenue recognition is notable, with implementation expected in 2025. This regulatory lag could impact short-term cash flows, though the eventual rate adjustment should provide stable, long-term returns typical of utility investments.

The company filed a settlement agreement with the Minnesota Public Utilities Commission reached with intervenors on its 2023 rate case

MINNEAPOLIS, Nov. 25, 2024 /PRNewswire/ -- Today, CenterPoint Energy filed a settlement agreement with the Minnesota Public Utilities Commission (Commission) for its rate case submitted in November 2023, to adjust natural gas distribution service rates in 2024 and 2025. The company reached a settlement agreement with all intervening parties including: Minnesota Department of Commerce, Minnesota Office of Attorney General – Residential Utilities Division, Citizens Utility Board of Minnesota, International Union of Operating Engineers Local 49, LIUNA of Minnesota and North Dakota, and Suburban Rate Authority.

If approved by the Commission, CenterPoint's rate adjustment will enable the company to:

• Continue to maintain the safety, resiliency and integrity of its natural gas distribution system to benefit the company's more than 920,000 customers in over 260 local Minnesota communities.
• Continue to support the advancement of low- and zero-carbon technologies, including recovering certain costs for the company's innovation plan approved in July 2024 by the Commission under Minnesota's Natural Gas Innovation Act for investments in innovative technologies and low- and zero-carbon energy resources.
• Conduct infrastructure projects to replace or upgrade existing pipelines, provide safe and reliable service, comply with federal pipeline regulations and relocate facilities to enable projects by government agencies such as roads, bridges, drainage and other infrastructure.
• Accommodate the increased investments to operate, maintain and deliver natural gas through the company's distribution system.

"From the outset, we were determined to use a collaborative approach with state agencies and all intervenors to reach a settlement agreement that worked for all parties. This agreement prioritizes the safety, reliability and resiliency of the energy system for the benefit of our customers and communities throughout Minnesota," said Brad Steber, CenterPoint's Vice President of Minnesota Gas. "The agreement meaningfully plans for current and anticipated near-term future investments to continue to serve our customers' needs for readily available energy resources. These proposed investments will enhance our ability to deliver energy when customers need it most to help them withstand the coldest days of winter and to keep them safe and warm."

The Commission will review and decide upon the filed settlement agreement. A decision is expected in 2025.

Meaningful investments in the company's natural gas system
A rate case is a forward-looking proposal to plan for the continued needs of customers for energy service. CenterPoint plans to continue to make investments in the safety and resiliency of the company's natural gas distribution system to benefit its customers including:

• Replacing natural gas lines using modern construction methods and materials.
• Relocating natural gas meters inside residential customer's homes to outside for improved access in case of an emergency and for enhanced customer safety.
• Deploying smart natural gas meters for residential customers, which have enhanced safety and communications features.
• Using methane detection vehicles that have a higher level of detection capability to monitor methane emissions and more efficiently conduct leak detection operations, allowing for faster mitigation and repair of natural gas leaks.
• Leveraging vacuum-like technology, also known as cross-compression, during repair, replacement and inspection of a natural gas line to help prevent natural gas from going into the air. Instead, the natural gas is temporarily stored or placed in another segment of natural gas line.

Rate adjustment proposal
As identified in the proposed settlement agreement, CenterPoint is requesting adjustments to the delivery charge, or the cost to deliver natural gas. The delivery charge accounts for approximately 50% of a typical residential customer's monthly bill. The remaining approximately 50% of a customer's bill is the cost of natural gas which is passed through at cost. CenterPoint does not profit from the overall cost of natural gas.

The requested increase is approximately 4.7% or $60.8 million for 2024 and approximately 3.1% or $42.7 million for 2025. The requested increase will add $2.70 to the average residential customer's monthly bill in 2024 and an additional $1.27 to an average residential customer's monthly bill in 2025.

While the rate case is under consideration, interim rates are in effect. Interim rates started with the January 2024 billing cycle and added approximately $4 per month to the average residential bill. It is anticipated that interim rates for 2025 would begin with the January 2025 billing cycle and be approximately $2 more per month for an average residential customer's bill as the Commission reviews the settlement agreement.

Interim rates are applied as an equal percentage across all customer types. After final rates have been approved by the Commission, and if interim rates are set higher than final approved rates, CenterPoint will calculate a refund to customers for the difference in interim rates and final rates. The refund will be based on actual customer usage while interim rates were in effect, including interest, and will be issued as a credit on a monthly bill.

CenterPoint offers various programs, tools and tips to help customers manage their bills and save energy. The company encourages those facing hardship to call CenterPoint to find out about payment arrangements and be referred to resources that may be available. To learn more, call 800-245-2377 between 7 a.m. and 7 p.m., Monday-Friday or visit CenterPointEnergy.com/PaymentAssistance.

More details about the rate case can be found at CenterPointEnergy.com/RateCase.

About CenterPoint Energy, Inc.
As the only investor-owned electric and gas utility based in Texas, CenterPoint Energy, Inc. (NYSE: CNP) is an energy delivery company with electric transmission and distribution, power generation and natural gas distribution operations that serve more than 7 million metered customers in Indiana, Louisiana, Minnesota, Mississippi, Ohio and Texas. With approximately 9,000 employees, CenterPoint Energy and its predecessor companies have been in business for more than 150 years. For more information, visit CenterPointEnergy.com.

Forward-looking statements
This news release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this news release, the words "anticipate," "believe," "continue," "could," "estimate," "expect," "forecast," "goal," "intend," "may," "objective," "plan," "potential," "predict," "projection," "should," "target," "will" or other similar words are intended to identify forward-looking statements. These forward-looking statements are based upon assumptions of management which are believed to be reasonable at the time made and are subject to significant risks and uncertainties. Actual events and results may differ materially from those expressed or implied by these forward-looking statements. Any statements in this news release regarding future events, such as approval by the Commission of the settlement agreement and timing thereof, the anticipated benefits of the rate adjustment, investments in the company's natural gas system and the anticipated benefits thereof, the amount and expected impact to customer's bills, and any other statements that are not historical facts are forward-looking statements. Each forward-looking statement contained in this news release speaks only as of the date of this release. Important factors that could cause actual results to differ materially from those indicated by the provided forward-looking information include risks and uncertainties relating to: (1) CenterPoint Energy's business strategies and strategic initiatives; (2) financial market conditions; (3) general economic conditions; (4) the timing and impact of future regulatory and legislative decisions; and (5) other factors, risks and uncertainties discussed in CenterPoint Energy's Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and CenterPoint's Quarterly Report on Form 10-Q for the quarters ended March 31, 2024, June 30, 2024, and September 30, 2024 and other reports CenterPoint Energy or its subsidiaries may file from time to time with the Securities and Exchange Commission.

For more information, contact
Communications
Media.Relations@CenterPointEnergy.com

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SOURCE CenterPoint Energy, Inc

FAQ

What is CenterPoint Energy's (CNP) 2023 Minnesota rate case settlement about?

The settlement agreement adjusts natural gas distribution service rates for 2024-2025, enabling infrastructure upgrades, safety improvements, and support for low-carbon technologies across Minnesota communities.

How many customers will be affected by CenterPoint Energy's (CNP) Minnesota rate adjustment?

The rate adjustment will affect more than 920,000 CenterPoint Energy customers across 260 local Minnesota communities.

When will the Minnesota Public Utilities Commission decide on CenterPoint Energy's (CNP) rate case?

The Commission's decision on CenterPoint Energy's rate case settlement is expected in 2025.

What infrastructure improvements will CenterPoint Energy (CNP) make under the Minnesota settlement?

The company will replace or upgrade existing pipelines, enhance system safety and reliability, comply with federal regulations, and relocate facilities for government infrastructure projects.