Contact: Minnesota Public Utilities Commission
Burl Haar 
Telephone: 651.201.2222
Janet Gonzalez 
Telephone:  651-201-2231
Fax: 651.297.7073

St. Paul –The Minnesota Public Utilities Commission, at its December 1st meeting, authorized a rate increase of approximately $43 million for CenterPoint Energy (CPE), i.e., $16.8 million less than the $59.8 million the Company had requested. This action culminates a year-long fact-finding and decision-making process. The Commission’s action included net reductions to the assets on which the company is allowed a return, reductions for allowed expenses, and an overall rate of return of 8.09% (10.24% return on equity) compared to the 8.29% (11.0% return on equity) requested by the Company.

CenterPoint’s rate filing included a proposed plan for a “decoupling” pilot project. This stems from the Next Generation Energy Act, passed by the Minnesota Legislature in 2007. The Act sets aggressive energy saving goals for all Minnesota electric and gas utilities and directs the Commission to establish criteria and standards for a pilot “decoupling” program and to approve at least one pilot proposal. The Commission established the standards earlier in 2009. CenterPoint’s proposed plan is the first such plan presented to the Commission.

Decoupling is intended to take away the link between the amount of energy a company sells and its revenue, and by so doing, eliminate the incentive to sell more. At the most general level, decoupling allows for periodic rate adjustments designed to hold company revenues at the Commission authorized target level, regardless of changes in the amount of gas CPE sells. In other words, the intent is to remove any disincentive for the utility to invest in conservation.

The specific plan presented to the Commission was the result of an agreement by several parties in the case; i.e., CenterPoint Energy, Energy Cents Coalition, Izaak Walton League of America, and the Minnesota Center for Environmental Advocacy. The agreement was for a 3 year pilot program and included a proposal for inverted block rates; i.e., rates that increase as usage volume grows. Inverted rates are intended to create incentives for individual customers to conserve.

The Commission adopted the decoupling/inverted block rate agreement presented by the parties, with some modifications. The main components of the plan are as follows:

• The Commission authorized revenue target for the decoupling plan will be the final level determined in the present rate case
• Annual review of the program will occur in the first quarter of each year
• Any rate adjustment authorized under the program will be included as a separate line item on customer bills
• Any over recovery (i.e., revenues above the authorized target) is to be refunded to ratepayers. If revenues fall below 3% of the revenue target, the Company is allowed to seek a rate adjustment
• Requires the filing of an Evaluation Plan detailing, among other things, the effects of the inverted block rate plan as well as all new and enhanced conservation projects stemming from the decoupling program
• Specifies that the program applies only to CPE’s small volume firm customers; i.e., residential customers and small volume commercial customers.

There were 25 additional decision issues in the Commission’s decision.

Parties may ask for rehearing and reconsideration of today’s decision within 20 days, as specified by statute.

CPE has been collecting an interim (i.e., temporary) rate increase of approximately $51.2 million since January 2, 2009. At the conclusion of this case, i.e., after any reconsideration has occurred, the difference between $51.2 million and the final authorized amount will be refunded to CPE customers.

A final written order formally documenting the Commission’s decision will be issued in several weeks. That order will be available via the Commission’s e-Dockets system using the case docket number (G-008/GR-08-1075). All other public documents in the case are also accessible there.