Houston Mayor John Whitmire is pushing for action to reduce the electric rates charged by CenterPoint Energy.
In a letter the Public Utility Commission (PUC) received this week, Mayor Whitmire criticized CenterPoint’s ongoing high profits, particularly as the utility is under investigation for system reliability issues.
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“A utility should not be allowed to continue to over-earn, especially when it is under investigation for failing to maintain the reliability of its system,” Whitmire stated in the letter.
Earlier this month, CenterPoint withdrew its mandatory rate review, a process designed to scrutinize the utility’s pricing practices. This withdrawal came despite claims from city leaders, including Houston, that CenterPoint is overcharging customers by more than $100 million annually.
However, an administrative judge ruled that CenterPoint could not drop the review.
The utility company must either appeal the decision or resume negotiations with the cities challenging its rates. These cities are calling for CenterPoint to lower its rates and relieve customers from what they believe to be inflated pricing.
State law requires that the Public Utility Commission of Texas conduct a comprehensive rate review every four years, with CenterPoint’s last review in 2019. CenterPoint had requested to delay its review until June 2025, but the judge denied the withdrawal, stating that the utility must adhere to the legal requirement of a timely review.
Some say waiting for a review is costing all of us
Consumer advocates warn that delaying the review could result in customers continuing to pay higher rates until at least 2025, with no opportunity for refunds on overcharges.
For every month that the PUC does not take action or set an interim lower rate, Mayor Whitmire and other city leaders argue that CenterPoint continues to collect an additional $10 million from overcharging customers.
What’s next?
The ball is now in the PUC’s court as it considers CenterPoint’s appeal.
Investigator Amy Davis has been following the case closely, digging into the latest developments to understand what this could mean for your electric bill.
Do you have a question for Amy? Email ADavis@kprc.com.
Dear Chairman Gleeson and Members of the Commission,
On August 1, 2024, CenterPoint Energy Houston Electric, LLC (CenterPoint) filed a request to withdraw its rate case application. This request was denied by the State Office of Administrative Hearings, and opposed by several parties in this proceeding, including the Houston Coalition of Cities (HCC) of which the City of Houston (City or Houston) is a member.
CenterPoint was required to file this application per State Law and the Commission’s corresponding Rate Review Schedule. Utilities, such as CenterPoint, take advantage of the numerous mechanisms in place that allow them to recover a significant portion of their costs outside of a base rate case. Alternative rate mechanisms, such as the Distribution Cost Recovery Factor (DCRF), incentivize utilities to avoid filing a rate case, thus the reason for the rate filing schedule. Houston is concerned that allowing CenterPoint to withdraw establishes a negative precedent, exacerbated by the fact that the ratepayers may be entitled to rate decrease based on the collective findings of the parties in this proceeding, including HCC.
Houston agrees that CenterPoint needs to focus on power resiliency and restoring the public trust. However, as regulator, Houston is also committed to ensuring ratepayers receive safe and reliable (and resilient) electric service at just and reasonable rates. A utility should not be allowed to continue to over-earn, especially when it is under investigation for failing to maintain the reliability of its system. If the Commission decides to abate the proceeding, Houston urges the Commissioners to set interim rates based on the evidence presented in the proceeding.
Mayor John Whitmire
CenterPoint Energy sent us the following statement:
“While we continue to undertake a historic level of resiliency actions and investment to be better prepared for the next major storm, CenterPoint Energy remains committed to affordability, as reflected by the fact that customer rates that pay for the Transmission & Distribution system have remained relatively flat over the past 10 years. CenterPoint will continue to prioritize affordability, including by conducting an independent third-party assessment of the benefits and costs of its longer-term investments.”
