2004-07-28 WS & CC Meeting - Laserfiche WebLink

Home Browse Search

Interim rates are an approved percentage increase on all customer biils that are effective about two months after a rate filing. These temporary rates are collected without changes to rate design. CenterPoint Energy Minnegasco is allowed to charge interim rates to recover the company's higher cost of providing utility distribution service, whlle regulators use subsequent months to determine final rates. Interim rates wiil take effect on October I, 2004, and stay in effect until the MPUC issues a fmal decision and final rates are implemented. If the fmal rates are less than interim rates, customers wiil be refunded the difference with interest. If fInal rates are higher than interim rates, customers will not be required to make up the difference. Public hearings providing opportunities for customers and others to provide input about the rate case will be scheduled for late fall. We will notify customers about the timing and location of the hearings through a news release, bill insert and on our Web site. An administrative law judge will oversee the hearings, and other parties (interveners) such as the OffIce of the Attorney General and the' Department of Commerce, will comment on our request. Why the rate case is needed The rate case flling is necessary for CenterPoint Energy Minnegasco to recover the increased costs of providing utility distribution service, and to improve the stability of our customers' bills. .1 . Our current rates do not ailow us to recover the increased costs for two reasons: our costs have increased and average customer demand, or sales, has decreased. These increased costs include pipeline relocation and reconstruction for street and highway projects, carryillg costs and customer debts related to higher natural gas costs, and other operating costs. Decreased average customer demand results from conservation improvements, energy efficiency, and improved building construction. Redesign of a utility's rate structure is traditionaily considered in a rate case. Our last rate case was flled in 1995. Since then, wholesale gas costs have become increasingly variable, causing customer bills to fluctuate more than in previous years. This filing proposes a new rate structure to improve the stability of customers' bills, and better match rates with the costs of serving each type of customer. Your energy dollar Understanding rate design The largest portion of a customer's bill, about 80 percent, is for the wholesale cost of natural gas. CenterPoint Energy Minnegasco passes this cost directly to customers with no mark-up. The remaining 20 percent of the bill is the company's cost of distributing natural gas to customers. Natural gas distribution costs are recovered two ways: Basic Charge: Partially covers the cost of those services we provide every month, regardless of how much gas a customer uses. These fixed costs include maintenance of gas service lines and regulators; gas meters; meter reading; billing; maintaining facilities; vehicles; and equipment. Delivery Charge: Recovers the cost of delivering natural gas not recovered through the Basic Charge. These costs include taxes, salaries, depreciation, interest, and other operating expenses. The Delivery Charge is a per therm charge and the total amount changes with customers' use. Under the current rate structure, residential customers are- charged a $5 monthly Basic Charge and a Delivery Charge of $.12857 per thermo Under the proposed rate structure, residential customers will be charged a monthiy Basic Charge of $16 and a Delivery Charge of $.03833 per thermo This structure will provide some measure of stability for most customers because their winter bills will decrease and summer bills will increase, with less seasonal fluctuation. Our rate request is to recover the higher costs of providing reliable and safe natural gas distribution service. The company has not requested an increase in its distribution rates for nine years; meanwhile, our costs have increased. Changes in whoiesale natural gas costs (increases and decreases) are recovered through monthly changes in rates on customers' bills, and are passed through without mark- . . up. Customers pay oniy the wholesale cost of natural gas incurred by the company to acquire the gas, pius the distribution cost to serve customers.