CenterPoint Ratepayers Revolt as Green Pricing Plan Leads to Skyrocketing Heating Bills

With the lowest natural gas prices in years, ratepayers might expect to get a break on their energy bills. However, an experimental pricing system imposed on CenterPoint customers this season by the Minnesota Public Utilities Commission (PUC) at the urging of environmental groups has many Minnesotans turning up the heat on state and utility officials over unexpectedly high winter natural gas heating bills. The controversial issue is the subject of recently introduced legislation at the state capitol.

One stunned homeowner from Dayton, Minnesota who received a February heating bill for $450 told the PUC in a blistering letter that she lives in a five-year old house with energy efficient windows, appliances, and furnace. “I know this was a colder year but these prices are outrageous,” Sue Harff wrote. “People are already losing their houses. Are we supposed to get priced out because of heat bills, too?”

Scores of irate and impassioned complaints have poured in to CenterPoint Energy and the PUC over the financial impact of the so-called “tiered natural gas pricing” program. Also known as “inverted block rate” pricing, the program charges customers who use comparatively more energy an inflated rate for natural gas. The complaints are posted publicly by the PUC.

“I am angry that CenterPoint put in place a system that forces us to pay higher gas bills at a time when the economy is slow and we have less money to spend,” Matthew Smith of Minneapolis wrote to the PUC in an email. ”The timing couldn’t be worse…MY WIFE AND I CANNOT AFFORD TO PAY THESE UNFAIRLY ALLOCATED RATES.”

Under the three-year pilot program, the first 30 “therms” (a unit of measurement) on the bill are discounted at a rate below cost, the next tier is charged approximately at cost, and the remaining three tiers are charged at increasingly higher rates per therm. The pricing structure does not take into account factors such as family income, household size, or energy efficiency investments made by homeowners.

“People that don’t have a lot of disposable income are already cutting corners and those that do have the money probably could care less about their energy bill and you are just legally stealing from them because they have no choice,” Theron Yantes told the PUC. “Your plan is pointless and is only hurting the lower and middle class again doing nothing to conserve energy.”

Many who lodge complaints express support for energy conservation, but believe the tiered pricing program will have the opposite effect. Some express concern about the financial impact not just on themselves, but on seniors and those with fixed incomes. Some stay-at-home parents say the program penalizes larger families for their energy use and smacks of social engineering. Others note that the U.S. has an abundance of natural gas and significant reserve supplies. Another common concern points out that the utility has a monopoly and there is no competitor for consumers to turn to for lower prices.

“It is analogous to two cars that get fuel at the gas station,” wrote Grant Hiesterman of Bloomington in responding to his $539 heating bill. “The car that needs 10 gallons pays $3.00 per gallon. The car that needs 25 gallons pays $6.00 per gallon…for the same gas!”

The pilot project grew out of the Next Generation Energy Act passed by the Minnesota Legislature and signed by Governor Pawlenty in 2007. The Act directed the PUC to “decouple” or change the way utilities raise revenue, relying less on the amount of energy sold, theoretically eliminating the disincentive for utilities to invest in conservation measures.

Some of Minnesota’s biggest environmental groups played a key role in crafting the controversial pilot program, including Energy Cents Coalition, Izaak Walton League, and the Minnesota Center for Environmental Advocacy.

Today the Senate Energy and Utilities Committee will hold a hearing on a bill (SF 817) introduced by Senator Michelle Benson (R-Ham Lake) that includes language repealing the natural gas utilities’ inverted block rate program. The committee may consider the repeal for inclusion in an omnibus energy policy bill to be assembled in the next few weeks. The companion bill in the House was discussed in committee earlier this month.

In the meantime, many CenterPoint consumers will be left wondering how they wound up paying the down payment for a controversial energy-saving experiment that the state, environmental groups and utility decided was worth everyone else’s investment.

A Maple Grove man with a newly constructed home with the latest energy efficient appliances and materials summed up the frustration and anger among many CenterPoint customers. “What are my options to decrease my bill and become more efficient? Should I start burning newspaper in a trash can in my garage?” Patrick O’Keefe wrote to the PUC. “Or should I spend $50,000 to add geothermal heating to my home? Both seem unreasonable.”

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