Controversial Energy Pricing Program Generates More Controversy

CenterPoint Energy has announced its support for the suspension of the controversial Inverted Block Rate natural gas pricing system for the utility’s 715,000 ratepayers.

In a joint filing with the Minnesota Public Utilities Commission (PUC), several environmental groups defended the premise of the program of charging some customers more than others for the amount of energy they use.

“The Parties continue to believe that the policy underpinnings relied on by the Commission in approving the [Inverted Block Gas Recovery] structure on a pilot basis are sound,” according to the document on file with the PUC.

The Minnesota Center for Environmental Advocacy (MCEA), Izaak Walton League of America (IWLA), and Energy Cents Coalition (ECC) announced they will ask the PUC on September 28 to establish a working group to make modifications to the program and report back in 2012. In the meantime, the pilot program would be suspended for the coming winter pending program changes. The option would remain to reinstitute the pilot program next year.

Public opposition to the tiered natural gas pricing program resulted in legislation that was signed by Governor Mark Dayton to eliminate the three-year pilot program. While acknowledging the public outcry, the environmental groups said in their filing that the program’s premise was to “send a price signal to exactly such customers.”

Despite the lowest natural gas prices in years, many CenterPoint ratepayers saw their energy bills spike this winter, thanks to the experimental pricing system.

Under the tiered energy 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.

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 are posted publicly on the PUC website. Concerns include the program’s financial impact on seniors, lower income families and others on fixed incomes, stay-at-home parents and daycare providers. Some question the program’s premise given the U.S. abundance of natural gas supplies.

“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.”

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.


Stay In the Loop

Stay Up To Date

Sign up today for our
e-update to find out what is
going on in your state and
local government.

FFM Tipline

We will do our best to uncover the wasteful spending you report.