Energy Efficiency

Fixed charged increase denied by Minnesota regulators

decoupling

UPDATE: The Public Utilities Commission (PUC) released its official, written ruling on June 3 after verbally ruling in favor of Fresh Energy’s recommended action of denying CenterPoint Energy’s request to increase the monthly customer charge (or “fixed fee”) in early May. Their specific decision on customer charges can be found online, including the following key arguments made by Fresh Energy throughout the case:

The Commission concludes that increasing CenterPoint’s customer charges would place too little emphasis on the need to set rates to encourage conservation. This is particularly true since the Company has a full-decoupling mechanism. One of the benefits of customer charges—in the absence of decoupling—is that they stabilize the utility’s revenue, guaranteeing a minimum amount of recovery each month regardless of customers’ usage. However, decoupling already guarantees that CenterPoint will not fail to recover its revenue requirement due to lower-than-predicted sales.

Further, a major goal of revenue decoupling is to align a utility’s interests with the public’s interest in energy efficiency. Increasing the customer charge undermines this goal by incrementally reducing customers’ incentive to conserve energy since, with a higher customer charge and relatively lower volumetric charge, they are less able to control the size of their bills by using less energy. Keeping CenterPoint’s customer charges at current levels will maintain the existing incentive to conserve without affecting the Company’s revenue stability.

 


Minnesota regulators have denied an increase to CenterPoint Energy’s monthly fixed charge, instead pointing to the company’s current decoupling policy as the best way to balance revenue requirements with energy savings.

  • On Thursday the Minnesota Public Utilities Commission denied CenterPoint Energy’s (the state’s largest natural gas utility) request to increase the residential customer charge from $9.50 to $11.75 per month.
  • Fresh Energy advocated for no increase in the residential customer charge, arguing that it is duplicative with the full decoupling in place and weakens the economics of energy efficiency for customers.
  • Commissioners agreed, arguing that increasing the portion of the customer’s bill that doesn’t vary with usage reduces a customer’s motivation for conservation and energy efficiency.

In August, 2015, CenterPoint Energy filed its third rate case in eight years with the Public Utilities Commission. Included in the case was a request to increase its residential customer charge from $9.50 per month to $11.75 per month. This would have weakened the economics of energy efficiency by limiting the portion the bill that customers can control through energy usage and investments in energy efficiency. Fresh Energy intervened in the case and offered testimony showing that the requested increase was unnecessary in the presence of the company’s full decoupling mechanism and ran contrary to Minnesota statute that requires rates to encourage conservation.

This is the second rate case decision in a row by the Minnesota Public Utilities Commission to deny an increase to the monthly fixed charge, or customer charge. The previous ruling was made in spring of 2015. That ruling involved two key victories within the Xcel Energy rate case: denying an increase to the fixed charge on consumers, and moving forward with a full decoupling policy, an accounting tool used to move utilities past the model of simply selling more and more kilowatt hours. Those were both significant steps toward a more efficient energy system for consumers and utilities.

Recent research by Fresh Energy, done in partnership with the Natural Resource Defense Council (NRDC), has shown that utilities with decoupling policies are putting more money into energy efficiency and achieving greater energy savings.

Moving forward, this issue will continue to be at the forefront of decision makers in Minnesota. Fresh Energy, NRDC, Minnesota Center for Environmental Advocacy, and Sierra Club, as well as other local stakeholders like AARP, are currently intervening in Xcel Energy’s rate case, where the utility is requesting an increase in the residential customer charge.

Minnesota regulators have denied an increase to CenterPoint Energy’s monthly fixed charge, instead pointing to the company’s current decoupling policy as the best way to balance revenue requirements with energy savings.

Leave a comment