CenterPoint Vice President Jason Ryan has outlined a plan under which its customers would be made whole for previous charges relating to the utility’s leases of mobile generation units that went unused during hurricane recovery efforts.
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As part of legislative negotiations with state lawmakers, Houston’s CenterPoint Energy says it has agreed to absorb the multi-million-dollar costs of 15 large, mobile generators that went unused during hurricane recovery efforts last year.
However, questions remain as to whether the deal will benefit consumers to the extent touted by the utility.
The Background
CenterPoint’s plan was unveiled during a debate this month over SB 231, which is legislation authored by Sen. Phil King to reform the state’s existing temporary emergency generation rules. Those existing rules — which King says were abused by CenterPoint — were created by legislation authored by the same Weatherford Republican during the 2021 legislative session.
During an April 3 hearing of the Senate Business and Commerce Committee, CenterPoint Vice President Jason Ryan outlined a plan under which its customers would be made whole for previous charges relating to the utility’s leases of mobile generation units that went unused during Hurricane Beryl recovery efforts. Previous reports have put the cost at $818 million, although Sen. King has put the total cost at $997 million if one factors in interest payments.
Ryan said then that CenterPoint would file a Public Utility Commission application to remove from rates the costs of the generators from the period starting at the end of April through the end of the lease. And indeed, on April 18, the company filed an application to reduce its annual revenues associated with the generation units by $24,022,583 (PUC Doc. No. 57980). Additionally, Ryan said April 3 that CenterPoint, at its own cost, would coordinate with the Electric Reliability Council of Texas (which operates the state’s primary electrical grid) to employ the leased units during the remaining two years of the lease to assist in the San Antonio area.
Questions About the Deal
However, an examination of the deal terms conducted by the Houston Chronicle questions whether ratepayers will receive the amount of benefit as touted by the utility. Under an April 7 article entitled “No, CenterPoint will not fully refund customers for its unused generators,” the newspaper’s Claire Hao noted that CenterPoint factors into the deal $250 million in revenue reductions that stem from a January settlement with cities in a recently settled rate case. Ratepayers were already due those savings, regardless of any negotiations over SB 231.
Hao also wrote that CenterPoint figured into its calculations the effect of delayed rate hikes for grid upgrades for 2023 and 2024. She noted that while the utility did withdraw an application to increase rates in February, CenterPoint has told state regulators it still plans to file a revised rate hike application in the future.
The Chronicle said that utility officials declined to answer a list of questions about the deal, including one about why its settlement agreement with cities was included in the package to make ratepayers whole for the unused generators. “What no one mentioned at last week’s meeting is that CenterPoint’s customers were already going to get some of those discounts,” wrote Hao.
HB 231, the legislation to reform the state’s emergency generation rules, has been adopted by the Texas Senate and referred to the House State Affairs committee.