Minn. AG seeks end to CenterPoint tiered gas rates

Attorney General Lori Swanson is asking the Minnesota Public Utilities Commission to roll back an experimental pricing structure for customers of CenterPoint energy's natural gas system.

Swanson said the so-called inverted block rate program was implemented with the best intentions. It was supposed to raise the price of natural gas as people used more to heat their homes and to encourage conservation.

But she said homeowners have a limited ability to conserve and that the plan may have unfairly raised their heating bills.

"We believe, and what our filing says today, is that the PUC ought to study further the impact on ratepayers before its allowed to continue, and in the meantime that the program ought to be suspended."

What's known as a "tiered rate structure" was authorized in state law more than 20 years ago, but was only implemented by CenterPoint last year. State energy legislation passed in 2007 directed the PUC to encourage experiments with non-traditional pricing structures.

Supporters said it would help justify investments in energy conservation. Opponents said market manipulation was the wrong way to accomplish that goal.

The experiment turned out to be an unpleasant surprise for some homeowners. The attorney general said some paid hundreds of dollars more to heat their house this winter because of the system.

One couple affected is Lloyd and Carol White of Minneapolis.

"Almost all of us have done good window treatments, and we have a new efficiency boiler for our furnace, and a new water heater," said Carol White, a piano teacher. "You know, we've done all of that and still our bills are higher."

The attorney general said up to 20 percent of CenterPoint customers, more than 140,000 households, might see higher bills because of the new rates.

Swanson also said that her office was also looking into potential manipulation of billing by CenterPoint. She said the new rates were accompanied by longer billing cycles that would put more gas on a single bill, and move some customers into a higher rate.

Swanson said she wanted CenterPoint to consider refunds for customers who might have been affected by that situation, although she wasn't asking for refunds based on the tiered rate structure alone.

CenterPoint energy spokeswoman Becca Virden said that the company was looking at the attorney general's request to the Public Utilities Commission.

"The program was actually originally designed to send price signals, and once we have an opportunity to review the attorney general's comments, we will respond accordingly and follow the regulatory process."

The Public Utilities Commission is also taking public comments on the price plan through June 6, and will likely have a meeting on the subject in late summer.

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