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CenterPoint Energy files to increase rates 6 percent

CenterPoint Energy on November 3 filed an application with the Minnesota Public Utility Commission (MPUC) to change the company's natural gas distribution rates.

If approved, the new rates will increase the average residential customer's bill by about 6 percent or $5.50 per month.

"CenterPoint Energy Minnesota revenues are not keeping pace with increasing costs," said David Baker, CenterPoint Energy's vice president of gas operations in Minnesota. "We recognize the importance of keeping our rates as reasonable as possible; however, the ability to earn a reasonable return on investment is critical to our ability to continue providing safe and reliable service to our customers in Minnesota."

This filing seeks approval to change the distribution charge on a customer's natural gas bill, which makes up about 20 percent of the total bill and covers the cost of distributing natural gas. The filing does not apply to the cost of natural gas, which is the wholesale price the company pays for natural gas and makes up about 80 percent of the bill.

The wholesale price of natural gas changes monthly, depending on market prices, and is passed on directly to customers with no mark-up.

The principal reasons CenterPoint Energy is proposing to change base rates are:

•Increased operating costs including higher uncollectible customer account expenses and the related collection and customer service costs, along with inflationary increases on other expenses.

•Increased expenses related to conservation improvement programs.

•Decreased average customer use because of energy efficiency and building construction improvements.

•Increased capital structure costs.

Additionally, CenterPoint Energy has proposed a pilot rate adjustment mechanism that separates the company's revenue from the volume of natural gas sold.

"By better aligning the interests of our company and our customers, these rate designs support the promotion of conservation and energy efficiency," Baker said.

Customers will see the first change on bills beginning January 2, when interim rates are expected to take effect. Interim rates will stay in place until a decision is made by the MPUC and the company implements final approved rates.

In 2009, public hearings will be held to provide customers and other interested parties the opportunity to comment on the rate request, followed by formal hearings at the MPUC. CenterPoint Energy expects a final decision from the MPUC and the new rates to be implemented in late 2009.

If approved, the new rates would generate approximately $59.8 million or 3.9 percent in additional revenue on an annual basis. The effect on individual monthly bills will vary depending on natural gas use and customer class.

If final approved rates are lower than interim rates, CenterPoint Energy will refund the difference to customers with interest. If the final rates are higher than the interim rates, customers will not be required to make up the difference.

Customers with questions about the proposed change to natural gas distribution rates can call CenterPoint Energy at (612) 372-4727 or 1-800-245-2377, or visit the company's Web site at