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UPDATED STORY: Gas bills will still decrease even if rate increase approved

Less than two weeks after stating that its monthly natural gas bills in Arkansas would drop 19 percent, CenterPoint Energy on Tuesday filed for an increase in its base rate.

Houston-based CenterPoint filed the application with the Arkansas Public Service Commission.

CenterPoint is seeking a 12.2 percent increase in its monthly gas bills. A news release from CenterPoint said an average customer's bill will rise $6.68 per month if the rate increase is approved by the commission. The company did not say how much an average bill is.

The company could not explain Tuesday how much the increase would be after the 19 percent drop is figured in for a residential bill of $100 per month.

The 19 percent drop that CenterPoint announced on Oct. 30 was a rate change to cover only the cost of natural gas, which utilities are required to pass along to customers without taking a profit.

But natural gas bills represent the total cost a utility incurs to supply gas to its customers.

"What was filed [Tuesday] was a rate increase for things other than [CenterPoint's] natural gas supply," said Valerie Boyce, the commission's chief of staff.

That includes the cost of building pipelines, meters and buying trucks -- everything the utility needs to get natural gas to its customers, Boyce said. Also included in base rates are salaries for employees, said Alicia Dixon, a spokesman for CenterPoint.

The reason CenterPoint and other utilities in the state had such large declines in the natural gas portion of their bills two weeks ago is because the cost of natural gas has declined significantly in the past year.

Natural gas was trading at $2.329 per million British thermal units on the New York Mercantile Exchange on Tuesday. At this time last year, natural gas was trading for $3.557 per million Btu. A Btu is the amount of heat required to increase the temperature of a pound of water 1 degree Fahrenheit.

The portion of CenterPoint's monthly bill that covers the cost of natural gas accounts for about 40 percent of the bill, the utility said. The base rate portion accounts for the remainder of the bill.

It will be a long process before the commission determines what is an appropriate cost adjustment for CenterPoint, Dixon said. CenterPoint expects it will take a year before the new rates go into effect, Dixon said.

It is unlikely that the commission will approve the entire 12.2 percent increase, Boyce said.

"That is the maximum [CenterPoint] could get," Boyce said. It is seldom that utilities get the entire rate increase they request, Boyce said.

CenterPoint's last increase in base rates went into effect eight years ago, Walter Bryant, CenterPoint's vice president of gas operations in Arkansas, said in a prepared statement.

CenterPoint has about 403,000 customers in Arkansas.

"Since that time, CenterPoint Energy has continued to make significant investments, such as our ongoing pipeline replacement programs, to maintain the safety and reliability of our natural gas system," Bryant said.

In addition to the rate increase, CenterPoint is proposing a formula rate plan to be used in response to a recently enacted law by the state legislature.

The annual mechanism would help reduce the lag in CenterPoint's recovery of its investments and expenses, the company said. The formula would allow for smaller rate adjustments over shorter periods of time rather than large adjustments over longer periods, CenterPoint said.

A Section on 11/11/2015

Print Headline: Gas-rate increase of 12.2% requested

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