Houston-area municipalities are actively contesting CenterPoint Energy’s proposal to impose $1.3 billion in charges related to Hurricane Beryl and other storms from the previous year. CenterPoint, the primary electric provider in the region, is entitled to pass on “reasonable and necessary” expenses incurred during extreme weather events to customers, but such charges must be approved by the Public Utility Commission of Texas (PUC).
Should the request be approved, it could increase the average household’s monthly electricity bill by approximately $2.13, as outlined in CenterPoint’s rate adjustment application. However, representatives from Houston are advocating for more than $200 million to be cut from these costs, arguing that inadequate maintenance and inspection of the utility’s infrastructure prior to Hurricane Beryl contributed to the extensive damage. Energy consultant Michael Ivey highlighted the unjust nature of charging customers for what he perceives as ineffective maintenance practices.
Countering this assertion, Darin Carroll, CenterPoint’s senior vice president of electric business, dismissed Houston’s claims as lacking evidence, stating that the majority of the damage was due to high winds and vegetation—factors that fell outside the company’s responsibility.
The vast majority of the $1.3 billion request—around $1.1 billion—stems from costs incurred during Hurricane Beryl. This expense includes over $800 million for hiring approximately 14,000 external workers to assist in power restoration. Additionally, the application includes around $60 million in expenses attributed to Hurricane Francine and a January snowstorm.
Originally, a hearing was scheduled for both parties to present their arguments before the State Office of Administrative Hearings, which would inform the PUC. However, the hearing has been postponed to allow for further discussion towards a potential settlement.
The charges associated with last May’s derecho, approved by the PUC in April, were about $400 million and could increase monthly bills by approximately $1. The recovery for the storms will occur through securitization, a process allowing utilities to issue bonds to address unexpected costs, distributing these expenses over time to minimize the impact on consumers.
While all parties agree on the securitization method, they remain divided over the actual charges. Houston officials argue for cuts due to alleged double-counting of employee salaries, while CenterPoint maintains that salaries incurred during storm response are justifiable, as employees often performed duties beyond their typical responsibilities.
The ongoing negotiations reflect the intricate balance between ensuring that utilities can maintain infrastructure and manage unexpected expenses, while also protecting consumers from excessive charges. It remains to be seen how these discussions will unfold and what compromises may arise to benefit both the utility and its customers.