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The average natural gas bill in Houston could triple next year unless state regulators step in to ease the financial burden, after natural gas prices spiked during the February freeze.

CenterPoint Energy and a dozen other utilities statewide filed applications Friday that, if approved, would allow the state to issue bonds for the utilities to spread over the 30 years the $3.6 billion cost of natural gas during the winter storm.

If CenterPoint’s application is approved, the average natural gas bill in the Houston area of about $30 a month would increase by $2 to $5 starting next year. If the request is rejected, CenterPoint said it would have to levy a monthly fee of as high as $40, pushing the average gas bill to almost $80 during summer and to more than $100 in winter.

“We share the frustration that our customers have over the natural gas price spikes,” said Jason Ryan, CenterPoint’s senior vice president of regulatory services and government affairs. “We know this is not a good outcome for them. We’ve been advocating to get to the best bad outcome that we could get to, and then working to make sure this never happens again.”

More than 1.8 million CenterPoint customers in the Houston area are on the hook for the $1.14 billion natural gas bill incurred by the utility when it was forced to buy natural gas when production plummeted during the winter storm. Natural gas wells and pipelines, which until this year were not required to be weatherized, froze and lost pressure during the storm, causing production to fall by almost half just as Texans were cranking up thermostats to stay warm.

As a result, natural gas prices in the Houston area rose as high as $400 per Dekatherm, compared with average market prices of around $3 per Dekatherm. Dekatherm is a unit of energy used primarily to measure natural gas.

To ease the financial burden on customers, CenterPoint and other utilities lobbied the Texas Legislature to pass House Bill 1520, which allows natural gas utilities to seek Railroad Commission approval for financing to recover the increased cost of natural gas during the winter storm. CenterPoint used such financing to recoup repair costs after Hurricane Ike in 2008.

If Texas’ natural gas regulators approve CenterPoint’s application, the Texas Public Financing Authority will issue “customer rate relief” bonds on the utility’s behalf to spread the natural gas cost over a period of 10 years. After the bond matures in 10 years, the natural gas rate increase to pay down the bond would go away.

If the Railroad Commission doesn’t approve CenterPoint’s application, the utility said it would rely on a “purchased gas adjustment” fee to recoup the costs of natural gas, which would increase customer bills by $15 to $40 a month.

“We already have the ability to recover these (natural gas) costs through a rate mechanism that’s been in place for a number of years, but we just don’t think it’s the right way to recover these costs from the customers we have the privilege to serve,” Ryan said. “The existing rate mechanism would be unaffordable for a number of our communities. So instead of recovering these costs over 12 months, we would recover these costs over potentially a decade or longer.”

CenterPoint, which distributes electricity and natural gas to Houston-area customers, buys most of its natural gas through long-term contracts. If demand spikes, it buys natural gas on the spot market, as it did during the storm. The utility passes along the cost of the natural gas without any markup. The company makes money from its natural gas business through distribution fees regulated by the state to pay for infrastructure, such as natural gas meters and compression stations.

The utility has some natural gas storage facilities to address supply shortfalls, and said it pulled as much natural gas from its storage as it could before buying gas on the spot market. Ultimately, no CenterPoint customer residential or business customer lost natural gas service during the storm, Ryan said.

The Railroad Commission began accepting applications Friday from utilities interested in using the securitization financing. If applications are approved, the Texas Public Financing Authority will likely start issuing bonds in the first half of next year. That’s when customers will see larger natural gas bills.

CenterPoint said it actively pursued claims against its natural gas suppliers to reduce its natural gas bill as much as possible. In addition to lobbying for the special financing, the company was the only natural gas utility to advocate for natural gas producers to weatherize wells and supply chains.

The utility also lobbied Congress to increase funding for the federal Low Income Home Energy Assistance Program, a bill payment assistance program. Centerpoint customers who have difficulty paying their natural gas bill can request a payment plan or extension by calling 713-659-2111 or 800-752-8036 or by visiting CenterPointEnergy.com/PaymentAssistance.

paul.takahashi@chron.com

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