Take Action for Inclusive Financing and Against Regressive Rate Increases

CenterPoint Energy, which provides natural gas to Minneapolis and many of the western suburbs, has had public hearings for an unpopular rate hike proposal which very refreshingly included a long-awaited remedy for preventably high natural gas bills to speak in favor of, called Inclusive Financing.   

Centerpoint - in the middle of the ongoing COVID crisis - is proposing a 8.7% rate increase for residential customers, (with a smaller rate increase for commercial and industrial customers) a percentage which concerningly includes a 26% increase in the fixed charge

Community Members were offered a chance to weigh in on both Inclusive Financing AND Centerpoint's proposed Rate Hike at 4 different hearings in Late July which were held via WebEx with Telephone for audio. Having attended all 4 hearings myself, each of these only resulted in 8 Public commenters participating (including myself).

In Contrast, an effort led by Community Power and coalition partners like Sierra Club Northstar was able to collect a total of 72 pre-recorded video comments in support of Inclusive Financing and against the rate hike proposal. 

See https://flipgrid.com/55c254d1 or Click the image below to see this new, innovative and much more convenient way for Community Members to weigh in!

 

(Students in the Youth N' Power summer training program shared video comments)   

 

WRITTEN COMMENTS DEADLINE:

Interesting Findings on Centerpoint's Rate Increase Proposal

The City of Minneapolis submitted its Inclusive Financing proposal as an intervention into Centerpoint’s Rate Case so that is why Centerpoint's Rate Increase was the main topic among the comments. 

To this date, there has not been a single commenter who spoke in support of Centerpoint Energy raising our rates during a historic pandemic in any of the 4 Public Hearings and online written comments.  

Even Centerpoint's spokesperson admitted at the July 28th hearing that they fully expect the final ruling to be different from their initial rate increase request. 

There is a routine norm for rate cases. First utility companies request a far greater rate hike that they could justify. Second, the Public Utilities Commission approves about half of their requested rate increase. So that way the decision can be publicly spun in the media as “a win for the people”. In this particular rate case, the MN Department of Commerce Division of Energy Resources concluded at the hearings that exactly half of Centerpoint’s current proposed rate hike was unjustified. 

In response to a question during the July 28th hearing, the Office of the Attorney General disclosed that a portion of Centerpoint’s proposed rate increase was for marketing & ads promoting increased natural gas use. Because the intent behind increased sales is to drive up shareholder profits, that is a cost which utility customers should not have to pay for. 

Centerpoint first filed this particular rate increase request back on October 28th, 2019. At the time, the Company had a $300 million capital spending plan of projects and system Infrastructure improvements. Many of these public improvement projects have since gotten postponed with the impact COVID has had on City Budgets. However, Centerpoint’s rate increase request is still the same amount as it was in October. In contrast, utility peer Minnesota Power has reduced its rate hike request to respond to the economic challenges during this historic Pandemic.  

 

What is most concerning about this rate case is that Centerpoint has added a proposed increase in the fixed charge by 25% from $9.50 to $12.00 per month. The Fixed Charge is the part of your utility bill that never goes away and is impossible to avoid or reduce even if you lower your energy use through conservation or energy efficiency. An increase in flat charge for service is deeply regressive, (disportionately impacting low income and those in smaller homes) and reduces the economic incentives to reducing gas use. 

When combined with the 6.8% proposed rate increase, the above changes will increase average residential gas bills for CenterPoint customers by 8.7% if fully approved by state regulators. As is allowed by state law, CenterPoint has already collecting a 5.8% interim rate increase since January 1st, 2020 before their full rate case is even approved or denied by state regulators at the Public Utilities Commission. Centerpoint will have to refund to customers the amount of the rate increases which regulators do not approve.

Keep in mind that CenterPoint, like Xcel and energy utilities in general, is a monopoly. So if you live in Centerpoint’s service territory, this means your only options to avoid these price hikes are to push on the Public Utilities Commission to deny part or all of the rate increase, pay the higher costs, or not have gas.

THE OPPORTUNITY

Within this same rate case hearing is also the first possibility for an exciting new option that could make it easier for all CenterPoint Energy customers, and particularly low-income families and tenants, to make their homes more energy efficient with no debt or upfront costs.

The City of Minneapolis, after years of guidance from multiple organizations and community members, has an amendment to the rate case that would enable an Inclusive Financing pilot project. See page 7 for Sustainability director Kim Havey,'s written comments and here for IF implementer Tammy Agard's comments.  

Inclusive Financing programs in other states, including Arkansas, Kansas, North Carolina, and New Hampshire, have helped dramatically increase the proportion of homes that are saving energy and switching to clean energy sources. But it is not yet an available option in for us Minnesota. 

The traditionally available energy efficiency programs have long excluded hundreds of thousands of Minnesotans who cannot afford to pay thousands of dollars up from or simply don't want to take on more debt. 

Not only does Inclusive Financing opens up a uniquely strategic movement space where climate justice, easing health burdens, housing & economic justice intersect.

Offering an Inclusive Financing option is also a concrete way to make good on promises for racial equity. This historic reliance on debt and established wealth have excluded non-white Minnesotans due to legacies of institutionalized racism in banking and lending that have maintained staggering racialized wealth gaps. 

Inclusive Financing 101:

In Inclusive Financing, the utility provides the upfront cash (sourced from a low-cost capital provider) for insulation and air sealing, better lighting or appliances, more efficient heating and cooling systems, and maybe even solar (depending on what the home needs). Then the price tag of the labor/ materials behind the energy efficiency improvements are paid off by the customer a bit at time on their monthly utility bill- with a lower bill from month one. The payback is designed to be less per month than the energy savings created by the efficiency improvements, where the minor monthly savings become much larger monthly savings after the home improvements are paid off. If the renter or homeowner moves to another place, then the monthly cost recovery charge stays with the improved building rather than following the former resident. The new resident(s) would gets the benefits of the building and would cover the lowered bill. See additional FAQ's here. 

That way the utility is able to recover these costs and participating households get a more comfortable home, all without having to put money down or being saddled with personal debt. 

 

There's a strong chance to make this program a reality as a Minneapolis pilot project through this rate case. It is important that this upcoming pilot project goes well in order to build leverage to expand inclusive financing to serve other communities - particularly renters and households who can't afford the upfront costs of home energy upgrades - across Minnesota.

 


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