This article was originally published by the Minnesota Reformer.
This past year has been good to CenterPoint. Not so for its customers.
On top of soaring gas prices, Minnesotans who get their natural gas from CenterPoint Energy are on the hook for $466 million to cover five days of energy costs when prices surged during the 2021 winter storm that crippled Texas’ power grid.
Minnesotans are slated to pay an additional $7.44 a month on average for 63 months to pay for the gas used during the storm, while CenterPoint isn’t slated to feel any pain from that event, as CEO David Lesar told shareholders in May 2021.
In fact, the February 2021 storm, known as “Winter Storm Uri,” turned out to be good for Texas-based CenterPoint — at least in regards to a well-timed merger between one of its affiliates and another Texas company accused of price gouging consumers during the storm.
CenterPoint received $1.3 billion in net, after-tax proceeds as a result of the merger, as detailed in a recent report by the advocacy group Citizens Utility Board.
“We’re not saying that CenterPoint did something illegal or intentionally exploited that storm to rip off rate payers,” said Brian Edstrom, the author of the report. “But it’s just frustrating to us that we are hearing from a lot of people that are paying for these extra storm-related costs that they had no control over … meanwhile, (CenterPoint’s) parent company did well.”
The company’s stock price is up more than 20% from a year ago, and Lesar was rewarded with an unusually generous compensation package — $37.8 million in 2021, far more than his peers at other utilities and 366 times as much as the average CenterPoint employee. (Shareholders balked at his compensation package and voiced their disapproval in a non-binding vote in April, but the company didn’t claw back any of his pay.)
The merger involved a company CenterPoint owned a majority stake in called Enable and the behemoth Energy Transfer, which boasts that nearly a third of the nation’s natural gas and crude oil moves through its pipelines.
CenterPoint received $5 million as part of the deal, and its Enable shares became Energy Transfer shares. CenterPoint then promptly sold its Energy Transfer shares, which had appreciated 20% in value in no small part because of the lucrative winter storm.
Energy Transfer made $2.7 billion from the winter storm, and posted quarterly revenue billions higher than the previous year.
“Within four months of the merger between Enable and Energy Transfer, we sold 100% of our common units at a 20% premium to Energy Transfer’s unit price when the transaction was announced last February,” Lesar told shareholders on an earnings call last month. “Not a bad outcome for those shareholders who thought we would never get out of this investment, let alone receive approximately $1.3 billion of net after-tax proceeds from it.”
The company is currently being sued by San Antonio’s municipal electric utility for alleged price-gouging. The utility, CPS Energy, says in its lawsuit that Energy Transfer charged them “unconscionable” natural gas prices: more than 15,000% higher than prevailing prices before the storm.
Asked for comment, a spokesman for CenterPoint pointed to the company’s filing before the Minnesota Public Utilities Commission. In the filing, the company notes that the prices Energy Transfer charged during Winter Storm Uri have nothing to do with the costs borne by Minnesota consumers. The company also disputes that the sale of its stake in Energy Transfer represented a windfall and points out that the business dealings of the parent company have no impact on Minnesota ratepayers, even in bad times.
“When Enable, and as a result, CenterPoint Energy, Inc. suffered significant losses of billions of dollars, CenterPoint Energy Minnesota Gas and its customers were unaffected. Therefore, it is inappropriate to conclude that CenterPoint Energy Minnesota Gas and its customers should be affected by any potential gains associated with Enable,” the company wrote in a filing to the Minnesota Public Utilities Commission.
Although CenterPoint says it would be “inappropriate” for customers to be affected by any gains from the sale, the company does argue Minnesota customers will be helped by the divestment since they “benefit from the financial health and stability of the parent company.”
The Citizens Utility Board is currently arguing before state regulators that CenterPoint and three other Minnesota utility companies should not be allowed to charge customers for all the extra costs associated with Winter Storm Uri — estimated to be about $660 million.
Along with the state’s Department of Commerce and Attorney General General Keith Ellison, the Citizens Utility Board says utility companies should have to bear some of the extra costs from the storm. They argue CenterPoint could have done more to avoid buying gas at inflated prices by calling on customers to curtail their use, especially those “interruptible customers,” who sign agreements to limit or stop taking natural gas if asked.
In filings before the Public Utilities Commission, the Citizens Utility Board recommended CenterPoint cover $82.4 million of the $466 million in costs associated with Winter Storm Uri.
Last month, two administrative law judges rejected their arguments, saying the utility acted prudently, and that customers should pay for the entire amount. Their recommendations will go to the state Public Utilities Commission, which has yet to make a final decision on the case.
Minnesota Reformer is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Minnesota Reformer maintains editorial independence. Contact Editor Patrick Coolican for questions: info@minnesotareformer.com. Follow Minnesota Reformer on Facebook and Twitter.