CenterPoint Energy Faces Scrutiny Over Hurricane Beryl Repair Costs
CenterPoint Energy, a major utility provider in Texas, has come under fire for seeking to shift the costs of repairing damages caused by Hurricane Beryl onto Houston ratepayers. The company’s accounting practices have been questioned during a recent hearing before the state agency that regulates Texas utilities, the Public Utility Commission (PUC).
Jason Ryan, CenterPoint’s executive vice president for regulatory services and government affairs, defended the company’s actions by explaining the internal and external audits being conducted on the expenses incurred by mutual assistance crews brought in after Hurricane Beryl. However, he emphasized that the final decision on what costs are reasonable lies with the PUC and other intervening parties.
The PUC, under orders from Governor Greg Abbott, is investigating CenterPoint’s handling of the aftermath of Hurricane Beryl and has stressed the importance of scrutinizing every expense to ensure ratepayers receive the best service. Commissioner Jimmy Glotfelty highlighted that any approved costs would ultimately be passed on to the customers.
In response to inquiries about the total costs incurred for repairs related to Hurricane Beryl and the preceding May derecho, CenterPoint has indicated that final figures may not be available until well into the next year. The company’s quarterly report to the U.S. Securities and Exchange Commission estimated restoration costs for the electric delivery facilities damaged by the storms to be in the range of $425 million to $475 million for the May 2024 Storm Events and $1.2 billion to $1.3 billion for Hurricane Beryl.
To cover these costs, CenterPoint plans to seek recovery through the issuance and sale of non-recourse securitization bonds, with the debt service and financing costs to be paid through a storm restoration charge imposed on Houston Electric’s customers. This approach has raised concerns among consumer advocates who argue that passing on such expenses to ratepayers discourages accountability and may lead to overbilling.
The issue of CenterPoint’s profit structure has also been scrutinized, particularly in relation to the company’s investments in capital infrastructure such as giant mobile generators. Senator Charles Schwertner, chairman of the Senate Select Committee on Hurricane and Tropical Storm Preparedness, Recovery, and Electricity, questioned CenterPoint CEO Jason Wells about the profitability of such investments, highlighting the substantial returns generated for shareholders.
Consumer advocates have raised alarms about potential double billing and overcharging by CenterPoint, particularly in instances where equipment damaged by the storms had previously been billed to customers in rate cases. They have called for increased transparency and oversight to prevent such practices and ensure fair treatment of ratepayers.
The debate over CenterPoint’s handling of Hurricane Beryl and its cost recovery mechanisms has underscored the need for regulatory reform in the utility sector. Energy experts have suggested adopting a performance-based regulatory model that incentivizes utilities to prioritize maintenance and efficiency to earn profits, rather than relying on capital investments that may not directly benefit customers.
While some states have begun exploring alternative regulatory frameworks, Texas has been slow to embrace such changes, with political and financial interests often influencing decision-making. The challenge of balancing the needs of ratepayers with the financial stability of utilities remains a pressing issue that requires collaborative efforts from legislators, regulators, and stakeholders.
In conclusion, the ongoing debate surrounding CenterPoint Energy’s handling of Hurricane Beryl repair costs highlights broader issues within the utility industry regarding accountability, transparency, and regulatory oversight. As discussions continue on how best to address these challenges, the ultimate goal should be to ensure that customers receive reliable service at reasonable rates while holding utilities accountable for their actions.
