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Houston Utility Granted Deregulation Recovery

CenterPoint Energy Inc., the former electric monopoly based in Houston, Texas that was broken up by deregulation in 1999, has been granted its request to recover what could turn out to be billions of dollars in deregulation-related costs.

The Texas Supreme Court ruled in favor of CenterPoint, which still owns and operates the electric delivery infrastructure throughout the Houston metropolitan area, saying that the utility was entitled to recoup $922 million from ratepayers that it had lost in investments it had made prior to deregulation when the energy company was known as Houston Lighting & Power. With interest, the final recovered amount will reach $2.4 billion, according to Thomas Brocato, general counsel for a coalition of 30 cites served by CenterPoint.

CenterPoint previously recovered $2.4 billion-plus interest from the Texas Public Utility Commission in 2004, but the utility appealed, arguing that the recovery was insufficient. The decision paves the way for the additional recovery, which is expected to cost Houston ratepayers an additional $3 per month on electric bills for the next 15 years. The initial recovery added more than $5 to the electric bills of Houston ratepayers.

“Today’s ruling by the Texas Supreme Court clears up much of the remaining uncertainty associated with the 1999 electric restructuring law,” said David M. McClanahan, president, and CEO of CenterPoint Energy, in a statement. “Following the PUC’s true-up decision in 2004, we were required to write off $950 million after taxes. The Court’s opinion reverses a number of the PUC decisions that caused that write-off. We look forward to working with the PUC and the other interested parties to implement the Court’s final decision.”

Because CenterPoint’s increase will be levied on delivery charges, and not electric rates, the increase will affect all Houston-area electric customers, even those who buy their electricity from an alternate retail electric provider.

Sources

CenterPoint Energy Receives True-Up Appeal Decision From Texas Supreme Court, CenterPoint Energy Inc. press release, March 18, 2011.

Power Bills May Go Up $3 a Month, The Houston Chronicle, March 19, 2011.

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