CenterPoint Energy

On April 5th, CenterPoint Energy filed an electric delivery rate increase request with the Public Utility Commission (PUC) of Texas. The requested adjustments would address a higher equity ratio and higher cost of equity for CenterPoint Houston, the Tax Cut and Jobs Act of 2017 that has significantly reduced the company’s cash flow. These secondary effects of the Tax Cuts and Job Act are likely to result in long term revisions to the cost of capital at a time when Texas needs to invest heavily in infrastructure to support the growing economy and the growing fleet of distributed renewable energy resources. It would also address the capital investment and ongoing Operations and Maintenance (O&M) expenses necessary to support continued growth in CenterPoint Houston’s transmission and distribution system due to the 20% increase in the number of customers being served. If approved, commercial electric rates for CenterPoint customers could increase by ~3.6%, while Large Secondary and Transmission customer rates could increase by ~11.5%, depending on rate class and usage. The new rates could go into effect in May.

Oncor Electric Delivery

In addition, Oncor has also filed a rate increase with the Public Utility Commission (PUC) to include additional distribution invested capital placed into service from January 2017 to December 2018 that was not included in the Company’s last general rate case. The Distribution Cost Recovery Factor (DCRF) that is adjusted annually based on these types of investments could be subject to substantial increases in this filing if it is approved. If the PUC authorizes the proposed rates, Large Secondary demand charges could increase from nearly four cents per kilowatt to nearly 11 cents, Primary demand charges could increase from just over two cents per kilowatt to more than six cents, and Transmission demand charges could increase from ~0.05 cents per kilowatt to ~0.10 cents. In addition, Secondary voltage consumption-based charges could increase from 0.02 cents per kilowatt-hour to nearly .06 cents, non-demand metered Primary Voltage customers could see charges increase from ~0.009 cents per kilowatt-hour to ~0.02 cents. These increases amount to 150-200% escalations and could go into effect on September 1, 2019.

Although neither of these cases has been approved, Tradition Energy will continue to monitor them and will notify clients in the likely case of authorization.