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CenterPoint Seeks AR Distribution Rate Increase

Faced with rising distribution costs and declining throughput on its system in Arkansas, CenterPoint Energy Inc. Tuesday filed with the Arkansas Public Service Commission (APSC) to raise its gas distribution rates in the state.

The filing seeks approval to raise the base rate portion of a customer's natural gas bill, which makes up about 30% of the total bill and covers the cost of distributing natural gas. The filing does not apply to the gas supply rate (GSR), which makes up about 70% of the bill. Through the GSR, the company passes through to its customers the actual cost it pays for the natural gas it purchases for use by its customers without any mark-up. In a separate filing, CenterPoint Energy will file a new GSR for the months of February and March, which is expected to reduce the GSR by about 9%.

CenterPoint said current rates do not allow the company to recover operating costs and earn a reasonable rate of return while it faces decreased revenues due to declining throughput as well as increased capital and labor costs.

"The cost of distributing natural gas to our customers has continued to increase while customer count and usage has declined," said Walter Bryant, CenterPoint Energy vice president of gas operations in Arkansas. "CenterPoint Energy recognizes the importance of keeping our rates as reasonable as possible; however, the ability to earn a reasonable return on investment is critical to our ability to continue providing safe and reliable service to our customers in Arkansas."

If the filing is approved by the APSC, CenterPoint Energy expects the new rates would go into effect later this year and would generate $50.9 million in additional revenue on an annual basis. The effect on individual monthly bills will vary depending on gas use and customer class.

CenterPoint, headquartered in Houston, is a domestic energy delivery company that includes electric transmission and distribution, natural gas distribution, competitive natural gas sales and services, and pipeline and field services operations. The company serves more than five million metered customers primarily in Arkansas, Louisiana, Minnesota, Mississippi, Oklahoma, and Texas.

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