CenterPoint Energy Reaches Deal with Texas to Absorb Generator Costs
CenterPoint Energy has reached a deal with the state of Texas to absorb the cost of 15 large, mobile generators it leased, valued at over $800 million. The move comes after months of intense criticism and negotiation with lawmakers, following the generators’ failure to prevent widespread power outages in the Houston area after Hurricane Beryl last year.
Background on the Generators
The generators were originally leased in response to the February 2021 winter storm, which crippled the state’s electrical grid and resulted in at least 246 deaths. However, during Hurricane Beryl, the outages were largely caused by storm damage to power distribution networks, rather than power generation. As a result, much of the Greater Houston area was without power for nearly two weeks.
Deal Details
Jason Ryan, executive vice president for CenterPoint Energy, testified before the Texas Senate Committee on Business and Commerce, announcing that customers would be made whole for what they’ve already been charged related to the generators. This will result in lower bills for customers, including a multi-year base-rate reduction and the forgiveness of certain costs incurred during Hurricane Beryl.
Customer Benefits
The deal is expected to benefit customers in several ways:
- A multi-year base-rate reduction will be implemented for all customers before the end of the month
- Customers will not be charged for the costs of the generators for the period starting at the end of April through the end of the lease
- The average residential customer can expect a reduction in rates of about $2 per month
Donation to ERCOT
CenterPoint will donate the generators to the Electric Reliability Council of Texas (ERCOT) for the remaining two years of the lease. ERCOT will use the generators to address potential problems in the San Antonio area, and CenterPoint will absorb the approximately $180 million in costs associated with this period.
Reaction from Lawmakers
Lt. Gov. Dan Patrick praised the deal, stating that ratepayers will be "made whole – in fact, more than whole" and that CenterPoint will return over $900 million to all ratepayers. This means that ratepayers under CenterPoint will not be responsible for the costs of the generators, which were deemed a bad business decision by the company.
Conclusion
In conclusion, CenterPoint Energy’s deal with the state of Texas is a significant step towards making things right with its customers. By absorbing the costs of the generators and providing rate reductions, the company is taking responsibility for its actions and working to prevent similar issues in the future. The donation of the generators to ERCOT will also help to support the reliability of the state’s electrical grid, benefiting all Texans.
