CenterPoint Completes $240 Million Pipeline Modernization Plan, Seeks Cost Recovery

(P&GJ) — CenterPoint Energy said that its Southern Indiana Gas and Electric (SIGECO) utility has filed a rate request with state regulators seeking to recover the costs of its 7-year, $240 million natural gas pipeline modernization plan in southwestern Indiana.

The gas system improvements included upgrades to portions of CenterPoint Energy's 3,200-mile network of distribution mains and transmission pipelines, which serve nine counties in southwestern Indiana. The work primarily consisted of replacing bare steel and cast-iron distribution mains with new industry-grade plastic mains, as well as inspecting and upgrading natural gas transmission pipelines.

The pipeline modernization plan was filed with the Indiana Utility Regulatory Commission (IURC) in 2013 to comply with federal safety rules and ensure the continued safe, reliable delivery of natural gas service to its more than 113,000 customers. That work has led to a 36% reduction in methane emissions since 2013, CenterPoint said.

Since 2008, more than 300 miles of gas mains have been replaced in the company's southwestern Indiana territory.

Using 2013 state laws focused on federal mandates and natural gas infrastructure needs, Indiana utilities submit forward-looking capital investment plans to the IURC for review and cost recovery. The statutes provide utilities the ability for gradual investment recovery as modernization progress is made – otherwise defined as 80% of total capital expenditures – lessening the effect of a larger rate increase through traditional rate recovery.

The balance of recovery must be sought through a traditional rate request at the end of the 7-year plan. With the 2013 filing and the IURC's approval and regular review of that plan, CenterPoint explained, it is now seeking recovery of the remaining 20% of those investments.

"These infrastructure investments are vital to meeting federal mandates and ensuring the safe and reliable delivery of natural gas to our customers," said Richard Leger, vice president of Natural Gas Distribution, Indiana and Ohio.

"While our natural gas customers will experience a base rate increase to their bills, it will be the first time in nearly 14 years we have pursued such recovery," Leger explained.  "We remain focused on maintaining affordability for our customers, as demonstrated by our commitment to expense management and continuing to offer natural gas as a cost-effective, reliable energy option due to low, stable natural gas commodity prices."

If the IURC approves the request, the average residential southwestern Indiana gas customer could see an approximate increase of about $15 per month. This represents the balance of costs not already recovered through the duration of the previous seven years and recovery of additional investments before and outside of the company's modernization plan related to public and system improvements required since 2006, CenterPoint said.    

Also requested within this filing is the continuation of natural gas energy efficiency programs through 2025 and the income-eligible universal service program, which provides additional gas bill reductions during the months of December through May for eligible Indiana South customers.

"Since inception of the programs, Indiana South customers have saved approximately 37 million therms of natural gas, or enough energy to heat 46,000 homes for a year, which also contributed to more than 195,000 metric tons of CO2e emissions saved," Leger said. "Energy efficiency programs are another way we strive to give customers the opportunity to reduce their energy usage and therefore lower their bill, while also lowering emissions."

The filing begins an IURC review process that will take several months to complete and include a public hearing as part of the regulatory process. If approved, the new rates would go into effect during the third quarter of 2021.

CenterPoint Energy's Indiana South gas territory delivers natural gas to customers in Daviess, Gibson, Knox, Martin, Pike, Posey, Spencer, Vanderburgh and Warrick counties.

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