As Gas Rates Rise, Cities Demand More Oversight

Apr 20, 2018

If you live in Austin, chances are your gas bill is going up. That’s because Texas Gas Service, the utility that supplies most of the city with gas, is raising rates. The company has done it every year since 2011, and some people think the process by which rates have risen needs an overhaul.

The Gas Reliability Infrastructure Program, or GRIP, was created by state lawmakers in 2003 to let gas companies making infrastructure improvements increase rates without a lot of financial oversight.

GRIP was meant to help companies cover costs for work they need to do quickly, like laying new pipe and fixing broken meters. But Thomas Brocato, a lawyer who represents cities on utility issues, says that’s not always what companies use GRIP money for.

“Utilities have included cases of wine, Segways, fitness machines, some frivolous items” in their spending, Brocato says. “I mean those are pretty rare [examples], but they do come up.”

Critics of GRIP say gas utilities rely on it too often. They're allowed to raise rates up to six times before triggering what’s called a “rate case.” Only then, they say, do regulators at the Railroad Commission of Texas really open up the books to see if a company is overcharging.

Critics also argue that companies that are already overcharging customers can still raise rates under GRIP.

“It just makes common sense that if you already have rates that are too high that you shouldn’t be able to increase rates,” Brocato says.

The cities Brocato represents want GRIP overhauled to answer these and other concerns. Lawmakers are looking at that possibility before the next Texas legislative session, but gas companies oppose the idea.

“We at CenterPoint [Energy] have spent, in the last handful of years, about a billion dollars investing in capital projects in this state,” Jason Ryan, vice president of government affairs for the energy and gas company, told the Texas House Committee on Energy Resources this week.

He said that GRIP is a transparent way for companies like his to recover their investment.

“If you believe that gas utilities are earning above their allowed return and nevertheless changing rates that make them earn more than their allowed return, then maybe you would take a look at making some changes,” Ryan said. “I think the evidence would show that that’s not the case.”

Calling the current process transparent and efficient, he argued changes to GRIP could trigger many more rate cases, which are cumbersome and costly for cities, utilities and regulators.