Swanson challenges fixed-price gas billing; The attorney general says consumers pay extra with plans under CenterPoint and Xcel

The fixed-billing programs offered by CenterPoint Energy and Xcel Energy boost costs for thousands of customers each year, according to state Attorney General Lori Swanson, and she wants them shut down.

In a complaint filed Thursday with the Public Utilities Commission (PUC), she said Minnesota consumers enrolled in the programs have overpaid their gas bills by at least $26 million in the past six years, compared with what they would have paid under standard billing.

"It's a little like betting on a roulette wheel with a casino that already knows where the number's going to stop," Swanson said.

She urged the PUC to investigate and put an end to CenterPoint Energy's No Surprise Bill and Xcel Energy's Fixed Monthly Gas Program, which she described as "fundamentally flawed."

The programs allow customers to lock in a natural gas payment for 12 months, no matter what happens with the weather or the price of energy.

However, customers come out ahead only if natural gas prices go up. If prices fall, they pay higher prices than they would have, and that's been the case every year except in 2002-2003, according to Swanson.

On average, customers have paid $206 more each year than standard bill payers between 2001 and 2006, Swanson found. The fixed-billing program brought in $5 million net profit for CenterPoint between 2001 and 2005, according to Swanson. Xcel figures were not available.

In separate statements sent Thursday by e-mail, representatives for CenterPoint and Xcel responded that the programs are meant to offer its customers more options.

CenterPoint reiterated its goal of providing customers a measure of certainty in the face of "unpredictable weather and fluctuating natural gas prices." The company defended its promotional materials, which Swanson attacked as misleading, saying they "state that customers could pay more or less" with the fixed-price program.

CenterPoint created its No Surprise program in 2001. Enrollment has gone from about 19,000 to more than 40,000 this year, or about 6 percent of eligible customers, the company said. Xcel is in the second year of its fixed-price program. About 4 percent, or 15,000 households and small businesses, are taking part.

Both programs charge fees of about $5 to $7 a month, plus a $30 penalty for early cancellation.

Swanson said the programs confuse many consumers and unfairly target senior citizens and people on fixed incomes.

Tyler Smith, a retiree from Stillwater, said he thought he was signing up for Xcel's budget plan, a free program that averages out monthly payments but provides a "true-up" period, in which bills are adjusted for actual use.

Last summer, Smith, 67, studied his bill and paid his actual use instead of his fixed price, which was significantly more. Afterward, he received a disconnection notice.

"It was a complete surprise," said Smith, one of five dissatisfied seniors on hand for Swanson's announcement. Smith said he overpaid by almost $1,000 last year using the fixed-bill plan.

"I just can't imagine why we would want a program like this to continue," he said. "You're paying for gas you never use. To me it doesn't sound logical."

If the PUC won't shut down the programs, Swanson is urging the agency to require an "opt-in" system rather than automatic reenrollment.

She also wants CenterPoint and Xcel to become more transparent, by offering side-by-side comparisons from the previous two years so customers can see how they are faring on the fixed-price plan.

If the PUC decides to investigate, it will hold a public hearing before making a ruling.