Minnesota regulators on Thursday approved a temporary rate increase for CenterPoint Energy, which will result in more expensive bills starting in January for customers of the state's largest natural gas utility.

The Public Utilities Commission (PUC) voted 4 to 0 in favor of a 5.3% hike in 2024, which is considered an interim rate while the commission investigates whether to approve the larger rate increase CenterPoint proposed in November.

Typically, the PUC grants those requests for temporary rate increases. But if the commission later decides to approve a final rate hike that is lower than the interim rate approved Thursday, customers will be refunded the difference.

The company's overall request was for a 6.5% increase in 2024 worth $84.6 million and a 3.7% hike in 2025 worth $51.8 million. While CenterPoint is seeking a 2.5% interim increase for 2025, the PUC opted not to act on that until next year.

The rates are separate from the cost of gas, which is passed to customers and varies depending on the price of the commodity. CenterPoint says the money is needed to improve the safety and reliability of its gas system and help advance efforts to cut carbon emissions under a state law for natural gas utilities. The company has roughly 830,000 residential customers in Minnesota and 80,000 commercial and industrial customers.

Minnesota Attorney General Keith Ellison's office wanted to limit residential rate hikes to 57% of the interim request for 2024. The office, which serves as a watchdog for ratepayers, said the PUC should reject the 2025 temporary request or at least defer action on it.

The office said in a letter to the PUC that Minnesotans are navigating a "dire constellation of budgetary pressures" amid rising costs for basic needs while CenterPoint has a pattern of "over-requesting rate increases" despite solid shareholder returns and pay for CEO David Lesar that is high compared with industry peers.

"CenterPoint is requesting its biggest dollar increase in recent memory at a time when residential ratepayers are experiencing a crisis in household budgeting," says a letter to the PUC signed by assistant AG Erin Conti.

CenterPoint said the 5.3% increase in 2024 would add $4 monthly to the standard residential bill.

The Houston-based company has asked for rate increases five times in the past decade, most recently in 2021, according to the PUC. Since 1995, the commission has not approved the full amount CenterPoint requested in initial rate requests.

In 2021, the PUC approved a 4.7% increase worth $48.5 million in ratepayer revenue for CenterPoint, though commercial customers picked up a larger share of the increase. CenterPoint had asked for 6.5% hike.

Last week, the PUC approved higher interim rates for Minnesota Power electric customers and Xcel Energy's gas system. Ellison's office also unsuccessfully argued in those cases to limit the impact on residential customers.

Average residential bills have increased consistently for utility customers in Minnesota. Data compiled by the Citizens Utility Board of Minnesota shows the average annual bill of a CenterPoint residential customer jumped 52% between 2019 and 2022 — to $1,143 from $750.

CenterPoint spokesman Joshua Solis said those numbers include the cost of natural gas, which customers directly pay and was significantly higher in 2022 because of factors such as increased demand nationally and worldwide. Solis said gas prices are significantly lower now than in 2022 and are estimated to stay lower over the winter compared with last year.

The cost of gas makes up 50% to 60% of a residential customer's bill, Solis said.