CENTERPOINT ENERGY INC

For the period ended Mar 31, 2024. Filed Apr 30, 2024.

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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.

Mar 31, 2024 · Filed Apr 30, 2024

CNP$40.66+1.7%Stored close · as of Nov 6, 2026

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Contents

Recent Events

Regulatory Proceedings. For further information, see Note 6 to the Interim Condensed Financial Statements. For information related to our pending and completed regulatory proceedings to date in 2024, see “—Liquidity and Capital Resources —Regulatory Matters” below.

Debt Transactions. During the three months ended March 31, 2024, CenterPoint Energy issued or borrowed a combined $400 million in new debt, comprised of Houston Electric’s issuance of $400 million aggregate principal amount of 5.15% general mortgage bonds due 2034. During the three months ended March 31, 2024, CenterPoint Energy repaid or redeemed a combined $22 million of existing debt, including SIGECO’s redemption of $22 million aggregate principal amount of outstanding first mortgage bonds due 2024. For information about debt transactions to date in 2024, see Note 11 to the Interim Condensed Financial Statements.

LAMS Asset Purchase Agreement. On February 19, 2024, CenterPoint Energy, through its subsidiary CERC Corp., entered into the LAMS Asset Purchase Agreement to sell its Louisiana and Mississippi natural gas LDC businesses. The transaction is expected to close in the first quarter of 2025. For further information about the transaction, see Note 3 to the Interim Condensed Financial Statements.

Equity Distribution Agreement. On January 10, 2024, CenterPoint Energy entered into an Equity Distribution Agreement with certain financial institutions with respect to the offering and sale from time to time of shares of Common Stock, having an aggregate gross sales price of up to $500 million. Sales of Common Stock may be made by any method permitted by applicable law and deemed to be an “at the market offering” as defined in Rule 415 of the Securities Act of 1933, as amended. CenterPoint Energy may also enter into one or more forward sales agreements pursuant to master forward confirmations. For further information, see Notes 18 and 20 to the Interim Condensed Financial Statements.

CENTERPOINT ENERGY CONSOLIDATED RESULTS OF OPERATIONS

For information regarding factors that may affect the future results of our consolidated operations, please read “Risk Factors” in Item 1A of Part I of the Registrants’ combined 2023 Form 10-K.

Income available to common shareholders for the three months ended March 31, 2024 and 2023 was as follows:

	Three Months Ended March 31,
	2024	2023	Favorable (Unfavorable)
(in millions)
Electric	$121	$123	$(2)
Natural Gas	283	234	49
Total Utility Operations	404	357	47
Corporate & Other (1)	(54)	(44)	(10)
Total CenterPoint Energy	$350	$313	$37

(1)Includes energy performance contracting and sustainable infrastructure services through Energy Systems Group before June 30, 2023, the date of the sale of Energy Systems Group, unallocated corporate costs, interest income and interest expense, intercompany eliminations and the reduction of income allocated to preferred shareholders before September 1, 2023, the date of the redemption of all of the outstanding shares of the Series A Preferred Stock.

Three months ended March 31, 2024 compared to three months ended March 31, 2023

Income available to common shareholders increased $37 million primarily due to the following items:

a decrease in income available to common shareholders of $2 million for the Electric reportable segment, as further discussed below;

an increase in income available to common shareholders of $49 million for the Natural Gas reportable segment, as further discussed below; and

a decrease in income available to common shareholders of $10 million for Corporate and Other, primarily due to $18 million increase in borrowing costs, partially offset by $12 million of dividends paid on shares of Series A Preferred Stock paid in the first quarter of 2023 prior to the redemption of all outstanding shares of Series A Preferred Stock in September 2023 as discussed in Note 18 to the Interim Condensed Financial statements.

CENTERPOINT ENERGY’S RESULTS OF OPERATIONS BY REPORTABLE SEGMENT

CenterPoint Energy’s CODM views net income as the measure of profit or loss for the reportable segments. Segment results include inter-segment interest income and expense, which may result in inter-segment profit and loss.

The following discussion of CenterPoint Energy’s results of operations is separated into two reportable segments, Electric and Natural Gas.

Electric (CenterPoint Energy)

For information regarding factors that may affect the future results of operations of CenterPoint Energy’s Electric reportable segment, please read “Risk Factors — Risk Factors Affecting Operations — Electric Generation, Transmission and Distribution,” “— Risk Factors Affecting Regulatory, Environmental and Legal Risks,” “— Risk Factors Affecting Financial, Economic and Market Risks,” “— Risk Factors Affecting Safety and Security Risks” and “— General and Other Risks” in Item 1A of Part I of the Registrants’ combined 2023 Form 10-K.

The following table provides summary data of CenterPoint Energy’s Electric reportable segment:

	Three Months Ended March 31,
	2024	2023	Favorable (Unfavorable)
(in millions, except operating statistics)
Revenues	$1,049	$952	$97
Expenses:
Utility natural gas, fuel and purchased power	43	60	17
Operation and maintenance	475	426	(49)
Depreciation and amortization	226	191	(35)
Taxes other than income taxes	78	67	(11)
Total expenses	822	744	(78)
Operating Income	227	208	19
Other Income (Expense):
Interest expense and other finance charges	(91)	(61)	(30)
Other income, net	16	12	4
Income Before Income Taxes	152	159	(7)
Income tax expense	31	36	5
Net Income	$121	$123	$(2)
Throughput (in GWh):
Residential	5,963	5,968	—%
Total	23,063	21,756	6%
Weather (percentage of normal weather for service area):
Cooling degree days	104%	134%	(30)%
Heating degree days	91%	87%	4%
Number of metered customers at end of period:
Residential	2,604,026	2,547,297	2%
Total	2,932,702	2,871,667	2%

The following table provides variance explanations for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 by major income statement caption for CenterPoint Energy’s Electric reportable segment:

	Favorable (Unfavorable)
(in millions)
Revenues
Transmission Revenues, including TCOS and TCRF, inclusive of costs billed by transmission providers, partially offset in operation and maintenance below	$55
Customer rates and the impact of the change in rate design	42
Bond Companies and SIGECO Securitization Subsidiary, offset in other line items below	8
Customer growth	6
Miscellaneous revenues, including service connections and off-system sales	2
Energy efficiency, and other pass-through, offset in operation and maintenance below	2
Equity return, related to the annual true-up of transition charges for amounts over or under collected in prior periods	1
Weather, efficiency improvements and other usage impacts	(2)
Cost of fuel and purchased power, offset in utility natural gas, fuel and purchased power below	(17)
Total	$97
Utility natural gas, fuel and purchased power
Cost of fuel, including coal, natural gas, and fuel oil, offset in revenues above	$15
Cost of purchased power, offset in revenues above	2
Total	$17
Operation and maintenance
Transmission costs billed by transmission providers, offset in revenues above	$(28)
All other operation and maintenance expense, including materials and supplies and insurance	(9)
Labor and benefits	(9)
Contract services	(1)
Energy efficiency, and other pass-through, offset in revenues above	(2)
Total	$(49)
Depreciation and amortization
Ongoing additions to plant-in-service	$(30)
Bond Companies and SIGECO Securitization Subsidiary, offset in other line items	(5)
Total	$(35)
Taxes other than income taxes
Incremental capital projects placed in service, and the impact of updated property tax rates	$(8)
Franchise fees and other taxes	(3)
Total	$(11)
Interest expense and other finance charges
Changes in outstanding debt	$(18)
Other, primarily AFUDC and impacts of regulatory deferrals	(9)
Bond Companies and SIGECO Securitization Subsidiary, offset in other line items	(3)
Total	$(30)
Other income, net
Other income, including AFUDC - Equity	$4
Total	$4

Income Tax Expense. For a discussion of effective tax rate per period by Registrant, see Note 12 to the Interim Condensed Financial Statements.

Natural Gas (CenterPoint Energy)

For information regarding factors that may affect the future results of operations of CenterPoint Energy’s Natural Gas reportable segment, please read “Risk Factors — Risk Factors Affecting Operations — Natural Gas,” “— Risk Factors Affecting Regulatory, Environmental and Legal Risks,” “— Risk Factors Affecting Financial, Economic and Market Risks,” “— Risk Factors Affecting Safety and Security Risks” and “— General and Other Risks” in Item 1A of Part I of the Registrants’ combined 2023 Form 10-K.

The following table provides summary data of CenterPoint Energy’s Natural Gas reportable segment:

	Three Months Ended March 31,
	2024	2023	Favorable (Unfavorable)
(in millions, except operating statistics)
Revenues	$1,570	$1,775	$(205)
Expenses:
Utility natural gas, fuel and purchased power	744	1,018	274
Non-utility cost of revenues, including natural gas	1	1	—
Operation and maintenance	234	228	(6)
Depreciation and amortization	132	122	(10)
Taxes other than income taxes	65	70	5
Total expenses	1,176	1,439	263
Operating Income	394	336	58
Other Income (Expense):
Interest expense and other finance charges	(51)	(44)	(7)
Other income, net	3	2	1
Income Before Income Taxes	346	294	52
Income tax expense	63	60	(3)
Net Income	$283	$234	$49
Throughput (in Bcf):
Residential	74	96	(23)%
Commercial and Industrial	101	133	(24)%
Total	175	229	(24)%
Weather (percentage of 10-year average for service area):
Heating degree days	82%	88%	(6)%
Number of metered customers at end of period:
Residential	4,026,029	3,973,454	1%
Commercial and Industrial	303,018	302,634	—%
Total	4,329,047	4,276,088	1%

	Favorable (Unfavorable)
(in millions)
Revenues
Cost of natural gas, offset in utility natural gas, fuel and purchased power below	$(274)
Energy efficiency and other pass-through, offset in operation and maintenance below	(10)
Gross receipts tax, offset in taxes other than income taxes below	(3)
Customer growth	4
Non-volumetric and miscellaneous revenue	5
Non-utility revenues	6
Weather and usage	18
Customer rates and impact of the change in rate design	49
Total	$(205)
Utility natural gas, fuel and purchased power
Cost of natural gas, offset in revenues above	$274
Total	$274
Operation and maintenance
Miscellaneous operations and maintenance expense, including bad debt expense	$(6)
Labor and benefits	(5)
Contract services	(4)
Corporate support services	(1)
Energy efficiency and other pass-through, offset in revenues above	10
Total	$(6)
Depreciation and amortization
Ongoing additions to plant-in-service	$(10)
Total	$(10)
Taxes other than income taxes
Gross receipts tax, offset in revenues above	$3
Incremental capital projects placed in service, and the impact of updated property tax rates	2
Total	$5
Interest expense and other finance charges
Other, primarily AFUDC and impacts of regulatory deferrals	$(12)
Changes in outstanding debt	5
Total	$(7)
Other income, net
AFUDC - Equity, primarily from increased capital spend	$2
Other	(1)
Total	$1

Income Tax Expense. For a discussion of effective tax rate per period by Registrant, see Note 12 to the Interim Condensed Financial Statements.

HOUSTON ELECTRIC CONSOLIDATED RESULTS OF OPERATIONS

Houston Electric’s CODM views net income as the measure of profit or loss for its single reportable segment. Houston Electric’s results of operations are affected by seasonal fluctuations in the demand for electricity. Houston Electric’s results of operations are also affected by, among other things, the actions of various governmental authorities having jurisdiction over rates Houston Electric charges, debt service costs, income tax expense, Houston Electric’s ability to collect receivables from REPs and Houston Electric’s ability to recover its regulatory assets. For more information regarding factors that may affect the future results of operations of Houston Electric’s business, please read “Risk Factors — Risk Factors Affecting Operations — Electric Generation, Transmission and Distribution,” “— Risk Factors Affecting Regulatory, Environmental and Legal Risks,” “— Risk Factors Affecting Financial, Economic and Market Risks,” “— Risk Factors Affecting Safety and Security Risks” and “— General and Other Risks” in Item 1A of Part I of the Registrants’ combined 2023 Form 10-K.

The following table provides summary data of Houston Electric’s single reportable segment:

	Three Months Ended March 31,
	2024	2023	Favorable (Unfavorable)
(in millions, except operating statistics)
Revenues:
TDU	$868	$760	$108
Bond Companies	33	32	1
Total revenues	901	792	109
Expenses:
Operation and maintenance, excluding Bond Companies	437	380	(57)
Depreciation and amortization, excluding Bond Companies	167	129	(38)
Taxes other than income taxes	75	64	(11)
Bond Companies	32	30	(2)
Total expenses	711	603	(108)
Operating Income	190	189	1
Other Income (Expense):
Interest expense and other finance charges	(76)	(53)	(23)
Interest expense on Securitization Bonds	(1)	(2)	1
Other income, net	11	7	4
Income Before Income Taxes	124	141	(17)
Income tax expense	25	33	8
Net Income	$99	$108	$(9)
Throughput (in GWh):
Residential	5,624	5,652	—%
Total	22,005	20,650	7%
Weather (percentage of 10-year average for service area):
Cooling degree days	104%	134%	(30)%
Heating degree days	92%	88%	4%
Number of metered customers at end of period:
Residential	2,470,925	2,414,905	2%
Total	2,780,362	2,720,041	2%

The following table provides variance explanations for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 by major income statement caption for Houston Electric:

	Favorable (Unfavorable)
(in millions)
Revenues
Transmission Revenues, including TCOS and TCRF, inclusive of costs billed by transmission providers, partially offset in operation and maintenance below	$55
Customer rates and the impact of the change in rate design	49
Customer growth	5
Equity return, related to the annual true-up of transition charges for amounts over or under collected in prior periods	1
Energy efficiency, partially offset in operations and maintenance below	1
Bond Companies, offset in other line items below	1
Weather, efficiency improvements and other usage impacts	(3)
Total	$109
Operation and maintenance, excluding Bond Companies
Transmission costs billed by transmission providers, offset in revenues above	$(28)
All other operation and maintenance expense, including materials and supplies and insurance	(17)
Labor and benefits	(9)
Contract services	(3)
Energy efficiency, offset in revenues above	(1)
Support services	1
Total	$(57)
Depreciation and amortization, excluding Bond Companies
Ongoing additions to plant-in-service	$(38)
Total	$(38)
Taxes other than income taxes
Incremental capital projects placed in service, and the impact of changes to tax rates	$(11)
Total	$(11)
Bond Companies expense
Operations and maintenance and depreciation expense, offset in revenues above	$(2)
Total	$(2)
Interest expense and other finance charges
Changes in outstanding debt	$(16)
Other, primarily AFUDC and impacts of regulatory deferrals	(7)
Total	$(23)
Interest expense on Securitization Bonds
Lower outstanding principal balance, offset in revenues above	$1
Total	$1
Other income, net
Other income, including AFUDC - Equity	$4
Total	$4

CERC CONSOLIDATED RESULTS OF OPERATIONS

CERC’s CODM views net income as the measure of profit or loss for its single reportable segment. CERC’s results of operations are affected by seasonal fluctuations in the demand for natural gas. CERC’s results of operations are also affected by, among other things, the actions of various federal, state and local governmental authorities having jurisdiction over rates CERC charges, debt service costs and income tax expense, CERC’s ability to collect receivables from customers and CERC’s ability to recover its regulatory assets. For more information regarding factors that may affect the future results of operations for CERC’s business, please read “Risk Factors — Risk Factors Affecting Operations — Natural Gas,” “— Risk Factors Affecting Regulatory, Environmental and Legal Risks,” “— Risk Factors Affecting Financial, Economic and Market Risks,” “— Risk Factors Affecting Safety and Security Risks” and “— General and Other Risks” in Item 1A of Part I of the Registrants’ combined 2023 Form 10-K.

	Three Months Ended March 31,
	2024	2023	Favorable (Unfavorable)
(in millions, except operating statistics)
Revenues	$1,512	$1,717	$(205)
Expenses:
Utility natural gas	724	998	274
Non-utility cost of revenues, including natural gas	1	1	—
Operation and maintenance	226	218	(8)
Depreciation and amortization	127	118	(9)
Taxes other than income taxes	64	69	5
Total expenses	1,142	1,404	262
Operating Income	370	313	57
Other Income (Expense):
Interest expense and other finance charges	(49)	(42)	(7)
Other income, net	3	1	2
Income Before Income Taxes	324	272	52
Income tax expense	60	60	—
Net Income	$264	$212	$52
Throughput (in Bcf):
Residential	71	94	(24)%
Commercial and Industrial	93	125	(26)%
Total	164	219	(25)%
Weather (percentage of 10-year average for service area):
Heating degree days	82%	89%	(7)%
Number of metered customers at end of period:
Residential	3,921,286	3,869,044	1%
Commercial and Industrial	292,398	292,014	—%
Total	4,213,684	4,161,058	1%

The following table provides variance explanations for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 by major income statement caption for CERC:

	Favorable (Unfavorable)
(in millions)
Revenues
Cost of natural gas, offset in utility natural gas, fuel and purchased power below	$(274)
Energy efficiency and other pass-through, offset in operation and maintenance below	(7)
Gross receipts tax, offset in taxes other than income taxes below	(3)
Non-volumetric and miscellaneous revenue	4
Customer growth	4
Non-utility revenues	6
Weather and usage	18
Customer rates and impact of the change in rate design	47
Total	$(205)
Utility natural gas, fuel and purchased power
Cost of natural gas, offset in revenues above	$274
Total	$274
Operation and maintenance
Miscellaneous operations and maintenance expense, including bad debt expense	$(6)
Labor and benefits	(4)
Contract services	(4)
Corporate support services	(1)
Energy efficiency and other pass-through, offset in revenues above	7
Total	$(8)
Depreciation and amortization
Ongoing additions to plant-in-service	$(9)
Total	$(9)
Taxes other than income taxes
Gross receipts tax, offset in revenues above	$3
Incremental capital projects placed in service, and the impact of updated property tax rates	2
Total	$5
Interest expense and other finance charges
Other, primarily AFUDC and impacts of regulatory deferrals	$(12)
Changes in outstanding debt	5
Total	$(7)
Other income, net
AFUDC - Equity, primarily from increased capital spend	$2
Total	$2

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