CenterPoint Energy
Cnp Ev Charging Station

CenterPoint Eyes More Regional Master Energy Plans

Feb. 22, 2022
The company’s CEO told analysts he could sell more gas distribution subsidiaries to power energy transition investment plans.

CenterPoint Energy Inc. could sell more of its gas distribution companies to fund investments in regional master energy plans in its hometown of Houston as well as elsewhere in its territories.

CenterPoint and Houston officials on Feb. 9 announced that they are partnering to develop long-range plans to guide the city’s transition to sustainable energy sources by hardening the grid, building out the city’s electric vehicle infrastructure and making other investments in renewables. That plan, which also involves other cities and counties in the region, is expected to be completed by summer and is likely to add to CenterPoint’s capital spending priorities.

On a Feb. 22 conference call after CenterPoint issued its fourth-quarter results, President and CEO Dave Lesar told analysts and investors his team also is working with leaders in other cities served by CenterPoint on similar collaborations. With Lesar and CFO Jason Wells promising the investment community they intend to not sell new stock to fund their capex plans – which top $19 billion over the next five years – that means funding will have to come from other sources.

CenterPoint last month took home more than $1.6 billion from the sales of gas distribution businesses in Arkansas and Oklahoma. The company’s CERC Corp. subsidiary runs similar business in a handful of other states and Lesar said they could provide financial fuel for spending plans in Houston and elsewhere.

“At this point in time, we're not essentially headed down any specific path,” Lesar said on the conference call. “It's just a great option to have as we look at our ability to spend more capital here in what is essentially one of the crown jewels of CenterPoint, which is Houston Electric.”

CenterPoint’s capital spending outlook already has grown from estimates laid out last fall. The team spent $100 million in late 2021 and has pulled forward from 2023 $200 million in spending on mobile generation capacity in the greater Houston area, an investment designed to improve the region’s ability to withstand severe weather events such as Winter Storm Uri last year. (In all, the mobile generation capacity will be about 500 MW and should be part of CenterPoint’s rate-generating asset base by September of next year.) Backfilling that $300 million through the coming years has lifted CenterPoint’s five-year capex guidance to about $19.2 billion.

For the fourth quarter, CenterPoint produced a profit of $641 million, more than four times its year-prior number thanks to a big gain related to the recently completed merger of Enable Midstream Partners, in which CenterPoint held a majority stake, with Energy Transfer LP. The company’s utility operations posted adjusted earnings of $171 million in the last three months of 2021 versus $133 million in the same period of 2020.

For the year, CenterPoint’s electric throughput rose about 4% to 103,000 GWh even though residential usage slipped 2%. The company finished 2021 with a little more than 2.8 million metered electric customers, an increase of 2% from the year before, and now has more than 60% of its rate base in the electric business.

Shares of CenterPoint (Ticker: CNP) rose about 2% Feb. 22 to close above $27. Over the past six months, they have risen about 5%.

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