CenterPoint Energy(CNP) - 2025 Q2 - Quarterly Report

General Information Form Details and Registrant Information This section provides the filing details for the Form 10-Q, identifying CenterPoint Energy, Inc., CenterPoint Energy Houston Electric, LLC, and CenterPoint Energy Resources Corp. as registrants, including their corporate information, NYSE-registered securities, filing statuses, and common stock outstanding as of July 21, 2025 - The report is a Quarterly Report on Form 10-Q for the period ended June 30, 2025, filed by CenterPoint Energy, Inc., CenterPoint Energy Houston Electric, LLC, and CenterPoint Energy Resources Corp[2][3][4] Registrant Filing Status | Registrant | Filer Status | | :-------------------------------- | :------------------- | | CenterPoint Energy, Inc. | Large accelerated filer | | CenterPoint Energy Houston Electric, LLC | Non-accelerated filer | | CenterPoint Energy Resources Corp. | Non-accelerated filer | - As of July 21, 2025, CenterPoint Energy, Inc. had 652,864,878 shares of common stock outstanding, excluding 166 shares held as treasury stock[11] Glossary This section provides a comprehensive glossary of acronyms and specialized terms used throughout the report, covering financial, regulatory, operational, and legal concepts pertinent to CenterPoint Energy and the utility industry, aiding in the understanding of the document's content Cautionary Statement Regarding Forward-Looking Information This statement advises readers that the report contains forward-looking statements, which are subject to various risks and uncertainties that could cause actual results to differ materially from those projected, outlining numerous factors that could impact future performance - Forward-looking statements are based on management's beliefs and assumptions and are identified by words such as 'anticipate,' 'believe,' 'expect,' 'plan,' 'will,' etc[18][19] - Key factors that could cause actual results to differ include business strategies (e.g., asset sales), industrial/commercial growth, capital funding and recovery, timely rate actions, economic conditions (recession, inflation, interest rates), severe weather events (May 2024 Storm Events, Hurricane Beryl), natural gas market volatility, non-payment for services, federal/state/local regulatory actions, supply chain disruptions, and litigation (e.g., February 2021 Winter Storm Event, Hurricane Beryl)[20][21][23] PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited condensed financial statements for CenterPoint Energy, Inc. and its subsidiaries, CenterPoint Energy Houston Electric, LLC, and CenterPoint Energy Resources Corp., for the three and six months ended June 30, 2025 and 2024, including consolidated income statements, balance sheets, cash flow statements, and statements of changes in equity, followed by detailed combined notes CenterPoint Energy, Inc. and Subsidiaries Financial Statements (Unaudited) Condensed Statements of Consolidated Income (Three Months Ended June 30) | Metric | 2025 (in millions) | 2024 (in millions) | Change (YoY) | | :-------------------------------- | :----------------- | :----------------- | :------------ | | Total Revenues | $1,944 | $1,905 | +$39 | | Operating Income | $417 | $467 | -$50 | | Net Income | $198 | $228 | -$30 | | Basic Earnings Per Common Share | $0.30 | $0.36 | -$0.06 | | Diluted Earnings Per Common Share | $0.30 | $0.36 | -$0.06 | Condensed Statements of Consolidated Income (Six Months Ended June 30) | Metric | 2025 (in millions) | 2024 (in millions) | Change (YoY) | | :-------------------------------- | :----------------- | :----------------- | :------------ | | Total Revenues | $4,864 | $4,525 | +$339 | | Operating Income | $1,066 | $1,083 | -$17 | | Net Income | $495 | $578 | -$83 | | Basic Earnings Per Common Share | $0.76 | $0.91 | -$0.15 | | Diluted Earnings Per Common Share | $0.76 | $0.91 | -$0.15 | Condensed Consolidated Balance Sheets (as of June 30, 2025 vs. December 31, 2024) | Metric | June 30, 2025 (in millions) | Dec 31, 2024 (in millions) | Change | | :-------------------------------- | :------------------------- | :------------------------- | :------- | | Total Current Assets | $2,930 | $4,381 | -$1,451 | | Property, Plant and Equipment, Net | $33,901 | $32,089 | +$1,812 | | Total Assets | $44,099 | $43,768 | +$331 | | Total Current Liabilities | $3,695 | $4,045 | -$350 | | Total Long-term Debt, Net | $20,564 | $20,397 | +$167 | | Total Shareholders' Equity | $11,019 | $10,666 | +$353 | Condensed Statements of Consolidated Cash Flows (Six Months Ended June 30) | Metric | 2025 (in millions) | 2024 (in millions) | Change (YoY) | | :-------------------------------- | :----------------- | :----------------- | :------------ | | Net cash provided by operating activities | $970 | $1,114 | -$144 | | Net cash used in investing activities | $(1,341) | $(1,600) | +$259 | | Net cash provided by financing activities | $440 | $459 | -$19 | | Net Increase (Decrease) in Cash | $69 | $(27) | +$96 | CenterPoint Energy Houston Electric, LLC and Subsidiaries Financial Statements (Unaudited) Condensed Statements of Consolidated Income (Three Months Ended June 30) | Metric | 2025 (in millions) | 2024 (in millions) | Change (YoY) | | :----------------- | :----------------- | :----------------- | :------------ | | Revenues | $1,008 | $1,044 | -$36 | | Operating Income | $252 | $303 | -$51 | | Net Income | $141 | $187 | -$46 | Condensed Statements of Consolidated Income (Six Months Ended June 30) | Metric | 2025 (in millions) | 2024 (in millions) | Change (YoY) | | :----------------- | :----------------- | :----------------- | :------------ | | Revenues | $1,892 | $1,945 | -$53 | | Operating Income | $434 | $493 | -$59 | | Net Income | $225 | $286 | -$61 | Condensed Consolidated Balance Sheets (as of June 30, 2025 vs. December 31, 2024) | Metric | June 30, 2025 (in millions) | Dec 31, 2024 (in millions) | Change | | :-------------------------------- | :------------------------- | :------------------------- | :------- | | Total Current Assets | $1,022 | $1,265 | -$243 | | Property, Plant and Equipment, Net | $17,939 | $17,122 | +$817 | | Total Assets | $20,402 | $19,712 | +$690 | | Total Current Liabilities | $1,895 | $1,741 | +$154 | | Long-Term Debt, Net | $8,820 | $8,322 | +$498 | | Total Member's Equity | $7,202 | $7,159 | +$43 | Condensed Statements of Consolidated Cash Flows (Six Months Ended June 30) | Metric | 2025 (in millions) | 2024 (in millions) | Change (YoY) | | :-------------------------------- | :----------------- | :----------------- | :------------ | | Net cash provided by operating activities | $117 | $350 | -$233 | | Net cash used in investing activities | $(881) | $(852) | -$29 | | Net cash provided by financing activities | $765 | $487 | +$278 | | Net Increase (Decrease) in Cash | $1 | $(15) | +$16 | CenterPoint Energy Resources Corp. and Subsidiaries Financial Statements (Unaudited) Condensed Statements of Consolidated Income (Three Months Ended June 30) | Metric | 2025 (in millions) | 2024 (in millions) | Change (YoY) | | :----------------- | :----------------- | :----------------- | :------------ | | Total Revenues | $731 | $679 | +$52 | | Operating Income | $124 | $117 | +$7 | | Net Income | $86 | $47 | +$39 | Condensed Statements of Consolidated Income (Six Months Ended June 30) | Metric | 2025 (in millions) | 2024 (in millions) | Change (YoY) | | :----------------- | :----------------- | :----------------- | :------------ | | Total Revenues | $2,519 | $2,191 | +$328 | | Operating Income | $531 | $487 | +$44 | | Net Income | $391 | $311 | +$80 | Condensed Consolidated Balance Sheets (as of June 30, 2025 vs. December 31, 2024) | Metric | June 30, 2025 (in millions) | Dec 31, 2024 (in millions) | Change | | :-------------------------------- | :------------------------- | :------------------------- | :------- | | Total Current Assets | $819 | $2,537 | -$1,718 | | Property, Plant and Equipment, Net | $11,888 | $11,406 | +$482 | | Total Assets | $15,012 | $16,425 | -$1,413 | | Total Current Liabilities | $845 | $1,260 | -$415 | | Long-Term Debt, Net | $4,347 | $5,174 | -$827 | | Total Stockholder's Equity | $6,009 | $6,268 | -$259 | Condensed Statements of Consolidated Cash Flows (Six Months Ended June 30) | Metric | 2025 (in millions) | 2024 (in millions) | Change (YoY) | | :-------------------------------- | :----------------- | :----------------- | :------------ | | Net cash provided by operating activities | $1,025 | $755 | +$270 | | Net cash used in investing activities | $455 | $(705) | +$1,160 | | Net cash used in financing activities | $(1,482) | $(50) | -$1,432 | | Net Increase (Decrease) in Cash | $(2) | $0 | -$2 | Combined Notes to Interim Condensed Financial Statements (Unaudited) (1) Background and Basis of Presentation - CenterPoint Energy is a public utility holding company with operating subsidiaries owning and operating electric transmission, distribution, and generation facilities, and natural gas distribution systems[49] - On March 7, 2025, SIGECO acquired Posey Solar (191 MW solar array) for approximately $357 million. On March 31, 2025, CERC Corp. completed the sale of its Louisiana and Mississippi natural gas LDC businesses for approximately $1.2 billion[51] - The Interim Condensed Financial Statements are prepared in conformity with GAAP, consolidating wholly-owned and majority-owned subsidiaries, with intercompany transactions eliminated[52][53] - CenterPoint Energy, Houston Electric, and SIGECO consolidate Variable Interest Entities (VIEs) like Transition Bond Company IV and SIGECO Securitization Subsidiary, which are bankruptcy-remote special purpose entities for securitization[54] (2) Accounting Policies and Recent Accounting Pronouncements - There have been no material changes in significant accounting policies from the combined 2024 Form 10-K, except as discussed[56] Cash, Cash Equivalents and Restricted Cash (June 30, 2025) | Registrant | Cash & Cash Equivalents (in millions) | Restricted Cash (in millions) | Total (in millions) | | :------------------------- | :------------------------------------ | :---------------------------- | :------------------ | | CenterPoint Energy | $93 | $6 | $99 | | Houston Electric | $15 | $0 | $15 | | CERC | $0 | $0 | $0 | - ASU 2023-09 (Income Taxes) enhances transparency of income tax disclosures, effective for annual periods beginning after December 15, 2024. ASU 2024-03 (Expense Disaggregation) improves disclosure of public business entity expenses, effective for annual periods beginning after December 15, 2026[58][59] (3) Acquisition and Divestiture - CERC Corp. completed the sale of its Louisiana and Mississippi natural gas LDC businesses on March 31, 2025, for approximately $1.2 billion. CenterPoint Energy recognized a $43 million loss, and CERC recognized a $52 million gain, net of $21 million transaction costs, for the six months ended June 30, 2025[62][65] - Goodwill of $217 million (CenterPoint Energy) and $122 million (CERC) allocated to the divested businesses was derecognized. CERC entered into a Transition Services Agreement to provide services for up to 24 months, with charges of $8.5 million for the three and six months ended June 30, 2025[65][66] - On March 7, 2025, SIGECO acquired 100% of the equity interests in Posey Solar, which was constructing a 191 MW solar array, for approximately $357 million. The project was placed into service on May 30, 2025, with cost recovery through updated base rates beginning June 17, 2025[68] (4) Revenue Recognition CenterPoint Energy Revenues by Segment (Six Months Ended June 30, 2025) | Segment | Revenue from Contracts with Customers (in millions) | Other (in millions) | Total Revenues (in millions) | | :---------------- | :---------------------------------------- | :------------------ | :--------------------------- | | Electric | $2,267 | $(10) | $2,257 | | Natural Gas | $2,639 | $(35) | $2,602 | | Corporate and Other | $3 | $2 | $5 | | Total | $4,909 | $(43) | $4,864 | Houston Electric Revenues (Six Months Ended June 30) | Metric | 2025 (in millions) | 2024 (in millions) | Change (YoY) | | :-------------------------------- | :----------------- | :----------------- | :------------ | | Revenue from contracts with customers | $1,906 | $1,959 | -$53 | | Total revenues | $1,892 | $1,945 | -$53 | CERC Revenues (Six Months Ended June 30) | Metric | 2025 (in millions) | 2024 (in millions) | Change (YoY) | | :-------------------------------- | :----------------- | :----------------- | :------------ | | Revenue from contracts with customers | $2,555 | $2,167 | +$388 | | Total revenues | $2,519 | $2,191 | +$328 | Accounts Receivable and Accrued Unbilled Revenues (CenterPoint Energy, June 30, 2025 vs. Dec 31, 2024) | Metric | Dec 31, 2024 (in millions) | June 30, 2025 (in millions) | Change | | :------------------------- | :------------------------- | :-------------------------- | :------- | | Accounts Receivable | $666 | $636 | -$30 | | Accrued Unbilled Revenues | $521 | $342 | -$179 | (5) Employee Benefit Plans CenterPoint Energy Pension Benefits (Six Months Ended June 30) | Metric | 2025 (in millions) | 2024 (in millions) | Change (YoY) | | :----------------------------- | :----------------- | :----------------- | :------------ | | Service cost | $12 | $12 | $0 | | Interest cost | $39 | $37 | +$2 | | Expected return on plan assets | $(40) | $(37) | -$3 | | Amortization of net loss | $14 | $14 | $0 | | Net periodic cost | $25 | $26 | -$1 | Expected Contributions to Pension and Postretirement Plans (2025) | Registrant | Pension Plans (in millions) | Postretirement Plans (in millions) | | :----------------- | :-------------------------- | :--------------------------------- | | CenterPoint Energy | $116 | $9 | | Houston Electric | $0 | $1 | | CERC | $0 | $5 | (6) Regulatory Matters Unrecognized Equity Return (June 30, 2025) | Registrant | Amount (in millions) | | :----------------- | :------------------- | | CenterPoint Energy | $296 | | Houston Electric | $131 | | CERC | $101 | - As of June 30, 2025, CenterPoint Energy and CERC each recorded current regulatory assets of $67 million and non-current regulatory assets of $30 million associated with the February 2021 Winter Storm Event[82] - Houston Electric's TEEEF regulatory assets totaled $84 million for short-term lease expenses and $156 million for long-term lease expenses as of June 30, 2025. Houston Electric proposed to release 15 large TEEEF units to the San Antonio area and filed for preapproval to lease additional smaller TEEEF units[89][93][95] - For the May 2024 Storm Events, Houston Electric filed for determination of approximately $502 million in system restoration costs, with a settlement approving $396 million in distribution-related costs and $29 million in transmission-related costs. Houston Electric and Restoration Bond Company II filed to register up to $396 million in securitization bonds[97][98] - For Hurricane Beryl, Houston Electric filed for determination of approximately $1.3 billion in system restoration costs[101] (7) Fair Value Measurements - Assets and liabilities are categorized into Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1 quoted prices), and Level 3 (unobservable inputs). No assets or liabilities were classified as Level 3 as of June 30, 2025, and December 31, 2024[102][103][104][105] CenterPoint Energy Fair Value Assets/Liabilities (June 30, 2025) | Category | Level 1 (in millions) | Level 2 (in millions) | Total (in millions) | | :-------------------------- | :-------------------- | :-------------------- | :------------------ | | Equity securities | $683 | $0 | $683 | | Investments | $20 | $0 | $20 | | Indexed debt securities derivative | $0 | $740 | $740 | Long-term Debt Fair Value (June 30, 2025) | Registrant | Carrying Amount (in millions) | Fair Value (in millions) | | :----------------- | :---------------------------- | :----------------------- | | CenterPoint Energy | $21,618 | $20,698 | | Houston Electric | $9,320 | $8,388 | | CERC | $4,347 | $4,304 | (8) Equity Securities and Indexed Debt Securities (ZENS) (CenterPoint Energy) Gains (Losses) on Equity Securities (Six Months Ended June 30) | Security | 2025 (in millions) | 2024 (in millions) | Change (YoY) | | :--------------- | :----------------- | :----------------- | :------------ | | AT&T Common | $63 | $24 | +$39 | | Charter Common | $57 | $(78) | +$135 | | WBD Common | $2 | $(10) | +$12 | | Total | $122 | $(64) | +$186 | Equity Securities Carrying Value (June 30, 2025) | Security | Shares Held | Carrying Value (in millions) | | :--------------- | :---------- | :--------------------------- | | AT&T Common | 10,212,945 | $296 | | Charter Common | 872,503 | $356 | | WBD Common | 2,470,685 | $28 | | Total | | $683 | - As of June 30, 2025, ZENS with an original principal amount of $828 million and a contingent principal amount of $4 million were outstanding. If all ZENS were exchanged for cash on this date, approximately $819 million in deferred taxes and $108 million in capital gains taxes would be payable[113][290] (9) Short-term Borrowings and Long-term Debt - In January 2025, SIGECO issued $165 million of 5.69% First Mortgage Bonds due 2055 for the Posey Solar acquisition. In February 2025, Houston Electric issued $500 million of 4.80% General Mortgage Bonds due 2030[114][115] - In May 2025, CenterPoint Energy accepted $1 billion aggregate purchase price of its and CERC's senior notes, resulting in a $36 million gain (CenterPoint Energy) and $9 million gain (CERC) on early extinguishment of debt[117] Revolving Credit Facilities (June 30, 2025) | Registrant | Size of Facility (in millions) | Termination Date | Debt for Borrowed Money to Capital Ratio | | :----------------- | :----------------------------- | :--------------- | :--------------------------------------- | | CenterPoint Energy | $2,400 | Dec 6, 2028 | 59.5% | | CenterPoint Energy (SIGECO) | $250 | Dec 6, 2028 | 45.0% | | Houston Electric | $300 | Dec 6, 2028 | 55.7% | | CERC | $1,050 | Dec 6, 2028 | 38.0% | | Total | $4,000 | | | - As of June 30, 2025, CenterPoint Energy had $1,845 million in commercial paper outstanding (4.60% avg. interest rate), and CERC had $192 million (4.52% avg. interest rate)[121] (10) Income Taxes Effective Tax Rates (Three Months Ended June 30) | Registrant | 2025 | 2024 | | :----------------- | :----- | :----- | | CenterPoint Energy | 22% | 13% | | Houston Electric | 20% | 20% | | CERC | 11% | 24% | Effective Tax Rates (Six Months Ended June 30) | Registrant | 2025 | 2024 | | :----------------- | :----- | :----- | | CenterPoint Energy | 22% | 16% | | Houston Electric | 20% | 20% | | CERC | 22% | 19% | - CenterPoint Energy's higher effective tax rate for 2025 periods was primarily due to non-deductible goodwill from the Louisiana and Mississippi natural gas LDC sale and reduced favorable tax return true-ups. CERC's lower Q2 2025 rate was due to a $12 million deferred income tax benefit, partially offset by non-deductible goodwill from the LDC sale[125][126] - CenterPoint Energy reported a net uncertain tax liability of $30 million as of June 30, 2025, with a reasonably possible $11 million tax benefit expected in the next 12 months[127] (11) Commitments and Contingencies Undiscounted Minimum Purchase Obligations (CenterPoint Energy and CERC, June 30, 2025) | Category | CenterPoint Energy (in millions) | CERC (in millions) | | :-------------------- | :----------------------------- | :----------------- | | Natural Gas Supply | $4,230 | $4,184 | | Electric Supply | $1,353 | N/A | | Other | $352 | N/A | - CenterPoint Energy's maximum exposure under parent company level guarantees for Energy Systems Group's obligations is approximately $457 million as of June 30, 2025, primarily for energy savings performance contracts[136] - CenterPoint Energy and Houston Electric are involved in multiple putative class actions and individual lawsuits related to Hurricane Beryl, alleging negligence, property damage, and economic losses. Cases are being transferred to an MDL pretrial court[139][140][141] - Litigation related to the February 2021 Winter Storm Event continues, with approximately 220 pending lawsuits. The Texas Supreme Court affirmed ERCOT's sovereign immunity, and the MDL judge dismissed certain claims against TDUs while allowing repleading of gross negligence claims[142][143][144][145] - CERC was named in 12 lawsuits alleging gas market manipulation; the MDL judge granted motions to dismiss and CERC's plea to jurisdiction in three served cases, dismissing all claims against CERC with prejudice[149][151] - CenterPoint Energy and CERC have accrued $13 million and $11 million, respectively, for remediation of Minnesota MGP sites, with estimated costs ranging from $8 million to $47 million (CenterPoint Energy) and $7 million to $41 million (CERC) over 5 to 50 years[155][156] - CenterPoint Energy recorded an approximate $132 million ARO for A.B. Brown and F.B. Culley ash pond closures and an additional $11 million ARO for historic ash placement at F.B. Culley under the CCR Legacy Rule[163][164] (12) Earnings Per Share (CenterPoint Energy) Basic and Diluted EPS (Three Months Ended June 30) | Metric | 2025 | 2024 | Change (YoY) | | :-------------------------------- | :----- | :----- | :------------ | | Basic Earnings Per Common Share | $0.30 | $0.36 | -$0.06 | | Diluted Earnings Per Common Share | $0.30 | $0.36 | -$0.06 | Basic and Diluted EPS (Six Months Ended June 30) | Metric | 2025 | 2024 | Change (YoY) | | :-------------------------------- | :----- | :----- | :------------ | | Basic Earnings Per Common Share | $0.76 | $0.91 | -$0.15 | | Diluted Earnings Per Common Share | $0.76 | $0.91 | -$0.15 | - Dilutive earnings per common share reflects the dilutive impact of potential issuances of shares of Common Stock associated with outstanding equity forwards, determined under the treasury stock method[170] (13) Reportable Segments - CenterPoint Energy's reportable segments are Electric (Texas Gulf Coast, southwestern Indiana), Natural Gas (Indiana, Minnesota, Ohio, Texas), and Corporate and Other. Houston Electric and CERC each consist of a single reportable segment[175][176][177] CenterPoint Energy Net Income by Segment (Six Months Ended June 30, 2025) | Segment | Net Income (in millions) | | :------------------ | :----------------------- | | Electric | $279 | | Natural Gas | $314 | | Corporate and Other | $(98) | | Total | $495 | CenterPoint Energy Expenditures for Long-lived Assets (Six Months Ended June 30) | Segment | 2025 (in millions) | 2024 (in millions) | Change (YoY) | | :------------------ | :----------------- | :----------------- | :------------ | | Electric | $1,716 | $951 | +$765 | | Natural Gas | $696 | $712 | -$16 | | Corporate and Other | $18 | $7 | +$11 | | Consolidated | $2,430 | $1,670 | +$760 | CenterPoint Energy Total Assets by Segment (June 30, 2025) | Segment | Total Assets (in millions) | | :------------------ | :------------------------- | | Electric | $25,231 | | Natural Gas | $17,090 | | Corporate and Other | $1,778 | | Consolidated | $44,099 | (14) Related Party Transactions - Houston Electric had $453 million in money pool borrowings, and CERC had $1 million in money pool investments as of June 30, 2025, with a weighted average interest rate of 4.65%[186] Corporate Service Charges (Six Months Ended June 30) | Registrant | 2025 (in millions) | 2024 (in millions) | Change (YoY) | | :----------------- | :----------------- | :----------------- | :------------ | | Houston Electric | $90 | $79 | +$11 | | CERC | $106 | $106 | $0 | (15) Equity Dividends Declared Per Share (Common Stock, Six Months Ended June 30) | Year | Per Share | | :--- | :-------- | | 2025 | $0.440 | | 2024 | $0.400 | - CenterPoint Energy entered into forward sale agreements in April and May 2025 for a total of 4,480,628 shares of Common Stock, with a gross sales price of approximately $165 million, under its Equity Distribution Agreement[192][193] - In May 2025, CenterPoint Energy entered into separate forward sale agreements for an aggregate of 24,864,865 shares of Common Stock at an initial forward price of $36.26 per share, totaling $904 million[194][195] - CenterPoint Energy's Accumulated Other Comprehensive Loss was $(17) million as of June 30, 2025[197] (16) Subsequent Events - In July 2025, SIGECO repaid $41 million of 3.45% first mortgage bonds due 2025[198] - On July 1, 2025, SIGECO closed on $205 million of Series 2025B First Mortgage Bonds and expects to close on $145 million of Series 2025C Bonds by October 1, 2025, for general corporate purposes[199][200] - A common stock dividend of $0.2200 per share was declared on July 17, 2025, payable September 11, 2025[201] - Jesus Soto, Jr. was appointed Executive Vice President and Chief Operating Officer, effective August 11, 2025[202] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the financial condition and results of operations for CenterPoint Energy, Inc. and its subsidiaries, covering recent events, consolidated and segment-specific financial performance, factors affecting future earnings, and a detailed analysis of liquidity and capital resources Recent Events - Jesus Soto, Jr. was appointed Executive Vice President and Chief Operating Officer, effective August 11, 2025[206] - The One Big Beautiful Bill Act of 2025 (OBBBA) was signed into law on July 4, 2025, with Executive Order 14315 issued on July 7, 2025, introducing changes to energy tax credits. Registrants do not expect material impacts due to limited generation activities qualifying for IRA tax credits[207] - Houston Electric entered definitive documentation to release 15 large TEEEF units to the San Antonio area for up to two years, without charging Houston customers or receiving revenue from ERCOT[208] - CenterPoint Energy increased its 10-year capital plan by an additional $4.5 billion (totaling approximately $53 billion through 2030) to support growth in Texas[209] - CenterPoint Energy plans to sell its Ohio natural gas LDC business for capital recycling and portfolio optimization; assets are not yet classified as held for sale[210] - CenterPoint Energy entered into forward sale agreements in May 2025 for 24,864,865 shares of Common Stock and in April/May 2025 for 4,480,628 shares under its Equity Distribution Agreement[211][212] - The sale of Louisiana and Mississippi natural gas LDC businesses was completed on March 31, 2025, for approximately $1.2 billion. SIGECO acquired Posey Solar (191 MW solar array) for approximately $357 million on March 7, 2025[213][214] CenterPoint Energy Consolidated Results of Operations Net Income (Three Months Ended June 30) | Segment | 2025 (in millions) | 2024 (in millions) | Favorable (Unfavorable) (in millions) | | :-------------------- | :----------------- | :----------------- | :------------------------------------ | | Electric | $171 | $215 | $(44) | | Natural Gas | $86 | $47 | $39 | | Total Utility Operations | $257 | $262 | $(5) | | Corporate and Other | $(59) | $(34) | $(25) | | Total CenterPoint Energy | $198 | $228 | $(30) | Net Income (Six Months Ended June 30) | Segment | 2025 (in millions) | 2024 (in millions) | Favorable (Unfavorable) (in millions) | | :-------------------- | :----------------- | :----------------- | :------------------------------------ | | Electric | $279 | $336 | $(57) | | Natural Gas | $314 | $330 | $(16) | | Total Utility Operations | $593 | $666 | $(73) | | Corporate and Other | $(98) | $(88) | $(10) | | Total CenterPoint Energy | $495 | $578 | $(83) | - The $30 million decrease in net income for the three months ended June 30, 2025, was primarily due to a $44 million decrease in the Electric segment and a $25 million decrease in Corporate and Other (driven by increased borrowing costs and tax expense, partially offset by a gain on early debt extinguishment)[219] - The $83 million decrease in net income for the six months ended June 30, 2025, was primarily due to a $57 million decrease in the Electric segment, a $16 million decrease in the Natural Gas segment, and a $10 million decrease in Corporate and Other (driven by increased borrowing costs and tax benefits offset in other segments, partially offset by a gain on early debt extinguishment)[220] Results of Operations by Reportable Segment Electric (CenterPoint Energy) - Net income for the Electric reportable segment decreased by $44 million to $171 million for the three months ended June 30, 2025, and by $57 million to $279 million for the six months ended June 30, 2025, compared to the prior year periods[223] - Total throughput for the Electric segment increased by 4% for the three months and 6% for the six months ended June 30, 2025. Residential throughput increased by 1% and 5% for the respective periods[223] - Customer growth for the Electric segment was 2% for both the three and six months ended June 30, 2025[223] - Revenue decrease for the three months ended June 30, 2025, was primarily due to a $(44) million unfavorable impact from Transition Bond Company IV, partially offset by +$21 million from Transmission Revenues and +$13 million from cost of fuel and purchased power[224] - Operation and maintenance expenses increased by $(26) million for the three months ended June 30, 2025, mainly due to $(24) million in contract services. Depreciation and amortization saw a favorable change of +$7 million, driven by +$42 million from Transition Bond Company IV and SIGECO Securitization Subsidiary, partially offset by ongoing plant additions and temporary generation lease expense[224] Natural Gas (CenterPoint Energy) - Net income for the Natural Gas reportable segment increased by $39 million to $86 million for the three months ended June 30, 2025, but decreased by $16 million to $314 million for the six months ended June 30, 2025, compared to the prior year periods[227] - Total throughput for the Natural Gas segment decreased by 4% for the three months but increased by 6% for the six months ended June 30, 2025. Residential throughput increased by 13% for the six-month period[227] - The number of metered customers for the Natural Gas segment decreased by 8% primarily due to the divestiture of the Louisiana and Mississippi natural gas LDCs[227] - Revenue increase for the six months ended June 30, 2025, was primarily driven by +$261 million from the cost of natural gas (offset in expenses) and +$74 million from customer rates, partially offset by a $(46) million unfavorable impact from the LDC divestiture[228] - Utility natural gas and fuel expenses increased by $(242) million for the six months ended June 30, 2025, mainly due to the cost of natural gas. A $(43) million loss on sale was recognized due to the divestiture of the Louisiana and Mississippi natural gas LDC businesses[228] Houston Electric Consolidated Results of Operations - Net income for Houston Electric decreased by $46 million to $141 million for the three months ended June 30, 2025, and by $61 million to $225 million for the six months ended June 30, 2025, compared to the prior year periods[231] - Total throughput for Houston Electric increased by 5% for the three months and 6% for the six months ended June 30, 2025. Residential throughput increased by 2% and 5% for the respective periods[231] - Customer growth for Houston Electric was 2% for both the three and six months ended June 30, 2025[231] - Revenue decrease for the six months ended June 30, 2025, was primarily due to a $(76) million unfavorable impact from Transition Bond Company IV, partially offset by +$22 million from weather and usage, and +$11 million from Transmission Revenues and customer growth[232] - Operation and maintenance expenses increased by $(40) million for the six months ended June 30, 2025, mainly due to contract services and corporate support services. Depreciation and amortization increased by $(39) million, driven by ongoing plant additions and temporary generation lease expense[232] CERC CONSOLIDATED RESULTS OF OPERATIONS - Net income for CERC increased by $39 million to $86 million for the three months ended June 30, 2025, and by $80 million to $391 million for the six months ended June 30, 2025, compared to the prior year periods[235] - Total throughput for CERC decreased by 7% for the three months but increased by 4% for the six months ended June 30, 2025. Residential throughput increased by 14% for the six-month period[235] - The number of metered customers for CERC decreased by 8% primarily due to the divestiture of the Louisiana and Mississippi natural gas LDCs[235] - Revenue increase for the six months ended June 30, 2025, was primarily driven by +$250 million from the cost of natural gas (offset in expenses) and +$70 million from customer rates, partially offset by a $(46) million unfavorable impact from the LDC divestiture[236] - Utility natural gas expenses increased by $(234) million for the six months ended June 30, 2025, mainly due to the cost of natural gas. A +$52 million gain on sale was recognized due to the divestiture of the Louisiana and Mississippi natural gas LDC businesses[236] Certain Factors Affecting Future Earnings - This section refers to the 'Risk Factors' in Part I, Item 1A of the Registrants' combined 2024 Form 10-K and the 'Cautionary Statement Regarding Forward-Looking Information' in this combined Form 10-Q for information on factors impacting future earnings[238] Liquidity and Capital Resources Cash Flows Analysis CenterPoint Energy Cash Flows (Six Months Ended June 30) | Activity | 2025 (in millions) | 2024 (in millions) | Change (YoY) | | :-------------------- | :----------------- | :----------------- | :------------ | | Operating activities | $970 | $1,114 | $(144) | | Investing activities | $(1,341) | $(1,600) | $259 | | Financing activities | $440 | $459 | $(19) | Houston Electric Cash Flows (Six Months Ended June 30) | Activity | 2025 (in millions) | 2024 (in millions) | Change (YoY) | | :-------------------- | :----------------- | :----------------- | :------------ | | Operating activities | $117 | $350 | $(233) | | Investing activities | $(881) | $(852) | $(29) | | Financing activities | $765 | $487 | $278 | CERC Cash Flows (Six Months Ended June 30) | Activity | 2025 (in millions) | 2024 (in millions) | Change (YoY) | | :-------------------- | :----------------- | :----------------- | :------------ | | Operating activities | $1,025 | $755 | $270 | | Investing activities | $455 | $(705) | $1,160 | | Financing activities | $(1,482) | $(50) | $(1,432) | - CenterPoint Energy's operating cash flow decreased by $144 million, primarily due to changes in net income after non-cash items ($-180M) and working capital ($-269M). CERC's investing cash flow increased by $1,160 million, driven by $1,219 million in proceeds from divestiture[240] - CERC's financing cash flow decreased by $1,432 million, primarily due to increased dividends to parent ($-404M), changes in contribution from parent ($-290M), and net payments of long-term debt ($-820M)[241] Future Capital Requirements and Funding Estimated Capital Expenditures (Remainder of 2025) | Registrant | Amount (in millions) | | :----------------- | :------------------- | | CenterPoint Energy | $2,929 | | Houston Electric | $1,835 | | CERC | $895 | - Estimated restoration costs associated with the May 2024 Storm Events for the remainder of 2025 are $28 million for CenterPoint Energy and Houston Electric[242] - Anticipated cash needs for the remainder of 2025 are expected to be met with available cash flow from operations, incremental bond issuances (including securitization), equity issuances, and borrowings under credit facilities, commercial paper, or other sources[244] Off-Balance Sheet Arrangements - The Registrants have no off-balance sheet arrangements other than Houston Electric's general mortgage bonds issued as collateral for CenterPoint Energy's tax-exempt long-term debt and certain guarantees[246] Regulatory Matters - Houston Electric is pursuing regulatory approvals for its TEEEF units, including a proposal to release 15 large units to the San Antonio area and an application for preapproval to lease additional small units[247][208][95] - Houston Electric filed for determination of $1.3 billion in system restoration costs related to Hurricane Beryl and received approval to securitize $396 million in distribution-related costs for the May 2024 Storm Events[248][101][249][97] - SIGECO acquired Posey Solar (191 MW solar) for $357 million, placed in service Q2 2025, with costs recovered through base rates. Indiana Electric terminated two solar PPAs due to delays/cost increases but has approved wind PPAs for future operation[250][214][252][253][254][255][256] - Construction of two 230 MW natural gas combustion turbines for Indiana Electric is underway, with the first placed in service Q2 2025 and the second expected Q3 2025. Houston Electric's Stewart-West Bay Transmission Project ($105 million) is expected to be approved in Q3 2025[257][258] - New Texas legislation (HB 4384, SB 231, SB 1963, SB 482) impacts LDC cost recovery, temporary generation unit types, securitization of storm costs, and penalties for assaulting utility workers. CenterPoint Energy's solar projects face delays and cost increases due to tariffs and supply chain issues[260][259] - Houston Electric reached a settlement for its Transmission and Distribution System Resiliency Plan (SRP) for approximately $3.18 billion in distribution-related investments. CERC's Minnesota Gas Rate Case settlement was approved, and Houston Electric's Rate Case settlement was approved[261][263][264] Significant Rate Change Applications (Pending or Completed in 2025) | Mechanism | Annual Increase (Decrease) (in millions) | Filing Date | Effective Date | Approval Date | | :--------------------------------------- | :------------------------------------- | :---------- | :------------- | :------------ | | Houston Electric Rate Case | $(47) | March 2024 | April 2025 | March 2025 | | Houston Electric TCOS | $64 | February 2025 | April 2025 | April 2025 | | Houston Electric DCRF | $123 | February 2025 | July 2025 | June 2025 | | CERC Minnesota Gas Rate Case | $104 | November 2023 | September 2025 | July 2025 | | CenterPoint Energy CSIA (Indiana South) | $2 | April 2025 | TBD | TBD | | CenterPoint Energy CSIA (Indiana North) | $9 | April 2025 | TBD | TBD | | CenterPoint Energy Rate Case (Ohio) | $100 | October 2024 | TBD | TBD | Tariffs - The U.S. government imposed new tariffs (e.g., 25% on steel imports in March 2025, 10% baseline on all imports in April 2025), and potential retaliatory measures create uncertainty, may increase commodity costs, impact supply chains, and contribute to inflation[270] Greenhouse Gas and Climate-Related Regulation and Compliance (CenterPoint Energy) - The EPA proposed to repeal all GHG emissions standards for the power sector under Section 111 of the Clean Air Act[271] - The SEC voluntarily delayed the implementation of its climate disclosure rules due to litigation and subsequently voted to end the defense of these rules[272][273] Climate Risk Trends and Uncertainties - Changes in the U.S. presidential administration and expected increases in electric demand have shifted the energy landscape, with executive orders aiming to increase investment in fossil fuel infrastructure[274] - The OBBBA includes changes to energy tax credits, including accelerated phase-outs, creating uncertainty regarding future renewable generation infrastructure development and the role of existing renewable generation[274] Other Liquidity and Capital Factors Credit Facilities Utilization (July 21, 2025) | Registrant | Size of Facility (in millions) | Amount Utilized (Commercial Paper) (in millions) | | :----------------- | :----------------------------- | :----------------------------------------------- | | CenterPoint Energy | $2,400 | $1,751 | | CenterPoint Energy (SIGECO) | $250 | $0 | | Houston Electric | $300 | $0 | | CERC | $1,050 | $187 | | Total | $4,000 | $1,938 | - Houston Electric had $396 million in money pool borrowings as of July 21, 2025, with a weighted average interest rate of 4.63%[283] Credit Ratings (July 21, 2025) | Registrant | Borrower/Instrument | Moody's Rating/Outlook | S&P Rating/Outlook | Fitch Rating/Outlook | | :----------------- | :------------------------------------ | :--------------------- | :----------------- | :----------------- | | CenterPoint Energy | Senior Unsecured Debt | Baa2/Negative | BBB/Negative | BBB/Stable | | CenterPoint Energy | SIGECO Senior Secured Debt | A1/Stable | A/Negative | n/a | | Houston Electric | Senior Secured Debt | A2/Negative | A/Negative | A/Negative | | CERC | CERC Corp. Senior Unsecured Debt | A3/Stable | BBB+/Negative | A-/Stable | - A decline in credit ratings could increase borrowing costs and cash collateral requirements (up to $289 million for CERC if ratings drop below investment grade)[288][289] - CenterPoint Energy's 10-year capital plan has increased to approximately $53 billion through 2030, and the company plans to sell its Ohio natural gas LDC business[292][293] - Houston Electric's ability to collect receivables from REPs is crucial; PUCT regulations allow deferral of bad debts from REP defaults for future recovery[294] - Other factors affecting cash requirements include cash collateral for contracts, accelerated payment dates on gas supply, increased costs from tariffs, interest expense increases, regulatory actions, litigation, pension contributions, and natural disaster restoration costs[295] Critical Accounting Policies - There have been no material changes to the critical accounting policies reported in the Registrants' combined 2024 Form 10-K[299] Item 3. Quantitative and Qualitative Disclosures about Market Risk This section addresses market risk disclosures, with Houston Electric and CERC utilizing a reduced disclosure format, while CenterPoint Energy manages interest rate risk through a combination of fixed and variable rate debt and interest rate swaps, detailing the impact of potential interest rate changes on its floating rate obligations and the fair value of its fixed-rate debt - Houston Electric and CERC use a reduced disclosure format for market risk as wholly-owned subsidiaries[300] - As of June 30, 2025, CenterPoint Energy's floating rate obligations aggregated $2.5 billion; a 100 basis point increase would raise annual interest expense by approximately $25 million[303] - CenterPoint Energy had $19.2 billion in fixed-rate debt (principal amount) with a fair value of $18.3 billion as of June 30, 2025. A 10% decline in interest rates would increase the fair value of these instruments by approximately $748 million[304] Item 4. Controls and Procedures This section confirms that management, including the principal executive and financial officers, concluded that the disclosure controls and procedures were effective as of June 30, 2025, and that no material changes in internal controls over financial reporting occurred during the three months ended June 30, 2025 - The principal executive officer and principal financial officer concluded that disclosure controls and procedures were effective as of June 30, 2025[305] - No material changes in the Registrants' internal controls over financial reporting occurred during the three months ended June 30, 2025[306] PART II. OTHER INFORMATION Item 1. Legal Proceedings This section refers to Note 11(d) of the Interim Condensed Financial Statements and relevant sections within 'Management's Discussion and Analysis' for detailed descriptions of material legal and regulatory proceedings, including environmental legal proceedings - For a description of material legal and regulatory proceedings, including environmental legal proceedings, refer to Note 11(d) to the Interim Condensed Financial Statements and 'Management's Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Future Sources and Uses of Cash' and '— Regulatory Matters'[308] Item 1A. Risk Factors This section states that there have been no material changes to the risk factors previously disclosed in the Registrants' combined 2024 Form 10-K - There have been no material changes from the risk factors disclosed in the Registrants' combined 2024 Form 10-K[309] Item 5. Other Information This section reports that no director or officer of CenterPoint Energy, Houston Electric, or CERC adopted or terminated a 'Rule 10b5-1 trading arrangement' or 'non-Rule 10b5-1 trading arrangement' during the three months ended June 30, 2025 - No director or officer of CenterPoint Energy, Houston Electric, or CERC adopted or terminated a 'Rule 10b5-1 trading arrangement' or 'non-Rule 10b5-1 trading arrangement' during the three months ended June 30, 2025[310] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including various agreements, corporate governance documents, and confirmations of forward sale transactions, noting that certain long-term debt instruments are omitted if their authorized amount does not exceed 10% of the Registrants' total consolidated assets - Exhibits include the Asset Purchase Agreement (2.1), Restated Articles of Incorporation (3.1), Bylaws (3.6), and Confirmations of Forward Sale Transactions (10.1-10.6)[313][314] - Certain long-term debt instruments are omitted if the total amount of securities authorized does not exceed 10% of the Registrants' total consolidated assets[312] Signatures This section contains the official signatures for the Form 10-Q, confirming its submission on behalf of CenterPoint Energy, Inc., CenterPoint Energy Houston Electric, LLC, and CenterPoint Energy Resources Corp. by Kristie L. Colvin, Senior Vice President and Chief Accounting Officer, on July 24, 2025 - The report is signed by Kristie L. Colvin, Senior Vice President and Chief Accounting Officer, on behalf of all three registrants[318] - The report was signed on July 24, 2025[318]