Annual Statements Open main menu

CENTERPOINT ENERGY INC - Quarter Report: 2021 March (Form 10-Q)



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE TRANSITION PERIOD FROM __________________ TO __________________

Commission file number 1-31447
CenterPoint Energy, Inc.
(Exact name of registrant as specified in its charter)
Texas
74-0694415
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
1111 Louisiana
Houston
Texas
77002
(Address of Principal Executive Offices)
(Zip Code)
(713) 207-1111
Registrant's telephone number, including area code

Commission file number 1-3187
CenterPoint Energy Houston Electric, LLC
(Exact name of registrant as specified in its charter)
Texas
22-3865106
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
1111 Louisiana
Houston
Texas
77002
(Address of Principal Executive Offices)
(Zip Code)
(713) 207-1111
Registrant's telephone number, including area code

Commission file number 1-13265
CenterPoint Energy Resources Corp.
(Exact name of registrant as specified in its charter)
Delaware
76-0511406
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
1111 Louisiana
Houston
Texas
77002
(Address of Principal Executive Offices)
(Zip Code)
(713) 207-1111
Registrant's telephone number, including area code




Securities registered pursuant to Section 12(b) of the Act:
RegistrantTitle of each classTrading Symbol(s)Name of each exchange on which registered
CenterPoint Energy, Inc. Common Stock, $0.01 par valueCNPThe New York Stock Exchange
Chicago Stock Exchange, Inc.
CenterPoint Energy, Inc. Depositary Shares for 1/20 of 7.00% Series B Mandatory Convertible Preferred Stock, $0.01 par valueCNP/PBThe New York Stock Exchange
CenterPoint Energy Houston Electric, LLC9.15% First Mortgage Bonds due 2021n/aThe New York Stock Exchange
CenterPoint Energy Houston Electric, LLC6.95% General Mortgage Bonds due 2033n/aThe New York Stock Exchange
CenterPoint Energy Resources Corp.6.625% Senior Notes due 2037n/aThe New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
CenterPoint Energy, Inc.YesþNoo
CenterPoint Energy Houston Electric, LLCYesþNoo
CenterPoint Energy Resources Corp.YesþNoo

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
CenterPoint Energy, Inc.YesþNoo
CenterPoint Energy Houston Electric, LLCYesþNoo
CenterPoint Energy Resources Corp.YesþNoo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filerNon-accelerated filerSmaller reporting companyEmerging growth company
CenterPoint Energy, Inc.
þ
oo
CenterPoint Energy Houston Electric, LLCoo
þ
CenterPoint Energy Resources Corp.oo
þ

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
CenterPoint Energy, Inc.YesNoþ
CenterPoint Energy Houston Electric, LLCYesNoþ
CenterPoint Energy Resources Corp.YesNoþ

Indicate the number of shares outstanding of each of the issuers’ classes of common stock as of April 29, 2021:
CenterPoint Energy, Inc.
580,495,853shares of common stock outstanding, excluding 166 shares held as treasury stock
CenterPoint Energy Houston Electric, LLC
1,000common shares outstanding, all held by Utility Holding, LLC, a wholly-owned subsidiary of CenterPoint Energy, Inc.
CenterPoint Energy Resources Corp.1,000shares of common stock outstanding, all held by Utility Holding, LLC, a wholly-owned subsidiary of CenterPoint Energy, Inc.
            

CenterPoint Energy Houston Electric, LLC and CenterPoint Energy Resources Corp. meet the conditions set forth in General Instructions H(1)(a) and (b) of Form 10-Q and are therefore filing this form with the reduced disclosure format specified in General Instruction H(2) of Form 10-Q.



TABLE OF CONTENTS
PART I.FINANCIAL INFORMATION 
Item 1.
 
 
 
 
Item 2.
Consolidated Results of Operations
Results of Operations by Reportable Segment
Item 3.
Item 4.
   
PART II.OTHER INFORMATION 
Item 1.
Item 1A.
Item 6.

i


GLOSSARY
ACEAffordable Clean Energy
AMAAsset Management Agreement
AMSAdvanced Metering System
APSCArkansas Public Service Commission
ARAMAverage rate assumption method
AROAsset retirement obligation
ARPAlternative revenue program
ARPAAmerican Rescue Plan Act of 2021
ASCAccounting Standards Codification
Asset Purchase AgreementAsset Purchase Agreement, dated as of April 29, 2021, by and between CERC Corp. and Southern Col Midco, LLC, a Delaware limited liability company and an affiliate of Summit Utilities, Inc.
ASUAccounting Standards Update
AT&T CommonAT&T Inc. common stock
BcfBillion cubic feet
Bond CompaniesBond Company III, Bond Company IV and Restoration Bond Company, each a wholly-owned, bankruptcy remote entity formed solely for the purpose of purchasing and owning transition or system restoration property through the issuance of Securitization Bonds
Bond Company IIICenterPoint Energy Transition Bond Company III, LLC, a wholly-owned subsidiary of Houston Electric
Bond Company IVCenterPoint Energy Transition Bond Company IV, LLC, a wholly-owned subsidiary of Houston Electric
BTABuild Transfer Agreement
Capital DynamicsCapital Dynamics, Inc.
CARES ActCoronavirus Aid, Relief, and Economic Security Act
CCRCoal Combustion Residuals
CEIPCenterPoint Energy Intrastate Pipelines, LLC, a wholly-owned subsidiary of CERC Corp.
CenterPoint EnergyCenterPoint Energy, Inc., and its subsidiaries
CERCCERC Corp., together with its subsidiaries
CERC Corp.CenterPoint Energy Resources Corp.
CESCenterPoint Energy Services, Inc. (now known as Symmetry Energy Solutions, LLC), previously a wholly-owned subsidiary of CERC Corp.
Charter CommonCharter Communications, Inc. common stock
CIPConservation Improvement Program
CNGCompressed Natural Gas
CNP MidstreamCenterPoint Energy Midstream, Inc., a wholly-owned subsidiary of CenterPoint Energy
CODMChief Operating Decision Maker, who is each Registrant’s Chief Operating Executive
Common StockCenterPoint Energy, Inc. common stock, par value $0.01 per share
COVID-19Novel coronavirus disease 2019 and related global outbreak that was subsequently declared a pandemic by the World Health Organization
COVID-19 ERPCOVID-19 Electricity Relief Program
CPCNCertificate of Public Convenience and Necessity
CPPClean Power Plan
CSIACompliance and System Improvement Adjustment
DCRFDistribution Cost Recovery Factor
DRRDistribution Replacement Rider
DSMADemand Side Management Adjustment
ECAEnvironmental Cost Adjustment
ii


GLOSSARY
EDITExcess deferred income taxes
EECREnergy Efficiency Cost Recovery
EECRFEnergy Efficiency Cost Recovery Factor
EEFCEnergy Efficiency Funding Component
EEFREnergy Efficiency Funding Rider
ELGEffluent Limitation Guidelines
Elk GP Merger SubElk GP Merger Sub LLC, a Delaware limited liability company and a direct wholly-owned subsidiary of Energy Transfer
Elk Merger SubElk Merger Sub LLC, a Delaware limited liability company and a direct wholly-owned subsidiary of Energy Transfer
EnableEnable Midstream Partners, LP
Enable GPEnable GP, LLC, Enable’s general partner
Enable MergerThe proposed merger of Elk Merger Sub with and into Enable and the merger of Elk GP Merger Sub with and into Enable GP, in each case on the terms and subject to the conditions set forth in the Enable Merger Agreement, with Enable and Enable GP surviving as wholly-owned subsidiaries of Energy Transfer
Enable Merger Agreement
Agreement and Plan of Merger by and among Energy Transfer, Elk Merger Sub LLC, Elk GP Merger Sub, Enable, Enable GP and, solely for the purposes of Section 2.1(a)(i) therein, Energy Transfer GP, and solely for the purposes of Section 1.1(b)(i) therein, CenterPoint Energy
Enable Series A Preferred UnitsEnable’s 10% Series A Fixed-to-Floating Non-Cumulative Redeemable Perpetual Preferred Units, representing limited partner interests in Enable
Energy ServicesOffered competitive variable and fixed-priced physical natural gas supplies primarily to commercial and industrial customers and electric and natural gas utilities through CES and CEIP
Energy Services Disposal GroupSubstantially all of the businesses within CenterPoint Energy’s and CERC’s Energy Services reporting unit that were sold under the Equity Purchase Agreement
Energy TransferEnergy Transfer LP, a Delaware limited partnership
Energy Transfer GPLE GP, LLC, a Delaware limited liability company and sole general partner of Energy Transfer
Energy Transfer Series G Preferred UnitsEnergy Transfer Series G Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Units
EPAEnvironmental Protection Agency
Equity Purchase AgreementEquity Purchase Agreement, dated as of February 24, 2020, by and between CERC Corp. and Symmetry Energy Solutions Acquisition, LLC (f/k/a Athena Energy Services Buyer, LLC)
ERCOTElectric Reliability Council of Texas
ESGEnergy Systems Group, LLC, a wholly-owned subsidiary of Vectren
February 2021 Winter Storm EventThe extreme and unprecedented winter weather event in February 2021 (Winter Storm Uri) resulting in electricity generation supply shortages, including in Texas, and natural gas supply shortages and increased wholesale prices of natural gas in the United States, primarily due to prolonged freezing temperatures
FERCFederal Energy Regulatory Commission
FitchFitch Ratings, Inc.
Form 10-QQuarterly Report on Form 10-Q
FRPFormula Rate Plan
GHGGreenhouse gases
GRIPGas Reliability Infrastructure Program
GSRGas Supply Rate
GWhGigawatt-hours
Houston ElectricCenterPoint Energy Houston Electric, LLC and its subsidiaries
IDEMIndiana Department of Environmental Management
iii


GLOSSARY
Indiana ElectricOperations of SIGECO’s electric transmission and distribution services, and includes its power generating and wholesale power operations
Indiana GasIndiana Gas Company, Inc., a wholly-owned subsidiary of Vectren
Indiana NorthGas operations of Indiana Gas
Indiana SouthGas operations of SIGECO
Indiana UtilitiesThe combination of Indiana Electric, Indiana North and Indiana South
Infrastructure ServicesProvided underground pipeline construction and repair services through VISCO and its wholly-owned subsidiaries, Miller Pipeline, LLC and Minnesota Limited, LLC
Infrastructure Services Disposal GroupBusinesses within the Infrastructure Services reporting unit that were sold under the Securities Purchase Agreement
Interim Condensed Financial StatementsUnaudited condensed consolidated interim financial statements and combined notes
IRPIntegrated Resource Plan
IRSInternal Revenue Service
IURCIndiana Utility Regulatory Commission
kVKilovolt
LIBORLondon Interbank Offered Rate
LNGLiquefied Natural Gas
LPSCLouisiana Public Service Commission
MergerThe merger of Merger Sub with and into Vectren on the terms and subject to the conditions set forth in the Merger Agreement, with Vectren continuing as the surviving corporation and as a wholly-owned subsidiary of CenterPoint Energy, Inc.
Merger AgreementAgreement and Plan of Merger, dated as of April 21, 2018, among CenterPoint Energy, Vectren and Merger Sub
Merger SubPacer Merger Sub, Inc., an Indiana corporation and wholly-owned subsidiary of CenterPoint Energy
MESCenterPoint Energy Mobile Energy Solutions, Inc., a wholly-owned subsidiary of CERC Corp.
MGPManufactured gas plant
MLPMaster Limited Partnership
Moody’sMoody’s Investors Service, Inc.
MPSCMississippi Public Service Commission
MPUCMinnesota Public Utilities Commission
MWMegawatts
NERCNorth American Electric Reliability Corporation
NGLsNatural gas liquids
NOLsNet operating losses
NRGNRG Energy, Inc.
OCCOklahoma Corporation Commission
OGEOGE Energy Corp.
PBRCPerformance Based Rate Change
Posey SolarPosey Solar, LLC, a special purpose entity
PowerTeam ServicesPowerTeam Services, LLC, a Delaware limited liability company, now known as Artera Services, LLC
PPAPower Purchase Agreement
PRPsPotentially responsible parties
PUCOPublic Utilities Commission of Ohio
PUCTPublic Utility Commission of Texas
Railroad CommissionRailroad Commission of Texas
RCRAResource Conservation and Recovery Act of 1976
iv


GLOSSARY
RegistrantsCenterPoint Energy, Houston Electric and CERC, collectively
REPRetail electric provider
Restoration Bond CompanyCenterPoint Energy Restoration Bond Company, LLC, a wholly-owned subsidiary of Houston Electric
ROEReturn on equity
ROURight of use
RRARate Regulation Adjustment
RSPRate Stabilization Plan
SECSecurities and Exchange Commission
Securities Purchase AgreementSecurities Purchase Agreement, dated as of February 3, 2020, by and among Vectren Utility Services, Inc., PowerTeam Services and, solely for purposes of Section 10.17 of the Securities Purchase Agreement, Vectren
Securitization BondsTransition and system restoration bonds
Series A Preferred StockCenterPoint Energy’s Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Stock, par value $0.01 per share, with a liquidation preference of $1,000 per share
Series B Preferred StockCenterPoint Energy’s 7.00% Series B Mandatory Convertible Preferred Stock, par value $0.01 per share, with a liquidation preference of $1,000 per share
Series C Preferred StockCenterPoint Energy’s Series C Mandatory Convertible Preferred Stock, par value $0.01 per share, with a liquidation preference of $1,000 per share
SIGECOSouthern Indiana Gas and Electric Company, a wholly-owned subsidiary of Vectren
S&PS&P Global Ratings
SRCSales Reconciliation Component
Symmetry Energy Solutions AcquisitionSymmetry Energy Solutions Acquisition, LLC, a Delaware limited liability company (f/k/a Athena Energy Services Buyer, LLC) and subsidiary of Energy Capital Partners, LLC
TBDTo be determined
TCJATax reform legislation informally called the Tax Cuts and Jobs Act of 2017
TCOSTransmission Cost of Service
TCRFTransmission Cost Recovery Factor
TDSICTransmission, Distribution and Storage System Improvement Charge
TDUTransmission and distribution utility
TenaskaTenaska Wind Holdings, LLC
Texas RETexas Reliability Entity
TOBTariffed On Bill
Utility HoldingUtility Holding, LLC, a wholly-owned subsidiary of CenterPoint Energy
VectrenVectren Corporation, a wholly-owned subsidiary of CenterPoint Energy as of February 1, 2019
VEDOVectren Energy Delivery of Ohio, Inc., a wholly-owned subsidiary of Vectren
VIEVariable interest entity
VISCOVectren Infrastructure Services Corporation, formerly a wholly-owned subsidiary of Vectren
Vistra Energy Corp.Texas-based energy company focused on the competitive energy and power generation markets, whose major subsidiaries include Luminant and TXU Energy
VRPVoluntary Remediation Program
VUHIVectren Utility Holdings, Inc., a wholly-owned subsidiary of Vectren
v


GLOSSARY
ZENS2.0% Zero-Premium Exchangeable Subordinated Notes due 2029
ZENS-Related SecuritiesAs of both March 31, 2021 and December 31, 2020, consisted of AT&T Common and Charter Common
2020 Form 10-KAnnual Report on Form 10-K for the fiscal year ended December 31, 2020 as filed with the SEC on February 25, 2021
vi


CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

From time to time the Registrants make statements concerning their expectations, beliefs, plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements that are not historical facts. These statements are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those expressed or implied by these statements. You can generally identify forward-looking statements by the words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “may,” “objective,” “plan,” “potential,” “predict,” “projection,” “should,” “target,” “will” or other similar words.

The Registrants have based their forward-looking statements on management’s beliefs and assumptions based on information reasonably available to management at the time the statements are made. The Registrants caution you that assumptions, beliefs, expectations, intentions and projections about future events may and often do vary materially from actual results. Therefore, the Registrants cannot assure you that actual results will not differ materially from those expressed or implied by the Registrants’ forward-looking statements. In this Form 10-Q, unless context requires otherwise, the terms “our,” “we” and “us” are used as abbreviated references to CenterPoint Energy, Inc. together with its consolidated subsidiaries, including Houston Electric, CERC and Vectren.

The following are some of the factors that could cause actual results to differ from those expressed or implied by the Registrants’ forward-looking statements and apply to all Registrants unless otherwise indicated:

the performance of Enable, the amount of cash distributions CenterPoint Energy receives from Enable, Enable’s ability to redeem the Enable Series A Preferred Units in certain circumstances and the value of CenterPoint Energy’s interest in Enable, and factors that may have a material impact on such performance, cash distributions and value, including factors such as:
competitive conditions in the midstream industry, and actions taken by Enable’s customers and competitors, including drilling, production and capital spending decisions of third parties and the extent and timing of the entry of additional competition in the markets served by Enable;
the timing and extent of changes in the supply of natural gas and associated commodity prices, particularly prices of natural gas and NGLs, the competitive effects of the available pipeline capacity in the regions served by Enable, and the effects of geographic and seasonal commodity price differentials, including the effects of these circumstances on re-contracting available capacity on Enable’s interstate pipelines and its commodity risk management activities;
economic effects of the actions of certain crude oil-exporting countries and the Organization of Petroleum Exporting Countries, which have resulted in a substantial decrease in oil and natural gas prices, and the combined impact of these events and COVID-19 on commodity prices;
the demand for crude oil, natural gas, NGLs and transportation and storage services;
environmental and other governmental regulations, including the availability of drilling permits and the regulation of hydraulic fracturing;
recording of goodwill, long-lived asset or other than temporary impairment charges by or related to Enable;
the timing of payments from Enable’s customers under existing contracts, including minimum volume commitment payments;
changes in tax status; and
access to debt and equity capital;
the integration of the businesses acquired in the Merger, including the integration of technology systems; the outcome of shareholder litigation filed against Vectren that could reduce the benefits of the Merger; the ability to realize additional benefits and commercial opportunities from the Merger, including the development of new opportunities and the performance of projects undertaken by ESG, which are subject to, among other factors, the level of success in bidding contracts and cancellation and/or reductions in the scope of projects by customers, and obligations related to warranties, guarantees and other contractual and legal obligations;
the recording of impairment charges;
industrial, commercial and residential growth in our service territories and changes in market demand, including the demand for our non-utility products and services and effects of energy efficiency measures and demographic patterns;
timely and appropriate rate actions that allow recovery of costs and a reasonable return on investment, including the timing and recovery of natural gas purchase costs associated with the February 2021 Winter Storm Event;
future economic conditions in regional and national markets and their effect on sales, prices and costs;
weather variations and other natural phenomena, including the impact of severe weather events on operations and capital, including impacts from the February 2021 Winter Storm Event;
CenterPoint Energy’s or Enable’s business strategies and strategic initiatives, restructurings, joint ventures and acquisitions or dispositions of assets or businesses, including the announced sale of our Natural Gas businesses in
vii


Arkansas and Oklahoma, which we cannot assure will be completed or will have the anticipated benefits to us, and the Enable Merger, which we cannot assure will be completed or will have the anticipated benefits to us or Enable;
the outcome of litigation, including litigation related to the February 2021 Winter Storm Event;
the ability of REPs, including REP affiliates of NRG and Vistra Energy Corp., to satisfy their obligations to CenterPoint Energy and Houston Electric, including the negative impact on such ability related to COVID-19 and the February 2021 Winter Storm Event;
the COVID-19 pandemic and its effect on our and Enable’s operations, business and financial condition, our industries and the communities we serve, U.S. and world financial markets and supply chains, potential regulatory actions and changes in customer and stakeholder behaviors relating thereto;
volatility and a substantial decline in the markets for oil and natural gas as a result of the actions of certain crude-oil exporting countries and the Organization of Petroleum Exporting Countries and reduced worldwide consumption due to the COVID-19 pandemic;
state and federal legislative and regulatory actions or developments affecting various aspects of our businesses (including the businesses of Enable), including, among others, energy deregulation or re-regulation, pipeline integrity and safety and changes in regulation and legislation pertaining to trade, health care, finance and actions regarding the rates charged by our regulated businesses;
any direct or indirect effects on our or Enable’s facilities, operations and financial condition resulting from terrorism, cyber-attacks, data security breaches or other attempts to disrupt our businesses or the businesses of third parties, or other catastrophic events such as fires, ice, earthquakes, explosions, leaks, floods, droughts, hurricanes, tornadoes, pandemic health events or other occurrences;
tax legislation, including the effects of the CARES Act and of the TCJA (which includes but is not limited to any potential changes to tax rates, tax credits and/or interest deductibility), as well as any changes in tax laws under the Biden administration, and uncertainties involving state commissions’ and local municipalities’ regulatory requirements and determinations regarding the treatment of EDIT and our rates;
our ability to mitigate weather impacts through normalization or rate mechanisms, and the effectiveness of such mechanisms;
actions by credit rating agencies, including any potential downgrades to credit ratings;
matters affecting regulatory approval, legislative actions, construction, implementation of necessary technology or other issues with respect to major capital projects that result in delays or cancellation or in cost overruns that cannot be recouped in rates;
local, state and federal legislative and regulatory actions or developments relating to the environment, including, among others, those related to global climate change, air emissions, carbon, waste water discharges and the handling and disposal of CCR that could impact the continued operation, cost recovery of generation plant costs and related assets, and CenterPoint Energy’s carbon emissions reduction targets;
the impact of unplanned facility outages or other closures;
our ability to fund and invest planned capital and the timely recovery of our investments, including those related to Indiana Electric’s generation transition plan as part of its most recent IRP;
our ability to successfully construct and operate electric generating facilities, including complying with applicable environmental standards and the implementation of a well-balanced energy and resource mix, as appropriate;
the sufficiency of our insurance coverage, including availability, cost, coverage and terms and ability to recover claims;
the availability and prices of raw materials and services and changes in labor for current and future construction projects and operations and maintenance costs, including our ability to control such costs;
the investment performance of CenterPoint Energy’s pension and postretirement benefit plans;
changes in interest rates and their impact on costs of borrowing and the valuation of CenterPoint Energy’s pension benefit obligation;
commercial bank and financial market conditions, our access to capital, the cost of such capital, and the results of our financing and refinancing efforts, including availability of funds in the debt capital markets;
changes in rates of inflation;
inability of various counterparties to meet their obligations to us;
non-payment for our services due to financial distress of our customers;
the extent and effectiveness of our and Enable’s risk management and hedging activities, including, but not limited to financial and weather hedges;
timely and appropriate regulatory actions, which include actions allowing securitization, for any future hurricanes or natural disasters or other recovery of costs;
acquisition and merger activities involving us or our competitors, including the ability to successfully complete merger, acquisition and divestiture plans;
our or Enable’s ability to recruit, effectively transition and retain management and key employees and maintain good labor relations;
viii


changes in technology, particularly with respect to efficient battery storage or the emergence or growth of new, developing or alternative sources of generation;
the impact of alternate energy sources on the demand for natural gas;
the timing and outcome of any audits, disputes and other proceedings related to taxes;
the effective tax rates;
political and economic developments, including energy and environmental policies under the Biden administration;
the transition to a replacement for the LIBOR benchmark interest rate;
the effect of changes in and application of accounting standards and pronouncements; and
other factors discussed in “Risk Factors” in Item 1A of Part I of the Registrants’ combined 2020 Form 10-K, which are incorporated herein by reference, and in other reports the Registrants file from time to time with the SEC.

You should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of the particular statement, and the Registrants undertake no obligation to update or revise any forward-looking statements. Investors should note that the Registrants announce material financial information in SEC filings, press releases and public conference calls. Based on guidance from the SEC, the Registrants may use the Investors section of CenterPoint Energy’s website (www.centerpointenergy.com) to communicate with investors about the Registrants. It is possible that the financial and other information posted there could be deemed to be material information. The information on CenterPoint Energy’s website is not part of this combined Form 10-Q.
ix

Table of Contents
PART I. FINANCIAL INFORMATION

Item 1.     FINANCIAL STATEMENTS

CENTERPOINT ENERGY, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED INCOME
(Unaudited)
Three Months Ended
 March 31,
20212020
(in millions, except per share amounts)
Revenues:
Utility revenues$2,484 $2,073 
Non-utility revenues63 94 
Total2,547 2,167 
Expenses:
Utility natural gas, fuel and purchased power935 609 
Non-utility cost of revenues, including natural gas40 64 
Operation and maintenance669 674 
Depreciation and amortization307 282 
Taxes other than income taxes143 136 
Goodwill impairment— 185 
Total2,094 1,950 
Operating Income453 217 
Other Income (Expense):
Loss on marketable securities(23)(144)
Gain on indexed debt securities26 135 
Interest expense and other finance charges(113)(139)
Interest expense on Securitization Bonds(6)(8)
Equity in earnings (loss) of unconsolidated affiliates, net108 (1,475)
Other income (expense), net(8)14 
Total(16)(1,617)
Income (Loss) from Continuing Operations Before Income Taxes437 (1,400)
Income tax expense (benefit)74 (347)
Income (Loss) from Continuing Operations363 (1,053)
Loss from Discontinued Operations (net of tax benefit of $-0- and $17, respectively)
— (146)
Net Income (Loss)363 (1,199)
Income allocated to preferred shareholders29 29 
Income (Loss) Available to Common Shareholders$334 $(1,228)
Basic earnings (loss) per common share - continuing operations
$0.56 $(2.15)
Basic earnings (loss) per common share - discontinued operations
— (0.29)
Basic Earnings (Loss) Per Common Share0.56 (2.44)
Diluted earnings (loss) per common share - continuing operations
$0.56 $(2.15)
Diluted earnings (loss) per common share - discontinued operations
— (0.29)
Diluted Earnings (Loss) Per Common Share$0.56 $(2.44)
Weighted Average Common Shares Outstanding, Basic552 502 
Weighted Average Common Shares Outstanding, Diluted631 502 

See Combined Notes to Interim Condensed Financial Statements
1

Table of Contents
CENTERPOINT ENERGY, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME
(Unaudited)
Three Months Ended
 March 31,
20212020
(in millions)
Net Income (Loss)$363 $(1,199)
Other comprehensive income (loss):
Adjustment to pension and other postretirement plans (net of tax of $-0- and $1)
Other comprehensive income (loss) from unconsolidated affiliates (net of tax of $-0- and $-0-)
(3)
Total(2)
Comprehensive income (loss)366 (1,201)
  Income allocated to preferred shareholders29 29 
Comprehensive income (loss) available to common shareholders
$337 $(1,230)

See Combined Notes to Interim Condensed Financial Statements


2

Table of Contents
CENTERPOINT ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

ASSETS
March 31,
2021
December 31,
2020
(in millions)
Current Assets:
Cash and cash equivalents ($142 and $139 related to VIEs, respectively)
$146 $147 
Investment in marketable securities
848 871 
Accounts receivable ($24 and $23 related to VIEs, respectively), less allowance for credit losses of $65 and $52, respectively
780 676 
Accrued unbilled revenues, less allowance for credit losses of $4 and $5, respectively
343 505 
Natural gas and coal inventory67 203 
Materials and supplies
310 297 
Taxes receivable
79 82 
Prepaid expenses and other current assets ($16 and $15 related to VIEs, respectively)
646 139 
Total current assets3,219 2,920 
Property, Plant and Equipment:
Property, plant and equipment
32,991 32,514 
Less: accumulated depreciation and amortization
10,252 10,152 
Property, plant and equipment, net22,739 22,362 
Other Assets:
Goodwill
4,697 4,697 
Regulatory assets ($597 and $633 related to VIEs, respectively)
3,795 2,094 
Investment in unconsolidated affiliates
853 783 
Preferred units – unconsolidated affiliate
363 363 
Other non-current assets240 252 
Total other assets9,948 8,189 
Total Assets$35,906 $33,471 

See Combined Notes to Interim Condensed Financial Statements


3

Table of Contents
CENTERPOINT ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS – (continued)
(Unaudited)

LIABILITIES AND SHAREHOLDERS’ EQUITY
March 31,
2021
December 31,
2020
(in millions, except share amounts)
Current Liabilities:
Short-term borrowings$— $24 
Current portion of VIE Securitization Bonds long-term debt
212 211 
Indexed debt, net13 15 
Current portion of other long-term debt1,563 1,669 
Indexed debt securities derivative927 953 
Accounts payable797 853 
Taxes accrued229 265 
Interest accrued119 145 
Dividends accrued— 136 
Customer deposits120 119 
Non-trading derivative liabilities
Other current liabilities344 432 
Total current liabilities4,326 4,825 
Other Liabilities:  
Deferred income taxes, net3,687 3,603 
Non-trading derivative liabilities14 27 
Benefit obligations675 680 
Regulatory liabilities3,407 3,448 
Other non-current liabilities1,033 1,019 
Total other liabilities8,816 8,777 
Long-term Debt:  
VIE Securitization Bonds, net499 536 
Other long-term debt, net13,549 10,985 
Total long-term debt, net14,048 11,521 
Commitments and Contingencies (Note 14)
Shareholders’ Equity:  
Cumulative preferred stock, $0.01 par value, 20,000,000 shares authorized, 2,402,400 shares outstanding, $2,402 liquidation preference (Note 19)
2,363 2,363 
Common stock, $0.01 par value, 1,000,000,000 shares authorized, 551,865,588 shares and 551,355,861 shares outstanding, respectively
Additional paid-in capital6,916 6,914 
Accumulated deficit(482)(845)
Accumulated other comprehensive loss(87)(90)
Total shareholders’ equity8,716 8,348 
Total Liabilities and Shareholders’ Equity$35,906 $33,471 

See Combined Notes to Interim Condensed Financial Statements
4

Table of Contents
CENTERPOINT ENERGY, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
(Unaudited)
Three Months Ended March 31,
20212020
(in millions)
Cash Flows from Operating Activities:
Net income (loss)$363 $(1,199)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization307 282 
Amortization of deferred financing costs
Deferred income taxes66 (377)
Goodwill impairment and loss from reclassification to held for sale— 214 
Goodwill impairment— 185 
Unrealized loss on marketable securities23 144 
Gain on indexed debt securities(26)(135)
Write-down of natural gas inventory— 
Equity in (earnings) losses of unconsolidated affiliates(108)1,475 
Distributions from unconsolidated affiliates39 70 
Pension contributions(8)(2)
Changes in other assets and liabilities, excluding acquisitions:
Accounts receivable and unbilled revenues, net29 236 
Inventory99 110 
Taxes receivable13 
Accounts payable(55)(192)
Non-trading derivatives, net(14)(53)
Margin deposits, net— 21 
Interest and taxes accrued(62)(95)
Net regulatory assets and liabilities(2,297)(27)
Other current assets— (5)
Other current liabilities(59)(37)
Other non-current assets— 19 
Other non-current liabilities17 
Other, net(5)
Net cash provided by (used in) operating activities(1,681)662 
Cash Flows from Investing Activities:
Capital expenditures(594)(664)
Distributions from unconsolidated affiliate in excess of cumulative earnings— 
Other, net(10)
Net cash used in investing activities(604)(654)
Cash Flows from Financing Activities:
Proceeds from (payments of) commercial paper, net38 (828)
Proceeds from long-term debt2,795 — 
Payments of long-term debt(388)(63)
Borrowings from revolving credit facilities— 1,050 
Payment of debt issuance costs(20)— 
Payment of dividends on Common Stock(88)(145)
Payment of dividends on Preferred Stock(48)(42)
Other, net(4)(4)
Net cash provided by (used in) financing activities2,285 (32)
Net Decrease in Cash, Cash Equivalents and Restricted Cash— (24)
Cash, Cash Equivalents and Restricted Cash at Beginning of Period167 271 
Cash, Cash Equivalents and Restricted Cash at End of Period $167 $247 

See Combined Notes to Interim Condensed Financial Statements
5

Table of Contents
CENTERPOINT ENERGY, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED CHANGES IN EQUITY
(Unaudited)
 
Three Months Ended March 31,
 20212020
 SharesAmountSharesAmount
 (in millions of dollars and shares)
Cumulative Preferred Stock, $0.01 par value; authorized 20,000,000 shares
Balance, beginning of period$2,363 $1,740 
Balance, end of period2,363 1,740 
Common Stock, $0.01 par value; authorized 1,000,000,000 shares
    
Balance, beginning of period551 502 
Issuances related to benefit and investment plans
— — — 
Balance, end of period552 502 
Additional Paid-in-Capital  
Balance, beginning of period6,914  6,080 
Issuances related to benefit and investment plans
 
Balance, end of period6,916  6,086 
Retained Earnings (Accumulated Deficit)   
Balance, beginning of period(845) 632 
Net income (loss)363  (1,199)
Common Stock dividends declared (see Note 19)
—  (145)
Preferred Stock dividends declared (see Note 19) — (42)
Adoption of ASU 2016-13— (7)
Balance, end of period(482) (761)
Accumulated Other Comprehensive Loss   
Balance, beginning of period(90) (98)
Other comprehensive income (loss) (2)
Balance, end of period
(87) (100)
Total Shareholders’ Equity$8,716  $6,970 

 See Combined Notes to Interim Condensed Financial Statements
6

Table of Contents
CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC AND SUBSIDIARIES
(AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.)
CONDENSED STATEMENTS OF CONSOLIDATED INCOME
(Unaudited)

Three Months Ended March 31,
20212020
(in millions)
Revenues$684 $634 
Expenses:  
Operation and maintenance373 359 
Depreciation and amortization141 129 
Taxes other than income taxes63 64 
Total577 552 
Operating Income107 82 
Other Income (Expense):  
Interest expense and other finance charges(45)(41)
Interest expense on Securitization Bonds(6)(8)
Other income, net
Total(46)(44)
Income Before Income Taxes61 38 
Income tax expense
Net Income$53 $33 

See Combined Notes to Interim Condensed Financial Statements

7

Table of Contents
CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC AND SUBSIDIARIES
(AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.)
CONDENSED STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME
(Unaudited)

Three Months Ended March 31,
20212020
(in millions)
Net income$53 $33 
Comprehensive income$53 $33 

See Combined Notes to Interim Condensed Financial Statements

8

Table of Contents
CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC AND SUBSIDIARIES
(AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.)
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

ASSETS
 March 31,
2021
December 31,
2020
(in millions)
Current Assets:  
Cash and cash equivalents ($142 and $139 related to VIEs, respectively)
$143 $139 
Accounts receivable ($24 and $23 related to VIEs, respectively), less allowance for credit losses of $1 and $1, respectively
263 268 
Accounts and notes receivable–affiliated companies674 
Accrued unbilled revenues83 113 
Materials and supplies202 195 
Prepaid expenses and other current assets ($16 and $15 related to VIEs, respectively)
32 47 
Total current assets1,397 769 
Property, Plant and Equipment:
Property, plant and equipment13,889 13,593 
Less: accumulated depreciation and amortization3,967 3,930 
Property, plant and equipment, net9,922 9,663 
Other Assets:  
Regulatory assets ($597 and $633 related to VIEs, respectively)
828 848 
Other non-current assets38 36 
Total other assets866 884 
Total Assets
$12,185 $11,316 

See Combined Notes to Interim Condensed Financial Statements

















9

Table of Contents
CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC AND SUBSIDIARIES
(AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.)
CONDENSED CONSOLIDATED BALANCE SHEETS – (continued)
(Unaudited)

LIABILITIES AND MEMBERS EQUITY
March 31,
2021
December 31,
2020
(in millions)
Current Liabilities:  
Current portion of VIE Securitization Bonds long-term debt212 211 
Current portion of other long-term debt300 402 
Accounts payable333 281 
Accounts and notes payable–affiliated companies41 96 
Taxes accrued103 158 
Interest accrued53 71 
Other current liabilities115 117 
Total current liabilities1,157 1,336 
Other Liabilities:  
Deferred income taxes, net1,051 1,041 
Benefit obligations75 75 
Regulatory liabilities1,187 1,252 
Other non-current liabilities95 95 
Total other liabilities2,408 2,463 
Long-term Debt:  
VIE Securitization Bonds, net499 536 
Other long-term debt, net4,957 3,870 
Total long-term debt, net5,456 4,406 
Commitments and Contingencies (Note 14)
Member’s Equity:
Common stock— — 
Additional paid-in capital2,548 2,548 
Retained earnings616 563 
Total member’s equity
3,164 3,111 
Total Liabilities and Member’s Equity
$12,185 $11,316 

See Combined Notes to Interim Condensed Financial Statements

10

Table of Contents
CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC AND SUBSIDIARIES
(AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.)
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
(Unaudited)
Three Months Ended March 31,
20212020
(in millions)
Cash Flows from Operating Activities: 
Net income$53 $33 
Adjustments to reconcile net income to net cash provided by operating activities:  
Depreciation and amortization141 129 
Amortization of deferred financing costs
Deferred income taxes(5)(1)
Changes in other assets and liabilities:  
Accounts and notes receivable, net21 19 
Accounts receivable/payable–affiliated companies(49)(3)
Inventory(7)(10)
Accounts payable14 (2)
Interest and taxes accrued(73)(80)
Net regulatory assets and liabilities(63)(11)
Other current assets16 13 
Other current liabilities(2)
Other assets— 
Other liabilities— 
Other, net(5)(3)
Net cash provided by operating activities47 103 
Cash Flows from Investing Activities:  
Capital expenditures(314)(286)
Decrease (increase) in notes receivable–affiliated companies(665)481 
Other, net(3)(3)
Net cash provided by (used in) investing activities(982)192 
Cash Flows from Financing Activities:  
Proceeds from long-term debt1,096 — 
Payments of long-term debt(138)(63)
Increase (decrease) in notes payable–affiliated companies(8)133 
Dividend to parent— (385)
Payment of debt issuance costs(10)— 
Net cash provided by (used in) financing activities940 (315)
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash(20)
Cash, Cash Equivalents and Restricted Cash at Beginning of Period154 235 
Cash, Cash Equivalents and Restricted Cash at End of Period$159 $215 

See Combined Notes to Interim Condensed Financial Statements

11

Table of Contents
CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC AND SUBSIDIARIES
(AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.)
CONDENSED STATEMENTS OF CONSOLIDATED CHANGES IN EQUITY
(Unaudited)
Three Months Ended March 31,
 20212020
 SharesAmountSharesAmount
 (in millions, except share amounts)
Common Stock    
Balance, beginning of period1,000 $— 1,000 $— 
Balance, end of period1,000 — 1,000 — 
Additional Paid-in-Capital   
Balance, beginning of period2,548  2,486 
Balance, end of period2,548  2,486 
Retained Earnings   
Balance, beginning of period563  780 
Net income53  33 
Dividend to parent— (385)
Balance, end of period616  428 
Accumulated Other Comprehensive Loss
Balance, beginning of period— (15)
Balance, end of period
— (15)
Total Member’s Equity$3,164  $2,899 

See Combined Notes to Interim Condensed Financial Statements

12

Table of Contents

CENTERPOINT ENERGY RESOURCES CORP. AND SUBSIDIARIES
(AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.)
CONDENSED STATEMENTS OF CONSOLIDATED INCOME
(Unaudited)
Three Months Ended
March 31,
20212020
(in millions)
Revenues:
Utility revenues$1,168 $996 
Non-utility revenues15 
Total1,177 1,011 
Expenses:  
Utility natural gas623 472 
Non-utility cost of revenues, including natural gas
Operation and maintenance198 209 
Depreciation and amortization80 74 
Taxes other than income taxes56 50 
Total959 811 
Operating Income218 200 
Other Expense:  
Interest expense and other finance charges(24)(30)
Other expense, net(1)(4)
Total(25)(34)
Income From Continuing Operations Before Income Taxes193 166 
Income tax expense 42 35 
Income From Continuing Operations151 131 
Loss from Discontinued Operations (net of tax benefit of $-0- and $11, respectively)
— (64)
Net Income $151 $67 

See Combined Notes to Interim Condensed Financial Statements


13

Table of Contents
CENTERPOINT ENERGY RESOURCES CORP. AND SUBSIDIARIES
(AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.)
CONDENSED STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME
(Unaudited)
Three Months Ended
 March 31,
 20212020
(in millions)
Net income (loss)$151 $67 
Comprehensive income (loss)$151 $67 

See Combined Notes to Interim Condensed Financial Statements

14

Table of Contents
CENTERPOINT ENERGY RESOURCES CORP. AND SUBSIDIARIES
(AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.)
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
ASSETS
 March 31,
2021
December 31,
2020
(in millions)
Current Assets:
  
Cash and cash equivalents$$
Accounts receivable, less allowance for credit losses of $56 and $45, respectively
349 233 
Accrued unbilled revenues, less allowance for credit losses of $3 and $4, respectively
167 260 
Accounts and notes receivable–affiliated companies11 
Materials and supplies64 58 
Natural gas inventory27 121 
Prepaid expenses and other current assets381 26 
Total current assets1,000 707 
Property, Plant and Equipment:
Property, plant and equipment9,070 8,972 
Less: accumulated depreciation and amortization2,466 2,414 
Property, plant and equipment, net6,604 6,558 
Other Assets:  
Goodwill757 757 
Regulatory assets1,947 220 
Other non-current assets48 66 
Total other assets2,752 1,043 
Total Assets
$10,356 $8,308 

See Combined Notes to Interim Condensed Financial Statements

















15

Table of Contents

CENTERPOINT ENERGY RESOURCES CORP. AND SUBSIDIARIES
(AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.)
CONDENSED CONSOLIDATED BALANCE SHEETS – (continued)
(Unaudited)
 
LIABILITIES AND STOCKHOLDER’S EQUITY
March 31,
2021
December 31,
2020
(in millions)
Current Liabilities:  
Short-term borrowings$— $24 
Accounts payable273 296 
Accounts and notes payable–affiliated companies48 50 
Taxes accrued90 74 
Interest accrued30 28 
Customer deposits76 76 
Other current liabilities137 178 
Total current liabilities654 726 
Other Liabilities:  
Deferred income taxes, net632 584 
Benefit obligations83 83 
Regulatory liabilities1,242 1,226 
Other non-current liabilities678 694 
Total other liabilities2,635 2,587 
Long-Term Debt4,349 2,428 
Commitments and Contingencies (Note 14)
Stockholder’s Equity:
Common stock— — 
Additional paid-in capital2,046 2,046 
Retained earnings662 511 
Accumulated other comprehensive income10 10 
Total stockholder’s equity2,718 2,567 
Total Liabilities and Stockholder’s Equity
$10,356 $8,308 


See Combined Notes to Interim Condensed Financial Statements

16

Table of Contents
CENTERPOINT ENERGY RESOURCES CORP. AND SUBSIDIARIES
(AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.)
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
(Unaudited)
Three Months Ended March 31,
20212020
(in millions)
Cash Flows from Operating Activities: 
Net income $151 $67 
Adjustments to reconcile net income to net cash provided by operating activities:  
Depreciation and amortization80 74 
Amortization of deferred financing costs
Deferred income taxes41 23 
Goodwill impairment and loss from reclassification to held for sale— 132 
Write-down of natural gas inventory— 
Changes in other assets and liabilities:  
Accounts receivable and unbilled revenues, net(41)169 
Accounts receivable/payable–affiliated companies(5)— 
Inventory64 114 
Accounts payable(10)(159)
Interest and taxes accrued18 (11)
Non-trading derivatives, net— (54)
Margin deposits, net— 21 
Net regulatory assets and liabilities(2,065)10 
Other current assets(1)
Other current liabilities(13)(13)
Other assets(2)18 
Other liabilities(8)(15)
Net cash provided by (used in) operating activities(1,787)381 
Cash Flows from Investing Activities:  
Capital expenditures(133)(176)
Other, net(1)
Net cash used in investing activities(131)(177)
Cash Flows from Financing Activities:  
Proceeds from (payments of) commercial paper, net226 (172)
Proceeds from long-term debt1,699 — 
Dividends to parent— (32)
Debt issuance costs(6)— 
Other, net(1)(1)
Net cash provided by (used in) financing activities1,918 (205)
Net Decrease in Cash, Cash Equivalents and Restricted Cash— (1)
Cash, Cash Equivalents and Restricted Cash at Beginning of Period
Cash, Cash Equivalents and Restricted Cash at End of Period$$

See Combined Notes to Interim Condensed Financial Statements
17

Table of Contents
CENTERPOINT ENERGY RESOURCES CORP. AND SUBSIDIARIES
(AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.)
CONDENSED STATEMENTS OF CONSOLIDATED CHANGES IN EQUITY
(Unaudited)
Three Months Ended March 31,
 20212020
 SharesAmountSharesAmount
 (in millions, except share amounts)
Common Stock  
Balance, beginning of period1,000 $— 1,000 $— 
Balance, end of period1,000 — 1,000 — 
Additional Paid-in-Capital   
Balance, beginning of period2,046  2,116 
Balance, end of period2,046  2,116 
Retained Earnings   
Balance, beginning of period511  515 
Net income (loss)151  67 
Dividend to parent—  (32)
Adoption of ASU 2016-13— (5)
Balance, end of period662  545 
Accumulated Other Comprehensive Income
   
Balance, beginning of period10  10 
Balance, end of period10  10 
Total Stockholder’s Equity$2,718  $2,671 

See Combined Notes to Interim Condensed Financial Statements

18

Table of Contents

CENTERPOINT ENERGY, INC. AND SUBSIDIARIES
CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC AND SUBSIDIARIES
CENTERPOINT ENERGY RESOURCES CORP. AND SUBSIDIARIES

COMBINED NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS

(1) Background and Basis of Presentation

General. This combined Form 10-Q is filed separately by three registrants: CenterPoint Energy, Inc., CenterPoint Energy Houston Electric, LLC and CenterPoint Energy Resources Corp. Information contained herein relating to any individual registrant is filed by such registrant solely on its own behalf. Each registrant makes no representation as to information relating exclusively to the other Registrants or the subsidiaries of CenterPoint Energy other than itself or its subsidiaries.

Except as discussed in the last paragraph in Note 12 to the Registrants’ Interim Condensed Financial Statements, no registrant has an obligation in respect of any other Registrant’s debt securities, and holders of such debt securities should not consider the financial resources or results of operations of any Registrant other than the obligor in making a decision with respect to such securities.

Included in this combined Form 10-Q are the Interim Condensed Financial Statements of CenterPoint Energy, Houston Electric and CERC, which are referred to collectively as the Registrants. The Interim Condensed Financial Statements are unaudited, omit certain financial statement disclosures and should be read with the Registrants’ financial statements included in the Registrants’ combined 2020 Form 10-K. The Combined Notes to Interim Condensed Financial Statements apply to all Registrants and specific references to Houston Electric and CERC herein also pertain to CenterPoint Energy, unless otherwise indicated.

Background. CenterPoint Energy, Inc. is a public utility holding company and owns interests in Enable, a publicly traded MLP, as described below. As of March 31, 2021, CenterPoint Energy’s operating subsidiaries reported as continuing operations were as follows:

Houston Electric provides electric transmission service to transmission service customers in the ERCOT region and distribution service to REPs serving the Texas Gulf Coast area that includes the city of Houston.

CERC (i) owns and operates natural gas distribution systems in six states; (ii) owns and operates permanent pipeline connections through interconnects with various interstate and intrastate pipeline companies through CEIP; and (iii) provides temporary delivery of LNG and CNG throughout the contiguous 48 states through MES.

Vectren holds three public utilities through its wholly-owned subsidiary, VUHI, a public utility holding company:
Indiana Gas provides energy delivery services to natural gas customers located in central and southern Indiana;

SIGECO provides energy delivery services to electric and natural gas customers located in and near Evansville in southwestern Indiana and owns and operates electric generation assets to serve its electric customers and optimizes those assets in the wholesale power market; and

VEDO provides energy delivery services to natural gas customers located in and near Dayton in west-central Ohio.

Vectren performs non-utility activities through ESG, which provides energy performance contracting and sustainable infrastructure services, such as renewables, distributed generation and combined heat and power projects.

As of March 31, 2021, CenterPoint Energy’s reportable segments were Electric, Natural Gas and Midstream Investments. Houston Electric and CERC each consist of a single reportable segment. For a description of CenterPoint Energy’s reportable segments, see Note 16.
As of March 31, 2021, CNP Midstream owned approximately 53.7% of the common units representing limited partner interests in Enable, which owns, operates and develops natural gas and crude oil infrastructure assets; CNP Midstream also owned 50% of the management rights and 40% of the incentive distribution rights in Enable GP. On February 16, 2021, Enable entered into the Enable Merger Agreement. At the closing of the transactions contemplated by the Enable Merger Agreement, if
19

Table of Contents
and when it occurs, Energy Transfer will acquire all of Enable’s outstanding equity interests, including all Enable common units and Enable Series A Preferred Units held by CenterPoint Energy, and in return CenterPoint Energy will receive Energy Transfer common units and Energy Transfer Series G Preferred Units. For additional information regarding CenterPoint Energy’s interest in Enable, including the 14,520,000 Enable Series A Preferred Units directly owned by CenterPoint Energy, and the Enable Merger, see Note 9.

As of March 31, 2021, CenterPoint Energy and Houston Electric had VIEs consisting of the Bond Companies, which are consolidated. The consolidated VIEs are wholly-owned, bankruptcy-remote, special purpose entities that were formed solely for the purpose of securitizing transition and system restoration-related property. Creditors of CenterPoint Energy and Houston Electric have no recourse to any assets or revenues of the Bond Companies. The bonds issued by these VIEs are payable only from and secured by transition and system restoration property, and the bondholders have no recourse to the general credit of CenterPoint Energy or Houston Electric.

Basis of Presentation. The preparation of the Registrants’ financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The Interim Condensed Financial Statements reflect all normal recurring adjustments that are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows for the respective periods. Amounts reported in the Condensed Statements of Consolidated Income are not necessarily indicative of amounts expected for a full-year period due to the effects of, among other things, (a) seasonal fluctuations in demand for energy and energy services, (b) changes in energy commodity prices, (c) timing of maintenance and other expenditures and (d) acquisitions and dispositions of businesses, assets and other interests. Certain prior year amounts have been reclassified to conform to the current year reportable segment presentation described in the 2020 Form 10-K.


(2) New Accounting Pronouncements

Management believes that recently adopted and recently issued accounting standards that are not yet effective will not have a material impact on the Registrants’ financial position, results of operations or cash flows upon adoption.

(3) Divestitures (CenterPoint Energy and CERC)

CenterPoint Energy completed the sale of the Infrastructure Services Disposal Group on April 9, 2020 for $850 million and collected a receivable of $4 million from PowerTeam Services in January 2021 for full and final settlement of the working capital adjustment in the Securities Purchase Agreement. CenterPoint Energy, through its subsidiary CERC Corp., completed the sale of the Energy Services Disposal Group on June 1, 2020 for $286 million in cash and collected a receivable for $79 million in October 2020 for full and final settlement of the working capital adjustment.. The earnings and expenses directly associated with these dispositions for the three months ended March 31, 2020 are reflected as discontinued operations on CenterPoint Energy’s and CERC’s Condensed Statements of Consolidated Income, as applicable.

20

Table of Contents
A summary of the Infrastructure Services and Energy Services Disposal Groups presented in CenterPoint Energy’s and CERC’s Condensed Statements of Consolidated Income, as applicable, is as follows:
Three Months Ended March 31, 2020
CenterPoint EnergyCERC
Infrastructure Services Disposal GroupEnergy Services Disposal GroupTotalEnergy Services Disposal Group
(in millions)
Revenues$222 $886 $1,108 $886 
Expenses:
Non-utility cost of revenues44 808 852 808 
Operation and maintenance 163 20 183 20 
Taxes other than income taxes
Total expenses208 829 1,037 829 
Income (loss) from Discontinued Operations before income taxes14 57 71 57 
Loss on classification to held for sale, net (1)
(96)(138)(234)(132)
Income tax benefit(5)(12)(17)(11)
Net loss from Discontinued Operations$(77)$(69)$(146)$(64)

(1)Loss from classification to held for sale is inclusive of goodwill impairment, gains and losses recognized upon sale, and for CenterPoint Energy, its costs to sell.

CenterPoint Energy and CERC have elected not to separately disclose discontinued operations on their respective Condensed Statements of Consolidated Cash Flows. Unregulated long-lived assets are not depreciated or amortized once they are classified as held for sale. The following table summarizes CenterPoint Energy’s and CERC’s cash flows from discontinued operations and certain supplemental cash flow disclosures related to the Infrastructure Services and Energy Services Disposal Groups, as applicable:
Three Months Ended March 31, 2020
CenterPoint EnergyCERC
Infrastructure Services Disposal GroupEnergy Services Disposal GroupEnergy Services Disposal Group
(in millions)
Write-down of natural gas inventory$— $$
Capital expenditures16 
Non-cash transactions:
Accounts payable related to capital expenditures

Other Sale Related Matters (CenterPoint Energy and CERC). CES provided natural gas supply to CenterPoint Energy’s and CERC’s Natural Gas under contracts executed in a competitive bidding process, with the duration of some contracts extending into 2021. In addition, CERC is the natural gas transportation provider for a portion of CES’s customer base and will continue to be the transportation provider for these customers as long as these customers retain a relationship with the divested CES business.

Transactions between CES and CenterPoint Energy’s and CERC’s Natural Gas that were previously eliminated in consolidation have been reflected in continuing operations until June 1, 2020, which was the date of closing of the sale of the Energy Services Disposal Group. Revenues and expenses included in continuing operations were as follows:
Three Months Ended March 31, 2020
CenterPoint EnergyCERC
(in millions)
Transportation revenue$16 $16 
Natural gas expense45 44 

Natural Gas had AMAs associated with their utility distribution service in Arkansas, Louisiana and Oklahoma with the
21

Table of Contents
Energy Services Disposal Group which expired in March 2021. The expired AMAs were replaced with new third-party AMAs beginning in April 2021. CenterPoint Energy and CERC had outstanding obligations related to the AMAs of $-0- and $24 million as of March 31, 2021 and December 31, 2020, respectively.

The Infrastructure Services Disposal Group provided pipeline construction and repair services to CenterPoint Energy’s and CERC’s Natural Gas. In accordance with consolidation guidance in ASC 980—Regulated Operations, costs incurred by Natural Gas utilities for these pipeline construction and repair services are not eliminated in consolidation when capitalized and included in rate base by the Natural Gas utility. Amounts charged for these services that are not capitalized are included primarily in Operation and maintenance expenses. Fees incurred by CenterPoint Energy’s and CERC’s Natural Gas for pipeline construction and repair services are as follows:
Three Months Ended March 31, 2020
CenterPoint EnergyCERC
(in millions)
Pipeline construction and repair services capitalized$34 $— 
Pipeline construction and repair service charges in operations and maintenance expense

In the Securities Purchase Agreement, CenterPoint Energy agreed to a mechanism to reimburse PowerTeam Services subsequent to closing of the sale for certain amounts of specifically identified change orders that may be ultimately rejected by one of VISCO’s customers as part of on-going audits. CenterPoint Energy’s maximum contractual exposure under the Securities Purchase Agreement, in addition to the amount reflected in the working capital adjustment, for these change orders is $21 million. CenterPoint Energy does not expect the ultimate outcome of this matter to have a material adverse effect on its financial condition, results of operations or cash flows. CenterPoint Energy anticipates this matter will be resolved in 2021.

(4) Revenue Recognition and Allowance for Credit Losses

Revenues from Contracts with Customers

In accordance with ASC 606, Revenue from Contracts with Customers, revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which the Registrants expect to be entitled to receive in exchange for these goods or services. The revenues and related balances in the following tables exclude operating revenues and balances from the Energy Services Disposal Group and the Infrastructure Services Disposal Group, which are reflected as discontinued operations prior to the date of closing of each transaction. See Note 3 for further information. Certain prior year amounts have been reclassified to conform to the current year reportable segment presentation described in the Registrants’ combined 2020 Form 10-K.

ARPs are contracts between the utility and its regulators, not between the utility and a customer. The Registrants recognize ARP revenue as other revenues when the regulator-specified conditions for recognition have been met. Upon recovery of ARP revenue through incorporation in rates charged for utility service to customers, ARP revenue is reversed and recorded as revenue from contracts with customers. The recognition of ARP revenues and the reversal of ARP revenues upon recovery through rates charged for utility service may not occur in the same period.

The following tables disaggregate revenues by reportable segment and major source:

CenterPoint Energy
Three Months Ended March 31, 2021
ElectricNatural Gas Corporate
 and Other
Total
(in millions)
Revenue from contracts
$833 $1,655 $53 $2,541 
Other (1)
(3)
Total revenues$830 $1,663 $54 $2,547 
Three Months Ended March 31, 2020
ElectricNatural GasCorporate
 and Other
Total
(in millions)
Revenue from contracts
$767 $1,296 $78 $2,141 
Other (1)
— 25 26 
Total revenues$767 $1,321 $79 $2,167 
22

Table of Contents

(1)Primarily consists of income from ARPs, weather hedge gains (losses) and leases. Total lease income was $2 million and $1 million for the three months ended March 31, 2021 and 2020, respectively.

Houston Electric
Three Months Ended March 31,
20212020
(in millions)
Revenue from contracts$687 $638 
Other (1)
(3)(4)
Total revenues
$684 $634 

(1)Primarily consists of income from ARPs and leases. Lease income was not significant for the three months ended March 31, 2021 and 2020.

CERC
Three Months Ended March 31,
20212020
(in millions)
Revenue from contracts$1,172 $984 
Other (1)
27 
Total revenues$1,177 $1,011 

(1)Primarily consists of income from ARPs, weather hedge gains (losses) and leases. Lease income was not significant for the three months ended March 31, 2021 and 2020.

Revenues from Contracts with Customers

Electric (CenterPoint Energy and Houston Electric). Houston Electric distributes electricity to customers over time and customers consume the electricity when delivered. Indiana Electric generates, distributes and transmits electricity to customers over time, and customers consume the electricity when delivered. Revenue, consisting of both volumetric and fixed tariff rates set by state regulators, such as the PUCT and the IURC, is recognized as electricity is delivered and represents amounts both billed and unbilled. Discretionary services requested by customers are provided at a point in time with control transferring upon the completion of the service. Revenue for discretionary services provided by Houston Electric is recognized upon completion of service based on the tariff rates set by the PUCT. Payments for electricity distribution and discretionary services are aggregated and received on a monthly basis. Houston Electric performs transmission services over time as a stand-ready obligation to provide a reliable network of transmission systems. Revenue is recognized upon time elapsed, and the monthly tariff rate set by the regulator. Payments are received on a monthly basis. Indiana Electric customers are billed monthly and payment terms, set by the regulator, require payment within a month of billing.

Natural Gas (CenterPoint Energy and CERC). CenterPoint Energy and CERC distribute and transport natural gas to customers over time, and customers consume the natural gas when delivered. Revenue, consisting of both volumetric and fixed tariff rates set by the state governing agency for that service area, is recognized as natural gas is delivered and represents amounts both billed and unbilled. Discretionary services requested by the customer are satisfied at a point in time and revenue is recognized upon completion of service and the tariff rates set by the applicable state regulator. Payments of natural gas distribution, transportation and discretionary services are aggregated and received on a monthly basis.

Contract Balances. When the timing of delivery of service is different from the timing of the payments made by customers and when the right to consideration is conditioned on something other than the passage of time, the Registrants recognize either a contract asset (performance precedes billing) or a contract liability (customer payment precedes performance). Those customers that prepay are represented by contract liabilities until the performance obligations are satisfied. The Registrants’ contract assets are included in Accrued unbilled revenues in their Condensed Consolidated Balance Sheets. As of March 31, 2021, CenterPoint Energy’s contract assets primarily relate to ESG contracts where revenue is recognized using the input method. The Registrants’ contract liabilities are included in Accounts payable and Other current liabilities in their Condensed Consolidated Balance Sheets. As of March 31, 2021, CenterPoint Energy’s contract liabilities primarily relate to ESG contracts where revenue is recognized using the input method.

23

Table of Contents
The opening and closing balances of accounts receivable related to ASC 606 revenues, other accrued unbilled revenue, contract assets and contract liabilities from contracts with customers from continuing operations as of December 31, 2020 and March 31, 2021, respectively, are as follows:

CenterPoint Energy
Accounts ReceivableOther Accrued Unbilled RevenuesContract
Assets
Contract Liabilities
(in millions)
Opening balance as of December 31, 2020
$604 $505 $27 $18 
Closing balance as of March 31, 2021
675 343 23 23 
Increase (decrease)
$71 $(162)$(4)$

The amount of revenue recognized in the three-month period ended March 31, 2021 that was included in the opening contract liability was $11 million. The difference between the opening and closing balances of the contract liabilities primarily results from the timing difference between CenterPoint Energy’s performance and the customer’s payment.

Houston Electric
Accounts ReceivableOther Accrued Unbilled RevenuesContract Liabilities
(in millions)
Opening balance as of December 31, 2020
$225 $113 $
Closing balance as of March 31, 2021
216 83 
Increase (decrease)$(9)$(30)$

The amount of revenue recognized in the three-month period ended March 31, 2021 that was included in the opening contract liability was $1 million. The difference between the opening and closing balances of the contract liabilities primarily results from the timing difference between Houston Electric’s performance and the customer’s payment.

CERC
Accounts ReceivableOther Accrued Unbilled Revenues
(in millions)
Opening balance as of December 31, 2020
$214 $261 
Closing balance as of March 31, 2021
299 168 
Increase (decrease)$85 $(93)

CERC does not have any opening or closing contract asset or contract liability balances.

Remaining Performance Obligations (CenterPoint Energy). The table below discloses (1) the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied (or partially unsatisfied) as of the end of the reporting period for contracts and (2) when CenterPoint Energy expects to recognize this revenue. Such contracts include energy performance and sustainable infrastructure services contracts of ESG, which are included in Corporate and Other.
Rolling 12 MonthsThereafterTotal
(in millions)
Revenue expected to be recognized on contracts in place as of March 31, 2021:
Corporate and Other
$259 $554 $813 
$259 $554 $813 

Practical Expedients and Exemption. Sales taxes and other similar taxes collected from customers are excluded from the transaction price. For contracts for which revenue from the satisfaction of the performance obligations is recognized in the amount invoiced, the practical expedient was elected and revenue expected to be recognized on these contracts has not been disclosed.

24

Table of Contents
Allowance for Credit Losses

CenterPoint Energy and CERC segregate financial assets that fall under the scope of Topic 326, primarily trade receivables due in one year or less, into portfolio segments based on shared risk characteristics, such as geographical location and regulatory environment, for evaluation of expected credit losses. Historical and current information, such as average write-offs, are applied to each portfolio segment to estimate the allowance for losses on uncollectible receivables. Additionally, the allowance for losses on uncollectible receivables is adjusted for reasonable and supportable forecasts of future economic conditions, which can include changing weather, commodity prices, regulations, and macroeconomic factors, among others. Houston Electric recognizes losses on financial assets that fall under the scope of Topic 326. Losses on financial assets are primarily recoverable through regulatory mechanisms and do not materially impact Houston Electric's allowance for credit losses. For a discussion of regulatory deferrals related to COVID-19 and the February 2021 Winter Storm Event, see Note 6.

(5) Employee Benefit Plans

The Registrants’ net periodic cost, before considering amounts subject to overhead allocations for capital expenditure projects or for amounts subject to deferral for regulatory purposes, includes the following components relating to pension and postretirement benefits:

Pension Benefits (CenterPoint Energy)
Three Months Ended March 31,
20212020
(in millions)
Service cost (1)
$10 $10 
Interest cost (2)
15 19 
Expected return on plan assets (2)
(26)(28)
Amortization of net loss (2)
10 
Net periodic cost$$11 

(1)Amounts presented in the table above are included in Operation and maintenance expense in CenterPoint Energy’s Condensed Statements of Consolidated Income, net of amounts capitalized and regulatory deferrals.
(2)Amounts presented in the table above are included in Other income (expense), net in CenterPoint Energy’s Condensed Statements of Consolidated Income, net of regulatory deferrals.

Postretirement Benefits
Three Months Ended March 31,
20212020
CenterPoint EnergyHouston ElectricCERCCenterPoint EnergyHouston ElectricCERC
(in millions)
Service cost (1)$$— $— $— $— $— 
Interest cost (2)
Expected return on plan assets (2)(1)(1)— (1)(1)— 
Amortization of prior service cost (credit) (2)(1)(1)— (1)(1)— 
Net periodic cost (income)$$(1)$$$(1)$

(1)Amounts presented in the tables above are included in Operation and maintenance expense in each of the Registrants’ respective Condensed Statements of Consolidated Income, net of amounts capitalized and regulatory deferrals.
(2)Amounts presented in the tables above are included in Other income (expense), net in each of the Registrants’ respective Condensed Statements of Consolidated Income, net of regulatory deferrals.

25

Table of Contents
The table below reflects the expected contributions to be made to the pension and postretirement benefit plans during 2021:
CenterPoint EnergyHouston ElectricCERC
(in millions)
Expected minimum contribution to pension plans during 2021$61 $— $— 
Expected contribution to postretirement benefit plans in 2021

On March 11, 2021, the ARPA was signed into law which includes pension plan funding relief for the sponsoring employers. As a result, the expected minimum contribution to pension plans for 2021 as disclosed is likely to be significantly reduced. However, at this time, CenterPoint Energy is not able to quantify the reduction amount until further IRS guidance related to the pension funding relief under the ARPA becomes available.

The table below reflects the contributions made to the pension and postretirement benefit plans during 2021:
Three Months Ended March 31, 2021
CenterPoint EnergyHouston ElectricCERC
(in millions)
Pension plans$$— $— 
Postretirement benefit plans— 

(6) Regulatory Matters

Equity Return

The Registrants are at times allowed by a regulator to defer an equity return as part of the recoverable carrying costs of a regulatory asset. A deferred equity return is capitalized for rate-making purposes, but it is not included in the Registrant’s regulatory assets on its Condensed Consolidated Balance Sheets. The allowed equity return is recognized in the Condensed Statements of Consolidated Income as it is recovered in rates. The recoverable allowed equity return not yet recognized by the Registrants is as follows:

March 31, 2021December 31, 2020
CenterPoint Energy (1)
Houston Electric (2)
CERC (3)
CenterPoint Energy (1)
Houston Electric (2)
CERC (3)
(in millions)
Allowed equity return not recognized$224 $130 $13 $229 $137 $13 

(1)In addition to the amounts described in (2) and (3) below, CenterPoint Energy’s allowed equity return on post in-service carrying cost generally associated with federally mandated investments in Indiana.
(2)Houston Electric’s allowed equity return on its true-up balance of stranded costs, other changes and related interest resulting from the formerly integrated electric utilities prior to Texas deregulation and certain storm restoration balances expected to be recovered in rates through 2024. The unrecognized equity return will be recognized as it is recovered in rates through 2024. The actual amounts recognized are adjusted at least annually to correct any over-collections or under-collections during the preceding 12 months.
(3)CERC’s allowed equity return on post in-service carrying cost associated with certain distribution facilities replacements expenditures in Texas.

The table below reflects the amount of allowed equity return recognized by each Registrant in its Condensed Statements of Consolidated Income:

Three Months Ended March 31,
20212020
CenterPoint EnergyHouston ElectricCERCCenterPoint EnergyHouston ElectricCERC
(in millions)
Allowed equity return recognized$$$— $$$— 
26

Table of Contents

February 2021 Winter Storm Event

In February 2021, certain of our jurisdictions experienced an extreme and unprecedented winter weather event that resulted in prolonged freezing temperatures, which impacted our businesses. In Texas, the February 2021 Winter Storm Event caused an electricity generation shortage that was severely disruptive to Houston Electric’s service territory and the wholesale generation market. While demand for electricity reached extraordinary levels due to the extreme cold, the supply of electricity significantly decreased in part because of the inability of certain power generation facilities to supply electric power to the grid. Houston Electric does not own or operate any electric generation facilities. It transmits and distributes to customers of REPs electric power that the REPs obtain from power generation facilities owned by third parties. ERCOT serves as the independent system operator and regional reliability coordinator for member electric power systems in most of Texas. To comply with ERCOT’s orders, Houston Electric implemented controlled outages across its service territory, resulting in a substantial number of businesses and residents being without power, many for extended periods of time, in compliance with ERCOT’s directives as an emergency procedure to avoid prolonged large-scale state-wide blackouts and long-term damage to the electric system in Texas. In anticipation of this weather event, Houston Electric implemented its emergency operations plan’s processes and procedures necessary to respond to such events, including establishing an incident command center and calling for mutual assistance from other utilities where needed, among other measures. Throughout the February 2021 Winter Storm Event, Houston Electric remained in contact with its regulators and stakeholders, including federal, state and local officials, as well as the PUCT and ERCOT.

The February 2021 Winter Storm Event also impacted wholesale prices of CenterPoint Energy and CERC’s natural gas and their ability to service customers in their Natural Gas service territories, including due to the reduction in available natural gas capacity and impacts to CenterPoint Energy’s and CERC’s natural gas supply portfolio activities, and the effects of weather on their systems and their ability to transport natural gas, among other things. The overall natural gas market, including the markets from which CenterPoint Energy and CERC sourced a significant portion of their natural gas for their operations, experienced significant impacts caused by the February 2021 Winter Storm Event, resulting in extraordinary increases in the price of natural gas purchased by CenterPoint Energy and CERC. On February 13, 2021, the Railroad Commission authorized each Texas natural gas distribution utility to record in a regulatory asset the extraordinary expenses associated with the February 2021 Winter Storm Event, including, but not limited to, natural gas cost and other costs related to the procurement and transportation of natural gas supply, subject to recovery in future regulatory proceedings. In addition, CenterPoint Energy’s and CERC’s Natural Gas utilities in jurisdictions outside of Texas deferred natural gas cost under existing recovery mechanisms and have either sought or intend to seek recovery of the increased cost of natural gas, which will be subject to customary regulatory prudency reviews that may impact the amounts recovered. Amounts for the under recovery of natural gas costs are reflected in regulatory assets and are probable of recovery; however, the timing of recovery for each jurisdiction for the estimated incremental gas cost attributable to the February 2021 Winter Storm Event within each regulatory asset is uncertain. As of March 31, 2021, CenterPoint Energy and CERC have recorded current regulatory assets of $462 million and $347 million, respectively, and non-current regulatory assets of $1.7 billion and $1.7 billion, respectively, associated with the February 2021 Winter Storm Event. Due to the uncertainty of timing and method of recovery, CenterPoint Energy and CERC may not earn a return on all amounts deferred in the non-current regulatory asset associated with the February 2021 Winter Storm Event.

On February 21, 2021, in response to the 2021 February Winter Storm Event, the PUCT issued an order prohibiting REPs from sending a request to TDUs to disconnect such REPs’ customers for non-payment, effective February 21, 2021. As a result of this order, in the event a request for disconnect is received from a REP, Houston Electric will not execute any such disconnect request until the PUCT issues orders for disconnects to resume. As of March 31, 2021, as authorized by the PUCT, CenterPoint Energy and Houston Electric established a regulatory asset of $14 million for bad debt expenses resulting from REPs’ default on their obligation to pay delivery charges to Houston Electric net of collateral. Additionally, CenterPoint Energy and Houston Electric recorded a regulatory asset of $14 million to defer operations and maintenance costs associated with the February 2021 Winter Storm Event.

See Notes 12 and 14(d) for further information regarding debt financing transactions and litigation related to the February 2021 Winter Storm Event, respectively.

COVID-19 Regulatory Matters

Governors, public utility commissions and other authorities in the states in which the Registrants operate issued a number of different orders related to the COVID-19 pandemic, including orders addressing customer non-payment and disconnection. Although the disconnect moratoriums have expired in certain of the Registrants’ service territories, CenterPoint Energy continues to support those customers who may need payment assistance, arrangements or extensions.

27

Table of Contents
The COVID-19 ERP allows program expenses to be recovered in rates. CenterPoint Energy’s and Houston Electric’s COVID-19 ERP regulatory assets were $-0- as of March 31, 2021 and $6 million as of December 31, 2020.

Commissions in all of Indiana Electric’s and CenterPoint Energy’s and CERC’s Natural Gas service territories have either (1) issued orders to record a regulatory asset for incremental bad debt expenses related to COVID-19, including costs associated with the suspension of disconnections and payment plans or (2) provided authority to recover bad debt expense through an existing tracking mechanism. CenterPoint Energy and CERC have recorded estimated incremental uncollectible receivables to the associated regulatory asset of $29 million and $27 million, respectively, as of March 31, 2021 and $22 million and $19 million, respectively, as of December 31, 2020.

In some of the states in which the Registrants operate, public utility commissions have authorized utilities to employ deferred accounting authority for certain COVID-19 related costs which ensure the safety and health of customers, employees, and contractors, that would not have been incurred in the normal course of business. CERC’s Natural Gas service territories in Minnesota and Arkansas will include any offsetting savings in the deferral. Other jurisdictions where the Registrants operate may require them to offset the deferral with savings as well. The Arkansas FRP, filed on April 5, 2021, included a request for (1) the regulatory asset as of September 30, 2020 in working capital for the 2021 historical year using a thirteen-month average of the asset balance; (2) the regulatory asset as of September 30, 2020 in working capital for the 2021 projected year using a thirteen-month average of the asset balance; and (3) the amortization of the balance over the 2021 projected year twelve-month period beginning October 1, 2021.

(7) Derivative Instruments

The Registrants are exposed to various market risks. These risks arise from transactions entered into in the normal course of business. The Registrants utilize derivative instruments such as swaps and options to mitigate the impact of changes in commodity prices, weather and interest rates on operating results and cash flows.

(a)Non-Trading Activities

Commodity Derivative Instruments (CenterPoint Energy). CenterPoint Energy, through the Indiana Utilities, enters into certain derivative instruments to mitigate the effects of commodity price movements. Outstanding derivative instruments designated as economic hedges at the Indiana Utilities hedge long-term variable rate natural gas purchases. The Indiana Utilities have authority to refund and recover mark-to-market gains and losses associated with hedging natural gas purchases, and thus the gains and losses on derivatives are deferred in a regulatory liability or asset.

Interest Rate Risk Derivative Instruments. From time to time, the Registrants may enter into interest rate derivatives that are designated as cash flow hedges or accounted for as economic hedges. The objective of these hedges is to offset risk associated with interest rates borne by the Registrants in connection with an anticipated future fixed rate debt offering or other exposure to variable rate debt. The Indiana Utilities have authority to refund and recover mark-to-market gains and losses associated with hedging financing activity, and thus the gains and losses on derivatives are deferred in a regulatory liability or asset.

The table below summarizes the Registrants’ outstanding interest rate hedging activity:
March 31, 2021December 31, 2020
Hedging ClassificationNotional Principal
(in millions)
Economic hedge (1)
$84 $84 

(1)Relates to interest rate derivative instruments at SIGECO.

Weather Hedges (CenterPoint Energy and CERC). CenterPoint Energy and CERC have weather normalization or other rate mechanisms that largely mitigate the impact of weather on Natural Gas in Arkansas, Indiana, Louisiana, Mississippi, Minnesota, Ohio and Oklahoma, as applicable. CenterPoint Energy’s and CERC’s Natural Gas in Texas and CenterPoint Energy’s electric operations in Texas and Indiana do not have such mechanisms, although fixed customer charges are historically higher in Texas for Natural Gas compared to its other jurisdictions. As a result, fluctuations from normal weather may have a positive or negative effect on CenterPoint Energy’s and CERC’s Natural Gas’ results in Texas and on CenterPoint Energy’s electric operations’ results in its Texas and Indiana service territories.

28

Table of Contents
CenterPoint Energy and CERC, as applicable, enter into winter season weather hedges from time to time for certain Natural Gas jurisdictions and electric operations’ service territory to mitigate the effect of fluctuations from normal weather on results of operations and cash flows. These weather hedges are based on heating degree days at 10-year normal weather. Houston Electric and Indiana Electric do not enter into weather hedges.

(b)Derivative Fair Values and Income Statement Impacts

The following tables present information about derivative instruments and hedging activities. The first table provides a balance sheet overview of Derivative Liabilities, while the last table provides a breakdown of the related income statement impacts.

Fair Value of Derivative Instruments and Hedged Items (CenterPoint Energy)
Derivative Liabilities
Fair Value
Balance Sheet LocationMarch 31, 2021December 31, 2020
Derivatives not designated as hedging instruments:(in millions)
Natural gas derivatives (1)
Current Liabilities: Non-trading derivative liabilities$$
Natural gas derivatives (1)
Other Liabilities: Non-trading derivative liabilities
Interest rate derivativesOther Liabilities: Non-trading derivative liabilities20 
Indexed debt securities derivative (2)
Current Liabilities927 953 
Total$943 $983 

(1)Natural gas contracts are subject to master netting arrangements. This netting applies to all undisputed amounts due or past due. However, the mark-to-market fair value of each natural gas contract is in a liability position with no offsetting amounts.
(2)Derivative component of the ZENS obligation that represents the ZENS holder’s option to receive the appreciated value of the reference shares at maturity. See Note 11 for further information.

Income Statement Impact of Hedge Accounting Activity (CenterPoint Energy)
Three Months Ended March 31,
Income Statement Location20212020
Derivatives not designated as hedging instruments:(in millions)
Indexed debt securities derivative (1)
Gain (loss) on indexed debt securities$26 $135 
Total
$26 $135 

(1)The indexed debt securities derivative is recorded at fair value and changes in the fair value are recorded in CenterPoint Energy’s Statements of Consolidated Income.

(c) Credit Risk Contingent Features (CenterPoint Energy)

Certain of CenterPoint Energy’s derivative instruments contain provisions that require CenterPoint Energy’s debt to maintain an investment grade credit rating on its long-term unsecured unsubordinated debt from S&P and Moody’s. If CenterPoint Energy’s debt were to fall below investment grade, it would be in violation of these provisions, and the counterparties to the derivative instruments could request immediate payment.
March 31,
2021
December 31, 2020
(in millions)
Aggregate fair value of derivatives with credit-risk-related contingent features in a liability position$$20 
Fair value of collateral already posted
Additional collateral required to be posted if credit risk contingent features triggered (1)

(1)The maximum collateral required if further escalating collateral is triggered would equal the net liability position.

29

Table of Contents
(8) Fair Value Measurements

Assets and liabilities that are recorded at fair value in the Registrants’ Condensed Consolidated Balance Sheets are categorized based upon the level of judgment associated with the inputs used to measure their value. Hierarchical levels, as defined below and directly related to the amount of subjectivity associated with the inputs to fair valuations of these assets and liabilities, are as follows:

Level 1: Inputs are unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date. The types of assets carried at Level 1 fair value generally are exchange-traded derivatives and equity securities.

Level 2: Inputs, other than quoted prices included in Level 1, are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar instruments in active markets, quoted prices for identical or similar assets or liabilities in inactive markets, inputs other than quoted prices that are observable for the asset or liability and inputs that are derived principally from or corroborated by observable market data by correlation or other means. Fair value assets and liabilities that are generally included in this category are derivatives with fair values based on inputs from actively quoted markets. A market approach is utilized to value the Registrants’ Level 2 natural gas derivative assets or liabilities. CenterPoint Energy’s Level 2 indexed debt securities derivative is valued using an option model and a discounted cash flow model, which uses projected dividends on the ZENS-Related Securities and a discount rate as observable inputs.

Level 3: Inputs are unobservable for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. Unobservable inputs reflect the Registrants’ judgments about the assumptions market participants would use in pricing the asset or liability since limited market data exists. The Registrants develop these inputs based on the best information available, including the Registrants’ own data.

The Registrants determine the appropriate level for each financial asset and liability on a quarterly basis.

The following tables present information about the Registrants’ assets and liabilities measured at fair value on a recurring basis as of March 31, 2021 and December 31, 2020 and indicate the fair value hierarchy of the valuation techniques utilized by the Registrants to determine such fair value.

CenterPoint Energy
March 31, 2021December 31, 2020

Level 1
Level 2Level 3Total
Level 1
Level 2Level 3Total
Assets(in millions)
Corporate equities$850 $— $— $850 $873 $— $— $873 
Investments, including money market funds (1)
43 — — 43 43 — — 43 
Total assets$893 $— $— $893 $916 $— $— $916 
Liabilities    
Indexed debt securities derivative
$— $927 $— $927 $— $953 $— $953 
Interest rate derivatives
— — — 20 — 20 
Natural gas derivatives
— — — 10 — 10 
Total liabilities$— $943 $— $943 $— $983 $— $983 

Houston Electric
March 31, 2021December 31, 2020

Level 1
Level 2Level 3Total
Level 1
Level 2Level 3Total
Assets(in millions)
Investments, including money market funds (1)
$27 $— $— $27 $26 $— $— $26 
Total assets$27 $— $— $27 $26 $— $— $26 

30

Table of Contents
CERC
March 31, 2021December 31, 2020

Level 1
Level 2Level 3Total
Level 1
Level 2Level 3Total
Assets(in millions)
Corporate equities$$— $— $$$— $— $
Investments, including money market funds (1)
11 — — 11 11 — — 11 
Total assets$13 $— $— $13 $13 $— $— $13 

(1)Amounts are included in Prepaid expenses and other current assets in the Condensed Consolidated Balance Sheets.

Estimated Fair Value of Financial Instruments

The fair values of cash and cash equivalents, investments in debt and equity securities measured at fair value and short-term borrowings are estimated to be approximately equivalent to carrying amounts and have been excluded from the table below. The carrying amounts of non-trading derivative assets and liabilities and CenterPoint Energy’s ZENS indexed debt securities derivative are stated at fair value and are excluded from the table below. The fair value of each debt instrument is determined by multiplying the principal amount of each debt instrument by a combination of historical trading prices and comparable issue data. These liabilities, which are not measured at fair value in the Registrants’ Condensed Consolidated Balance Sheets, but for which the fair value is disclosed, would be classified as Level 2 in the fair value hierarchy.
 March 31, 2021December 31, 2020
CenterPoint Energy (1)
Houston Electric (1)
CERC
CenterPoint Energy (1)
Houston Electric (1)
CERC
Long-term debt, including current maturities
(in millions)
Carrying amount
$15,823 $5,968 $4,349 $13,401 $5,019 $2,428 
Fair value
16,848 6,485 4,580 15,226 5,957 2,855 

(1)Includes Securitization Bonds debt.

(9) Unconsolidated Affiliates (CenterPoint Energy and CERC)

CenterPoint Energy has the ability to significantly influence the operating and financial policies of Enable, a publicly traded MLP, and, accordingly, accounts for its investment in Enable’s common units using the equity method of accounting. Enable is considered to be a VIE because the power to direct the activities that most significantly impact Enable’s economic performance does not reside with the holders of equity investment at risk. However, CenterPoint Energy is not considered the primary beneficiary of Enable since it does not have the power to direct the activities of Enable that are considered most significant to the economic performance of Enable. As of March 31, 2021, CenterPoint Energy’s maximum exposure to loss related to Enable is limited to its investment in unconsolidated affiliate, its investment in Enable Series A Preferred Units and outstanding current accounts receivable from Enable.

On February 16, 2021, Enable entered into the Enable Merger Agreement. At the closing of the transactions contemplated by the Enable Merger Agreement, if and when it occurs, Energy Transfer will acquire all of Enable’s outstanding equity interests, resulting in the exchange of Enable common units owned by CenterPoint Energy at the transaction exchange ratio of 0.8595x Energy Transfer common units for each Enable common unit. CenterPoint Energy will also receive $5 million in cash in exchange for its interest in Enable GP and Energy Transfer Series G Preferred Units with an aggregate liquidation preference of approximately $385 million in exchange for all of its Enable Series A Preferred Units. Pursuant to previously disclosed support agreements, CenterPoint Energy and OGE, who collectively own approximately 79.2% of Enable’s common units, delivered written consents approving the Enable Merger Agreement and, on a non-binding, advisory basis, the compensation that will or may become payable to Enable’s named executive officers in connection with the transactions contemplated by the Enable Merger Agreement. The transactions contemplated under the Enable Merger Agreement are expected to be completed in the second half of 2021, subject to customary closing conditions, including Hart-Scott-Rodino antitrust clearance. Upon the consummation of the transaction, the partnership agreements between CenterPoint Energy and OGE will terminate, and CenterPoint Energy will pay $30 million in cash to OGE (or other mutually agreed upon consideration). Because CenterPoint Energy will retain an investment in the midstream industry at the completion of this transaction, the transaction does not represent a strategic shift that will have a major effect on CenterPoint Energy’s operations or financial results, and as such, Enable is not classified and presented as discontinued operations. Equity method investments that do not qualify for discontinued operations are not presented as assets held for sale.
31

Table of Contents

Investment in Unconsolidated Affiliates (CenterPoint Energy):
March 31, 2021December 31, 2020
(in millions)
Enable$852 $782 
Other
  Total$853 $783 

As of March 31, 2021, Enable’s common unit price closed at $6.48 per unit.

Equity in Earnings (Losses) of Unconsolidated Affiliates, net (CenterPoint Energy):
Three Months Ended March 31,
2021
2020 (1)
(in millions)
Enable$108 $(1,475)
        Total$108 $(1,475)

(1)Included an impairment charge on CenterPoint Energy’s investment in Enable of $1,541 million.


Limited Partner Interest and Units Held in Enable (CenterPoint Energy):


March 31, 2021
Limited Partner Interest (1)
Common Units
Enable Series A Preferred Units (2)
CenterPoint Energy (3)
53.7 %233,856,623 14,520,000 
OGE25.5 %110,982,805 — 
Public unitholders20.8 %91,007,338 — 
        Total units outstanding100.0 %435,846,766 14,520,000 

(1)Excludes the Enable Series A Preferred Units owned by CenterPoint Energy.
(2)The carrying amount of the Enable Series A Preferred Units, reflected as Preferred units - unconsolidated affiliate on CenterPoint Energy’s Condensed Consolidated Balance Sheets, was $363 million as of both March 31, 2021 and December 31, 2020. There were no settled transactions in the three months ended March 31, 2021 that would indicate a stand-alone, observable, and readily determinable fair value for securities identical or similar to Enable Series A Preferred Units. No impairment charges or adjustment due to observable price changes were required or recorded during the current or prior reporting periods.
(3)Held indirectly through CNP Midstream.

Generally, sales to any person or entity (including a series of sales to the same person or entity) of more than 5% of the aggregate of the common units CenterPoint Energy owns in Enable or sales to any person or entity (including a series of sales to the same person or entity) by OGE of more than 5% of the aggregate of the common units it owns in Enable are subject to mutual rights of first offer and first refusal set forth in Enable’s Agreement of Limited Partnership.

Interests Held in Enable GP (CenterPoint Energy):

CenterPoint Energy and OGE held the following interests in Enable GP as of both March 31, 2021 and December 31, 2020:
March 31, 2021
Management
Rights (1)
Incentive Distribution Rights (2)
CenterPoint Energy (3)
50 %40 %
OGE50 %60 %
32

Table of Contents

(1)Enable is controlled jointly by CenterPoint Energy and OGE. Sale of CenterPoint Energy’s or OGE’s ownership interests in Enable GP to a third party is subject to mutual rights of first offer and first refusal, and CenterPoint Energy is not permitted to dispose of less than all of its interest in Enable GP.
(2)If cash distributions to Enable’s unitholders exceed $0.330625 per common unit in any quarter, Enable GP will receive increasing percentages or incentive distributions rights, up to 50%, of the cash Enable distributes in excess of that amount. In certain circumstances Enable GP will have the right to reset the minimum quarterly distribution and the target distribution levels at which the incentive distributions receive increasing percentages to higher levels based on Enable’s cash distributions at the time of the exercise of this reset election. To date, no incentive distributions have been made.
(3)Held indirectly through CNP Midstream.

Distributions Received from Enable (CenterPoint Energy):
Three Months Ended March 31,
20212020
Per UnitCash DistributionPer UnitCash Distribution
(in millions, except per unit amounts)
Enable common units$0.16525 $39 $0.3305 $77 
Enable Series A Preferred Units0.62500 0.6250 
  Total CenterPoint Energy$48 $86 
Transactions with Enable (CenterPoint Energy and CERC):

The transactions with Enable in the following tables exclude transactions with the Energy Services Disposal Group.
CenterPoint Energy and CERC
Three Months Ended March 31,
20212020
(in millions)
Natural gas expenses, includes transportation and storage costs $32 $27 
CenterPoint Energy and CERC
March 31, 2021December 31, 2020
(in millions)
Accounts payable for natural gas purchases from Enable$$
Accounts receivable for amounts billed for services provided to Enable

Summarized Financial Information for Enable (CenterPoint Energy)

Summarized unaudited consolidated income information for Enable is as follows:
Three Months Ended March 31,
20212020
(in millions)
Operating revenues$970 $648 
Cost of sales, excluding depreciation and amortization519 226 
Depreciation and amortization106 104 
Goodwill and long-lived assets impairments— 28 
Operating income206 146 
Net income attributable to Enable common units155 103 
Reconciliation of Equity in Earnings (Losses), net:
CenterPoint Energy’s interest$83 $55 
Basis difference amortization (1)
25 12 
Loss on dilution, net of proportional basis difference recognition— (1)
Impairment of CenterPoint Energy’s equity method investment in Enable — (1,541)
CenterPoint Energy’s equity in earnings (losses), net$108 $(1,475)
33

Table of Contents
(1)Equity in earnings of unconsolidated affiliate includes CenterPoint Energy’s share of Enable earnings adjusted for the amortization of the basis difference of CenterPoint Energy’s original investment in Enable and its underlying equity in net assets of Enable. The basis difference is being amortized through the year 2048 or will cease upon the sale of CenterPoint Energy’s investment in Enable.

Summarized unaudited consolidated balance sheet information for Enable is as follows:
March 31, 2021December 31, 2020
(in millions)
Current assets$449 $381 
Non-current assets11,315 11,348 
Current liabilities1,334 582 
Non-current liabilities3,249 4,052 
Non-controlling interest26 26 
Preferred equity362 362 
Accumulated other comprehensive loss(5)(6)
Enable partners’ equity6,798 6,713 
Reconciliation of Investment in Enable:
CenterPoint Energy’s ownership interest in Enable partners’ equity$3,645 $3,601 
CenterPoint Energy’s basis difference (1)
(2,793)(2,819)
CenterPoint Energy’s equity method investment in Enable$852 $782 

(1)The basis difference is being amortized through the year 2048 or will cease upon sale of CenterPoint Energy’s investment in Enable.

(10) Goodwill and Other Intangibles (CenterPoint Energy)

CenterPoint Energy’s goodwill by reportable segment as of March 31, 2021 and December 31, 2020 is as follows:
(in millions)
Electric (1)
$936 
Natural Gas3,323 
Corporate and Other 438 
Total$4,697 
(1)Amount presented is net of the accumulated goodwill impairment charge of $185 million recorded in 2020.
The tables below present information on CenterPoint Energy’s intangible assets, excluding goodwill, recorded in Other non-current assets on CenterPoint Energy’s Condensed Consolidated Balance Sheets and the related amortization expense included in Depreciation and amortization on CenterPoint Energy’s Condensed Statements of Consolidated Income, unless otherwise indicated.
March 31, 2021December 31, 2020
Gross Carrying AmountAccumulated AmortizationNet BalanceGross Carrying AmountAccumulated AmortizationNet Balance
(in millions)
Customer relationships$33 $(9)$24 $33 $(8)$25 
Trade names16 (3)13 16 (3)13 
Construction backlog (1)
(5)— (5)— 
Operation and maintenance agreements (1)
12 (1)11 12 (1)11 
Other(1)(1)
Total$68 $(19)$49 $68 $(18)$50 

34

Table of Contents
(1)Amortization expense related to the operation and maintenance agreements and construction backlog is included in Non-utility cost of revenues, including natural gas on CenterPoint Energy’s Condensed Statements of Consolidated Income.
Three Months Ended March 31,
20212020
(in millions)
Amortization expense of intangible assets recorded in Depreciation and amortization $$
Amortization expense of intangible assets recorded in Non-utility cost of revenues, including natural gas— 
CenterPoint Energy estimates that amortization expense of intangible assets with finite lives for the next five years will be as follows:
Amortization
 Expense (1)
CenterPoint Energy
(in millions)
Remaining nine months of 2021$
2022
2023
2024
2025
2026


(11) Indexed Debt Securities (ZENS) and Securities Related to ZENS (CenterPoint Energy)

(a) Investment in Securities Related to ZENS

A subsidiary of CenterPoint Energy holds shares of certain securities detailed in the table below, which are securities with a readily determinable fair value and are expected to be held to facilitate CenterPoint Energy’s ability to meet its obligation under the ZENS. Unrealized gains and losses resulting from changes in the market value of the ZENS-Related Securities are recorded in CenterPoint Energy’s Condensed Statements of Consolidated Income.
Shares Held
March 31, 2021December 31, 2020
AT&T Common10,212,945 10,212,945 
Charter Common872,503 872,503 

(b) ZENS

In September 1999, CenterPoint Energy issued ZENS having an original principal amount of $1.0 billion of which $828 million remained outstanding as of March 31, 2021. Each ZENS is exchangeable at the holder’s option at any time for an amount of cash equal to 95% of the market value of the reference shares attributable to such note. The number and identity of the reference shares attributable to each ZENS are adjusted for certain corporate events.

CenterPoint Energy’s reference shares for each ZENS consisted of the following:
March 31, 2021December 31, 2020
(in shares)
AT&T Common0.7185 0.7185 
Charter Common0.061382 0.061382 

35

Table of Contents
CenterPoint Energy pays interest on the ZENS at an annual rate of 2% plus the amount of any quarterly cash dividends paid in respect of the reference shares attributable to the ZENS. The principal amount of the ZENS is subject to increases or decreases to the extent that the annual yield from interest and cash dividends on the reference shares attributable to the ZENS is less than or more than 2.309%. The adjusted principal amount is defined in the ZENS instrument as “contingent principal.” As of March 31, 2021, the ZENS, having an original principal amount of $828 million and a contingent principal amount of $52 million, were outstanding and were exchangeable, at the option of the holders, for cash equal to 95% of the market value of the reference shares attributable to the ZENS.

(12) Short-term Borrowings and Long-term Debt

Inventory Financing. CenterPoint Energy’s and CERC’s Natural Gas had AMAs associated with their utility distribution service in Arkansas, Louisiana and Oklahoma with the Energy Services Disposal Group that expired in March 2021. The expired AMAs were replaced with new third-party AMAs beginning in April 2021. CenterPoint Energy’s and CERC’s Natural Gas have AMAs with third parties associated with their utility distribution service in Arkansas, Indiana, Louisiana, Minnesota, Mississippi, Oklahoma and Texas. The AMAs have varying terms, the longest of which expires in 2027. Pursuant to the provisions of the agreements, CenterPoint Energy’s and CERC’s Natural Gas either sells natural gas to the asset manager and agrees to repurchase an equivalent amount of natural gas throughout the year at the same cost, or simply purchases its full natural gas requirements at each delivery point from the asset manager. These transactions are accounted for as an inventory financing. CenterPoint Energy and CERC had $-0- and $24 million outstanding obligations related to the AMAs as of March 31, 2021 and December 31, 2020, respectively.

Debt Transactions. In February 2021, CERC Corp. received financing commitments totaling $1.7 billion on a 364-day term loan facility to bridge any working capital needs related to the February 2021 Winter Storm Event. In March 2021, CERC Corp. issued $700 million aggregate principal amount of 0.70% senior notes and $1.0 billion aggregate principal amount of floating rate senior notes (three-month LIBOR plus 0.5%) due 2023. Total proceeds, net of issuance expenses and fees, of approximately $1.69 billion were used for general corporate purposes, including to fund working capital. Upon the consummation of the senior notes offerings, in March 2021, CERC Corp. terminated all of the commitments for the 364-day term loan facility.

In March 2021, Houston Electric issued $400 million aggregate principal amount of 2.35% general mortgage bonds due 2031 and $700 million aggregate principal amount of 3.35% general mortgage bonds due 2051. Total proceeds, net of issuance expenses and fees, of approximately $1.08 billion were or will be used for general limited liability company purposes, including capital expenditures and the repayment of (i) all of Houston Electric’s outstanding $102 million 9.15% first mortgage bonds due 2021, which matured on March 15, 2021, (ii) all of Houston Electric’s outstanding $300 million of 1.85% general mortgage bonds due 2021, which were called for redemption in full on May 1, 2021, as discussed further below, and (iii) all or a portion of Houston Electric’s borrowings under the CenterPoint Energy money pool.

Debt Redemption. In April 2021, Houston Electric provided notice of redemption relating to $300 million aggregate principal amount of its outstanding 1.85% general mortgage bonds due 2021. All of the outstanding bonds were called for redemption in full on May 1, 2021 at a redemption price equal to 100% of the principal amount, plus accrued and unpaid interest.

CenterPoint Energy Term Loan. In April 2021, CenterPoint Energy amended its existing term loan agreement, of which $700 million is still outstanding, by extending its maturity from May 15, 2021 to June 14, 2021.

Credit Facilities. In February 2021, each of CenterPoint Energy, Houston Electric, CERC Corp. and VUHI replaced their existing revolving credit facilities with new amended and restated credit facilities. The size of the CenterPoint Energy facility decreased from $3.3 billion to $2.4 billion, while the sizes of the Houston Electric, CERC Corp. and VUHI facilities remained unchanged.

36

Table of Contents
The Registrants had the following revolving credit facilities as of March 31, 2021:
Execution
 Date
RegistrantSize of
Facility
Draw Rate of LIBOR plus (1)
Financial Covenant Limit on Debt for Borrowed Money to Capital Ratio 
Debt for Borrowed Money to Capital
Ratio as of
March 31, 2021 (2)
Termination Date
(in millions)
February 4, 2021CenterPoint Energy $2,400 1.625%65.0%(3)57.4%February 4, 2024
February 4, 2021
CenterPoint Energy (4)
400 1.250%65.0%49.9%February 4, 2024
February 4, 2021Houston Electric300 1.375%67.5%(3)57.9%February 4, 2024
February 4, 2021CERC 900 1.250%65.0%61.5%February 4, 2024
Total
$4,000 

(1)Based on current credit ratings.
(2)As defined in the revolving credit facility agreements, excluding Securitization Bonds.
(3)For CenterPoint Energy and Houston Electric, the financial covenant limit will temporarily increase to 70% if Houston Electric experiences damage from a natural disaster in its service territory and CenterPoint Energy certifies to the administrative agent that Houston Electric has incurred system restoration costs reasonably likely to exceed $100 million in a consecutive 12-month period, all or part of which Houston Electric intends to seek to recover through securitization financing. Such temporary increase in the financial covenant would be in effect from the date CenterPoint Energy delivers its certification until the earliest to occur of (i) the completion of the securitization financing, (ii) the first anniversary of CenterPoint Energy’s certification or (iii) the revocation of such certification.
(4)This credit facility was issued by VUHI, is guaranteed by SIGECO, Indiana Gas and VEDO and includes a $20 million letter of credit sublimit. This credit facility backstops VUHI’s commercial paper program.

The Registrants, including the subsidiaries of CenterPoint Energy discussed above, were in compliance with all financial debt covenants as of March 31, 2021.

The table below reflects the utilization of the Registrants’ respective revolving credit facilities:
March 31, 2021December 31, 2020
RegistrantLoansLetters
of Credit
Commercial
Paper
Weighted Average Interest RateLoansLetters
of Credit
Commercial
Paper
Weighted Average Interest Rate
(in millions, except weighted average interest rate)
CenterPoint Energy (1)
$— $11 $772 0.21 %$— $11 $1,078 0.23 %
CenterPoint Energy (2)
— — 210 0.18 %— — 92 0.22 %
Houston Electric— — — — %— — — — %
CERC — — 573 0.21 %— — 347 0.23 %
Total$— $11 $1,555 $— $11 $1,517 

(1)CenterPoint Energy’s outstanding commercial paper generally has maturities of 60 days or less.
(2)This credit facility was issued by VUHI and is guaranteed by SIGECO, Indiana Gas and VEDO.
Liens. As of March 31, 2021, Houston Electric’s assets were subject to liens securing approximately $5.4 billion of general mortgage bonds, including approximately $68 million held in trust to secure pollution control bonds that mature in 2028 for which CenterPoint Energy is obligated. These general mortgage bonds are not reflected in Houston Electric’s consolidated financial statements because of the contingent nature of the obligations. Houston Electric may issue additional general mortgage bonds on the basis of retired bonds, 70% of property additions or cash deposited with the trustee. As of March 15, 2021, no Houston Electric first mortgage bonds remained outstanding. Houston Electric could issue approximately $3.4 billion of additional first mortgage bonds and general mortgage bonds on the basis of retired bonds and 70% of property additions as of March 31, 2021. Houston Electric has contractually agreed that it will not issue additional first mortgage bonds, subject to certain exceptions.

37

Table of Contents
Other. As of March 31, 2021, certain financial institutions agreed to issue, from time to time, up to $20 million of letters of credit on behalf of Vectren and certain of its subsidiaries in exchange for customary fees. These agreements to issue letters of credit expire on December 31, 2021. As of March 31, 2021, such financial institutions had issued $1 million of letters of credit on behalf of Vectren and certain of its subsidiaries. 

(13) Income Taxes

The Registrants reported the following effective tax rates:
Three Months Ended March 31,
20212020
CenterPoint Energy - Continuing operations (1)
17 %25 %
CenterPoint Energy - Discontinued operations (2)
— %10 %
Houston Electric 13 %13 %
CERC - Continuing operations (3)
22 %21 %
CERC - Discontinued operations (4)
— %15 %

(1)CenterPoint Energy’s lower effective tax rate on income from continuing operations for the three months ended March 31, 2021 compared to the higher effective tax rate on a loss from continuing operations for the three months ended March 31, 2020 was primarily driven by an increase in the amount of amortization of the net regulatory EDIT liability. The higher effective tax rate on the loss from continuing operations for the three months ended March 31, 2020 was primarily due to lower earnings from the impairment of CenterPoint Energy’s investment in Enable. Other effective tax rate drivers include the non-deductible goodwill impairment at the Indiana Electric reporting unit, the impact of NOL carryback claims allowed under the CARES Act, and an increase in the amount of remeasurement of state deferred tax liabilities for changes in apportionment, the effects of which were compounded by the book loss in the three months ended March 31, 2020.
(2)CenterPoint Energy’s lower than statutory tax rate on the loss from discontinued operations for the three months ended March 31, 2020 was primarily due to the non-deductible portions of goodwill impairments on the Energy Services and Infrastructure Services Disposal Groups.
(3)CERC’s higher effective tax rate on income from continuing operations for the three months ended March 31, 2021 compared to the three months ended March 31, 2020 was primarily driven by a decrease in the amount of amortization of the net regulatory EDIT liability.
(4)CERC’s lower than statutory tax rate on the loss from discontinued operations for the three months ended March 31, 2020 was primarily due to the non-deductible portion of the goodwill impairment on the Energy Services Disposal Group.

On March 11, 2021, the ARPA was enacted in response to continued economic and health impacts of the COVID-19 pandemic. The ARPA expands the definition of “covered employee” under section 162(m) beginning in 2027, and extends the employee retention tax credit through December 31, 2021, among other provisions. CenterPoint Energy does not currently anticipate any material impacts from this legislation. On March 27, 2020, the CARES Act was enacted in response to the COVID-19 pandemic. The CARES Act provides relief to corporate taxpayers by permitting a five-year carryback of 2018-2020 NOLs, deferring the payment of the employer share of payroll taxes for the remaining months of 2020 until 2021 and 2022, increasing the 30% limitation on interest expense deductibility to 50% of adjusted taxable income for 2019 and 2020, and accelerating refunds for minimum tax credit carryforwards, among other provisions. Based on the CARES Act NOL carryback provision, during the three months ended March 31, 2020, CenterPoint Energy recorded a $19 million benefit resulting from carryback claims to be filed to refund taxes paid.

CenterPoint Energy reported a net uncertain tax liability, inclusive of interest and penalties, of $10 million as of March 31, 2021. Interest and penalties of $1 million were recorded on the uncertain tax liability for the three month period ending March 31, 2021. The Registrants believe that it is reasonably possible that a decrease of up to $6 million in unrecognized tax benefits may occur in the next 12 months as a result of a lapse of statutes on older exposures and/or the acceptance of an application for an accounting method change. For CenterPoint Energy, tax years through 2018 have been audited and settled with the IRS. For the 2019 through 2021 tax years CenterPoint Energy is a participant in the IRS’s Compliance Assurance Process. Vectren’s pre-Merger 2017 through 2019 tax years are still open for examination.

38

Table of Contents
(14) Commitments and Contingencies

(a)Purchase Obligations (CenterPoint Energy and CERC)

Commitments include minimum purchase obligations related to CenterPoint Energy’s and CERC’s Natural Gas reportable segment and CenterPoint Energy’s Electric reportable segment. A purchase obligation is defined as an agreement to purchase goods or services that is enforceable and legally binding on the registrant and that specifies all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Contracts with minimum payment provisions have various quantity requirements and durations and are not classified as non-trading derivative assets and liabilities in CenterPoint Energy’s and CERC’s Condensed Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020. These contracts meet an exception as “normal purchases contracts” or do not meet the definition of a derivative. Natural gas and coal supply commitments also include transportation contracts that do not meet the definition of a derivative.  

On February 9, 2021, Indiana Electric entered into a BTA with a subsidiary of Capital Dynamics. Pursuant to the BTA, Capital Dynamics, with its partner Tenaska, will build a 300 MW solar array in Posey County, Indiana through a special purpose entity Posey Solar. Upon completion of construction, currently projected to be at the end of 2023, and subject to IURC approval, Indiana Electric will acquire Posey Solar and its solar array assets for a fixed purchase price.

As of March 31, 2021, undiscounted minimum purchase obligations are approximately:
CenterPoint EnergyCERC
Natural Gas
and Coal Supply
Other (1)
Natural Gas Supply
(in millions)
Remaining nine months of 2021$429 $$271 
2022547 12 332 
2023470 404 279 
2024392 198 259 
2025337 231 
2026304 226 
2027 and beyond1,634 137 1,331 

(1)CenterPoint Energy’s undiscounted minimum payment obligations related to its 25-year agreement for its solar PPA in Warrick County, Indiana and its purchase commitment under its BTA in Posey County, Indiana are included above. The remaining undiscounted payment obligations relate primarily to technology hardware and software agreements.

Excluded from the table above are estimates for cash outlays from other PPAs through Indiana Electric that do not have minimum thresholds but do require payment when energy is generated by the provider. Costs arising from certain of these commitments are pass-through costs, generally collected dollar-for-dollar from retail customers through regulator-approved cost recovery mechanisms.

(b) Guarantees and Product Warranties (CenterPoint Energy)

In the normal course of business, ESG enters into contracts requiring it to timely install infrastructure, operate facilities, pay vendors and subcontractors and support warranty obligations and, at times, issue payment and performance bonds and other forms of assurance in connection with these contracts.

Specific to ESG’s role as a general contractor in the performance contracting industry, as of March 31, 2021, there were 51 open surety bonds supporting future performance with an aggregate face amount of approximately $527 million. ESG’s exposure is less than the face amount of the surety bonds and is limited to the level of uncompleted work under the contracts. As of March 31, 2021, approximately 47% of the work was yet to be completed on projects with open surety bonds. Further, various subcontractors issue surety bonds to ESG. In addition to these performance obligations, ESG also warrants the functionality of certain installed infrastructure generally for one year and the associated energy savings over a specified number of years. As of March 31, 2021, there were 32 warranties totaling $554 million and an additional $1.2 billion in energy savings commitments not guaranteed by Vectren. Since ESG’s inception in 1994, CenterPoint Energy believes ESG has had a history of generally meeting its performance obligations and energy savings guarantees and its installed products operating effectively.
39

Table of Contents
CenterPoint Energy assessed the fair value of its obligation for such guarantees as of March 31, 2021 and no amounts were recorded on CenterPoint Energy’s Condensed Consolidated Balance Sheets.

CenterPoint Energy issues parent company level guarantees to certain vendors, customers and other commercial counterparties of ESG. These guarantees do not represent incremental consolidated obligations, but rather, represent guarantees of subsidiary obligations to allow those subsidiaries to conduct business without posting other forms of assurance. As of March 31, 2021, CenterPoint Energy, primarily through Vectren, has issued parent company level guarantees supporting ESG’s obligations. For those obligations where potential exposure can be estimated, management estimates the maximum exposure under these guarantees to be approximately $517 million as of March 31, 2021. This exposure primarily relates to energy savings guarantees on federal energy savings performance contracts. Other parent company level guarantees, certain of which do not contain a cap on potential liability, have been issued in support of federal operations and maintenance projects for which a maximum exposure cannot be estimated based on the nature of the projects. While there can be no assurance that performance under any of these parent company guarantees will not be required in the future, CenterPoint Energy considers the likelihood of a material amount being incurred as remote.

(c)Guarantees and Product Warranties (CenterPoint Energy and CERC)

On February 24, 2020, CenterPoint Energy, through its subsidiary CERC Corp., entered into the Equity Purchase Agreement to sell the Energy Services Disposal Group. The transaction closed on June 1, 2020. In the normal course of business prior to June 1, 2020, the Energy Services Disposal Group through CES, traded natural gas under supply contracts and entered into natural gas related transactions under transportation, storage and other contracts. In connection with the Energy Services Disposal Group’s business activities prior to the closing of the sale of the Energy Services Disposal Group on June 1, 2020, CERC Corp. issued guarantees to CES’s counterparties to guarantee the payment of CES’s obligations. When CES remained wholly owned by CERC Corp., these guarantees did not represent incremental consolidated obligations, but rather, these guarantees represented guarantees of CES’s obligations to allow it to conduct business without posting other forms of assurance.

A CERC Corp. guarantee primarily had a one- or two-year term, although CERC Corp. would generally not be released from obligations incurred by CES prior to the termination of such guarantee unless the beneficiary of the guarantee affirmatively released CERC Corp. from its obligations under the guarantee. Throughout CERC Corp.’s ownership of CES and subsequent to the sale of the Energy Services Disposal Group through March 31, 2021, CERC Corp. did not pay any amounts under guarantees of CES’s obligations.

Under the terms of the Equity Purchase Agreement, Symmetry Energy Solutions Acquisition must generally use reasonable best efforts to replace existing CERC Corp. guarantees with credit support provided by a party other than CERC Corp. as of and after the closing of the transaction. Additionally, to the extent that CERC Corp. retains any exposure relating to certain guarantees of CES’s obligations 90 days after closing of the transaction, Symmetry Energy Solutions Acquisition will pay a 3% annualized fee on such exposure, increasing by 1% on an annualized basis every three months. As of March 31, 2021, management estimates approximately $51 million of exposure remained outstanding under CERC Corp. guarantees issued prior to the closing of the transaction on June 1, 2020. On May 3, 2021, the estimated remaining exposure under these obligations decreased to $41 million. CES has provided replacement credit support to counterparties to whom CERC Corp. had issued guarantees prior to closing representing the full amount of CERC’s remaining exposure under the guarantees. CERC believes that counterparties to whom replacement credit support has been provided would seek payment if needed under such replacement credit support instead of a CERC Corp. guarantee. No additional guarantees were provided by CERC Corp. to CES subsequent to the closing of the transaction on June 1, 2020.

If CERC Corp. is required to pay a counterparty under a guarantee in respect of obligations of CES, Symmetry Energy Solutions Acquisition is required to promptly reimburse CERC Corp. for all amounts paid. If Symmetry Energy Solutions Acquisition fails to reimburse CERC Corp., CERC Corp. has the contractual right to seek payment from Shell Energy North America (US), L.P. in an amount up to $40 million in the aggregate. While there can be no assurance that payment under any of these guarantees will not be required in the future, CenterPoint Energy and CERC consider the likelihood of a material amount being incurred as remote.

CenterPoint Energy and CERC recorded no amounts on their respective Condensed Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020 related to the performance of these guarantees.

40

Table of Contents
(d) Legal, Environmental and Other Matters

Legal Matters

Minnehaha Academy (CenterPoint Energy and CERC). On August 2, 2017, a natural gas explosion occurred at the Minnehaha Academy in Minneapolis, Minnesota, resulting in the deaths of two school employees, serious injuries to others and significant property damage to the school. CenterPoint Energy and CERC cooperated with the investigation conducted by the National Transportation Safety Board, which concluded its investigation in December 2019 and issued a report without making any recommendations. Further, CenterPoint Energy and CERC contested and reached a settlement regarding approximately $200,000 in fines imposed by the Minnesota Office of Pipeline Safety. In early 2018, the Minnesota Occupational Safety and Health Administration concluded its investigation without any adverse findings against CenterPoint Energy or CERC. CenterPoint Energy, certain of its subsidiaries, including CERC, and the contractor company working in the school were named in wrongful death, property damage and personal injury litigation arising out of the incident and have now reached confidential settlement agreements in all litigation. CenterPoint Energy’s and CERC’s general and excess liability insurance policies provide coverage for third party bodily injury and property damage claims. 

Litigation Related to the Merger (CenterPoint Energy). With respect to the Merger, in July 2018, seven separate lawsuits were filed against Vectren and the individual directors of Vectren’s Board of Directors in the U.S. District Court for the Southern District of Indiana. These lawsuits alleged violations of Sections 14(a) of the Exchange Act and SEC Rule 14a-9 on the grounds that the Vectren Proxy Statement filed on June 18, 2018 was materially incomplete because it omitted material information concerning the Merger. In August 2018, the seven lawsuits were consolidated, and the Court denied the plaintiffs’ request for a preliminary injunction. In October 2018, the plaintiffs filed their Consolidated Amended Class Action Complaint. In December 2018, two plaintiffs voluntarily dismissed their lawsuits. In September 2019, the court granted the defendants’ motion to dismiss and dismissed the remaining plaintiffs’ claims with prejudice, which the plaintiffs appealed in October 2019. The U.S. Court of Appeals for the Seventh Circuit heard oral arguments in September 2020, and a ruling is expected in 2021. The defendants believe that the allegations asserted are without merit and intend to vigorously defend themselves against the claims raised. CenterPoint Energy does not expect the ultimate outcome of this matter to have a material adverse effect on its financial condition, results of operations or cash flows.

Litigation Related to the February 2021 Winter Storm Event. With respect to the February 2021 Winter Storm Event, CenterPoint Energy, CERC and Houston Electric, along with ERCOT, have received claims and lawsuits filed by plaintiffs alleging personal injury, property damage and other injuries and damages. Additionally, various regulatory and governmental entities have announced that they intend to conduct or are conducting inquiries, investigations and other reviews of the February 2021 Winter Storm Event and the efforts made by various entities to prepare for, and respond to, this event, including the electric generation shortfall issues. Entities that have announced that they plan to conduct or are conducting such inquiries, investigations and other reviews include the United States Congress, FERC, NERC, Texas RE, ERCOT, Texas government entities and officials such as the Texas Governor’s office, the Texas Legislature, the Texas Attorney General, the PUCT, the City of Houston and other municipal and county entities in Houston Electric’s service territory, among other entities.

Like other Texas TDUs, Houston Electric may become involved in certain of the above-referenced investigations, litigation or other regulatory and legal proceedings regarding their efforts to restore power and their compliance with NERC, ERCOT and PUCT rules and directives. CenterPoint Energy and Houston Electric are responding to inquiries from the Texas Attorney General and the Galveston County District Attorney’s Office, and CenterPoint Energy and CERC are responding to inquiries from the Arkansas, Minnesota and Oklahoma Attorneys General. CenterPoint Energy, Houston Electric and CERC are subject to, and may be further subject to, litigation and claims. Such claims include, or in the future could include, wrongful death, personal injury and property damage claims, lawsuits for impacts on businesses and other organizations and entities and shareholder claims, among other claims or litigation matters. As of April 29, 2021, CenterPoint Energy and Houston Electric have been named as a defendant in approximately 60 lawsuits related to the February 2021 Winter Storm Event. CenterPoint Energy and Houston Electric intend to vigorously defend themselves against the claims raised. CenterPoint Energy, Houston Electric and CERC are unable to predict the consequences of any such matters or to estimate a range of potential losses.

Litigation Related to the Enable Merger. In March 2021, several lawsuits were filed by persons claiming to be Enable unitholders against various defendants, including Enable, the members of Enable GP’s Board of Directors, Energy Transfer, and other parties to the Enable Merger Agreement, challenging the Enable Merger and the disclosures made in connection therewith. CenterPoint Energy has been named in one such lawsuit pending in the United States District Court for the Southern District of New York. The lawsuits allege violations of Section 14(a) of the Exchange Act and SEC Rule 14a-9 on the grounds that the Registration Statement on Form S-4 filed by Energy Transfer on March 19, 2021, was materially incomplete because it omitted material information about, among other things, Enable's and Energy Transfer's financial projections and the analyses conducted by Enable's financial advisors. The lawsuits further allege that the individual defendants, including, among others,
41

Table of Contents
Energy Transfer and CenterPoint Energy, violated Section 20(a) of the Exchange Act as controlling persons of Enable. Plaintiffs seek to have the court enjoin the Enable Merger, require defendants to disseminate a new registration statement disclosing the allegedly omitted information, declare that defendants violated the Exchange Act, rescind the Enable Merger or award rescissory damages in the event the Enable Merger is consummated, along with attorneys’ fees, costs, and other relief. CenterPoint Energy’s dates to respond to the lawsuit in which it was sued have not yet been set. CenterPoint Energy cannot predict the outcome of litigation related to the Enable Merger Agreement, but believes the litigation is without merit, intends to defend vigorously against such litigation, and does not expect the ultimate outcome of such litigation to have a material adverse effect on its financial condition, results of operations or cash flows.

Environmental Matters

MGP Sites. CenterPoint Energy, CERC and their predecessors operated MGPs in the past. In addition, certain of CenterPoint Energy’s subsidiaries acquired through the Merger operated MGPs in the past. The costs CenterPoint Energy or CERC, as applicable, expect to incur to fulfill their respective obligations are estimated by management using assumptions based on actual costs incurred, the timing of expected future payments and inflation factors, among others. While CenterPoint Energy and CERC have recorded all costs which they presently are obligated to incur in connection with activities at these sites, it is possible that future events may require remedial activities which are not presently foreseen, and those costs may not be subject to PRP or insurance recovery.

(i)Minnesota MGPs (CenterPoint Energy and CERC). With respect to certain Minnesota MGP sites, CenterPoint Energy and CERC have completed state-ordered remediation and continue state-ordered monitoring and water treatment. CenterPoint Energy and CERC recorded a liability as reflected in the table below for continued monitoring and any future remediation required by regulators in Minnesota.

(ii)Indiana MGPs (CenterPoint Energy). In the Indiana Gas service territory, the existence, location and certain general characteristics of 26 gas manufacturing and storage sites have been identified for which CenterPoint Energy may have some remedial responsibility. A remedial investigation/feasibility study was completed at one of the sites under an agreed upon order between Indiana Gas and the IDEM, and a Record of Decision was issued by the IDEM in January 2000. The remaining sites have been submitted to the IDEM’s VRP. CenterPoint Energy has also identified its involvement in 5 manufactured gas plant sites in SIGECO’s service territory, all of which are currently enrolled in the IDEM’s VRP. CenterPoint Energy is currently conducting some level of remedial activities, including groundwater monitoring at certain sites.

(iii)Other MGPs (CenterPoint Energy and CERC). In addition to the Minnesota and Indiana sites, the EPA and other regulators have investigated MGP sites that were owned or operated by CenterPoint Energy or CERC or may have been owned by one of their former affiliates.

Total costs that may be incurred in connection with addressing these sites cannot be determined at this time. The estimated accrued costs are limited to CenterPoint Energy’s and CERC’s share of the remediation efforts and are therefore net of exposures of other PRPs. The estimated range of possible remediation costs for the sites for which CenterPoint Energy and CERC believe they may have responsibility was based on remediation continuing for the minimum time frame given in the table below.
March 31, 2021
CenterPoint EnergyCERC
(in millions, except years)
Amount accrued for remediation$12 $
Minimum estimated remediation costs
Maximum estimated remediation costs55 32 
Minimum years of remediation30 
Maximum years of remediation50 50 

The cost estimates are based on studies of a site or industry average costs for remediation of sites of similar size. The actual remediation costs will depend on the number of sites to be remediated, the participation of other PRPs, if any, and the remediation methods used.

CenterPoint Energy and CERC do not expect the ultimate outcome of these matters to have a material adverse effect on the financial condition, results of operations or cash flows of either CenterPoint Energy or CERC.
42

Table of Contents

Asbestos. Some facilities owned by the Registrants or their predecessors contain or have contained asbestos insulation and other asbestos-containing materials. The Registrants are from time to time named, along with numerous others, as defendants in lawsuits filed by a number of individuals who claim injury due to exposure to asbestos, and the Registrants anticipate that additional claims may be asserted in the future. Although their ultimate outcome cannot be predicted at this time, the Registrants do not expect these matters, either individually or in the aggregate, to have a material adverse effect on their financial condition, results of operations or cash flows.

CCR Rule (CenterPoint Energy). In April 2015, the EPA finalized its CCR Rule, which regulates ash as non-hazardous material under the RCRA. The final rule allows beneficial reuse of ash, and the majority of the ash generated by Indiana Electric’s generating plants will continue to be reused. In July 2018, the EPA released its final CCR Rule Phase I Reconsideration which extended the deadline to October 31, 2020 for ceasing placement of ash in ponds that exceed groundwater protections standards or that fail to meet location restrictions. In August 2019, the EPA proposed additional “Part A” amendments to its CCR Rule with respect to beneficial reuse of ash and other materials. Further “Part B” amendments, which related to alternate liners for CCR surface impoundments and the surface impoundment closure process, were published in March 2020. The Part A amendments were finalized in August 2020 and extended the deadline to cease placement of ash in ponds to April 11, 2021. The EPA published the final Part B amendments in November 2020. The Part A amendments do not restrict Indiana Electric’s current beneficial reuse of its fly ash. CenterPoint Energy continues to evaluate the Part B amendments to determine potential impacts.

Indiana Electric has three ash ponds, two at the F.B. Culley facility (Culley East and Culley West) and one at the A.B. Brown facility. Under the existing CCR Rule, Indiana Electric is required to perform integrity assessments, including ground water monitoring, at its F.B. Culley and A.B. Brown generating stations. The ground water studies are necessary to determine the remaining service life of the ponds and whether a pond must be retrofitted with liners or closed in place. Indiana Electric’s Warrick generating unit is not included in the scope of the CCR Rule as this unit has historically been part of a larger generating station that predominantly serves an adjacent industrial facility. Preliminary groundwater monitoring indicates potential groundwater impacts very close to Indiana Electric’s ash impoundments, and further analysis is ongoing. The CCR Rule required companies to complete location restriction determinations by October 18, 2018. Indiana Electric completed its evaluation and determined that one F.B. Culley pond (Culley East) and the A.B. Brown pond fail the aquifer placement location restriction. As a result of this failure, Indiana Electric is required to cease disposal of new ash in the ponds and commence closure of the ponds by April 11, 2021. CenterPoint Energy has applied for the extensions available under the CCR Rule that would allow Indiana Electric to continue to use the ponds through October 15, 2023. The inability to take these extensions may result in increased and potentially significant operational costs in connection with the accelerated implementation of an alternative ash disposal system or adversely impact Indiana Electric’s future operations. Failure to comply with these requirements could also result in an enforcement proceeding including the imposition of fines and penalties. On April 24, 2019, Indiana Electric received an order from the IURC approving recovery in rates of costs associated with the closure of the Culley West pond, which has already completed closure activities. On August 14, 2019, Indiana Electric filed its petition with the IURC for recovery of costs associated with the closure of the A.B. Brown ash pond, which would include costs associated with the excavation and recycling of ponded ash.  This petition was subsequently approved by the IURC on May 13, 2020. On October 28, 2020, the IURC approved Indiana Electric’s ECA proceeding, which included the initiation of recovery of the federally mandated project costs.

Indiana Electric continues to refine site specific estimates of closure costs for its ten-acre Culley East pond. In July 2018, Indiana Electric filed a Complaint for Damages and Declaratory Relief against its insurers seeking reimbursement of defense, investigation and pond closure costs incurred to comply with the CCR Rule, and has since reached confidential settlement agreements with its insurers. The proceeds of these settlements will offset costs that have been and will be incurred to close the ponds.

As of March 31, 2021, CenterPoint Energy has recorded an approximate $88 million ARO, which represents the discounted value of future cash flow estimates to close the ponds at A.B. Brown and F.B. Culley. This estimate is subject to change due to the contractual arrangements; continued assessments of the ash, closure methods, and the timing of closure; implications of Indiana Electric’s generation transition plan; changing environmental regulations; and proceeds received from the settlements in the aforementioned insurance proceeding. In addition to these removal costs, Indiana Electric also anticipates equipment purchases of between $60 million and $80 million to complete the A.B. Brown closure project.

Other Environmental. From time to time, the Registrants identify the presence of environmental contaminants during operations or on property where their predecessors have conducted operations. Other such sites involving contaminants may be identified in the future. The Registrants have and expect to continue to remediate any identified sites consistent with state and federal legal obligations. From time to time, the Registrants have received notices, and may receive notices in the future, from regulatory authorities or others regarding status as a PRP in connection with sites found to require remediation due to the
43

Table of Contents
presence of environmental contaminants. In addition, the Registrants have been, or may be, named from time to time as defendants in litigation related to such sites. Although the ultimate outcome of such matters cannot be predicted at this time, the Registrants do not expect these matters, either individually or in the aggregate, to have a material adverse effect on their financial condition, results of operations or cash flows.

Other Proceedings

The Registrants are involved in other legal, environmental, tax and regulatory proceedings before various courts, regulatory commissions and governmental agencies regarding matters arising in the ordinary course of business. From time to time, the Registrants are also defendants in legal proceedings with respect to claims brought by various plaintiffs against broad groups of participants in the energy industry. Some of these proceedings involve substantial amounts. The Registrants regularly analyze current information and, as necessary, provide accruals for probable and reasonably estimable liabilities on the eventual disposition of these matters. The Registrants do not expect the disposition of these matters to have a material adverse effect on the Registrants’ financial condition, results of operations or cash flows.

(15) Earnings Per Share (CenterPoint Energy)

The Series C Preferred Stock issued in May 2020 are considered participating securities since these shares participate in dividends on Common Stock on a pari passu, pro rata, as-converted basis. As a result, beginning June 30, 2020, earnings per share on Common Stock is computed using the two-class method required for participating securities.

The two-class method uses an earnings allocation formula that treats participating securities as having rights to earnings that otherwise would have been available only to common shareholders. Under the two-class method, income (loss) available to common shareholders from continuing operations is derived by subtracting the following from income (loss) from continuing operations:

preferred share dividend requirement;

deemed dividends for the amortization of the beneficial conversion feature recognized at issuance of the Series C Preferred Stock; and

an allocation of undistributed earnings to preferred shareholders of participating securities (Series C Preferred Stock) based on the securities’ right to receive dividends.

Undistributed earnings are calculated by subtracting dividends declared on Common Stock, the preferred share dividend requirement and deemed dividends for the amortization of the beneficial conversion feature from net income. Net losses are not allocated to the Series C Preferred Stock as it does not have a contractual obligation to share in the losses of CenterPoint Energy.

The Series C Preferred Stock includes conversion features at a price that is below the fair value of the Common Stock on the commitment date. This beneficial conversion feature, which was approximately $32 million, represents the difference between the fair value per share of the Common Stock as of the commitment date and the conversion price, multiplied by the number of common shares issuable upon conversion. The beneficial conversion feature is recognized as a discount to Series C Preferred Stock and was amortized as a deemed dividend over the period from the issue date to the first allowable conversion date, which was November 6, 2020.

Basic earnings per common share is computed by dividing income available to common shareholders from continuing operations by the basic weighted average number of common shares outstanding during the period. Participating securities are excluded from basic weighted average number of common shares outstanding. Diluted earnings per common share is computed by dividing income available to common shareholders from continuing operations by the weighted average number of common shares outstanding, including all potentially dilutive common shares, if the effect of such common shares is dilutive.

Diluted earnings per share reflects the dilutive effect of potential common shares from share-based awards and convertible preferred shares. The dilutive effect of the restricted stock, Series B Preferred Stock and Series C Preferred Stock is computed using the if-converted method, which assumes conversion of the restricted stock, Series B Preferred Stock and Series C Preferred Stock at the beginning of the period, giving income recognition for the add-back of the preferred share dividends, amortization of beneficial conversion feature, and undistributed earnings allocated to preferred shareholders.

44

Table of Contents
The following table reconciles numerators and denominators of CenterPoint Energy’s basic and diluted earnings per common share.
Three Months Ended March 31,
20212020
(in millions, except per share and share amounts)
Numerator:
Income (loss) from continuing operations$363 $(1,053)
Less: Preferred stock dividend requirement (Note 19)29 29 
Less: Undistributed earnings allocated to preferred shareholders23 — 
Income (loss) available to common shareholders from continuing operations - basic311 (1,082)
Income (loss) available to common shareholders from discontinued operations - basic and diluted
— (146)
Add back: Series B Preferred Stock dividend17— 
Add back: Undistributed earnings allocated to preferred shareholders23— 
Income (loss) available to common shareholders - diluted$351 $(1,228)
Denominator:
Weighted average common shares outstanding - basic551,546,000 502,388,000 
Plus: Incremental shares from assumed conversions:
Restricted stock (1)
3,114,000 — 
Series B Preferred Stock (2)
35,937,000 — 
Series C Preferred Stock40,823,000 — 
Weighted average common shares outstanding - diluted631,420,000 502,388,000 
Earnings (Loss) Per Common Share:
Basic earnings (loss) per common share - continuing operations
$0.56 $(2.15)
Basic earnings (loss) per common share - discontinued operations
— (0.29)
Basic Earnings (Loss) Per Common Share$0.56 $(2.44)
Diluted earnings (loss) per common share - continuing operations
$0.56 $(2.15)
Diluted earnings (loss) per common share - discontinued operations
— (0.29)
Diluted Earnings (Loss) Per Common Share$0.56 $(2.44)

(1)2,567,000 incremental common shares from assumed conversions of restricted stock have not been included in the computation of diluted earnings (loss) per share for the three months ended March 31, 2020, as their inclusion would be anti-dilutive.

(2)The computation of diluted earnings per common share outstanding for the three months ended March 31, 2020 excludes 35,923,000 potentially dilutive shares from the denominator, because the shares would be anti-dilutive.

(16) Reportable Segments

The Registrants’ determination of reportable segments considers the strategic operating units under which its CODM manages sales, allocates resources and assesses performance of various products and services to wholesale or retail customers in differing regulatory environments. Each Registrant’s CODM views net income as the measure of profit or loss for the reportable segments. Certain prior year amounts have been reclassified to conform to the current year reportable segment presentation described in the Registrants’ combined 2020 Form 10-K.

As of March 31, 2021, reportable segments by Registrant were as follows:

CenterPoint Energy

CenterPoint Energy’s Electric reportable segment consists of electric transmission services to transmission service customers in the ERCOT region and distribution services to REPs serving the Texas Gulf Coast area and electric transmission and distribution services primarily to southwestern Indiana and includes power generation and wholesale power operations.

CenterPoint Energy’s Natural Gas reportable segment consists of (i) intrastate natural gas sales to, and natural gas transportation and distribution for residential, commercial, industrial and institutional customers in Arkansas, Indiana, Louisiana, Minnesota, Mississippi, Ohio, Oklahoma and Texas; (ii) permanent pipeline connections through
45

Table of Contents
interconnects with various interstate and intrastate pipeline companies through CEIP; and (iii) temporary delivery of LNG and CNG throughout the contiguous 48 states through MES.

CenterPoint Energy’s Midstream Investments reportable segment consists of the equity investment in Enable (excluding the Enable Series A Preferred Units). See Note 9 regarding the impact of the Enable Merger.

CenterPoint Energy’s Corporate and Other consists of energy performance contracting and sustainable infrastructure     services through ESG and other corporate operations which support all of the business operations of CenterPoint Energy.

Houston Electric

Houston Electric’s single reportable segment consists of electric transmission services to transmission service customers in the ERCOT region and distribution services to REPs serving the Texas Gulf Coast area.

CERC

CERC’s single reportable segment consists of (i) intrastate natural gas sales to, and natural gas transportation and distribution for residential, commercial, industrial and institutional customers in Arkansas, Louisiana, Minnesota, Mississippi, Oklahoma and Texas; (ii) permanent pipeline connections through interconnects with various interstate and intrastate pipeline companies through CEIP; and (iii) temporary delivery of LNG and CNG throughout the contiguous 48 states through MES.

Financial data for reportable segments is as follows, including Corporate and Other, and Discontinued Operations for reconciliation purposes:

CenterPoint Energy
Three Months Ended March 31,
20212020
Revenues from
External
Customers
Equity in Earnings of Unconsolidated AffiliatesNet Income (Loss)Revenues from
External
Customers
Equity in Earnings of Unconsolidated AffiliatesNet Income (Loss)
(in millions)
Electric$830 (1)$— $75 $767 (1)$— $(134)
Natural Gas 1,663 — 229 1,321 — 201 
Midstream Investments (2)
— 108 71 — (1,475)(1,127)
Corporate and Other54 — (12)79 — 
Continuing Operations$2,547 $108 363 $2,167 $(1,475)(1,053)
Discontinued Operations, net— (146)
Consolidated$363 $(1,199)
(1)Houston Electric revenues from major external customers are as follows (CenterPoint Energy and Houston Electric):
Three Months Ended March 31,
20212020
(in millions)
Affiliates of NRG$195 $156 
Affiliates of Vistra Energy Corp.88 81 

(2)Includes the impairment of CenterPoint Energy’s equity method investment in Enable of $1,541 million recorded during the three months ended March 31, 2020.
46

Table of Contents
Total Assets
March 31, 2021December 31, 2020
(in millions)
Electric$15,410 $14,493 
Natural Gas 17,208 14,976 
Midstream Investments994 913 
Corporate and Other, net of eliminations (1)
2,294 3,089 
Consolidated$35,906 $33,471 

(1)Total assets included pension and other postemployment-related regulatory assets of $533 million and $540 million as of March 31, 2021 and December 31, 2020, respectively.

Houston Electric

Houston Electric consists of a single reportable segment; therefore, a tabular reportable segment presentation has not been included.

CERC

CERC consists of a single reportable segment; therefore, a tabular reportable segment presentation has not been included.

(17) Supplemental Disclosure of Cash Flow Information

CenterPoint Energy and CERC elected not to separately disclose discontinued operations on their respective Condensed Statements of Consolidated Cash Flows. The table below provides supplemental disclosure of cash flow information and has not been recast to exclude the Infrastructure Services and Energy Services Disposal Groups prior to the closing of the respective transactions.
Three Months Ended March 31,
20212020
CenterPoint EnergyHouston ElectricCERCCenterPoint EnergyHouston ElectricCERC
(in millions)
Cash Payments/Receipts:
Interest, net of capitalized interest$159 $70 $21 $148 $68 $35 
Income tax payments, net (4)— — — — — 
Non-cash transactions: 
Accounts payable related to capital expenditures166 140 56 200 110 66 
ROU assets obtained in exchange for lease liabilities — — 14 — 


The table below provides a reconciliation of cash, cash equivalents and restricted cash reported in the Condensed Consolidated Balance Sheets to the amount reported in the Condensed Statements of Consolidated Cash Flows.
March 31, 2021December 31, 2020
CenterPoint EnergyHouston ElectricCERCCenterPoint EnergyHouston ElectricCERC
(in millions)
Cash and cash equivalents (1)$146 $143 $$147 $139 $
Restricted cash included in Prepaid expenses and other current assets21 16 — 20 15 — 
Total cash, cash equivalents and restricted cash shown in Condensed Statements of Consolidated Cash Flows
$167 $159 $$167 $154 $

(1)Houston Electric’s Cash and cash equivalents as of March 31, 2021 and December 31, 2020 included $142 million and $139 million, respectively, of cash related to the Bond Companies.

47

Table of Contents
(18) Related Party Transactions (Houston Electric and CERC)

Houston Electric and CERC participate in CenterPoint Energy’s money pool through which they can borrow or invest on a short-term basis. Funding needs are aggregated and external borrowing or investing is based on the net cash position. The net funding requirements of the CenterPoint Energy money pool are expected to be met with borrowings under CenterPoint Energy’s revolving credit facility or the sale of CenterPoint Energy’s commercial paper.  

The table below summarizes CenterPoint Energy money pool activity:
March 31, 2021December 31, 2020
Houston ElectricCERCHouston ElectricCERC
 (in millions, except interest rates)
Money pool investments (borrowings) (1)
$665 $— $(8)$— 
Weighted average interest rate
0.21 %0.21 %0.24 %0.24 %

(1)Included in Accounts and notes receivable (payable)–affiliated companies on Houston Electric’s and CERC’s respective Condensed Consolidated Balance Sheets.

CenterPoint Energy provides some corporate services to Houston Electric and CERC. The costs of services have been charged directly to Houston Electric and CERC using methods that management believes are reasonable. These methods include usage rates, dedicated asset assignment and proportionate corporate formulas based on operating expenses, assets, gross margin, employees and a composite of assets, gross margin and employees. Houston Electric provides certain services to CERC. These services are billed at actual cost, either directly or as an allocation and include fleet services, shop services, geographic services, surveying and right-of-way services, radio communications, data circuit management and field operations. Additionally, CERC provides certain services to Houston Electric. These services are billed at actual cost, either directly or as an allocation and include line locating and other miscellaneous services. These charges are not necessarily indicative of what would have been incurred had Houston Electric and CERC not been affiliates.

Amounts charged for these services were as follows and are included primarily in operation and maintenance expenses:
Three Months Ended March 31,
20212020
Houston ElectricCERCHouston ElectricCERC
(in millions)
Corporate service charges$43 $50 $49 $55 
Net affiliate service charges (billings)
(1)(6)

The table below presents transactions among Houston Electric, CERC and their parent, CenterPoint Energy.
Three Months Ended March 31,
20212020
Houston ElectricCERCHouston ElectricCERC
(in millions)
Cash dividends paid to parent$— $— $385 $32 

48

Table of Contents
(19) Equity

Dividends Declared and Paid (CenterPoint Energy)
Dividends Declared
Per Share
Dividends Paid
Per Share
Three Months Ended March 31, Three Months Ended March 31,
2021202020212020
Common Stock$— $0.2900 $0.1600 $0.2900 
Series A Preferred Stock— 30.6250 30.6250 30.6250 
Series B Preferred Stock— 17.5000 17.5000 17.5000 
Series C Preferred Stock (1)
— — 0.1600 — 

(1)The Series C Preferred Stock is entitled to participate in any dividend or distribution (excluding those payable in Common Stock) with the Common Stock on a pari passu, pro rata, as-converted basis. The per share amount reflects the dividend per share of Common Stock as if the Series C Preferred Stock were converted into Common Stock.

Preferred Stock (CenterPoint Energy)

Liquidation Preference Per ShareShares Outstanding as ofOutstanding Value as of
March 31, 2021December 31, 2020March 31, 2021December 31, 2020
(in millions, except shares and per share amounts)
Series A Preferred Stock$1,000 800,000 800,000 $790 $790 
Series B Preferred Stock1,000 977,400 977,400 950 950 
Series C Preferred Stock1,000 625,000 625,000 623 623 
2,402,400 2,402,400 $2,363 $2,363 

Income Allocated to Preferred Shareholders (CenterPoint Energy)
Three Months Ended March 31,
20212020
(in millions)
Series A Preferred Stock$12 $12 
Series B Preferred Stock17 17 
Total income allocated to preferred shareholders
$29 $29 

Accumulated Other Comprehensive Income (Loss)

Changes in accumulated comprehensive income (loss) are as follows:
Three Months Ended March 31,
20212020
CenterPoint EnergyHouston ElectricCERCCenterPoint EnergyHouston ElectricCERC
(in millions)
Beginning Balance$(90)$— $10 $(98)$(15)$10 
Other comprehensive loss before reclassifications:
Other comprehensive income (loss) from unconsolidated affiliates— — (3)— — 
Amounts reclassified from accumulated other comprehensive loss:
Actuarial losses (1)
— — — — 
Tax expense
— — — (1)— — 
Net current period other comprehensive income (loss)
— — (2)— — 
Ending Balance$(87)$— $10 $(100)$(15)$10 

(1)Amounts are included in the computation of net periodic cost and are reflected in Other income (expense), net in each of the Registrants’ respective Statements of Consolidated Income.
49

Table of Contents


(20) Subsequent Events (CenterPoint Energy)

CenterPoint Energy Dividend Declarations
Equity InstrumentDeclaration DateRecord DatePayment DatePer Share
Common StockApril 23, 2021May 20, 2021June 10, 2021$0.1600 
Series B Preferred StockApril 23, 2021May 15, 2021June 1, 202117.5000 

Enable Distributions Declarations (CenterPoint Energy)
Equity InstrumentDeclaration DateRecord DatePayment DatePer Unit DistributionExpected Cash Distribution
(in millions)
Enable common unitsApril 26, 2021May 13, 2021May 25, 2021$0.16525 $39 
Enable Series A Preferred Units (1)
April 26, 2021April 26, 2021May 14, 20210.58730 

(1)On February 18, 2021, the Enable Series A Preferred Units converted to the floating rate period where the distribution rate is equal to the sum of three-month LIBOR, as calculated on each applicable date of determination, and 8.50%.

Series C Preferred Stock

In April 2021, CenterPoint Energy received two notifications of intent by shareholders to convert their Series C Preferred Stock to Common Stock. The table below details the two notifications.

Date of NoticeConversion DateShares of Series C Preferred Stock ConvertedShares of Common Stock
 to be Issued
April 5, 2021April 5, 2021400,00026,126,714
April 16, 2021April 16. 202137,5002,449,379

Conversion of the remaining Series C Preferred Stock is mandatory on May 7, 2021, the 12-month anniversary date of the preferred stock purchase agreements. The remaining 187,500 shares of Series C Preferred Stock are expected to convert into 12,246,897 shares of Common Stock.

Sale of Arkansas and Oklahoma Natural Gas Businesses

On April 29, 2021, CenterPoint Energy, through its subsidiary CERC Corp., entered into an Asset Purchase Agreement to sell its Arkansas and Oklahoma Natural Gas businesses for $2.15 billion in cash, including recovery of approximately $425 million of storm-related incremental natural gas costs incurred in the February 2021 Winter Storm Event, subject to certain adjustments set forth in the Asset Purchase Agreement. The assets include approximately 17,000 miles of main pipeline in Arkansas, Oklahoma and certain portions of Bowie County, Texas serving more than half a million customers. The transaction is anticipated to close by the end of 2021, subject to customary closing conditions, including Hart-Scott-Rodino antitrust clearance and state regulatory approvals.
50

Table of Contents
Item 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF CENTERPOINT ENERGY, INC. AND SUBSIDIARIES

The following combined discussion and analysis should be read in combination with the Interim Condensed Financial Statements contained in this combined Form 10-Q and the Registrants’ combined 2020 Form 10-K. When discussing CenterPoint Energy’s consolidated financial information, it includes the results of Houston Electric and CERC, which, along with CenterPoint Energy, are collectively referred to as the Registrants. Where appropriate, information relating to a specific Registrant has been segregated and labeled as such. In this combined Form 10-Q, the terms “our,” “we” and “us” are used as abbreviated references to CenterPoint Energy, Inc. together with its consolidated subsidiaries. No Registrant makes any representations as to the information related solely to CenterPoint Energy or the subsidiaries of CenterPoint Energy other than itself.

RECENT EVENTS

February 2021 Winter Storm Event. In February 2021, portions of the United States experienced an extreme and unprecedented winter weather event resulting in corresponding electricity generation shortages, including in Texas, and natural gas shortages and increased wholesale prices of natural gas in the United States. Many customers of Houston Electric’s REPs and, to a lesser extent, of CERC were severely impacted by outages in electricity and natural gas delivery during the February 2021 Winter Storm Event. As a result of this weather event, the governors of Texas, Oklahoma and Louisiana declared states of either disaster or emergencies in their respective states. Subsequently, President Biden also approved major disaster declarations for all or parts of Texas, Oklahoma and Louisiana.

CenterPoint Energy has a corporate response planning team comprised of employees across the organization, including members of senior management, that assesses risks to its business, including for health, safety and environmental matters and personnel issues, and has addressed various impacts of the February 2021 Winter Storm Event. The corporate response planning team coordinated additional support for operations and other personnel that responded directly to the February 2021 Winter Storm Event.

The February 2021 Winter Storm Event has had, and may continue to have, financial impacts on CenterPoint Energy, Houston Electric and CERC, including substantial increases in prices for natural gas, decreased revenues at Houston Electric due to ERCOT-mandated outages, additional interest expense related to external financing to pay for natural gas working capital, potential impacts to credit metrics, significant impacts to the REPs, including the REPs’ ability to pay invoices from Houston Electric, increases in bad debt expense, issues with counterparties and customers, litigation and investigations or inquiries from government or regulatory agencies and entities, and other financial impacts. CenterPoint Energy does not anticipate meaningful long-term changes to its credit profile or credit ratings given its access to external financing sources and the regulatory mechanisms that are in place to seek recovery of these excess costs. For more information regarding regulatory impacts, debt transactions and litigation, see Notes 6, 12 and 14 to the Interim Condensed Financial Statements and “—Liquidity and Capital Resources” below.

Sale of Arkansas and Oklahoma Natural Gas Businesses. On April 29, 2021, CenterPoint Energy, through its subsidiary CERC Corp., entered into an Asset Purchase Agreement to sell its Arkansas and Oklahoma Natural Gas businesses for $2.15 billion in cash, including recovery of approximately $425 million of storm-related incremental natural gas costs incurred in the February 2021 Winter Storm Event, subject to certain adjustments set forth in the Asset Purchase Agreement. The transaction is anticipated to close by the end of 2021, subject to satisfaction of customary closing conditions. For further information, see Note 20 to the Interim Condensed Financial Statements.

Enable Merger Agreement. On February 16, 2021, Enable entered into the Enable Merger Agreement. At the closing of the transactions contemplated by the Enable Merger Agreement, if and when it occurs, Energy Transfer will acquire all of Enable’s outstanding equity interests, including all Enable common units and Enable Series A Preferred Units held by CenterPoint Energy, and in return CenterPoint Energy will receive Energy Transfer common units and Energy Transfer Series G Preferred Units. For more information, see Notes 1 and 9 to the Interim Condensed Financial Statements.

Regulatory Proceedings. For details related to our pending and completed regulatory proceedings to date in 2021, see “—Liquidity and Capital Resources —Regulatory Matters” below.

Debt Transactions. In February 2021, each of CenterPoint Energy, Houston Electric, CERC Corp. and VUHI replaced their existing revolving credit facilities with new amended and restated credit facilities. Also, in February 2021, CERC Corp. received financing commitments totaling $1.7 billion on a 364-day term loan facility to bridge any working capital needs related to the February 2021 Winter Storm Event. In March 2021, CERC Corp. issued $1.7 billion aggregate principal amount of senior notes and Houston Electric issued $1.1 billion aggregate principal amount of general mortgage bonds. Upon the
51

Table of Contents
consummation of its senior notes offerings, in March 2021, CERC Corp. terminated all of the commitments for the 364-day term loan facility. Additionally, in March 2021, Houston Electric repaid all of its remaining outstanding $102 million first mortgage bonds at maturity. In April 2021, Houston Electric provided notice of redemption relating to $300 million aggregate principal amount of its outstanding general mortgage bonds (which were redeemed on May 1, 2021) and CenterPoint Energy amended its existing term loan agreement to provide for a 30-day extension of its maturity date. For more information, see Note 12 to the Interim Condensed Financial Statements.

Series C Preferred Stock Conversions. In April 2021, CenterPoint Energy received two notifications of intent by shareholders to convert their Series C Preferred Stock to Common Stock. For further information, see Note 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 2020 Form 10-K.

Income (loss) available to common shareholders for the three months ended March 31, 2021 and 2020 was as follows:

Three Months Ended March 31,
20212020Favorable (Unfavorable)
(in millions)
Electric75 (134)$209 
Natural Gas229 201 28 
Total Utility Operations304 67 237 
Midstream Investments (1)
71 (1,127)1,198 
Corporate & Other (2)
(41)(22)(19)
Discontinued Operations — (146)146 
  Total CenterPoint Energy$334 $(1,228)1,562 

(1)For a discussion of the components of equity in earnings from CenterPoint Energy’s equity investment in Enable, see Note 9 to the Interim Condensed Financial Statements.
(2)Includes energy performance contracting and sustainable infrastructure services through ESG, unallocated corporate costs, interest income and interest expense, intercompany eliminations and the reduction of income allocated to preferred shareholders.

Three months ended March 31, 2021 compared to three months ended March 31, 2020

Income available to common shareholders increased $1,562 million primarily due to the following items in the first quarter of 2020 which did not repeat in the first quarter of 2021:

the impairment of our investment in Enable further discussed in Note 9 to the Interim Condensed Financial Statements;
impairment of Indiana Electric;
losses from discontinued operations;
partially offset by the favorable income tax impact of the CARES Act.

Excluding those items, income available to common shareholders increased $73 million primarily due to the following key factors:

rate relief, net of increases in depreciation and amortization and taxes other than income taxes;
favorable weather and usage, net of the impacts of COVID-19;
continued customer growth;
operation and maintenance expense discipline;
reduced interest expense; and
increased earnings at Enable.

52

Table of Contents
Income Tax Expense. For a discussion of effective tax rate per period, see Note 13 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. Certain prior year amounts have been reclassified to conform to the current year presentation described in the Registrants’ combined 2020 Form 10-K.

The following discussion of results of operations by reportable segment concentrates on CenterPoint Energy’s Utility Operations, conducted through two reportable segments, Electric and Natural Gas. A discussion of CenterPoint Energy’s Midstream Investments reportable segment results is included in the discussion of CenterPoint Energy’s consolidated results above.

Electric (CenterPoint Energy)

For information regarding factors that may affect the future results of operations of the Electric reportable segment, please read “Risk Factors — Risk Factors Associated with Our Consolidated Financial Condition,” “— Risk Factors Affecting Electric Generation, Transmission and Distribution Businesses,” “— Risk Factors Affecting Our Businesses” and “— General Risk Factors Affecting Our Businesses and/or CenterPoint Energy’s Interests in Enable Midstream Partners, LP” in Item 1A of Part I of the Registrants’ combined 2020 Form 10-K.

The following table provides summary data of the Electric reportable segment:

Three Months Ended March 31,
20212020Favorable (Unfavorable)
(in millions, except operating statistics)
Revenues$830 $767 $63 
Cost of revenues (1)
45 35 (10)
Revenues less Cost of revenues785 732 53 
Expenses:
Operation and maintenance416 403 (13)
Depreciation and amortization169 154 (15)
Taxes other than income taxes67 68 
Goodwill impairment— 185 185 
Total expenses652 810 158 
Operating Income133 (78)211 
Other Income (Expense)
Interest expense and other finance charges(56)(55)(1)
Other income, net— 
Income (Loss) from Continuing Operations Before Income Taxes84 (126)210 
Income tax expense(1)
Net Income (Loss)$75 $(134)209 
Throughput (in GWh):
Residential6,0705,679%
Total21,24121,243— %
Weather (percentage of 10-year average for service area):
Cooling degree days109 %187 %(78)%
Heating degree days95 %80 %15 %
Number of metered customers at end of period:
Residential2,448,4392,389,585%
Total2,765,4962,701,004%

(1)Includes Utility natural gas, fuel and purchased power.

53

Table of Contents
The following table provides variance explanations for the three months ended March 31, 2021 compared to three months ended March 31, 2020 by major income statement caption for the Electric reportable segment:
Favorable (Unfavorable)
(in millions)
Revenues less Cost of revenues
Transmission Revenues, including TCOS and TCRF and impact of the change in rate design, inclusive of costs billed by transmission providers, partially offset in operation and maintenance$136 
Customer growth
Bond Companies, offset in other line items
Weather impacts and other usage
Impacts from increased peak demand in 2020, collected in rates in 2021
Bond Companies equity return, related to the annual true-up of transition charges for amounts over or under collected in prior periods
Energy efficiency, offset in operation and maintenance
Miscellaneous revenues, primarily related right-of-way revenue(3)
Refund of protected and unprotected EDIT, offset in income tax expense(10)
Impacts on usage of COVID-19(12)
Customer rates and impact of the change in rate design(79)
Total$53 
Operation and maintenance
Support services$
Contract services
Labor and benefits
Energy efficiency, offset in revenues(1)
Bond Companies, offset in other line items(1)
All other operation and maintenance expense, including materials and supplies and insurance(3)
Transmission costs billed by transmission providers, offset in revenues less cost of revenues(21)
Total$(13)
Depreciation and amortization
Bond Companies, offset in other line items$(6)
Ongoing additions to plant-in-service(9)
Total$(15)
Taxes other than income taxes
Franchise fees and other taxes$
Incremental capital projects placed in service(1)
Total$
Goodwill Impairment
Indiana Electric goodwill impairment charge in 2020$185 
$185 
Interest expense and other finance charges
Bond Companies, offset in other line items$
Debt to fund incremental capital projects(3)
Total$(1)
Other income (expense), net
Reduction to non-service benefit cost$
Investments in CenterPoint Energy Money Pool interest income(1)
Bond Companies interest income, offset in other line items(1)
Total$— 

Income Tax Expense. For a discussion of effective tax rate per period by Registrant, see Note 13 to the Interim Condensed Financial Statements.


54

Table of Contents
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 Associated with Our Consolidated Financial Condition,” “— Risk Factors Affecting Natural Gas' Business,” “— Risk Factors Affecting Our Businesses” and “— General Risk Factors Affecting Our Businesses and/or CenterPoint Energy’s Interests in Enable Midstream Partners, LP” in Item 1A of Part I of the Registrants’ combined 2020 Form 10-K.

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

Three Months Ended March 31,
20212020Favorable (Unfavorable)
(in millions, except operating statistics)
Revenues$1,663 $1,321 $342 
Cost of revenues (1)
893 580 (313)
Revenues less Cost of revenues770 741 29 
Expenses:
Operation and maintenance256 272 16 
Depreciation and amortization122 111 (11)
Taxes other than income taxes74 67 (7)
Total expenses452 450 (2)
Operating Income318 291 27 
Other Income (Expense)
Interest expense and other finance charges(33)(41)
Other expense, net— (2)
Income from Continuing Operations Before Income Taxes285 248 37 
Income tax expense56 47 (9)
Net Income$229 $201 28 
Throughput (in Bcf):
Residential12810720 %
Commercial and Industrial145146(1)%
Total273253%
Weather (percentage of 10-year average for service area):
Heating degree days103 %85 %18 %
Number of metered customers at end of period:
Residential4,343,8634,266,685%
Commercial and Industrial351,363350,009— %
Total4,695,2264,616,694%

(1)Includes Utility natural gas, fuel and purchased power and Non-utility cost of revenues, including natural gas.














55

Table of Contents
The following table provides variance explanations for the three months ended March 31, 2021 compared to three months ended March 31, 2020 by major income statement caption for the Natural Gas reportable segment:
Favorable (Unfavorable)
(in millions)
Revenues less Cost of revenues
Weather and usage, excluding impacts from COVID-19$21 
Customer growth
Gross receipts tax, offset in taxes other than income taxes
Energy efficiency, offset in operation and maintenance
Customer rates and impact of the change in rate design, exclusive of the TCJA impact
Refund of protected and unprotected EDIT, offset in income tax expense(2)
Impacts of COVID-19, including usage and other miscellaneous charges(3)
Non-volumetric and miscellaneous revenue, excluding impacts from COVID-19(3)
Total$29 
Operation and maintenance
Other operating and maintenance expenses$
Support Services
Merger related expenses, primarily severance and technology
Contracted services
Materials and supplies
Bad Debt
Insurance
Energy efficiency, offset in revenues less cost of revenues(3)
Total$16 
Depreciation and amortization
Incremental capital projects placed in service(11)
Total$(11)
Taxes other than income taxes
Incremental capital projects placed in service$(2)
Gross receipts tax, offset in revenues less cost of revenues(5)
Total$(7)
Interest expense and other finance charges
Reduced interest rates on outstanding borrowings, partially offset by incremental borrowings for capital expenditures$
Total$
Other expense, net
Reduction to non-service benefit cost$
Money pool investments with CenterPoint Energy interest income
Total$

Income Tax Expense. For a discussion of effective tax rate per period by Registrant, see Note 13 to the Interim Condensed Financial Statements.


56

Table of Contents
HOUSTON ELECTRIC’S MANAGEMENT’S NARRATIVE ANALYSIS
OF CONSOLIDATED RESULTS OF OPERATIONS

Houston Electric’s CODM views net income as the measure of profit or loss for its reportable segment. Houston Electric consists of a 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 Associated with Our Consolidated Financial Condition,” “— Risk Factors Affecting Electric Generation, Transmission and Distribution Businesses,” “— Risk Factors Affecting Our Businesses” and “— General Risk Factors Affecting Our Businesses and/or CenterPoint Energy’s Interests in Enable Midstream Partners, LP” in Item 1A of Part I of the Registrants’ combined 2020 Form 10-K.

Three Months Ended March 31,
20212020Favorable (Unfavorable)
(in millions, except operating statistics)
Revenues:
TDU$640 $596 44 
Bond Companies44 38 
Total revenues684 634 50 
Expenses:
Operation and maintenance, excluding Bond Companies371 358 (13)
Depreciation and amortization, excluding Bond Companies105 99 (6)
Taxes other than income taxes63 64 
Bond Companies38 31 (7)
Total expenses577 552 (25)
Operating Income107 82 25 
Other Income (Expense)
Interest expense and other finance charges(45)(41)(4)
Interest expense on Securitization Bonds(6)(8)
Other income, net— 
Income from Continuing Operations Before Income Taxes61 38 23 
Income tax expense(3)
Net Income$53 $33 20 
Throughput (in GWh):
Residential5,7015,351%
Total19,73920,102(2)%
Weather (percentage of 10-year average for service area):
Cooling degree days112 %185 %(73)%
Heating degree days104 %68 %36 %
Number of metered customers at end of period:
Residential2,318,0302,260,352%
Total2,615,9172,552,739%

57


The following table provides variance explanations for the three months ended March 31, 2021 compared to three months ended March 31, 2020 by major income statement caption for Houston Electric:

Favorable (Unfavorable)
(in millions)
Revenues
Transmission Revenues, including TCOS and TCRF and impact of the change in rate design, inclusive of costs billed by transmission providers$136 
Customer growth
Weather impacts and other usage
Bond Companies, offset in other line items
Impacts from increased peak demand in 2020, collected in rates in 2021
Equity return, related to the annual true-up of transition charges for amounts over or under collected in prior periods
Energy efficiency, offset in operation and maintenance
Miscellaneous revenues, primarily related to right-of-way revenues(5)
Refund of protected and unprotected EDIT, offset in income tax expense(10)
Impacts on usage of COVID-19(12)
Customer rates and impact of the change in rate design(83)
Total$50 
Operation and maintenance, excluding Bond Companies
Support services$
Contract services
Labor and benefits
Energy efficiency, offset in revenues(1)
Transmission costs billed by transmission providers, offset in revenues(21)
Total$(13)
Depreciation and amortization, excluding Bond Companies
Ongoing additions to plant-in-service$(6)
Total$(6)
Taxes other than income taxes
Franchise fees and other taxes$
Incremental capital projects placed in service(1)
Total$
Bond Companies expense
Operations and maintenance and depreciation expense, offset in other line items$(7)
$(7)
Interest expense and other finance charges
Debt to fund incremental capital projects$(4)
Total$(4)
Interest expense on Securitization Bonds
Lower outstanding principal balance, offset in other line items$
Total$
Other income (expense), net
Reduction to non-service benefit cost$
Investments in CenterPoint Energy Money Pool interest income(1)
Bond Companies interest income, offset in other line items(1)
Total$— 

Income Tax Expense. For a discussion of effective tax rate per period, see Note 13 to the Interim Condensed Financial Statements.
58

Table of Contents
CERC’S MANAGEMENT’S NARRATIVE ANALYSIS OF CONSOLIDATED RESULTS OF OPERATIONS

CERC’s CODM views net income as the measure of profit or loss for its 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 Associated with Our Consolidated Financial Condition,” “— Risk Factors Affecting Natural Gas’ Business,” “— Risk Factors Affecting Our Businesses” and “— General Risk Factors Affecting Our Businesses and/or CenterPoint Energy’s Interests in Enable Midstream Partners, LP” in Item 1A of Part I of the Registrants’ combined 2020 Form 10-K.

Three Months Ended March 31,
20212020Favorable (Unfavorable)
(in millions, except operating statistics)
Revenues$1,177 $1,011 $166 
Cost of revenues (1)
625 478 (147)
Revenues less Cost of revenues552 533 19 
Expenses:
Operation and maintenance198 209 11 
Depreciation and amortization80 74 (6)
Taxes other than income taxes56 50 (6)
Total expenses334 333 (1)
Operating Income218 200 18 
Other Income (Expense)
Interest expense and other finance charges(24)(30)
Other expense, net(1)(4)
Income from Continuing Operations Before Income Taxes193 166 27 
Income tax expense42 35 (7)
Income From Continuing Operations151 131 20 
Loss from Discontinued Operations (net of tax benefit of $-0- and $11, respectively)— (64)64 
Net Income$151 $67 84 
Throughput (in Bcf):
Residential937426 %
Commercial and Industrial8790(3)%
Total18016410 %
Weather (percentage of 10-year average for service area):
Heating degree days102 %86 %16 %
Number of metered customers at end of period:
Residential3,362,9023,299,011%
Commercial and Industrial261,944261,120— %
Total3,624,8463,560,131%

(1)Includes Utility natural gas and Non-utility cost of revenues, including natural gas.

59

Table of Contents
The following table provides variance explanations for the three months ended March 31, 2021 compared to three months ended March 31, 2020 by major income statement caption for CERC:

Favorable (Unfavorable)
(in millions)
Revenues less Cost of revenues
Weather and usage, excluding impacts from COVID-19$17 
Customer growth
Gross receipts tax, offset in taxes other than income taxes
Energy efficiency, offset in operation and maintenance
Non-volumetric and miscellaneous revenue, excluding impacts from COVID-19(1)
Refund of protected and unprotected EDIT, offset in income tax expense(2)
Impacts of COVID-19, including usage and other miscellaneous charges(3)
Customer rates and impact of the change in rate design, exclusive of the TCJA impact(6)
Total$19 
Operation and maintenance
Other operating and maintenance expense and support services$
Merger related expenses, primarily severance and technology
Materials and supplies
Contracted services
Labor and benefits
Bad Debt
Insurance
Energy efficiency, offset in revenues less cost of revenues(4)
Total$11 
Depreciation and amortization
Incremental capital projects placed in service$(6)
Total$(6)
Taxes other than income taxes
Incremental capital projects placed in service$(1)
Gross receipts tax, offset in revenues less cost of revenues(5)
Total$(6)
Interest expense and other finance charges
Reduced interest rates on outstanding borrowings, partially offset by incremental borrowings for capital expenditures$
Total$
Other expense, net
Reduction to non-service benefit cost$
Money pool investments with CenterPoint Energy interest income
Total$

Income Tax Expense. For a discussion of effective tax rate per period, see Note 13 to the Interim Condensed Financial Statements.

CERTAIN FACTORS AFFECTING FUTURE EARNINGS

For information on other developments, factors and trends that may have an impact on the Registrants’ future earnings, please read “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Certain Factors Affecting Future Earnings” in Item 7 of Part II and “Risk Factors” in Item 1A of Part I of the Registrants’ combined 2020 Form 10-K and “Cautionary Statement Regarding Forward-Looking Information” in this combined Form 10-Q.

60

Table of Contents
LIQUIDITY AND CAPITAL RESOURCES

Historical Cash Flows

The following table summarizes the net cash provided by (used in) operating, investing and financing activities during the three months ended March 31, 2021 and 2020:
 Three Months Ended March 31,
 20212020
CenterPoint EnergyHouston ElectricCERCCenterPoint EnergyHouston ElectricCERC
(in millions)
Cash provided by (used in):
Operating activities$(1,681)$47 $(1,787)$662 $103 $381 
Investing activities(604)(982)(131)(654)192 (177)
Financing activities2,285 940 1,918 (32)(315)(205)

Operating Activities. The following items contributed to increased (decreased) net cash provided by operating activities for the three months ended March 31, 2021 compared to the three months ended March 31, 2020:
CenterPoint EnergyHouston
 Electric
CERC
(in millions)
Changes in net income after adjusting for non-cash items$1,616 $28 $(29)
Changes in working capital(57)(25)(51)
Increase in regulatory assets (1)
(2,270)(52)(2,075)
Change in equity in earnings of unconsolidated affiliates(1,583)— — 
Change in distributions from unconsolidated affiliates (2)
(31)— — 
Higher pension contribution(6)— — 
Other(12)(7)(13)
$(2,343)$(56)$(2,168)

(1)The increase in regulatory assets is primarily due to the incurred natural gas costs associated with the February 2021 Winter Storm Event. See Note 6 to the Interim Condensed Financial Statements for more information on the February 2021 Winter Storm Event.
(2)This change is partially offset by the change in distributions from Enable in excess of cumulative earnings in investing activities noted in the table below.

Investing Activities. The following items contributed to (increased) decreased net cash used in investing activities for the three months ended March 31, 2021 compared to the three months ended March 31, 2020:
CenterPoint EnergyHouston
 Electric
CERC
(in millions)
Capital expenditures$70 $(28)$43 
Net change in notes receivable from affiliated companies— (1,146)— 
Change in distributions from Enable in excess of cumulative earnings (7)— — 
Other(13)— 
$50 $(1,174)$46 

61

Table of Contents
Financing Activities. The following items contributed to (increased) decreased net cash used in financing activities for the three months ended March 31, 2021 compared to the three months ended March 31, 2020:
CenterPoint EnergyHouston
 Electric
CERC
(in millions)
Net changes in commercial paper outstanding$866 $— $398 
Net changes in long-term debt outstanding, excluding commercial paper2,470 1,021 1,699 
Net changes in long-term revolving credit facilities(1,050)— — 
Net changes in debt issuance costs(20)(10)(6)
Decreased payment of Common Stock dividends57 — — 
Increased payment of preferred stock dividends(6)— — 
Net change in notes payable from affiliated companies— (141)— 
Dividend to parent— 385 32 
$2,317 $1,255 $2,123 

Future Sources and Uses of Cash

The liquidity and capital requirements of the Registrants are affected primarily by results of operations, capital expenditures, debt service requirements, tax payments, working capital needs and various regulatory actions. Capital expenditures are expected to be used for investment in infrastructure. These capital expenditures are anticipated to maintain reliability and safety, increase resiliency and expand our systems through value-added projects. In addition to dividend payments on CenterPoint Energy’s Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Common Stock, and in addition to interest payments on debt, the Registrants’ principal anticipated cash requirements for the remaining nine months of 2021 include the following:
CenterPoint EnergyHouston ElectricCERC
(in millions)
Estimated capital expenditures$2,778 $1,365 $866 
Scheduled principal payments on Securitization Bonds174 174 — 
Minimum contributions to pension plans and other post-retirement plans70 
Maturing CenterPoint Energy term loans700 — — 
Maturing CenterPoint Energy and VUHI senior notes555 — — 
Maturing Houston Electric general mortgage bonds300 300 — 

February 2021 Winter Storm Event. In February 2021, portions of the United States experienced an extreme and unprecedented winter weather event resulting in corresponding electricity generation shortages, including in Texas, and natural gas shortages and increased wholesale prices of natural gas in the United States. As a result of this weather event, the governors of Texas, Oklahoma and Louisiana declared states of either disaster or emergencies in their respective states. Subsequently, President Biden also approved major disaster declarations for all or parts of Texas, Oklahoma and Louisiana.

As a result of the February 2021 Winter Storm Event, from February 12, 2021 to February 22, 2021, management estimates CenterPoint Energy spent approximately an incremental $2.2 billion more on natural gas supplies (inclusive of an incremental $2.1 billion more spent by CERC on natural gas supplies). These amounts are preliminary estimates as of April 29, 2021 and remain subject to final settlement. While CenterPoint Energy and CERC will seek to recover the increased costs from its customers (although timing of recovery is uncertain), in the interim, CERC has issued additional external debt financing to pay for such natural gas working capital. For further details, see Note 12 to the Interim Condensed Financial Statements. The proceeds from the debt financing, along with existing sources of liquidity, provide CERC with sufficient capital to address the settlement of natural gas purchases, including the associated upstream supply charges, at the end of March 2021. Any additional external debt financing and/or partial or delayed recovery may negatively impact CenterPoint Energy’s or CERC’s credit metrics, and may lead to a downgrade of CenterPoint Energy’s or CERC’s credit rating.

Although CenterPoint Energy’s and CERC’s excess costs from the increase in natural gas prices are subject to available natural gas recovery mechanisms in their jurisdictions (although timing of recovery is uncertain), until such amounts are
62

Table of Contents
ultimately recovered from customers, CenterPoint Energy and CERC will continue to incur increased finance-related costs, resulting in a significant use of cash. See “— Regulatory Matters — February 2021 Winter Storm Event” below.

The Registrants expect that anticipated cash needs for the remaining nine months of 2021 will be met with borrowings under their credit facilities, proceeds from the issuance of long-term debt, term loans or common stock, anticipated cash flows from operations, with respect to CenterPoint Energy and CERC, proceeds from commercial paper, with respect to CenterPoint Energy, distributions from Enable until the closing of the Enable Merger expected in the second half of 2021, including any proceeds therefrom, distributions from Energy Transfer or proceeds from dispositions of Energy Transfer common units or Energy Transfer Series G Preferred Units after the expected closing of the Enable Merger, and, with respect to CERC, proceeds from any potential asset sales, including the announced sale of our Natural Gas businesses in Arkansas and Oklahoma, which is expected to close by the end of 2021, subject to satisfaction of customary closing conditions. Discretionary financing or refinancing may result in the issuance of equity securities of CenterPoint Energy or debt securities of the Registrants in the capital markets or the arrangement of additional credit facilities or term bank loans. Issuances of equity or debt in the capital markets, funds raised in the commercial paper markets and additional credit facilities may not, however, be available on acceptable terms. For further information about the Enable Merger and the announced sale of our Arkansas and Oklahoma Natural Gas businesses, see Notes 9 and 20, respectively, to the Interim Condensed Financial Statements.

Off-Balance Sheet Arrangements

Other than Houston Electric’s general mortgage bonds issued as collateral for tax-exempt long-term debt of CenterPoint Energy as discussed in Note 12, guarantees as discussed in Note 14(b) to the Interim Condensed Financial Statements, we have no off-balance sheet arrangements.

Regulatory Matters

COVID-19 Regulatory Matters

For information about COVID-19 regulatory matters, see Note 6 to the Interim Condensed Financial Statements.

February 2021 Winter Storm Event

The Texas Legislature conducted in late February and March initial hearings on the February 2021 Winter Storm Event. Immediately after the February 2021 Winter Storm Event, five unaffiliated directors of the ERCOT Board resigned. Three ERCOT market segment directors have also resigned and their replacements were appointed. Presently, the Texas legislature is considering legislation that would require unaffiliated directors of ERCOT to be Texas residents. On March 3, 2021, the ERCOT Board terminated the employment agreement with the ERCOT President and CEO with 60 days’ notice. On April 27, 2021, the ERCOT Board announced a new interim President and CEO. Following the February 2021 Winter Storm Event, all three PUCT commissioners have also either resigned or announced their resignation. To date, Governor Abbott has announced two new PUCT commissioners and both have been confirmed by the Texas Senate. Under consideration at the Texas Legislature is legislation requiring the number of appointed PUCT commissioners to be increased from three to five. For the two additional PUCT commissioner appointees, one will be appointed by the Texas Lieutenant Governor and one will be appointed by the Texas Speaker of the House.

On February 13, 2021, the Railroad Commission authorized each Texas natural gas distribution utility to record in a regulatory asset the extraordinary expenses associated with the February 2021 Winter Storm Event, including, but not limited to, natural gas cost and other costs related to the procurement and transportation of natural gas supply, subject to recovery in future proceedings. In addition, CenterPoint Energy’s and CERC’s Natural Gas utilities in jurisdictions outside of Texas deferred natural gas cost under existing recovery mechanisms and have either sought or intend to seek recovery of the increased cost of natural gas, which will be subject to customary regulatory prudency reviews that may impact the amounts recovered. Amounts for the under recovery of natural gas costs are reflected in regulatory assets and are probable of recovery; however, the timing of recovery for each jurisdiction for the estimated incremental gas cost attributable to the February 2021 Winter Storm Event within each regulatory asset is uncertain.

63

Table of Contents
The table below presents the estimated incremental natural gas costs included in regulatory assets as of March 31, 2021 by state as a result of the February 2021 Winter Storm Event and CenterPoint Energy’s and CERC’s requested recovery status as of April 29, 2021:

StateRecovery StatusLegislative ActivityEstimated Incremental Gas Cost
(in millions)
ArkansasFiled application on April 16, 2021 to recover over a five-year period beginning May 1, 2021. On April 28, 2021, APSC approved CERC to begin recovery effective May 2021 at a customer deposit interest rate of 0.8% over a five year period, subject to a true-up after APSC determines appropriate allocation, length of recovery, and carrying charge. A hearing is scheduled in August 2021.A securitization bill has been passed and recovery via the securitization is beyond 2021.$343 
LouisianaFiled application on April 16, 2021 for North Louisiana to recover over a three-year period beginning May 1, 2021. LPSC approved on April 22, 2021.None.75
MinnesotaFiled application on March 15, 2021 requesting to recover over a two-year period beginning May 1, 2021.None.470
MississippiRecovery expected to begin September 2021 through normal gas cost recovery.None.3
OklahomaFiled application on February 25, 2021 to defer incremental gas costs is pending at the OCC.A securitization bill has passed in the Oklahoma legislature.79
TexasCost currently deferred to a regulatory asset pending recovery method.A securitization bill is progressing through the Texas legislature. Approval of the bill could occur as early as the second quarter of 2021 which could allow recovery by the first quarter of 2022.1,105 
Total CERC$2,075 
Indiana NorthRecovery expected to begin September 2021 through normal gas recovery.None.96
Indiana SouthRecovery expected to begin August 2021 through normal gas recovery.None.18
Total CenterPoint Energy$2,189 

For additional information about February 2021 Winter Storm Event regulatory matters, see Note 6 to the Interim Condensed Financial Statements.

Indiana Electric CPCN (CenterPoint Energy)

On February 9, 2021, Indiana Electric entered into a BTA with a subsidiary of Capital Dynamics. Under the agreement, Capital Dynamics, with its partner Tenaska, will build a 300 MW solar array in Posey County, Indiana through a special purpose entity Posey Solar. Upon completion of construction, which is projected to be at the end of 2023, and subject to approval by the IURC, Indiana Electric will acquire Posey Solar and its solar array assets for a fixed purchase price. On February 23, 2021, Indiana Electric filed a CPCN with the IURC seeking approval to purchase the project. Indiana Electric is also seeking approval for a 100 MW solar PPA in Warrick County, Indiana. The request accounts for increased cost of debt related to this PPA, which provides equivalent equity return to offset imputed debt during the 25 year life of the PPA. A hearing is scheduled to begin in June 2021 and a decision on the CPCN is expected by the fourth quarter of 2021.

Indiana Electric Securitization of Planned Generation Retirements (CenterPoint Energy)

The State of Indiana has enacted legislation, Senate Bill 386, that would enable CenterPoint Energy to request approval from the IURC to securitize the remaining book value and removal costs associated with generating facilities to be retired in the
64

Table of Contents
next twenty-four months. The Governor of Indiana signed the legislation on April 19, 2021. CenterPoint Energy intends to seek securitization in the future associated with planned coal generation retirements.

Space City Solar Transmission Interconnection Project (CenterPoint Energy and Houston Electric)

On December 17, 2020, Houston Electric filed a certificate of convenience and necessity application with the PUCT for approval to build a 345 kV transmission line in Wharton County, Texas connecting the Hillje substation on Houston Electric’s transmission system to the planned 610 MW Space City Solar Generation facility being developed by third-party developer EDF Renewables. Depending on the route ultimately approved by the PUCT, the estimated capital cost of the transmission line project ranges from approximately $23 million to $71 million. The actual capital costs of the project will depend on actual land acquisition costs, construction costs, and other factors in addition to route selection. In January 2021, Houston Electric executed a Standard Generation Interconnection Agreement for the Space City Solar Generation facility with EDF Renewables, which also provided security for the transmission line project in the form of a $23 million letter of credit, the amount of which is subject to change depending on the route approved. A hearing at the PUCT is scheduled for June 2021. The PUCT is required to issue its final decision on the transmission line project no later than December 2021. Subject to PUCT approval, Houston Electric expects to complete construction and energization of the transmission line by June 2022.

Minnesota Base Rate Case (CenterPoint Energy and CERC)

On October 28, 2019, CERC filed a general rate case with the MPUC seeking approval for a revenue increase of approximately $62 million with a projected test year ended December 31, 2020. The revenue increase is based upon a requested ROE of 10.15% and an overall after-tax rate of return of 7.41% on a total rate base of approximately $1,307 million. CERC implemented interim rates reflecting $53 million for gas used on and after January 1, 2020. In September 2020, a settlement that addressed all issues except the Inclusive Financing/Tariffed On Bill Financing (TOB) proposal by the City of Minneapolis was signed by a majority of all parties and was filed with the Office of Administrative Hearings. A stipulation between the City of Minneapolis and CERC addressing the TOB proposal was filed on September 2, 2020. The settlement reflects a $38.5 million increase and was based on an overall after-tax rate of return of 6.86% and does not specify individual cost of capital components. On March 1, 2021, the MPUC issued a written final order approving the $38.5 million increase and rejected the TOB stipulation. The order also required CERC and the City of Minneapolis to submit a future filing to allow for further development of a potential TOB pilot program and additional or expanded low-income conservation improvement programs. A compliance filing was submitted on March 12, 2021 proposing a final rate implementation on June 1st and the interim refund occurring in June 2021, contingent on final MPUC approval.

Indiana South Base Rate Case (CenterPoint Energy)

On October 30, 2020, and as subsequently amended, Indiana South filed its base rate case with the IURC seeking approval for a revenue increase of approximately $29 million. This rate case filing is required under Indiana TDSIC statutory requirements before the completion of Indiana South’s capital expenditure program, approved in 2014 for investments starting in 2014 through 2020. The revenue increase is based upon a requested ROE of 10.15% and an overall after-tax rate of return of 5.99% on total rate base of approximately $469 million. Indiana South has utilized a projected test year, reflecting its 2021 budget as the basis for the revenue increase requested, and proposes to implement rates in two phases. The first phase of rate implementation will occur as of the date of an order in this proceeding, expected in September 2021, and the second phase of rate implementation will occur at the completion of the test year, as of December 31, 2021. On April 16, 2021, Indiana South announced that an agreement in principle has been reached with certain parties. On April 23, 2021, a Stipulation and Settlement Agreement was filed resolving all issues in the case. The settlement recommended a revenue increase of $20.5 million based on a 9.7% ROE and an overall after-tax rate of return of 5.78% on total rate base of approximately $469 million. A settlement hearing is scheduled for June 24, 2021. A final order is expected in the second half of 2021. Under Indiana statutory requirements, the IURC has 300 days from the date of the filing of Indiana South’s case-in-chief to issue an order.

Indiana North Base Rate Case (CenterPoint Energy)

On December 18, 2020, Indiana North filed its base rate case with the IURC seeking approval for a revenue increase of approximately $21 million. This rate case filing is required under Indiana TDSIC statutory requirements before the completion of Indiana North’s capital expenditure program, approved in 2014 for investments starting in 2014 through 2020. The revenue increase is based upon a requested ROE of 10.15% and an overall after-tax rate of return of 6.32% on total rate base of approximately $1,611 million. Indiana North has utilized a projected test year, reflecting its 2021 budget as the basis for the revenue increase requested, and proposes to implement rates in two phases. The first phase of rate implementation will occur as of the date of an order in this proceeding, expected in October 2021, and the second phase of rate implementation will occur at the completion of the test year, as of December 31, 2021. Hearings at the IURC are currently scheduled to occur in May and
65

Table of Contents
June 2021. Under Indiana statutory requirements, the IURC has a minimum of 300 days and maximum of 360 days from the date of the filing of Indiana North’s case-in-chief to issue an order.

Rate Change Applications

The Registrants are routinely involved in rate change applications before state regulatory authorities. Those applications include general rate cases, where the entire cost of service of the utility is assessed and reset. In addition, Houston Electric is periodically involved in proceedings to adjust its capital tracking mechanisms (TCOS and DCRF) and annually files to adjust its EECRF. CERC is periodically involved in proceedings to adjust its capital tracking mechanisms in Texas (GRIP), its cost of service adjustments in Arkansas, Louisiana, Mississippi and Oklahoma (FRP, RSP, RRA and PBRC, respectively), its decoupling mechanism in Minnesota, and its energy efficiency cost trackers in Arkansas, Minnesota, Mississippi and Oklahoma (EECR, CIP, EECR and EECR, respectively). CenterPoint Energy is periodically involved in proceedings to adjust its capital tracking mechanisms in Indiana (CSIA for gas and TDSIC for electric) and Ohio (DRR), its decoupling mechanism in Indiana (SRC for gas), and its energy efficiency cost trackers in Indiana (EEFC for gas and DSMA for electric) and Ohio (EEFR). The table below reflects significant applications pending or completed since the Registrants’ combined 2020 Form 10-K was filed with the SEC.
Mechanism
Annual Increase (Decrease) (1)
(in millions)
Filing
 Date
Effective DateApproval DateAdditional Information
CenterPoint Energy and Houston Electric (PUCT)
TCOS9March 2021April
2021
April 2021Based on net change in invested capital of $80 million.
CenterPoint Energy and CERC - Arkansas (APSC)
FRP (1)
13April
2021
TBDTBDBased on ROE of 9.50% with 50 basis point (+/-) earnings band. Revenue increase of $13 million based on prior test year true-up earned return on equity of 11.43% combined with projected test year earned return on equity of 3.59%. The initial term of Rider FRP will terminate on September 10, 2021; a request to extend the Rider FRP term for an additional five years was filed on May 5, 2021.
CenterPoint Energy and CERC - Beaumont/East Texas, South Texas, Houston and Texas Coast (Railroad Commission)
GRIP (1)
28March 2021TBDTBDBased on net change in invested capital of $197 million.
CenterPoint Energy and CERC - Minnesota (MPUC)
DecouplingN/ASeptember 2020September 2020March 2021Represents under-recovery of approximately $2 million recorded for and during the period July 1, 2019 through June 30, 2020, including approximately $1 million related to the period July 1, 2018 through June 30, 2019.
Rate Case (1)
39October 2019June
2021
TBD
See discussion above under Minnesota Base Rate Case.
CIP Financial Incentive (1)
10May
2021
TBDTBDCIP Financial Incentive based on 2020 activity.
CenterPoint Energy and CERC - Mississippi (MPSC)
RRA (1)
4April
2021
TBDTBDBased on ROE of 9.81% with 100 basis point (+/-) earnings band. Revenue increase of approximately $4 million based on 2020 test year adjusted earned ROE of 6.97%.
CenterPoint Energy and CERC - Oklahoma (OCC)
PBRC (1)
(1)March 2021TBDTBDBased on ROE of 10% with 50 basis point (+/-) earnings band. Revenue credit of approximately $1 million based on 2020 test year adjusted earned ROE of 12.42%.
CenterPoint Energy - Indiana South - Gas (IURC)
Rate Case (1)
29October 2020September 2021TBD
See discussion above under Indiana South Base Rate Case.
CSIA (1)
(1)April
2021
July
2021
TBDRequested an increase of $11 million to rate base, which reflects a $(1 million) annual decrease in current revenues. 80% of revenue requirement is included in requested rate increase and 20% is deferred until the next rate case. The mechanism also includes refunds associated with the TCJA, resulting in no change to the previous credit provided, and a change in the total (over)/under-recovery variance of less than $1 million annually.
CenterPoint Energy - Indiana North - Gas (IURC)
Rate Case (1)
21December 2020October 2021TBD
See discussion above under Indiana North Base Rate Case.
CSIA (1)
5April
2021
July
2021
TBDRequested an increase of $37 million to rate base, which reflects a $5 million annual increase in current revenues. 80% of revenue requirement is included in requested rate increase and 20% is deferred until the next rate case. The mechanism also includes refunds associated with the TCJA, resulting in no change to the previous credit provided, and a change in the total (over)/under-recovery variance of $6 million annually.
66

Table of Contents
Mechanism
Annual Increase (Decrease) (1)
(in millions)
Filing
 Date
Effective DateApproval DateAdditional Information
CenterPoint Energy - Ohio (PUCO)
DRR (1)
9April
2021
September 2021TBDRequested an increase of $71 million to rate base for investments made in 2020, which reflects a $9 million annual increase in current revenues. A change in (over)/under-recovery variance of $5 million annually is also included in rates.
CenterPoint Energy - Indiana Electric (IURC)
TDSIC (1)
3February 2021May
 2021
TBD
Requested an increase of $28 million to rate base, which reflects a $3 million annual increase in current revenues. 80% of the revenue requirement is included in requested rate increase and 20% is deferred until next rate case. The mechanism also includes a change in (over)/under-recovery variance of less than $1 million.
CECA (1)
8February 2021June
2021
TBD
Reflects an $8 million annual increase in current revenues through a non-traditional rate making approach related to a 50 MW universal solar array placed in service in January 2021.
ECA(1)
2May 2021August 2021TBDRequested an increase of $39 million to rate base, which reflects a $2 million annual increase in current revenues. 80% of the revenue requirement is included in requested rate increase and 20% is deferred until next rate case. The mechanism also included a change in (over)/under-recovery variance of less than $1 million annually.

(1)Represents proposed increases (decreases) when effective date and/or approval date is not yet determined. Approved rates could differ materially from proposed rates.

CPP and ACE Rule (CenterPoint Energy)

On August 3, 2015, the EPA released its CPP Rule, which required a 32% reduction in carbon emissions from 2005 levels. The final rule was published in the Federal Register on October 23, 2015, and that action was immediately followed by litigation ultimately resulting in the U.S. Supreme Court staying implementation of the rule. On August 31, 2018, the EPA published its proposed CPP replacement rule, the ACE Rule, which was finalized on July 8, 2019 and requires states to implement a program of energy efficiency improvement targets for individual coal-fired electric generating units. On January 19, 2021, the ACE Rule was struck down by the U.S. District Court of Appeals for the D.C. Circuit. CenterPoint Energy is currently unable to predict whether the Biden Administration will continue its defense of the CPP or ACE Rule, or what a new replacement rule would look like. The Biden administration recommitted the United States to the Paris Agreement, which can be expected to drive a renewed regulatory push to require further GHG emission reductions from the energy sector. Shortly after taking office in January 2021, President Biden issued a series of executive orders designed to address climate change. President Biden has also signed an executive order requiring agencies to review environmental actions taken by the Trump administration, which would have included the ACE Rule, and the Biden administration has issued a memorandum to departments and agencies to refrain from proposing or issuing rules until a departmental or agency head appointed or designated by the Biden administration has reviewed and approved the rule. Reentry into the Paris Agreement and President Biden’s executive orders may result in the development of additional regulations or changes to existing regulations, and on April 22, 2021, President Biden announced a new goal of 50% reduction of economy-wide GHG emissions by 2035. On March 1, 2020, CenterPoint Energy announced corporate carbon emission goals, which are expected to be used to guide Indiana Electric’s transition to a low carbon fleet and position Indiana Electric to comply with anticipated future regulatory requirements from the Biden administration to further reduce GHG emissions from its electric fleet.

Other Matters

Credit Facilities

The Registrants may draw on their respective revolving credit facilities from time to time to provide funds used for general corporate and limited liability company purposes, including to backstop CenterPoint Energy’s and CERC’s commercial paper programs. The facilities may also be utilized to obtain letters of credit. For further details related to the Registrants’ revolving credit facilities, please see Note 12 to the Interim Condensed Financial Statements.

67

Table of Contents
Based on the consolidated debt to capitalization covenant in the Registrants’ revolving credit facilities, the Registrants would have been permitted to utilize the full capacity of such revolving credit facilities, which aggregated approximately $4 billion as of March 31, 2021. As of April 29, 2021, the Registrants had the following revolving credit facilities and utilization of such facilities:
Amount Utilized as of April 29, 2021
RegistrantSize of FacilityLoansLetters of CreditCommercial PaperWeighted Average Interest RateTermination Date
(in millions)
CenterPoint Energy $2,400 $— $11 $846 0.21%February 4, 2024
CenterPoint Energy (1)
400 — — 192 0.18%February 4, 2024
Houston Electric300 — — — —%February 4, 2024
CERC900 — — 545 0.19%February 4, 2024
Total
$4,000 $— $11 $1,583 

(1)The credit facility was issued by VUHI and is guaranteed by SIGECO, Indiana Gas and VEDO.

Borrowings under each of the revolving credit facilities are subject to customary terms and conditions. However, there is no requirement that the borrower makes representations prior to borrowing as to the absence of material adverse changes or litigation that could be expected to have a material adverse effect. Borrowings under each of the revolving credit facilities are subject to acceleration upon the occurrence of events of default that we consider customary. The revolving credit facilities also provide for customary fees, including commitment fees, administrative agent fees, fees in respect of letters of credit and other fees. In each of the revolving credit facilities, the spread to LIBOR and the commitment fees fluctuate based on the borrower’s credit rating. Each of the Registrant’s credit facilities provide for a mechanism to replace LIBOR with possible alternative benchmarks upon certain benchmark replacement events. The borrowers are currently in compliance with the various business and financial covenants in the four revolving credit facilities.

Long-term Debt

For detailed information about the Registrants’ debt transactions in 2021, see Note 12 to the Interim Condensed Financial Statements.

Securities Registered with the SEC

On May 29, 2020, the Registrants filed a joint shelf registration statement with the SEC registering indeterminate principal amounts of Houston Electric’s general mortgage bonds, CERC Corp.’s senior debt securities and CenterPoint Energy’s senior debt securities and junior subordinated debt securities and an indeterminate number of shares of Common Stock, shares of preferred stock, depositary shares, as well as stock purchase contracts and equity units. The joint shelf registration statement will expire on May 29, 2023. For information related to the Registrants’ debt issuances in 2021, see Note 12 to the Interim Condensed Financial Statements.

Temporary Investments

As of April 29, 2021, the Registrants had no temporary investments.

Money Pool

The Registrants participate in a money pool through which they and certain of their subsidiaries can borrow or invest on a short-term basis. Funding needs are aggregated and external borrowing or investing is based on the net cash position. The net funding requirements of the CenterPoint Energy money pool are expected to be met with borrowings under CenterPoint Energy’s revolving credit facility or the sale of CenterPoint Energy’s commercial paper. The net funding requirements of the CERC money pool are expected to be met with borrowings under CERC’s revolving credit facility or the sale of CERC’s commercial paper. The money pool may not provide sufficient funds to meet the Registrants’ cash needs.

68

Table of Contents
The table below summarizes CenterPoint Energy money pool activity by Registrant as of April 29, 2021:
Weighted Average Interest RateHouston ElectricCERC
 (in millions)
Money pool investments (borrowings)
0.20%$569 $— 

Impact on Liquidity of a Downgrade in Credit Ratings

The interest on borrowings under the credit facilities is based on each respective borrower’s credit ratings. As of April 29, 2021, Moody’s, S&P and Fitch had assigned the following credit ratings to the borrowers:
 Moody’sS&PFitch
RegistrantBorrower/InstrumentRatingOutlook (1)RatingOutlook (2)RatingOutlook (3)
CenterPoint Energy
CenterPoint Energy Senior Unsecured Debt
Baa2StableBBBStableBBBStable
CenterPoint EnergyVectren Corp. Issuer Ratingn/an/aBBB+Stablen/an/a
CenterPoint EnergyVUHI Senior Unsecured DebtA3StableBBB+Stablen/an/a
CenterPoint Energy
Indiana Gas Senior Unsecured Debt
n/an/aBBB+Stablen/an/a
CenterPoint EnergySIGECO Senior Secured DebtA1 StableAStablen/an/a
Houston Electric
Houston Electric Senior Secured Debt
A2StableAStableAStable
CERC
CERC Corp. Senior Unsecured Debt
A3NegativeBBB+StableA-Stable

(1)A Moody’s rating outlook is an opinion regarding the likely direction of an issuer’s rating over the medium term.
(2)An S&P outlook assesses the potential direction of a long-term credit rating over the intermediate to longer term.
(3)A Fitch rating outlook indicates the direction a rating is likely to move over a one- to two-year period.

The Registrants cannot assure that the ratings set forth above will remain in effect for any given period of time or that one or more of these ratings will not be lowered or withdrawn entirely by a rating agency. The Registrants note that these credit ratings are included for informational purposes and are not recommendations to buy, sell or hold the Registrants’ securities and may be revised or withdrawn at any time by the rating agency. Each rating should be evaluated independently of any other rating. Any future reduction or withdrawal of one or more of the Registrants’ credit ratings could have a material adverse impact on the Registrants’ ability to obtain short- and long-term financing, the cost of such financings and the execution of the Registrants’ commercial strategies.

A decline in credit ratings could increase borrowing costs under the Registrants’ revolving credit facilities. If the Registrants’ credit ratings had been downgraded one notch by S&P and Moody’s from the ratings that existed as of March 31, 2021, the impact on the borrowing costs under the four revolving credit facilities would have been insignificant. A decline in credit ratings would also increase the interest rate on long-term debt to be issued in the capital markets and could negatively impact the Registrants’ ability to complete capital market transactions and to access the commercial paper market. Additionally, a decline in credit ratings could increase cash collateral requirements and reduce earnings of CenterPoint Energy’s and CERC’s Natural Gas reportable segments.

Pipeline tariffs and contracts typically provide that if the credit ratings of a shipper or the shipper’s guarantor drop below a threshold level, which is generally investment grade ratings from both Moody’s and S&P, cash or other collateral may be demanded from the shipper in an amount equal to the sum of three months’ charges for pipeline services plus the unrecouped cost of any lateral built for such shipper. If the credit ratings of CERC Corp. decline below the applicable threshold levels, CERC might need to provide cash or other collateral of as much as $162 million as of March 31, 2021. The amount of collateral will depend on seasonal variations in transportation levels.

ZENS and Securities Related to ZENS (CenterPoint Energy)

If CenterPoint Energy’s creditworthiness were to drop such that ZENS holders thought its liquidity was adversely affected or the market for the ZENS were to become illiquid, some ZENS holders might decide to exchange their ZENS for cash. Funds for the payment of cash upon exchange could be obtained from the sale of the shares of ZENS-Related Securities that CenterPoint Energy owns or from other sources. CenterPoint Energy owns shares of ZENS-Related Securities equal to
69

Table of Contents
approximately 100% of the reference shares used to calculate its obligation to the holders of the ZENS. ZENS exchanges result in a cash outflow because tax deferrals related to the ZENS and shares of ZENS-Related Securities would typically cease when ZENS are exchanged or otherwise retired and shares of ZENS-Related Securities are sold. The ultimate tax liability related to the ZENS and ZENS-Related Securities continues to increase by the amount of the tax benefit realized each year, and there could be a significant cash outflow when the taxes are paid as a result of the retirement or exchange of the ZENS. If all ZENS had been exchanged for cash on March 31, 2021, deferred taxes of approximately $490 million would have been payable in 2021. If all the ZENS-Related Securities had been sold on March 31, 2021, capital gains taxes of approximately $152 million would have been payable in 2021 based on 2021 tax rates in effect. For additional information about ZENS, see Note 11 to the Interim Condensed Financial Statements.

Cross Defaults

Under each of CenterPoint Energy’s (including VUHI’s), Houston Electric’s and CERC’s respective revolving credit facilities, as well as under CenterPoint Energy’s term loan agreement, a payment default on, or a non-payment default that permits acceleration of, any indebtedness for borrowed money and certain other specified types of obligations (including guarantees) exceeding $125 million by the borrower or any of their respective significant subsidiaries will cause a default under such borrower’s respective credit facility or term loan agreement. A default by CenterPoint Energy would not trigger a default under its subsidiaries’ debt instruments or revolving credit facilities.

Possible Acquisitions, Divestitures and Joint Ventures

From time to time, the Registrants consider the acquisition or the disposition of assets or businesses or possible joint ventures, strategic initiatives or other joint ownership arrangements with respect to assets or businesses. Any determination to take action in this regard will be based on market conditions and opportunities existing at the time, and accordingly, the timing, size or success of any efforts and the associated potential capital commitments are unpredictable. The Registrants may seek to fund all or part of any such efforts with proceeds from debt and/or equity issuances. Debt or equity financing may not, however, be available to the Registrants at that time due to a variety of events, including, among others, maintenance of our credit ratings, industry conditions, general economic conditions, market conditions and market perceptions. As announced in December 2020, CenterPoint Energy’s business strategy incorporated the Business Review and Evaluation Committee’s recommendations to increase its planned capital expenditures in its electric and natural gas businesses to support rate base growth and sell certain of its Natural Gas businesses located in Arkansas and Oklahoma as a means to efficiently finance a portion of such increased capital expenditures, among other recommendations. On April 29, 2021, CenterPoint Energy, through its subsidiary CERC Corp., entered into an Asset Purchase Agreement to sell its Arkansas and Oklahoma Natural Gas businesses for $2.15 billion in cash, including recovery of approximately $425 million of storm-related incremental natural gas costs incurred in the February 2021 Winter Storm Event, subject to certain adjustments set forth in the Asset Purchase Agreement. For further information regarding the announced sale of our Arkansas and Oklahoma Natural Gas businesses, see Note 20 to the Interim Condensed Financial Statements.

Additionally, CenterPoint Energy’s process of evaluating and optimizing the various businesses, assets and ownership interests currently held by it considered, among other things, various plans, proposals and other strategic alternatives with respect to Enable and CenterPoint Energy’s investment in Enable, which may result in the disposition of a portion or all of its ownership interest in Enable. In February 2021, CenterPoint Energy announced its support of the Enable Merger, which is expected to close in the second half of 2021, subject to customary closing conditions, including Hart-Scott-Rodino antitrust clearance. CenterPoint Energy may not realize any or all of the anticipated strategic, financial, operational or other benefits from the Enable Merger, if completed, or from any disposition or reduction of its anticipated resulting investment in Energy Transfer. There can be no assurances that any disposal of Energy Transfer common units or Energy Transfer Series G Preferred Units will be completed. Any disposal of such securities may involve significant costs and expenses, including in connection with any public offering, a significant underwriting discount. For information regarding the Enable Merger, see Note 9 to the Interim Condensed Financial Statements.

Enable Midstream Partners (CenterPoint Energy)

CenterPoint Energy receives quarterly cash distributions from Enable on its common units and Enable Series A Preferred Units. A reduction in the cash distributions CenterPoint Energy receives from Enable could significantly impact CenterPoint Energy’s liquidity. For additional information about cash distributions from Enable, see Notes 9 and 20 to the Interim Condensed Financial Statements.
70

Table of Contents

Hedging of Interest Expense for Future Debt Issuances

From time to time, the Registrants may enter into interest rate agreements to hedge, in part, volatility in the U.S. treasury rates by reducing variability in cash flows related to interest payments. For further information, see Note 7(a) to the Interim Condensed Financial Statements.

Weather Hedge (CenterPoint Energy and CERC)

CenterPoint Energy and CERC have historically entered into partial weather hedges for certain Natural Gas jurisdictions and electric operations’ Texas service territory to mitigate the impact of fluctuations from normal weather. CenterPoint Energy and CERC remain exposed to some weather risk as a result of the partial hedges. For more information about weather hedges, see Note 7(a) to the Interim Condensed Financial Statements.

Collection of Receivables from REPs (CenterPoint Energy and Houston Electric)

Houston Electric’s receivables from the distribution of electricity are collected from REPs that supply the electricity Houston Electric distributes to their customers. Before conducting business, a REP must register with the PUCT and must meet certain financial qualifications. Nevertheless, adverse economic conditions, the February 2021 Winter Storm Event, structural problems in the market served by ERCOT or financial difficulties of one or more REPs could impair the ability of these REPs to pay for Houston Electric’s services or could cause them to delay such payments. Houston Electric depends on these REPs to remit payments on a timely basis, and any delay or default in payment by REPs could adversely affect Houston Electric’s cash flows. In the event of a REP default, Houston Electric’s tariff provides a number of remedies, including the option for Houston Electric to request that the PUCT suspend or revoke the certification of the REP. Applicable regulatory provisions require that customers be shifted to another REP or a provider of last resort if a REP cannot make timely payments. However, Houston Electric remains at risk for payments related to services provided prior to the shift to the replacement REP or the provider of last resort. If a REP were unable to meet its obligations, it could consider, among various options, restructuring under the bankruptcy laws, in which event such REP might seek to avoid honoring its obligations and claims might be made against Houston Electric involving payments it had received from such REP. If a REP were to file for bankruptcy, Houston Electric may not be successful in recovering accrued receivables owed by such REP that are unpaid as of the date the REP filed for bankruptcy. However, PUCT regulations authorize utilities, such as Houston Electric, to defer bad debts resulting from defaults by REPs for recovery in future rate cases, subject to a review of reasonableness and necessity.

Other Factors that Could Affect Cash Requirements

In addition to the above factors, the Registrants’ liquidity and capital resources could also be negatively affected by:

further reductions in the cash distributions we receive from Enable;
cash collateral requirements that could exist in connection with certain contracts, including weather hedging arrangements, and natural gas purchases, natural gas price and natural gas storage activities of CenterPoint Energy’s and CERC’s Natural Gas reportable segment; 
acceleration of payment dates on certain gas supply contracts, under certain circumstances, as a result of increased natural gas prices, including as a result of the February 2021 Winter Storm Event, and concentration of natural gas suppliers (CenterPoint Energy and CERC); 
increased costs related to the acquisition of natural gas, including as a result of the February 2021 Winter Storm Event (CenterPoint Energy and CERC); 
increases in interest expense in connection with debt refinancings and borrowings under credit facilities or term loans or the use of alternative sources of financings due to the effects of COVID-19 and the February 2021 Winter Storm Event on capital and other financial markets; 
the outcome of litigation, including litigation related to the February 2021 Winter Storm Event; 
the ability of REPs, including REP affiliates of NRG and Vistra Energy Corp., to satisfy their obligations to CenterPoint Energy and Houston Electric, including the negative impact on such ability related to COVID-19 and the February 2021 Winter Storm Event;
various legislative or regulatory actions; 
incremental collateral, if any, that may be required due to regulation of derivatives (CenterPoint Energy); 
slower customer payments and increased write-offs of receivables due to higher natural gas prices, changing economic conditions, COVID-19 or the February 2021 Winter Storm Event (CenterPoint Energy and CERC); 
the satisfaction of any obligations pursuant to guarantees;
contributions to pension and postretirement benefit plans; 
71

Table of Contents
restoration costs and revenue losses resulting from future natural disasters such as hurricanes and the timing of recovery of such restoration costs; and
various other risks identified in “Risk Factors” in Item 1A of Part I of the Registrants’ combined 2020 Form 10-K.

Certain Contractual Limits on Our Ability to Issue Securities and Borrow Money

Houston Electric has contractually agreed that it will not issue additional first mortgage bonds, subject to certain exceptions. Additionally, certain provisions in note purchase agreements relating to debt issued by VUHI have the effect of restricting the amount of additional first mortgage bonds issued by SIGECO.

For information about the total debt to capitalization financial covenants in the Registrants’ and certain of CenterPoint Energy’s subsidiaries’ revolving credit facilities, see Note 12 to the Interim Condensed Financial Statements.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Houston Electric and CERC meet the conditions specified in General Instruction H(1)(a) and (b) to Form 10-Q and are therefore permitted to use the reduced disclosure format for wholly-owned subsidiaries of reporting companies. Accordingly, Houston Electric and CERC have omitted from this report the information called for by Item 3 (Quantitative and Qualitative Disclosures About Market Risk) of Part I of the Form 10-Q.

Interest Rate Risk (CenterPoint Energy)

As of March 31, 2021, CenterPoint Energy had outstanding long-term debt, lease obligations and obligations under its ZENS that subject it to the risk of loss associated with movements in market interest rates.

CenterPoint Energy’s floating rate obligations aggregated $3.4 billion and $2.4 billion as of March 31, 2021 and December 31, 2020, respectively. If the floating interest rates were to increase by 10% from March 31, 2021 rates, CenterPoint Energy’s combined interest expense would increase by approximately $1.7 million annually.

As of March 31, 2021 and December 31, 2020, CenterPoint Energy had outstanding fixed-rate debt (excluding indexed debt securities) aggregating $12.5 billion and $11.1 billion, respectively, in principal amount and having a fair value of $13.5 billion and $12.9 billion, respectively. Because these instruments are fixed-rate, they do not expose CenterPoint Energy to the risk of loss in earnings due to changes in market interest rates. However, the fair value of these instruments would increase by approximately $376 million if interest rates were to decline by 10% from levels at March 31, 2021. In general, such an increase in fair value would impact earnings and cash flows only if CenterPoint Energy were to reacquire all or a portion of these instruments in the open market prior to their maturity.

In general, such an increase in fair value would impact earnings and cash flows only if CenterPoint Energy were to reacquire all or a portion of these instruments in the open market prior to their maturity.

The ZENS obligation is bifurcated into a debt component and a derivative component. The debt component of $13 million as of March 31, 2021 was a fixed-rate obligation and, therefore, did not expose CenterPoint Energy to the risk of loss in earnings due to changes in market interest rates. However, the fair value of the debt component would increase by approximately $2 million if interest rates were to decline by 10% from levels at March 31, 2021. Changes in the fair value of the derivative component, a $927 million recorded liability at March 31, 2021, are recorded in CenterPoint Energy’s Condensed Statements of Consolidated Income and, therefore, it is exposed to changes in the fair value of the derivative component as a result of changes in the underlying risk-free interest rate. If the risk-free interest rate were to increase by 10% from March 31, 2021 levels, the fair value of the derivative component liability would decrease by approximately $1 million, which would be recorded as an unrealized gain in CenterPoint Energy’s Condensed Statements of Consolidated Income.

Equity Market Value Risk (CenterPoint Energy)

CenterPoint Energy is exposed to equity market value risk through its ownership of 10.2 million shares of AT&T Common and 0.9 million shares of Charter Common, which CenterPoint Energy holds to facilitate its ability to meet its obligations under the ZENS. See Note 11 to the Interim Condensed Financial Statements for a discussion of CenterPoint Energy’s ZENS obligation. Changes in the fair value of the ZENS-Related Securities held by CenterPoint Energy are expected to substantially offset changes in the fair value of the derivative component of the ZENS. A decrease of 10% from the March 31, 2021 aggregate market value of these shares would result in a net loss of less than $1 million, which would be recorded as a loss in CenterPoint Energy’s Condensed Statements of Consolidated Income.

72

Table of Contents
Commodity Price Risk From Non-Trading Activities (CenterPoint Energy)

CenterPoint Energy’s regulated operations in Indiana have limited exposure to commodity price risk for transactions involving purchases and sales of natural gas, coal and purchased power for the benefit of retail customers due to current state regulations, which, subject to compliance with those regulations, allow for recovery of the cost of such purchases through natural gas and fuel cost adjustment mechanisms. CenterPoint Energy’s utility natural gas operations in Indiana have regulatory authority to lock in pricing for up to 50% of annual natural gas purchases using arrangements with an original term of up to 10 years. This authority has been utilized to secure fixed price natural gas using both physical purchases and financial derivatives. As of March 31, 2021, the recorded fair value of non-trading energy derivative liabilities was $7 million for CenterPoint Energy’s utility natural gas operations in Indiana, which is offset by a regulatory asset.

Although CenterPoint Energy’s regulated operations are exposed to limited commodity price risk, natural gas and coal prices have other effects on working capital requirements, interest costs, and some level of price-sensitivity in volumes sold or delivered. Constructive regulatory orders, such as those authorizing lost margin recovery, other innovative rate designs and recovery of unaccounted for natural gas and other natural gas-related expenses, also mitigate the effect natural gas costs may have on CenterPoint Energy’s financial condition. In 2008, the PUCO approved an exit of the merchant function in CenterPoint Energy’s Ohio natural gas service territory, allowing Ohio customers to purchase substantially all natural gas directly from retail marketers rather than from CenterPoint Energy.

Item 4.CONTROLS AND PROCEDURES

In accordance with Exchange Act Rules 13a-15 and 15d-15, the Registrants carried out separate evaluations, under the supervision and with the participation of each company’s management, including the principal executive officer and principal financial officer, of the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report. Based on those evaluations, the principal executive officer and principal financial officer, in each case, concluded that the disclosure controls and procedures were effective as of March 31, 2021 to provide assurance that information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and such information is accumulated and communicated to management, including the principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding disclosure.

There has been no change in the Registrants’ internal controls over financial reporting that occurred during the three months ended March 31, 2021 that has materially affected, or is reasonably likely to materially affect, the Registrants’ internal controls over financial reporting.

PART II. OTHER INFORMATION

Item 1.LEGAL PROCEEDINGS

For a description of certain legal and regulatory proceedings, please read Note 14(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,” each of which is incorporated herein by reference. See also “Business — Regulation” and “— Environmental Matters” in Item 1 and “Legal Proceedings” in Item 3 of the Registrants’ combined 2020 Form 10-K.

Item 1A.RISK FACTORS

There have been no material changes from the risk factors disclosed in the Registrants’ combined 2020 Form 10-K.
73

Table of Contents

Item 6.EXHIBITS

Exhibits filed herewith are designated by a cross (†); all exhibits not so designated are incorporated by reference to a prior filing as indicated. Agreements included as exhibits are included only to provide information to investors regarding their terms. Agreements listed below may contain representations, warranties and other provisions that were made, among other things, to provide the parties thereto with specified rights and obligations and to allocate risk among them, and no such agreement should be relied upon as constituting or providing any factual disclosures about the Registrants, any other persons, any state of affairs or other matters.
 
Pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K, the Registrants have not filed as exhibits to this Form 10-Q certain long-term debt instruments, including indentures, under which the total amount of securities authorized does not exceed 10% of the total assets of the Registrants and its subsidiaries on a consolidated basis. The Registrants hereby agree to furnish a copy of any such instrument to the SEC upon request.
Exhibit
Number
DescriptionReport or Registration
Statement
SEC File or
Registration
Number
Exhibit
Reference
CenterPoint EnergyHouston ElectricCERC
2.1*CenterPoint Energy’s Form 8-K dated April 21, 20181-314472.1x
2.2*CenterPoint Energy’s Form 8-K dated February 3, 20201-31447x
2.3*CenterPoint Energy’s Form 8-K dated February 24, 20201-31447xx
†2.4*xx
3.1CenterPoint Energy’s Form 8-K dated July 24, 20081-314473.2x
3.2Houston Electric’s Form 10-Q for the quarter ended June 30, 20111-31873.1x
3.3

CERC Form 10-K for the year ended December 31, 19971-132653(a)(1)x
3.4CERC Form 10-K for the year ended December 31, 19971-132653(a)(2)x
3.5CERC Form 10-K for the year ended December 31, 19981-132653(a)(3)x
3.6CERC Form 10-Q for the quarter ended June 30, 20031-132653(a)(4)x
3.7CenterPoint Energy’s Form 8-K dated February 21, 20171-314473.1x
3.8Houston Electric’s Form 10-Q for the quarter ended June 30, 20111-31873.2x
3.9CERC Form 10-K for the year ended December 31, 19971-132653(b)x
74

Table of Contents
Exhibit
Number
DescriptionReport or Registration
Statement
SEC File or
Registration
Number
Exhibit
Reference
CenterPoint EnergyHouston ElectricCERC
3.10CenterPoint Energy’s Form 10-K for the year ended December 31, 20111-314473(c)x
3.11CenterPoint Energy’s Form 8-K dated August 22, 20181-314473.1x
3.12CenterPoint Energy’s Form 8-K dated September 25, 20181-314473.1x
3.13CenterPoint Energy’s Form 8-K dated May 6, 2020
1-314473.1x
4.1CenterPoint Energy’s Registration Statement on Form S-43-695024.1x
4.2CenterPoint Energy’s Form 8-K dated August 22, 20181-314474.1x
4.3CenterPoint Energy’s Form 8-K dated September 25, 20181-314474.1x
4.4CenterPoint Energy’s Form 8-K dated September 25, 20181-314474.2x
4.5CenterPoint Energy’s Form 8-K dated September 25, 20181-314474.3x
4.6CenterPoint Energy’s Form 8-K dated February 4, 20211-314474.1x
4.7CenterPoint Energy’s Form 8-K dated February 4, 20211-314474.2xx
4.8CenterPoint Energy’s Form 8-K dated February 4, 20211-314474.3xx
75

Table of Contents
Exhibit
Number
DescriptionReport or Registration
Statement
SEC File or
Registration
Number
Exhibit
Reference
CenterPoint EnergyHouston ElectricCERC
4.9CenterPoint Energy’s Form 8-K dated February 4, 20211-314474.4x
4.10CenterPoint Energy’s Form 8-K dated May 15, 20191-314474.1x
4.11First Amendment to Term Loan Agreement, dated as of April 26, 2021, by and among CenterPoint Energy, as Borrower, Mizuho Bank, Ltd., as Administrative Agent, and the banks named thereinCenterPoint Energy’s Form 8-K dated April 26, 20211-314474.1x
4.12CenterPoint Energy’s Form 8-K dated May 6, 2020
1-314474.1x
4.13CenterPoint Energy’s Form 8-K dated May 6, 2020
1-314474.2x
4.14CenterPoint Energy’s Form 8-K dated May 6, 2020
1-314474.3x
4.15CenterPoint Energy’s Form 8-K dated May 6, 2020
1-314474.4x
4.16CenterPoint Energy’s Form 8-K dated May 6, 2020
1-314474.5x
4.17CERC’s Form 8-K dated February 5, 19981-132654.1x
†4.18x
†4.19x
76

Table of Contents
Exhibit
Number
DescriptionReport or Registration
Statement
SEC File or
Registration
Number
Exhibit
Reference
CenterPoint EnergyHouston ElectricCERC
4.20Houston Electric’s Form 10-Q for the quarter ended September 30, 20021-31874(j)(1)x
4.21Houston Electric’s Form 8-K dated March 8, 20211-31874.4x
†4.22x
10.1CenterPoint Energy’s Form 10-K for the year ended December 31, 20201-3144710(q)(12)x
10.2CenterPoint Energy’s Form 10-K for the year ended December 31, 20201-3144710(q)(13)x
10.3Form 8-K of CenterPoint Energy, Inc. dated May 6, 20201-3144710.1x
10.4CenterPoint Energy’s Form 8-K dated February 16, 20211-3144710.1x
10.5CenterPoint Energy’s Form 8-K dated February 16, 20211-3144710.2x
10.6CenterPoint Energy’s Form 8-K dated April 27, 20171-3144710.1x
10.7CenterPoint Energy’s Form 10-K for the year ended December 31, 20201-3144710(t)(2)x
†31.1.1x
†31.1.2x
†31.1.3x
†31.2.1x
†31.2.2x
†31.2.3x
†32.1.1x
†32.1.2x
†32.1.3x
†32.2.1x
†32.2.2x
†32.2.3x
77

Table of Contents
Exhibit
Number
DescriptionReport or Registration
Statement
SEC File or
Registration
Number
Exhibit
Reference
CenterPoint EnergyHouston ElectricCERC
†101.INSInline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL documentxxx
†101.SCHInline XBRL Taxonomy Extension Schema Documentxxx
†101.CALInline XBRL Taxonomy Extension Calculation Linkbase Documentxxx
†101.DEFInline XBRL Taxonomy Extension Definition Linkbase Documentxxx
†101.LABInline XBRL Taxonomy Extension Labels Linkbase Documentxxx
†101.PREInline XBRL Taxonomy Extension Presentation Linkbase Documentxxx
†104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)xxx
*Schedules to this agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. A copy of any omitted schedules will be furnished supplementally to the SEC upon request; provided, however, that the parties may request confidential treatment pursuant to Rule 24b-2 of the Exchange Act for any document so furnished.
78

Table of Contents
SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

CENTERPOINT ENERGY, INC.
CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC
CENTERPOINT ENERGY RESOURCES CORP.
By:/s/ Kristie L. Colvin
Kristie L. Colvin
Senior Vice President and Chief Accounting Officer

Date: May 6, 2021



79