CenterPoint Energy (CNP) 10-K risk factor changes: FY2021 vs FY2020

The following, along with any additional legal proceedings identified or incorporated by reference in Item 3 of this combined report on Form 10-K, summarizes the principal risk factors associated with the holding [removed: company,] [added: company and] the businesses conducted by its [removed: subsidiaries and its interests in Enable.][added: subsidiaries.]

For other factors that may cause actual [added: results to differ from those indicated in any forward-]

[removed: results to differ from those indicated in any forward-looking] [added: looking] statement or projection contained in this combined report on Form 10-K, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Certain Factors Affecting Future Earnings” in Item 7, which should be read in conjunction with the risk factors contained in this Item 1A.

As a result, CenterPoint Energy depends on the performance of and distributions from its subsidiaries [removed: and from Enable] to meet its payment obligations and to pay dividends on its common and preferred stock, and provisions of applicable law or contractual restrictions could limit the amount of those distributions.

CenterPoint Energy derives all of its operating income from, and holds [added: substantially] all of its assets through, its [removed: subsidiaries, including its interests in Enable.][added: subsidiaries.]

As a result, CenterPoint Energy depends on the performance of and distributions from its subsidiaries [removed: and Enable] to meet its payment obligations and to pay dividends on its common and preferred stock.

In addition, provisions of applicable law, such as those limiting the legal sources of dividends, limit CenterPoint Energy’s subsidiaries’ [removed: and Enable’s] ability to make payments or other distributions to CenterPoint Energy, and its subsidiaries [removed: or Enable] could agree to contractual restrictions on their ability to make payments or other distributions.

While current ring-fencing measures have not impacted Houston Electric’s ability to pay dividends to CenterPoint Energy, the imposition of any additional [removed: ring-fencing] measures impacting CenterPoint Energy’s ability to receive dividends from Houston Electric could materially adversely affect CenterPoint Energy’s cash flows, credit quality, financial condition and results of operations.

CenterPoint Energy’s right to receive [removed: any] assets of any subsidiary, and therefore the right of its creditors to participate in those assets, [removed: will be] [added: are] structurally subordinated to the claims of that subsidiary’s creditors, including trade creditors.

In addition, even if CenterPoint Energy were a creditor of any subsidiary, its rights as a creditor would [added: likely] be effectively subordinated to any security interest in the assets of that subsidiary and any [added: senior] indebtedness of the [removed: subsidiary senior to that held by CenterPoint Energy.][added: subsidiary.]

For example, we depend on (i) long-term debt, (ii) borrowings through our revolving credit facilities and, for CenterPoint Energy and CERC, commercial paper [removed: programs, (iii) distributions from CenterPoint Energy’s interests in Enable] [added: programs] and [removed: (iv)] [added: (iii)] if market conditions permit, issuances of additional shares of common or preferred stock by CenterPoint Energy.

As of December 31, [removed: 2020,] [added: 2021,] CenterPoint Energy had [removed: $13.4] [added: $16] billion of outstanding indebtedness on a consolidated basis, which includes [removed: $747] [added: $537] million of non-recourse Securitization Bonds.

For information on outstanding indebtedness of Houston Electric and CERC as well as [removed: maturities through 2025,] [added: future maturities,] see Note 14 to the consolidated financial statements.

- general economic and capital market [removed: conditions;][added: conditions, including inflation;]

- the future performance of our [removed: and Enable’s] businesses;

[removed: With respect to impacts related to our investment in Enable, see] [added: See] Note [removed: 22] [added: 7] to the consolidated financial statements for further [removed: information on the recently announced Enable Merger.][added: information.]

The Registrants’ current credit ratings and any changes in credit ratings in [removed: 2020] [added: 2021] and to date in [removed: 2021] [added: 2022] are discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Other Matters — Impact on Liquidity of a Downgrade in Credit Ratings” in Item 7 of Part II of this report.

These credit ratings may not remain in effect for any given period of time and one or more of these ratings may be [removed: lowered] [added: reduced] or withdrawn [removed: entirely] by a rating agency.

An impairment of goodwill, long-lived assets, including intangible assets, equity method investments and an impairment or fair value adjustment [removed: to CenterPoint Energy’s Enable Series A Preferred Unit investment] could reduce our earnings.

Long-lived assets, including intangible assets with finite useful lives, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying [removed: amount] [added: value] may not be recoverable.

During the year ended December 31, 2020, CenterPoint Energy identified and recorded a goodwill impairment charge of $185 million in the Indiana Electric reporting [removed: unit, reducing the carrying value of the reporting unit to its fair value as of March 31, 2020.][added: unit.]

Should the annual goodwill impairment test or another periodic impairment test or an observable [removed: transaction, including for the Series A Preferred Unit investment,] [added: transaction] indicate the fair value of our assets is less than the carrying value, we would be required to take a non-cash charge to earnings with a correlative effect on [removed: equity and] [added: equity, increasing] balance sheet leverage as measured by debt to total capitalization.

A non-cash impairment charge or fair value adjustment could materially adversely impact our [added: financial condition and] results of [removed: operations and financial condition.][added: operations.]

CenterPoint Energy has approximately $828 million principal amount of ZENS outstanding as of December 31, [removed: 2020.][added: 2021.]

CenterPoint Energy may redeem all of the ZENS at any time at a redemption amount per ZENS equal to the higher of the contingent principal amount per ZENS [removed: ($56] [added: ($38] million in the aggregate, or [removed: $3.97] [added: $2.65] per ZENS, as of December 31, [removed: 2020)] [added: 2021)] or the sum of the current market value of the reference shares attributable to one ZENS at the time of redemption.

If the ZENS had been redeemed on December 31, [removed: 2020,] [added: 2021,] deferred taxes of approximately [removed: $471] [added: $539] million would have been payable in [removed: 2020,] [added: 2021,] based on [removed: 2020] [added: 2021] tax rates in effect.

In addition, if all the shares of ZENS-Related Securities had been sold on December 31, [removed: 2020] [added: 2021] to fund the aggregate redemption amount, capital gains taxes of approximately [removed: $159] [added: $146] million would have been payable in [removed: 2020.][added: 2021.]

While funds for the payment of cash upon exchange of ZENS could be obtained from the sale of the shares of ZENS-Related Securities that CenterPoint Energy owns or from other sources, ZENS exchanges result in a cash outflow [added: because tax deferrals related to the ZENS and ZENS-Related Securities shares would typically be disposed when ZENS are exchanged and ZENS-Related Securities shares are sold.]

Dividend requirements associated with CenterPoint Energy’s Series A Preferred [removed: Stock, Series B Preferred] Stock [removed: and Series C Preferred Stock] subject it to certain risks.

CenterPoint Energy has [removed: also issued 725,000] [added: 800,000] shares of Series [removed: C] [added: A] Preferred Stock [removed: of which 625,000 shares remain] outstanding.

Any future payments of cash dividends, and the amount of any cash dividends CenterPoint Energy pays, on its Series A Preferred [removed: Stock, Series B Preferred] Stock [removed: and Series C Preferred Stock] will depend on, among other things, its financial condition, capital requirements and results of operations and the ability of our subsidiaries [removed: and Enable] to distribute cash to CenterPoint Energy, as well as other factors that CenterPoint Energy’s Board of Directors (or an authorized committee thereof) may consider relevant.

Any failure to pay scheduled dividends on the Series A Preferred [removed: Stock, Series B Preferred] Stock [removed: and Series C Preferred Stock] when due could materially adversely impact our ability to access capital on acceptable terms and would likely have a material adverse impact on the market price of the Series A Preferred Stock, [removed: the Series B Preferred Stock,] Common Stock and CenterPoint Energy’s debt securities and would prohibit CenterPoint Energy, under the terms of the Series A Preferred [removed: Stock and Series B Preferred] Stock, from paying cash dividends on or repurchasing shares of Common Stock (subject to limited exceptions) until such time as CenterPoint Energy has paid all accumulated and unpaid dividends on the Series A Preferred [removed: Stock and the Series B Preferred] Stock.

[removed: Further, the terms of the Series A Preferred Stock and the Series B Preferred Stock provide that if dividends on any of the respective shares have not been declared and paid for the equivalent of three or more semi-annual or six or more quarterly dividend periods, whether or not for] consecutive dividend periods, the holders of such shares, voting together as a single class with holders of any and all other series of CenterPoint Energy’s capital stock on parity with its Series A Preferred Stock [removed: or its Series B Preferred Stock] (as to the payment of dividends and amounts payable on liquidation, dissolution or winding up of CenterPoint Energy’s affairs) upon which like voting rights have been conferred and are exercisable, will be entitled to vote for the election of a total of two additional members of CenterPoint Energy’s Board of Directors, subject to certain terms and limitations.

Changes in the method of determining LIBOR, or the replacement of LIBOR with an alternative reference rate, may adversely affect the cost of capital related to outstanding debt and other financial [removed: instruments and may adversely affect the cash distributions received from the Enable Series A Preferred Units.][added: instruments.]

LIBOR is [added: currently] the basic rate of interest widely used as a global reference for setting interest rates on variable rate loans and other securities.

[removed: On November 30, 2020, the] [added: The] Financial Conduct Authority [added: in the United Kingdom previously] announced [removed: its] [added: that it would phase out LIBOR as a benchmark by 2021, but later expressed] support for the extension of certain tenors of U.S. dollar LIBOR until June 2023, as well as the replacement of LIBOR by the SOFR.

[removed: However, because] [added: Because] SOFR is a broad U.S. Treasury repo financing rate that represents overnight secured funding transactions, it differs fundamentally from [removed: LIBOR..][added: LIBOR.]

[removed: The future of LIBOR at this time remains uncertain and any] [added: Any] changes in the methods by which LIBOR is determined or regulatory activity related to LIBOR’s phaseout could cause LIBOR to perform differently than in the past or cease to exist.

Changes in the method of calculating LIBOR, or the replacement of LIBOR with an alternative rate or [removed: benchmark,] [added: benchmark such as SOFR,] may adversely affect interest rates and result in higher borrowing costs.

[removed: However, we] [added: We] are still currently evaluating the impact of any such potential benchmark replacements or unavailability of LIBOR.

CenterPoint Energy is a holding company that derives all of its operating income from, and holds substantially all of its assets through, its subsidiaries.

- unanticipated actions from the Federal Reserve;

- investor willingness to invest in companies associated with fossil fuels;

Goodwill is tested for impairment at least annually, as well as when events or changes in circumstances indicates that the carrying value may not be recoverable.

No impairments to goodwill were recorded during the year ended December 31, 2021.

Further, the terms of the Series A Preferred Stock provide that if dividends on any of the respective shares have not been declared and paid for the equivalent of three or more semi-annual or six or more quarterly dividend periods, whether or not for

Accordingly, beginning January 1, 2022, the Financial Conduct Authority ceased publishing one week and two-month U.S. dollar LIBOR and is expected to cease publishing all remaining U.S. dollar LIBOR tenors in June 2023.

The Federal Reserve has also advised banks to cease entering into new contracts that use U.S. dollar LIBOR as a reference rate.

See also “—The February 2021 Winter Storm...” below for further information.

As allowed by a new law enacted by the Texas legislature after the February 2021 Winter Storm Event, Houston Electric is now leasing mobile generation units that can provide temporary emergency electric energy and aid in restoring power to some customers during certain widespread power outages that are impacting its distribution system.

The amount of electricity generated by the state’s power generation companies was insufficient to meet the amount demanded by customers.

This resulted in ERCOT directing TDUs to significantly Load Shed, which caused outages across the ERCOT electric grid of Texas, including in Houston Electric’s service territory.

For more information, see “— Houston Electric’s use of temporary ...” and “— The February 2021 Winter Storm ...”

Similarly, while Indiana Electric generates power, it is also party to a number of PPAs with third parties.

Indiana Electric’s power generation may be disrupted or otherwise insufficient, if third parties do not deliver required power under our PPAs, power generation capacity is inadequate or MISO issues directives to its members (such as Indiana Electric) to implement controlled outages as a result of an emergency or due to reliability issues.

If such disruptions were to occur, Indiana Electric’s transmission and distribution services may be diminished or interrupted; it could have claims and litigation filed against it; and its reputation, financial condition, results of operations and cash flows could be adversely affected.

In 2021, Indiana Electric experienced coal supply shortages due to labor shortages that the coal industry is experiencing.

While the coal supply shortage that Indiana Electric experienced did not impact its ability to deliver electricity to its customers, labor shortages as well as supply shortages in the future, whether caused by insufficient supply or supplier bankruptcy or other regulatory and supply issues in the mining industry, may lead to increased cost and have a material adverse impact on our operations, which could have a material adverse effect on our financial condition, results of operations and cash flows.

See “— Continued disruptions to the supply...”

As of December 31, 2021, Houston Electric provided electric delivery service to approximately 59 REPs.

Adverse economic

Houston Electric’s PUCT-approved tariff outlines the remedies available to Houston Electric in the event that a REP defaults on amounts owed.

Among the remedies available to Houston Electric are seeking recourse against any cash deposit, letter of credit, or surety bond provided by the REP or implementing mutually agreeable terms with the REP.

For example, following the February 2021 Winter Storm Event, multiple REPs filed for bankruptcy.

We are currently capturing the amounts owed by the REPs as a permitted regulatory asset for bad debt expenses, which will be subject to a reasonableness review by the PUCT when we seek recovery in our next base rate case.

On November 17, 2021, Indiana Electric received the staff report on the IRP.

For example, we, along with our developers of the Posey solar project, have recently announced plans to downsize the Posey solar project from 300 MW to 200 MW due to supply chain issues experienced in the energy industry, the rising cost of commodities and community feedback.

For additional information, see “— Continued disruptions to the supply...” Furthermore, we have announced our intent to acquire and/or develop additional solar and wind facilities as part of our capital plan.

However, we have not yet entered into definitive agreements with developers for the acquisition and/or development of such additional projects, and we face significant competition with other bidders for a limited number of such generation facilities that developers plan to construct, including those that are in an acceptable position on the MISO interconnection queue.

As a result, suitable generation facility project candidates may not be available on terms and conditions we find acceptable, or the expected benefits of a completed facility may not be realized fully or at all, or may not be realized in the anticipated timeframe.

If we are unable to complete or acquire such generation facilities, or if they do not perform as anticipated, our future growth, financial condition, results of operations and cash flows may be adversely affected.

The FERC has designated the NERC as the

While Houston Electric and Indiana Electric have received minor fines in the past for noncompliance, if Houston Electric or Indiana Electric were to be found to be in noncompliance with applicable mandatory reliability standards again, they would be subject to sanctions, including substantial monetary penalties, which could range as high as over a million dollars per violation per day, and non-monetary penalties, such as having to file a mitigation plan to prevent recurrence of a similar violation and having certain milestones in such plan tracked.

Houston Electric’s use of temporary mobile generation resources is subject to various risks, including related failure to obtain and deploy sufficient mobile generation units, potential performance issues and allegations about Houston Electric’s deployment of the resources (including the planning, execution, and effectiveness of the same), regulatory and environmental requirements, and timely recovery of capital.

Following the February 2021 Winter Storm Event, the Texas legislature passed a new law, effective September 1, 2021, that allows TDUs, like Houston Electric, to lease and operate temporary back-up generation resources during widespread power outages where ERCOT has ordered a TDU to shed load or the TDU’s distribution facilities are not being fully served by the bulk power system under normal operations.

In response to this legislation, Houston Electric has entered into short-term and long-term leases with a third party provider to obtain mobile generation units.

However, if Houston Electric is otherwise unable to deploy a sufficient number of mobile generation units in time to respond to a particular event; if the mobile generation units fail to perform as intended; if Houston Electric is otherwise unable to provide back-up generation resources and restore power as intended; or if the use of mobile generation units or their failure to perform causes or is alleged to cause any personal injury, property damage, or other damage or loss due to allegations that it failed to deploy such units reasonably or effectively and failed to respond to particular power outages, Houston Electric could be subject to claims, demands, litigation, liability, regulatory scrutiny, and loss of reputation.

As noted above, the legislation prescribes specific and limited use for the mobile generation units, and Houston Electric’s mobile generation units have limited generation capacity, such that in future events customers could still be without power despite deployment of the mobile units.

While Houston Electric has insurance coverage and indemnity rights for its use of mobile generation units, if its insurers or indemnitors fail to meet their indemnity obligations, Houston Electric could be liable for personal injury, property damage, or other damage or loss.

Further, the mobile generation units are subject to various environmental regulations and permitting requirements, which could have an impact on Houston Electric’s ability to use these units, and noncompliance with which could subject Houston Electric to further potential liability.

CenterPoint Energy also owns interests in Enable.

CenterPoint Energy is a holding company with no operations or operating assets of its own.

- volatility or fluctuations in distributions from Enable’s units or volatility in Enable’s unit price;

- integration of Vectren’s businesses into CenterPoint Energy, including technology systems;

In addition, our future financing activities may also be impacted by our ability to consummate the proposed sale of our Natural Gas businesses in Arkansas and Oklahoma.

For further information on the proposed sale, see “— Our potential business strategies and strategic initiatives, including merger and acquisition activities and the disposition of assets or businesses, may not be completed or perform as expected, adversely affecting our financial condition, results of operations and cash flows” below.

For investments CenterPoint Energy accounts for under the equity method, the impairment test considers whether the fair value of such investment as a whole, not the underlying net assets, has declined and whether that decline is other than temporary.

CenterPoint Energy identified and recorded an impairment during the year ended December 31, 2020 based on the severity of the decline in Enable’s common unit price during the three months ended March 31, 2020 due to the macroeconomic conditions related in part to the COVID-19 pandemic, combined with Enable’s announcement on April 1, 2020 to reduce its quarterly distributions per common unit by 50%, and the market outlook indicating excess supply of crude oil and natural gas and continued depressed crude oil and natural gas prices impacting the midstream oil and gas industry.

For further information regarding CenterPoint Energy’s impairment of its equity investment in Enable, please see Notes 10 and 11 to the consolidated financial statements.

A sustained or severe decline in Enable’s common unit price could result in CenterPoint Energy recording impairment charges again in the future.

because tax deferrals related to the ZENS and ZENS-Related Securities shares would typically cease when ZENS are exchanged and ZENS-Related Securities shares are sold.

CenterPoint Energy has issued 800,000 shares of Series A Preferred Stock and 19,550,000 depositary shares, each representing a 1/20th interest in a share of CenterPoint Energy’s Series B Preferred Stock, which is expected to convert into Common Stock on September 1, 2021.

The Series C Preferred Stock are expected to convert to Common Stock on or around May 7, 2021.

Additionally, on and after February 18, 2021, Enable is expected to pay distributions on the Enable Series A Preferred Units with an annual rate equal to three-month LIBOR plus 8.5%.

On July 27, 2017, the Financial Conduct Authority in the United Kingdom announced that it would phase out LIBOR as a benchmark by the end of 2021.

While this announcement extends the transition period to June 2023, the Federal Reserve concurrently issued a statement advising banks to stop new U.S. dollar LIBOR issuances by the end of 2021.

It is unclear whether other new methods of calculating LIBOR will be established such that it continues to exist after 2021.

Houston Electric transmits and distributes to customers of REPs electric power that the REPs obtain from power generation facilities owned by third parties.

The state’s power generation fell short of demand, resulting in significant electricity outages across Texas, including in Houston Electric’s service territory.

See also “—The February 2021 Winter Storm Event has caused severe disruptions to our customers and our markets in certain of our jurisdictions and

could have a material adverse impact to our financial condition, results of operations, cash flows and liquidity” below for further information.

As of December 31, 2020, Houston Electric did business with approximately 64 REPs.

Indiana Electric’s 2016 IRP modeling projected that the lowest cost and least risk generation portfolio to serve customers over the next 20 years involve retirement of a significant portion of its current generating fleet and replacing that generation capacity with other resources.

Implementation of Indiana Electric’s IRP will likely require recovery of new capital investments, as well as costs of retiring the current generation fleet, including any remaining unrecovered costs of retired assets.

Depending on comments received on the IRP, the filing of any future requests for generating facilities could be delayed.

Further, certain legislative activities such as a prohibition on the construction of new generation assets in excess of a set MW capacity, similar to moratorium legislation introduced in 2019 and ultimately defeated, or other legislation restricting or delaying new generation could negatively affect Indiana Electric’s ability to construct new generation facilities and execution of its capital plan.

Currently, its coal supply is purchased largely from a

In addition, if Houston Electric or Indiana Electric were to be found to be in noncompliance with applicable mandatory reliability standards, they could be subject to sanctions, including substantial monetary penalties.

See “—The February 2021 Winter Storm Event has caused severe disruptions to our customers and our markets in certain of our jurisdictions and could have a material adverse impact to our financial condition, results of operations, cash flows and liquidity” below and Note 22 to the consolidated financial statements for further information.

Natural Gas has pending, or anticipates the filing of, rate cases in Indiana and Minnesota during 2021.

approved, and are subject to certain limitations that may reduce or otherwise impede Natural Gas’ ability to adjust its rates or result in rates below those requested by Natural Gas.

operations.

CenterPoint Energy continues to evaluate the Part B amendments to determine potential impacts.

For example, President Biden has recommitted the United States to the Paris Agreement.

The terms on which the United States will be re-entering the Paris Agreement are unclear at this time.

Additionally, Houston Electric’s and Indiana Electric’s transmission and distribution businesses’ revenues could be adversely affected to the extent any resulting regulatory action has the effect of reducing consumption of electricity by ultimate consumers within its service territory.

For further discussion, see “Business—Environmental Matters” in Item 1 and “— Risk Factors Affecting Natural Gas’ Business —Natural Gas must compete with alternate energy sources, which could result in less natural gas delivered and have an adverse impact on our results of operations, financial condition and cash flows.”

Furthermore, in March 2020, we established a goal to reduce carbon emissions directly attributable to our operations 70% from 2005 levels by 2035, and we announced a broad corporate initiative to achieve a net reduction of carbon emissions attributed to customer usage 20–30% from 2005 levels by 2040.

Our ability to achieve these carbon emission reduction goals depends on various external factors, including supportive energy policies, alternative fuels programs, research and development efforts focused on low-carbon technologies such as carbon capture, customer participation in conservation and energy-efficiency programs and low natural gas prices.

We expect to increase our renewable energy resources portfolio as part of our IRP process and to continue optimizing technology advancements to modernize our systems.

CenterPoint Energy, Inc. is a public utility holding [removed: company and owns interests in Enable.][added: company.]

CERC Corp. is an indirect, wholly-owned subsidiary of CenterPoint Energy that owns and operates natural gas distribution facilities in [removed: six] [added: several] states, with operating subsidiaries that own and operate permanent pipeline connections through interconnects with various interstate and intrastate pipeline [removed: companies, and provide temporary delivery of LNG and CNG throughout the contiguous 48 states.][added: companies.]

[removed: Houston Electric also] [added: CERC] consists of a single reportable segment.

As of December 31, [removed: 2020,] [added: 2021,] CenterPoint Energy’s reportable segments were [removed: Electric, Natural Gas] [added: Electric] and [removed: Midstream Investments.][added: Natural Gas.]

- The Electric reportable segment includes electric transmission and distribution services [removed: in Houston Electric’s transmission and distribution service territory] that are subject to rate regulation [added: in Houston Electric’s] and [added: Indiana Electric’s service territories, as well as the] impacts of generation-related stranded costs and other true-up balances recoverable by the regulated electric utility and energy delivery services to electric customers and electric generation assets to serve [removed: its] electric customers and optimize those assets in the [added: wholesale power market in Indiana Electric’s service territory.]

- The Natural Gas reportable segment includes natural gas distribution services that are subject to rate regulation in CenterPoint Energy’s and CERC’s service territories, as well as home appliance maintenance and repair services to customers in Minnesota and home repair protection plans to natural gas customers in [removed: Texas] [added: Arkansas, Indiana, Mississippi, Ohio, Oklahoma] and [removed: Louisiana] [added: Texas] through a third [removed: party.][added: party as of December 31, 2021.]

For further [removed: information on the Enable Merger,] [added: information,] see Note [removed: 22] [added: 8] to the consolidated financial statements.

We expect our [removed: and Enable’s] businesses to continue to be affected by the key factors and trends discussed below.

For [removed: further] [added: more] information, see Note [removed: 4] [added: 16] to the consolidated financial statements.

To assess our financial performance, our management primarily monitors [added: recovery of costs and return on investments by the evaluation of] net income and cash flows, among other things, from our [added: regulated service territories within our] reportable segments.

Within these broader financial measures, we monitor margins, [added: natural gas and fuel costs,] interest expense, capital spending [removed: and] working capital [removed: requirements.][added: requirements, and operation and maintenance expense.]

In addition to these financial measures, we also monitor a number of variables that management considers important to [added: gauge the performance of] our reportable segments, including the number of customers, throughput, use per customer, [added: commodity prices, heating and cooling degree days, environmental impacts, safety factors, system reliability and customer satisfaction.]

The nature of our businesses requires significant amounts of capital investment, [added: particularly in light of our new 10-year capital plan,] and we rely on internally generated cash, borrowings under our credit facilities, proceeds from commercial paper and issuances of debt and equity in the capital markets to satisfy these capital needs.

With respect to CERC, we intend to use proceeds from [removed: any potential asset sales, including] the [removed: potential] [added: completed] dispositions of our Natural Gas businesses in Arkansas and [removed: Oklahoma,] [added: Oklahoma and any potential further asset sales] to satisfy a portion of its capital needs.

To the extent adverse economic [removed: conditions] [added: conditions, including supply chain disruptions,] affect our suppliers and customers, results from our energy delivery businesses may suffer.

Although the Houston area represents a large part of our customer base, we have [removed: a diverse customer base throughout the eight states our utility businesses serve.]

In Minnesota, for instance, education and health services are the state’s largest [removed: sectors, whereas Arkansas has a large food manufacturing industry.][added: sectors.]

[removed: Beginning in 2019 and continuing through 2020, a] [added: A] new construction cycle in Houston helped overall residential customer growth to surpass the long-term trend of [removed: 2%.][added: 2% for the last two years.]

[added: Regulatory Proceedings.] For [removed: details] [added: information] related to our pending and completed regulatory proceedings [removed: and orders] in [removed: 2020] [added: 2021] and to date in [removed: 2021,] [added: 2022,] see “—Liquidity and Capital Resources —Regulatory Matters” [removed: in Item 7 of Part II of this report, which discussion is incorporated herein by reference.][added: below.]

For information [removed: on] [added: regarding] the Enable Merger, see [removed: Note 22] [added: Notes 4, 11 and 12] to the consolidated financial statements.

February 2021 Winter Storm Event. In February 2021, portions of the United States experienced an extreme and unprecedented winter weather event [removed: resulting] [added: that resulted] in corresponding electricity generation shortages, including in Texas, [removed: and] natural gas shortages and increased wholesale prices of natural gas in the United States.

Many [added: customers of] Houston [removed: Electric] [added: Electric’s REPs] and, to a lesser extent, [removed: CERC customers have been] [added: 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 [removed: have] declared states of either disaster or emergencies in their respective states.

The February 2021 Winter Storm Event [removed: has had, and may continue to have,] [added: resulted in] financial impacts [removed: on] [added: to] CenterPoint Energy, Houston Electric and CERC, including substantial increases in prices for natural gas, decreased revenues at Houston Electric due to ERCOT-mandated outages, [removed: the need to raise] additional [added: interest expense related to] external financing to pay for natural gas working capital, [removed: potential impacts to credit metrics,] significant impacts to the [removed: REPs serving customers of Houston Electric,] [added: REPs,] including the REPs’ ability to pay [removed: invoices,] [added: 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 [removed: not] [added: not, at this time,] anticipate [removed: meaningful] long-term [added: financial impacts associated with the February 2021 Winter Storm Event, including] changes to its credit [removed: profile or] [added: profile,] credit ratings [added: or liquidity,] given [removed: its anticipated access to external financing sources and] the regulatory mechanisms that are in place [added: in our jurisdictions] to recover [removed: these excess costs.][added: the extraordinary expenses.]

[removed: For further discussion of this impairment, see] [added: See] Note [removed: 10] [added: 21] to the consolidated financial statements.

For [removed: further information,] [added: more information regarding regulatory impacts, debt transactions and litigation,] see [added: Notes 7, 14 and 16 to the consolidated financial statements and] “—Liquidity and Capital [removed: Resources—Future] [added: Resources —Future] Sources and Uses of Cash” [added: and “—Regulatory Matters”] below.

[removed: For further discussion, see] [added: See] Note [removed: 11] [added: 4] to the consolidated financial [removed: statements.][added: statements for further details.]

As announced in December 2020, [removed: CenterPoint Energy’s] [added: our] business strategy incorporated the Business Review and Evaluation Committee’s recommendations to increase [removed: its] [added: our] planned capital expenditures in [removed: its] [added: our] electric and [removed: Natural Gas] [added: natural gas] businesses to support rate base growth and sell certain of [removed: its] [added: our] Natural Gas businesses located in Arkansas and Oklahoma as a means to efficiently finance a portion of such increased capital [removed: expenditures, among other recommendations.][added: expenditures.]

For [removed: more] information about [removed: the private placements,] [added: COVID-19 regulatory matters,] see Note [removed: 13] [added: 7] to the consolidated financial statements.

For more information, see [removed: Note 14] [added: Notes 4, 11 and 12] to the consolidated financial statements.

The magnitude of our [removed: and Enable’s] future earnings and results of our [removed: and Enable’s] operations will depend on or be affected by numerous factors that apply to all Registrants unless otherwise indicated including:

- the [removed: expected benefits of the Merger and integration, including the outcome of shareholder litigation filed against Vectren that could reduce anticipated benefits of the Merger; as well as the ability to successfully integrate the Vectren businesses and to realize anticipated benefits and commercial opportunities; and the] development of new opportunities and the performance of projects undertaken by [removed: ESG, including,] [added: Energy Systems Group, 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;

- timely and appropriate rate actions that allow recovery of costs and a reasonable return on [removed: investment;][added: investment, including the timing and amount of the recovery of Houston Electric’s mobile generation leases;]

- weather variations and other natural phenomena, including the impact of severe weather events on operations and capital, [removed: including] [added: such as] impacts from the February 2021 Winter Storm Event;

- the COVID-19 pandemic and its effect on our [removed: 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;

- state and federal legislative and regulatory actions or developments affecting various aspects of our [removed: businesses (including the businesses of Enable),] [added: businesses,] 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;

- 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 [added: in tax laws] under the [removed: Biden] [added: current] administration, and uncertainties involving state commissions’ and local municipalities’ regulatory requirements and determinations regarding the treatment of EDIT and our 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 [removed: the continued operation,] [added: operations,] cost recovery of generation plant costs and related assets, and CenterPoint Energy’s [removed: carbon emissions reduction targets;][added: net zero emission goals;]

- [removed: any] direct or indirect effects on our [removed: or Enable’s] facilities, [added: resources,] operations and financial condition resulting from terrorism, [removed: cyber-attacks,] [added: cyber attacks or intrusions,] 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, [removed: tornadoes,] [added: tornadoes and other severe weather events,] pandemic health events or other occurrences;

Houston Electric and CERC each consist of a single reportable segment.

The sale of our Natural Gas businesses in Arkansas and Oklahoma was completed in January 2022.

In February 2021, we announced our support for the Enable Merger, which closed in December 2021.

At our September 2021 analyst day, we announced our plans to exit the midstream sector by the end of 2022 and become a pure-play utility focusing on growth in our existing service territories.

In September 2021, we entered into a Forward Sale Agreement to sell 50 million Energy Transfer Common Units immediately following the closing of the Enable Merger.

In December 2021, we completed sales of 150 million Energy Transfer Common Units (inclusive of the Energy Transfer Common Units sold pursuant to the Forward Sale Agreement) and 192,390 Energy Transfer Series G Preferred Units for net proceeds of $1,320 million.

Proceeds from future dispositions of Energy Transfer Common Units or Energy Transfer Series G Preferred Units could reduce borrowings or provide additional support for our capital investment needs.

a diverse customer base throughout the various states our utility businesses serve.

Further, the global supply chain has experienced significant disruptions due to a multitude of factors, such as labor shortages, resource availability, long lead times, inflation and weather.

These disruptions have adversely impacted the utility industry.

Like many of our peers, we have experienced disruptions to our supply chain and may continue to experience such disruptions in the future.

For example, we, along with the developer of the project, recently announced plans to downsize the solar array to be built in Posey County, Indiana from 300 MW to 200 MW due to supply chain issues experienced in the energy industry, rising cost of commodities and community feedback.

Sale of 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 in gas cost, including 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 sale closed on January 10, 2022.

On August 31, 2021, CenterPoint Energy, through its subsidiary CERC Corp., completed the sale of MES to Last Mile Energy.

Net Zero Emission Goals. In September 2021, CenterPoint Energy announced new net zero emission goals for both Scope 1 and certain Scope 2 emissions by 2035 as well as a goal to reduce certain Scope 3 emissions by 20% to 30% by 2035.

For more information regarding CenterPoint Energy’s new net zero emission goals and the risks associated with them, see “Risk Factors — Risk Factors Affecting Our Businesses — CenterPoint Energy is subject to operational and financial risks...” and “Management’s Discussion and Analysis — Liquidity and Capital Resources” in this Form 10-K.

continuing to work with individual regulatory agencies to reach a successful final resolution on the recovery of the extraordinary costs.

On December 2, 2021, the Enable Merger closed pursuant to the Enable Merger Agreement.

At the closing of the Enable Merger, CenterPoint Energy transferred 100% of the Enable Common Units and Enable Series A Preferred Units it owned in exchange for Energy Transfer Common Units and Energy Transfer Series G Preferred Units, respectively.

In December 2021, we completed sales of approximately 75% of the acquired Energy Transfer Common Units and 50% of Energy Transfer Series G Preferred Units for net proceeds of $1,320 million.

Debt Transactions. In 2021, CenterPoint Energy, Houston Electric and CERC issued a combined $4.5 billion in new debt and repaid or redeemed a combined $2.7 billion of debt, excluding scheduled principal payments on Securitization Bonds.

Additionally, on January 31, 2022, CERC Corp. redeemed $425 million aggregate principal amount of CERC’s outstanding senior notes due 2023.

For further information about debt transactions in 2021 and to date in 2022, see Note 12 to the consolidated financial statements.

Board of Directors Governance Structure.

On July 22, 2021, CenterPoint Energy announced the decision of the independent directors of the Board to implement a new independent Board leadership and governance structure and appointed a new independent chair of the Board.

To implement this new governance structure, the independent directors of the Board eliminated the Executive Chairman position.

- volatility in the markets for oil and natural gas as a result of, among other factors, the actions of certain crude-oil exporting countries and the Organization of Petroleum Exporting Countries, increasing exports of LNG to Europe and climate change concerns, including the increasing adoption and use of alternative energy sources;

- CenterPoint Energy’s ability to execute on its initiatives, targets and goals, including its net zero emission goals and its operations and maintenance expenditure goals;

- the outcome of litigation, including litigation related to the February 2021 Winter Storm Event;

| Corporate & Other (2) | | | | | | (305) | | | | | | (201) | | | | | | (272) | | | | | | (104) | | | | | | 71 | | |

| Discontinued Operations | | | | | | 818 | | | | | | (1,256) | | | | | | 276 | | | | | | 2,074 | | | | | | (1,532) | | |

2021 Compared to 2020

- goodwill impairment at Indiana Electric in 2020;

- the dividend requirement and amortization of beneficial conversion feature associated with Series C Preferred Stock in 2020; and

- favorable income tax impacts in 2021, partially offset by the CARES Act in 2020.

- losses on the sale of Energy Transfer Common Units and Energy Transfer Series G Preferred Units in 2021;

- make-whole premiums on debt redeemed in 2021; and

- the impact of the Board-implemented governance changes announced in July 2021.

Excluding those items, income available to common shareholders increased $191 million primarily due to the following key factors:

During the fourth quarter of 2020, CenterPoint Energy’s CODM requested that the financial information for the electric businesses be presented on an aggregated basis for review, resulting in one Electric reportable segment, comprised of Houston Electric and Indiana Electric.

Also, the Natural Gas Distribution reportable segment was renamed Natural Gas.

Additionally, during the fourth quarter of 2020, CenterPoint Energy’s CODM requested that the CERC corporate functions be included within the financial results of CenterPoint Energy’s Natural Gas reportable segment for review purposes.

During the fourth quarter of 2020, CERC’s CODM requested that the CERC corporate functions be included within the financial results of CERC’s Natural Gas reportable segment for review purposes.

As a result of this change, and following the divestiture of the Energy Services Disposal Group, CERC now consists of a single reportable segment.

wholesale power market in Indiana Electric’s transmission and distribution service territory.

- The Midstream Investments reportable segment includes CenterPoint Energy’s equity investment in Enable and is dependent upon the results of Enable, which are driven primarily by the volume of natural gas, NGLs and crude oil that Enable gathers, processes and transports across its systems and other factors as discussed below under “— Factors Influencing Midstream Investments.” 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 further information about the Midstream Investments reportable segment, see “Business — Our Business — Midstream Investments” in Item 1 of Part I of this report.

On February 1, 2019, we acquired Vectren for approximately $6 billion in cash.

Through its subsidiaries, Vectren’s operations consist of utility and non-utility businesses.

The utility operations include three public utilities, Indiana Gas, SIGECO and VEDO, which, in the aggregate, provide natural gas distribution and transportation services to nearly 67% of Indiana and about 20% of Ohio and electric transmission and distribution services to southwestern Indiana, including power generating and wholesale power operations.

In total, these utility operations supply natural gas and electricity to over one million customers in Indiana and Ohio.

The non-utility operations included ESG and Infrastructure Services.

ESG provides energy services through performance-based energy contracting operations and sustainable infrastructure services, such as renewables, distributed generation and combined heat and power projects.

ESG assists schools, hospitals, governmental facilities and other private institutions with reducing energy and maintenance costs by upgrading their facilities with energy-efficient equipment.

ESG operates throughout the United States.

Infrastructure Services, through its wholly-owned subsidiaries, provided underground pipeline and repair services to many utilities, including our utilities, as well as other industries.

Concurrent with the completion of the Merger in 2019, we added two new reportable segments, Indiana Electric Integrated and Infrastructure Services.

On February 3, 2020, CenterPoint Energy, through its subsidiary VUSI, entered into the Securities Purchase Agreement to sell the Infrastructure Services Disposal Group.

The transaction closed on April 9, 2020.

See Note 18 for further changes on reportable segments during 2020.

commodity prices and heating and cooling degree days.

From an operational standpoint, we monitor operation and maintenance expense, safety factors, system reliability and customer satisfaction to gauge our performance.

For example, the economic impacts of COVID-19 have been felt nationwide, with every region of the country experiencing deep reductions in employment in the second quarter of 2020.

We believe that all of the states that we serve have improved economically since then and continue to recover, although at different rates.

Despite the overall economic impact of the recession, housing growth has continued and accelerated in 2020.

CERC’s Natural Gas customer growth was 1.7% for 2020, which is slightly higher than in previous years.

Performance of the Electric reportable segment and the Natural Gas reportable segment is significantly influenced by energy usage per customer, which is significantly impacted by weather conditions.

For Houston Electric, revenues are generally higher during the warmer months when more electricity is used for cooling purposes.

For Indiana Electric, a significant portion of its sales are for space heating and cooling.

Consequently, as in certain past years, Indiana Electric’s results of operations may be adversely affected by warmer-than-normal heating season weather or colder-than-normal cooling season weather.

For CERC’s Natural Gas, demand for natural gas for heating purposes is generally higher in the colder months.

Therefore, we compare our results on a weather-adjusted basis.

In 2020, the Houston area experienced weather that was warmer than normal compared to 2019.

Although the summer months were somewhat hotter than normal, the warmer than normal temperatures started early in the year with a mild winter.

Our Natural Gas service territories experienced warmer weather in 2020 than it has since 2017.

Historically, both CenterPoint Energy’s TDU and CERC’s Natural Gas have utilized weather hedges to help reduce the impact of mild weather on their financial results.

CenterPoint Energy’s TDU and CERC’s Natural Gas entered into a weather hedge for the 2019–2020 winter heating season in Texas where no weather normalization mechanisms exist.

In CERC’s non-Texas jurisdictions, weather

As of December 31, [removed: 2020,] [added: 2021,] the Registrants had outstanding long-term debt and lease obligations and CenterPoint Energy had obligations under its ZENS that subject them to the risk of loss associated with movements in market interest rates.

CenterPoint Energy’s floating rate obligations aggregated [removed: $2.4] [added: $4.5] billion and [removed: $3.9] [added: $2.4] billion as of December 31, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] respectively.

If the floating interest rates were to increase by 10% from December 31, [removed: 2020] [added: 2021] rates, CenterPoint Energy’s combined interest expense would increase by approximately [removed: $1] [added: $2] million annually.

Houston Electric did not have any floating rate obligations as of either December 31, [removed: 2020] [added: 2021] or [removed: 2019.][added: 2020.]

CERC’s floating rate obligations aggregated [removed: $347 million] [added: $1.9 billion] and [removed: $376] [added: $347] million as of December 31, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] respectively.

If the floating interest rates were to increase by 10% from December 31, [removed: 2020] [added: 2021] rates, CERC’s combined interest expense would increase by approximately $1 million annually.

As of December 31, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] CenterPoint Energy had outstanding fixed-rate debt (excluding indexed debt securities) aggregating [removed: $11.1] [added: $11.7] billion and [removed: $11.2] [added: $11.1] billion, respectively, in principal amount and having a fair value of [removed: $12.9] [added: $13.0] billion and [removed: $12.2] [added: $12.9] billion, respectively.

However, the fair value of these instruments would increase by approximately [removed: $288] [added: $359] million if interest rates were to decline by 10% from their levels as of December 31, [removed: 2020.][added: 2021.]

As of December 31, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] Houston Electric had outstanding fixed-rate debt aggregating [removed: $5.1] [added: $5.5] billion and [removed: $5.0] [added: $5.1] billion, respectively, in principal amount and having a fair value of approximately [removed: $6.0] [added: $6.3] billion and [removed: $5.5] [added: $6.0] billion, respectively.

However, the fair value of these instruments would increase by approximately [removed: $161] [added: $214] million if interest rates were to decline by 10% from their levels as of December 31, [removed: 2020.][added: 2021.]

As of December 31, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] CERC had outstanding fixed-rate debt aggregating [removed: $2.1] [added: $2.5] billion and [removed: $2.2] [added: $2.1] billion, respectively, in principal amount and having a fair value of [removed: $2.5] [added: $2.8] billion and $2.5 billion, respectively.

However, the fair value of these instruments would increase by approximately [removed: $69] [added: $71] million if interest rates were to decline by 10% from their levels at December 31, [removed: 2020.][added: 2021.]

The debt component of [removed: $15] [added: $10] million at December 31, [removed: 2020] [added: 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 [removed: $2] [added: $1] million if interest rates were to decline by 10% from levels at December 31, [removed: 2020.][added: 2021.]

Changes in the fair value of the derivative component, a [removed: $953] [added: $903] million recorded liability at December 31, [removed: 2020,] [added: 2021,] are recorded in CenterPoint Energy’s 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.

[removed: If the risk-free] [added: free] interest rate were to increase by 10% from December 31, [removed: 2020] [added: 2021] levels, the fair value of the derivative component liability would decrease by [removed: less than] [added: approximately] $1 million, which would be recorded as an unrealized gain in CenterPoint Energy’s Statements of Consolidated Income.

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 [removed: ZENS.][added: ZENS and through its ownership of 51 million shares of Energy Transfer Common Units and 0.2 million shares of Energy Transfer Series G Preferred Units.]

See Note 12 to the consolidated financial statements for a discussion of CenterPoint Energy’s ZENS [removed: obligation.][added: obligation and the Energy Transfer Common Units and Energy Transfer Series G Preferred Units that CenterPoint Energy holds.]

A decrease of 10% from the December 31, [removed: 2020] [added: 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 on debt securities in CenterPoint Energy’s Statements of Consolidated Income.

As of December 31, [removed: 2020,] [added: 2021,] the recorded fair value of non-trading energy derivative [removed: liabilities] [added: assets] was [removed: $10] [added: $14] million for CenterPoint Energy’s utility natural gas operations in Indiana, which is offset by a regulatory asset.

If the risk-

As of December 31, 2020, the Enable Series A Preferred Units annual distribution rate was 10%.

On February 18, 2021, five years after the issue date, the Enable Series A Preferred Units annual distribution rate changed to a percentage of the Stated Series A Liquidation Preference per Series A Preferred unit equal to the sum of (a) Three-Month LIBOR, as calculated on each applicable date of determination, and (b) 8.50%.

CERC Corp. is an indirect, wholly-owned subsidiary of CenterPoint Energy that owns and operates natural gas distribution facilities in [removed: six] [added: several] states, with operating subsidiaries that own and operate permanent pipeline connections through interconnects with various interstate and intrastate pipeline [removed: companies, and provide temporary delivery of LNG and CNG throughout the contiguous 48 states.][added: companies.]

Vectren performs non-utility activities through [removed: ESG,] [added: Energy Systems Group,] which provides energy performance contracting and sustainable infrastructure services.

For further information, see Note [removed: 4] [added: 20] to the consolidated financial statements.

As of December 31, [removed: 2020,] [added: 2021,] CenterPoint Energy’s reportable segments were [removed: Electric, Natural Gas] [added: Electric] and [removed: Midstream Investments.][added: Natural Gas.]

- the charters of the audit, compensation, [removed: finance] and [removed: governance] [added: governance, environmental and sustainability] committees of our Board of Directors.

Our website address is [removed: *www.centerpointenergy.com.*] [added: *www.centerpointenergy.co*m*.*] Investors should also note that we announce material financial information in SEC filings, press releases and public conference calls.

For further discussion of the Securitization Bonds and the outstanding balances as of December 31, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] see Note 14 to the consolidated financial statements.

As of December 31, [removed: 2020,] [added: 2021,] Houston Electric’s customers consisted of approximately [removed: 64] [added: 59] REPs, which sell electricity to approximately [removed: 2.6] [added: 2.7] million metered customers in Houston Electric’s certificated service area, and municipalities, electric cooperatives and other distribution companies located outside Houston Electric’s certificated service area.

The table below reflects the number of metered customers in Houston Electric’s service area as of December 31, [removed: 2020:][added: 2021:]

As of December 31, [removed: 2020,] [added: 2021,] Indiana Electric supplied electric service to the following:

Total load and the related reserve margin at the time of the system summer peak on August [removed: 10, 2020,] [added: 26, 2021,] is presented below in MW, except for reserve margin at peak.

| Total load at peak | | | [removed: 984] [added: 1,003] | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Generating capability | | | [removed: 1,167] [added: 1,217] | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Purchase supply (effective capacity) | | | [removed: 37] [added: 38] | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Interruptible contracts & direct load control | | | [removed: 39] [added: 36] | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Total power supply capacity | | | [removed: 1,243] [added: 1,291] | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Reserve margin at peak | | | [removed: 26] [added: 29] | | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

The winter peak load for the [removed: 2019-2020] [added: 2020-2021] season of approximately [removed: 716] [added: 742] MW occurred on February [removed: 14, 2020.][added: 15, 2021.]

Indiana Electric’s newest [added: in-service] solar array, which was approved by the IURC in 2018, consists of approximately 150,000 solar panels distributed across 300 acres along Indiana State Road 545 between Troy and New Boston, Indiana.

[removed: Construction of the] [added: The] 50 MW universal solar array was [removed: nearing completion at the end of 2020, and the project was] placed in service for southwestern Indiana electric customers in early 2021.

Approximately [removed: 2.0] [added: 2.2] million tons were purchased for generating electricity during [removed: 2020.][added: 2021.]

Indiana Electric’s coal inventory was approximately [removed: 707,000] [added: 246,000] tons as of December 31, [removed: 2020.][added: 2021.]

The average cost of coal per ton purchased and delivered in [removed: 2020] [added: 2021] was [removed: $50.73.][added: $52.02.]

As part of its power portfolio, Indiana Electric is a 1.5% shareholder in the OVEC, and based on its participation in the ICPA between OVEC and its shareholder companies, many of whom are regulated electric utilities, Indiana Electric has the right to 1.5% of OVEC’s generating capacity output, which, as of December 31, [removed: 2020,] [added: 2021,] was approximately 32 [removed: MWs.][added: MW.]

Based on OVEC’s current financing, as of September 30, [removed: 2020,] [added: 2021,] Indiana Electric’s 1.5% share of OVEC’s debt obligation equates to between [removed: $19] [added: $17] million and [removed: $24] [added: $20] million, depending on revolving capacity commitments.

Moody’s rates OVEC one notch below investment [removed: grade] [added: grade,] with a positive outlook.

Fitch [removed: continues to rate] [added: rates] OVEC [removed: as investment grade] [added: BBB-] with a stable outlook.

S&P [added: Global] withdrew its ratings on January 9, 2020 at OVEC’s request.

In [removed: 2020,] [added: 2021,] Indiana Electric purchased approximately [removed: 116] [added: 134] GWh from OVEC.

Indiana Electric purchased approximately [removed: 76] [added: 77] GWh under this contract in [removed: 2020.][added: 2021.]

Indiana Electric purchased approximately [removed: 126] [added: 129] GWh under this contract in [removed: 2020.][added: 2021.]

In total, wind resources provided approximately [removed: 5%] [added: 3%] of total GWh sourced in [removed: 2020.][added: 2021.]

During [removed: 2020,] [added: 2021,] in intervals when purchases from the MISO were in excess of generation sold to the MISO, the net purchases were [removed: 742] [added: 83] GWh.

During the year ended December 31, [removed: 2020,] [added: 2021,] in intervals when sales to the MISO were in excess of purchases from the MISO, the net sales were [removed: 385] [added: 1,457] GWh.

As of December 31, [removed: 2020,] [added: 2021,] Indiana Electric had interconnections with Louisville Gas and Electric Company, Duke Energy Shared Services, Inc., Indianapolis Power & Light Company, Hoosier Energy Rural Electric Cooperative, Inc. and Big Rivers Electric Corporation providing the ability to simultaneously interchange approximately [removed: 900] [added: 750] MW during peak load periods.

For another provider of transmission and distribution services to provide such services in Indiana Electric’s territory, it would be required to obtain [removed: a certificate of convenience and necessity from the] IURC [removed: and, depending on the location] [added: approval] of [removed: the facilities, may also be required to obtain franchises from one or more municipalities.][added: such service territory.]

CenterPoint Energy’s and CERC’s Natural Gas [removed: engages] [added: engage] in regulated intrastate natural gas sales and natural gas transportation and storage for residential, commercial, industrial and transportation customers.

CenterPoint Energy’s and CERC’s Natural Gas [removed: provides] [added: provide] permanent pipeline connections through interconnects with various interstate and intrastate pipeline companies through [removed: CEIP and temporary delivery of LNG and CNG throughout the lower 48 states through MES, utilizing a fleet of customized equipment to provide continuity of natural gas service when pipeline supply is not available.][added: CEIP.]

CenterPoint Energy’s and CERC’s Natural Gas also [removed: provides] [added: provided] services in Minnesota consisting of residential appliance repair and maintenance services along with HVAC equipment sales and home repair protection plans to natural gas customers in Arkansas, [removed: Louisiana,] [added: Indiana,] Mississippi, [added: Ohio,] Oklahoma and Texas through a third [removed: party.][added: party as of December 31, 2021.]

Upon consummation of the Merger, CenterPoint Energy added the legacy natural gas utility services of Vectren, which includes the natural gas utility operations of Indiana Gas, SIGECO and VEDO and provides natural gas distribution and transportation services to nearly two-thirds of Indiana and west central [removed: Ohio, primarily in the west-central area.][added: Ohio.]

CenterPoint Energy is a public utility holding company.

- our Supplier Code of Conduct:

The Electric reportable segment is comprised of Houston Electric and Indiana Electric.

Houston Electric does not make direct retail or wholesale sales of electric energy or own or operate any power generation generating facilities other than leasing facilities that provide temporary emergency electric energy to aid in restoring power to distribution customers during certain widespread power outages as allowed by a new law enacted after the February 2021 Winter Storm Event.

| Texas gulf coast | | | 2,359,168 | | | | | | 301,770 | | | | | | 2,660,938 | | |

| Southwestern Indiana | | | 131,125 | | | | | | 19,257 | | | | | | 150,382 | | |

Indiana Electric’s most recently completed 50 MW solar array, which was approved by the IURC in 2018, was placed into service in early 2021 and consists of approximately 150,000 solar panels distributed across 300 acres along Indiana State Road 545 between Troy and New Boston, Indiana.

Indiana Electric entered into a BTA with a subsidiary of Capital Dynamics to build a 300 MW solar array in Posey County, Indiana.

Indiana Electric received approval from the IURC on October 27, 2021.

Subsequently, due to the rising costs for the project, caused in part by supply chain issues in the energy industry and the rising costs of commodities, we, along with Capital Dynamics, recently announced plans to downsize the project to approximately 200 MW.

Indiana Electric collaboratively agreed to the scope change and is currently working through contract negotiations, contingent on further IURC review and approval.

Indiana Electric also received approval to purchase 100 MW of solar power in Warrick County, Indiana, under a 25-year PPA, with the related solar array expected to be completed in late 2023.

Commercial operation is currently projected to begin in 2024.

Indiana service territory certificates are exclusive.

| Arkansas | | | 376,934 | | | | | | 47,663 | | | | | | 424,597 | | |

| Louisiana | | | 230,362 | | | | | | 16,183 | | | | | | 246,545 | | |

| Minnesota | | | 829,869 | | | | | | 71,679 | | | | | | 901,548 | | |

| Mississippi | | | 120,993 | | | | | | 13,029 | | | | | | 134,022 | | |

| Oklahoma | | | 88,787 | | | | | | 10,655 | | | | | | 99,442 | | |

| Texas | | | 1,736,874 | | | | | | 105,634 | | | | | | 1,842,508 | | |

| Total CERC Natural Gas | | | 3,383,819 | | | | | | 264,843 | | | | | | 3,648,662 | | |

| Indiana | | | 683,412 | | | | | | 65,234 | | | | | | 748,646 | | |

| Ohio | | | 305,197 | | | | | | 24,525 | | | | | | 329,722 | | |

| Total CenterPoint Energy Natural Gas | | | 4,372,428 | | | | | | 354,602 | | | | | | 4,727,030 | | |

In 2021, approximately 68% of CenterPoint

| | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | |

Additionally, CenterPoint Energy’s and CERC’s Natural Gas business in Minnesota entered into a third-party AMA beginning in February 2021.

For amounts outstanding under these AMAs, see Notes 4 and 14 to the consolidated financial statements.

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, contracted to 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, which was received on October 27, 2021, Indiana Electric will acquire Posey Solar and its solar array assets for a fixed purchase price.

Due to rising cost for the project, caused in part by supply chain issues in the energy industry and the rising costs of commodities, we, along with Capital Dynamics, recently announced plans to downsize the project to approximately 200 MW.

Indiana Electric collaboratively agreed to the scope change and is currently working through contract negotiations, contingent on further IURC review and approval.

Indiana Electric also received approval to purchase 100 MW of solar power in Warrick County, Indiana, under a 25 year PPA, with the related solar array expected to be completed in late 2023.

Indiana Electric has also sought approval to purchase 185 MW of solar power in Vermillion County, Indiana, under a 15-year PPA, and 150 MW of solar power in Knox County, Indiana, under a 20-year PPA.

Subject to necessary approvals, both solar arrays are expected to be in service by 2023.

Section 114 of the 2020 Pipes Act is a self-mandating rule for natural gas pipeline operations like CERC’s.

Section 114 focuses on processes and procedures to eliminate or reduce emissions during normal operations.

CenterPoint Energy is a public utility holding company and owns interests in Enable, a publicly traded MLP.

As of December 31, 2020, 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 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 Notes 11 and 22 to the consolidated financial statements.

On February 3, 2020, CenterPoint Energy, through its subsidiary VUSI, entered into the Securities Purchase Agreement to sell the businesses within its Infrastructure Services reportable segment.

The transaction closed on April 9, 2020 for $854 million in cash, inclusive of cash received after closing for the working capital adjustment.

Additionally, on February 24, 2020, CenterPoint Energy, through its subsidiary CERC Corp., entered into the Equity Purchase Agreement to sell CES, which represents substantially all of the businesses within the Energy Services reportable segment.

This transaction does not include CEIP and its assets or MES.

The transaction closed on June 1, 2020 for approximately $365 million in cash, inclusive of cash received after closing for the working capital adjustment.

During the fourth quarter of 2020, CenterPoint Energy’s CODM requested that the financial information for the electric businesses be presented on an aggregated basis for review, resulting in one Electric reportable segment, comprised of Houston Electric and Indiana Electric.

Houston Electric does not make direct retail or wholesale sales of electric energy or own or operate any electric generating facilities.

| Texas Gulf Coast | | | 2,303,315 | | | | | | 296,512 | | | | | | 2,599,827 | | |

| Indiana | | | 130,159 | | | | | | 19,130 | | | | | | 149,289 | | |

| | | | 2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

Another 173,000 tons are stored off-site to be shipped when plant inventory is reduced.

In July 2019, House Bill 6 was enacted in Ohio, which provides financial support to the members of OVEC serving Ohio customers (although Indiana Electric does not serve customers in Ohio).

In July 2020, an investigation led by the U.S. Attorney’s Office resulted in a federal grand jury indictment of the Speaker of the Ohio House of Representatives, among other individuals, in connection with a racketeering conspiracy involving the adoption of House Bill 6.

In light of the allegations in the indictment, proposed legislation has been introduced that would repeal House Bill 6.

The outcome of the U.S. Attorney’s Office investigation and its impact on House Bill 6 is unknown at this time.

If the provisions of House Bill 6 are ultimately eliminated, it is unclear whether, and in what form, the Ohio General Assembly would pass new legislation addressing similar issues, which could repeal subsidies associated with House Bill 6.

Indiana Electric is not aware of any other party intending to enter this business in its service area at this time.

During the fourth quarter of 2020, CenterPoint Energy and CERC’s CODM requested that the CERC corporate functions be included within the financial results of CenterPoint Energy’s Natural Gas reportable segment for review purposes.

See Note 18 to the consolidated financial statements for further information.

| Arkansas | | | 381,961 | | | | | | 47,931 | | | | | | 429,892 | | |

| Louisiana | | | 232,265 | | | | | | 16,429 | | | | | | 248,694 | | |

| Minnesota | | | 819,249 | | | | | | 71,425 | | | | | | 890,674 | | |

| Mississippi | | | 120,082 | | | | | | 13,018 | | | | | | 133,100 | | |

| Oklahoma | | | 89,019 | | | | | | 10,720 | | | | | | 99,739 | | |

| Texas | | | 1,707,252 | | | | | | 100,877 | | | | | | 1,808,129 | | |

| Total CERC Natural Gas | | | 3,349,828 | | | | | | 260,400 | | | | | | 3,610,228 | | |

| Indiana | | | 674,936 | | | | | | 64,851 | | | | | | 739,787 | | |

| Ohio | | | 303,843 | | | | | | 24,474 | | | | | | 328,317 | | |

| Total CenterPoint Energy Natural Gas | | | 4,328,607 | | | | | | 349,725 | | | | | | 4,678,332 | | |

Certain contracts are firm commitments under five- and ten-year arrangements.

| | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| CenterPoint Energy | | | | | | | | | | | | | | | | | | | | | | | |

CenterPoint Energy’s and CERC’s Natural Gas has an obligation to

For further information regarding the AMAs with the Energy Services Disposal Group, see Note 4 to the consolidated financial statements.

For a discussion of material legal and regulatory proceedings affecting the Registrants as of December 31, [removed: 2020,] [added: 2021,] please read “Business — Regulation” and “Business — Environmental Matters” in Item 1 of this report, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Regulatory Matters” in Item 7 of this report and Note 16(e) to the consolidated financial statements, which information is incorporated herein by reference.

| | | | FOR THE FISCAL YEAR ENDED DECEMBER 31, [removed: 2020] [added: 2021] | | |

The aggregate market values of the voting stock held by non-affiliates of the Registrants as of June 30, [removed: 2020] [added: 2021] are as follows:

| CenterPoint Energy, Inc. (using the definition of beneficial ownership contained in Rule 13d-3 promulgated pursuant to Securities Exchange Act of 1934 and excluding shares held by directors and executive officers) | | | | | | [removed: $10,142,624,694] [added: $14,445,680,164] | | |

Indicate the number of shares outstanding of each of the issuers’ classes of common stock as of February [removed: 22, 2021:][added: 15, 2022:]

| CenterPoint Energy, Inc. | | | [removed: 551,579,922] [added: 628,936,067] | | | shares of common stock outstanding, excluding 166 shares held as treasury stock | | |

Portions of the definitive proxy statement relating to the [removed: 2020] [added: 2022] Annual Meeting of Shareholders of CenterPoint Energy, which will be filed with the Securities and Exchange Commission within 120 days of December 31, [removed: 2020,] [added: 2021,] are incorporated by reference in Item 10, Item 11, Item 12, Item 13 and Item 14 of Part III of this Form 10-K.

| Item 1. | | | | | | Business | | | | | | [removed: [1](#iad7ee2cb909d478c89e59a724ad5607a_19)] [added: [1](#i0b01e54b47c242c9bf7278aee4b9ae35_19)] | | |

| Item 1A. | | | | | | Risk Factors | | | | | | [removed: [20](#iad7ee2cb909d478c89e59a724ad5607a_40)] [added: [17](#i0b01e54b47c242c9bf7278aee4b9ae35_40)] | | |

| Item 1B. | | | | | | Unresolved Staff Comments | | | | | | [removed: [40](#iad7ee2cb909d478c89e59a724ad5607a_43)] [added: [36](#i0b01e54b47c242c9bf7278aee4b9ae35_43)] | | |

| Item 2. | | | | | | Properties | | | | | | [removed: [41](#iad7ee2cb909d478c89e59a724ad5607a_46)] [added: [37](#i0b01e54b47c242c9bf7278aee4b9ae35_46)] | | |

| Item 3. | | | | | | Legal Proceedings | | | | | | [removed: [43](#iad7ee2cb909d478c89e59a724ad5607a_49)] [added: [39](#i0b01e54b47c242c9bf7278aee4b9ae35_49)] | | |

| Item 4. | | | | | | Mine Safety Disclosures | | | | | | [removed: [43](#iad7ee2cb909d478c89e59a724ad5607a_52)] [added: [39](#i0b01e54b47c242c9bf7278aee4b9ae35_52)] | | |

| Item 5. | | | | | | Market for Registrants’ Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | | | | | | [removed: [43](#iad7ee2cb909d478c89e59a724ad5607a_58)] [added: [39](#i0b01e54b47c242c9bf7278aee4b9ae35_58)] | | |

| Item 6. | | | | | | Selected Financial Data | | | | | | [removed: [43](#iad7ee2cb909d478c89e59a724ad5607a_61)] [added: [39](#i0b01e54b47c242c9bf7278aee4b9ae35_61)] | | |

| Item 7. | | | | | | Management’s Discussion and Analysis of Financial Condition and Results of Operations | | | | | | [removed: [44](#iad7ee2cb909d478c89e59a724ad5607a_64)] [added: [40](#i0b01e54b47c242c9bf7278aee4b9ae35_67)] | | |

| Item 7A. | | | | | | Quantitative and Qualitative Disclosures About Market Risk | | | | | | [removed: [86](#iad7ee2cb909d478c89e59a724ad5607a_100)] [added: [77](#i0b01e54b47c242c9bf7278aee4b9ae35_109)] | | |

| Item 8. | | | | | | Financial Statements and Supplementary Data | | | | | | [removed: [88](#iad7ee2cb909d478c89e59a724ad5607a_103)] [added: [78](#i0b01e54b47c242c9bf7278aee4b9ae35_112)] | | |

| Item 9. | | | | | | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | | | | | | [removed: [189](#iad7ee2cb909d478c89e59a724ad5607a_301)] [added: [177](#i0b01e54b47c242c9bf7278aee4b9ae35_253)] | | |

| Item 9A. | | | | | | Controls and Procedures | | | | | | [removed: [190](#iad7ee2cb909d478c89e59a724ad5607a_304)] [added: [177](#i0b01e54b47c242c9bf7278aee4b9ae35_256)] | | |

| Item 9B. | | | | | | Other Information | | | | | | [removed: [192](#iad7ee2cb909d478c89e59a724ad5607a_307)] [added: [180](#i0b01e54b47c242c9bf7278aee4b9ae35_259)] | | |

| Item 10. | | | | | | Directors, Executive Officers and Corporate Governance | | | | | | [removed: [192](#iad7ee2cb909d478c89e59a724ad5607a_313)] [added: [180](#i0b01e54b47c242c9bf7278aee4b9ae35_265)] | | |

| Item 11. | | | | | | Executive Compensation | | | | | | [removed: [193](#iad7ee2cb909d478c89e59a724ad5607a_316)] [added: [180](#i0b01e54b47c242c9bf7278aee4b9ae35_268)] | | |

| Item 12. | | | | | | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | | | | | | [removed: [193](#iad7ee2cb909d478c89e59a724ad5607a_319)] [added: [180](#i0b01e54b47c242c9bf7278aee4b9ae35_271)] | | |

| Item 13. | | | | | | Certain Relationships and Related Transactions, and Director Independence | | | | | | [removed: [193](#iad7ee2cb909d478c89e59a724ad5607a_322)] [added: [180](#i0b01e54b47c242c9bf7278aee4b9ae35_274)] | | |

| Item 14. | | | | | | Principal Accounting Fees and Services | | | | | | [removed: [193](#iad7ee2cb909d478c89e59a724ad5607a_325)] [added: [180](#i0b01e54b47c242c9bf7278aee4b9ae35_277)] | | |

| Item 15. | | | | | | Exhibits and Financial Statement Schedules | | | | | | [removed: [194](#iad7ee2cb909d478c89e59a724ad5607a_331)] [added: [181](#i0b01e54b47c242c9bf7278aee4b9ae35_283)] | | |

| Item 16. | | | | | | Form 10-K Summary | | | | | | [removed: [194](#iad7ee2cb909d478c89e59a724ad5607a_334)] [added: [182](#i0b01e54b47c242c9bf7278aee4b9ae35_286)] | | |

| Bailey to Jones Creek Project | | | | | | A transmission project in the greater Freeport, Texas area, which includes enhancements to two existing substations and the construction of a new 345 kV double-circuit line [removed: to be] located in the counties of Brazoria, Matagorda and Wharton | | |

| Bond Companies | | | | | | Bond Company [removed: 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 | | |

| Enable Merger | | | | | | The [removed: 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 [removed: Transfer] [added: Transfer, which closed on December 2, 2021] | | |

| Enable Merger Agreement | | | | | | Agreement and Plan of Merger by and among Energy Transfer, Elk Merger [removed: Sub LL,] [added: Sub,] 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 | | |

| Energy Transfer Series G Preferred Units | | | | | | Energy Transfer Series G Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred [removed: Units] [added: Units, representing limited partner interests in Energy Transfer] | | |

| [removed: ESG] [added: Energy Systems Group] | | | | | | Energy Systems Group, LLC, a wholly-owned subsidiary of Vectren | | |

| Form [removed: 10-Q] [added: 10-K] | | | | | | [removed: Quarterly] [added: Annual] Report on Form [removed: 10-Q] [added: 10-K] | | |

| MES | | | | | | CenterPoint Energy Mobile Energy Solutions, [removed: Inc.,] [added: Inc. (now known as Mobile Energy Solutions, Inc.), previously] a wholly-owned subsidiary of CERC Corp. | | |

| ZENS-Related Securities | | | | | | As of both December 31, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] consisted of AT&T Common and Charter Common | | |

| [removed: 2019] [added: 2020] Form 10-K | | | | | | Annual Report on Form 10-K for the fiscal year ended December 31, [removed: 2019 as filed with the SEC on February 27, 2020, as recast in the Registrants’ Current Report on Form 8-K dated May 18, 2020, and filed with the SEC on May 19,] 2020 | | |

- Dividend requirements associated with CenterPoint Energy’s Series A Preferred [removed: Stock, Series B Preferred] Stock [removed: and Series C Preferred Stock] subject it to certain risks.

- Disruptions at power generation facilities owned by third parties or directives issued by regulatory authorities could [removed: interrupt] [added: cause interruptions in] Houston Electric’s [removed: sales of] [added: and Indiana Electric’s ability to provide] transmission and distribution [removed: services.][added: services and adversely affect their reputation, financial condition, results of operations and cash flows.]

- Indiana Electric’s execution of its generation transition plan, including its IRP, [removed: and its regulated power supply operations] are subject to various risks, including timely recovery of capital [removed: investments,] [added: investments and] increased costs and [removed: facility outages or shutdowns.][added: risks related to the timing and cost of development and/or construction of new generation facilities.]

| | | | | | | | | | | | |

| Item 9C. | | | | | | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | | | | | | [180](#i0b01e54b47c242c9bf7278aee4b9ae35_259) | | |

| Asset Purchase Agreement | | | | | | Asset 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. | | |

| BTA | | | | | | Build Transfer Agreement | | |

| Capital Dynamics | | | | | | Capital Dynamics, Inc., a Delaware corporation | | |

| Enable Common Units | | | | | | Enable common units, representing limited partnership interests in Enable | | |

| Energy Transfer Common Units | | | | | | Energy Transfer common units, representing limited partner interests in Energy Transfer | | |

| Forward Sale Agreement | | | | | | Contingent forward sale agreement for 50 million Energy Transfer Common Units, dated September 21, 2021, by and between CNP Midstream and an investment banking financial institution | | |

| Load Shed | | | | | | Curtailing the amount of electricity a TDU can transmit and distribute to its customers | | |

| MW | | | | | | Megawatts | | |

| Natural Gas | | | | | | Natural gas distribution businesses | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| Posey Solar | | | | | | Posey Solar, LLC, a Delaware limited liability company | | |

| PPA | | | | | | Power purchase agreement | | |

| | | | | | | | | |

| READY | | | | | | CenterPoint Energy’s serious injury and fatality prevention model. READY stands for Recognize, Evaluate, Anticipate, Define, Yes | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| Scope 1 emissions | | | | | | Direct source of emissions from a company’s operations | | |

| Scope 2 emissions | | | | | | Indirect source of emissions from a company’s energy usage | | |

| Scope 3 emissions | | | | | | Indirect source of emissions from a company’s end-users | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| Tenaska | | | | | | Tenaska Wind Holdings, LLC | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| TOB | | | | | | Tariffed On Bill | | |

| TSA | | | | | | Transportation Security Administration | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| CenterPoint Energy, Inc. | | | Depositary shares, each representing a 1/20th interest in a share of 7.00% Series B Mandatory Convertible Preferred Stock, $0.01 par value | | | CNP/PB | | | New York Stock Exchange | | |

| CenterPoint Energy Houston Electric, LLC | | | 9.15% First Mortgage Bonds due 2021 | | | n/a | | | New York Stock Exchange | | |

| ADFIT | | | | | | Accumulated deferred federal income taxes | | |

| ARAM | | | | | | Average rate assumption method | | |

| Bond Company III | | | | | | CenterPoint Energy Transition Bond Company III, LLC, a wholly-owned subsidiary of Houston Electric | | |

| CECL | | | | | | Current expected credit losses | | |

| Change in Control Plan | | | | | | CenterPoint Energy Change in Control Plan (As Amended and Restated Effective May 1, 2017) | | |

| CVR | | | | | | Conservation Voltage Reduction | | |

| DA | | | | | | Distribution Automation | | |

| Dodd-Frank Act | | | | | | Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 | | |

| EGT | | | | | | Enable Gas Transmission, LLC | | |

| EIN | | | | | | Employer Identification Number | | |

| EPAct of 2005 | | | | | | Energy Policy Act of 2005 | | |

| FIP | | | | | | Funding Improvement Plan | | |

| ICA | | | | | | Interstate Commerce Act of 1887 | | |

| KW | | | | | | Kilowatt | | |

| MP2018 | | | | | | 2018 pension mortality improvement scale developed annually by the Society of Actuaries | | |

| MP2019 | | | | | | 2019 pension mortality improvement scale developed annually by the Society of Actuaries | | |

| MRT | | | | | | Enable Mississippi River Transmission, LLC | | |

| MW | | | | | | Megawatt | | |

| OPGW | | | | | | Optical Ground Wire | | |

| PSR Amendments | | | | | | Federal Pipeline Safety Regulations Amendments | | |

| SESH | | | | | | Southeast Supply Header, LLC | | |

| STIP | | | | | | Short-term Incentive Plan | | |

| TSCR | | | | | | Tax Savings Credit Rider | | |

- The February 2021 Winter Storm Event has caused severe disruptions to our customers and our markets in certain of our jurisdictions and could have a material adverse impact to our financial condition, results of operations, cash flows and liquidity.

- CenterPoint Energy may be unable to effectively complete the integration of the businesses acquired in the Merger, including the integration of technology systems, for which significant time and resources have been allocated thereto.

Risk Factors Affecting CenterPoint Energy’s Interests in Enable Midstream Partners, LP (CenterPoint Energy)

- CenterPoint Energy’s cash flows will be adversely impacted if it receives less cash distributions from Enable than it currently expects, whether as a result of Enable’s performance or otherwise, or if it reduces its ownership in Enable.

- We cannot be certain of the precise value of any merger consideration we may receive in the Enable Merger because the exchange ratio is fixed and the market price of Energy Transfer’s common units may fluctuate.

The following discussion is based on the Registrants’ businesses as of December 31, [removed: 2020.][added: 2021.]

For information related to debt outstanding under the [removed: Mortgage and] General Mortgage, see Note 14 to the consolidated financial statements.

*Electric Lines - Transmission and Distribution.* As of December 31, [removed: 2020,] [added: 2021,] Houston Electric and Indiana Electric owned and operated the following electric transmission and distribution lines:

*Generating Capacity.* As of December 31, [removed: 2020,] [added: 2021,] Indiana Electric had [removed: 1,167] [added: 1,217] MW of installed generating capacity, as set forth in the following table.

| Total Solar Capacity | | | | | | | | | | | | | | | | | | | | | | | | [removed: 4] [added: 54] | | |

| Total Generating Capacity [added: (3)] | | | | | | | | | | | | | | | | | | | | | | | | [removed: 1,167] [added: 1,217] | | |

*Substations.* As of December 31, [removed: 2020,] [added: 2021,] Houston Electric owned 239 major substation sites having a total installed rated transformer capacity of [removed: 69,915] [added: 71,241] Mva.

As of December 31, [removed: 2020,] [added: 2021,] Indiana Electric’s transmission system also includes 33 substations with an installed capacity of approximately [removed: 4,730] [added: 4,555] Mva.

In addition, Indiana Electric’s distribution system includes [removed: 79] [added: 77] distribution substations with an installed capacity of approximately [removed: 2,117] [added: 2,137] Mva and [removed: 56,124] [added: 56,973] distribution transformers with an installed capacity of [removed: 2,527] [added: 2,580] Mva.

*Service Centers.* As of December 31, [removed: 2020,] [added: 2021,] Houston Electric operated 13 regional service centers located on a total of 320 acres of land and Indiana Electric operated 6 regional service centers located on a total of 50 acres of land.

As of December 31, [removed: 2020,] [added: 2021,] CenterPoint Energy’s and CERC’s Natural Gas owned approximately [removed: 99,000] [added: 100,000] and [removed: 77,000] [added: 78,000] linear miles of natural gas distribution and transmission mains, respectively, varying in size from one-half inch to 24 inches in diameter.

[removed: Generally, in each of the cities, towns and rural areas served by CenterPoint Energy’s and CERC’s Natural Gas, they] own the underground gas mains and service lines, metering and regulating equipment located on customers’ premises and the district regulating equipment necessary for pressure maintenance.

As of December 31, [removed: 2020,] [added: 2021,] CEIP owned and operated over [removed: 264] [added: 285] miles of intrastate pipeline in Louisiana, Texas and Oklahoma.

No first mortgage bonds are outstanding under the Mortgage and Houston Electric is contractually obligated to not issue any additional first mortgage bonds under the Mortgage and is undertaking actions to release the lien of the Mortgage.

| 69 kV | | | | | | 216 | | | | | | 2 | | | | | | 564 | | | | | | — | | |

| 138 kV | | | | | | 2,260 | | | | | | 24 | | | | | | 411 | | | | | | 9 | | |

| 345 kV | | | | | | 1,445 | | | | | | — | | | | | | 63 | | | | | | 15 | | |

| Total | | | | | | 3,921 | | | | | | 26 | | | | | | 1,038 | | | | | | 24 | | |

| Distribution lines | | | | | | 29,753 | | | | | | 27,172 | | | | | | 4,614 | | | | | | 2,546 | | |

| Troy | | | | | | | | | | | | Spencer County | | | | | | 2021 | | | | | | 50 | | |

(3)Excludes 1.5% participation in OVEC.

See Item 1.

Business for more details.

*Mobile Generation.* As allowed by a new law enacted by the Texas legislature after the February 2021 Winter Storm Event, Houston Electric is now leasing mobile generation facilities that can provide temporary emergency electric energy that can aid in restoring power to customers during certain widespread power outages that are impacting its distribution system.

In 2021, Houston Electric entered into two leases for mobile generation: (1) a temporary short-term basis lease initially for 125 MW and that expanded to 220 MW by December 31, 2021 and (2) a 7.5 year lease for up to 505 MW of mobile generation, of which 125 MW was delivered as of December 31, 2021.

Generally, in each of the cities, towns and rural areas served by CenterPoint Energy’s and CERC’s Natural Gas, they

| | | | | | | Houston Electric | | | | | | | | | | | | Indiana Electric | | | | | | | | |

| 69 kV | | | | | | 213 | | | | | | 2 | | | | | | 552 | | | | | | — | | |

| 138 kV | | | | | | 2,254 | | | | | | 24 | | | | | | 408 | | | | | | 9 | | |

| 345 kV | | | | | | 1,338 | | | | | | — | | | | | | 48 | | | | | | 15 | | |

| Total | | | | | | 3,805 | | | | | | 26 | | | | | | 1,008 | | | | | | 24 | | |

| | | | | | | Overhead Lines | | | | | | Underground Lines | | | | | | Overhead Lines | | | | | | Underground Lines | | |

| Distribution lines | | | | | | 29,525 | | | | | | 26,520 | | | | | | 4,580 | | | | | | 2,505 | | |

As of February [removed: 22, 2021,] [added: 15, 2022,] CenterPoint Energy’s common stock was held by approximately [removed: 26,409] [added: 24,985] shareholders of record.

The amount of future cash dividends will be subject to determination based upon CenterPoint Energy’s [added: financial condition and] results of [removed: operations and financial condition,] [added: operations,] future business prospects, any applicable contractual restrictions and other factors that CenterPoint Energy’s Board of Directors considers relevant and will be declared at the discretion of CenterPoint Energy’s Board of Directors.

During the quarter ended December 31, [removed: 2020,] [added: 2021,] none of CenterPoint Energy’s equity securities registered pursuant to Section 12 of the Securities Exchange Act of 1934 were purchased by or on behalf of CenterPoint Energy or any “affiliated purchasers,” as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934.

As of February [removed: 22, 2021,] [added: 15, 2022,] all of Houston Electric’s 1,000 outstanding common shares were held by Utility Holding, LLC, a wholly-owned subsidiary of CenterPoint Energy.

As of February [removed: 22, 2021,] [added: 15, 2022,] all of CERC Corp.’s 1,000 outstanding shares of common stock were held by Utility Holding, LLC, a wholly-owned subsidiary of CenterPoint Energy.

We have audited the accompanying consolidated balance sheets of CenterPoint Energy, Inc. and subsidiaries (the "Company") as of December 31, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] the related statements of consolidated income, comprehensive income, changes in equity, and cash [removed: flows] [added: flows,] for each of the three years in the period ended December 31, [removed: 2020,] [added: 2021,] and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2020,] [added: 2021,] in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, [removed: 2020,] [added: 2021,] based on criteria established in [removed: Internal] [added: *Internal] Control — Integrated Framework [removed: (2013)] [added: (2013)*] issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February [removed: 25, 2021] [added: 22, 2022,] expressed an unqualified opinion on the Company's internal control over financial reporting.

Critical Audit [removed: Matters][added: Matter]

The critical audit [removed: matters] [added: matter] communicated below [removed: are matters] [added: is a matter] arising from the current-period audit of the financial statements that [removed: were] [added: was] communicated or required to be communicated to the audit committee and that (1) [removed: relate] [added: relates] to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing [added: a] separate [removed: opinions] [added: opinion] on the critical audit [removed: matters] [added: matter] or on the accounts or disclosures to which [removed: they relate.][added: it relates.]

In connection with [removed: the] [added: their] preparation of [removed: quarterly] [added: the] financial statements for the [removed: period] [added: three months] ended March 31, 2020, [removed: the Company] [added: CenterPoint Energy and CERC] identified triggering events [removed: and performed an] [added: to perform] interim goodwill impairment [removed: analysis] [added: tests] for each of their reporting units due to the macroeconomic conditions related in part to the COVID-19 pandemic and the resulting decrease in CenterPoint Energy’s enterprise market capitalization below book value from the decline in CenterPoint Energy’s [removed: common stock] [added: Common Stock] price.

[removed: The Company] [added: CenterPoint Energy] evaluates its equity method [removed: investment] [added: investments, when not reflected as held] for [added: sale, for] impairment when factors indicate that a decrease in the value of its investment has occurred and the carrying amount of its investment may not be recoverable.

[added: Based on the severity of the decline in the price of Enable Common Units during the three months ended March 31, 2020 primarily due to the macroeconomic conditions related in part to the COVID-19 pandemic, combined with Enable’s] announcement on April 1, 2020 [removed: that it would] [added: to] reduce its quarterly distributions per [removed: common unit] [added: Enable Common Unit] by 50%, and the market outlook indicating excess supply and continued depressed crude oil and natural gas prices impacting the midstream oil and gas [removed: industry.][added: industry, CenterPoint Energy determined, in connection with its preparation of the financial statements, that an other than temporary decrease in the value of its investment in Enable had occurred.]

[removed: No further] [added: (2)Includes the] impairment [removed: was] [added: of CenterPoint Energy’s equity method investment in Enable of $1,541 million] recorded during the year ended December 31, 2020.

Accounting for the economics of rate regulation impacts multiple financial statement line items and disclosures, such as property, plant, and equipment, net; [added: prepaid expenses and other current assets;] regulatory assets and liabilities; utility revenues and expenses; operation and maintenance expense; depreciation and amortization expense; and income tax expense.

The Company’s rates are subject to regulatory rate-setting processes by [removed: certain municipalities and] the Commissions.

[removed: Decisions to be made by] the [removed: Commissions in the] future will impact the accounting for regulated operations, including decisions about the amount of allowable costs and return on invested capital included in rates and any refunds that may be required.

- We read relevant regulatory orders issued by the Commissions for the Company and other public [removed: utilities in the states the Company operates in,] [added: utilities,] regulatory statutes, interpretations, procedural memorandums, filings made by intervenors, and other publicly available information to assess the likelihood of recovery in future rates or of a future reduction in rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances.

We inspected the [removed: capital-projects] [added: capital projects] budget and inquired of management to identify projects that are designed to replace assets that may be retired prior to the end of the useful life.

| | | | [added: | | |] Year Ended December 31, | | | | | | | | | [removed: | | | | | |]

| | | | [removed: 2020] [added: 2021] | | | | | | [removed: 2019] [added: 2020] | | | | | | [removed: 2018] [added: 2019] | | |

| Utility revenues | | | $ | [removed: 7,049] [added: 8,042] | | | | | $ | [removed: 7,202] [added: 7,049] | | | | | $ | [removed: 6,199] [added: 7,202] | |

| Non-utility revenues | | | [removed: 369] [added: 310] | | | | | | [removed: 362] [added: 369] | | | | | | [removed: 78] [added: 362] | | |

| Total | | | [removed: 7,418] [added: 8,352] | | | | | | [removed: 7,564] [added: 7,418] | | | | | | [removed: 6,277] [added: 7,564] | | |

| Utility natural gas, fuel and purchased power | | | [removed: 1,488] [added: 2,127] | | | | | | [removed: 1,762] [added: 1,488] | | | | | | [removed: 1,464] [added: 1,762] | | |

| Non-utility cost of revenues, including natural gas | | | [removed: 257] [added: 208] | | | | | | 257 | | | | | | [removed: 40] [added: 257] | | |

| Operation and maintenance | | | [removed: 2,744] [added: 2,810] | | | | | | [removed: 2,775] [added: 2,744] | | | | | | [removed: 2,271] [added: 2,775] | | |

| Depreciation and amortization | | | [removed: 1,189] [added: 1,316] | | | | | | [removed: 1,225] [added: 1,189] | | | | | | [removed: 1,230] [added: 1,225] | | |

| Taxes other than income taxes | | | [removed: 516] [added: 528] | | | | | | [removed: 474] [added: 516] | | | | | | [removed: 404] [added: 474] | | |

| Goodwill impairment | | | [removed: 185] [added: —] | | | | | | [removed: —] [added: 185] | | | | | | — | | |

| Total | | | [removed: 6,379] [added: 6,989] | | | | | | [removed: 6,493] [added: 6,379] | | | | | | [removed: 5,409] [added: 6,493] | | |

| Operating Income | | | [removed: 1,039] [added: 1,363] | | | | | | [removed: 1,071] [added: 1,039] | | | | | | [removed: 868] [added: 1,071] | | |

| Gain (loss) on [removed: marketable] [added: equity] securities | | | [removed: 49] [added: (172)] | | | | | | [removed: 282] [added: 49] | | | | | | [removed: (22)] [added: 282] | | |

| [removed: Loss] [added: Gain (loss)] on indexed debt securities | | | [removed: (60)] [added: 50] | | | | | | [removed: (292)] [added: (60)] | | | | | | [removed: (232)] [added: (292)] | | |

| Interest expense and other finance charges | | | [removed: (501)] [added: (508)] | | | | | | [removed: (528)] [added: (501)] | | | | | | [removed: (361)] [added: (528)] | | |

| Interest expense on Securitization Bonds | | | [removed: (28)] [added: (21)] | | | | | | [removed: (39)] [added: (28)] | | | | | | [removed: (59)] [added: (39)] | | |

| Equity in [removed: earnings (loss)] [added: (earnings) losses] of unconsolidated [removed: affiliates, net] [added: affiliates] | | | [removed: (1,428)] [added: (339)] | | | | | | [removed: 230] [added: 1,428] | | | | | | [removed: 307] [added: (230)] | | |

| Interest income [added: (expense), net (1)] | | | [removed: 3] [added: $] | [added: —] | | | | | [removed: 17] [added: $] | [added: —] | | | | | [removed: 24] [added: $] | [added: —] | | [added: | | | $ | — | | | | | $ | 18 | | | | | $ | 4 | |]

| Interest [removed: income from] [added: expense on] Securitization Bonds | | | [removed: 1] [added: (21)] | | | | | | [removed: 5] [added: (28)] | | | | | | [removed: 4] [added: (39)] | | |

| Other income, net | | | [removed: 60] [added: 58] | | | | | | [removed: 28] [added: 64] | | | | | | [removed: 22] [added: 51] | | |

| [removed: Income (Loss)] [added: Income] from Continuing Operations Before Income [removed: Taxes | | | (865)] [added: Taxes] | | | | | | [removed: 774] [added: $] | [added: 78] | | | | | [removed: 551] [added: $] | [added: 73] | |

| Income tax expense (benefit) | | | [removed: (274)] [added: 51] | | | | | | [removed: 92] [added: 97] | | | | | | [removed: 155] [added: (3)] | | |

| [removed: Income (Loss)] [added: Net income (loss)] from [removed: Continuing Operations | | | (591)] [added: Discontinued Operations] | | | | | | [removed: 682] [added: $] | [added: (66)] | | | | | [removed: 396] [added: $] | [added: 23] | |

| Income (Loss) from Discontinued Operations (net of tax expense (benefit) of [removed: $21, $46,] [added: $—, $(2),] and [removed: $(9),] [added: $17,] respectively) | | | [removed: (182)] [added: —] | | | | | | [removed: 109] [added: (66)] | | | | | | [removed: (28)] [added: 23] | | |

Decisions to be made by the Commissions in

| Gain on sale | | | 8 | | | | | | — | | | | | | — | | |

| Total | | | (585) | | | | | | (476) | | | | | | (526) | | |

| Income from Continuing Operations Before Income Taxes | | | 778 | | | | | | 563 | | | | | | 545 | | |

| Income tax expense | | | 110 | | | | | | 80 | | | | | | 30 | | |

| Income from Continuing Operations | | | 668 | | | | | | 483 | | | | | | 515 | | |

| Income allocated to preferred shareholders | | | 95 | | | | | | 176 | | | | | | 117 | | |

| Temporary Equity (Note 19) | | | 3 | | | | | | — | | |

| Goodwill impairment | | | — | | | | | | 185 | | | | | | — | | |

| Gain on Enable Merger | | | (681) | | | | | | — | | | | | | — | | |

| Transaction costs related to Enable Merger (Note 4) | | | (49) | | | | | | — | | | | | | — | | |

| Cash received related to Enable Merger | | | 5 | | | | | | — | | | | | | — | | |

| Proceeds from sale of equity securities, net of transaction costs | | | 1,320 | | | | | | — | | | | | | — | | |

| Payment of obligation for finance lease | | | (179) | | | | | | — | | | | | | — | | |

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

February 22, 2022

| VIE Securitization Bonds, net | | | 317 | | | | | | 536 | | |

| Depreciation and amortization | | | 642 | | | | | | 560 | | | | | | 648 | | |

| Payment of obligation for finance lease | | | (179) | | | | | | — | | | | | | — | | |

| Net income | | | | | | | | | 381 | | | | | | | | | | | | 334 | | | | | | | | | | | | 356 | | |

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

The Company is subject to rate regulation by regulators and commissions in various jurisdictions (collectively, the “Commissions”) that have jurisdiction with respect to the rates of electric and gas transmission and distribution companies in those jurisdictions.

Accounting for the economics of rate regulation impacts multiple financial statement line items and disclosures, such as property, plant, and equipment, net; prepaid expenses and other current assets; regulatory assets and liabilities; utility revenues and expenses; operation and maintenance expense; depreciation and amortization expense; and income tax expense.

The Company’s rates are subject to regulatory rate-setting processes by the Commissions.

Decisions to be made by the Commissions in the future will impact the accounting for regulated operations, including decisions about the amount of allowable

costs and return on invested capital included in rates and any refunds that may be required.

We inspected the capital projects budget and inquired of management to identify projects that are designed to replace assets that may be retired prior to the end of the useful life.

February 22, 2022

| Gain on sale | | | 11 | | | | | | — | | | | | | — | | |

| Taxes receivable | | | 28 | | | | | | — | | |

| Short-term borrowings | | | $ | 7 | | | | | $ | 24 | |

| Notes payable - affiliated companies | | | 224 | | | | | | — | | |

| Depreciation and amortization | | | 326 | | | | | | 304 | | | | | | 293 | | |

| Taxes receivable | | | (28) | | | | | | — | | | | | | — | | |

| Other operating activities, net | | | 8 | | | | | | 5 | | | | | | 25 | | |

| Other investing activities, net | | | 14 | | | | | | 7 | | | | | | — | | |

| Decrease in short-term borrowings, net | | | (27) | | | | | | — | | | | | | — | | |

| Other financing activities, net | | | (1) | | | | | | (2) | | | | | | (3) | | |

Houston, Texas

Goodwill — Refer to Note 6 to the financial statements

*Critical Audit Matter Description*

The Company’s evaluation of goodwill for impairment involves the comparison of the fair value of each reporting unit to its carrying value.

In its annual goodwill impairment test on July 1, 2020 (“measurement date”) and as triggering events are identified, the Company used the income approach and a market approach to estimate fair value of each reporting unit, which required management to make significant estimates and assumptions related to forecasts of future revenues and operating margins based on certain assumptions including (i) future capital expenditures and rate base growth, (ii) estimated future rate changes, (iii) discount rates, and (iv) long-term growth rates.

Changes in these assumptions could have a significant impact on

the fair value of a reporting unit, the amount of any goodwill impairment charge, or both.

The Company’s goodwill is $4.7 billion as of December 31, 2020.

Pursuant to the analysis, the Company recorded a goodwill impairment of $185 million for a reporting unit, Indiana Electric, within the Electric reportable segment.

No further impairments on goodwill associated with these conditions were recognized during the year ended December 31, 2020.

Given the significant assumptions used by management as noted above to estimate fair value, performing audit procedures to evaluate the reasonableness of these estimates and assumptions related to forecasts of future revenue and operating margin required a high degree of auditor judgment.

*How the Critical Audit Matter Was Addressed in the Audit*

Our audit procedures related to the assumptions used to forecast future revenue and operating margin used by management within the income approach included the following, among others:

- We tested the effectiveness of controls over management’s goodwill impairment evaluation, including those over the determination of fair value, such as controls related to management’s forecasts of future cash flows and planned growth initiatives, the regulatory environment, discount rates, and long-term growth rates.

- We evaluated the reasonableness of management’s forecasts by comparing the forecasts to:

◦Historical revenues, operating margins, capital expenditures, rate base growth, and rate changes.

◦Internal communications to management and the Board of Directors.

◦Forecasted information included in Company press releases as well as in analyst and industry reports for the Company and certain of its peer companies.

- We compared future rate changes to the Company’s scheduled rate filings and the amount of capital expenditures for the regulated entities to communications with regulators including integrated resource plans.

- We evaluated the impact of changes in management’s forecasts from the measurement date to December 31, 2020.

- We involved our fair value specialists who assisted in:

◦Assessing the appropriateness of the valuation methodology used to determine the company specific risk premiums in calculating the discount rates.

◦Testing the determined discount rates by independently estimating a discount rate for each business using a process consistent with generally accepted valuation practices.

◦Evaluating the reasonableness of the long-term growth rate through a comparison to industry reports and peer companies.

Equity Method Investment Impairment — Refer to Notes 10 and 11 to the financial statements

An impairment loss, based on the excess of the carrying value over the estimate of fair value of the investment, is recognized in earnings when an impairment is deemed to be other than temporary.

As of December 31, 2020, the Company holds an equity method investment, Enable Midstream Partners, LP (herein after referred to as “Enable”), with a recorded value of $782 million.

During the three months ended March 31, 2020, the Company recognized an impairment of $1,541 million based on the severity of decline in Enable’s common unit price due to the macroeconomic conditions related in part to the COVID-19 pandemic, combined with Enable’s

Given the significant assumptions used by management to estimate fair value including (i) recent market transactions of comparable companies and EBITDA to total enterprise multiples for comparable companies and the volume weighted average of the quoted price of Enable’s units, (ii) assumptions in the income approach including Enable’s forecasted cash distributions, forecasted growth rate of Enable’s cash distributions beyond 2020, and the determination of the cost of equity including market risk premiums, and (iii) the weighting of the different approaches, performing audit procedures to evaluate the reasonableness of these estimates and assumptions including the weighting percentages required a high degree of auditor judgment.

Our audit procedures related to the assumptions used to calculate the recent market transactions of comparable companies and EBITDA to total enterprise value multiples for comparable companies, and the volume weighted average of the quoted price of Enable’s units used in the market approach to approximate fair value at the measurement date included the following, among others:

- We tested the effectiveness of controls over management’s equity method investment impairment evaluation, including those over the determination of fair value, such as controls related to identifying comparable transactions, volume weighted average prices, and EBITDA multiples.

◦Assessing the appropriateness of fair value calculated based on the volume weighted average price model through independently recalculating the value and assessing the time period for which the common unit trading price data was pulled.

◦Assessing the appropriateness of the valuation multiples used in market approach valuation methods through independent recalculation and comparison to selected guideline comparable companies and independently obtained EBITDA multiples.

Our audit procedures related to the assumptions used in the income approach including Enable’s forecasted cash distributions, forecasted growth rate of Enable’s cash distributions beyond 2020, and the determination of the cost of equity including market risk premiums included the following, among others:

- We tested the effectiveness of controls over management’s equity method investment impairment evaluation, including controls related to assumptions utilized in the income approach for the determination of fair value.

- We agreed the forecasted distributions and historical cash flows used in the income approach to publicly available information from Enable.

◦Performing an analysis of the inflation, economic, and industry growth statistics to determine a range of acceptable forecasted growth rates of Enable’s cash distributions.

◦Independently calculating a cost of equity including market risk premiums using a process consistent with generally accepted valuation practices.

Our audit procedures related to the weighting of the different approaches included the following, among others:

- We tested the effectiveness of controls over management’s equity method investment impairment evaluation, including those over the determination of the weighting of the income approach and market approach used to calculate the fair value of Enable.

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 December 31, [removed: 2020] [added: 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 December 31, [removed: 2020] [added: 2021] that has materially affected, or is reasonably likely to materially affect, the Registrants’ internal controls over financial reporting.

Based on the Registrants’ evaluation under the framework in *Internal Control — Integrated Framework* (2013), the Registrants’ management has concluded, in each case, that their internal control over financial reporting was effective as of December 31, [removed: 2020.][added: 2021.]

Deloitte & Touche LLP, CenterPoint Energy’s independent registered public accounting firm, has issued an attestation report on the effectiveness of CenterPoint Energy’s internal control over financial reporting as of December 31, [removed: 2020] [added: 2021] which is set forth below.

We have audited the internal control over financial reporting of CenterPoint Energy, Inc. and subsidiaries (the “Company”) as of December 31, [removed: 2020,] [added: 2021,] based on criteria established in *Internal Control [removed: -] [added: —] Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2020,] [added: 2021,] based on criteria established in *Internal Control [removed: -] [added: —] Integrated Framework (2013)* issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, [removed: 2020,] [added: 2021,] of the Company and our report dated February [removed: 25, 2021,] [added: 22, 2022,] expressed an unqualified opinion on those financial statements.

February 22, 2022

February 25, 2021

None.

Compensatory Arrangements of Certain Officers (CenterPoint Energy)

*Amendment to Change in Control Plan*

On February 19, 2021, the Board of Directors of CenterPoint Energy approved the First Amendment to the previously adopted Change in Control Plan.

The Change in Control Plan continues to cover officers of CenterPoint Energy, including the Chief Executive Officer, the Chief Financial Officer and CenterPoint Energy’s other named executive officers, and provides for severance payments and other benefits in the event a “Covered Termination” (as defined in the Change in Control Plan) occurs three months prior to or within two years after the completion of a transaction that effects a “Change in Control” (as defined in the Change in Control Plan).

One such benefit provided under the Change in Control Plan is an enhanced retirement benefit equal to the pay credits that would have otherwise accrued under the cash balance formula of the CenterPoint Energy Retirement Plan if the officer had remained employed through the severance period.

However, participation in the CenterPoint Energy Retirement Plan was closed for all non-union employees hired or rehired on or after January 1, 2020.

Because officers hired or rehired on or after the such date are not eligible for the CenterPoint Energy Retirement Plan, the First Amendment provides that the enhanced retirement benefit under the Change in Control Plan for such officers will instead be an amount equal to the employer non-matching contributions that the officers would otherwise have received under the CenterPoint Energy Savings Plan if the officers had remained employed through the severance period.

Benefits under the Change in Control Plan, including the enhanced retirement benefit as amended by the First Amendment, continue to be subject to a “double trigger” because both a Change in Control and termination of the participant’s employment are required for the participant to qualify for benefits.

The foregoing summary is qualified in its entirety by the First Amendment, which is filed as Exhibit 10(t)(2) hereto and incorporated herein by reference.

*Amendments to Forms of Award Agreement under Long-Term Incentive Plan*

On February 19, 2021 and February 24, 2021, the Compensation Committee approved new forms of award agreement under CenterPoint Energy’s LTIP for restricted stock unit awards, including a new form of award agreement for restricted stock unit awards for the Chief Executive Officer.

The newly approved forms of award agreement condition the otherwise time-based grants under the LTIP upon CenterPoint Energy’s achievement of performance goals established by the Compensation Committee.

With respect to certain such grants beginning in 2021, the Compensation Committee has established a performance goal requiring positive operating income in the last full calendar year of the restricted period as a condition for vesting.

With respect to payouts related to retirement (age 55 or greater with at least five years of service or, for the Chief Executive Officer, at least three years of service), such retirement payouts will be subject to the performance goals established by the Compensation Committee and will occur after determination of achievement at the end of the three-year vesting cycle.

The description of the forms of award agreement, as amended, are qualified in their entirety by reference to the full text of the respective form of restricted stock unit award agreement, which are included as Exhibits 10(q)(12) and 10(q)(13) hereto and incorporated herein by reference.

*Compensatory Arrangements of Certain Officers*

On February 19, 2021, the Compensation Committee determined that Milton Carroll, Executive Chairman of CenterPoint Energy, will be eligible to participate in CenterPoint Energy’s STIP.

His short-term incentive compensation target is 75% of base salary.

The Compensation Committee also approved a cash bonus of $881,475 for Mr. Carroll, payable in March 2021.

On February 19, 2021, the Compensation Committee approved an award under CenterPoint Energy’s STIP of $2,463,750 for David J.

Lesar, President and Chief Executive Officer of CenterPoint Energy, based on a full year of his base salary.

PART III

Not Applicable.

PART III

For CenterPoint Energy, the information called for by Item 10, to the extent not set forth in “Information About Our Executive Officers” in Item 1, will be set forth in the definitive proxy statement relating to CenterPoint Energy’s [removed: 2021] [added: 2022] annual meeting of shareholders pursuant to SEC Regulation 14A.

For CenterPoint Energy, the information called for by Item 11 will be set forth in the definitive proxy statement relating to CenterPoint Energy’s [removed: 2021] [added: 2022] annual meeting of shareholders pursuant to SEC Regulation 14A.

For CenterPoint Energy, the information called for by Item 12 will be set forth in the definitive proxy statement relating to CenterPoint Energy’s [removed: 2021] [added: 2022] annual meeting of shareholders pursuant to SEC Regulation 14A.

For CenterPoint Energy, the information called for by Item 13 will be set forth in the definitive proxy statement relating to CenterPoint Energy’s [removed: 2021] [added: 2022] annual meeting of shareholders pursuant to SEC Regulation 14A.

For CenterPoint Energy, the information called for by Item 14 will be set forth in the definitive proxy statement relating to CenterPoint Energy’s [removed: 2021] [added: 2022] annual meeting of shareholders pursuant to SEC Regulation 14A.

Aggregate fees billed to Houston Electric and CERC during the year ended December 31, [removed: 2020] [added: 2021] and [removed: 2019] [added: 2020] by their principal accounting firm, Deloitte & Touche LLP, are set forth below.

| Audit fees (1) | | | $ | [removed: 658,965] [added: 650,344] | | | | | $ | [removed: 907,560] [added: 963,833] | | | | | $ | [removed: 884,400] [added: 658,965] | | | | | $ | [removed: 1,419,000] [added: 907,560] | |

| Audit-related fees (2) | | | [removed: 343,000] [added: 347,000] | | | | | | [removed: 172,500] [added: 152,000] | | | | | | [removed: 371,500] [added: 343,000] | | | | | | [removed: 130,500] [added: 172,500] | | |

| Total audit and audit-related fees | | | [removed: 1,001,965] [added: 997,344] | | | | | | [removed: 1,080,060] [added: 1,115,833] | | | | | | [removed: 1,255,900] [added: 1,001,965] | | | | | | [removed: 1,549,500] [added: 1,080,060] | | |

| Total fees | | | $ | [removed: 1,001,965] [added: 997,344] | | | | | $ | [removed: 1,080,060] [added: 1,115,833] | | | | | $ | [removed: 1,255,900] [added: 1,001,965] | | | | | $ | [removed: 1,549,500] [added: 1,080,060] | |

(1)For [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] amounts include fees for services provided by the principal accounting firm relating to the integrated audit of financial statements and internal control over financial reporting, statutory audits, attest services, and regulatory filings.

(2)For [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] includes fees for consultations concerning financial accounting and reporting standards and various agreed-upon or expanded procedures related to accounting records to comply with financial accounting or regulatory reporting matters.

| | | | 2021 | | | | | | | | | | | | 2020 | | | | | | | | |

| | | | 2020 | | | | | | | | | | | | 2019 | | | | | | | | |

| Report of Independent Registered Public Accounting Firm [added: (PCAOB ID No. 34)] | | | [removed: [88](#iad7ee2cb909d478c89e59a724ad5607a_103)] [added: [78](#i0b01e54b47c242c9bf7278aee4b9ae35_112)] | | |

| Statements of Consolidated [added: Comprehensive] Income for the Three Years Ended December 31, 2020 | | | [removed: [93](#iad7ee2cb909d478c89e59a724ad5607a_109)] [added: [90](#i0b01e54b47c242c9bf7278aee4b9ae35_139)] | | |

| Statements of Consolidated Comprehensive Income for the Three Years Ended December 31, [removed: 2020] [added: 2021] | | | [removed: [94](#iad7ee2cb909d478c89e59a724ad5607a_112)] [added: [82](#i0b01e54b47c242c9bf7278aee4b9ae35_121)] | | |

| Consolidated Balance Sheets as of December 31, [removed: 2020] [added: 2021] and [removed: 2019] [added: 2020] | | | [removed: [95](#iad7ee2cb909d478c89e59a724ad5607a_118)] [added: [83](#i0b01e54b47c242c9bf7278aee4b9ae35_124)] | | |

| Statements of Consolidated Cash Flows for the Three Years Ended December 31, [removed: 2020] [added: 2021] | | | [removed: [97](#iad7ee2cb909d478c89e59a724ad5607a_124)] [added: [85](#i0b01e54b47c242c9bf7278aee4b9ae35_127)] | | |

| Statements of Consolidated Changes in Equity for the Three Years Ended December 31, [removed: 2020] [added: 2021] | | | [removed: [98](#iad7ee2cb909d478c89e59a724ad5607a_127)] [added: [86](#i0b01e54b47c242c9bf7278aee4b9ae35_130)] | | |

| Report of Independent Registered Public Accounting Firm [added: (PCAOB ID No. 34)] | | | [removed: [99](#iad7ee2cb909d478c89e59a724ad5607a_133)] [added: [87](#i0b01e54b47c242c9bf7278aee4b9ae35_133)] | | |

| Statements of Consolidated Income for the Three Years Ended December 31, [removed: 2020] [added: 2021] | | | [removed: [101](#iad7ee2cb909d478c89e59a724ad5607a_136)] [added: [89](#i0b01e54b47c242c9bf7278aee4b9ae35_136)] | | |

| Statements of Consolidated Comprehensive Income for the Three Years Ended December 31, [removed: 2019] [added: 2021] | | | [removed: [102](#iad7ee2cb909d478c89e59a724ad5607a_139)] [added: [98](#i0b01e54b47c242c9bf7278aee4b9ae35_157)] | | |

| Consolidated Balance Sheets as of December 31, [removed: 2020] [added: 2021] and [removed: 2019] [added: 2020] | | | [removed: [103](#iad7ee2cb909d478c89e59a724ad5607a_145)] [added: [91](#i0b01e54b47c242c9bf7278aee4b9ae35_142)] | | |

| Statements of Consolidated Cash Flows for the Three Years Ended December 31, [removed: 2020] [added: 2021] | | | [removed: [105](#iad7ee2cb909d478c89e59a724ad5607a_151)] [added: [93](#i0b01e54b47c242c9bf7278aee4b9ae35_145)] | | |

| Statements of Consolidated Changes in Equity for the Three Years Ended December 31, [removed: 2020] [added: 2021] | | | [removed: [105](#iad7ee2cb909d478c89e59a724ad5607a_151)] [added: [93](#i0b01e54b47c242c9bf7278aee4b9ae35_145)] | | |

| Report of Independent Registered Public Accounting Firm [added: (PCAOB ID No. 34)] | | | [removed: [107](#iad7ee2cb909d478c89e59a724ad5607a_157)] [added: [95](#i0b01e54b47c242c9bf7278aee4b9ae35_151)] | | |

| Statements of Consolidated Income for the Three Years Ended December 31, [removed: 2020] [added: 2021] | | | [removed: [109](#iad7ee2cb909d478c89e59a724ad5607a_160)] [added: [81](#i0b01e54b47c242c9bf7278aee4b9ae35_118)] | | |

| Statements of Consolidated [removed: Comprehensive] Income for the Three Years Ended December 31, [removed: 2020] [added: 2021] | | | [removed: [110](#iad7ee2cb909d478c89e59a724ad5607a_166)] [added: [97](#i0b01e54b47c242c9bf7278aee4b9ae35_154)] | | |

| Consolidated Balance Sheets as of December 31, [removed: 2020] [added: 2021] and [removed: 2019] [added: 2020] | | | [removed: [111](#iad7ee2cb909d478c89e59a724ad5607a_172)] [added: [99](#i0b01e54b47c242c9bf7278aee4b9ae35_160)] | | |

| Statements of Consolidated Cash Flows for the Three Years Ended December 31, [removed: 2020] [added: 2021] | | | [removed: [113](#iad7ee2cb909d478c89e59a724ad5607a_178)] [added: [101](#i0b01e54b47c242c9bf7278aee4b9ae35_163)] | | |

| Statements of Consolidated Changes in Equity for the Three Years Ended December 31, [removed: 2020] [added: 2021] | | | [removed: [114](#iad7ee2cb909d478c89e59a724ad5607a_181)] [added: [102](#i0b01e54b47c242c9bf7278aee4b9ae35_166)] | | |

| Combined Notes to Consolidated Financial Statements | | | [removed: [115](#iad7ee2cb909d478c89e59a724ad5607a_184)] [added: [103](#i0b01e54b47c242c9bf7278aee4b9ae35_169)] | | |

The financial statements of Enable Midstream Partners, LP required pursuant to Rule 3-09 of Regulation S-X are included in this filing for CenterPoint Energy as [removed: Exhibit 99.1.][added: Exhibits 99.1 and 99.2.]

*(a)(2) Financial Statement Schedules for the Three Years Ended December 31, [removed: 2020.*][added: 2021.*]

See Index of Exhibits beginning on page [removed: 195,] [added: 182,] which index also includes the management contracts or compensatory plans or arrangements required to be filed as exhibits to this Form 10-K by Item 601(b)(10)(iii) of Regulation S-K.

For Fiscal Year Ended December 31, [removed: 2020][added: 2021]

| [removed: 4(e)] [added: 4(e)(17)] | | | — | | | [removed: [Form of Depositary Receipt for the Depositary Shares (included as Exhibit A] [added: [Twenty-Fifth Supplemental Indenture] to Exhibit [removed: 4(d))](http://www.sec.gov/Archives/edgar/data/1130310/000119312518288531/d589550dex42.htm)] [added: 4(](http://www.sec.gov/Archives/edgar/data/1130310/000113031016000055/cnp_exhibit45x9302016.htm)[e](http://www.sec.gov/Archives/edgar/data/1130310/000113031016000055/cnp_exhibit45x9302016.htm)[)(1) dated as of August 11, 2016](http://www.sec.gov/Archives/edgar/data/1130310/000113031016000055/cnp_exhibit45x9302016.htm)] | | | | | | CenterPoint Energy’s Form [removed: 8-K dated] [added: 10-Q for the quarter ended] September [removed: 25, 2018] [added: 30, 2016] | | | | | | 1-31447 | | | | | | [removed: 4.3] [added: 4.5] | | | | | | X | | | | | | [added: X] | | | | | | | | |

| [removed: 4(f)] [added: 4(c)] | | | — | | | [Contribution and Registration Agreement dated December 18, 2001 among Reliant Energy, CenterPoint Energy and the Northern Trust Company, trustee under the Reliant Energy, Incorporated Master Retirement Trust](http://www.sec.gov/Archives/edgar/data/1130310/000095012902001679/h95548ex4-3.txt) | | | | | | CenterPoint Energy’s Form 10-K for the year ended December 31, 2001 | | | | | | 1-31447 | | | | | | 4.3 | | | | | | X | | | | | | | | | | | | | | |

| [removed: 4(g)(1)] [added: 4(d)(1)] | | | — | | | Mortgage and Deed of Trust, dated November 1, 1944 between Houston Lighting and Power Company (HL&P) and Chase Bank of Texas, National Association (formerly, South Texas Commercial National Bank of Houston), as Trustee, as amended and supplemented by 20 Supplemental Indentures thereto | | | | | | HL&P’s Form S-7 filed on August 25, 1977 | | | | | | 2-59748 | | | | | | 2(b) | | | | | | X | | | | | | X | | | | | | | | |