Item 1. FINANCIAL STATEMENTS

296K characters. Original on sec.gov · Markdown

Item 1. FINANCIAL STATEMENTS

CENTERPOINT ENERGY, INC. AND SUBSIDIARIES

CONDENSED STATEMENTS OF CONSOLIDATED INCOME

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(in millions, except per share amounts)
Revenues:
Utility revenues	$	1,842	$	1,849	$	6,341	$	6,355
Non-utility revenues	14		11		40		159
Total	1,856		1,860		6,381		6,514
Expenses:
Utility natural gas, fuel and purchased power	197		192		1,217		1,550
Non-utility cost of revenues, including natural gas	1		1		2		98
Operation and maintenance	775		648		2,162		1,990
Depreciation and amortization	334		374		1,083		1,042
Taxes other than income taxes	125		127		410		395

Total	1,432		1,342		4,874		5,075
Operating Income	424		518		1,507		1,439
Other Income (Expense):
Gain (loss) on equity securities	54		49		(10)		56
Gain (loss) on indexed debt securities	(53)		(47)		14		(52)
Loss on sale	—		—		—		(12)
Interest expense and other finance charges	(191)		(176)		(601)		(489)
Interest expense on Securitization Bonds	(4)		(7)		(15)		(11)




Other income, net	15		13		39		39
Total	(179)		(168)		(573)		(469)
Income Before Income Taxes	245		350		934		970
Income tax expense	52		68		163		245


Net Income	193		282		771		725
Income allocated to preferred shareholders	—		26		—		50
Income Available to Common Shareholders	$	193	$	256	$	771	$	675



Basic Earnings Per Common Share	$	0.30	$	0.41	$	1.20	$	1.07


Diluted Earnings Per Common Share	$	0.30	$	0.40	$	1.20	$	1.07

Weighted Average Common Shares Outstanding, Basic	648		631		640		631
Weighted Average Common Shares Outstanding, Diluted	648		633		641		633

See Combined Notes to Interim Condensed Financial Statements

Table of Contents

CENTERPOINT ENERGY, INC. AND SUBSIDIARIES

CONDENSED STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(in millions)
Net income	$	193	$	282	$	771	$	725
Other comprehensive income (loss):
Adjustment to pension and other postretirement plans (net of tax of $-0-, $-0-, $-0-, and $-0-)	1		1		2		—
Net deferred gain from cash flow hedges (net of tax of $0, $-0-, $1, and $-0-)	—		2		4		2
Reclassification of deferred gain from cash flow hedges realized in net income (net of tax of $-0-, $-0-, $-0- and $-0-)	(1)		—		(1)		—


Total	—		3		5		2
Comprehensive income	193		285		776		727
Income allocated to preferred shareholders	—		26		—		50
Comprehensive income available to common shareholders	$	193	$	259	$	776	$	677

See Combined Notes to Interim Condensed Financial Statements

Table of Contents

CENTERPOINT ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


	September 30, 2024		December 31, 2023
	(in millions)
ASSETS
Current Assets:
Cash and cash equivalents ($111 and $90 related to VIEs, respectively)	$	112	$	90
Investment in equity securities	531		541

Accounts receivable ($2 and $21 related to VIEs, respectively), less allowance for credit losses of $29 and $27, respectively	701		710
Accrued unbilled revenues ($2 and $2 related to VIEs, respectively), less allowance for credit losses of $1 and $2, respectively	338		516

Natural gas and coal inventory	184		197
Materials and supplies	549		573
Non-trading derivative assets	1		—
Taxes receivable	169		94
Current assets held for sale	1,346		—
Regulatory assets	243		161
Prepaid expenses and other current assets ($13 and $15 related to VIEs, respectively)	96		145
Total current assets	4,270		3,027
Property, Plant and Equipment, net:
Property, plant and equipment	41,891		40,396
Less: accumulated depreciation and amortization	10,453		10,543
Property, plant and equipment, net	31,438		29,853
Other Assets:
Goodwill	3,943		4,160
Regulatory assets ($316 and $402 related to VIEs, respectively)	3,007		2,513






Other non-current assets	235		162
Total other assets	7,185		6,835
Total Assets	$	42,893	$	39,715

See Combined Notes to Interim Condensed Financial Statements

Table of Contents

CENTERPOINT ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS – (continued)

(Unaudited)


	September 30, 2024		December 31, 2023
	(in millions, except par value and shares)
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Short-term borrowings	$	—	$	4
Current portion of VIE Securitization Bonds long-term debt	94		178
Indexed debt, net	3		5
Current portion of other long-term debt	51		872
Indexed debt securities derivative	591		605
Accounts payable	1,684		917

Taxes accrued	265		291
Interest accrued	229		236
Dividends accrued	137		126
Customer deposits	96		111
Non-trading derivative liabilities	5		9


Current liabilities held for sale	220		—
Other current liabilities	461		510
Total current liabilities	3,836		3,864
Other Liabilities:
Deferred income taxes, net	4,383		4,079
Non-trading derivative liabilities	2		3
Benefit obligations	591		572
Regulatory liabilities	3,031		3,208

Other non-current liabilities	786		763
Total other liabilities	8,793		8,625
Long-term Debt, net:
VIE Securitization Bonds, net	314		320
Other long-term debt, net	19,415		17,239
Total long-term debt, net	19,729		17,559
Commitments and Contingencies (Note 13)

Shareholders’ Equity:

Common stock, $0.01 par value, 1,000,000,000 shares authorized, 651,721,174 shares and 631,225,829 shares outstanding, respectively	6		6
Additional paid-in capital	9,091		8,604
Retained earnings	1,468		1,092
Accumulated other comprehensive loss	(30)		(35)
Total shareholders’ equity	10,535		9,667
Total Liabilities and Shareholders’ Equity	$	42,893	$	39,715

See Combined Notes to Interim Condensed Financial Statements

Table of Contents

CENTERPOINT ENERGY, INC. AND SUBSIDIARIES

CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS

(Unaudited)


	Nine Months Ended September 30,
	2024		2023
	(in millions)
Cash Flows from Operating Activities:
Net income	$	771	$	725


Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	1,083		1,042

Deferred income taxes	238		94




Loss on divestitures	—		12
Loss (gain) on equity securities	10		(56)
Loss (gain) on indexed debt securities	(14)		52



Pension contributions	(5)		(30)
Changes in other assets and liabilities:
Accounts receivable and unbilled revenues, net	145		528

Inventory	19		63
Taxes receivable	(75)		(47)
Accounts payable	(247)		(443)

Current regulatory assets and liabilities	(91)		1,173
Non-current regulatory assets and liabilities	(553)		(71)

Other current assets and liabilities	(25)		(41)
Other non-current assets and liabilities	31		59
Other operating activities, net	(37)		9


Net cash provided by operating activities	1,250		3,069
Cash Flows from Investing Activities:
Capital expenditures	(2,501)		(3,323)







Proceeds from divestitures	—		145


Other investing activities, net	(58)		(12)


Net cash used in investing activities	(2,559)		(3,190)
Cash Flows from Financing Activities:
Decrease in short-term borrowings, net	(2)		(14)

Payments of commercial paper, net	(520)		(1,496)
Proceeds from long-term debt and term loans, net	2,757		5,574
Payments of long-term debt and term loans, including make-whole premiums	(963)		(2,613)




Payment of debt issuance costs	(25)		(50)


Payment of dividends on Common Stock	(384)		(359)
Payment of dividends on Preferred Stock	—		(49)
Proceeds from issuance of Common Stock, net	494		—



Redemption of Series A Preferred Stock	—		(800)
Other financing activities, net	(28)		(25)


Net cash provided by financing activities	1,329		168
Net Increase in Cash, Cash Equivalents and Restricted Cash	20		47
Cash, Cash Equivalents and Restricted Cash at Beginning of Period	109		91
Cash, Cash Equivalents and Restricted Cash at End of Period	$	129	$	138

See Combined Notes to Interim Condensed Financial Statements

Table of Contents

CENTERPOINT ENERGY, INC. AND SUBSIDIARIES

CONDENSED STATEMENTS OF CONSOLIDATED CHANGES IN EQUITY

(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount
	(in millions of dollars and shares, except authorized shares and par value amounts)
Cumulative Preferred Stock, $0.01 par value; authorized 20,000,000 shares
Balance, beginning of period	—	$	—	1	$	790	—	$	—	1	$	790



Redemption of Series A Preferred Stock	—	—		(1)	(790)		—	—		(1)	(790)
Balance, end of period	—	—		—	—		—	—		—	—
Common Stock, $0.01 par value; authorized 1,000,000,000 shares
Balance, beginning of period	642	6		631	6		631	6		630	6
Issuances of Common Stock	10	—		—	—		19	—		—	—
Issuances related to benefit and investment plans	—	—		—	—		2	—		1	—

Balance, end of period	652	6		631	6		652	6		631	6
Additional Paid-in-Capital
Balance, beginning of period		8,836			8,570			8,604			8,568
Issuances of Common Stock, net of issuance costs		247			—			494			—
Issuances related to benefit and investment plans		8			11			(7)			13


Balance, end of period		9,091			8,581			9,091			8,581
Retained Earnings
Balance, beginning of period		1,542			1,032			1,092			709
Net income		193			282			771			725
Common Stock dividends declared (see Note 18)		(267)			(246)			(395)			(366)
Preferred Stock dividends declared (see Note 18)		—			(41)			—			(41)





Balance, end of period		1,468			1,027			1,468			1,027
Accumulated Other Comprehensive Loss
Balance, beginning of period		(30)			(32)			(35)			(31)
Other comprehensive income		—			3			5			2
Balance, end of period		(30)			(29)			(30)			(29)
Total Shareholders’ Equity		$	10,535		$	9,585		$	10,535		$	9,585

See Combined Notes to Interim Condensed Financial Statements

Table of Contents

CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC AND SUBSIDIARIES

(AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.)

CONDENSED STATEMENTS OF CONSOLIDATED INCOME

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(in millions)
Revenues	$	1,058	$	1,083	$	3,003	$	2,784
Expenses:
Operation and maintenance	533		409		1,426		1,190
Depreciation and amortization	171		210		580		555
Taxes other than income taxes	71		70		221		201
Total	775		689		2,227		1,946
Operating Income	283		394		776		838
Other Income (Expense):
Interest expense and other finance charges	(74)		(69)		(229)		(185)
Interest expense on Securitization Bonds	(1)		(2)		(3)		(6)



Other income, net	12		5		33		22
Total	(63)		(66)		(199)		(169)
Income Before Income Taxes	220		328		577		669
Income tax expense	41		72		112		147
Net Income	$	179	$	256	$	465	$	522

See Combined Notes to Interim Condensed Financial Statements

Table of Contents

CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC AND SUBSIDIARIES

(AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.)

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


	September 30, 2024		December 31, 2023
	(in millions)
ASSETS
Current Assets:
Cash and cash equivalents ($96 and $76 related to VIEs, respectively)	$	97	$	76
Accounts receivable ($1 and $19 related to VIEs, respectively), less allowance for credit losses of $1 and $1, respectively	446		295
Accounts and notes receivable–affiliated companies	13		251
Accrued unbilled revenues	191		142
Materials and supplies	393		409
Taxes receivable	—		38


Prepaid expenses and other current assets ($13 and $13 related to VIEs, respectively)	24		48
Total current assets	1,164		1,259
Property, Plant and Equipment, net:
Property, plant and equipment	21,371		19,515
Less: accumulated depreciation and amortization	4,568		4,469
Property, plant and equipment, net	16,803		15,046
Other Assets:
Regulatory assets ($-0- and $74 related to VIEs, respectively)	1,288		752

Other non-current assets	41		29
Total other assets	1,329		781
Total Assets	$	19,296	$	17,086

See Combined Notes to Interim Condensed Financial Statements

Table of Contents

CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC AND SUBSIDIARIES

(AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.)

CONDENSED CONSOLIDATED BALANCE SHEETS – (continued)

(Unaudited)


	September 30, 2024		December 31, 2023
	(in millions)
LIABILITIES AND MEMBER’S EQUITY
Current Liabilities:

Current portion of VIE Securitization Bonds long-term debt	$	81	$	161

Accounts payable	1,314		351
Accounts and notes payable–affiliated companies	156		104
Taxes accrued	153		155
Interest accrued	120		99

Other current liabilities	134		111
Total current liabilities	1,958		981
Other Liabilities:
Deferred income taxes, net	1,465		1,406
Benefit obligations	40		32
Regulatory liabilities	966		1,025

Other non-current liabilities	92		107
Total other liabilities	2,563		2,570



Long-Term Debt, net	8,126		7,426
Commitments and Contingencies (Note 13)
Member’s Equity:
Common stock	—		—
Additional paid-in capital	5,069		4,745
Retained earnings	1,580		1,364

Total member’s equity	6,649		6,109
Total Liabilities and Member’s Equity	$	19,296	$	17,086

See Combined Notes to Interim Condensed Financial Statements

Table of Contents

CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC AND SUBSIDIARIES

(AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.)

CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS

(Unaudited)


	Nine Months Ended September 30,
	2024		2023
	(in millions)
Cash Flows from Operating Activities:
Net income	$	465	$	522
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	580		555
Deferred income taxes	42		117


Changes in other assets and liabilities:
Accounts receivable and unbilled revenues, net	(203)		(211)
Accounts receivable/payable–affiliated companies	(19)		(9)
Inventory	16		(18)
Accounts payable	(113)		(23)
Taxes receivable	38		(8)
Current regulatory assets and liabilities	(1)		6
Non-current regulatory assets and liabilities	(527)		(119)
Other current assets and liabilities	53		18
Other non-current assets and liabilities	(10)		44
Other operating activities, net	(15)		(16)
Net cash provided by operating activities	306		858
Cash Flows from Investing Activities:
Capital expenditures	(1,171)		(1,724)
Decrease (increase) in notes receivable–affiliated companies	238		(400)


Other investing activities, net	(111)		(8)
Net cash used in investing activities	(1,044)		(2,132)
Cash Flows from Financing Activities:


Proceeds from long-term debt and term loan, net	699		1,398
Payments of long-term debt	(80)		(77)
Increase (decrease) in notes payable–affiliated companies	71		(642)
Dividend to parent	(249)		(239)
Contribution from parent	324		885

Payment of debt issuance costs	(4)		(12)

Other financing activities, net	(2)		(1)
Net cash provided by financing activities	759		1,312
Net Increase in Cash, Cash Equivalents and Restricted Cash	21		38
Cash, Cash Equivalents and Restricted Cash at Beginning of Period	89		88
Cash, Cash Equivalents and Restricted Cash at End of Period	$	110	$	126

See Combined Notes to Interim Condensed Financial Statements

Table of Contents

CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC AND SUBSIDIARIES

(AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.)

CONDENSED STATEMENTS OF CONSOLIDATED CHANGES IN EQUITY

(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount
	(in millions, except share amounts)


Common Stock
Balance, beginning of period	1,000	$	—	1,000	$	—	1,000	$	—	1,000	$	—
Balance, end of period	1,000	—		1,000	—		1,000	—		1,000	—
Additional Paid-in-Capital
Balance, beginning of period		4,975			4,510			4,745			3,860

Contribution from parent		94			235			324			885

Balance, end of period		5,069			4,745			5,069			4,745
Retained Earnings
Balance, beginning of period		1,495			1,244			1,364			1,138
Net income		179			256			465			522
Dividend to parent		(94)			(79)			(249)			(239)
Balance, end of period		1,580			1,421			1,580			1,421




Total Member’s Equity		$	6,649		$	6,166		$	6,649		$	6,166

See Combined Notes to Interim Condensed Financial Statements

Table of Contents

CENTERPOINT ENERGY RESOURCES CORP. AND SUBSIDIARIES

(AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.)

CONDENSED STATEMENTS OF CONSOLIDATED INCOME

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(in millions)
Revenues:
Utility revenues	$	589	$	574	$	2,757	$	3,014
Non-utility revenues	11		9		34		31
Total	600		583		2,791		3,045
Expenses:
Utility natural gas	140		141		1,046		1,399
Non-utility cost of revenues, including natural gas	1		1		2		2
Operation and maintenance	207		187		614		616
Depreciation and amortization	124		125		389		365
Taxes other than income taxes	51		53		176		181

Total	523		507		2,227		2,563
Operating Income	77		76		564		482
Other Income (Expense):

Interest expense and other finance charges	(38)		(44)		(145)		(131)



Other income, net	4		6		10		12
Total	(34)		(38)		(135)		(119)
Income Before Income Taxes	43		38		429		363
Income tax expense	9		10		84		80


Net Income	$	34	$	28	$	345	$	283

See Combined Notes to Interim Condensed Financial Statements

Table of Contents

CENTERPOINT ENERGY RESOURCES CORP. AND SUBSIDIARIES

(AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.)

CONDENSED STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,

	2024		2023		2024		2023
	(in millions)
Net income	$	34	$	28	$	345	$	283

Adjustment to pension and other postretirement plans (net of tax of $-0-, $-0-, $-0- and $-0-)	—		—		(1)		(1)

Other comprehensive loss	—		—		(1)		(1)
Comprehensive income	$	34	$	28	$	344	$	282

See Combined Notes to Interim Condensed Financial Statements

Table of Contents

CENTERPOINT ENERGY RESOURCES CORP. AND SUBSIDIARIES

(AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.)

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


	September 30, 2024		December 31, 2023
	(in millions)
ASSETS
Current Assets:
Cash and cash equivalents	$	1	$	1
Accounts receivable, less allowance for credit losses of $24 and $25, respectively	201		356
Accrued unbilled revenues, less allowance for credit losses of $1 and $1, respectively	111		329
Accounts and notes receivable–affiliated companies	23		43

Materials and supplies	109		107
Natural gas inventory	144		156
Non-trading derivative assets	1		—
Taxes receivable	106		101

Current assets held for sale	1,251		—
Regulatory assets	242		161
Prepaid expenses and other current assets	30		55
Total current assets	2,219		1,309
Property, Plant and Equipment, net:
Property, plant and equipment	15,295		15,672
Less: accumulated depreciation and amortization	4,110		4,169
Property, plant and equipment, net	11,185		11,503
Other Assets:
Goodwill	1,461		1,583
Regulatory assets	816		850




Other non-current assets	112		51
Total other assets	2,389		2,484
Total Assets	$	15,793	$	15,296

See Combined Notes to Interim Condensed Financial Statements

Table of Contents

CENTERPOINT ENERGY RESOURCES CORP. AND SUBSIDIARIES

(AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.)

CONDENSED CONSOLIDATED BALANCE SHEETS – (continued)

(Unaudited)


	September 30, 2024		December 31, 2023
	(in millions)
LIABILITIES AND STOCKHOLDER’S EQUITY
Current Liabilities:
Short-term borrowings	$	—	$	4
Current portion of long-term debt	10		—
Accounts payable	254		392
Accounts payable–affiliated companies	79		99

Taxes accrued	120		145
Interest accrued	50		70
Customer deposits	81		95
Non-trading derivative liabilities	4		8
Current liabilities held for sale	220		—
Other current liabilities	231		274
Total current liabilities	1,049		1,087
Other Liabilities:
Deferred income taxes, net	1,372		1,246

Non-trading derivative liabilities	2		3
Benefit obligations	73		74
Regulatory liabilities	1,808		1,882

Other non-current liabilities	474		455
Total other liabilities	3,729		3,660
Long-Term Debt, net	4,772		4,670
Commitments and Contingencies (Note 13)
Stockholder’s Equity:
Common stock	—		—
Additional paid-in capital	4,519		4,229
Retained earnings	1,709		1,634
Accumulated other comprehensive income	15		16
Total stockholder’s equity	6,243		5,879
Total Liabilities and Stockholder’s Equity	$	15,793	$	15,296

See Combined Notes to Interim Condensed Financial Statements

Table of Contents

CENTERPOINT ENERGY RESOURCES CORP. AND SUBSIDIARIES

(AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.)

CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS

(Unaudited)


	Nine Months Ended September 30,
	2024		2023
	(in millions)
Cash Flows from Operating Activities:
Net income	$	345	$	283
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	389		365

Deferred income taxes	95		(113)


Changes in other assets and liabilities:
Accounts receivable and unbilled revenues, net	333		724
Accounts receivable/payable–affiliated companies	(1)		57
Inventory	(9)		90
Taxes receivable	(5)		—
Accounts payable	(124)		(384)



Current regulatory assets and liabilities	(89)		1,129
Non-current regulatory assets and liabilities	(20)		63

Other current assets and liabilities	(41)		64
Other non-current assets and liabilities	18		(5)
Other operating activities, net	(33)		(3)
Net cash provided by operating activities	858		2,270
Cash Flows from Investing Activities:
Capital expenditures	(1,027)		(1,219)
Decrease (increase) in notes receivable–affiliated companies	1		(86)


Other investing activities, net	44		(15)


Net cash used in investing activities	(982)		(1,320)
Cash Flows from Financing Activities:
Decrease in short-term borrowings, net	(2)		(14)

Payments of commercial paper, net	(287)		(805)
Proceeds from long-term debt and term loan, net	399		2,006
Payments of long-term debt and term loan	—		(2,275)

Dividends to parent	(270)		(347)
Payment of debt issuance costs	(4)		(13)


Contribution from parent	290		500


Other financing activities, net	(2)		(1)


Net cash provided by (used in) financing activities	124		(949)
Net Increase in Cash, Cash Equivalents and Restricted Cash	—		1
Cash, Cash Equivalents and Restricted Cash at Beginning of Period	1		—
Cash, Cash Equivalents and Restricted Cash at End of Period	$	1	$	1

See Combined Notes to Interim Condensed Financial Statements

Table of Contents

CENTERPOINT ENERGY RESOURCES CORP. AND SUBSIDIARIES

(AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.)

CONDENSED STATEMENTS OF CONSOLIDATED CHANGES IN EQUITY

(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount
	(in millions, except share amounts)
Common Stock
Balance, beginning of period	1,000	$	—	1,000	$	—	1,000	$	—	1,000	$	—
Balance, end of period	1,000	—		1,000	—		1,000	—		1,000	—
Additional Paid-in-Capital
Balance, beginning of period		4,519			4,229			4,229			3,729

Contribution from parent		—			—			290			500


Balance, end of period		4,519			4,229			4,519			4,229
Retained Earnings
Balance, beginning of period		1,699			1,562			1,634			1,618
Net income		34			28			345			283
Dividend to parent		(24)			(36)			(270)			(347)
Balance, end of period		1,709			1,554			1,709			1,554
Accumulated Other Comprehensive Income
Balance, beginning of period		15			15			16			16
Other comprehensive loss		—			—			(1)			(1)
Balance, end of period		15			15			15			15
Total Stockholder’s Equity		$	6,243		$	5,798		$	6,243		$	5,798

See Combined Notes to Interim Condensed Financial Statements

Table of Contents

CENTERPOINT ENERGY, INC. AND SUBSIDIARIES

CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC AND SUBSIDIARIES

CENTERPOINT ENERGY RESOURCES CORP. AND SUBSIDIARIES

COMBINED NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS

(1) Background and Basis of Presentation

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

Except as discussed in Note 11, no registrant has an obligation in respect of any other Registrant’s debt securities, and holders of such debt securities should not consider the financial resources or results of operations of any Registrant other than the obligor in making a decision with respect to such securities.

Basis of Presentation. Included in this combined Form 10-Q are the Interim Condensed Financial Statements of CenterPoint Energy, Houston Electric and CERC, which are referred to collectively as the Registrants. The Interim Condensed Financial Statements, which omit certain financial statement disclosures, are unaudited and should be read with the Registrants’ financial statements included in the Registrants’ combined 2023 Form 10-K. The Combined Notes to Interim Condensed Financial Statements apply to all Registrants and specific references to Houston Electric and CERC herein also pertain to CenterPoint Energy, unless otherwise indicated. The Interim Condensed Financial Statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows for the respective periods. Amounts reported in the Condensed Statements of Consolidated Income are not necessarily indicative of amounts expected for a full-year period due to the effects of, among other things, (a) seasonal fluctuations in demand for energy, (b) changes in energy commodity prices, (c) timing of maintenance and other expenditures and (d) acquisitions and dispositions of businesses, assets and other interests.

Background. CenterPoint Energy is a public utility holding company. On June 30, 2023, CenterPoint Energy completed the sale of its indirect subsidiary, Energy Systems Group, to an unaffiliated third party. On February 19, 2024, CenterPoint Energy, through its subsidiary CERC Corp., entered into the LAMS Asset Purchase Agreement to sell its Louisiana and Mississippi natural gas LDC businesses. The transaction is expected to close in the first quarter of 2025. For additional information, see Note 3.

As of September 30, 2024, CenterPoint Energy’s operating subsidiaries were as follows:

Houston Electric owns and operates electric transmission and distribution facilities in the Texas gulf coast area that includes the city of Houston;
CERC Corp. (i) directly owns and operates natural gas distribution systems in Louisiana, Minnesota, Mississippi and Texas, (ii) indirectly, through Indiana Gas and CEOH, owns and operates natural gas distribution systems in Indiana and Ohio, respectively, and (iii) owns and operates permanent pipeline connections through interconnects with various interstate and intrastate pipeline companies through CEIP; and
SIGECO provides energy delivery services to electric and natural gas customers located in and near Evansville in southwestern Indiana and owns and operates electric generation assets to serve its electric customers and optimizes those assets in the wholesale power market.

As of September 30, 2024, CenterPoint Energy’s reportable segments were Electric, Natural Gas, and Corporate and Other. Houston Electric and CERC each consist of a single reportable segment. For a description of CenterPoint Energy’s reportable segments, see Note 15.

Principles of Consolidation. The accompanying Interim Condensed Financial Statements have been prepared in conformity with generally accepted accounting principles. The accounts of the Registrants and their wholly-owned and majority-owned and controlled subsidiaries are included in the Interim Condensed Financial Statements. All intercompany transactions and balances are eliminated in consolidation.

Table of Contents

As of September 30, 2024, CenterPoint Energy, Houston Electric and SIGECO had VIEs including Bond Company IV and the SIGECO Securitization Subsidiary, which are consolidated. The consolidated VIEs are wholly-owned, bankruptcy-remote, special purpose entities that were formed solely for the purpose of securitizing transition property or facilitating the securitization financing of qualified costs in the second quarter of 2023 associated with the completed retirement of SIGECO’s A.B. Brown coal generation facilities. CenterPoint Energy, through SIGECO, has a controlling financial interest in the SIGECO Securitization Subsidiary and is the VIE’s primary beneficiary. For further information, see Note 6. Creditors of CenterPoint Energy, Houston Electric and SIGECO have no recourse to any assets or revenues of Bond Company IV or the SIGECO Securitization Subsidiary, as applicable. The Securitization Bonds issued by these VIEs are payable only from and secured by transition or securitization property, as applicable, and the bondholders have no recourse to the general credit of CenterPoint Energy, Houston Electric or SIGECO.

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

(2) New Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). This ASU updates segment disclosure requirements through enhanced disclosures around significant segment expenses. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Registrants are currently evaluating the impact of this ASU on their respective consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). This ASU enhances the transparency of income tax disclosures related to rate reconciliation and income taxes. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The Registrants are currently evaluating the impact of this ASU on their respective consolidated financial statements.

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

(3) Held for Sale and Divestitures (CenterPoint Energy and CERC)

Held for Sale. On February 19, 2024, CERC Corp. entered into the LAMS Asset Purchase Agreement, pursuant to which CERC Corp. has agreed to sell its Louisiana and Mississippi natural gas LDC businesses. The purchase price for the Louisiana and Mississippi natural gas LDC businesses is $1.2 billion and subject to adjustment as set forth in the LAMS Asset Purchase Agreement, including adjustments based on net working capital, regulatory assets and liabilities and capital expenditures at closing. The completion of the proposed transaction is subject to customary closing conditions, including (i) the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (ii) approval of the LPSC, (iii) approval of the MPSC, (iv) no Material Adverse Effect (as defined in the LAMS Asset Purchase Agreement) having occurred, and (v) customary closing conditions regarding the accuracy of the representations and warranties and compliance by the parties with the respective obligations under the LAMS Asset Purchase Agreement. The proposed transaction is not subject to a financing condition and is expected to close by the end of the first quarter of 2025, subject to satisfaction of the foregoing conditions. The businesses include approximately 12,000 miles of main pipeline in Louisiana and Mississippi serving more than 300,000 customers. The Louisiana and Mississippi natural gas LDC businesses are reflected in CenterPoint Energy’s Natural Gas reportable segment and CERC’s single reportable segment, as applicable. Filings were made on April 24, 2024 to the LPSC and on April 25, 2024 to the MPSC requesting approval of the transaction.

In February 2024, certain assets and liabilities representing the Louisiana and Mississippi natural gas LDC businesses met the held for sale criteria. The sale will be considered an asset sale for tax purposes, requiring net deferred tax liabilities to be excluded from held for sale balances.

The Registrants record assets and liabilities held for sale at the lower of their carrying value or their estimated fair value less cost to sell. Neither CenterPoint Energy nor CERC recognized any gains or losses upon classification of held for sale during the three and nine months ended September 30, 2024. See Note 9 for further information about the allocation of goodwill to the businesses to be sold.

Table of Contents

The assets and liabilities of the Louisiana and Mississippi natural gas LDC businesses classified as held for sale in CenterPoint Energy’s and CERC’s Condensed Consolidated Balance Sheets, as applicable, included the following:


	September 30, 2024
	CenterPoint Energy		CERC
	(in millions)
Receivables, net	$	9	$	9
Accrued unbilled revenues	11		11
Natural gas inventory	6		6
Materials and supplies	13		13
Property, plant and equipment, net	1,030		1,030
Goodwill	217		122
Regulatory assets	57		57
Other	3		3
Total current assets held for sale	$	1,346	$	1,251

Short-term borrowings	$	3	$	3
Accounts payable	18		18


Customer deposits	14		14
Regulatory liabilities	92		92
Other	93		93
Total current liabilities held for sale	$	220	$	220

Although the Louisiana and Mississippi natural gas LDC businesses meet the held for sale criteria, their proposed disposals do not represent a strategic shift for CenterPoint Energy and CERC as both will retain significant operations in, and will continue to invest in, their natural gas businesses. Therefore, the assets and liabilities associated with these transactions are not reflected as discontinued operations on CenterPoint Energy’s and CERC’s Condensed Statements of Consolidated Income, as applicable, and the December 31, 2023 Condensed Consolidated Balance Sheets were not required to be recast for assets held for sale. Since the depreciation on the Louisiana and Mississippi natural gas LDC businesses assets will continue to be reflected in revenues through customer rates until the expected closing of the transaction and will be reflected in the carryover basis of the rate-regulated assets once sold, CenterPoint Energy and CERC will continue to record depreciation on those assets through the expected closing of the transaction.

The pre-tax income for the Louisiana and Mississippi natural gas LDC businesses, excluding interest and corporate allocations, included in CenterPoint Energy’s and CERC’s Condensed Statements of Consolidated Income is as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(in millions)
Income (loss) Before Income Taxes	$	1	$	(2)	$	45	$	33

Divestiture of Energy Systems Group. On May 21, 2023, CenterPoint Energy, through its subsidiary Vectren Energy Services, entered into an Equity Purchase Agreement to sell all of the outstanding limited liability company interests of Energy Systems Group to ESG Holdings Group, for a purchase price of $157 million, subject to customary adjustments set forth in the Equity Purchase Agreement, including adjustments based on Energy Systems Group’s net working capital at closing, indebtedness, cash and cash equivalents and transaction expenses. The transaction closed on June 30, 2023, and CenterPoint Energy received $154 million in cash. Additionally, as of September 30, 2024, CenterPoint Energy had a payable of approximately $2 million to ESG Holdings Group for working capital and other adjustments set forth in the Equity Purchase Agreement, which had not yet been finalized. For a discussion of CenterPoint Energy’s pre-disposition guarantees related to Energy Systems Group, see Note 13(b).

CenterPoint Energy recognized a loss on sale of approximately $12 million, including $3 million of transaction costs, during the nine months ended September 30, 2023, in connection with the closing of the sale of Energy Systems Group. Additionally, CenterPoint Energy recognized a current tax expense of $33 million during the nine months ended September 30, 2023, as a result of the cash taxes payable upon the closing of the sale.

Table of Contents

The pre-tax loss for Energy Systems Group, excluding interest and corporate allocations, included in CenterPoint Energy’s Condensed Statements of Consolidated Income is as follows:


	Three Months Ended September 30, 2023		Nine Months Ended September 30, 2023
	(in millions)
Loss Before Income Taxes	$	—	$	4

(4) Revenue Recognition and Allowance for Credit Losses

In accordance with ASC 606, Revenue from Contracts with Customers, revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which the Registrants expect to be entitled to receive in exchange for these goods or services.

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

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

CenterPoint Energy











	Three Months Ended September 30, 2024
	Electric		Natural Gas		Corporate and Other		Total
	(in millions)
Revenue from contracts with customers	$	1,245	$	603	$	1	$	1,849
Other (1)	(2)		8		1		7

Total revenues	$	1,243	$	611	$	2	$	1,856











	Nine Months Ended September 30, 2024
	Electric		Natural Gas		Corporate and Other		Total
	(in millions)
Revenue from contracts with customers	$	3,504	$	2,842	$	3	$	6,349
Other (1)	(5)		34		3		32

Total revenues	$	3,499	$	2,876	$	6	$	6,381











	Three Months Ended September 30, 2023
	Electric		Natural Gas		Corporate and Other		Total
	(in millions)
Revenue from contracts with customers	$	1,274	$	589	$	1	$	1,864
Other (1)	(13)		8		1		(4)

Total revenues	$	1,261	$	597	$	2	$	1,860










	Nine Months Ended September 30, 2023
	Electric		Natural Gas		Corporate and Other		Total
	(in millions)
Revenue from contracts with customers	$	3,272	$	3,100	$	125	$	6,497
Other (1)	(22)		36		3		17

Total revenues	$	3,250	$	3,136	$	128	$	6,514

Table of Contents

(1)Primarily consists of income from ARPs and leases. Total lease income was $1 million and $2 million for the three months ended September 30, 2024 and 2023, respectively, and $5 million and $6 million for the nine months ended September 30, 2024 and 2023, respectively.

Houston Electric


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(in millions)
Revenue from contracts with customers	$	1,065	$	1,100	$	3,024	$	2,821
Other (1)	(7)		(17)		(21)		(37)
Total revenues	$	1,058	$	1,083	$	3,003	$	2,784

(1)Primarily consists of income from ARPs and leases. Lease income was not significant for the three and nine months ended September 30, 2024 and 2023.

CERC


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(in millions)
Revenue from contracts with customers	$	593	$	575	$	2,760	$	3,012
Other (1)	7		8		31		33

Total revenues	$	600	$	583	$	2,791	$	3,045

(1)Primarily consists of income from ARPs and leases. Lease income was $1 million and $1 million for the three months ended September 30, 2024 and 2023, respectively, and $3 million and $3 million for the nine months ended September 30, 2024 and 2023, respectively.

Revenues from Contracts with Customers

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

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

Contract Balances. When the timing of delivery of service is different from the timing of the payments made by customers and when the right to consideration is conditioned on something other than the passage of time, the Registrants recognize a contract liability when customer payment precedes performance. Those customers that prepay are represented by contract liabilities until the performance obligations are satisfied. The Registrants’ contract liabilities are included in Accounts payable and Other current liabilities in their Condensed Consolidated Balance Sheets.

Table of Contents

The opening and closing balances of accounts receivable, accrued unbilled revenues and contract liabilities from contracts with customers are as follows:

CenterPoint Energy


	Accounts Receivable		Accrued Unbilled Revenues		Contract Liabilities
	(in millions)
Opening balance as of December 31, 2023	$	652	$	516	$	2
Closing balance as of September 30, 2024	650		349		5
Increase (decrease)	$	(2)	$	(167)	$	3

The amount of revenue recognized during the nine months ended September 30, 2024 that was included in the opening contract liability was $2 million. The difference between the opening and closing balances of the contract liabilities primarily results from the timing difference between CenterPoint Energy’s performance and the customer’s payment.

Houston Electric


	Accounts Receivable		Accrued Unbilled Revenues		Contract Liabilities
	(in millions)
Opening balance as of December 31, 2023	$	275	$	142	$	2
Closing balance as of September 30, 2024	421		191		5
Increase	$	146	$	49	$	3

The amount of revenue recognized during the nine months ended September 30, 2024 that was included in the opening contract liability was $2 million. The difference between the opening and closing balances of the contract liabilities primarily results from the timing difference between Houston Electric’s performance and the customer’s payment.

CERC


	Accounts Receivable		Accrued Unbilled Revenues
	(in millions)
Opening balance as of December 31, 2023	$	330	$	329
Closing balance as of September 30, 2024	183		122
Decrease	$	(147)	$	(207)

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

Remaining Performance Obligations (CenterPoint Energy). Following the completed sale of Energy Systems Group on June 30, 2023, as discussed in Note 3, CenterPoint Energy had no remaining performance obligations.

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

Allowance for Credit Losses

CenterPoint Energy and CERC segregate financial assets that fall under the scope of Topic 326, primarily trade receivables due in one year or less, into portfolio segments based on shared risk characteristics, such as geographical location and regulatory environment, for evaluation of expected credit losses. Historical and current information, such as average write-offs, are applied to each portfolio segment to estimate the allowance for losses on uncollectible receivables. Additionally, the allowance for losses on uncollectible receivables is adjusted for reasonable and supportable forecasts of future economic conditions, which can include changing weather, commodity prices, regulations, and macroeconomic factors, among others. Houston Electric had no material changes in its methodology to recognize losses on financial assets that fall under the scope of Topic 326, primarily due to the nature of its customers and regulatory environment. For a discussion of regulatory deferrals, see Note 6**.**

Table of Contents

(5) Employee Benefit Plans

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

Pension Benefits (CenterPoint Energy)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(in millions)
Service cost (1)	$	6	$	6	$	18	$	19
Interest cost (2)	18		19		55		57
Expected return on plan assets (2)	(19)		(19)		(56)		(57)

Amortization of net loss (2)	7		7		21		21


Net periodic cost	$	12	$	13	$	38	$	40

(1)Included in Operation and maintenance expense in CenterPoint Energy’s Condensed Statements of Consolidated Income, net of amounts capitalized and regulatory deferrals.

(2)Included in Other income, net in CenterPoint Energy’s Condensed Statements of Consolidated Income, net of regulatory deferrals.

Postretirement Benefits


	Three Months Ended September 30,
	2024						2023
	CenterPoint Energy		Houston Electric		CERC		CenterPoint Energy		Houston Electric		CERC
	(in millions)

Interest cost (2)	$	3	$	1	$	1	$	3	$	1	$	1
Expected return on plan assets (2)	(1)		(1)		(1)		(1)		(1)		—
Amortization of prior service cost (credit) (2)	(1)		(1)		1		(1)		(1)		1
Amortization of net loss (2)	(2)		(1)		(1)		(2)		(1)		(1)




Net periodic cost (benefit)	$	(1)	$	(2)	$	—	$	(1)	$	(2)	$	1

	Nine Months Ended September 30,
	2024						2023
	CenterPoint Energy		Houston Electric		CERC		CenterPoint Energy		Houston Electric		CERC
	(in millions)
Service cost (1)	$	1	$	—	$	—	$	1	$	—	$	—
Interest cost (2)	9		4		3		9		4		3
Expected return on plan assets (2)	(4)		(3)		(1)		(4)		(3)		—
Amortization of prior service cost (credit) (2)	(2)		(4)		2		(2)		(4)		2
Amortization of net loss (2)	(6)		(3)		(2)		(6)		(3)		(2)




Net periodic cost (benefit)	$	(2)	$	(6)	$	2	$	(2)	$	(6)	$	3

(1)Included in Operation and maintenance expense in each of the Registrants’ respective Condensed Statements of Consolidated Income, net of amounts capitalized and regulatory deferrals.

(2)Included in Other income, net in each of the Registrants’ respective Condensed Statements of Consolidated Income, net of regulatory deferrals.

Table of Contents

The table below reflects the expected contributions to be made to the pension and postretirement benefit plans during 2024:


	CenterPoint Energy		Houston Electric		CERC
	(in millions)
Expected contributions to pension plans	$	11	$	—	$	—
Expected contributions to postretirement benefit plans	8		1		4

The table below reflects the contributions made to the pension and postretirement benefit plans during the periods presented:


	Three Months Ended September 30, 2024						Nine Months Ended September 30, 2024
	CenterPoint Energy		Houston Electric		CERC		CenterPoint Energy		Houston Electric		CERC
	(in millions)
Pension plans	$	2	$	—	$	—	$	5	$	—	$	—
Postretirement benefit plans	2		—		1		6		—		4

(6) Regulatory Matters

Equity Return

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


	September 30, 2024						December 31, 2023
	CenterPoint Energy (1)		Houston Electric (2)		CERC (3)		CenterPoint Energy (1)		Houston Electric (2)		CERC (3)
	(in millions)
Unrecognized equity return	$	226	$	76	$	85	$	204	$	75	$	69

(1)In addition to the amounts described in (2) and (3) below, represents CenterPoint Energy’s allowed equity return on post in-service carrying cost generally associated with investments in Indiana.

(2)Represents Houston Electric’s allowed equity return on its true-up balance of stranded costs, other changes and related interest resulting from the formerly integrated electric utilities prior to Texas deregulation to be recovered in rates through 2024 and certain TEEEF costs and storm restoration costs.

(3)Represents CERC’s allowed equity return on post in-service carrying cost associated with certain distribution facilities replacement expenditures in Texas and costs associated with investments in Indiana.

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


	Three Months Ended September 30,
	2024						2023
	CenterPoint Energy		Houston Electric		CERC		CenterPoint Energy		Houston Electric		CERC
	(in millions)
Allowed equity return recognized	$	1	$	—	$	1	$	14	$	14	$	—

	Nine Months Ended September 30,
	2024						2023
	CenterPoint Energy		Houston Electric		CERC		CenterPoint Energy		Houston Electric		CERC
	(in millions)
Allowed equity return recognized	$	22	$	19	$	2	$	32	$	30	$	1

Table of Contents

February 2021 Winter Storm Event

In February 2021, certain of the Registrants’ jurisdictions experienced an extreme and unprecedented winter weather event that resulted in prolonged freezing temperatures, which impacted their businesses. The February 2021 Winter Storm Event impacted wholesale prices of CenterPoint Energy’s and CERC’s natural gas purchases and their ability to serve customers in their Natural Gas service territories, including due to the reduction in available natural gas capacity and impacts to CenterPoint Energy’s and CERC’s natural gas supply portfolio activities, and the effects of weather on their systems and their ability to transport natural gas, among other things. The overall natural gas market, including the markets from which CenterPoint Energy and CERC sourced a significant portion of their natural gas for their operations, experienced significant impacts caused by the February 2021 Winter Storm Event, resulting in extraordinary increases in the cost of natural gas purchased by CenterPoint Energy and CERC of approximately $2 billion. CenterPoint Energy and CERC have completed recovery of natural gas costs in Mississippi, Indiana, Louisiana and Texas, and continue to recover the natural gas cost in Minnesota. As of September 30, 2024, CenterPoint Energy and CERC had each recorded current regulatory assets of $67 million and non-current regulatory assets of $83 million associated with the February 2021 Winter Storm Event. As of December 31, 2023, CenterPoint Energy and CERC had each recorded current regulatory assets of $86 million and non-current regulatory assets of $130 million associated with the February 2021 Winter Storm Event.

As of September 30, 2024 and December 31, 2023, as authorized by the PUCT, both CenterPoint Energy and Houston Electric had each recorded a regulatory asset of $8 million for bad debt expenses resulting from REPs’ default on their obligation to pay delivery charges to Houston Electric net of collateral. Additionally, both CenterPoint Energy and Houston Electric had each recorded a regulatory asset of $18 million and $17 million as of September 30, 2024 and December 31, 2023, respectively, and requested reimbursement of costs associated with the February 2021 Winter Storm Event in Houston Electric’s rate case, which was filed in March 2024. On August 1, 2024, Houston Electric announced that it was withdrawing its base rate application with the PUCT in order to focus on addressing the impacts of Hurricane Beryl in its service territory and accelerating preparedness and resiliency efforts for the remaining storm season. Subsequently, intervenors filed a motion to challenge the withdrawal of the base rate proceeding. On August 16, 2024, the ALJ issued an order denying the requested withdrawal of the base rate proceeding, leaving the base rate proceeding abated. Houston Electric filed an appeal of the ALJ’s order to the PUCT, and on October 24, 2024, the PUCT heard oral arguments on the appeal and indicated that they will decide the appeal on November 14, 2024.

See Note 13(c) for further information regarding litigation related to the February 2021 Winter Storm Event.

Texas Public Securitization

The Texas Natural Gas Securitization Finance Corporation issued customer rate relief bonds in March 2023, and on March 23, 2023, CenterPoint Energy and CERC, collectively, received approximately $1.1 billion in cash proceeds from the issuance and sale of the state’s customer rate relief bonds. The proceeds from the state’s customer rate relief bonds included carrying costs incurred through August 2022. Incremental carrying costs incurred after August 2022 until the date the proceeds were received are recorded in a separate regulatory asset; the most recent CERC rate proceeding in Texas included a request for recovery of this regulatory asset and was included in the settlement agreement approved by the Railroad Commission in June 2024. As CenterPoint Energy and CERC have no future financial obligations for the repayment of the state’s customer rate relief bonds, the customer rate relief bonds are not recorded on CenterPoint Energy’s or CERC’s balance sheets. The $1.1 billion in cash proceeds from the state’s customer rate relief bonds is considered to be a government grant. The state’s customer rate relief bonds are backed in part by customer rate relief property, including customer rate relief charges, which are non-bypassable uniform monthly volumetric charges to be paid by all existing and future sales customers as a component of each regulated utility’s gas cost, separate from their base rate. CERC only acts as a collection agent, whose duties include management, servicing and administration of a portion of the customer rate relief property which is associated with the customer rate relief charge imposed on customers of CERC under the guidance and direction from the Railroad Commission. The Texas Natural Gas Securitization Finance Corporation, and not CenterPoint Energy or CERC, is the owner of the customer rate relief property. The assets of the Texas Natural Gas Securitization Finance Corporation are not available to pay creditors of CenterPoint Energy, CERC, or their affiliates. While the customer rate relief charges will be included by CERC in their monthly billings, the billing amount is established by the Railroad Commission. CERC will remit all customer rate relief charges collected to the financing entity set up by the Railroad Commission. Therefore, the collection and servicing of customer rate relief charges have no impact on the respective Condensed Statements of Consolidated Income of CenterPoint Energy or CERC.

As U.S. generally accepted accounting principles have no specific accounting guidance for government grants or assistance, the cash proceeds from the state’s customer rate relief bonds were accounted for as a government grant by analogy to the grant model under IAS 20—Accounting for Government Grants and Disclosures of Government Assistance. CenterPoint

Table of Contents

Energy and CERC reflect the proceeds from the grant as a deduction to natural gas costs and recognized the $1.1 billion of cash proceeds from the state’s customer rate relief bonds within Utility natural gas expense on their respective Condensed Statements of Consolidated Income in the three months ended March 31, 2023, net of the recognition of natural gas cost related to relieving CenterPoint Energy and CERC’s regulatory assets related to the February 2021 Winter Storm Event in the same period.

Indiana Electric Securitization of Generation Retirements (CenterPoint Energy)

On January 4, 2023, the IURC issued an order in accordance with Indiana Senate Enrolled Act 386 authorizing the issuance of up to $350 million in securitization bonds to securitize qualified costs associated with the retirements of Indiana Electric’s A.B. Brown coal-fired generation facilities. Accordingly, CenterPoint Energy determined that the retirement of property, plant and equipment became probable upon the issuance of the order. No loss on abandonment was recognized in connection with issuance of the order as there was no disallowance of all or part of the cost of the abandoned property, plant and equipment. In the first quarter of 2023, upon receipt of the order, CenterPoint Energy reclassified property, plant and equipment to be recovered through securitization to a regulatory asset and such amounts continued to earn a full return until recovered through securitization.

The SIGECO Securitization Subsidiary issued $341 million aggregate principal amount of the SIGECO Securitization Bonds on June 29, 2023. The SIGECO Securitization Subsidiary used a portion of the net proceeds from the issuance of the SIGECO Securitization Bonds to purchase the securitization property from SIGECO. No gain or loss was recognized.

The SIGECO Securitization Bonds are secured by the securitization property, which includes the right to recover, through non-bypassable securitization charges payable by SIGECO’s retail electric customers, the qualified costs of SIGECO authorized by the IURC order. The SIGECO Securitization Subsidiary, and not SIGECO, is the owner of the securitization property, and the assets of the SIGECO Securitization Subsidiary are not available to pay the creditors of SIGECO or its affiliates, other than the SIGECO Securitization Subsidiary. SIGECO has no payment obligations with respect to the SIGECO Securitization Bonds except to remit collections of securitization charges as set forth in a servicing agreement between SIGECO and the SIGECO Securitization Subsidiary. The non-bypassable securitization charges are subject to a true-up mechanism.

Houston Electric TEEEF

Pursuant to legislation passed in 2021, Houston Electric entered into two leases for TEEEF (temporary generation) which are detailed in Note 19. Houston Electric initially sought recovery of the lease costs and the applicable return as of December 31, 2021 under these lease agreements of approximately $200 million in its DCRF application filed with the PUCT on April 5, 2022, and subsequently amended on July 1, 2022, to show temporary generation in a separate Rider TEEEF. A final order was issued on April 5, 2023 approving a revenue requirement of $39 million that results in full recovery of costs requested but lengthens the amortization period for the short-term lease to be collected over 82.5 months. On May 25, 2023, the PUCT issued its order on rehearing which clarified some of the findings, but did not change the approval of TEEEF cost recovery. The PUCT’s decision on the first TEEEF filing is final and non-appealable.

On April 5, 2023, Houston Electric made its second TEEEF filing requesting recovery of TEEEF related costs incurred through December 31, 2022. Houston Electric requested a new annual revenue requirement of approximately $188 million using 78 months to amortize the related deferred costs for proposed rates beginning September 2023, a net increase in TEEEF revenues of approximately $149 million. On August 28, 2023, the State Office of Administrative Hearings issued an Order setting interim rates to collect an annual revenue requirement at the filed amount. Interim rates became effective on September 1, 2023, subject to surcharge or refund if they differ from the final rates approved by the PUCT. An agreement in principle was reached which reduced the annual revenue requirement by approximately $35 million based on recovering the balance as of December 31, 2022 over a 102 month amortization period (instead of the 78 month period in the initial filing) and also allows for revised interim rates (to incorporate the agreement in principle and the initial interim rates that have been in place since September 1, 2023). The updated interim rates were implemented on December 15, 2023 and approved by the PUCT pursuant to its order issued on February 1, 2024 when the PUCT approved the agreement in principle. The PUCT’s decision on the second TEEEF filing is final and non-appealable.

On September 11, 2024, the Texas Consumer Association (“TCA”) filed a complaint with the PUCT requesting that the PUCT modify its rulings with respect to its prior decisions related to the TEEEF filings made in 2022 and 2023. Specifically, TCA requested that the PUCT end cost recovery and return on investment on all the large 32 MW and 5 MW TEEEF units approved in docket 53442. On October 2, 2024, Houston Electric filed a response to the TCA complaint and requested that the complaint be dismissed due to the principles of res judicata and collateral estoppel. On October 8, 2024, TCA supplemented its complaint and on October 9, 2024, PUCT staff filed a statement of position stating that Houston Electric’s response provided a

Table of Contents

strong argument for dismissal of the complaint, but also stating that it would be prudent to have a thorough legal argument from TCA. On October 10, 2024, PUCT issued Order No. 2 finding the TCA complaint insufficient and requiring supplemental information or amendment from TCA by October 24, 2024; TCA filed supplemental information on October 24, 2024.

Houston Electric defers costs associated with the short-term and long-term leases that are probable of recovery and would otherwise be charged to expense in a regulatory asset, including allowed debt returns, and determined that such regulatory assets remain probable of recovery as of September 30, 2024. Right of use finance lease assets, such as assets acquired under the long-term leases, are evaluated for impairment under the long-lived asset impairment model by assessing if a capital disallowance from a regulator is probable through monitoring the outcome of rate cases and other proceedings. Houston Electric continues to monitor the ongoing proceedings and did not record any impairments on its right of use assets in the year ended December 31, 2023 nor the three and nine months ended September 30, 2024. See Note 19 for further information.

May 2024 Storm Events

Houston Electric’s service territory experienced sudden and destructive severe weather events in May 2024 that included hurricane-like winds and tornadoes. The May 2024 Storm Events caused significant damage to Houston Electric’s electric delivery system. As of September 30, 2024, Houston Electric had recorded $345 million in Property, plant and equipment and $74 million in Regulatory assets, excluding carrying costs, for such restoration costs. Based on currently available information, as of September 30, 2024, Houston Electric estimates that total costs to restore the electric delivery facilities damaged as a result of the May 2024 Storm Events will be approximately $462 million, excluding carrying costs. These preliminary estimates are subject to revision as certain restoration costs are expected to be incurred through the end of 2025.

As is common with electric utilities serving coastal regions, the poles, towers, wires, street lights and pole-mounted equipment that comprise Houston Electric’s transmission and distribution system are not covered by property insurance. Houston Electric is deferring certain storm restoration costs as management believes it is probable that such costs will be recovered through the regulatory process. The ultimate recovery of the costs (or a portion thereof) is expected to be sought through the issuance and sale of non-recourse securitization bonds for distribution-related costs and the TCOS capital mechanism for transmission-related costs. However, neither the amount nor timing of the recovery is certain.

See Note 11 for further information regarding a term loan facility to fund certain costs related to the May 2024 Storm Events.

Hurricane Beryl

On July 8, 2024, Hurricane Beryl made landfall in Texas, bringing sustained winds, storm surges and torrential rain into Houston Electric’s service territory. Hurricane Beryl caused significant damage to Houston Electric’s electric delivery system. Based on currently available information, as of September 30, 2024, Houston Electric estimates that total costs to restore the electric delivery facilities damaged as a result of Hurricane Beryl will be approximately $1.1 billion, excluding carrying costs. As of September 30, 2024, Houston Electric had recorded $670 million in Property, plant and equipment and $453 million in Regulatory assets, excluding carrying costs, for such restoration costs.

Houston Electric is deferring certain storm restoration costs as management believes it is probable that such costs will be recovered through the regulatory process. Similar to the costs related to the May 2024 Storm Events, insurance coverage was not available for damages to much of our transmission and distribution assets. The ultimate recovery of the costs (or a portion thereof) relating to Hurricane Beryl is expected to be sought through the issuance and sale of non-recourse securitization bonds for distribution-related costs. However, neither the amount nor timing of the recovery is certain.

(7) Derivative Instruments

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

Table of Contents

**(a)**Non-Trading Activities

Commodity Derivative Instruments (CenterPoint Energy and CERC). CenterPoint Energy and CERC, through the Indiana Utilities they respectively own, enter into certain derivative instruments to mitigate the effects of commodity price movements. Outstanding derivative instruments designated as economic hedges at the Indiana Utilities hedge long-term variable rate natural gas purchases. The Indiana Utilities have authority to refund and recover mark-to-market gains and losses associated with hedging natural gas purchases, and thus the gains and losses on derivatives are deferred in a regulatory liability or asset. All other financial instruments do not qualify or are not designated as cash flow or fair value hedges.

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

The table below summarizes CenterPoint Energy’s and Houston Electric’s outstanding interest rate hedging activity:


	September 30, 2024		December 31, 2023
Hedging Classification	Notional Principal

	(in millions)
CenterPoint Energy:

Cash flow hedge (1) (2)	$	—	$	200
Economic hedge (3)	$	150	$	—
Houston Electric:
Cash flow hedge (2)	$	—	$	100
Economic hedge (3)	$	150	$	—

(1)Relates to interest rate derivative instruments at CenterPoint Energy that terminated on May 8, 2024. The interest rate swap agreements were designated as cash flow hedges of forecasted transactions. CenterPoint Energy records all changes in the fair value of cash flow hedges in accumulated other comprehensive income (loss) until the underlying hedged transaction occurs, when it reclassifies that amount into earnings.

(2)Relates to interest rate derivative instruments at Houston Electric that terminated on February 26, 2024. The interest rate treasury lock agreements were designated as cash flow hedges of forecasted transactions. Houston Electric records all changes in the fair value of cash flow hedges to a regulatory asset or liability, which is amortized over the life of the associated debt being hedged.

(3)Relates to interest rate derivative instruments at Houston Electric with a termination date of December 24, 2025.

**(b)**Derivative Fair Values and Financial Statement Presentation

CenterPoint Energy and Houston Electric had no interest rate derivatives designated as cash flow hedges outstanding as of September 30, 2024. Houston Electric’s interest rate derivatives not designated as cash flow hedges were not material as of September 30, 2024. CenterPoint Energy’s interest rate derivatives designated as cash flow hedges were not material as of December 31, 2023 and were included in current Non-trading derivative liabilities on CenterPoint Energy’s Condensed Consolidated Balance Sheets. Houston Electric’s interest rate derivatives designated as cash flow hedges were not material as of December 31, 2023 and were included in Prepaid expenses and other current assets on Houston Electric’s Condensed Consolidated Balance Sheets.

Table of Contents

The following tables provide a balance sheet overview of the Registrants’ derivative assets and liabilities in the periods presented:


		September 30, 2024				December 31, 2023
	Balance Sheet Location	Derivative Assets Fair Value		Derivative Liabilities Fair Value		Derivative Assets Fair Value		Derivative Liabilities Fair Value
CenterPoint Energy:		(in millions)

Derivatives not designated as hedging instruments:
Natural gas derivatives (1)	Current Assets: Non-trading derivative assets	$	1	$	—	$	—	$	—



Natural gas derivatives (1)	Current Liabilities: Non-trading derivative liabilities	—		5		—		9
Natural gas derivatives (1)	Other Liabilities: Non-trading derivative liabilities	—		2		—		3





Indexed debt securities derivative (2)	Current Liabilities	—		591		—		605

	Total	$	1	$	598	$	—	$	617

(1)Natural gas contracts are subject to master netting arrangements. This netting applies to all undisputed amounts due or past due. However, the mark-to-market fair value of each natural gas contract was in a liability position with no offsetting amounts as of September 30, 2024 and December 31, 2023, respectively. As of September 30, 2024 and December 31, 2023, the notional volume of natural gas derivatives were 32,251 MMBtu per day and 27,421 MMBtu per day, respectively.

(2)Derivative component of the ZENS obligation that represents the ZENS holder’s option to receive the appreciated value of the reference shares at maturity and other payments to which they may be entitled. See Note 10 for further information.


		September 30, 2024				December 31, 2023
	Balance Sheet Location	Derivative Assets Fair Value		Derivative Liabilities Fair Value		Derivative Assets Fair Value		Derivative Liabilities Fair Value
CERC:		(in millions)




Derivatives not designated as hedging instruments:
Natural gas derivatives (1)	Current Assets: Non-trading derivative assets	$	1	$	—	$	—	$	—
Natural gas derivatives (1)	Current Liabilities: Non-trading derivative liabilities	—		4		—		8
Natural gas derivatives (1)	Other Liabilities: Non-trading derivative liabilities	—		2		—		3






	Total	$	1	$	6	$	—	$	11

(1)Natural gas contracts are subject to master netting arrangements. This netting applies to all undisputed amounts due or past due. However, the mark-to-market fair value of each natural gas contract was in a liability position with no offsetting amounts as of September 30, 2024 and December 31, 2023, respectively. As of September 30, 2024 and December 31, 2023, the notional volume of natural gas derivatives were 27,644 MMBtu per day and 23,504 MMBtu per day, respectively.

The table below provides the related income statement impacts of derivative activity for the periods presented:


		Three Months Ended September 30,				Nine Months Ended September 30,
	Income Statement Location	2024		2023		2024		2023
CenterPoint Energy:						(in millions)
Derivatives not designated as hedging instruments:
Indexed debt securities derivative (1)	Gain (loss) on indexed debt securities	$	(53)	$	(47)	$	14	$	(52)

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

Cash inflows and outflows associated with derivatives are included in operating activities on the statement of cash flows.

Table of Contents

(c) Credit Risk Contingent Features (CenterPoint Energy and CERC)

Certain of CenterPoint Energy’s and CERC’s derivative instruments contain provisions that require CenterPoint Energy and CERC to maintain an investment grade credit rating on their respective long-term unsecured unsubordinated debt from S&P and Moody’s. If CenterPoint Energy’s or CERC’s debt were to fall below investment grade, it would be in violation of these provisions, and the counterparties to the derivative instruments could request immediate payment or additional collateral. No collateral had been posted for CenterPoint Energy or CERC as of September 30, 2024 or December 31, 2023. The table below sets forth additional detail for the periods presented:


	September 30, 2024				December 31, 2023
	CenterPoint Energy		CERC		CenterPoint Energy		CERC
	(in millions)
Aggregate fair value of derivatives containing material adverse change provisions in a net liability position	$	5	$	4	$	9	$	8

Additional collateral required to be posted if credit risk contingent features triggered	5		4		9		8

(8) Fair Value Measurements

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

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

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

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

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

Table of Contents

The following tables present information about the Registrants’ assets and liabilities measured at fair value on a recurring basis as of September 30, 2024 and December 31, 2023 and indicate the fair value hierarchy of the valuation techniques utilized by the Registrants to determine such fair value.

CenterPoint Energy


	September 30, 2024						December 31, 2023
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets	(in millions)
Equity securities	$	531	$	—	$	—	$	531	$	541	$	—	$	—	$	541
Investments, including money market funds (1)	35		—		—		35		31		—		—		31

Natural gas derivatives	—		1		—		1		—		—		—		—



Total assets	$	566	$	1	$	—	$	567	$	572	$	—	$	—	$	572
Liabilities
Indexed debt securities derivative	$	—	$	591	$	—	$	591	$	—	$	605	$	—	$	605

Natural gas derivatives	—		7		—		7		—		12		—		12



Total liabilities	$	—	$	598	$	—	$	598	$	—	$	617	$	—	$	617

Houston Electric


	September 30, 2024						December 31, 2023
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets	(in millions)
Investments, including money market funds (1)	$	20	$	—	$	—	$	20	$	14	$	—	$	—	$	14

Total assets	$	20	$	—	$	—	$	20	$	14	$	—	$	—	$	14

CERC


	September 30, 2024						December 31, 2023
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets	(in millions)

Investments, including money market funds (1)	$	15	$	—	$	—	$	15	$	15	$	—	$	—	$	15
Natural gas derivatives	—		1		—		1		—		—		—		—
Total assets	$	15	$	1	$	—	$	16	$	15	$	—	$	—	$	15
Liabilities
Natural gas derivatives	$	—	$	6	$	—	$	6	$	—	$	11	$	—	$	11
Total liabilities	$	—	$	6	$	—	$	6	$	—	$	11	$	—	$	11

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

Items Measured at Fair Value on a Nonrecurring Basis

As a result of classifying the Louisiana and Mississippi natural gas LDC businesses as held for sale, CenterPoint Energy and CERC used a market approach consisting of contractual sales price adjusted for estimated working capital and other contractual purchase price adjustments to determine the fair value of the businesses classified as held for sale, which are Level 2 inputs. Neither CenterPoint Energy nor CERC recognized any gains or losses upon classification as held for sale during the three and nine months ended September 30, 2024. See Note 3 for further information.

Estimated Fair Value of Financial Instruments

The fair values of cash and cash equivalents, investments in debt and equity securities measured at fair value and short-term borrowings are estimated to be approximately equivalent to carrying amounts and have been excluded from the table below. The carrying amounts of non-trading derivative assets and liabilities and CenterPoint Energy’s ZENS indexed debt securities derivative are stated at fair value and are excluded from the table below. The fair value of each debt instrument is determined by multiplying the principal amount of each debt instrument by a combination of historical trading prices and comparable issue data. These liabilities, which are not measured at fair value in the Registrants’ Condensed Consolidated Balance Sheets, but for which the fair value is disclosed, would be classified as Level 2 in the fair value hierarchy.

Table of Contents


	September 30, 2024						December 31, 2023
	CenterPoint Energy (1)		Houston Electric (1)		CERC		CenterPoint Energy (1)		Houston Electric (1)		CERC
Long-term debt, including current maturities	(in millions)


Carrying amount	$	19,874	$	8,207	$	4,782	$	18,609	$	7,587	$	4,670
Fair value	19,270		7,596		4,806		17,804		6,917		4,627

(1)Includes Securitization Bonds, as applicable.

(9) Goodwill (CenterPoint Energy and CERC)

CenterPoint Energy’s goodwill by reportable segment is as follows:


	December 31, 2023		Held For Sale		September 30, 2024
	(in millions)
Electric (1)	$	936	$	—	$	936
Natural gas (2)	2,920		217		2,703
Corporate and other	304		—		304

Total	$	4,160	$	217	$	3,943

(1)Amount presented is net of the accumulated goodwill impairment charge of $185 million recorded in 2020.

(2)If a disposal group reflects a component of a reporting unit and meets the definition of a business, the goodwill within that reporting unit is allocated to the disposal group based on the relative fair value of the components representing a business that will be retained and disposed. As a result, goodwill attributable to the Louisiana and Mississippi natural gas LDC businesses to be disposed of was classified as held for sale as of September 30, 2024. CenterPoint Energy did not recognize any goodwill impairments within the Natural Gas reportable segment during the nine months ended September 30, 2024. For further information, see Note 3.

CERC’s goodwill is as follows:


	December 31, 2023		Held For Sale		September 30, 2024
	(in millions)
Goodwill (1)	$	1,583	$	122	$	1,461

(1)In connection with the classification of the Louisiana and Mississippi natural gas LDC businesses as held for sale as of September 30, 2024 described above, goodwill attributable to CERC to be disposed of as part of the transaction was classified as held for sale as of September 30, 2024. CERC did not recognize any goodwill impairments during the nine months ended September 30, 2024. For further information, see Note 3.

CenterPoint Energy and CERC perform goodwill impairment tests at least annually and evaluate goodwill when events or changes in circumstances indicate that its carrying value may not be recoverable. Goodwill is evaluated for impairment by performing a qualitative assessment or using a quantitative test. If we choose to perform a qualitative assessment and determine it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the quantitative test is then performed; otherwise, no further testing is required. The quantitative test, if required, is performed by comparing the fair value of each reporting unit with the carrying amount of the reporting unit, including goodwill. The estimated fair value of the reporting unit is primarily determined based on an income approach or a weighted combination of income and market approaches. When the carrying amount is in excess of the estimated fair value of the reporting unit, the excess amount is recorded as an impairment charge, not to exceed the carrying amount of goodwill. CenterPoint Energy and CERC performed their annual goodwill impairment tests in the third quarter of 2024 and determined that no goodwill impairment charge was required for any reporting unit as a result of those tests.

Table of Contents

(10) Equity Securities and Indexed Debt Securities (ZENS) (CenterPoint Energy)

(a) Equity Securities

Gains and losses on equity securities, net of transaction costs, are recorded in Gain (loss) on equity securities in CenterPoint Energy’s Condensed Statements of Consolidated Income. The following table presents unrealized gains (losses), net on equity securities owned by CenterPoint Energy for each period presented:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(in millions)
AT&T Common	$	29	$	(10)	$	53	$	(35)
Charter Common	22		63		(56)		88
WBD Common	3		(5)		(7)		3


Other	—		1		—		—
Total gains (losses) on equity securities, net	$	54	$	49	$	(10)	$	56

CenterPoint Energy and its subsidiaries hold shares of certain securities detailed in the table below, which are classified as trading securities. Shares of AT&T Common, Charter Common and WBD Common are expected to be held to facilitate CenterPoint Energy’s ability to meet its obligation under the ZENS. The following table presents information on CenterPoint Energy’s equity securities for each period presented:


	Shares Held		Carrying Value
	September 30, 2024	December 31, 2023	September 30, 2024		December 31, 2023
			(in millions)
AT&T Common	10,212,945	10,212,945	$	224	$	171
Charter Common	872,503	872,503	283		339
WBD Common	2,470,685	2,470,685	21		28


Other			3		3
Total			$	531	$	541

(b) ZENS

In September 1999, CenterPoint Energy issued ZENS having an original principal amount of $1.0 billion of which $828 million remained outstanding as of September 30, 2024. Each ZENS is exchangeable at the holder’s option at any time for an amount of cash equal to 95% of the market value of the reference shares attributable to such note. The number and identity of the reference shares attributable to each ZENS are adjusted for certain corporate events. CenterPoint Energy’s reference shares for each ZENS consisted of the following:


	September 30, 2024	December 31, 2023
	(in shares)
AT&T Common	0.7185	0.7185
Charter Common	0.061382	0.061382
WBD Common	0.173817	0.173817

CenterPoint Energy pays interest on the ZENS at an annual rate of 2% plus the amount of any quarterly cash dividends paid in respect of the reference shares attributable to the ZENS. The principal amount of the ZENS is subject to increases or decreases to the extent that the annual yield from interest and cash dividends on the reference shares attributable to the ZENS is less than or more than 2.309%. The adjusted principal amount is defined in the ZENS instrument as “contingent principal.” As of September 30, 2024, the ZENS, having an original principal amount of $828 million and a contingent principal amount of $11 million, were outstanding and were exchangeable, at the option of the holders, for cash equal to 95% of the market value of the reference shares attributable to the ZENS.

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

Inventory Financing. CenterPoint Energy’s and CERC’s Natural Gas businesses utilize third-party AMAs associated with their utility distribution service in Indiana, Louisiana, Minnesota, Mississippi and Texas. The AMAs have varying terms, the longest of which expires in 2029. Pursuant to the provisions of the agreements, CenterPoint Energy’s and CERC’s Natural Gas

Table of Contents

either sells natural gas to the asset manager and agrees to repurchase an equivalent amount of natural gas throughout the year at the same cost, or simply purchases its full natural gas requirements at each delivery point from the asset manager. Certain of these transactions are accounted for as an inventory financing. CenterPoint Energy and CERC had $3 million outstanding obligations related to the AMAs as of September 30, 2024 and $4 million as of December 31, 2023, recorded in Short-term borrowings on CenterPoint Energy’s and CERC’s Condensed Consolidated Balance Sheets.

Debt Issuance. In February 2024, Houston Electric issued $400 million aggregate principal amount of 5.15% general mortgage bonds due 2034. Total proceeds, net of discount, transaction expenses and fees, were approximately $395 million, which were used for general limited liability company purposes, including capital expenditures and working capital purposes.

In May 2024, CenterPoint Energy issued $700 million aggregate principal amount of 5.40% senior notes due 2029. Total proceeds, net of discount, transaction expenses and fees were approximately $693 million, which were used for general corporate purposes, including the redemption of $350 million aggregate principal amount of CenterPoint Energy’s outstanding floating rate senior notes due 2024, as further described below.

In June 2024, CERC issued $400 million aggregate principal amount of 5.40% senior notes due 2034. Total proceeds, net of discount, transaction expenses and fees, were approximately $396 million, which were used for general corporate purposes, including working capital purposes.

In June 2024, Houston Electric entered into a delayed draw term loan agreement with a maturity date of December 24, 2025, pursuant to which the banks party thereto committed to provide term loans in an aggregate principal amount of up to $300 million. The term loan agreement also permits Houston Electric to request additional commitments and/or additional loans, such additional commitments and/or loans not to exceed $200 million and subject to the satisfaction of certain customary conditions precedent. The borrowings under the term loan agreement bear interest at Houston Electric’s option, at a rate equal to either (i) Term SOFR (as defined in the term loan agreement), which includes an adjustment of 0.10% per annum plus a margin of 1.0%, or (ii) the Alternate Base Rate (as defined in the term loan agreement). On June 28, 2024, Houston Electric borrowed $100 million, and the proceeds thereof were used for working capital to support liquidity needs from the May 2024 Storm Events and for general limited liability company purposes. In September 2024, Houston Electric borrowed the remaining $200 million aggregate principal amount available under the term loan agreement and has used the proceeds thereof for working capital to support liquidity needs from the May 2024 Storm Events and general limited liability company purposes.

In August 2024, CenterPoint Energy, through its wholly-owned subsidiary SIGECO, and certain institutional investors in the private placement market (“Private Placement Purchasers”) entered into a bond purchase agreement, under which SIGECO agreed to sell, and each Private Placement Purchaser agreed to severally purchase (i) on August 29, 2024, $100 million 5.18% First Mortgage Bonds, Series 2024A, Tranche A due 2034 (the “Series 2024A Tranche A Bonds”) and $60 million 5.28% First Mortgage Bonds, Series 2024A, Tranche B due 2036 (the “Series 2024A Tranche B Bonds” and, together with the Series 2024A Tranche A Bonds, the “Series 2024A Bonds”), and (ii) on January 31, 2025, or such sooner date, as may be selected by SIGECO upon not less than five business days’ advance notice, $165 million 5.69% First Mortgage Bonds, Series 2025A, Tranche A due 2055 (the “Series 2025A Bonds” and, together with the Series 2024A Bonds, the “Private Placement Bonds”).

The proceeds of the Private Placement Bonds will be used for general corporate purposes, including repaying short-term debt, refunding long-term debt at maturity or otherwise, and funding capital expenditures such as SIGECO’s Posey Solar project. On August 29, 2024, SIGECO closed on the offering of $160 million of the Series 2024A Bonds. The closing of the Series 2025 A Bonds is expected to occur on or prior to January 31, 2025.

Junior Subordinated Notes. In August 2024, CenterPoint Energy issued $400 million aggregate principal amount of 7.000% Fixed-to-Fixed Reset Rate Junior Subordinated Notes, Series A, due 2055 (the “Series A Notes”) and $400 million aggregate principal amount of 6.850% Fixed-to-Fixed Reset Rate Junior Subordinated Notes, Series B, due 2055 (the “Series B Notes,” and together with the Series A Notes, the “Junior Subordinated Notes”). Interest on the Junior Subordinated Notes accrues from August 14, 2024 and is payable semiannually in arrears on February 15 and August 15 of each year, beginning on February 15, 2025, and maturing on February 15, 2055. The Series A Notes bear interest (i) from and including August 14, 2024 to, but excluding, February 15, 2030 at the rate of 7.000% per annum and (ii) from and including February 15, 2030, during each five-year period following February 15, 2030 (each such five-year period, a “Series A Interest Reset Period”), at a rate per annum equal to the Five-Year Treasury Rate (as defined in the Junior Subordinated Notes Indenture) as of two business days prior to the beginning of the applicable Series A Interest Reset Period plus a spread of 3.254%, with such rate per annum to be reset on each five-year anniversary of February 15, 2030. The Series B Notes bear interest (i) from and including August 14, 2024, but excluding, February 15, 2035 at the rate of 6.850% per annum and (ii) from and including February 15, 2035, during each five-year period following February 15, 2035 (each such five-year period, a “Series B Interest Reset Period”), at a rate per annum equal to the Five-Year Treasury Rate (as defined in the Junior Subordinated Notes Indenture) as of two business days prior to the beginning of the applicable Series B Interest Reset Period plus a spread of 2.946%, with such rate per annum

Table of Contents

to be reset on each five-year anniversary of February 15, 2035. So long as no event of default (as defined in the prospectus supplement relating to the offering of the Junior Subordinated Notes) with respect to a given series of Junior Subordinated Notes has occurred and is continuing, CenterPoint Energy may, at its option, defer interest payments on such series of Junior Subordinated Notes, from time to time, for one or more deferral periods of up to 20 consecutive semiannual interest payment periods, except that no such optional deferral period (as defined in the prospectus supplement relating to the offering of the Junior Subordinated Notes) may extend beyond the final maturity date of such series of Junior Subordinated Notes or end on a day other than the day immediately preceding an interest payment date.

During any optional deferral period, CenterPoint Energy (and its majority-owned subsidiaries, as applicable) will not (subject to certain exceptions as described in the Junior Subordinated Notes Indenture): (i) declare or pay any dividends or distributions on any of CenterPoint Energy’s capital stock; (ii) redeem, purchase, acquire or make a liquidation payment with respect to any of CenterPoint Energy’s capital stock; (iii) pay any principal, interest (to the extent such interest is deferrable) or premium on, or repay, repurchase or redeem any of CenterPoint Energy’s indebtedness that ranks equally with or junior to the Junior Subordinated Notes in right of payment (including debt securities of other series, such as the other series of the Junior Subordinated Notes issued); or (iv) make any payments with respect to any guarantees by CenterPoint Energy of any indebtedness if such guarantees rank equally with or junior to the Junior Subordinated Notes in right of payment.

The Junior Subordinated Notes are CenterPoint Energy’s unsecured obligations and rank junior and subordinate in right of payment to the prior payment in full of CenterPoint Energy’s existing and future Senior Indebtedness (as defined in the Junior Subordinated Notes Indenture). Total proceeds for the sale of the Junior Subordinated Notes, net of issuance costs and transaction expenses and fees, were approximately $790 million, which were used for general corporate purposes, including the redemption of $500 million aggregate principal amount of CenterPoint Energy’s outstanding 2.50% senior notes due 2024 as further described below and the repayment of a portion of outstanding commercial paper.

Convertible Senior Notes. Interest on the Convertible Notes is payable semiannually in arrears on February 15 and August 15 of each year, beginning on February 15, 2024. The Convertible Notes will mature on August 15, 2026, unless earlier converted or repurchased by CenterPoint Energy in accordance with their terms.

Prior to the close of business on the business day immediately preceding May 15, 2026, the Convertible Notes are convertible only under certain conditions. On or after May 15, 2026 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders of the Convertible Notes may convert all or any portion of their Convertible Notes at any time at the conversion rate then in effect, irrespective of the conditions. CenterPoint Energy may not redeem the Convertible Notes prior to the maturity date and no sinking fund is provided for the Convertible Notes.

Upon conversion of the Convertible Notes, CenterPoint Energy will pay cash up to the aggregate principal amount of the Convertible Notes to be converted and pay or deliver, as the case may be, cash, shares of Common Stock, or a combination of cash and shares of Common Stock, at CenterPoint Energy’s election, in respect of the remainder, if any, of CenterPoint Energy’s conversion obligation in excess of the aggregate principal amount of the Convertible Notes being converted. The conversion rate for the Convertible Notes is initially 27.1278 shares of Common Stock per $1,000 principal amount of Convertible Notes (equivalent to an initial conversion price of approximately $36.86 per share of Common Stock). The initial conversion price of the Convertible Notes represents a premium of approximately 25.0% over the last reported sale price of the Common Stock on the NYSE on August 1, 2023. Initially, a maximum of 33,909,700 shares of Common Stock may be issued upon conversion of the Convertible Notes based on the initial maximum conversion rate of 33.9097 shares of Common Stock per $1,000 principal amount of Convertible Notes. The conversion rate will be subject to adjustment in some events (as described in the Convertible Notes Indenture) but will not be adjusted for any accrued and unpaid interest.

In addition, following certain corporate events that occur prior to the maturity date of the Convertible Notes, CenterPoint Energy will, in certain circumstances, increase the conversion rate for a holder of Convertible Notes who elects to convert its Convertible Notes in connection with such a corporate event. If CenterPoint Energy undergoes a fundamental change (as described in the Convertible Notes Indenture), holders of the Convertible Notes may require CenterPoint Energy to repurchase for cash all or any portion of their Convertible Notes at a fundamental change repurchase price equal to 100% of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

The Convertible Notes are senior unsecured obligations of CenterPoint Energy and rank senior in right of payment to any of CenterPoint Energy’s indebtedness that is expressly subordinated in right of payment to the Convertible Notes; equal in right of payment to any of CenterPoint Energy’s unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of CenterPoint Energy’s secured indebtedness it may incur in the future to the extent of the value of the assets securing such future secured indebtedness; and structurally junior to all indebtedness and other liabilities (including trade

Table of Contents

payables but excluding intercompany obligations and liabilities of a type not required to be reflected on a balance sheet of such subsidiaries in accordance with generally accepted accounting principles) of CenterPoint Energy’s subsidiaries.

Debt Redemption. In March 2024, CenterPoint Energy, through its wholly-owned subsidiary SIGECO, redeemed $22 million aggregate principal amount of SIGECO’s outstanding 3.50% first mortgage bonds due 2024 at a redemption price equal to 100% of the principal amount of the first mortgage bonds to be redeemed plus accrued and unpaid interest thereon.

In May 2024, CenterPoint Energy redeemed $350 million aggregate principal amount of its outstanding floating rate senior notes due 2024 at a redemption price equal to 100% of the principal amount to be redeemed plus accrued and unpaid interest thereon.

In September 2024, CenterPoint Energy redeemed $500 million aggregate principal amount of its outstanding 2.50% senior notes due 2024 at a redemption price equal to 100% of the principal amount to be redeemed plus accrued and unpaid interest thereon.

Credit Facilities. The Registrants had the following revolving credit facilities as of September 30, 2024:


Execution Date	Registrant	Size of Facility		Draw Rate of SOFR plus (1)	Financial Covenant Limit on Debt for Borrowed Money to Capital Ratio		Debt for Borrowed Money to Capital Ratio as of September 30, 2024 (2)	Termination Date
		(in millions)
December 6, 2022	CenterPoint Energy	$	2,400	1.500%	65.0%	(3)	59.7%	December 6, 2027
December 6, 2022	CenterPoint Energy (4)	250		1.125%	65.0%		45.1%	December 6, 2027

December 6, 2022	Houston Electric	300		1.250%	67.5%	(3)	53.2%	December 6, 2027
December 6, 2022	CERC	1,050		1.125%	65.0%		39.5%	December 6, 2027
	Total	$	4,000

(1)Based on credit ratings as of September 30, 2024.

(2)As defined in the revolving credit facility agreements, excluding Securitization Bonds.

(3)For CenterPoint Energy and Houston Electric, the financial covenant limit will temporarily increase to 70% if Houston Electric experiences damage from a natural disaster in its service territory and CenterPoint Energy certifies to the administrative agent that Houston Electric has incurred system restoration costs reasonably likely to exceed $100 million in a consecutive 12-month period, all or part of which Houston Electric intends to seek to recover through securitization financing. Such temporary increase in the financial covenant would be in effect from the date CenterPoint Energy delivers its certification until the earliest to occur of (i) the completion of the securitization financing, (ii) the first anniversary of CenterPoint Energy’s certification or (iii) the revocation of such certification.

(4)This credit facility was issued by SIGECO.

The Registrants, as well as the subsidiaries of CenterPoint Energy discussed above, were in compliance with all financial debt covenants as of September 30, 2024.

Table of Contents

The table below reflects the utilization of the Registrants’ respective revolving credit facilities:


	September 30, 2024								December 31, 2023
Registrant	Loans		Letters of Credit		Commercial Paper (2)		Weighted Average Interest Rate		Loans		Letters of Credit		Commercial Paper (2)		Weighted Average Interest Rate
	(in millions, except weighted average interest rate)
CenterPoint Energy	$	—	$	—	$	803	4.91	%	$	—	$	—	$	1,036	5.54	%
CenterPoint Energy (1)	—		—		—		—	%	—		—		—		—	%
Houston Electric	—		—		—		—	%	—		—		—		—	%
CERC	—		1		197		4.90	%	—		1		484		5.53	%
Total	$	—	$	1	$	1,000			$	—	$	1	$	1,520

(1)This credit facility was issued by SIGECO.

(2)CenterPoint Energy’s and CERC’s outstanding commercial paper generally have maturities of up to 60 days and 30 days, respectively, and are backstopped by the respective issuer’s long-term revolving credit facility. Neither Houston Electric nor SIGECO has a commercial paper program.

Liens. As of September 30, 2024, Houston Electric’s assets were subject to liens securing approximately $8 billion of general mortgage bonds outstanding under the General Mortgage, including approximately $68 million held in trust to secure pollution control bonds that mature in 2028 for which CenterPoint Energy is obligated. The general mortgage bonds that are held in trust to secure pollution control bonds are not reflected in Houston Electric’s consolidated financial statements because of the contingent nature of the obligations. Houston Electric may issue additional general mortgage bonds on the basis of retired bonds, 70% of property additions or cash deposited with the trustee. Houston Electric could issue approximately $5.1 billion of additional general mortgage bonds on the basis of retired bonds and 70% of property additions as of September 30, 2024. No first mortgage bonds are outstanding under the M&DOT, and Houston Electric is contractually obligated to not issue any additional first mortgage bonds under the M&DOT and is undertaking actions to release the lien of the M&DOT and terminate the M&DOT.

As of September 30, 2024, SIGECO had approximately $985 million aggregate principal amount of first mortgage bonds outstanding. Generally, all of SIGECO’s real and tangible property is subject to the lien of SIGECO’s mortgage indenture which was amended and restated effective as of January 1, 2023. As of September 30, 2024, SIGECO was permitted to issue additional bonds under its mortgage indenture up to 70% of then currently unfunded property additions and approximately $814 million of additional first mortgage bonds could be issued on this basis.

(12) Income Taxes

The Registrants reported the following effective tax rates:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
CenterPoint Energy (1)	21	%	19	%	18	%	25	%

Houston Electric (2)	19	%	22	%	19	%	22	%
CERC (3)	21	%	25	%	20	%	22	%

(1)CenterPoint Energy’s higher effective tax rate for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 was primarily due to a decrease in EDIT amortization and a decrease in qualifying costs eligible for research and development tax credits. CenterPoint Energy’s lower effective tax rate for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 was primarily due to the absence of impacts associated with the sale of Energy Systems Group recorded in 2023, a decrease in state income taxes, and the tax impacts of the state deferred remeasurement benefit of $25 million related to the Louisiana and Mississippi natural gas LDC businesses sale, which met the held for sale criteria in the first quarter of 2024 and is described further below, partially offset by the tax impacts of the valuation allowance of $21 million established against Louisiana and Mississippi NOLs, since those NOLs will not be utilized due to the Louisiana and Mississippi natural gas LDC businesses sale. See Note 3 for further details.

(2)Houston Electric’s lower effective tax rate for the three and nine months ended September 30, 2024 compared to the same period ended September 30, 2023 was primarily driven by a decrease in state income taxes and an increase in EDIT amortization.

Table of Contents

(3)CERC’s lower effective tax rate for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 was primarily driven by a decrease in state income taxes, partially offset by a decrease in EDIT amortization. CERC’s lower effective tax rate for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 was primarily driven by a decrease in state income taxes, partially offset by a decrease in EDIT amortization. In addition, the tax impacts of the state deferred remeasurement benefit of $24 million associated with the Louisiana and Mississippi natural gas LDC businesses sale meeting the held for sale criteria during 2024. For tax purposes, when the held for sale criteria is met, the CERC and unitary state apportionment rates must be updated to account for the sale and applied to the estimated post-sale net deferred tax liability. This impact was partially offset by the tax impacts of a valuation allowance of $21 million against Louisiana and Mississippi NOLs, since those NOLs will not be utilized due to the Louisiana and Mississippi natural gas LDC businesses sale.

CenterPoint Energy reported a net uncertain tax liability, inclusive of interest and penalties, of $31 million as of September 30, 2024. The Registrants believe that it is reasonably possible that the Registrants will recognize a $3 million tax benefit, including penalties and interest, in the next 12 months as a result of a lapse of statutes on the 2020 Indiana state return.

Tax Audits and Settlements. Tax years through 2022 have been audited and settled with the IRS for CenterPoint Energy. For tax years 2023 and 2024, the Registrants are participants in the IRS’s Compliance Assurance Process. Vectren’s pre-Merger 2014 through 2019 tax years have been audited and settled with the IRS.

(13) Commitments and Contingencies

**(a)**Purchase Obligations (CenterPoint Energy and CERC)

Commitments include minimum purchase obligations related to CenterPoint Energy’s and CERC’s Natural Gas reportable segment and CenterPoint Energy’s Electric reportable segment. A purchase obligation is defined as an agreement to purchase goods or services that is enforceable and legally binding on the registrant and that specifies all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Contracts with minimum payment provisions have various quantity requirements and durations and are not classified as non-trading derivative assets and liabilities in CenterPoint Energy’s and CERC’s Condensed Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023 because these contracts meet an exception as “normal purchases contracts” or do not meet the definition of a derivative. Natural gas and coal supply commitments also include transportation contracts that do not meet the definition of a derivative.

On February 1, 2023, Indiana Electric entered into an amended and restated BTA to purchase the 191 MW Posey Solar project for a fixed purchase price over the anticipated 35-year life. On February 7, 2023, Indiana Electric filed a CPCN with the IURC to approve the amended BTA. With the passage of the IRA, Indiana Electric can now pursue PTCs for solar projects. Indiana Electric filed the updated CPCN with a request that project costs, net of PTCs, be recovered in rate base, through base rates or the CECA mechanism, depending on which provides more timely recovery. On September 6, 2023, the IURC issued an order approving the CPCN. The Posey Solar project is expected to be placed in service in 2025.

On January 11, 2023, the IURC issued an order approving the settlement agreement granting Indiana Electric a CPCN to purchase and acquire the 130 MW Pike County solar project through a BTA and approved the estimated cost. The IURC also designated the project as a clean energy project as well as approved the proposed levelized rate and associated ratemaking and accounting treatment. Due to inflationary pressures, the developer disclosed that costs exceeded the agreed upon levels in the BTA. After negotiations, Indiana Electric and the developer were not able to agree upon updated pricing. As a result, on February 27, 2024, Indiana Electric provided notice that it was exercising its right to terminate the BTA, which terminated all further obligations of Indiana Electric with respect to the project.

Table of Contents

As of September 30, 2024, other than discussed below, minimum purchase obligations were approximately:


	CenterPoint Energy						CERC
	Natural Gas Supply		Electric Supply (1)		Other (2)		Natural Gas Supply
	(in millions)
Remainder of 2024	$	207	$	45	$	23	$	205
2025	616		457		55		612
2026	554		113		57		550
2027	476		107		12		473
2028	432		68		8		429
Thereafter	1,870		767		213		1,844

(1)CenterPoint Energy’s undiscounted minimum payment obligations related to PPAs with commitments ranging from 15 years to 25 years and its purchase commitments under its BTA in Posey County, Indiana at the original contracted amount.

(2)The undiscounted payment obligations relate primarily to technology hardware and software agreements.

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

(b) Guarantees (CenterPoint Energy)

On May 21, 2023, CenterPoint Energy, through Vectren Energy Services, entered into the Equity Purchase Agreement to sell Energy Systems Group. The sale closed on June 30, 2023. See Note 3 for further information.

In the normal course of business prior to the consummation of the transaction on June 30, 2023, CenterPoint Energy, primarily through Vectren, issued parent company level guarantees supporting Energy Systems Group’s obligations. When Energy Systems Group was wholly-owned by CenterPoint Energy, these guarantees did not represent incremental consolidated obligations, but rather, these guarantees represented guarantees of Energy Systems Group’s obligations to allow it to conduct business without posting other forms of assurance. For those obligations where potential exposure can be estimated, management estimated the maximum exposure under these guarantees to be approximately $473 million as of September 30, 2024 and expects the exposure to decrease pro rata. This exposure primarily relates to energy savings guarantees on federal energy savings performance contracts. Other parent company level guarantees, certain of which do not contain a cap on potential liability, were issued prior to the sale of Energy Systems Group in support of federal operations and maintenance projects for which a maximum exposure cannot be estimated based on the nature of the projects.

Under the terms of the Equity Purchase Agreement, ESG Holdings Group must generally use reasonable best efforts to replace existing CenterPoint Energy guarantees with credit support provided by a party other than CenterPoint Energy as of and after the closing of the transaction. The Equity Purchase Agreement also requires certain protections to be provided for any damages incurred by CenterPoint Energy in relation to these guarantees not released by closing. No additional guarantees were provided by CenterPoint Energy in favor of Energy Systems Group subsequent to the closing of the sale on June 30, 2023.

While there can be no assurance that performance under any of these parent company guarantees will not be required in the future, CenterPoint Energy considers the likelihood of a material amount being incurred as remote. CenterPoint Energy believes that, from Energy Systems Group’s inception in 1994 to the closing of the sale of Energy Systems Group on June 30, 2023, Energy Systems Group had a history of generally meeting its performance obligations and energy savings guarantees and its installed products operated effectively. CenterPoint Energy recorded no amounts on its Condensed Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023 related to its obligation under the outstanding guarantees.

**(c)**Legal, Environmental and Other Matters

Legal Matters

Litigation Related to Hurricane Beryl. Various federal, state and local governmental and regulatory agencies and other entities, such as the Texas Governor’s office, the Texas Legislature and the PUCT, have called for or are conducting inquiries and investigations into Hurricane Beryl, the efforts made by Houston Electric to prepare for, and respond to, this event,

Table of Contents

including the electric service outage issues, and the procurement of temporary generation units. Moreover, additional governmental and regulatory agencies and other entities may conduct such inquiries and investigations, as well. There are significant uncertainties around these inquiries and investigations and potential results and consequences, including whether any financial penalties will be assessed or changes to Houston Electric’s system, service territories, operations and/or regulatory treatment will result therefrom.

CenterPoint Energy and Houston Electric are subject to current and potential future litigation and claims arising out of Hurricane Beryl, which litigation and claims could include allegations of, among other things, personal injury, property damage, various economic losses in connection with loss of power, unlawful business practices, and others. As of September 30, 2024, three putative class actions have been filed against CenterPoint Energy and/or Houston Electric in the District Courts of Harris County, Texas, on behalf of individuals or entities who claim losses due to power outages lasting at least 48 hours as a result of Hurricane Beryl, such actions consisting of the following proposed classes: (1) all restaurants in Harris County, Galveston County, and Montgomery County; (2) all residential customers; and (3) all health, wellness, medical and beauty facilities in Harris County. These putative classes assert claims and theories of negligence, gross negligence, nuisance, fraud, and/or violation of Houston Electric’s tariff for retail delivery service, and each seeks damages in excess of $100 million for, among other things, business interruption, property damage and loss, cost of repair, loss of use and market value, lost income, nuisance, extreme mental anguish and/or punitive damages. In addition, as of September 30, 2024, an individual action has been filed in Harris County District Court asserting claims of negligence, negligence per se and gross negligence against CenterPoint Energy and Houston Electric. The plaintiff in this action alleges personal injury from a power line and seeks damages in excess of $1 million. CenterPoint Energy and Houston Electric intend to vigorously defend themselves against the lawsuits. CenterPoint Energy and its subsidiaries have general and excess liability insurance policies that provide coverage for third party bodily injury and property damage claims. Given the nature of some allegations, it is possible that the insurers could dispute coverage for some types of claims or damages that may be alleged by plaintiffs, and one of CenterPoint Energy’s insurers has denied indemnity coverage in the putative class actions based on the failure to supply exclusion and has also reserved its rights with respect to coverage in those actions. CenterPoint Energy and Houston Electric intend to continue to pursue all available insurance coverage for all of these matters. For more information regarding Hurricane Beryl, see Note 6.

Litigation Related to the February 2021 Winter Storm Event. Various legal proceedings are still pending against numerous entities with respect to the February 2021 Winter Storm Event, including against CenterPoint Energy, Utility Holding, Houston Electric, and CERC. Like other Texas energy companies and TDUs, CenterPoint Energy and Houston Electric have become involved in certain investigations, litigation and other regulatory and legal proceedings regarding their efforts to restore power during the storm and their compliance with NERC, ERCOT and PUCT rules and directives. Additionally, like other natural gas market participants, CERC has been named in litigation alleging gas market manipulation.

CenterPoint Energy, Utility Holding, and Houston Electric, along with hundreds of other defendants (including ERCOT, power generation companies, other TDUs, natural gas producers, REPs, and other entities) have received claims and lawsuits filed by plaintiffs alleging wrongful death, personal injury, property damage and other injuries and damages. As of September 30, 2024, there were approximately 220 pending lawsuits that are consolidated in Texas state court in Harris County, Texas, as part of the MDL proceeding related to the February 2021 Winter Storm Event, and CenterPoint Energy and Houston Electric, along with numerous other entities, have been named as defendants in approximately 155 of those lawsuits. One of the lawsuits in the MDL is a putative class action on behalf of everyone who received electric power via the ERCOT grid and sustained a power outage between February 10, 2021 and February 28, 2021. Additionally, Utility Holding is currently named as a defendant in one lawsuit in which CenterPoint Energy and Houston Electric are also named as defendants.

The judge overseeing the MDL issued an initial case management order and stayed all proceedings and discovery. Per the case management order, the judge entertained dispositive motions in five representative or “bellwether” cases and, in late January 2023, issued rulings on them. The judge ruled that ERCOT has sovereign immunity as a governmental entity and dismissed the suits against it. In a subsequent opinion in an unrelated matter, the Texas Supreme Court held that ERCOT is entitled to sovereign immunity. This ruling will apply to claims against ERCOT in the MDL. The MDL judge also dismissed all claims against the natural gas defendants (which list of natural gas defendants incorrectly included Utility Holding) and the REP defendants and some causes of action against the other defendants. CenterPoint Energy expects that the claims against Utility Holding will ultimately be dismissed in light of the judge’s initial rulings. As to the TDU and generator defendants, the judge dismissed some causes of action but denied the motions to dismiss claims for negligence, gross negligence, and nuisance, which denial the TDU defendants and generator defendants asked the courts of appeals to overturn. On April 2, 2024, a three-judge panel of the Court of Appeals for the Fourteenth District of Texas issued an opinion in the TDU mandamus proceeding, granting in part and denying in part the TDUs’ mandamus request. In its opinion, the panel granted the TDUs’ mandamus request relating to the TDUs’ motion to dismiss the plaintiffs’ claims for negligence and negligent and strict liability nuisance and ordered those claims be dismissed. The panel denied the TDUs’ mandamus request relating to the TDUs’ motion to dismiss the plaintiffs’ gross negligence and intentional nuisance claims. On May 22, 2024, the TDUs filed a mandamus petition with the Supreme Court of Texas, seeking dismissal of the remaining claims. On June 28, 2024, the Supreme Court of Texas requested a

Table of Contents

response from the plaintiffs to the mandamus petition, and the plaintiffs filed their response on July 26, 2024. The TDUs filed their reply in support of their mandamus petition on August 12, 2024. On August 30, 2024, the Supreme Court of Texas requested briefing on the merits of the TDUs’ mandamus. The TDUs’ initial brief was filed on September 30, 2024. The plaintiffs’ response was filed on October 21, 2024, and the TDUs’ reply brief is due on November 5, 2024. In the generator mandamus proceeding pending in the Court of Appeals for the First District of Texas, the plaintiffs have asked the entire First Court of Appeals to rehear the panel’s decision granting the generators’ mandamus request. The MDL judge allowed defendants (including Houston Electric) to file several additional motions on preliminary legal issues, and otherwise the cases remain stayed. CenterPoint Energy, Utility Holding, and Houston Electric intend to vigorously defend themselves against the claims raised.

CenterPoint Energy and Houston Electric have also responded to inquiries from the Texas Attorney General and the Galveston County District Attorney’s Office, and various other regulatory and governmental entities also conducted inquiries, investigations and other reviews of the February 2021 Winter Storm Event and the efforts made by various entities to prepare for, and respond to, the event, including the electric generation shortfall issues.

In February 2023, twelve lawsuits were filed in state district court in Harris County and Tom Green County, Texas, against dozens of gas market participants in Texas, including natural gas producers, processors, pipelines, marketers, sellers, traders, gas utilities, and financial institutions. Plaintiffs named CERC as a defendant, along with “CenterPoint Energy Services, Inc.,” incorrectly identifying it as CERC’s parent company (CenterPoint Energy previously divested CES). One lawsuit filed in Harris County is a putative class action on behalf of two classes of electric and natural gas customers (those who experienced a loss of electricity and/or natural gas, and those who were charged securitization-related surcharges on a utility bill or were otherwise charged higher rates for electricity and/or gas during the February 2021 Winter Storm Event), potentially including millions of class members. Two other lawsuits (one filed in Harris County and one in Tom Green County) are brought by an entity that purports to be an assignee of claims by tens of thousands of persons and entities that have assigned claims to the plaintiff. These, and nine other similar lawsuits filed in Harris County, generally allege that the defendants engaged in gas market manipulation and price gouging, including by intentionally withholding, suppressing, or diverting supplies of natural gas in connection with the February 2021 Winter Storm Event, Winter Storm Elliott, and other severe weather conditions, and through financial market manipulation. Plaintiffs allege that this manipulation impacted gas supply and prices as well as the market, supply, and price of electricity in Texas and caused blackouts and other damage. Plaintiffs assert claims for tortious interference with existing contract, private nuisance, and unjust enrichment, and allege a broad array of injuries and damages, including personal injury, property damage, and harm from certain costs being securitized and passed on to ratepayers. The lawsuits do not specify the amount of damages sought, but seek broad categories of actual, compensatory, statutory, consequential, economic, and punitive damages; restitution and disgorgement; pre- and post-judgment interest; costs and attorneys’ fees; and other relief. As of September 30, 2024, most of the lawsuits had not been served, but the three cases in which defendants were served were tagged for transfer to the existing MDL proceeding referenced above. On February 2, 2024, CERC filed pleas to the jurisdiction in the three cases in which it was served; CERC also partially joined the other defendants’ motions to dismiss and additional pleas to the jurisdiction. On April 2, 2024, plaintiffs in the three served cases filed amended petitions rather than responding to pleas to the jurisdiction and motions to dismiss. Among other changes, plaintiffs in these three cases dismissed CES, but maintained the same three causes of action as to the remaining defendants. CERC has vigorously defended itself against the claims raised, including filing updated pleas to the jurisdiction on May 17, 2024 in response to plaintiffs’ amended petitions – and will continue to do so. On August 12, 2024, plaintiffs in the putative class action filed a motion for leave to amend to add additional plaintiffs/class representatives. Defendants opposed this motion on September 20, 2024. On September 23, 2024, the MDL judge heard oral argument on CERC’s plea to the jurisdiction and defendants’ motions to dismiss and other pleas to the jurisdiction. The MDL judge has not yet issued any rulings on these motions. The nine other similar lawsuits filed in Harris County have also been tagged for transfer to the MDL proceeding, but the defendants, including CERC, have not been served. These gas market cases are in addition to the 220 cases noted above regarding electric market issues.

To date, there have not been demands, quantification, disclosure or discovery of damages by any party to any of the above legal matters that are sufficient to enable CenterPoint Energy and its subsidiaries to estimate exposure. Given that, as well as the preliminary nature of the proceedings, the numerosity of parties and complexity of issues involved, and the uncertainties of litigation, CenterPoint Energy and its subsidiaries are unable to predict the outcome or consequences of any of the foregoing matters or to estimate a range of potential losses. CenterPoint Energy and its subsidiaries have general and excess liability insurance policies that provide coverage for third party bodily injury and property damage claims. As CenterPoint Energy previously noted, given the nature of certain of the plaintiffs’ allegations, insurance coverage may not be available other than for third party bodily injury and property damage claims caused by an accident, and one of CenterPoint Energy’s insurers has reserved its rights with respect to coverage for plaintiffs’ intentional nuisance claims as well as plaintiffs’ claims in the gas market cases. CenterPoint Energy and its subsidiaries intend to continue to pursue all available insurance coverage for all of these matters.

Table of Contents

Jefferson Parish. Several parishes and the State of Louisiana filed 42 suits under Louisiana’s State and Local Coastal Resources Management Act (SLCRMA) against hundreds of oil and gas companies seeking compensatory damages for contamination and erosion of the Louisiana coastline allegedly caused by historical oil and gas operations. One of the defendants in one of the lawsuits (filed in 2013 only by the Parish of Jefferson) is Primary Fuels, Inc., a predecessor company of CenterPoint Energy, which operated in Louisiana from 1983-1989. All 42 suits were removed to Louisiana federal courts twice and were stayed for several years pending the district courts’ consideration of various motions to remand and multiple appeals of remand orders. Recently, several cases involving other parishes that had been remanded to Louisiana state court have begun to resume proceedings in state court. However, as of September 30, 2024, the federal district court had not ruled on Jefferson Parish’s motion to remand to state court the lawsuit which includes Primary Fuels, Inc. among the defendants.

Because of the procedurally preliminary nature of the proceedings, lack of information about both the scope of and damages for Jefferson Parish’s claim against Primary Fuels, Inc., the numerosity of parties and complexity of issues involved, and the uncertainties of litigation, CenterPoint Energy and its subsidiaries are unable to predict the outcome or consequences of this matter or to estimate a range of potential losses. CenterPoint Energy will continue to vigorously defend itself against the claims raised and pursue any and all available insurance coverage.

Environmental Matters

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

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

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

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

Total costs that may be incurred in connection with addressing these sites cannot be determined at this time. The estimated accrued costs are limited to CenterPoint Energy’s and CERC’s share of the remediation efforts and are therefore net of exposures of other PRPs. The estimated range of possible remediation costs for the sites for which CenterPoint Energy and CERC believe they may have responsibility was based on remediation continuing for the minimum time frame given in the table below:


	September 30, 2024
	CenterPoint Energy		CERC
	(in millions, except years)
Amount accrued for remediation	$	13	$	11
Minimum estimated remediation costs	8		7
Maximum estimated remediation costs	47		40
Minimum years of remediation	5		5
Maximum years of remediation	50		50

Table of Contents

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

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

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

CCR Rule (CenterPoint Energy). In April 2015, the EPA finalized its CCR Rule, which regulates ash as non-hazardous material under the RCRA. The final rule allows beneficial reuse of ash, and a portion of the ash generated by Indiana Electric’s generating plants will continue to be reused. In July 2018, the EPA released its final CCR Rule Phase I Reconsideration which extended the deadline to October 31, 2020 for ceasing placement of ash in ponds that exceed groundwater protections standards or that fail to meet location restrictions. In August 2019, the EPA proposed additional “Part A” amendments to its CCR Rule with respect to beneficial reuse of ash and other materials. The Part A amendments were finalized in August 2020 and extended the deadline to cease placement of ash in ponds to April 11, 2021, discussed further below. The Part A amendments do not restrict Indiana Electric’s current beneficial reuse of its fly ash.

Indiana Electric has three ash ponds, two at the F.B. Culley facility (Culley East and Culley West) and one at the A.B. Brown facility. Under the CCR Rule, Indiana Electric is required to perform integrity assessments, including ground water monitoring, at its F.B. Culley and A.B. Brown generating stations. The ground water studies were necessary to determine the remaining service life of the ponds and whether a pond must be retrofitted with liners or closed in place. Groundwater monitoring indicates potential groundwater impacts very close to Indiana Electric’s ash impoundments, and further analysis is ongoing. The CCR Rule required companies to complete location restriction determinations by October 18, 2018. Indiana Electric completed its evaluation and determined that one F.B. Culley pond (Culley East) and the A.B. Brown pond fail the aquifer placement location restriction. As a result of this failure, Indiana Electric was required to cease disposal of new ash in the ponds and commence closure of the ponds by April 11, 2021, unless approved for an extension. CenterPoint Energy filed timely extension requests available under the CCR Rule that would allow Indiana Electric to continue to use the ponds through October 15, 2023. On October 5, 2022, the EPA issued a proposed conditional approval of the Part A extension request for the A.B. Brown pond. Both the Culley East and A.B. Brown facilities have been taken out of service in a timely manner per the commitments made to the EPA in the extension requests filed for both ponds. On April 24, 2019, Indiana Electric received an order from the IURC approving recovery in rates of costs associated with the closure of the Culley West pond, which has already completed closure activities. On August 14, 2019, Indiana Electric filed its petition with the IURC for recovery of costs associated with the closure of the A.B. Brown ash pond, which would include costs associated with the excavation and recycling of ponded ash. This petition was subsequently approved by the IURC on May 13, 2020. On October 28, 2020, the IURC approved Indiana Electric’s ECA proceeding, which included the initiation of recovery of the federally mandated project costs.

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

On November 1, 2022, Indiana Electric filed for a CPCN to recover federally mandated costs associated with closure of the Culley East Pond, its third and final ash pond. Indiana Electric sought accounting and ratemaking relief for the project, and on June 8, 2023, Indiana Electric filed a revised CPCN for recovery of the federally mandated ash pond costs. On February 7, 2024 the IURC approved the federally mandated costs, both incurred and projected, of $52 million in capital costs, plus an estimated $133 thousand in annual operation and maintenance expenses, for recovery through the ECA.

As of September 30, 2024, CenterPoint Energy recorded an approximate $119 million ARO, which represents the discounted value of future cash flow estimates to close the ponds at A.B. Brown and F.B. Culley. This estimate is subject to change due to the contractual arrangements; continued assessments of the ash, closure methods, and the timing of closure; implications of Indiana Electric’s generation transition plan; changing environmental regulations; and proceeds received from

Table of Contents

the settlements in the aforementioned insurance proceeding. In addition to these AROs, Indiana Electric also anticipates equipment purchases of between $60 million and $80 million to complete the A.B. Brown closure project.

On April 25, 2024, the EPA released its final Hazardous and Solid Waste Management System; Disposal of Coal Combustion Residuals from Electric Utilities; Legacy CCR Surface Impoundments rule (CCR Legacy Rule), which was published in the federal register in May 2024. The CCR Legacy Rule requires companies to investigate previously closed impoundments that were used historically for ash disposal or locations which have had ash placed on them in amounts set forth in the CCR Legacy Rule. The Registrants have completed their preliminary review of potential sites that will require further investigation under the CCR Legacy Rule and identified certain sites in Indiana for further evaluation. In September 2024, Indiana Electric recorded an approximate $11 million ARO with a corresponding increase of $11 million to Property, plant and equipment for amounts recoverable for electric generation stations that are currently in service. These estimates reflect the discounted value of future estimated capping costs for an area of historic ash placement at F.B. Culley. Indiana Electric will continue to refine the assumptions, engineering analyses and resulting cost estimates associated with this ARO and such refinement could materially impact the amount of the estimated ARO.

Clean Water Act Permitting of Groundwater and Power Plant Discharges. In April 2020, the U.S. Supreme Court issued an opinion providing that indirect discharges via groundwater or other non-point sources are subject to permitting and liability under the Clean Water Act when they are the functional equivalent of a direct discharge. On November 27, 2023, the EPA published draft guidance regarding the application of the “functional equivalent” analysis as related to permitting of certain discharges through groundwater to surface waters. The Registrants do not currently anticipate impacts from this guidance, but groundwater monitoring continues under the CCR Rule.

In 2015, the EPA finalized revisions to the existing steam electric wastewater discharge standards which set more stringent wastewater discharge limits and effectively prohibited further wet disposal of coal ash in ash ponds. In February 2019, the IURC approved Indiana Electric’s Effluent Limitation Guidelines Compliance Plan for its F.B. Culley Generating Station, which was completed in compliance with the requirements of the Effluent Limitation Guidelines. On April 25, 2024, the EPA released its final Supplemental Effluent Limitation Guidelines and Standards for the Steam Electric Generating Point Source Category. The Registrants currently anticipate that they will be in compliance with the Supplemental ELG Guidelines at the Culley facility due to previous wastewater treatment upgrades.

Other Environmental. From time to time, the Registrants identify the presence of environmental contaminants during operations or on property where their predecessors have conducted operations. Other such sites involving contaminants may be identified in the future. The Registrants have and expect to continue to remediate any identified sites consistent with state and federal legal obligations. From time to time, the Registrants have received notices, and may receive notices in the future, from regulatory authorities or others regarding status as a PRP in connection with sites found to require remediation due to the presence of environmental contaminants. In addition, the Registrants have been, or may be, named from time to time as defendants in litigation related to such sites. Although the ultimate outcome of such matters cannot be predicted at this time, the Registrants do not expect these matters, either individually or in the aggregate, to have a material adverse effect on their financial condition, results of operations or cash flows.

Other Proceedings

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

(14) Earnings Per Share (CenterPoint Energy)

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

Diluted earnings per common share reflects the dilutive effect of potential common shares from share-based awards. The dilutive effect of restricted stock is computed using the if-converted method, which assumes conversion of the restricted stock

Table of Contents

at the beginning of the period. The dilutive effect of restricted stock is computed using the treasury stock method, as applicable, which includes the incremental shares that would be hypothetically vested in excess of the number of shares assumed to be hypothetically repurchased with the assumed proceeds.

Diluted earnings per common share will also reflect the dilutive effect of potential common shares from the conversion of the Convertible Notes. Convertible debt in which the principal amount must be settled in cash is excluded from the calculation of diluted earnings per common share. There would be no interest expense adjustment to the numerator for the cash-settled portion of the Convertible Notes because that portion will always be settled in cash. The conversion spread value in shares will be included in diluted earnings per common share using the if-converted method if the convertible debt is in the money. The denominator of diluted earnings per common share is determined by dividing the conversion spread value of the share-settled portion of the Convertible Notes as of the reporting date by the average share price over the reporting period. For the three and nine months ended September 30, 2024, the convertible debt was not in the money; therefore, no incremental shares were assumed converted or included in the diluted earnings per share calculation below. For further details about the Convertible Notes, see Note 11.

The following table reconciles numerators and denominators of CenterPoint Energy’s basic and diluted earnings per common share:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(in millions, except per share and share amounts)
Numerator:
Net income	$	193	$	282	$	771	$	725
Less: Preferred stock dividend requirement (Note 18)	—		26		—		50







Income available to common shareholders – basic and diluted	$	193	$	256	$	771	$	675
Denominator:
Weighted average common shares outstanding – basic	647,797,000		631,185,000		640,287,000		630,854,000
Plus: Incremental shares from assumed conversions:
Restricted stock	417,000		1,858,000		1,074,000		2,183,000


Weighted average common shares outstanding – diluted	648,214,000		633,043,000		641,361,000		633,037,000







Earnings Per Common Share:


Basic	$	0.30	$	0.41	$	1.20	$	1.07


Diluted	$	0.30	$	0.40	$	1.20	$	1.07

(15) Reportable Segments

The Registrants’ determination of reportable segments considers the strategic operating units under which the CODM manages sales, allocates resources and assesses performance of various products and services to wholesale or retail customers in differing regulatory environments. Each Registrant’s CODM views net income as the measure of profit or loss for the reportable segments.

As of September 30, 2024, reportable segments by Registrant were as follows:

CenterPoint Energy

CenterPoint Energy’s Electric reportable segment consists of electric transmission and distribution services in the Texas gulf coast area in the ERCOT region and electric transmission and distribution services primarily to southwestern Indiana and includes power generation and wholesale power operations in the MISO region.
CenterPoint Energy’s Natural Gas reportable segment consists of (i) intrastate natural gas sales to, and natural gas transportation and distribution for residential, commercial, industrial and institutional customers in Indiana, Louisiana, Minnesota, Mississippi, Ohio and Texas; and (ii) permanent pipeline connections through interconnects with various interstate and intrastate pipeline companies through CEIP.
CenterPoint Energy’s Corporate and Other category consists of energy performance contracting and sustainable infrastructure services through Energy Systems Group through June 30, 2023, the date of the sale of Energy Systems

Table of Contents

Group, and corporate operations which support all of the business operations of CenterPoint Energy. CenterPoint Energy’s Corporate and Other also includes office buildings and other real estate used for business operations.

Houston Electric

Houston Electric’s single reportable segment consists of electric transmission services to transmission service customers in the ERCOT region and distribution services to REPs serving the Texas gulf coast area that includes the city of Houston.

CERC

CERC’s single reportable segment following the Restructuring consisted of (i) intrastate natural gas sales to, and natural gas transportation and distribution for, residential, commercial, industrial and institutional customers in Indiana, Louisiana, Minnesota, Mississippi, Ohio and Texas; and (ii) permanent pipeline connections through interconnects with various interstate and intrastate pipeline companies through CEIP.

The following table provides financial data for CenterPoint Energy’s reportable segments. Each of Houston Electric and CERC consist of a single reportable segment; therefore, a tabular reportable segment presentation has not been included for Houston Electric or CERC.

CenterPoint Energy













	Three Months Ended September 30,
	2024		2023
	Revenues from External Customers		Net Income (Loss)		Revenues from External Customers		Net Income (Loss)
	(in millions)
Electric	$	1,243	$	226	$	1,261	$	290
Natural Gas	611		30		597		27
Corporate and Other	2		(63)		2		(35)

Consolidated	$	1,856	$	193	$	1,860	$	282













	Nine Months Ended September 30,
	2024		2023
	Revenues from External Customers		Net Income (Loss)		Revenues from External Customers		Net Income (Loss)
	(in millions)
Electric	$	3,499	$	562	$	3,250	$	593
Natural Gas	2,876		360		3,136		296
Corporate and Other	6		(151)		128		(164)

Consolidated	$	6,381	$	771	$	6,514	$	725


	Total Assets
	September 30, 2024		December 31, 2023
	(in millions)
Electric	$	23,458	$	21,089
Natural Gas	17,966		17,429

Corporate and Other, net of eliminations (1)	1,469		1,197

Consolidated	$	42,893	$	39,715

(1)Total assets included pension and other postemployment-related regulatory assets of $368 million and $385 million as of September 30, 2024 and December 31, 2023, respectively.

Table of Contents

(16) Supplemental Disclosure of Cash Flow and Balance Sheet Information

Supplemental Disclosure of Cash Flow Information

The table below provides supplemental disclosure of cash flow information:


	Nine Months Ended September 30,
	2024						2023
	CenterPoint Energy		Houston Electric		CERC		CenterPoint Energy		Houston Electric		CERC
	(in millions)
Cash Payments/Receipts:
Interest, net of capitalized interest	$	620	$	218	$	169	$	521	$	211	$	153
Income tax payments (refunds), net	(8)		26		3		200		12		113
Non-cash transactions:
Accounts payable related to capital expenditures	1,133		1,075		97		264		137		122
ROU assets obtained in exchange for lease liabilities (1)	5		—		—		3		1		—

(1) Excludes ROU assets obtained through prepayment of the lease liabilities. See Note 19.

The table below provides a reconciliation of cash, cash equivalents and restricted cash reported in the Condensed Consolidated Balance Sheets to the amount reported in the Condensed Statements of Consolidated Cash Flows:


	September 30, 2024						December 31, 2023
	CenterPoint Energy		Houston Electric		CERC		CenterPoint Energy		Houston Electric		CERC
	(in millions)
Cash and cash equivalents (1)	$	112	$	97	$	1	$	90	$	76	$	1
Restricted cash included in Prepaid expenses and other current assets (2)	17		13		—		19		13		—

Total cash, cash equivalents and restricted cash shown in Condensed Statements of Consolidated Cash Flows	$	129	$	110	$	1	$	109	$	89	$	1

(1)Cash and cash equivalents related to VIEs as of September 30, 2024 and December 31, 2023 included $111 million and $90 million, respectively, at CenterPoint Energy and $96 million and $76 million, respectively, at Houston Electric.

(2)Restricted cash primarily related to accounts established by CenterPoint Energy and Houston Electric in connection with the issuance of the Securitization Bonds to collateralize the Securitization Bonds that were issued in these financing transactions. These restricted cash accounts are not available for withdrawal until the maturity of the Securitization Bonds.

Supplemental Disclosure of Balance Sheet Information

Included in other current liabilities on CERC’s Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023 was $99 million and $118 million, respectively, of credits related to customers on budget billing programs. Included in other current liabilities on Houston Electric’s Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023 was $85 million and $47 million, respectively, of accrued contributions in aid of construction.

(17) Related Party Transactions (Houston Electric and CERC)

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

Table of Contents

The table below summarizes CenterPoint Energy money pool activity:


	September 30, 2024						December 31, 2023
	Houston Electric			CERC			Houston Electric			CERC
	(in millions, except interest rates)
Money pool investments (borrowings), net (1)	$	(71)		$	—		$	238		$	1
Weighted average interest rate	4.98		%	4.98		%	5.59		%	5.59		%

(1)Included in Accounts and notes payable–affiliated companies on Houston Electric’s Condensed Consolidated Balance Sheets as of September 30, 2024 and Accounts and notes receivable–affiliated companies on Houston Electric’s and CERC’s respective Condensed Consolidated Balance Sheets as of December 31, 2023, as applicable.

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

Amounts charged for these services were as follows and are included primarily in Operation and maintenance expenses on the Condensed Statements of Consolidated Income:


	Three Months Ended September 30,								Nine Months Ended September 30,
	2024				2023				2024				2023
	Houston Electric		CERC		Houston Electric		CERC		Houston Electric		CERC		Houston Electric		CERC
	(in millions)
Corporate service charges	$	45	$	50	$	40	$	56	$	124	$	156	$	115	$	162
Net affiliate service charges (billings)	(1)		1		(1)		1		(4)		4		(7)		7

The table below presents transactions among Houston Electric, CERC and their parent, Utility Holding:


	Three Months Ended September 30,								Nine Months Ended September 30,
	2024				2023				2024				2023
	Houston Electric		CERC		Houston Electric		CERC		Houston Electric		CERC		Houston Electric		CERC
	(in millions)
Cash dividends paid to parent	$	94	$	24	$	79	$	36	$	249	$	270	$	239	$	347

Cash contribution from parent	94		—		235		—		324		290		885		500

Table of Contents

(18) Equity

Dividends Declared and Paid (CenterPoint Energy)

CenterPoint Energy declared and paid dividends on its Common Stock as follows during the periods indicated below:


	Dividends Declared Per Share								Dividends Paid Per Share
	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023		2024		2023		2024		2023
Common Stock	$	0.410	$	0.390	$	0.610	$	0.580	$	0.200	$	0.190	$	0.600	$	0.570
Series A Preferred Stock (1)	—		30.625		—		30.625		—		30.625		—		61.250

(1)On September 1, 2023, CenterPoint Energy redeemed all 800,000 outstanding shares of its Series A Preferred Stock, in whole for cash at a redemption price of $1,000 per share, plus any accumulated and unpaid dividends thereon to, but excluding, the redemption date.

Common Stock (CenterPoint Energy)

(a) Underwritten Offering

On August 9, 2024, CenterPoint Energy issued 9,754,194 shares of Common Stock in an underwritten public offering at a price of $25.36 per share, for net proceeds of $247 million after deducting issuance costs. The proceeds from the offering were used for the repayment of a portion of CenterPoint Energy’s then-outstanding commercial paper.

(b) Equity Distribution Agreement

On January 10, 2024, CenterPoint Energy entered into an Equity Distribution Agreement with certain financial institutions with respect to the offering and sale from time to time of shares of Common Stock, having an aggregate gross sales price of up to $500 million. Sales of Common Stock may be made by any method permitted by applicable law and deemed to be an “at the market offering” as defined in Rule 415 of the Securities Act of 1933, as amended. CenterPoint Energy may also enter into one or more forward sales agreements pursuant to master forward confirmations. The offer and sale of Common Stock under the Equity Distribution Agreement will terminate upon the earliest of (1) the sale of all Common Stock subject to the Equity Distribution Agreement, (2) termination of the Equity Distribution Agreement, or (3) May 17, 2026. During the three months ended September 30, 2024, CenterPoint Energy did not issue any shares of Common Stock through the ATM Managers under the Equity Distribution Agreement. During the nine months ended September 30, 2024, CenterPoint Energy issued 8,790,848 shares of Common Stock through the ATM Managers under the Equity Distribution Agreement, representing aggregate cash proceeds of $247 million, which was net of compensation paid by CenterPoint Energy to the ATM Managers of $2 million. As of September 30, 2024, CenterPoint Energy had not entered into any forward sale agreements under the at-the-market program. Additionally, as of September 30, 2024, CenterPoint Energy had $250 million of remaining capacity available under the program.

Income Allocated to Series A Preferred Shareholders (CenterPoint Energy)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(in millions)
Series A Preferred Stock (1)	$	—	$	26	$	—	$	50




Total income allocated to preferred shareholders	$	—	$	26	$	—	$	50

Table of Contents

Accumulated Other Comprehensive Income (Loss)

Changes in accumulated comprehensive income (loss) are as follows:


	Three Months Ended September 30,
	2024		2023
	CenterPoint Energy		CERC		CenterPoint Energy		CERC
	(in millions)
Beginning Balance	$	(30)	$	15	$	(32)	$	15
Other comprehensive income before reclassifications:

Net deferred gain from cash flow hedges	—		—		2		—

Amounts reclassified from accumulated other comprehensive income (loss):

Prior service cost (1)	—		—		1		—
Actuarial losses (1)	1		—		—		—
Reclassification of deferred loss from cash flow hedges realized in net income	(1)		—		—		—



Other comprehensive income	—		—		3		—
Ending Balance	$	(30)	$	15	$	(29)	$	15

	Nine Months Ended September 30,
	2024		2023
	CenterPoint Energy		CERC		CenterPoint Energy		CERC
	(in millions)
Beginning Balance	$	(35)	$	16	$	(31)	$	16
Other comprehensive income (loss) before reclassifications:
Remeasurement of pension and other postretirement plans	(2)		—		—		—


Net deferred gain from cash flow hedges	4		—		2		—
Amounts reclassified from accumulated other comprehensive income (loss):

Prior service cost (benefit) (1)	2		—		—		(1)
Actuarial losses (gain) (1)	2		(1)		—		—
Reclassification of deferred loss from cash flow hedges realized in net income	(1)		—		—		—




Other comprehensive income (loss)	5		(1)		2		(1)
Ending Balance	$	(30)	$	15	$	(29)	$	15

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

(19) Leases

In 2021, Houston Electric entered into a temporary short-term lease and long-term leases for temporary generation. The short-term lease agreement allowed Houston Electric to take delivery of TEEEF assets on a short-term basis with an initial term ending on September 30, 2022 and extended until December 31, 2022. At such time, the short-term lease agreement expired and all temporary generation assets were leased under the long-term lease agreement. Per Houston Electric’s short-term lease accounting policy election, a ROU asset and lease liability are not reflected on Houston Electric’s Condensed Consolidated Balance Sheets. Expenses associated with the short-term lease, including carrying costs, are deferred to a regulatory asset and totaled, net of amounts recovered in rates, $92 million and $100 million as of September 30, 2024 and December 31, 2023, respectively.

The long-term lease agreement includes up to 505 MW of TEEEF, all of which was delivered as of December 31, 2022, triggering lease commencement at delivery, with an initial term ending in 2029 for all TEEEF leases. These assets were previously available under the short-term lease agreement. Houston Electric derecognized the finance lease liability when the extinguishment criteria in Topic 405 - Liabilities was achieved. Per the terms of the agreement, lease payments are due and

Table of Contents

made in full by Houston Electric upon taking possession of the asset, relieving substantially all of the associated finance lease liability at that time. The remaining finance lease liability associated with the commenced long-term TEEEF agreement was not significant as of September 30, 2024 and December 31, 2023 and relates to removal costs that will be incurred at the end of the lease term. As of September 30, 2024, Houston Electric secured a first lien on the assets leased under the prepayment agreement, except for assets with lease payments totaling $84 million, which is being held in an escrow account, not controlled by Houston Electric, and the funds will be released when a first lien can be secured for Houston Electric. Expenses associated with the long-term lease, including depreciation expense on the right of use asset and carrying costs, are deferred to a regulatory asset and totaled, net of amounts recovered in rates, $147 million and $124 million as of September 30, 2024 and December 31, 2023, respectively. For further discussion of the regulatory impacts, see Note 6.

Houston Electric will also incur variable costs throughout the lease term for the operation and maintenance of the TEEEF units. Lease costs, including variable and ROU asset amortization costs, are deferred to Regulatory assets as incurred as a recoverable cost under the 2021 Texas legislation. See Note 6 for further information regarding recovery of these deferred costs.

The components of lease cost, included in Operation and maintenance expense on the Registrants’ respective Condensed Statements of Consolidated Income, are as follows:


	Three Months Ended September 30,
	2024						2023
	CenterPoint Energy		Houston Electric		CERC		CenterPoint Energy		Houston Electric		CERC
	(in millions)
Operating lease cost	$	2	$	—	$	—	$	1	$	1	$	—
Short-term lease cost	—		—		—		15		14		—

Total lease cost (1)	$	2	$	—	$	—	$	16	$	15	$	—

	Nine Months Ended September 30,
	2024						2023
	CenterPoint Energy		Houston Electric		CERC		CenterPoint Energy		Houston Electric		CERC
	(in millions)
Operating lease cost	$	4	$	2	$	1	$	4	$	2	$	1
Short-term lease cost	8		7		—		28		27		—

Total lease cost (1)	$	12	$	9	$	1	$	32	$	29	$	1

(1) CenterPoint Energy and Houston Electric defer finance lease costs for TEEEF to Regulatory assets for recovery rather than to Depreciation and Amortization in the Condensed Statements of Consolidated Income.

The components of lease income were as follows:


	Three Months Ended September 30,
	2024						2023
	CenterPoint Energy		Houston Electric		CERC		CenterPoint Energy		Houston Electric		CERC
	(in millions)
Operating lease income	$	1	$	—	$	1	$	2	$	1	$	1
Variable lease income	—		—		—		—		—		—
Total lease income	$	1	$	—	$	1	$	2	$	1	$	1

	Nine Months Ended September 30,
	2024						2023
	CenterPoint Energy		Houston Electric		CERC		CenterPoint Energy		Houston Electric		CERC
	(in millions)
Operating lease income	$	4	$	—	$	3	$	5	$	1	$	3
Variable lease income	1		—		—		1		—		—
Total lease income	$	5	$	—	$	3	$	6	$	1	$	3

Table of Contents

Supplemental balance sheet information related to leases was as follows:


	September 30, 2024									December 31, 2023
	CenterPoint Energy			Houston Electric			CERC			CenterPoint Energy			Houston Electric			CERC
	(in millions, except lease term and discount rate)
Assets:
Operating ROU assets (1)	$	16		$	5		$	4		$	13		$	6		$	4
Finance ROU assets (2)	454			454			—			526			526			—
Total leased assets	$	470		$	459		$	4		$	539		$	532		$	4

Liabilities:
Current operating lease liability (3)	$	3		$	2		$	1		$	3		$	1		$	1
Non-current operating lease liability (4)	13			3			3			10			5			3
Total leased liabilities (5)	$	16		$	5		$	4		$	13		$	6		$	4

Weighted-average remaining lease term (in years) - operating leases	11.9			3.2			3.4			4.7			3.9			3.1
Weighted-average discount rate - operating leases	4.53		%	4.11		%	4.04		%	4.13		%	4.09		%	3.60		%
Weighted-average remaining lease term (in years) - finance leases	4.8			4.8			—			5.5			5.5			—
Weighted-average discount rate - finance leases	3.60		%	3.60		%	—			3.60		%	3.60		%	—

(1)Reported within Other assets in the Registrants’ respective Condensed Consolidated Balance Sheets, net of accumulated amortization.

(2)Reported within Property, Plant and Equipment in the Registrants’ respective Condensed Consolidated Balance Sheets, net of accumulated amortization.

(3)Reported within Current other liabilities in the Registrants’ respective Condensed Consolidated Balance Sheets.

(4)Reported within Other liabilities in the Registrants’ respective Condensed Consolidated Balance Sheets.

(5)Finance lease liabilities were not significant as of September 30, 2024 or December 31, 2023 and are reported within Other long-term debt in the Registrants’ respective Condensed Consolidated Balance Sheets when applicable.

As of September 30, 2024, finance lease liabilities were not significant to the Registrants. As of September 30, 2024, maturities of operating lease liabilities were as follows:


	CenterPoint Energy		Houston Electric		CERC
	(in millions)
Remainder of 2024	$	1	$	1	$	1
2025	4		2		2
2026	4		1		1
2027	2		1		—
2028	1		—		—
Thereafter	11		—		—

Total lease payments	23		5		4
Less: Interest	7		—		—
Present value of lease liabilities	$	16	$	5	$	4

Table of Contents

As of September 30, 2024, future minimum finance lease payments to be received were not significant to the Registrants. As of September 30, 2024, maturities of undiscounted operating lease payments to be received are as follows:


	CenterPoint Energy		Houston Electric		CERC
	(in millions)
Remainder of 2024	$	—	$	—	$	—
2025	3		1		—
2026	3		—		—
2027	2		—		—
2028	2		—		—
Thereafter	2		—		—

Total lease payments to be received	$	12	$	1	$	—

Other information related to leases is as follows:









	Nine Months Ended September 30,
	2024						2023
	CenterPoint Energy		Houston Electric		CERC		CenterPoint Energy		Houston Electric		CERC
	(in millions)
Operating cash flows from operating leases included in the measurement of lease liabilities	$	4	$	2	$	1	$	4	$	1	$	1

See Note 16 for information on ROU assets obtained in exchange for operating lease liabilities.

Table of Contents

Previous: Cover and table of contents · Next: Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF CENTERPOINT ENERGY, INC. AND SUBSIDIARIES