CENTERPOINT ENERGY INC

CenterPoint Energy is a public utility holding company whose operating subsidiaries own and operate electric transmission, distribution and generation facilities and natural gas distribution systems. As of December 31, 2025, the company's indirect, wholly-owned operating subsidiaries included Houston Electric, which provides electric transmission service in the ERCOT region and distribution service to REPs serving the Texas Gulf Coast area including the city of Houston; CERC Corp., which owns and operates natural gas distribution systems in Minnesota, Texas, Indiana, and Ohio and owns intrastate pipeline connections through CEIP; and SIGECO, which provides energy delivery services to electric and natural gas customers in southwestern Indiana and owns electric generation assets. The company's reportable segments are Electric, Natural Gas, and Corporate and Other.

Houston Electric faces no other electric transmission and distribution utilities in its service area, and for another provider to offer such services it would be required to obtain a CCN from the PUCT and potentially franchises from municipalities. Indiana Electric similarly has no other electric transmission and distribution utilities in its service area, as Indiana service territory certificates are exclusive. CenterPoint Energy's natural gas distribution businesses compete primarily with alternate energy sources such as electricity and other fuel sources, and in some areas intrastate pipelines, other gas distributors and marketers compete directly for gas sales to end users. As of December 31, 2025, Houston Electric served 67 REPs and 2,859,313 total metered customers, while Indiana Electric served 154,402 metered customers and the natural gas businesses served 4,029,085 total metered customers across all states.

CenterPoint Energy generates revenue primarily through regulated electric transmission and distribution services and natural gas sales and transportation. Houston Electric's revenues are derived from rates collected from each REP based on the amount of electricity delivered, with distribution rates for residential and small commercial customers primarily based on energy delivered and rates for large commercial and industrial customers primarily based on peak demand. Indiana Electric's revenues are derived from rates collected from customers based on electricity delivered, and it also receives transmission revenue from other MISO members' use of its transmission system. The natural gas distribution businesses generate revenue from intrastate natural gas sales to and transportation for residential, commercial, industrial and transportation customers, with the cost of natural gas passed through to customers under purchased gas adjustment provisions in tariffs. The company also earns revenue from residential appliance repair and maintenance services and HVAC equipment sales in Minnesota and home repair protection plans in Indiana, Ohio and Texas through a third party.

The Electric reportable segment consists of Houston Electric's transmission and distribution operations in the Texas Gulf Coast area and Indiana Electric's transmission, distribution and generation operations in southwestern Indiana. Houston Electric does not own or operate any power generating facilities other than TEEEF, and as of December 31, 2025, it leased 519 MW of TEEEF on a long-term basis. Indiana Electric had 1,228 MW of installed generating capacity as of December 31, 2025, including 360 MW of coal capacity, 623 MW of gas capacity, 245 MW of solar capacity, and 3 MW of landfill gas capacity. Indiana Electric has entered into various PPAs to purchase solar and wind power, including a 170 MW wind PPA with NextEra Energy, Inc. and a 150 MW solar PPA with Origis, and it also has firm purchase supply agreements including a 32 MW coal agreement with OVEC through 2040. For the year ended December 31, 2025, Sunrise LLC accounted for 100% of Indiana Electric's coal purchases, with 643,030 tons of coal purchased at an average cost of $68.04 per ton.

The Natural Gas reportable segment includes natural gas distribution operations in Indiana, Minnesota, Ohio and Texas, as well as intrastate pipeline connections through CEIP. As of December 31, 2025, the natural gas businesses served 4,029,085 total metered customers, with the largest metropolitan areas served being Houston, Texas; Minneapolis, Minnesota; Evansville, Indiana; and Dayton, Ohio. For the year ended December 31, 2025, approximately 68% and 69% of total throughput for CenterPoint Energy's and CERC's natural gas distribution businesses, respectively, occurred in the first and fourth quarters. Major natural gas suppliers for the year ended December 31, 2025 included Tenaska Marketing Ventures, LLC at 32% for CenterPoint Energy and 30% for CERC, and Macquarie Energy, LLC at 12% for CenterPoint Energy and 13% for CERC. The natural gas businesses own and operate 8 underground natural gas storage facilities with 43 Bcf of storage capacity and 14 Bcf of working capacity, 15 propane air-gas manufacturing plants, and 1 LNG plant facility, and they contract for upstream storage services with 100 Bcf of storage capacity.

On March 7, 2025, SIGECO acquired 100% of the equity interests in Posey Solar, which was constructing a 191 MW solar array in Posey County, Indiana, for approximately $357 million. On March 31, 2025, CenterPoint Energy, through its subsidiary CERC Corp., completed the sale of its Louisiana and Mississippi natural gas LDC businesses for approximately $1.2 billion. On October 20, 2025, CenterPoint Energy, through its subsidiary CERC Corp., entered into the Ohio Securities Purchase Agreement to sell all of the issued and outstanding equity interests in CEOH for total consideration of approximately $2.62 billion, comprised of $1.42 billion in cash and a 364-day seller promissory note in the original principal amount of $1.2 billion. In 2025, CenterPoint Energy issued or borrowed a combined $3.7 billion of new debt, including $1.0 billion aggregate principal amount of convertible senior notes due 2028 and $700 million aggregate principal amount of junior subordinated notes, and repurchased approximately $1.5 billion of outstanding debt in connection with settlement of tender offers. In April and May 2025, CenterPoint Energy entered into forward sales agreements pursuant to the Equity Distribution Agreement.

For the year ended December 31, 2025, CenterPoint Energy reported consolidated net income available to common shareholders of $1,052 million, compared to $1,019 million in 2024 and $867 million in 2023. Total consolidated revenues were $9,352 million in 2025, compared to $8,640 million in 2024 and $8,569 million in 2023. The Electric reportable segment contributed net income of $705 million in 2025, up from $671 million in 2024, while the Natural Gas reportable segment contributed $570 million in 2025, up from $566 million in 2024. The Corporate and Other segment reported a net loss of $223 million in 2025, compared to a loss of $218 million in 2024. Operating income for the Electric segment was $1,245 million in 2025, compared to $1,139 million in 2024, and for the Natural Gas segment was $897 million in 2025, compared to $867 million in 2024.

On September 29, 2025, CenterPoint Energy announced a new 10-year capital plan to invest $65 billion from 2026 through 2035, inclusive of a $2 billion increase in previously planned capital expenditures through 2030. On February 19, 2026, CenterPoint Energy announced an additional increase of $500 million to reflect total capital expenditures of approximately $65.5 billion through 2035. The plan is expected to advance economic growth, enhance the experience of customers and deliver consistent value for stakeholders across the company's jurisdictions. Approximately 85% of CenterPoint Energy's projected consolidated investments are expected to be recovered through interim capital recovery trackers or rate cases based on a forward test year.

Management anticipates significant growth in electric demand over the next decade, especially in the Houston Electric territory where management forecasts a nearly 50% increase in peak electric load demand to over 30 GW by 2029 and demand nearly doubling by the mid 2030s, as compared to 2024. This forecasted growth is expected to be driven by a diverse set of economic drivers including data centers, energy refining and exports, advanced manufacturing and logistics. Management additionally believes there are increased electric demand opportunities in the Indiana Electric jurisdiction, and Indiana Electric's 2025 IRP included a large load scenario with a corresponding alternative preferred portfolio. Management expects residential meter growth for Houston Electric to remain in line with long-term trends at approximately 2% annually, and for CERC at approximately 1% annually.

The company expects to continue to manage costs and seek regulatory recovery mechanisms to mitigate regulatory lag. Approximately 85% of the company's rate base has been subject to a rate case since the beginning of 2023, which supports clarity and stability through 2029 with final orders improving enterprise weighted average returns on equity. The company has weather normalization or other rate mechanisms that largely mitigate the impact of weather on its natural gas distribution businesses in Indiana, Minnesota and Ohio, though its natural gas distribution businesses in Texas and its electric operations in Texas and Indiana do not have such mechanisms.

The company's 10-year capital plan includes significant investments in electric transmission and distribution infrastructure, including Houston Electric's proposed 765 kV and other transmission projects, as well as investments in natural gas distribution infrastructure. The company is also investing in technology infrastructure, including advanced grid infrastructure and AI-related technology. The company's ability to execute its capital plan is subject to various risks including supply chain disruptions, labor shortages, inflation, and regulatory approvals.

In 2025, CenterPoint Energy issued or borrowed a combined $3.7 billion of new debt, including $1.0 billion aggregate principal amount of convertible senior notes due 2028 and $700 million aggregate principal amount of junior subordinated notes. In January 2026, CERC Corp. entered into a delayed draw term loan agreement for up to $800 million, borrowing $500 million on January 20, 2026, and expects to borrow the remaining $300 million during the first quarter of 2026. The company expects to fund its capital investments through internally-generated cash, borrowings under credit facilities, proceeds from commercial paper, cash proceeds from strategic transactions, and issuances of equity and debt securities in the capital markets, including the issuance of non-recourse system restoration bonds. On February 18, 2026, Treasury Notice 2026-7 was issued, which clarifies the computation of AFSI and is expected to result in a prospective reduction to the company's annual CAMT liability, and the company expects to be able to amend prior year tax returns to claim a refund of CAMT paid.

The company faces headwinds from macroeconomic and geopolitical developments including high rates of inflation, supply chain disruptions, labor market constraints, tariffs, high interest rates, general economic slowdown and escalating global conflicts. These factors have contributed to increased prices for materials and services and have impacted the company's ability to procure resources and labor necessary for its business and capital plan. The company has experienced disruptions to its supply chain and increased prices and scarcity of resources and labor, and if such conditions continue, they could negatively impact its ability to procure materials, supplies or services at a reasonable cost in a timely manner, result in project cancellations or scope changes, delays, cost overruns, and under-recovery of costs.

The company faces regulatory and political risks including potential adverse rate case outcomes, challenges to cost recovery, and customer affordability concerns. In consideration of customer affordability concerns, Indiana Electric cancelled nearly $1 billion in renewable energy generation projects in 2025. The company also faces risks related to the execution of its generation transition plan, including the retirement of coal-fired generation units, as the U.S. Department of Energy issued emergency order 202(c) in December 2025 directing Indiana Electric to continue operating F.B. Culley Unit 2 through March 23, 2026. The company is also subject to risks related to the timing and success of Houston Electric's release of its large and medium TEEEF units and the ability to complete future transactions involving those units on acceptable terms.

The company faces material risks from rate regulation that may delay or deny its ability to earn an expected return and fully and timely recover costs, as evidenced by the 2024 Houston Electric general rate case where the company sought a $60 million revenue increase and 10.4% ROE but received an overall revenue requirement decrease of approximately $47 million and a 9.65% ROE. The company is subject to significant risks related to the execution of its 10-year capital plan to invest approximately $65.5 billion through 2035, including supply chain disruptions, inflation, labor shortages, and regulatory approvals. Houston Electric's receivables are concentrated in a small number of REPs, with approximately 37% and 23% of the $279 million billed receivables balance as of December 31, 2025 owed by affiliates of NRG and Vistra Energy Corp., respectively. The company faces litigation risks, including claims related to the February 2021 Winter Storm Event and Hurricane Beryl, and if CenterPoint Energy redeems the ZENS prior to maturity in 2029, deferred taxes of approximately $897 million would have been payable as of December 31, 2025, disregarding the availability of net operating loss carryforwards and CAMT carryforwards.

Management's message emphasizes the company's strategic focus on being an energy delivery company with significant capital investments reflected in the new 10-year capital plan announced in September 2025 to invest $65 billion from 2026 through 2035, increased to approximately $65.5 billion in February 2026. The key strategic priorities include advancing economic growth, improving customer experience through enhancing safety, reliability and resiliency of systems, and delivering consistent value for stakeholders. Management highlights that approximately 85% of the company's rate base has been subject to a rate case since the beginning of 2023, supporting clarity and stability through 2029 with final orders improving enterprise weighted average returns on equity, and that approximately 85% of projected consolidated investments are expected to be recovered through interim capital recovery trackers or rate cases based on a forward test year. Management also emphasizes the anticipated significant growth in electric demand, particularly in the Houston Electric territory where a nearly 50% increase in peak electric load demand to over 30 GW by 2029 is forecasted, with demand nearly doubling by the mid 2030s compared to 2024.