CenterPoint Energy Reports Third Quarter 2011 Earnings
2011-11-02T05:00:00Z

Houston, TX – November 2, 2011CenterPoint Energy, Inc. (NYSE: CNP) today reported net income of $973 million, or $2.27 per diluted share, for the third quarter of 2011 compared to $123 million, or $0.29 per diluted share, for the same period of 2010. The third quarter of 2011 includes net income of $811 million, or $1.89 per diluted share, reflecting the final resolution of the appeals of the 2004 true-up order of the Texas Public Utility Commission (Texas PUC) issued in connection with the restructuring of the Texas electric industry. Excluding this amount, net income would have been $162 million, or $0.38 per diluted share, for the third quarter of 2011 compared to $123 million, or $0.29 per diluted share, for the same period of 2010.

Operating income for the third quarter of 2011 was $357 million compared to $327 million for the same period of 2010.

“This was a significant quarter for our company,” said David M. McClanahan, president and chief executive officer of CenterPoint Energy. “We resolved the long-standing proceeding arising from the restructuring of the electric industry in Texas.  As a result, we expect to issue an additional $1.695 billion in transition bonds later this year or early next year, and have booked $811 million in net income this year and will recognize another $258 million over time. Operationally, our regulated electric and natural gas utilities reported solid results and our field services unit continued to realize growth from the investments we made in the Haynesville and Fayetteville shales. We continue to look for opportunities to invest across our portfolio of electric and natural gas businesses and build value for our shareholders.”

For the nine months ended September 30, 2011, net income was $1.24 billion, or $2.89 per diluted share, compared to $318 million, or $0.78 per diluted share, for the same period of 2010. Excluding the effects of the resolution of the true-up proceeding described above, net income would have been $429 million, or $1.00 per diluted share, for the nine months ended September 30, 2011, compared to $318 million, or $0.78 per diluted share, for the same period of 2010.

Operating income for the nine months ended September 30, 2011, was $1.024 billion compared to $947 million for the same period of 2010.

Electric Transmission & Distribution

The electric transmission & distribution segment reported operating income of $244 million for the third quarter of 2011, consisting of $213 million from the regulated electric transmission & distribution utility operations (TDU) and $31 million related to securitization bonds. Operating income for the third quarter of 2010 was $212 million, consisting of $178 million from the TDU and $34 million related to securitization bonds. Operating income for the TDU benefited from increased usage primarily due to warmer weather, growth of over 35,000 metered customers since September 2010 and lower depreciation and amortization expense.  These gains were partially offset by higher operation and maintenance expenses primarily related to increased labor, benefits and transmission expenses.

Operating income for the nine months ended September 30, 2011, was $530 million, consisting of $434 million from the TDU and $96 million related to securitization bonds. Operating income for the same period of 2010 was $477 million, consisting of $371 million from the TDU and $106 million related to securitization bonds.

Natural Gas Distribution

The natural gas distribution segment reported an operating loss of $2 million for the third quarter of 2011 compared to a loss of $4 million for the same period of 2010. The operating loss improved due to lower operation and maintenance expenses, primarily reduced bad debt expenses. Due to seasonal impacts, this segment typically reports a loss in the third quarter.   

Operating income for the nine months ended September 30, 2011, was $153 million compared to $145 million for the same period of 2010.

Interstate Pipelines 

The interstate pipelines segment reported operating income of $60 million for the third quarter of 2011 compared to $68 million for the same period of 2010. The decline was due to lower revenues primarily related to an expired backhaul contract, restructured contracts with our natural gas distribution affiliates and lower off-system sales. These declines were partially offset by increased ancillary services and lower operation and maintenance expenses.

In addition to operating income, this segment recorded equity income of $6 million for the third quarter of 2011 from its 50 percent interest in the Southeast Supply Header (SESH) compared to $8 million for the same period of 2010.

Operating income for the nine months ended September 30, 2011, was $196 million compared to $207 million for the same period of 2010. In addition to operating income, this segment recorded equity income of $15 million for each of the nine months ended September 30, 2011, and 2010 from its 50 percent interest in SESH.  

Field Services
 
The field services segment reported operating income of $61 million for the third quarter of 2011 compared to $40 million for the same period of 2010. Operating income benefited from higher gathering volumes in the Haynesville and Fayetteville shales, revenues attributable to throughput volume commitments and lower operation and maintenance expenses.  These gains were partially offset by lower prices received from sales of retained gas and higher depreciation and amortization expenses primarily related to facility expansions.

In addition to operating income, this business had equity income of $2 million for the third quarter of 2011 from its 50 percent interest in a gathering and processing joint venture (Waskom) compared to $3 million for the same period of 2010. 

Operating income for the nine months ended September 30, 2011, was $136 million compared to $94 million for the same period of 2010. Equity income from Waskom was $7 million for the nine months ended September 30, 2011, compared to $8 million for the same period of 2010.

Competitive Natural Gas Sales and Services

The competitive natural gas sales and services segment reported an operating loss of $10 million for the third quarter of 2011 compared to operating income of $7 million for the same period of 2010.  The third quarter of 2011 included gains of $6 million resulting from mark-to-market accounting for derivatives associated with certain forward natural gas purchases and sales used to lock in economic margins compared to gains of $19 million for the same period of 2010. The third quarter of 2011 also included a $7 million write-down of natural gas inventory to the lower of average cost or market compared to a $6 million write-down in the same period of 2010. Basis spreads on pipeline transportation opportunities remain depressed and continue to negatively impact this segment’s results.

Operating income for the nine months ended September 30, 2011, was $3 million compared to $16 million for the same period of 2010. Operating income for the nine months ended September 30, 2011, included gains of $8 million resulting from mark-to-market accounting compared to gains of $14 million for the same period of 2010. The nine months ended September 30, 2011, included a $7 million write-down of natural gas inventory compared to a $6 million write-down in the same period of 2010.

Resolution of True-up Remand Proceeding

On October 13, 2011, the Texas PUC approved a final order resolving all issues raised in connection with the Texas Supreme Court’s remand of the Texas PUC’s 2004 true-up order.  Pursuant to the final order, the company is entitled to recover an additional true-up balance of $1.695 billion, less certain expenses. On October 27, 2011, the Texas PUC approved a financing order that authorizes the company to issue transition bonds to securitize the approved true-up amounts. In the third quarter of 2011, the company recorded net income of $811 million related to the true-up remand.  An additional $258 million in net income will be recognized over the life of the transition bonds.

Dividend Declaration

On October 26, 2011, CenterPoint Energy’s board of directors declared a regular quarterly cash dividend of $0.1975 per share of common stock payable on December 9, 2011, to shareholders of record as of the close of business on November 16, 2011. 

Outlook for 2011

Excluding the effects of the resolution of the true-up proceeding, CenterPoint Energy expects its 2011 earnings to be at the high end of its guidance range of $1.04 to $1.14 per diluted share. This guidance takes into consideration performance to date and various economic and operational assumptions related to the business segments in which the company operates. The company has made certain assumptions regarding financing activities and the impact to earnings of various regulatory proceedings. In providing this guidance, the company has not included the impact of any changes in accounting standards, any impact from significant acquisitions or divestitures, any impact to income from the change in value of Time Warner stocks and the related ZENS securities, or the timing effects of mark-to-market and inventory accounting in the company’s competitive natural gas sales and services business. For the impact of these factors on the company’s earnings for the three and nine months ended September 30, 2011, see the attached reconciliation.

Filing of Form 10-Q for CenterPoint Energy, Inc.

Today, CenterPoint Energy, Inc. filed with the Securities and Exchange Commission (SEC) its Quarterly Report on Form 10-Q for the period ended September 30, 2011. A copy of that report is available on the company’s website, under the Investors section. Other filings the company makes with the SEC and other documents relating to its corporate governance can also be found on that site.

Webcast of Earnings Conference Call

CenterPoint Energy’s management will host an earnings conference call on Wednesday, November 2, 2011, at 10:30 a.m. Central time or 11:30 a.m. Eastern time. Interested parties may listen to a live audio broadcast of the conference call on the company’s website, under the Investors section. A replay of the call can be accessed approximately two hours after the completion of the call and will be archived on the website for at least one year.

CenterPoint Energy, Inc., headquartered in Houston, Texas, is a domestic energy delivery company that includes electric transmission & distribution, natural gas distribution, competitive natural gas sales and services, interstate pipelines, and field services operations. The company serves more than five million metered customers primarily in Arkansas, Louisiana, Minnesota, Mississippi, Oklahoma and Texas. Assets total nearly $21 billion. With over 8,800 employees, CenterPoint Energy and its predecessor companies have been in business for more than 135 years. For more information, visit the company’s website at CenterPointEnergy.com.

This news release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual events and results may differ materially from those expressed or implied by these forward-looking statements.  The statements in this news release regarding the company’s earnings outlook for 2011 and future financial performance and results of operations, the anticipated issuance of transition bonds to recover the amount authorized in the true-up remand proceeding, and any other statements that are not historical facts are forward-looking statements. Each forward-looking statement contained in this news release speaks only as of the date of this release. Factors that could affect actual results include (1) state and federal legislative and regulatory actions or developments affecting various aspects of CenterPoint Energy’s businesses, including, among others, energy deregulation or re-regulation, pipeline safety, health care reform, financial reform and tax legislation; (2) state and federal legislative and regulatory actions or developments relating to the environment, including those related to global climate change; (3) timely and appropriate rate actions and increases, allowing recovery of costs and a reasonable return on investment; (4) factors that may impact the timing and completion of the contemplated transition bond offering, including actions by the Texas PUC, any appeals of the financing order issued by the Texas PUC and future market conditions; (5) the timing and outcome of any audits, disputes or other proceedings related to taxes; (6) problems with construction, implementation of necessary technology or other issues with respect to major capital projects that result in delays or in cost overruns that cannot be recouped in rates; (7) industrial, commercial and residential growth in CenterPoint Energy’s service territories and changes in market demand, including the effects of energy efficiency measures, and demographic patterns; (8) the timing and extent of changes in commodity prices, particularly natural gas and natural gas liquids, and the effects of geographic and seasonal commodity price differentials, including the effects on re-contracting available capacity on CenterPoint Energy’s interstate pipelines; (9) the timing and extent of changes in the supply of natural gas, including supplies available for gathering by CenterPoint Energy’s field services business and transporting by its interstate pipelines; (10) weather variations and other natural phenomena; (11) the direct or indirect effects on CenterPoint Energy’s facilities, operations and financial condition resulting from terrorism, cyber attacks, data security breaches or other attempts to disrupt its businesses or the businesses of third parties, or other catastrophic events; (12) the impact of unplanned facility outages; (13) timely and appropriate regulatory actions allowing securitization or other recovery of costs associated with any future hurricanes or natural disasters; (14) changes in interest rates or rates of inflation; (15) commercial bank and financial market conditions, CenterPoint Energy’s access to capital, the cost of such capital, and the results of our financing and refinancing efforts, including availability of funds in the debt capital markets; (16) actions by rating agencies; (17) effectiveness of CenterPoint Energy’s risk management activities; (18) inability of various counterparties to meet their obligations; (19) non-payment for services due to financial distress of CenterPoint Energy’s customers; (20) the ability of GenOn Energy, Inc. (formerly known as RRI Energy, Inc.) and its subsidiaries to satisfy their obligations to CenterPoint Energy and its subsidiaries; (21) the ability of retail electric providers, and particularly the two largest customers of the TDU, to satisfy their obligations to CenterPoint Energy and its subsidiaries; (22) the outcome of litigation brought by or against CenterPoint Energy; (23) CenterPoint Energy’s ability to control costs; (24) the investment performance of pension and postretirement benefit plans; (25) potential business strategies, including restructurings, acquisitions or dispositions of assets or businesses; (26) acquisition and merger activities; and (27) other factors discussed in CenterPoint Energy’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010, and Forms 10-Q for the quarters ended March 31, 2011, June 30, 2011, and September 30, 2011, and other reports CenterPoint Energy or its subsidiaries may file from time to time with the Securities and Exchange Commission.

CenterPoint Energy, Inc. and Subsidiaries
Reconciliation of reported Net Income and diluted EPS to the basis used in providing 2011 annual earnings guidance
Quarter Ended
 
Nine Months Ended
September 30, 2011
 
September 30, 2011
Net Income
EPS
 
Net Income
 
EPS 
(in millions)(in millions)
As reported $ 973 $ 2.27 $ 1,240 $ 2.89 
True-up related items:
Debt component return, net of taxes(224)(0.52) (224) (0.52)
Extraordinary item, net of taxes(587)(1.37) (587) (1.37)
Excluding true-up related items
$ 162
$ 0.38
$ 429
$ 1.00
       
Timing effects impacting CES(1):      
Mark-to-market (gains) losses - natural gas derivative contracts(4)(0.01) (5) (0.01)
Natural gas inventory write-downs40.01 4 0.01
ZENS-related mark-to-market (gains) losses:      
Marketable securities(2) 520.12 19 0.05
Indexed debt securities(57)(0.13) (42) (0.10)
Per the basis used in providing 2011 annual earnings guidance$ 157$ 0.37 $ 405 $ 0.95
(1) Competitive natural gas sales and services
(2) Time Warner Inc., Time Warner Cable Inc. and AOL Inc.
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New team of CenterPoint Energy crews arrive in Puerto Rico to support ongoing power restoration efforts

Houston – Feb. 12, 2018 – A new team of 70 CenterPoint Energy employees arrived in Puerto Rico over the weekend, joining the more than 1,500 crews from other U.S. utilities that are helping Puerto Rico Electric Power Authority (PREPA) restore power following the devastation of Hurricane Maria. This second team of skilled linemen replaced the initial 70 employees who have been working on the island since mid-January.

"We continue to make progress having restored power to nearly 1,500 residents in the Arecibo area since we arrived on the island," said Ed Scott, director of operations for CenterPoint Energy. "Because of the logistical and geographical challenges, this mission has been unique. Crews will often work all day to restore service to only a handful of residents. But our employees are highly skilled and dedicated to the task at hand, having replaced 152 poles and more than 1,400 spans of wire to date."

Extensive portions of Puerto Rico's electric grid are located in rugged, mountainous terrain that has little or no road access due to Hurricane Maria's impact. Some customers may not be able to receive power to their homes or businesses because of their location and damage from the storm.

"CenterPoint Energy crews continue to work hand-in-hand with other utilities to overcome these challenges. It's immensely gratifying to turn the lights on for the residents of Puerto Rico," added Scott.

In late October, the Edison Electric Institute (EEI) and the American Public Power Association (APPA) received a request from PREPA to support power restoration efforts on the island. In early November, PREPA expanded its aid request to include the National Rural Electric Cooperative Association (NRECA).

As a result, a team of electric company storm response experts has been on the ground coordinating closely with local officials, the Federal Emergency Management Agency, and the U.S. Army Corps of Engineers. The team has been focused on assessing damages and formalizing a structure for supporting logistics, equipment needs and supply chain issues, as well as ensuring ongoing restoration efforts are completed safely, effectively and efficiently.

CenterPoint Energy is part of electric utility mutual assistance programs that provide access to thousands of linemen and tree trimmers from around the country to lend a hand during widespread power outage emergencies. Coming to the aid of other utilities is nothing new to CenterPoint Energy employees. Over the years, crews have responded and restored power to hundreds of thousands of customers throughout the country who have been left in the dark following hurricanes, ice storms, tornadoes and severe thunderstorms.

For updates, follow CenterPoint Energy on Twitter: @CNPAlerts and Facebook: Facebook.com/CenterPointEnergy.

 

CenterPoint Energy earns "Emergency Recovery Award" for restoration efforts following severe storms in Sealy, Texas

Houston – Jan. 29, 2018 – CenterPoint Energy has been presented with the Edison Electric Institute (EEI)'s "Emergency Assistance Award" for its outstanding power restoration efforts after storms hit Sealy, Texas in May 2017.

"At CenterPoint Energy, we take pride in the work we do and our commitment to serving our communities. Whenever a storm approaches, we have a plan in place and proactively respond to the emergency. Then, we work hard to restore power as quickly and safely as possible," said Ed Scott, director of operations for CenterPoint Energy.

On May 23, severe storms with winds between 80 and 100 mph hit the community of Sealy. The torrential rain, massive hail and tornado-force winds resulted in nearly 70,000 customer outages. While the storm was isolated to only 15.5 square-miles of CenterPoint Energy's 5,000 square-mile service area, the damage to the electrical infrastructure was extreme.

Working safely and efficiently, CenterPoint Energy crews replaced nine wooden transmission poles, 246 distribution poles and 356 spans of wire (See restoration photos). Crews restored service to 100 percent of customers within two days, dedicating more than 16,000 man-hours to the effort.

"The tireless work by CenterPoint Energy's crews during the Sealy Microburst exemplifies our industry's commitment to customer service," said EEI President Tom Kuhn. "CenterPoint Energy's crews worked diligently to safely restore service to customers, and are very deserving of this award."

The award is presented to EEI member companies to recognize their extraordinary efforts to restore power to customers after service disruptions caused by severe weather conditions or other natural events. The winners were chosen by a panel of judges following an international nomination process, and the awards were presented during EEI's Winter Board and Chief Executives Meeting in Scottsdale.

Snow accumulation can block vents and freeze natural gas meters

Minneapolis – Jan. 24, 2018 – As Minnesotans experience the first snow and ice accumulation of the season, CenterPoint Energy would like to remind the public of important safety tips that can also help prevent service interruptions and ensure proper meter operation.  Snow and ice accumulation on or near the natural gas meter set and/or on the roof above a meter can lead to potentially dangerous conditions, including natural gas buildup in homes and businesses and service disruptions. 

Knowing how your gas meter operates and recognizing the following signs of danger can help prevent potential problems:

  • Accumulations of snow and ice on the meter set can also cause the regulator to malfunction. 
  • Regulators are designed to maintain a constant pressure, ensure safe delivery of natural gas and vent natural gas safely to the atmosphere.
  • Snow can block the regulator vent and freeze the regulator causing improper operation.
  • Thawing snow or ice dams from rooftops above the meter should be kept clear to prevent ice from encasing the meter or chunks of ice falling on the meter causing potential damage.
  • Additionally, customers should maintain a clear path of snow or debris to provide easy access to the natural gas meter.

CenterPoint Energy would also like to remind the public of important winter natural gas safety tips:

  • Do not deposit snow piles on or near the meter.
  • Do not use a snow blower or shovel near the meter or attempt to remove ice from the meter yourself. You can use a broom to keep the snow cleared around and on top of the meter and piping.
  • Call 1-800-296-9815 if there is ice on the meter or one or more of the following conditions exist:
      • Meter is located below a downspout.
      • Overhang or eave does not fully extend over the meter.
      • Meter is located below a roof valley without a gutter.
      • Meter is located below an exterior water spout

If you suspect a natural gas leak, leave the area immediately on foot and tell others to do the same. 

    • Do not start or drive your car into or near a gas leak or vapor cloud.
    • Do not use electric switches, telephones (including cell phones), or anything that could cause a spark.
    • Once safely away from the area, call the CenterPoint Energy emergency gas leak hot line at 1-800-296-9815 and 911 to report the location and description of the leak and CenterPoint Energy will dispatch a trained service technician immediately. 

For more natural gas safety tips, visit the company's website at CenterPointEnergy.com/BeSafe.

CenterPoint Energy, Inc., headquartered in Houston, Texas, is a domestic energy delivery company that includes electric transmission & distribution, natural gas distribution and energy services operations. The company serves more than five million metered customers primarily in Arkansas, Louisiana, Minnesota, Mississippi, Oklahoma, and Texas. The company also owns 54.1 percent of the common and subordinated units representing limited partner interests in Enable Midstream Partners, a publicly traded master limited partnership it jointly controls with OGE Energy Corp., which owns, operates and develops natural gas and crude oil infrastructure assets. With more than 7,700 employees, CenterPoint Energy and its predecessor companies have been in business for more than 150 years. The utility also operates a non-regulated business in Minnesota called Home Service Plus®. For more information, visit the website at CenterPointEnergy.com.

CenterPoint Energy crews depart for Puerto Rico to support ongoing power restoration efforts

Houston – Jan. 19, 2018 – This morning, CenterPoint Energy crews departed for Puerto Rico as part of a nationwide, coordinated power restoration plan involving several investor-owned electric companies. CenterPoint Energy's 70 employees will join the more than 1,500 additional restoration crew members from other utilities traveling to the island to support the Puerto Rico Electric Power Authority (PREPA) in the next phase of its restoration process. CenterPoint Energy expects its employees and resources to be in Puerto Rico for approximately six weeks.

"We are fully committed to restoring power to Puerto Rico as quickly and as safely as possible," said Ed Scott, director of operations for CenterPoint Energy. "This restoration mission will be more difficult than any other we have worked on, but our crews are prepared to work long hours safely, facing the logistical and geographical challenges accompanying the historic damage to Puerto Rico's infrastructure."

CenterPoint Energy's equipment departed from the Port of Lake Charles in Louisiana on Jan. 3. The barge carrying the trucks and equipment arrived yesterday in the Port of Ponce, Puerto Rico. Once the crews land, they will be transported to the port to collect the equipment and drive the trucks to the Arecibo region, where they will be stationed. This weekend, crews will start working 16-hour shifts after a safety and onboarding process. The company is making plans to send at least one additional shift.

In late October, the Edison Electric Institute (EEI) and the American Public Power Association (APPA) received a request from PREPA to support power restoration efforts on the island. In early November, PREPA expanded its aid request to include the National Rural Electric Cooperative Association (NRECA).

As a result, a team of electric company storm response experts has been on the ground coordinating closely with local officials, the Federal Emergency Management Agency, and the U.S. Army Corps of Engineers. The team has been focused on assessing damages and formalizing a structure for supporting logistics, equipment needs and supply chain issues, as well as ensuring ongoing restoration efforts are completed safely, effectively and efficiently. Experts have identified basecamps for crews and staging sites for materials that will allow workers and materials to be located closer to restoration areas.

Extensive portions of Puerto Rico's electric grid are located in rugged, mountainous terrain that has little or no road access due to Hurricane Maria's impact. Some customers may not be able to receive power to their homes or businesses because of damage from the storm.

"CenterPoint Energy crews will be working hand-in-hand with other utilities to overcome these challenges and assist our fellow citizens in Puerto Rico," added Scott.

CenterPoint Energy is part of electric utility mutual assistance programs that provide access to thousands of linemen and tree trimmers from around the country to lend a hand during widespread power outage emergencies. Coming to the aid of other utilities is nothing new to CenterPoint Energy employees. Over the years, crews have responded and restored power to hundreds of thousands of customers throughout the country who have been left in the dark following hurricanes, ice storms, tornadoes and severe thunderstorms.

For updates, follow CenterPoint Energy on Twitter: @CNPAlerts and Facebook: Facebook.com/CenterPointEnergy.

Natural gas service restoration in Cleveland, Texas substantially complete

Houston – Jan. 19, 2018 – Following a natural gas outage affecting more than 1,400 customers in Cleveland, Texas, CenterPoint Energy has restored service to all customers who have provided the company access to perform safety checks and relight pilots.

A small number of customers still remain without service because CenterPoint Energy employees were not able to access their home or business. The relighting process requires CenterPoint Energy employees to have access to each location to light pilots and check to make sure it is safe to resume service.

"A customer needs to call us only if there is a door hanger at their home or business indicating that we've already been by to attempt to restore service," said Gary Chalk, district director for CenterPoint Energy. "Please call the number on the door tag left by our service personnel.

"We greatly appreciate our customers' cooperation and patience as our employees worked as quickly as we could to safely restore natural gas service," said Chalk.

Customers have been without gas service because of an equipment malfunction due to extremely low temperatures.