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.
some_text CenterPoint Energy

View More Tweets ›

 Recent News

 

 

MPHA, SRC, and CenterPoint Energy Announce Weatherization Assistance Pilot Program for Glendale Townhomes

​Sustainable Resources Center, Inc. (SRC), CenterPoint Energy, and the Minneapolis Public Housing Authority (MPHA) are pleased to announce a partnership to pursue weatherization and energy-efficiency improvements to Glendale Townhomes.

Glendale is a development of 184 family townhomes in the Prospect Park neighborhood of Minneapolis. It was built in 1952, making it the oldest major public housing property in Minneapolis. "These townhomes were built without many of the features and materials we would use today to best protect against our Minnesota winters," said Mary Boler, MPHA’s Managing Director of Low Income Public Housing. "The enhancements we can put in place over time, with these partners, should help us improve interior comfort and create real energy savings."

The process will start in April with selection of one of Glendale’s eight-unit townhome buildings for an initial pilot. Following a kick-off meeting with residents, SRC will conduct an energy audit of the building, identifying priorities for each unit, and begin the work. Lessons learned from the pilot will inform the approach to the remaining buildings.

"I am delighted to know that SRC, MPHA, and CenterPoint Energy will be working together to bring needed weatherization and heating resources to the Glendale Townhomes," said Minneapolis City Council Member Gordon, whose Ward 2 includes Glendale. "This energy and money-saving investment will help ensure safer, more comfortable, more energy-efficient homes for the residents of this wonderful, close-knit community for years to come."

SRC provides free home energy upgrades to hundreds of income-eligible homeowners and renters in Hennepin County each year. "Not only does the work permanently reduce energy bills, it also improves the health, safety, and comfort of residents," said SRC’s Executive Director Jed Norgaarden. "We are happy to have worked through the unique set of hurdles presented by this particular project, and look forward to getting started."

The weatherization and energy-efficiency measures will likely include wall and attic insulation, weather-stripping of doors and windows, and caulking at critical junctures. Additional enhancements could include cleaning, repair, or replacement of furnaces, water heaters, and vent fans, as well as installing smart thermostats and LED light bulbs.

"We have worked hard and faced considerable expense over the years to keep Glendale, like all of our properties, as comfortable as possible all throughout the year," said MPHA’s Director of Facilities and Development, Tim Gaetz. "In the coming months, we will be exploring how we can leverage this unique, three-way partnership to continue that commitment to the residents of Glendale."

Financial support for the project will come from CenterPoint Energy and the U.S. Department of Energy’s "Weatherization Assistance Program" (WAP), which is administered by the Minnesota Department of Commerce.

"We are pleased to be able to support this worthwhile project through our Conservation Improvement Programs," said Todd Berreman, director of energy efficiency for CenterPoint Energy. "Weatherizing these homes to modern standards will reduce energy costs and emissions and help improve the well-being of our customers."

CenterPoint Energy honored by Junior Achievement with A U.S. President's Volunteer Service Award

HOUSTON – March 14, 2017 – Junior Achievement USA® (JA) announced that it has honored CenterPoint Energy with a Bronze level 2015-2016 U.S. President's Volunteer Service Award for providing more than 5,000 volunteer hours to local Junior Achievement offices during the 2015-2016 school year. The U.S. President's Volunteer Service Award was presented to 64 organizations at an evening awards ceremony during the JA Volunteer Summit, on March 7, 2017 in New York, NY.

In 2003, President George W. Bush established the President's Council on Service and Civic Participation (the Council) to recognize the valuable contributions volunteers make in communities and encourage more people to serve. The Council created the President's Volunteer Service Award program as a way to thank and honor individuals who, by their demonstrated commitment and example, inspire others to engage in volunteer service. In 2006, Junior Achievement became an official certifying organization for this award, which recognizes corporations with a U.S. presence that provide volunteers to teach JA programs anywhere in the world.

"Junior Achievement volunteers are important mentors for young people, bringing our programs to life. JA volunteers share their experiences and skills with students while delivering our programs, teaching them how to manage their money, succeed in the workforce, or start a business that creates jobs and grows the economy. JA's volunteers are critical to our organization's success and are a vital part of our mission," said Rick Franke, president of Junior Achievement of Southeast Texas.

"Respect for the communities in which we operate is a core value upon which CenterPoint Energy has operated for many years," said Scott Prochazka, president and chief executive officer for CenterPoint Energy and JA of Southeast Texas board member. "Our company works with the communities we serve to enhance quality of life in the areas of community development, health and human services and education."

To learn more about what CenterPoint Energy is doing in your community, visit CenterPointEnergy.com/Community.

CenterPoint Energy honored by Junior Achievement with A U.S. President's Volunteer Service Award

MINNEAPOLIS – March 14, 2017 – Junior Achievement USA® (JA) announced that it has honored CenterPoint Energy with a Bronze level 2015-2016 U.S. President's Volunteer Service Award for providing more than 5,000 volunteer hours to local Junior Achievement offices during the 2015-2016 school year. The U.S. President's Volunteer Service Award was presented to 64 organizations at an evening awards ceremony during the JA Volunteer Summit, on March 7, 2017 in New York, NY.

In 2003, President George W. Bush established the President's Council on Service and Civic Participation (the Council) to recognize the valuable contributions volunteers make in communities and encourage more people to serve. The Council created the President's Volunteer Service Award program as a way to thank and honor individuals who, by their demonstrated commitment and example, inspire others to engage in volunteer service. In 2006, Junior Achievement became an official certifying organization for this award, which recognizes corporations with a U.S. presence that provide volunteers to teach JA programs anywhere in the world.

 "Junior Achievement volunteers are important mentors for young people, bringing our programs to life. JA volunteers share their experiences and skills with students while delivering our programs, teaching them how to manage their money, succeed in the workforce, or start a business that creates jobs and grows the economy. JA's volunteers are critical to our organization's success and are a vital part of our mission," said Gina Blayney, president of Junior Achievement of the Upper Midwest.

"Respect for the communities in which we operate is a core value upon which CenterPoint Energy has operated for many years," said Scott Prochazka, president and chief executive officer for CenterPoint Energy and JA of Southeast Texas board member. "Our company works with the communities we serve to enhance quality of life in the areas of community development, health and human services and education."

To learn more about what CenterPoint Energy is doing in your community, visit CenterPointEnergy.com/Community.

CenterPoint Energy Employees Present Workshop to Future Leaders

​CenterPoint Energy employees, in conjunction with the Beaumont Chamber Foundation, conducted a leadership workshop at Vidor High School on Wednesday, March 8, 2017. 

Nearly 40 high school students were chosen by their counselors and club sponsors to attend this workshop in an effort to grow their leadership skills.  The workshop combined activities, group projects, and personality quizzes in order to acquire necessary skills to lead their organizations.  The leadership workshop was the first in a new initiative to train local youth to become effective leaders.

Matt McCallon, Senior Marketing Consultant, and Tara Vincent, Ops Support Rep were two of the three presenters to the group of high school students attending the workshop.  They were honored to represent CenterPoint Energy and impart skills and knowledge regarding effective communication, group collaboration, and a charge to share newly learned skills with their peers.  McCallon and Vincent work out of CenterPoint's Southeast TX District Office in Beaumont, Texas.

 

 

CenterPoint Energy recognized by the Greater Beaumont Chamber of Commerce with the Century Plus Award

HOUSTON – March 13, 2017 – CenterPoint Energy received The Century Plus Award presented by the Greater Beaumont Chamber of Commerce. This award is given to businesses that have been members of the chamber for over one hundred years. The awards were presented at the Member Recognition Luncheon 2017 on February 23. CenterPoint Energy district director Gary Chalk attended the luncheon and received the award on behalf of the company.