Houston – July 30, 2021 – To ease the financial impact on its Texas natural gas customers from record natural gas prices during Winter Storm Uri, CenterPoint Energy today filed an application with the Railroad Commission of Texas (Commission) to securitize these extraordinary natural gas costs. If the Commission approves the filing, the costs would be spread out over a number of years instead of just one year. This recovery option is designed for the company to recover its prudently incurred natural gas costs while protecting customers against unexpected increases on their monthly bills.
As a result of HB 1520 passing in the 87th Texas legislative session, natural gas utilities may request approval of the Commission for the Texas Public Finance Authority to issue Customer Rate Relief (CRR) bonds to recover natural gas costs from Winter Storm Uri. To qualify for approval, the utility must establish that the natural gas costs were prudently incurred and that there are benefits to its customers from securitization financing versus traditional recovery through the monthly Purchased Gas Adjustment. If securitization financing is approved, all natural gas customer bills would begin to reflect the recovery of Winter Storm Uri costs upon the issuance of CRR bonds, which are expected to be issued in 2022.
According to a preliminary estimate, the natural gas price spike resulted in about $1.14 billion in unexpected costs for CenterPoint Energy's Texas natural gas customers during Winter Storm Uri. Without securitization financing, these costs would be passed through to customers through the monthly Purchased Gas Adjustment. The estimated monthly impact to natural gas costs for the average residential customer if Winter Storm Uri's extraordinary costs were recovered through the monthly Purchased Gas Adjustment is estimated to be approximately $15 to $40 per month for 12 months, depending on customer usage. Instead, the use of securitization financing is expected to provide the most cost effective and affordable method of recovering these costs and would provide customers with rate relief. If the securitization request is granted, the estimated monthly customer rate relief charge to recover Winter Storm Uri's costs is expected to be in the range of $2.50 to $5.00 per month depending on usage.
The company serves more than 1.8 million residential and business natural gas customers in Texas that would benefit from the issuance of the CRR bonds.
"We understand the severe impact that the historic weather emergency had on all Texans," said Tal Centers, CenterPoint Energy's Vice President, Texas Gas. "The extraordinary natural gas price increases during Winter Storm Uri's widespread extreme cold resulted in significant natural gas cost increases for CenterPoint Energy and our customers."
Centers added, "This proposal is designed to recover natural gas costs in a way that protects our customers against dramatic increases on their monthly bills that would otherwise occur."
CenterPoint Energy follows a natural gas supply plan that is shared with regulators annually. In mid-February, large parts of the country experienced an extended period of extremely cold temperatures during Winter Storm Uri. In preparation for this weather event, in accordance with its plan, the company took proactive steps to secure reliable natural gas supply ahead of and during the event. However, demand for natural gas and significant supply issues in certain areas contributed to sudden, unprecedented price spikes.
Despite the extreme weather and market conditions, the company maintained reliable natural gas service to its human needs customers. To ensure sufficient supply to meet customer needs, however, the utility had to purchase additional natural gas at very high prices in the daily spot markets. As a regulated utility, CenterPoint Energy is required to purchase and deliver a reliable supply of natural gas to its customers. The price that the utility pays for natural gas is the same price that it charges to customers. There is no mark-up on the cost of natural gas.
In addition to providing for securitization financing of prudently incurred natural gas costs from Winter Storm Uri, HB 1520 requires the Commission to study measures that would mitigate the impact on customer bills from future catastrophic weather events. "We look forward to working with the Commission on this study to make sure our future natural gas supply plans continue to yield reasonable rates for our customers," Centers said.
As always, customers who have difficulty paying their CenterPoint Energy bill can request a payment plan or extension by calling 713-659-2111 or 800-752-8036 or visiting CenterPointEnergy.com/PaymentAssistance.
CenterPoint Energy is also continuing to work with regulators in other jurisdictions regarding customer rate relief.
About CenterPoint Energy
As the only investor-owned electric and gas utility based in Texas, CenterPoint Energy, Inc. (NYSE: CNP) is an energy delivery company with electric transmission and distribution, power generation and natural gas distribution operations that serve more than 7 million metered customers in Arkansas, Indiana, Louisiana, Minnesota, Mississippi, Ohio, Oklahoma and Texas. As of March 31, 2021, the company owned approximately $36 billion in assets and also owned 53.7 percent of the common units representing limited partner interests in Enable Midstream Partners, LP, a publicly traded master limited partnership that owns, operates and develops strategically located natural gas and crude oil infrastructure assets. With approximately 9,500 employees, CenterPoint Energy and its predecessor companies have been in business for more than 150 years. For more information, visit CenterPointEnergy.com.
Forward Looking Statement
This news release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this news release, the words "anticipate," "believe," "continue," "could," "estimate," "expect," "forecast," "goal," "intend," "may," "objective," "plan," "potential," "predict," "projection," "should," "target," "will" or other similar words are intended to identify forward-looking statements. These forward-looking statements are based upon assumptions of management which are believed to be reasonable at the time made and are subject to significant risks and uncertainties. Actual events and results may differ materially from those expressed or implied by these forward-looking statements. Any statements in this news release regarding future events, such as the application to securitize natural gas costs, including its approval, if any, and its expected impacts, such as relating to customers' bills and the effectiveness and benefits of this cost recovery option, 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. Important factors that could cause actual results to differ materially from those indicated by the provided forward-looking information include risks and uncertainties relating to: (1) the impact of COVID-19; (2) financial market conditions; (3) general economic conditions; (4) the timing and impact of future regulatory and legislative decisions; (5) effects of competition; (6) weather variations; (7) changes in business plans; and (8) other factors, risks and uncertainties discussed in CenterPoint Energy's Annual Report on Form 10-K for the fiscal year ended December 31, 2020, CenterPoint Energy's Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 and other reports CenterPoint Energy or its subsidiaries may file from time to time with the Securities and Exchange Commission.
