CenterPoint Energy reaches settlement agreement with parties to lower bills for customers in its 2024 Houston Electric Rate Case

Rhea-AI Summary

CenterPoint Energy has reached a settlement agreement in its 2024 Houston Electric Rate Case that will result in approximately $50 million less annual revenue through roughly 2029. The settlement, pending PUCT approval, will reduce customer bills by about $1 monthly, representing a 2% decrease for residential customers using 1,000 kWh per month.

The company has invested $8 billion in grid improvements since 2019, including 2,200 miles of new distribution lines, 100+ miles of transmission lines, and eight new substations. The settlement includes CenterPoint's proposal to relocate 15 large emergency generation units to San Antonio for two years starting Spring 2025, helping address ERCOT's regional energy shortfall without generating profit for CenterPoint.

Notable achievements include installing 437 Intelligent Grid Switching Devices, resulting in over 80 million minutes of avoided customer outages in 2023. CenterPoint's rates have remained relatively flat over the last decade, staying below annual inflation of 2.8%, and were the lowest among Texas peer utilities in 2024.

Positive

• Settlement reduces annual revenue by $50 million, lowering customer bills by ~2%
• $8 billion investment in grid infrastructure since 2019
• Lowest utility rates among Texas peers in 2024
• 80 million minutes of customer outages avoided in 2023

Negative

• Revenue reduction of $50 million annually through 2029

Insights

Utility Regulatory Expert

The settlement agreement in CenterPoint Energy's 2024 Houston Electric Rate Case presents a carefully orchestrated balance between customer benefits and operational sustainability. The $50 million annual revenue reduction through 2029 represents a modest 2% decrease in residential bills, while preserving the company's ability to maintain its $8 billion infrastructure investment program.

Several key aspects warrant investor attention:

• Rate Structure Stability: The settlement maintains CenterPoint's position as the lowest-cost utility provider in Texas, with rates remaining relatively flat over the past decade despite 2.8% average annual inflation. This pricing advantage provides a competitive moat and regulatory goodwill.
• Infrastructure Investment Returns: The settlement acknowledges substantial grid investments, including 2,200 miles of distribution lines and multiple substations, suggesting continued regulatory support for capital recovery.
• ERCOT Strategy: The proposal to relocate emergency generation units to San Antonio represents a shrewd regulatory strategy. While foregoing direct profits, this move builds political capital and potentially positions CenterPoint favorably for future regulatory proceedings.
• Financial Impact Management: The combination of rate case reductions and storm recovery cost arrangements effectively neutralizes the historical temporary generation costs, demonstrating sophisticated financial engineering that minimizes impact on long-term earnings.

The settlement's timing and structure indicate a proactive regulatory approach, potentially reducing regulatory risk and supporting stable returns through the next rate case cycle. The company's demonstrated ability to maintain service quality while managing costs efficiently suggests continued strength in its regulated utility operations.

Settlement expected to result in approximately $50 million less revenue annually and a reduction in electric customer bills by about $1 a month for most customers while also continuing to deliver support for significant local economic growth and upgrades across Greater Houston area

Combination of rate case revenue reduction and other financial commitments, including some 2024 foregone storm recovery costs, would roughly equal the same amount that has been billed to CenterPoint customers for the temporary generation costs since 2021

Company would make no revenue or profit off of the temporary emergency generator proposal to help ERCOT and State of Texas which would have otherwise been paid by all customers across the state including CenterPoint customers

HOUSTON, Jan. 29, 2025 /PRNewswire/ -- CenterPoint Energy (CenterPoint) announced today that it has reached a settlement agreement with parties to its 2024 rate case for its CenterPoint Energy Houston Electric business (Houston Electric), including the City of Houston and other regional municipalities. Subject to Public Utility Commission of Texas (PUCT) review and approval, the settlement is expected to result in approximately $50 million less annual revenue to CenterPoint through roughly 2029, and an average decrease of approximately $1 a month for most customers or approximately 2 percent of the monthly bill of residential customers that use 1,000 kWh per month.

A rate case for Houston Electric occurs approximately once every four years and is part of an open and transparent regulatory process in which rates are set by the PUCT.

"All of us at CenterPoint are committed to continuing to work to meet the needs of our customers and providing the reliable, safe, and affordable service that they expect and deserve. Our settle agreement with these parties would reduce the amount of revenue that CenterPoint receives, and customer bills would decrease, while also addressing the significant investments we have made to strengthen our system for the benefit of our customers. Following customer feedback and constructive discussions with intervening parties over the last several months, this plan keeps our customers at the forefront and supports CenterPoint's ultimate goal of building the most resilient coastal grid in the country," said Jason Ryan, Executive Vice President of Regulatory Services and Government Affairs.

CenterPoint requested to temporarily withdraw its rate case in August to focus on the company's Greater Houston Resiliency Initiative in the aftermath of Hurricane Beryl. The company resumed talks in the fall and this settlement agreement reflects discussions with intervening parties. It also includes both an expected rate reduction for customers and a proposal for CenterPoint to reduce its overall revenue by approximately $50 million until the next rate case. Residential customer bills will be lower by approximately $0.82 a month. Small business customer bills will be lower by approximately $1.28 a month.

Over the last decade, CenterPoint's rates have remained relatively flat on an average annual basis, well below annual inflation, which averaged around 2.8 percent during that timeframe. The portion of customers' electric bills that covers CenterPoint's system was just under $50 a decade ago, and it remains approximately $50 today. In 2024, CenterPoint's rates were the lowest among its peer utilities in Texas.

Investing in the Greater Houston Area's Electric Grid
CenterPoint's 2024 rate case is intended to support the capital investments that the company has made to expand and improve the Greater Houston area's electric system. To help meet the region's growing electric demand, CenterPoint has invested approximately $8 billion in its grid since the most recent rate case in 2019. Among these investments were: 

• Installing nearly 2,200 miles of new distribution lines and more than 100 miles of new transmission lines to meet the needs of a strong economy;
• Constructing six new distribution substations and two new transmission substations to support regional growth and increased load needs;
• Interconnections for 25 new generation resources for the grid;
• Elevating 11 substations to aid in flood mitigation and improve the resiliency of CenterPoint Energy's system; and
• Installing 437 Intelligent Grid Switching Devices to help prevent and reduce sustained outages, resulting in more than 80 million minutes of customer outages avoided in 2023.

These investments preceded the actions that CenterPoint has taken to strengthen the grid, improve communications and expand local and emergency partnerships as part of the Greater Houston Resiliency Initiative launched in August 2024. For more information about CenterPoint Energy's electric rates and investments in the Greater Houston area grid, please visit CenterPointEnergy.com/FactsMatter.

CenterPoint's proposal to help ERCOT would also help reduce customer bills
In December 2024, CenterPoint Energy proposed a unique solution to help mitigate the Electric Reliability Council of Texas's (ERCOT) regional energy shortfall in Central Texas which is projected to begin in the summer 2025 while also lowering Greater Houston-area electric customer bills. CenterPoint's proposal would send all 15 large emergency generation units to the San Antonio region for two years starting in Spring 2025. During that time, the company would make no revenue or profit off the proposal to help ERCOT and the State. Greater Houston Area electric customer bills would be reduced around that same time. This proposal is subject to ERCOT board approval.

To be clear, CenterPoint would receive no revenue or profit from ERCOT for the time period after the units are in San Antonio being dispatched by ERCOT. CenterPoint would also not charge Houston-area customers for costs associated with these units after the time period when they are in San Antonio being dispatched by ERCOT. 

The combination of rate case revenue reduction and other financial commitments, including some 2024 foregone storm recovery costs, would roughly equal the same amount that has been billed to CenterPoint customers for the temporary generation costs since 2021.

The company would make no revenue or profit off of the temporary emergency generator proposal to help ERCOT and State of Texas which would have otherwise been paid by all customers across the state including CenterPoint customers.

CenterPoint's Role in the Texas Electricity Market
CenterPoint is an electric transmission and distribution company in the Texas market. The Company does not own any power plants in the state; does not generate any electricity in the state; and does not purchase electricity on behalf of customers in Texas. It also does not have any electric customers in Texas outside the 12-county Greater Houston area.

About CenterPoint Energy, Inc. 
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 Indiana, Louisiana, Minnesota, Mississippi, Ohio and Texas. With approximately 9,000 employees, CenterPoint Energy and its predecessor companies have been in business for more than 150 years. For more information, visit CenterPointEnergy.com.

Forward-looking Statements
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," "would" or other similar words are intended to identify forward-looking statements. These forward-looking statements, which include statements regarding expected annual revenue decreases and future bill impacts, 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 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 pandemics, including the COVID-19 pandemic; (2) financial market conditions; (3) general economic conditions; (4) the timing and impact of future regulatory and legislative decisions; and (5) other factors, risks and uncertainties discussed in CenterPoint Energy's Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and CenterPoint's Quarterly Reports on Form 10-Q for the quarters ended March 31, 2024, June 30, 2024 and September 30, 2024 and other reports CenterPoint Energy or its subsidiaries may file from time to time with the Securities and Exchange Commission.

For more information, contact
Communications
Media.Relations@CenterPointEnergy.com

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SOURCE CenterPoint Energy

FAQ

How much will CenterPoint Energy's (CNP) 2024 rate settlement reduce customer bills?

The settlement will reduce residential customer bills by approximately $0.82 per month and small business bills by $1.28 per month, representing about a 2% decrease for residential customers using 1,000 kWh monthly.

What infrastructure investments has CenterPoint Energy (CNP) made since 2019?

CenterPoint has invested $8 billion since 2019, including 2,200 miles of new distribution lines, 100+ miles of transmission lines, six new distribution substations, and two new transmission substations.

How long will CenterPoint Energy's (CNP) new rate settlement remain in effect?

The settlement is expected to remain in effect through roughly 2029, with rate cases typically occurring once every four years.

What is CenterPoint Energy's (CNP) plan for emergency generation units in 2025?

CenterPoint plans to send 15 large emergency generation units to the San Antonio region for two years starting Spring 2025, helping address ERCOT's energy shortfall without generating profit for the company.

How has CenterPoint Energy's (CNP) rate performance compared to inflation over the past decade?

CenterPoint's rates have remained relatively flat over the last decade, staying well below the annual inflation rate of 2.8%, with the system portion of customer bills remaining at approximately $50.