|
(Mark One)
|
|
þ
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
|
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2016
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
|
FOR THE TRANSITION PERIOD FROM __________________ TO __________________
|
Texas
|
74-0694415
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
|
|
1111 Louisiana
|
|
Houston, Texas 77002
|
(713) 207-1111
|
(Address and zip code of principal executive offices)
|
(Registrant’s telephone number, including area code
)
|
Large accelerated filer
þ
|
Accelerated filer
o
|
Non-accelerated filer
o
|
Smaller reporting company
o
|
|
|
(Do not check if a smaller reporting company)
|
|
|
PART I.
|
|
FINANCIAL INFORMATION
|
|
|
|
|
|
Item 1.
|
|
||
|
|
|
|
|
|
|
|
|
|
Three and Nine Months Ended September 30, 2016 and 2015 (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three and Nine Months Ended September 30, 2016 and 2015 (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2016 and December 31, 2015 (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2016 and 2015 (unaudited)
|
|
|
|
|
|
|
|
||
|
|
|
|
Item 2.
|
|
||
|
|
|
|
Item 3.
|
|
||
|
|
|
|
Item 4.
|
|
||
|
|
|
|
PART II.
|
|
OTHER INFORMATION
|
|
|
|
|
|
Item 1.
|
|
||
|
|
|
|
Item 1A.
|
|
||
|
|
|
|
Item 5.
|
|
||
|
|
|
|
Item 6.
|
|
GLOSSARY
|
||
|
|
|
AOL
|
|
AOL Inc.
|
APSC
|
|
Arkansas Public Service Commission
|
ArcLight
|
|
ArcLight Capital Partners, LLC
|
ASU
|
|
Accounting Standards Update
|
Atmos Energy Marketing
|
|
Atmos Energy Marketing, LLC, a wholly-owned subsidiary of Atmos Energy Holdings, Inc., a wholly-owned subsidiary of Atmos Energy Corporation
|
AT&T
|
|
AT&T Inc.
|
AT&T Common
|
|
AT&T common stock
|
Bcf
|
|
Billion cubic feet
|
BDA
|
|
Billing Determinant Adjustment
|
Bond Companies
|
|
Transition and system restoration bond companies
|
Brazos Valley Connection
|
|
A portion of the Houston region transmission project between Houston Electric’s Zenith substation and the Gibbons Creek substation owned by the Texas Municipal Power Agency
|
CECL
|
|
Current expected credit losses
|
CenterPoint Energy
|
|
CenterPoint Energy, Inc., and its subsidiaries
|
CERC Corp.
|
|
CenterPoint Energy Resources Corp.
|
CERC
|
|
CERC Corp., together with its subsidiaries
|
CES
|
|
CenterPoint Energy Services, Inc.
|
Charter
|
|
Charter Communications, Inc.
|
Charter Common
|
|
Charter common stock
|
CIP
|
|
Conservation Improvement Program
|
Continuum
|
|
The retail energy services business of Continuum Retail Energy Services, LLC, including its wholly-owned subsidiary Lakeshore Energy Services, LLC and the natural gas wholesale assets of Continuum Energy Services, LLC
|
DCRF
|
|
Distribution Cost Recovery Factor
|
Dodd-Frank
|
|
Dodd-Frank Wall Street Reform and Consumer Protection Act
|
EECR
|
|
Energy Efficiency Cost Recovery
|
EECRF
|
|
Energy Efficiency Cost Recovery Factor
|
Enable
|
|
Enable Midstream Partners, LP
|
FASB
|
|
Financial Accounting Standards Board
|
Fitch
|
|
Fitch, Inc.
|
Form 10-Q
|
|
Quarterly Report on Form 10-Q
|
GenOn
|
|
GenOn Energy, Inc.
|
GRIP
|
|
Gas Reliability Infrastructure Program
|
GWh
|
|
Gigawatt-hours
|
Houston Electric
|
|
CenterPoint Energy Houston Electric, LLC and its subsidiaries
|
IBEW
|
|
International Brotherhood of Electrical Workers
|
Interim Condensed Financial Statements
|
|
Condensed consolidated interim financial statements and notes
|
IRS
|
|
Internal Revenue Service
|
LIBOR
|
|
London Interbank Offered Rate
|
LPSC
|
|
Louisiana Public Service Commission
|
MGPs
|
|
Manufactured gas plants
|
Moody’s
|
|
Moody’s Investors Service, Inc.
|
MPSC
|
|
Mississippi Public Service Commission
|
MPUC
|
|
Minnesota Public Utilities Commission
|
NAV
|
|
Net asset value
|
•
|
the performance of Enable, the amount of cash distributions we receive from Enable, Enable’s ability to redeem the Series A Preferred Units in certain circumstances and the value of our interest in Enable, and factors that may have a material impact on such performance, cash distributions and value, including factors such as:
|
◦
|
competitive conditions in the midstream industry, and actions taken by Enable’s customers and competitors, including the extent and timing of the entry of additional competition in the markets served by Enable;
|
◦
|
the timing and extent of changes in the supply of natural gas and associated commodity prices, particularly prices of natural gas and NGLs, the competitive effects of the available pipeline capacity in the regions served by Enable, and the effects of geographic and seasonal commodity price differentials, including the effects of these circumstances on re-contracting available capacity on Enable’s interstate pipelines;
|
◦
|
the demand for crude oil, natural gas, NGLs and transportation and storage services;
|
◦
|
environmental and other governmental regulations, including the availability of drilling permits and the regulation of hydraulic fracturing;
|
◦
|
recording of non-cash goodwill, long-lived asset or other than temporary impairment charges by or related to Enable;
|
◦
|
changes in tax status;
|
◦
|
access to debt and equity capital; and
|
◦
|
the availability and prices of raw materials and services for current and future construction projects;
|
•
|
state and federal legislative and regulatory actions or developments affecting various aspects of our businesses (including the businesses of Enable), including, among others, energy deregulation or re-regulation, pipeline integrity and safety, health care reform, financial reform, tax legislation and actions regarding the rates charged by our regulated businesses;
|
•
|
timely and appropriate rate actions that allow recovery of costs and a reasonable return on investment;
|
•
|
industrial, commercial and residential growth in our service territories and changes in market demand, including the effects of energy efficiency measures and demographic patterns;
|
•
|
future economic conditions in regional and national markets and their effect on sales, prices and costs;
|
•
|
weather variations and other natural phenomena, including the impact of severe weather events on operations and capital;
|
•
|
our ability to mitigate weather impacts through normalization or rate mechanisms, and the effectiveness of such mechanisms;
|
•
|
the timing and extent of changes in commodity prices, particularly natural gas, and the effects of geographic and seasonal commodity price differentials
;
|
•
|
problems with regulatory approval, 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;
|
•
|
local, state and federal legislative and regulatory actions or developments relating to the environment, including those related to global climate change;
|
•
|
the impact of unplanned facility outages;
|
•
|
any direct or indirect effects on our facilities, operations and financial condition resulting from terrorism, cyber-attacks, data security breaches or other attempts to disrupt our businesses or the businesses of third parties, or other catastrophic events such as fires, earthquakes, explosions, leaks, floods, droughts, hurricanes, pandemic health events or other occurrences;
|
•
|
our ability to invest planned capital and the timely recovery of our investment in capital;
|
•
|
our ability to control operation and maintenance costs;
|
•
|
actions by credit rating agencies;
|
•
|
the sufficiency of our insurance coverage, including availability, cost, coverage and terms;
|
•
|
the investment performance of our pension and postretirement benefit plans;
|
•
|
commercial bank and financial market conditions, our 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;
|
•
|
changes in interest rates or rates of inflation;
|
•
|
inability of various counterparties to meet their obligations to us;
|
•
|
non-payment for our services due to financial distress of our customers;
|
•
|
effectiveness of our risk management activities;
|
•
|
timely and appropriate regulatory actions allowing securitization or other recovery of costs associated with any future hurricanes or natural disasters;
|
•
|
our potential business strategies and strategic initiatives, including restructurings, joint ventures and acquisitions or dispositions of assets or businesses, which we cannot assure you will be completed or will have the anticipated benefits to us;
|
•
|
acquisition and merger activities involving us or our competitors;
|
•
|
our or Enable’s ability to recruit, effectively transition and retain management and key employees and maintain good labor relations;
|
•
|
the ability of GenOn (formerly known as RRI Energy, Inc., Reliant Energy and RRI), a wholly-owned subsidiary of NRG, and its subsidiaries to satisfy their obligations to us, including indemnity obligations, or obligations in connection with the contractual arrangements pursuant to which we are their guarantor;
|
•
|
the outcome of litigation;
|
•
|
the ability of REPs, including REP affiliates of NRG and Energy Future Holdings Corp., to satisfy their obligations to us and our subsidiaries;
|
•
|
changes in technology, particularly with respect to efficient battery storage or the emergence or growth of new, developing or alternative sources of generation;
|
•
|
the timing and outcome of any audits, disputes and other proceedings related to taxes;
|
•
|
the effective tax rates;
|
•
|
the effect of changes in and application of accounting standards and pronouncements; and
|
•
|
other factors we discuss in “Risk Factors” in Item 1A of Part I of our 2015 Form 10-K, which is incorporated herein by reference, and other reports we file from time to time with the SEC.
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
1,889
|
|
|
$
|
1,630
|
|
|
$
|
5,447
|
|
|
$
|
5,595
|
|
|
|
|
|
|
|
|
|
||||||||
Expenses:
|
|
|
|
|
|
|
|
||||||||
Natural gas
|
683
|
|
|
527
|
|
|
2,031
|
|
|
2,410
|
|
||||
Operation and maintenance
|
505
|
|
|
479
|
|
|
1,539
|
|
|
1,465
|
|
||||
Depreciation and amortization
|
324
|
|
|
268
|
|
|
873
|
|
|
724
|
|
||||
Taxes other than income taxes
|
93
|
|
|
91
|
|
|
288
|
|
|
289
|
|
||||
Total
|
1,605
|
|
|
1,365
|
|
|
4,731
|
|
|
4,888
|
|
||||
Operating Income
|
284
|
|
|
265
|
|
|
716
|
|
|
707
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Other Income (Expense):
|
|
|
|
|
|
|
|
||||||||
Gain (loss) on marketable securities
|
77
|
|
|
(134
|
)
|
|
187
|
|
|
(72
|
)
|
||||
Gain (loss) on indexed debt securities
|
(72
|
)
|
|
129
|
|
|
(258
|
)
|
|
62
|
|
||||
Interest and other finance charges
|
(83
|
)
|
|
(88
|
)
|
|
(256
|
)
|
|
(266
|
)
|
||||
Interest on securitization bonds
|
(23
|
)
|
|
(25
|
)
|
|
(70
|
)
|
|
(80
|
)
|
||||
Equity in earnings (losses) of unconsolidated affiliate, net
|
73
|
|
|
(794
|
)
|
|
164
|
|
|
(699
|
)
|
||||
Other, net
|
20
|
|
|
12
|
|
|
41
|
|
|
36
|
|
||||
Total
|
(8
|
)
|
|
(900
|
)
|
|
(192
|
)
|
|
(1,019
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Income (Loss) Before Income Taxes
|
276
|
|
|
(635
|
)
|
|
524
|
|
|
(312
|
)
|
||||
Income tax expense (benefit)
|
97
|
|
|
(244
|
)
|
|
193
|
|
|
(129
|
)
|
||||
Net Income (Loss)
|
$
|
179
|
|
|
$
|
(391
|
)
|
|
$
|
331
|
|
|
$
|
(183
|
)
|
|
|
|
|
|
|
|
|
||||||||
Basic Earnings (Loss) Per Share
|
$
|
0.42
|
|
|
$
|
(0.91
|
)
|
|
$
|
0.77
|
|
|
$
|
(0.43
|
)
|
|
|
|
|
|
|
|
|
||||||||
Diluted Earnings (Loss) Per Share
|
$
|
0.41
|
|
|
$
|
(0.91
|
)
|
|
$
|
0.76
|
|
|
$
|
(0.43
|
)
|
|
|
|
|
|
|
|
|
||||||||
Dividends Declared Per Share
|
$
|
0.2575
|
|
|
$
|
0.2475
|
|
|
$
|
0.7725
|
|
|
$
|
0.7425
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted Average Shares Outstanding, Basic
|
431
|
|
|
430
|
|
|
431
|
|
|
430
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Weighted Average Shares Outstanding, Diluted
|
433
|
|
|
430
|
|
|
433
|
|
|
430
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net income (loss)
|
$
|
179
|
|
|
$
|
(391
|
)
|
|
$
|
331
|
|
|
$
|
(183
|
)
|
Other comprehensive income:
|
|
|
|
|
|
|
|
||||||||
Adjustment related to pension and other postretirement plans (net of tax of $2, $1, $1 and $3)
|
1
|
|
|
1
|
|
|
1
|
|
|
5
|
|
||||
Net deferred gain from cash flow hedges (net of tax of $1, $-0-, $-0-, $-0-)
|
2
|
|
|
—
|
|
|
1
|
|
|
—
|
|
||||
Total
|
3
|
|
|
1
|
|
|
2
|
|
|
5
|
|
||||
Comprehensive income (loss)
|
$
|
182
|
|
|
$
|
(390
|
)
|
|
$
|
333
|
|
|
$
|
(178
|
)
|
|
September 30,
2016 |
|
December 31,
2015 |
||||
Current Assets:
|
|
|
|
||||
Cash and cash equivalents ($269 and $264 related to VIEs, respectively)
|
$
|
270
|
|
|
$
|
264
|
|
Investment in marketable securities
|
814
|
|
|
805
|
|
||
Accounts receivable ($97 and $64 related to VIEs, respectively), less bad debt reserve of $18 and $20, respectively
|
682
|
|
|
593
|
|
||
Accrued unbilled revenues
|
186
|
|
|
279
|
|
||
Natural gas inventory
|
160
|
|
|
168
|
|
||
Materials and supplies
|
191
|
|
|
179
|
|
||
Non-trading derivative assets
|
49
|
|
|
89
|
|
||
Taxes receivable
|
23
|
|
|
172
|
|
||
Prepaid expenses and other current assets ($38 and $35 related to VIEs, respectively)
|
154
|
|
|
140
|
|
||
Total current assets
|
2,529
|
|
|
2,689
|
|
||
|
|
|
|
||||
Property, Plant and Equipment:
|
|
|
|
||||
Property, plant and equipment
|
17,500
|
|
|
16,650
|
|
||
Less: accumulated depreciation and amortization
|
5,417
|
|
|
5,113
|
|
||
Property, plant and equipment, net
|
12,083
|
|
|
11,537
|
|
||
|
|
|
|
||||
Other Assets:
|
|
|
|
||||
Goodwill
|
862
|
|
|
840
|
|
||
Regulatory assets ($1,999 and $2,373 related to VIEs, respectively)
|
2,756
|
|
|
3,129
|
|
||
Notes receivable – unconsolidated affiliate
|
—
|
|
|
363
|
|
||
Non-trading derivative assets
|
24
|
|
|
36
|
|
||
Investment in unconsolidated affiliate
|
2,535
|
|
|
2,594
|
|
||
Preferred units – unconsolidated affiliate
|
363
|
|
|
—
|
|
||
Other
|
134
|
|
|
102
|
|
||
Total other assets
|
6,674
|
|
|
7,064
|
|
||
|
|
|
|
||||
Total Assets
|
$
|
21,286
|
|
|
$
|
21,290
|
|
|
September 30,
2016 |
|
December 31,
2015 |
||||
Current Liabilities:
|
|
|
|
||||
Short-term borrowings
|
$
|
43
|
|
|
$
|
40
|
|
Current portion of VIE securitization bonds long-term debt
|
410
|
|
|
391
|
|
||
Indexed debt
|
112
|
|
|
145
|
|
||
Current portion of other long-term debt
|
250
|
|
|
328
|
|
||
Indexed debt securities derivative
|
562
|
|
|
442
|
|
||
Accounts payable
|
422
|
|
|
483
|
|
||
Taxes accrued
|
134
|
|
|
158
|
|
||
Interest accrued
|
93
|
|
|
117
|
|
||
Non-trading derivative liabilities
|
19
|
|
|
11
|
|
||
Other
|
353
|
|
|
343
|
|
||
Total current liabilities
|
2,398
|
|
|
2,458
|
|
||
|
|
|
|
||||
Other Liabilities:
|
|
|
|
|
|
||
Deferred income taxes, net
|
5,206
|
|
|
5,047
|
|
||
Non-trading derivative liabilities
|
4
|
|
|
5
|
|
||
Benefit obligations
|
909
|
|
|
904
|
|
||
Regulatory liabilities
|
1,279
|
|
|
1,276
|
|
||
Other
|
282
|
|
|
273
|
|
||
Total other liabilities
|
7,680
|
|
|
7,505
|
|
||
|
|
|
|
||||
Long-term Debt:
|
|
|
|
|
|
||
VIE securitization bonds
|
1,931
|
|
|
2,276
|
|
||
Other long-term debt
|
5,805
|
|
|
5,590
|
|
||
Total long-term debt
|
7,736
|
|
|
7,866
|
|
||
|
|
|
|
||||
Commitments and Contingencies (Note 14)
|
|
|
|
|
|
||
|
|
|
|
||||
Shareholders’ Equity:
|
|
|
|
|
|
||
Common stock (430,681,855 shares and 430,262,703 shares outstanding, respectively)
|
4
|
|
|
4
|
|
||
Additional paid-in capital
|
4,190
|
|
|
4,180
|
|
||
Accumulated deficit
|
(658
|
)
|
|
(657
|
)
|
||
Accumulated other comprehensive loss
|
(64
|
)
|
|
(66
|
)
|
||
Total shareholders’ equity
|
3,472
|
|
|
3,461
|
|
||
|
|
|
|
||||
Total Liabilities and Shareholders’ Equity
|
$
|
21,286
|
|
|
$
|
21,290
|
|
|
Nine Months Ended September 30,
|
||||||
|
2016
|
|
2015
|
||||
Cash Flows from Operating Activities:
|
|
|
|
||||
Net income (loss)
|
$
|
331
|
|
|
$
|
(183
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
873
|
|
|
724
|
|
||
Amortization of deferred financing costs
|
19
|
|
|
21
|
|
||
Deferred income taxes
|
150
|
|
|
(264
|
)
|
||
Unrealized loss (gain) on marketable securities
|
(187
|
)
|
|
72
|
|
||
Loss (gain) on indexed debt securities
|
258
|
|
|
(62
|
)
|
||
Write-down of natural gas inventory
|
1
|
|
|
4
|
|
||
Equity in (earnings) losses of unconsolidated affiliate, net of distributions
|
(164
|
)
|
|
843
|
|
||
Pension contributions
|
(7
|
)
|
|
(63
|
)
|
||
Changes in other assets and liabilities, excluding acquisitions:
|
|
|
|
||||
Accounts receivable and unbilled revenues, net
|
86
|
|
|
450
|
|
||
Inventory
|
(5
|
)
|
|
33
|
|
||
Taxes receivable
|
149
|
|
|
122
|
|
||
Accounts payable
|
(90
|
)
|
|
(332
|
)
|
||
Fuel cost recovery
|
(43
|
)
|
|
71
|
|
||
Non-trading derivatives, net
|
23
|
|
|
(7
|
)
|
||
Margin deposits, net
|
65
|
|
|
20
|
|
||
Interest and taxes accrued
|
(48
|
)
|
|
(39
|
)
|
||
Net regulatory assets and liabilities
|
(26
|
)
|
|
92
|
|
||
Other current assets
|
(9
|
)
|
|
22
|
|
||
Other current liabilities
|
31
|
|
|
(36
|
)
|
||
Other assets
|
—
|
|
|
6
|
|
||
Other liabilities
|
29
|
|
|
9
|
|
||
Other, net
|
16
|
|
|
15
|
|
||
Net cash provided by operating activities
|
1,452
|
|
|
1,518
|
|
||
Cash Flows from Investing Activities:
|
|
|
|
||||
Capital expenditures
|
(1,047
|
)
|
|
(1,131
|
)
|
||
Acquisitions, net of cash acquired
|
(102
|
)
|
|
—
|
|
||
Decrease in notes receivable – unconsolidated affiliate
|
363
|
|
|
—
|
|
||
Investment in preferred units – unconsolidated affiliate
|
(363
|
)
|
|
—
|
|
||
Distributions from unconsolidated affiliate in excess of cumulative earnings
|
223
|
|
|
74
|
|
||
Decrease (increase) in restricted cash of Bond Companies
|
(2
|
)
|
|
9
|
|
||
Proceeds from sale of marketable securities
|
178
|
|
|
32
|
|
||
Other, net
|
11
|
|
|
(8
|
)
|
||
Net cash used in investing activities
|
(739
|
)
|
|
(1,024
|
)
|
||
Cash Flows from Financing Activities:
|
|
|
|
||||
Increase (decrease) in short-term borrowings, net
|
3
|
|
|
(4
|
)
|
||
Proceeds of commercial paper, net
|
63
|
|
|
302
|
|
||
Proceeds from long-term debt
|
600
|
|
|
—
|
|
||
Payments of long-term debt
|
(855
|
)
|
|
(513
|
)
|
||
Debt issuance costs
|
(9
|
)
|
|
—
|
|
||
Payment of dividends on common stock
|
(332
|
)
|
|
(319
|
)
|
||
Distribution to ZENS note holders
|
(178
|
)
|
|
(32
|
)
|
||
Other, net
|
1
|
|
|
1
|
|
||
Net cash used in financing activities
|
(707
|
)
|
|
(565
|
)
|
||
Net Increase (Decrease) in Cash and Cash Equivalents
|
6
|
|
|
(71
|
)
|
||
Cash and Cash Equivalents at Beginning of Period
|
264
|
|
|
298
|
|
||
Cash and Cash Equivalents at End of Period
|
$
|
270
|
|
|
$
|
227
|
|
Supplemental Disclosure of Cash Flow Information:
|
|
|
|
||||
Cash Payments:
|
|
|
|
||||
Interest, net of capitalized interest
|
$
|
324
|
|
|
$
|
323
|
|
Income tax (refunds), net
|
(105
|
)
|
|
12
|
|
||
Non-cash transactions:
|
|
|
|
||||
Accounts payable related to capital expenditures
|
75
|
|
|
87
|
|
•
|
Houston Electric, which engages in the electric transmission and distribution business in the Texas Gulf Coast area that includes the city of Houston; and
|
•
|
CERC Corp. (together with its subsidiaries), which owns and operates natural gas distribution systems. A wholly-owned subsidiary of CERC Corp. offers variable and fixed-price physical natural gas supplies primarily to commercial and industrial customers and electric and natural gas utilities. As of
September 30, 2016
, CERC Corp. also owned approximately
55.4%
of the limited partner interests in Enable, which owns, operates and develops natural gas and crude oil infrastructure assets.
|
|
|
Estimate Fair Value
|
|
Estimate Useful Life
|
||
|
|
(in millions)
|
|
(in years)
|
||
Customer relationships
|
|
$
|
34
|
|
|
15
|
Covenants not to compete
|
|
4
|
|
|
4
|
|
Total identifiable intangibles
|
|
$
|
38
|
|
|
|
|
Three Months Ended September 30,
|
||||||||||||||
|
2016
|
|
2015
|
||||||||||||
|
Pension
Benefits (1) |
|
Postretirement
Benefits (1) |
|
Pension
Benefits (1) |
|
Postretirement
Benefits (1) |
||||||||
|
(in millions)
|
||||||||||||||
Service cost
|
$
|
10
|
|
|
$
|
1
|
|
|
$
|
10
|
|
|
$
|
1
|
|
Interest cost
|
23
|
|
|
4
|
|
|
24
|
|
|
5
|
|
||||
Expected return on plan assets
|
(26
|
)
|
|
(2
|
)
|
|
(30
|
)
|
|
(2
|
)
|
||||
Amortization of prior service cost (credit)
|
3
|
|
|
(1
|
)
|
|
2
|
|
|
—
|
|
||||
Amortization of net loss
|
15
|
|
|
—
|
|
|
14
|
|
|
1
|
|
||||
Settlement cost
(2)
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
||||
Net periodic cost
|
$
|
25
|
|
|
$
|
2
|
|
|
$
|
21
|
|
|
$
|
5
|
|
|
|
|
|
|
|
|
|
||||||||
|
Nine Months Ended September 30,
|
||||||||||||||
|
2016
|
|
2015
|
||||||||||||
|
Pension
Benefits (1) |
|
Postretirement
Benefits (1) |
|
Pension
Benefits (1) |
|
Postretirement
Benefits (1) |
||||||||
|
(in millions)
|
||||||||||||||
Service cost
|
$
|
28
|
|
|
$
|
2
|
|
|
$
|
30
|
|
|
$
|
2
|
|
Interest cost
|
70
|
|
|
13
|
|
|
70
|
|
|
15
|
|
||||
Expected return on plan assets
|
(76
|
)
|
|
(5
|
)
|
|
(90
|
)
|
|
(5
|
)
|
||||
Amortization of prior service cost (credit)
|
7
|
|
|
(2
|
)
|
|
7
|
|
|
(1
|
)
|
||||
Amortization of net loss
|
47
|
|
|
—
|
|
|
43
|
|
|
3
|
|
||||
Settlement cost
(2)
|
—
|
|
|
—
|
|
|
10
|
|
|
—
|
|
||||
Curtailment gain
(3)
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
||||
Net periodic cost
|
$
|
76
|
|
|
$
|
5
|
|
|
$
|
70
|
|
|
$
|
14
|
|
(1)
|
Net periodic cost in these tables is before considering amounts subject to overhead allocations for capital expenditure projects or for amounts subject to deferral for regulatory purposes.
|
(2)
|
A one-time, non-cash settlement charge is required when lump sum distributions or other settlements of plan benefit obligations during a plan year exceed the service cost and interest cost components of net periodic cost for that year. Due to the amount of lump sum payment distributions from the non-qualified pension plan during the three and nine months
|
(3)
|
A curtailment gain or loss is required when the expected future services of a significant number of current employees are reduced or eliminated for the accrual of benefits. In May 2016, Houston Electric entered into a renegotiated collective bargaining agreement with the IBEW Local Union 66 that provides that for Houston Electric union employees covered under the agreement who retire on or after January 1, 2017, retiree medical and prescription drug coverage will be provided exclusively through the NECA/IBEW Family Medical Care Plan in exchange for the payment of monthly premiums as determined under the agreement. As a result, the accrued postretirement benefits related to such future Houston Electric union retirees were eliminated. Houston Electric recognized a curtailment gain of
$3 million
as an accelerated recognition of the prior service credit that would otherwise be recognized in future periods.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
Pension and Postretirement Plans
|
|
Pension and Postretirement Plans
|
||||||||||||
|
(in millions)
|
||||||||||||||
Beginning Balance
|
$
|
(65
|
)
|
|
$
|
(81
|
)
|
|
$
|
(65
|
)
|
|
$
|
(85
|
)
|
Other comprehensive income (loss) before reclassifications
(1)
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
||||
Amounts reclassified from accumulated other comprehensive loss:
|
|
|
|
|
|
|
|
||||||||
Prior service cost
(2)
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
||||
Actuarial losses
(2)
|
2
|
|
|
1
|
|
|
5
|
|
|
7
|
|
||||
Tax expense
|
(2
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
(3
|
)
|
||||
Net current period other comprehensive income
|
1
|
|
|
1
|
|
|
1
|
|
|
5
|
|
||||
Ending Balance
|
$
|
(64
|
)
|
|
$
|
(80
|
)
|
|
$
|
(64
|
)
|
|
$
|
(80
|
)
|
(1)
|
Total other comprehensive income (loss) related to the remeasurement of the postretirement plan.
|
(2)
|
These accumulated other comprehensive components are included in the computation of net periodic cost.
|
(a)
|
Non-Trading Activities
|
(b)
|
Derivative Fair Values and Income Statement Impacts
|
Fair Value of Derivative Instruments
|
||||||||||
|
|
September 30, 2016
|
||||||||
Total derivatives not designated
as hedging instruments
|
|
Balance Sheet
Location
|
|
Derivative
Assets
Fair Value
|
|
Derivative
Liabilities
Fair Value
|
||||
|
|
|
|
(in millions)
|
||||||
Natural gas derivatives
(1) (2) (3)
|
|
Current Assets: Non-trading derivative assets
|
|
$
|
51
|
|
|
$
|
2
|
|
Natural gas derivatives
(1) (2) (3)
|
|
Other Assets: Non-trading derivative assets
|
|
24
|
|
|
—
|
|
||
Natural gas derivatives
(1) (2) (3)
|
|
Current Liabilities: Non-trading derivative liabilities
|
|
19
|
|
|
41
|
|
||
Natural gas derivatives
(1) (2) (3)
|
|
Other Liabilities: Non-trading derivative liabilities
|
|
4
|
|
|
11
|
|
||
Indexed debt securities derivative
|
|
Current Liabilities
|
|
—
|
|
|
562
|
|
||
Total
|
|
$
|
98
|
|
|
$
|
616
|
|
(1)
|
The fair value shown for natural gas contracts is comprised of derivative gross volumes totaling
1,080
Bcf or a net
16
Bcf short position. Of the net short position, basis swaps constitute a net
128
Bcf long position.
|
(2)
|
Natural gas contracts are presented on a net basis in the Condensed Consolidated Balance Sheets as they are subject to master netting arrangements. This netting applies to all undisputed amounts due or past due and causes derivative assets (liabilities) to be ultimately presented net in a liability (asset) account within the Condensed Consolidated Balance Sheets. The net of total non-trading natural gas derivative assets and liabilities was a
$50 million
asset as shown on CenterPoint Energy’s Condensed Consolidated Balance Sheets (and as detailed in the table below), and was comprised of the natural gas contracts derivative assets and liabilities separately shown above, offset by collateral netting of
$6 million
.
|
(3)
|
Derivative Assets and Derivative Liabilities include no material amounts related to physical forward transactions with Enable.
|
Offsetting of Natural Gas Derivative Assets and Liabilities
|
||||||||||||
|
|
September 30, 2016
|
||||||||||
|
|
Gross Amounts
Recognized (1)
|
|
Gross Amounts Offset in the Consolidated Balance Sheets
|
|
Net Amount Presented in the Consolidated Balance Sheets (2)
|
||||||
|
|
(in millions)
|
||||||||||
Current Assets: Non-trading derivative assets
|
|
$
|
70
|
|
|
$
|
(21
|
)
|
|
$
|
49
|
|
Other Assets: Non-trading derivative assets
|
|
28
|
|
|
(4
|
)
|
|
24
|
|
|||
Current Liabilities: Non-trading derivative liabilities
|
|
(43
|
)
|
|
24
|
|
|
(19
|
)
|
|||
Other Liabilities: Non-trading derivative liabilities
|
|
(11
|
)
|
|
7
|
|
|
(4
|
)
|
|||
Total
|
|
$
|
44
|
|
|
$
|
6
|
|
|
$
|
50
|
|
(1)
|
Gross amounts recognized include some derivative assets and liabilities that are not subject to master netting arrangements.
|
(2)
|
The derivative assets and liabilities on the Condensed Consolidated Balance Sheets exclude accounts receivable or accounts payable that, should they exist, could be used as offsets to these balances in the event of a default.
|
Fair Value of Derivative Instruments
|
||||||||||
|
|
December 31, 2015
|
||||||||
Total derivatives not designated
as hedging instruments
|
|
Balance Sheet
Location
|
|
Derivative
Assets
Fair Value
|
|
Derivative
Liabilities
Fair Value
|
||||
|
|
|
|
(in millions)
|
||||||
Natural gas derivatives
(1) (2) (3)
|
|
Current Assets: Non-trading derivative assets
|
|
$
|
90
|
|
|
$
|
2
|
|
Natural gas derivatives
(1) (2) (3)
|
|
Other Assets: Non-trading derivative assets
|
|
36
|
|
|
—
|
|
||
Natural gas derivatives
(1) (2) (3)
|
|
Current Liabilities: Non-trading derivative liabilities
|
|
10
|
|
|
60
|
|
||
Natural gas derivatives
(1) (2) (3)
|
|
Other Liabilities: Non-trading derivative liabilities
|
|
4
|
|
|
25
|
|
||
Indexed debt securities derivative
|
|
Current Liabilities
|
|
—
|
|
|
442
|
|
||
Total
|
|
$
|
140
|
|
|
$
|
529
|
|
(1)
|
The fair value shown for natural gas contracts is comprised of derivative gross volumes totaling
767
Bcf or a net
112
Bcf long position. Of the net long position, basis swaps constitute
133
Bcf.
|
(2)
|
Natural gas contracts are presented on a net basis in the Condensed Consolidated Balance Sheets as they are subject to master netting arrangements. This netting applies to all undisputed amounts due or past due and causes derivative assets (liabilities) to be ultimately presented net in a liability (asset) account within the Condensed Consolidated Balance Sheets. The net of total non-trading natural gas derivative assets and liabilities was a
$109 million
asset as shown on CenterPoint Energy’s Condensed Consolidated Balance Sheets (and as detailed in the table below), and was comprised of the natural gas contracts derivative assets and liabilities separately shown above, offset by collateral netting of
$56 million
.
|
(3)
|
Derivative Assets and Derivative Liabilities include no material amounts related to physical forward transactions with Enable.
|
(1)
|
Gross amounts recognized include some derivative assets and liabilities that are not subject to master netting arrangements.
|
(2)
|
The derivative assets and liabilities on the Condensed Consolidated Balance Sheets exclude accounts receivable or accounts payable that, should they exist, could be used as offsets to these balances in the event of a default.
|
|
||||||||||
Income Statement Impact of Derivative Activity
|
||||||||||
|
|
|
|
Three Months Ended September 30,
|
||||||
Total derivatives not designated
as hedging instruments |
|
Income Statement Location
|
|
2016
|
|
2015
|
||||
|
|
|
|
(in millions)
|
||||||
Natural gas derivatives
|
|
Gains (Losses) in Revenues
|
|
$
|
31
|
|
|
$
|
39
|
|
Natural gas derivatives
|
|
Gains (Losses) in Expenses: Natural Gas
|
|
(13
|
)
|
|
(30
|
)
|
||
Indexed debt securities derivative
|
|
Gains (Losses) in Other Income (Expense)
|
|
(72
|
)
|
|
129
|
|
||
Total
|
|
$
|
(54
|
)
|
|
$
|
138
|
|
Income Statement Impact of Derivative Activity
|
||||||||||
|
|
|
|
Nine Months Ended September 30,
|
||||||
Total derivatives not designated
as hedging instruments
|
|
Income Statement Location
|
|
2016
|
|
2015
|
||||
|
|
|
|
(in millions)
|
||||||
Natural gas derivatives
|
|
Gains (Losses) in Revenues
|
|
$
|
1
|
|
|
$
|
88
|
|
Natural gas derivatives
|
|
Gains (Losses) in Expenses: Natural Gas
|
|
35
|
|
|
(72
|
)
|
||
Indexed debt securities derivative
|
|
Gains (Losses) in Other Income (Expense)
|
|
(258
|
)
|
|
62
|
|
||
Total
|
|
$
|
(222
|
)
|
|
$
|
78
|
|
(c)
|
Credit Risk Contingent Features
|
|
Quoted Prices in
Active Markets
for Identical Assets
(Level 1)
|
|
Significant Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Netting
Adjustments (1)
|
|
Balance
as of
September 30, 2016
|
||||||||||
|
|
|
|
|
|||||||||||||||
|
(in millions)
|
||||||||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Corporate equities
|
$
|
816
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
816
|
|
Investments, including money
market funds
(2)
|
55
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
55
|
|
|||||
Natural gas derivatives
(3)
|
4
|
|
|
72
|
|
|
22
|
|
|
(25
|
)
|
|
73
|
|
|||||
Total assets
|
$
|
875
|
|
|
$
|
72
|
|
|
$
|
22
|
|
|
$
|
(25
|
)
|
|
$
|
944
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Indexed debt securities derivative
|
$
|
—
|
|
|
$
|
562
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
562
|
|
Natural gas derivatives
(3)
|
5
|
|
|
44
|
|
|
5
|
|
|
(31
|
)
|
|
23
|
|
|||||
Total liabilities
|
$
|
5
|
|
|
$
|
606
|
|
|
$
|
5
|
|
|
$
|
(31
|
)
|
|
$
|
585
|
|
(1)
|
Amounts represent the impact of legally enforceable master netting arrangements that allow CenterPoint Energy to settle positive and negative positions and also include cash collateral of
$6 million
posted with the same counterparties.
|
(2)
|
Amounts are included in Prepaid Expenses and Other Current Assets in the Condensed Consolidated Balance Sheets.
|
(3)
|
Natural gas derivatives include no material amounts related to physical forward transactions with Enable.
|
|
Quoted Prices in
Active Markets
for Identical Assets
(Level 1)
|
|
Significant Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Netting
Adjustments (1)
|
|
Balance
as of
December 31, 2015
|
||||||||||
|
|
|
|
|
|||||||||||||||
|
(in millions)
|
||||||||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Corporate equities
|
$
|
807
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
807
|
|
Investments, including money
market funds
(2)
|
53
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
53
|
|
|||||
Natural gas derivatives
(3)
|
4
|
|
|
115
|
|
|
21
|
|
|
(15
|
)
|
|
125
|
|
|||||
Total assets
|
$
|
864
|
|
|
$
|
115
|
|
|
$
|
21
|
|
|
$
|
(15
|
)
|
|
$
|
985
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Indexed debt securities derivative
|
$
|
—
|
|
|
$
|
442
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
442
|
|
Natural gas derivatives
(3)
|
13
|
|
|
65
|
|
|
9
|
|
|
(71
|
)
|
|
16
|
|
|||||
Total liabilities
|
$
|
13
|
|
|
$
|
507
|
|
|
$
|
9
|
|
|
$
|
(71
|
)
|
|
$
|
458
|
|
(1)
|
Amounts represent the impact of legally enforceable master netting arrangements that allow CenterPoint Energy to settle positive and negative positions and also include cash collateral of
$56 million
posted with the same counterparties.
|
(2)
|
Amounts are included in Prepaid Expenses and Other Current Assets in the Condensed Consolidated Balance Sheets.
|
(3)
|
Natural gas derivatives include no material amounts related to physical forward transactions with Enable.
|
|
Fair Value Measurements Using Significant
Unobservable Inputs (Level 3)
|
||||||||||||||
|
Derivative Assets and Liabilities, Net
|
||||||||||||||
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
(in millions)
|
||||||||||||||
Beginning balance
|
$
|
16
|
|
|
$
|
10
|
|
|
$
|
12
|
|
|
$
|
17
|
|
Purchases
|
—
|
|
|
—
|
|
|
12
|
|
|
—
|
|
||||
Total gains
|
9
|
|
|
5
|
|
|
13
|
|
|
5
|
|
||||
Total settlements
|
(8
|
)
|
|
(2
|
)
|
|
(24
|
)
|
|
(8
|
)
|
||||
Transfers into Level 3
|
—
|
|
|
1
|
|
|
5
|
|
|
1
|
|
||||
Transfers out of Level 3
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
||||
Ending balance
(1)
|
$
|
17
|
|
|
$
|
14
|
|
|
$
|
17
|
|
|
$
|
14
|
|
The amount of total gains for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held at the reporting date
|
$
|
6
|
|
|
$
|
6
|
|
|
$
|
14
|
|
|
$
|
7
|
|
(1)
|
CenterPoint Energy did not have significant Level 3 sales during either of the
three
or
nine
months ended
September 30, 2016
or
2015
.
|
|
September 30, 2016
|
|
December 31, 2015
|
||||||||||||
|
Carrying
Amount |
|
Fair
Value |
|
Carrying
Amount
|
|
Fair
Value
|
||||||||
|
(in millions)
|
||||||||||||||
Financial assets:
|
|
|
|
|
|
|
|
||||||||
Notes receivable – unconsolidated affiliate
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
363
|
|
|
$
|
356
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
||||||||
Long-term debt
|
$
|
8,396
|
|
|
$
|
9,139
|
|
|
$
|
8,585
|
|
|
$
|
9,067
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
|
(in millions)
|
||||||||||||||
Operating revenues
|
|
$
|
620
|
|
|
$
|
646
|
|
|
$
|
1,658
|
|
|
$
|
1,852
|
|
Cost of sales, excluding depreciation and amortization
|
|
268
|
|
|
287
|
|
|
717
|
|
|
856
|
|
||||
Impairment of goodwill and other long-lived assets
|
|
8
|
|
|
1,105
|
|
|
8
|
|
|
1,105
|
|
||||
Operating income (loss)
|
|
139
|
|
|
(975
|
)
|
|
299
|
|
|
(778
|
)
|
||||
Net income (loss) attributable to Enable
|
|
110
|
|
|
(985
|
)
|
|
231
|
|
|
(817
|
)
|
||||
Reconciliation of Equity in Earnings (Losses), net:
|
|
|
|
|
|
|
|
|
||||||||
CenterPoint Energy’s interest
|
|
$
|
61
|
|
|
$
|
(546
|
)
|
|
$
|
128
|
|
|
$
|
(453
|
)
|
Basis difference amortization
(1)
|
|
12
|
|
|
2
|
|
|
36
|
|
|
4
|
|
||||
Impairment of CenterPoint Energy’s equity method investment in Enable
|
|
—
|
|
|
(250
|
)
|
|
—
|
|
|
(250
|
)
|
||||
CenterPoint Energy’s equity in earnings (losses), net
(2)
|
|
$
|
73
|
|
|
$
|
(794
|
)
|
|
$
|
164
|
|
|
$
|
(699
|
)
|
(1)
|
Equity in earnings (losses) of unconsolidated affiliates includes CenterPoint Energy’s share of Enable’s earnings adjusted for the amortization of the basis difference of CenterPoint Energy’s original investment in Enable and its underlying equity in Enable’s net assets. The basis difference is amortized over approximately
33
years, the average life of the assets to which the basis difference is attributed.
|
(2)
|
These amounts include CenterPoint Energy’s share of Enable’s impairment of goodwill and long-lived assets and the impairment of CenterPoint Energy’s equity method investment in Enable totaling
$862 million
during the three and nine months ended September 30, 2015. This impairment is partially offset by
$68 million
and
$163 million
of earnings for the three and nine months ended September 30, 2015, respectively.
|
|
|
September 30,
2016 |
|
December 31, 2015
|
||||
|
|
(in millions)
|
||||||
Current assets
|
|
$
|
408
|
|
|
$
|
381
|
|
Non-current assets
|
|
10,833
|
|
|
10,845
|
|
||
Current liabilities
|
|
338
|
|
|
615
|
|
||
Non-current liabilities
|
|
3,174
|
|
|
3,080
|
|
||
Non-controlling interest
|
|
11
|
|
|
12
|
|
||
Preferred equity
|
|
362
|
|
|
—
|
|
||
Enable partners’ equity
|
|
7,356
|
|
|
7,519
|
|
||
Reconciliation of Equity Method Investment in Enable:
|
|
|
|
|
||||
CenterPoint Energy’s ownership interest in Enable partners’ capital
|
|
$
|
4,073
|
|
|
$
|
4,163
|
|
CenterPoint Energy’s basis difference
|
|
(1,538
|
)
|
|
(1,569
|
)
|
||
CenterPoint Energy’s equity method investment in Enable
|
|
$
|
2,535
|
|
|
$
|
2,594
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
|
(in millions)
|
||||||||||||||
Investment in Enable’s common and subordinated units
|
|
$
|
74
|
|
|
$
|
74
|
|
|
$
|
223
|
|
|
$
|
219
|
|
Investment in Enable’s Series A Preferred Units
|
|
9
|
|
|
—
|
|
|
13
|
|
(1)
|
—
|
|
|
December 31, 2015
|
|
Continuum Acquisition (1)
|
|
September 30,
2016 |
||||||
|
(in millions)
|
||||||||||
Natural Gas Distribution
|
$
|
746
|
|
|
$
|
—
|
|
|
$
|
746
|
|
Energy Services
|
83
|
|
(2)
|
22
|
|
|
105
|
|
|||
Other Operations
|
11
|
|
|
—
|
|
|
11
|
|
|||
Total
|
$
|
840
|
|
|
$
|
22
|
|
|
$
|
862
|
|
(a)
|
Short-term Borrowings
|
(b)
|
Long-term Debt
|
|
September 30, 2016
|
|
December 31, 2015
|
|
||||||||||||||||||||||||||||
|
Size of
Facility |
|
Loans
|
|
Letters
of Credit |
|
Commercial
Paper |
|
Size of
Facility |
|
Loans
|
|
Letters
of Credit |
|
Commercial
Paper |
|
||||||||||||||||
|
(in millions)
|
|
||||||||||||||||||||||||||||||
CenterPoint Energy
|
$
|
1,600
|
|
|
$
|
—
|
|
|
$
|
6
|
|
|
$
|
539
|
|
(1)
|
$
|
1,200
|
|
|
$
|
—
|
|
|
$
|
6
|
|
|
$
|
716
|
|
(1)
|
Houston Electric
|
300
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
300
|
|
|
200
|
|
(2)
|
4
|
|
|
—
|
|
|
||||||||
CERC Corp.
|
600
|
|
|
—
|
|
|
3
|
|
|
459
|
|
(3)
|
600
|
|
|
—
|
|
|
2
|
|
|
219
|
|
(3)
|
||||||||
Total
|
$
|
2,500
|
|
|
$
|
—
|
|
|
$
|
13
|
|
|
$
|
998
|
|
|
$
|
2,100
|
|
|
$
|
200
|
|
|
$
|
12
|
|
|
$
|
935
|
|
|
(1)
|
Weighted average interest rate was
0.81%
and
0.79%
as of
September 30, 2016
and
December 31, 2015
, respectively.
|
(2)
|
Weighted average interest rate was
1.637%
as of
December 31, 2015
.
|
(3)
|
Weighted average interest rate was
0.76%
and
0.81%
as of
September 30, 2016
and
December 31, 2015
, respectively.
|
(a)
|
Natural Gas Supply Commitments
|
(b)
|
Legal, Environmental and Other Matters
|
(c)
|
Guarantees
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
(in millions, except share and per share amounts)
|
||||||||||||||
Net income (loss)
|
$
|
179
|
|
|
$
|
(391
|
)
|
|
$
|
331
|
|
|
$
|
(183
|
)
|
|
|
|
|
|
|
|
|
||||||||
Basic weighted average shares outstanding
|
430,682,000
|
|
|
430,262,000
|
|
|
430,581,000
|
|
|
430,152,000
|
|
||||
Plus: Incremental shares from assumed conversions:
|
|
|
|
|
|
|
|
||||||||
Restricted stock
(1)
|
2,714,000
|
|
|
—
|
|
|
2,714,000
|
|
|
—
|
|
||||
Diluted weighted average shares
|
433,396,000
|
|
|
430,262,000
|
|
|
433,295,000
|
|
|
430,152,000
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Basic earnings (loss) per share
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
$
|
0.42
|
|
|
$
|
(0.91
|
)
|
|
$
|
0.77
|
|
|
$
|
(0.43
|
)
|
|
|
|
|
|
|
|
|
||||||||
Diluted earnings (loss) per share
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
$
|
0.41
|
|
|
$
|
(0.91
|
)
|
|
$
|
0.76
|
|
|
$
|
(0.43
|
)
|
(1)
|
1,759,000
incremental shares from assumed conversions of restricted stock have not been included in the computation of diluted earnings (loss) per share for either the three months or nine months ended September 30, 2015, as their inclusion would be anti-dilutive.
|
|
For the Three Months Ended September 30, 2016
|
||||||||||
|
Revenues from
External Customers |
|
Net
Intersegment Revenues |
|
Operating
Income |
||||||
|
(in millions)
|
||||||||||
Electric Transmission & Distribution
|
$
|
908
|
|
(1)
|
$
|
—
|
|
|
$
|
257
|
|
Natural Gas Distribution
|
370
|
|
|
7
|
|
|
22
|
|
|||
Energy Services
|
608
|
|
|
6
|
|
|
5
|
|
|||
Midstream Investments
(2)
|
—
|
|
|
—
|
|
|
—
|
|
|||
Other Operations
|
3
|
|
|
—
|
|
|
—
|
|
|||
Eliminations
|
—
|
|
|
(13
|
)
|
|
—
|
|
|||
Consolidated
|
$
|
1,889
|
|
|
$
|
—
|
|
|
$
|
284
|
|
|
For the Three Months Ended September 30, 2015
|
||||||||||
|
Revenues from
External Customers |
|
Net
Intersegment Revenues |
|
Operating
Income |
||||||
|
(in millions)
|
||||||||||
Electric Transmission & Distribution
|
$
|
827
|
|
(1)
|
$
|
—
|
|
|
$
|
244
|
|
Natural Gas Distribution
|
353
|
|
|
6
|
|
|
11
|
|
|||
Energy Services
|
446
|
|
|
6
|
|
|
7
|
|
|||
Midstream Investments
(2)
|
—
|
|
|
—
|
|
|
—
|
|
|||
Other Operations
|
4
|
|
|
—
|
|
|
3
|
|
|||
Eliminations
|
—
|
|
|
(12
|
)
|
|
—
|
|
|||
Consolidated
|
$
|
1,630
|
|
|
$
|
—
|
|
|
$
|
265
|
|
|
For the Nine Months Ended September 30, 2016
|
|
|
|
||||||||||||
|
Revenues from
External
Customers
|
|
Net
Intersegment
Revenues
|
|
Operating
Income
|
|
Total Assets as of September 30, 2016
|
|
||||||||
|
(in millions)
|
|
||||||||||||||
Electric Transmission & Distribution
|
$
|
2,331
|
|
(1)
|
$
|
—
|
|
|
$
|
498
|
|
|
$
|
10,090
|
|
|
Natural Gas Distribution
|
1,672
|
|
|
21
|
|
|
202
|
|
|
5,732
|
|
|
||||
Energy Services
|
1,433
|
|
|
17
|
|
|
11
|
|
|
990
|
|
|
||||
Midstream Investments
(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
2,535
|
|
|
||||
Other Operations
|
11
|
|
|
—
|
|
|
5
|
|
|
2,920
|
|
(3)
|
||||
Eliminations
|
—
|
|
|
(38
|
)
|
|
—
|
|
|
(981
|
)
|
|
||||
Consolidated
|
$
|
5,447
|
|
|
$
|
—
|
|
|
$
|
716
|
|
|
$
|
21,286
|
|
|
|
For the Nine Months Ended September 30, 2015
|
|
|
|
||||||||||||
|
Revenues from
External Customers |
|
Net
Intersegment Revenues |
|
Operating
Income |
|
Total Assets as of December 31, 2015
|
|
||||||||
|
(in millions)
|
|
||||||||||||||
Electric Transmission & Distribution
|
$
|
2,144
|
|
(1)
|
$
|
—
|
|
|
$
|
498
|
|
|
$
|
10,028
|
|
|
Natural Gas Distribution
|
1,958
|
|
|
21
|
|
|
176
|
|
|
5,657
|
|
|
||||
Energy Services
|
1,482
|
|
|
28
|
|
|
29
|
|
|
857
|
|
|
||||
Midstream Investments
(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
2,594
|
|
|
||||
Other Operations
|
11
|
|
|
—
|
|
|
4
|
|
|
2,879
|
|
(3)
|
||||
Eliminations
|
—
|
|
|
(49
|
)
|
|
—
|
|
|
(725
|
)
|
|
||||
Consolidated
|
$
|
5,595
|
|
|
$
|
—
|
|
|
$
|
707
|
|
|
$
|
21,290
|
|
|
(1)
|
Electric Transmission & Distribution revenues from major customers are as follows:
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
|
(in millions)
|
||||||||||||||
Affiliates of NRG
|
|
$
|
223
|
|
|
$
|
222
|
|
|
$
|
527
|
|
|
$
|
578
|
|
Affiliates of Energy Future Holdings Corp.
|
|
$
|
71
|
|
|
$
|
67
|
|
|
$
|
166
|
|
|
$
|
170
|
|
(2)
|
Midstream Investments’ equity earnings (losses) are as follows:
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
|
(in millions)
|
||||||||||||||
Enable
(a)
|
|
$
|
73
|
|
|
$
|
(794
|
)
|
|
$
|
164
|
|
|
$
|
(699
|
)
|
(a)
|
These amounts include CenterPoint Energy’s share of Enable’s impairment of goodwill and long-lived assets and the impairment of CenterPoint Energy’s equity method investment in Enable totaling
$862 million
during the three and nine months ended September 30, 2015. This impairment is partially offset by
$68 million
and
$163 million
of earnings for the three and nine months ended September 30, 2015, respectively.
|
|
|
September 30, 2016
|
|
December 31, 2015
|
||||
|
|
(in millions)
|
||||||
Enable
|
|
$
|
2,535
|
|
|
$
|
2,594
|
|
(3)
|
Included in total assets of Other Operations as of
September 30, 2016
and
December 31, 2015
are pension and other postemployment-related regulatory assets of
$775 million
and
$814 million
, respectively.
|
Item 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF CENTERPOINT ENERGY, INC. AND SUBSIDIARIES
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Revenues
|
$
|
1,889
|
|
|
$
|
1,630
|
|
|
$
|
5,447
|
|
|
$
|
5,595
|
|
Expenses
|
1,605
|
|
|
1,365
|
|
|
4,731
|
|
|
4,888
|
|
||||
Operating Income
|
284
|
|
|
265
|
|
|
716
|
|
|
707
|
|
||||
Interest and Other Finance Charges
|
(83
|
)
|
|
(88
|
)
|
|
(256
|
)
|
|
(266
|
)
|
||||
Interest on Securitization Bonds
|
(23
|
)
|
|
(25
|
)
|
|
(70
|
)
|
|
(80
|
)
|
||||
Equity in Earnings (Losses) of Unconsolidated Affiliate, net
|
73
|
|
|
(794
|
)
|
|
164
|
|
|
(699
|
)
|
||||
Other Income, net
|
25
|
|
|
7
|
|
|
(30
|
)
|
|
26
|
|
||||
Income (Loss) Before Income Taxes
|
276
|
|
|
(635
|
)
|
|
524
|
|
|
(312
|
)
|
||||
Income Tax Expense (Benefit)
|
97
|
|
|
(244
|
)
|
|
193
|
|
|
(129
|
)
|
||||
Net Income (Loss)
|
$
|
179
|
|
|
$
|
(391
|
)
|
|
$
|
331
|
|
|
$
|
(183
|
)
|
|
|
|
|
|
|
|
|
||||||||
Basic Earnings (Loss) Per Share
|
$
|
0.42
|
|
|
$
|
(0.91
|
)
|
|
$
|
0.77
|
|
|
$
|
(0.43
|
)
|
|
|
|
|
|
|
|
|
||||||||
Diluted Earnings (Loss) Per Share
|
$
|
0.41
|
|
|
$
|
(0.91
|
)
|
|
$
|
0.76
|
|
|
$
|
(0.43
|
)
|
•
|
a $867 million increase in equity earnings from our investment in Enable, as 2015 results included impairment charges of $862 million, discussed further in Note 8;
|
•
|
a $211 million increase in the gain on marketable securities included in Other Income, net shown above;
|
•
|
a $19 million increase in operating income (discussed below by segment);
|
•
|
a $9 million increase in cash distributions on Series A Preferred Units included in Other Income, net shown above;
|
•
|
a $5 million decrease in interest expense due to lower weighted average interest rates on outstanding debt; and
|
•
|
a $2 million decrease in interest expense related to lower outstanding balances of our Securitization Bonds.
|
•
|
a $201 million increase in losses on the underlying value of the indexed debt securities related to the ZENS included in Other Income, net shown above.
|
•
|
a $863 million increase in equity earnings from our investment in Enable, as 2015 results included impairment charges of $862 million, discussed further in Note 8;
|
•
|
a $259 million increase in the gain on marketable securities included in Other Income, net shown above;
|
•
|
a $13 million increase in cash distributions on Series A Preferred Units included in Other Income, net shown above;
|
•
|
a $10 million decrease in interest expense due to lower weighted average interest rates on outstanding debt;
|
•
|
a $10 million decrease in interest expense related to lower outstanding balances of our Securitization Bonds; and
|
•
|
a $9 million increase in operating income (discussed below by segment).
|
•
|
a $322 million increase in income tax expense due to higher income before tax;
|
•
|
a $320 million increase in the loss on indexed debt securities related to the ZENS included in Other Income, net shown above, resulting from a loss of $117 million from the Charter merger in 2016 compared to a loss of $7 million from Verizon’s acquisition of AOL in 2015 and increased losses of $210 million in the underlying value of the indexed debt securities;
|
•
|
a $4 million decrease in interest income included in Other Income, net shown above; and
|
•
|
a $3 million decrease in dividend income included in Other Income, net shown above.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
(in millions)
|
||||||||||||||
Electric Transmission & Distribution
|
$
|
257
|
|
|
$
|
244
|
|
|
$
|
498
|
|
|
$
|
498
|
|
Natural Gas Distribution
|
22
|
|
|
11
|
|
|
202
|
|
|
176
|
|
||||
Energy Services
|
5
|
|
|
7
|
|
|
11
|
|
|
29
|
|
||||
Other Operations
|
—
|
|
|
3
|
|
|
5
|
|
|
4
|
|
||||
Total Consolidated Operating Income
|
$
|
284
|
|
|
$
|
265
|
|
|
$
|
716
|
|
|
$
|
707
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
(in millions, except throughput and customer data)
|
||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
TDU
|
$
|
725
|
|
|
$
|
683
|
|
|
$
|
1,881
|
|
|
$
|
1,782
|
|
Bond Companies
|
183
|
|
|
144
|
|
|
450
|
|
|
362
|
|
||||
Total revenues
|
908
|
|
|
827
|
|
|
2,331
|
|
|
2,144
|
|
||||
Expenses:
|
|
|
|
|
|
|
|
||||||||
Operation and maintenance, excluding Bond Companies
|
336
|
|
|
322
|
|
|
995
|
|
|
944
|
|
||||
Depreciation and amortization, excluding Bond Companies
|
96
|
|
|
86
|
|
|
285
|
|
|
253
|
|
||||
Taxes other than income taxes
|
59
|
|
|
56
|
|
|
173
|
|
|
167
|
|
||||
Bond Companies
|
160
|
|
|
119
|
|
|
380
|
|
|
282
|
|
||||
Total expenses
|
651
|
|
|
583
|
|
|
1,833
|
|
|
1,646
|
|
||||
Operating Income
|
$
|
257
|
|
|
$
|
244
|
|
|
$
|
498
|
|
|
$
|
498
|
|
Operating Income:
|
|
|
|
|
|
|
|
||||||||
TDU
|
$
|
234
|
|
|
$
|
219
|
|
|
$
|
428
|
|
|
$
|
418
|
|
Bond Companies
(1)
|
23
|
|
|
25
|
|
|
70
|
|
|
80
|
|
||||
Total segment operating income
|
$
|
257
|
|
|
$
|
244
|
|
|
$
|
498
|
|
|
$
|
498
|
|
Throughput (in GWh):
|
|
|
|
|
|
|
|
||||||||
Residential
|
10,776
|
|
|
10,388
|
|
|
23,427
|
|
|
23,284
|
|
||||
Total
|
26,518
|
|
|
25,612
|
|
|
66,839
|
|
|
65,378
|
|
||||
Number of metered customers at end of period:
|
|
|
|
|
|
|
|
||||||||
Residential
|
2,116,312
|
|
|
2,069,213
|
|
|
2,116,312
|
|
|
2,069,213
|
|
||||
Total
|
2,389,014
|
|
|
2,337,806
|
|
|
2,389,014
|
|
|
2,337,806
|
|
(1)
|
Represents the amount necessary to pay interest on the Securitization Bonds.
|
•
|
customer growth of $10 million from the addition of over 51,000 new customers;
|
•
|
higher equity return of $7 million, primarily related to true-up proceeds;
|
•
|
higher DCRF revenues of $6 million, primarily due to the implementation of new rates in September from the 2016 filing; and
|
•
|
higher transmission-related revenues of $18 million, which were partially offset by increased transmission costs billed by transmission providers of $13 million.
|
•
|
customer growth of $24 million from the addition of over 51,000 new customers;
|
•
|
higher transmission-related revenues of $65 million, which were partially offset by increased transmission costs billed by transmission providers of $41 million; and
|
•
|
higher equity return of $17 million, primarily related to true-up proceeds.
|
•
|
higher depreciation, primarily due to ongoing additions to plant in service, and other taxes of $38 million;
|
•
|
higher operation and maintenance expenses of $8 million
,
primarily due to contract services and corporate services;
|
•
|
lower right-of-way revenues of $4 million; and
|
•
|
lower usage, net of the weather hedge, of $3 million, primarily due to milder weather.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
(in millions, except throughput and customer data)
|
||||||||||||||
Revenues
|
$
|
377
|
|
|
$
|
359
|
|
|
$
|
1,693
|
|
|
$
|
1,979
|
|
Expenses:
|
|
|
|
|
|
|
|
||||||||
Natural gas
|
104
|
|
|
106
|
|
|
679
|
|
|
1,014
|
|
||||
Operation and maintenance
|
159
|
|
|
155
|
|
|
526
|
|
|
510
|
|
||||
Depreciation and amortization
|
61
|
|
|
55
|
|
|
180
|
|
|
165
|
|
||||
Taxes other than income taxes
|
31
|
|
|
32
|
|
|
106
|
|
|
114
|
|
||||
Total expenses
|
355
|
|
|
348
|
|
|
1,491
|
|
|
1,803
|
|
||||
Operating Income
|
$
|
22
|
|
|
$
|
11
|
|
|
$
|
202
|
|
|
$
|
176
|
|
Throughput (in Bcf):
|
|
|
|
|
|
|
|
||||||||
Residential
|
12
|
|
|
12
|
|
|
105
|
|
|
128
|
|
||||
Commercial and industrial
|
51
|
|
|
52
|
|
|
193
|
|
|
196
|
|
||||
Total Throughput
|
63
|
|
|
64
|
|
|
298
|
|
|
324
|
|
||||
Number of customers at end of period:
|
|
|
|
|
|
|
|
||||||||
Residential
|
3,143,357
|
|
|
3,110,645
|
|
|
3,143,357
|
|
|
3,110,645
|
|
||||
Commercial and industrial
|
251,043
|
|
|
248,911
|
|
|
251,043
|
|
|
248,911
|
|
||||
Total
|
3,394,400
|
|
|
3,359,556
|
|
|
3,394,400
|
|
|
3,359,556
|
|
•
|
rate increases of $8 million;
|
•
|
rate stabilization of $7 million, reflecting adjustments from decoupling in Minnesota and Arkansas;
|
•
|
lower bad debt expense of $3 million;
|
•
|
lower sales and use tax of $3 million; and
|
•
|
customer growth of $1 million from the addition of approximately 35,000 new customers.
|
•
|
increased depreciation and amortization of $6 million, primarily due to ongoing additions to plant in service; and
|
•
|
increased labor and benefits expense of $5 million.
|
•
|
rate increases of $34 million;
|
•
|
rate stabilization of $11 million, reflecting adjustments from decoupling in Minnesota and Arkansas; and
|
•
|
customer growth of $3 million from the addition of approximately 35,000 new customers.
|
•
|
higher depreciation and amortization of $15 million, primarily due to ongoing additions to plant in service; and
|
•
|
increased labor and benefits expense of $9 million.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
(in millions, except throughput and customer data)
|
||||||||||||||
Revenues
|
$
|
614
|
|
|
$
|
452
|
|
|
$
|
1,450
|
|
|
$
|
1,510
|
|
Expenses:
|
|
|
|
|
|
|
|
||||||||
Natural gas
|
591
|
|
|
433
|
|
|
1,389
|
|
|
1,445
|
|
||||
Operation and maintenance
|
16
|
|
|
11
|
|
|
43
|
|
|
32
|
|
||||
Depreciation and amortization
|
1
|
|
|
1
|
|
|
5
|
|
|
3
|
|
||||
Taxes other than income taxes
|
1
|
|
|
—
|
|
|
2
|
|
|
1
|
|
||||
Total expenses
|
609
|
|
|
445
|
|
|
1,439
|
|
|
1,481
|
|
||||
Operating Income
|
$
|
5
|
|
|
$
|
7
|
|
|
$
|
11
|
|
|
$
|
29
|
|
|
|
|
|
|
|
|
|
||||||||
Mark-to-market gain (loss)
|
$
|
(2
|
)
|
|
$
|
5
|
|
|
$
|
(18
|
)
|
|
$
|
3
|
|
|
|
|
|
|
|
|
|
||||||||
Throughput (in Bcf)
|
200
|
|
|
138
|
|
|
570
|
|
|
459
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Number of customers at end of period
|
31,669
|
|
|
18,052
|
|
|
31,669
|
|
|
18,052
|
|
(1)
|
These amounts include our share of Enable’s impairment of goodwill and long-lived assets and the impairment of our equity method investment in Enable totaling $862 million during the three and nine months ended September 30, 2015 (see Note 8). This impairment is partially offset by $68 million and $163 million of earnings for the three and nine months ended September 30, 2015, respectively.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
(in millions)
|
||||||||||||||
Revenues
|
$
|
3
|
|
|
$
|
4
|
|
|
$
|
11
|
|
|
$
|
11
|
|
Expenses
|
3
|
|
|
1
|
|
|
6
|
|
|
7
|
|
||||
Operating Income
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
5
|
|
|
$
|
4
|
|
|
Nine Months Ended September 30,
|
||||||
|
2016
|
|
2015
|
||||
|
(in millions)
|
||||||
Cash provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
1,452
|
|
|
$
|
1,518
|
|
Investing activities
|
(739
|
)
|
|
(1,024
|
)
|
||
Financing activities
|
(707
|
)
|
|
(565
|
)
|
•
|
capital expenditures of approximately $334 million;
|
•
|
scheduled principal payments on Securitization Bonds of $63 million;
|
•
|
dividend payments on CenterPoint Energy, Inc. common stock; and
|
•
|
interest payments on debt.
|
Execution Date
|
|
Company
|
|
Size of
Facility
|
|
Amount
Utilized at
October 21, 2016 (1)
|
|
Termination Date
|
||||
|
|
|
|
(in millions)
|
|
|
||||||
March 3, 2016
|
|
CenterPoint Energy
|
|
$
|
1,600
|
|
|
$
|
486
|
|
(2)
|
March 3, 2021
|
March 3, 2016
|
|
Houston Electric
|
|
300
|
|
|
4
|
|
(3)
|
March 3, 2021
|
||
March 3, 2016
|
|
CERC Corp.
|
|
600
|
|
|
379
|
|
(4)
|
March 3, 2021
|
(1)
|
Based on the consolidated debt to capitalization covenant in our revolving credit facility and the revolving credit facility of each of Houston Electric and CERC Corp., we would have been permitted to utilize the full capacity of such revolving credit facilities, which aggregated $2.5 billion as of
September 30, 2016
.
|
(2)
|
Represents outstanding commercial paper of $480 million and outstanding letters of credit of $6 million.
|
(3)
|
Represents outstanding letters of credit.
|
(4)
|
Represents outstanding commercial paper of $375 million and outstanding letters of credit of $4 million.
|
|
|
Moody’s
|
|
S&P
|
|
Fitch
|
||||||
Company/Instrument
|
|
Rating
|
|
Outlook (1)
|
|
Rating
|
|
Outlook (2)
|
|
Rating
|
|
Outlook (3)
|
CenterPoint Energy Senior
Unsecured Debt
|
|
Baa1
|
|
Stable
|
|
BBB+
|
|
Developing
|
|
BBB
|
|
Stable
|
Houston Electric Senior
Secured Debt |
|
A1
|
|
Stable
|
|
A
|
|
Developing
|
|
A
|
|
Stable
|
CERC Corp. Senior Unsecured
Debt
|
|
Baa2
|
|
Stable
|
|
A-
|
|
Developing
|
|
BBB
|
|
Stable
|
(1)
|
A Moody’s rating outlook is an opinion regarding the likely direction of an issuer’s rating over the medium term.
|
(2)
|
An S&P rating outlook assesses the potential direction of a long-term credit rating over the intermediate to longer term.
|
(3)
|
A Fitch rating outlook indicates the direction a rating is likely to move over a one- to two-year period.
|
•
|
cash collateral requirements that could exist in connection with certain contracts, including our weather hedging arrangements, and gas purchases, gas price and gas storage activities of our Natural Gas Distribution and Energy Services business segments;
|
•
|
acceleration of payment dates on certain gas supply contracts, under certain circumstances, as a result of increased gas prices and concentration of natural gas suppliers;
|
•
|
increased costs related to the acquisition of natural gas;
|
•
|
increases in interest expense in connection with debt refinancings and borrowings under credit facilities;
|
•
|
various legislative or regulatory actions;
|
•
|
incremental collateral, if any, that may be required due to regulation of derivatives;
|
•
|
the ability of GenOn and its subsidiaries to satisfy their obligations in respect of GenOn’s indemnity obligations to us and our subsidiaries or in connection with the contractual obligations to a third party pursuant to which our subsidiary is their guarantor;
|
•
|
the ability of REPs, including REP affiliates of NRG and Energy Future Holdings Corp., to satisfy their obligations to us and our subsidiaries;
|
•
|
slower customer payments and increased write-offs of receivables due to higher gas prices or changing economic conditions;
|
•
|
the outcome of litigation brought by or against us;
|
•
|
contributions to pension and postretirement benefit plans;
|
•
|
restoration costs and revenue losses resulting from future natural disasters such as hurricanes and the timing of recovery of such restoration costs; and
|
•
|
various other risks identified in “Risk Factors” in Item 1A of Part I of our
2015
Form 10-K.
|
Item 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
Item 4.
|
CONTROLS AND PROCEDURES
|
Item 1.
|
LEGAL PROCEEDINGS
|
Item 1A.
|
RISK FACTORS
|
Item 5.
|
OTHER INFORMATION
|
Item 6.
|
EXHIBITS
|
Exhibit
Number
|
|
Description
|
|
Report or Registration
Statement
|
|
SEC File or
Registration
Number
|
|
Exhibit
Reference
|
3.1
|
|
Restated Articles of Incorporation of CenterPoint Energy
|
|
CenterPoint Energy’s Form 8-K dated July 24, 2008
|
|
1-31447
|
|
3.2
|
3.2
|
|
Second Amended and Restated Bylaws of CenterPoint Energy
|
|
CenterPoint Energy’s Form 10-K for the year ended December 31, 2015
|
|
1-31447
|
|
3(b)
|
3.3
|
|
Statement of Resolutions Deleting Shares Designated Series A Preferred Stock of CenterPoint Energy
|
|
CenterPoint Energy’s Form 10-K for the year ended December 31, 2011
|
|
1-31447
|
|
3(c)
|
4.1
|
|
Form of CenterPoint Energy Stock Certificate
|
|
CenterPoint Energy’s Registration Statement on Form S-4
|
|
3-69502
|
|
4.1
|
4.2
|
|
$1,600,000,000 Credit Agreement, dated as of March 3, 2016, among CenterPoint Energy, as Borrower, and the banks named therein
|
|
CenterPoint Energy’s Form 8-K dated March 3, 2016
|
|
1-31447
|
|
4.1
|
4.3
|
|
$300,000,000 Credit Agreement, dated as of March 3, 2016, among Houston Electric, as Borrower, and the banks named therein
|
|
CenterPoint Energy’s Form 8-K dated March 3, 2016
|
|
1-31447
|
|
4.2
|
4.4
|
|
$600,000,000 Credit Agreement, dated as of March 3, 2016, among CERC Corp., as Borrower, and the banks named therein
|
|
CenterPoint Energy’s Form 8-K dated March 3, 2016
|
|
1-31447
|
|
4.3
|
+4.5
|
|
Twenty-Fifth Supplemental Indenture, dated as of August 11, 2016, to the General Mortgage Indenture, dated as of October 10, 2002, between Houston Electric and the Trustee
|
|
|
|
|
|
|
+4.6
|
|
Officer’s Certificate, dated as of August 11, 2016, setting forth the form, terms and provisions of the Twenty-Sixth Series of General Mortgage Bonds
|
|
|
|
|
|
|
+12
|
|
Computation of Ratios of Earnings to Fixed Charges
|
|
|
|
|
|
|
+31.1
|
|
Rule 13a-14(a)/15d-14(a) Certification of Scott M. Prochazka
|
|
|
|
|
|
|
+31.2
|
|
Rule 13a-14(a)/15d-14(a) Certification of William D. Rogers
|
|
|
|
|
|
|
+32.1
|
|
Section 1350 Certification of Scott M. Prochazka
|
|
|
|
|
|
|
+32.2
|
|
Section 1350 Certification of William D. Rogers
|
|
|
|
|
|
|
Exhibit
Number
|
|
Description
|
|
Report or Registration
Statement
|
|
SEC File or
Registration
Number
|
|
Exhibit
Reference
|
+101.INS
|
|
XBRL Instance Document
|
|
|
|
|
|
|
+101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
|
|
|
+101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
|
|
+101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
|
|
+101.LAB
|
|
XBRL Taxonomy Extension Labels Linkbase Document
|
|
|
|
|
|
|
+101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
|
|
|
CENTERPOINT ENERGY, INC.
|
|
|
|
|
By:
|
/s/ Kristie L. Colvin
|
|
Kristie L. Colvin
|
|
Senior Vice President and Chief Accounting Officer
|
|
|
Exhibit
Number
|
|
Description
|
|
Report or Registration
Statement
|
|
SEC File or
Registration
Number
|
|
Exhibit
Reference
|
3.1
|
|
Restated Articles of Incorporation of CenterPoint Energy
|
|
CenterPoint Energy’s Form 8-K dated July 24, 2008
|
|
1-31447
|
|
3.2
|
3.2
|
|
Second Amended and Restated Bylaws of CenterPoint Energy
|
|
CenterPoint Energy’s Form 10-K for the year ended December 31, 2015
|
|
1-31447
|
|
3(b)
|
3.3
|
|
Statement of Resolutions Deleting Shares Designated Series A Preferred Stock of CenterPoint Energy
|
|
CenterPoint Energy’s Form 10-K for the year ended December 31, 2011
|
|
1-31447
|
|
3(c)
|
4.1
|
|
Form of CenterPoint Energy Stock Certificate
|
|
CenterPoint Energy’s Registration Statement on Form S-4
|
|
3-69502
|
|
4.1
|
4.2
|
|
$1,600,000,000 Credit Agreement, dated as of March 3, 2016, among CenterPoint Energy, as Borrower, and the banks named therein
|
|
CenterPoint Energy’s Form 8-K dated March 3, 2016
|
|
1-31447
|
|
4.1
|
4.3
|
|
$300,000,000 Credit Agreement, dated as of March 3, 2016, among Houston Electric, as Borrower, and the banks named therein
|
|
CenterPoint Energy’s Form 8-K dated March 3, 2016
|
|
1-31447
|
|
4.2
|
4.4
|
|
$600,000,000 Credit Agreement, dated as of March 3, 2016, among CERC Corp., as Borrower, and the banks named therein
|
|
CenterPoint Energy’s Form 8-K dated March 3, 2016
|
|
1-31447
|
|
4.3
|
+4.5
|
|
Twenty-Fifth Supplemental Indenture, dated as of August 11, 2016, to the General Mortgage Indenture, dated as of October 10, 2002, between Houston Electric and the Trustee
|
|
|
|
|
|
|
+4.6
|
|
Officer’s Certificate, dated as of August 11, 2016, setting forth the form, terms and provisions of the Twenty-Sixth Series of General Mortgage Bonds
|
|
|
|
|
|
|
+12
|
|
Computation of Ratios of Earnings to Fixed Charges
|
|
|
|
|
|
|
+31.1
|
|
Rule 13a-14(a)/15d-14(a) Certification of Scott M. Prochazka
|
|
|
|
|
|
|
+31.2
|
|
Rule 13a-14(a)/15d-14(a) Certification of William D. Rogers
|
|
|
|
|
|
|
+32.1
|
|
Section 1350 Certification of Scott M. Prochazka
|
|
|
|
|
|
|
+32.2
|
|
Section 1350 Certification of William D. Rogers
|
|
|
|
|
|
|
Exhibit
Number
|
|
Description
|
|
Report or Registration
Statement
|
|
SEC File or
Registration
Number
|
|
Exhibit
Reference
|
+101.INS
|
|
XBRL Instance Document
|
|
|
|
|
|
|
+101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
|
|
|
+101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
|
|
+101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
|
|
+101.LAB
|
|
XBRL Taxonomy Extension Labels Linkbase Document
|
|
|
|
|
|
|
+101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
|
|
CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC
|
||
Dated: August 11, 2016
|
By:
|
/s/ Kristie L. Colvin
|
|
Name:
|
Kristie L. Colvin
|
|
Title:
|
Senior Vice President and Chief Accounting Officer
|
THE BANK OF NEW YORK MELLON TRUST COMPANY, NATIONAL ASSOCIATION (successor in
trust to JPMORGAN CHASE BANK), as Trustee
|
||
Dated: August 11, 2016
|
By:
|
/s/ Valere Boyd
|
|
Name:
|
Valere Boyd
|
|
Title:
|
Vice President
|
STATE OF TEXAS
|
)
|
) ss
|
|
COUNTY OF HARRIS
|
)
|
/s/ Alida E. Duggan
|
Notary Public
|
On August 10, 2016 before me,
|
Marvin G. Cuenca, Notary Public
|
|
(insert name and title of the officer)
|
(8)
|
Not applicable.
|
(9)
|
Not applicable.
|
(10)
|
Not applicable.
|
(11)
|
Not applicable.
|
(12)
|
Not applicable.
|
(13)
|
See subsection (7) above.
|
(14)
|
Not applicable.
|
(15)
|
Not applicable.
|
(16)
|
Not applicable.
|
(18)
|
Not applicable.
|
(19)
|
Not applicable.
|
(20)
|
For purposes of the Bonds, "Business Day" shall mean any day, other than Saturday or Sunday, on which commercial banks and foreign exchange markets are open for business, including dealings in deposits in U.S. dollars, in New York, New York.
|
(21)
|
Not applicable.
|
(22)
|
The Bonds shall have such other terms and provisions as are provided in the form thereof attached hereto as
Exhibit A
, and shall be issued in substantially such form.
|
9.
|
The First Mortgage Collateralization Date has not occurred.
|
/s/ Kristie L. Colvin
|
Kristie L. Colvin
|
Senior Vice President and Chief Accounting Officer
|
/s/ Valere Boyd
|
Valere Boyd
|
Vice President
|
Original Interest Accrual Date: August 11, 2016
|
Redeemable: Yes [X] No [ ]
|
|
Stated Maturity: September 1, 2026
|
Redemption Date: At any time.
|
|
Interest Rate: 2.40%
|
Redemption Price: on any date prior to June 1, 2026 at a price equal to the greater of (i) 100% of the principal amount of this Security or the portion hereof to be redeemed or (ii) the sum of the present values of the remaining scheduled payments of principal and interest on this Security or the portion thereof to be redeemed that would be due if this Security matured on June 1, 2026 but for the redemption (not including any portion of such payments of interest accrued to the Redemption Date) discounted to the Redemption Date on a semiannual basis at the applicable Treasury Rate plus 15 basis points; plus, in each case, accrued and unpaid interest to the Redemption Date on the principal amount being redeemed; or on or after June 1, 2026, at a price equal to 100% of the principal amount of this Security or the portion thereof to be redeemed plus accrued and unpaid interest to the Redemption Date on the principal amount being redeemed.
|
|
Interest Payment Dates: March 1 and September 1
|
||
Regular Record Dates: February 15 and August 15 immediately preceding the respective Interest Payment Date
|
||
Principal Amount
|
Registered No. T-1
|
$300,000,000*
|
CUSIP 15189X AQ1
|
|
CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC
|
|
|
Attest: ___________________________________
|
By: ______________________________________________
|
Vincent A. Mercaldi
|
Kristie L. Colvin
|
Assistant Secretary
|
Senior Vice President and Chief Accounting Officer
|
|
THE BANK OF NEW YORK MELLON TRUST
|
|
COMPANY, NATIONAL ASSOCIATION, as Trustee
|
|
|
|
By: ______________________________________________
|
|
|
|
|
|
|
|
|
Aggregate Principal
|
|
|
|
|
|
|
|
|
Amount of Securities
|
|
|
|
|
Decrease in Aggregate
|
|
Increase in Aggregate
|
|
Remaining After
|
|
Notation by
|
Date of
|
|
Principal Amount of
|
|
Principal Amount of
|
|
Such Decrease or
|
|
Security
|
Adjustment
|
|
Securities
|
|
Securities
|
|
Increase
|
|
Registrar
|
|
Nine Months Ended September 30,
|
||||||
|
2016
|
|
2015
|
||||
|
(in millions, except ratios)
|
||||||
Net income (loss)
|
$
|
331
|
|
|
$
|
(183
|
)
|
Equity in losses (earnings) of unconsolidated affiliates, net of distributions
|
59
|
|
|
917
|
|
||
Income tax expense (benefit)
|
193
|
|
|
(129
|
)
|
||
Capitalized interest
|
(5
|
)
|
|
(7
|
)
|
||
|
578
|
|
|
598
|
|
||
|
|
|
|
||||
Fixed charges, as defined:
|
|
|
|
|
|
||
|
|
|
|
||||
Interest
|
326
|
|
|
346
|
|
||
Capitalized interest
|
5
|
|
|
7
|
|
||
Interest component of rentals charged to operating expense
|
3
|
|
|
3
|
|
||
Total fixed charges
|
334
|
|
|
356
|
|
||
|
|
|
|
||||
Earnings, as defined
|
$
|
912
|
|
|
$
|
954
|
|
|
|
|
|
||||
Ratio of earnings to fixed charges
|
2.73
|
|
|
2.68
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ Scott M. Prochazka
|
|
Scott M. Prochazka
|
|
President and Chief Executive Officer
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ William D. Rogers
|
|
William D. Rogers
|
|
Executive Vice President and Chief Financial Officer
|
/s/ Scott M. Prochazka
|
|
Scott M. Prochazka
|
|
President and Chief Executive Officer
|
|
November 4, 2016
|
|
/s/ William D. Rogers
|
|
William D. Rogers
|
|
Executive Vice President and Chief Financial Officer
|
|
November 4, 2016
|
|