|
(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, 2017
|
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
|
Emerging growth company
o
|
|
|
(Do not check if a smaller reporting company)
|
|
|
|
PART I.
|
|
FINANCIAL INFORMATION
|
|
|
|
|
|
Item 1.
|
|
||
|
|
|
|
|
|
|
|
|
|
Three and Nine Months Ended September 30, 2017 and 2016 (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three and Nine Months Ended September 30, 2017 and 2016 (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2017 and December 31, 2016 (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2017 and 2016 (unaudited)
|
|
|
|
|
|
|
|
||
|
|
|
|
Item 2.
|
|
||
|
|
|
|
Item 3.
|
|
||
|
|
|
|
Item 4.
|
|
||
|
|
|
|
PART II.
|
|
OTHER INFORMATION
|
|
|
|
|
|
Item 1.
|
|
||
|
|
|
|
Item 1A.
|
|
||
|
|
|
|
Item 5.
|
|
||
|
|
|
|
Item 6.
|
|
GLOSSARY
|
||
AEM
|
|
Atmos Energy Marketing, LLC, previously a wholly-owned subsidiary of Atmos Energy Holdings, Inc., a wholly-owned subsidiary of Atmos Energy Corporation
|
AMAs
|
|
Asset Management Agreements
|
AMS
|
|
Advanced Metering System
|
APSC
|
|
Arkansas Public Service Commission
|
ASU
|
|
Accounting Standards Update
|
AT&T
|
|
AT&T Inc.
|
AT&T Common
|
|
AT&T common stock
|
Bcf
|
|
Billion cubic feet
|
BDA
|
|
Billing Determinant Adjustment, which is a revenue stabilization mechanism used to adjust revenues impacted by declines in natural gas consumption which occurred after the most recent rate case
|
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
|
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., a wholly-owned subsidiary of CERC Corp.
|
Charter Common
|
|
Charter Communications, Inc. common stock
|
Charter merger
|
|
Merger of Charter Communications, Inc. and Time Warner Cable Inc.
|
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 previously owned by Continuum Energy Services, LLC
|
DCRF
|
|
Distribution Cost Recovery Factor
|
EECR
|
|
Energy Efficiency Cost Recovery
|
EECRF
|
|
Energy Efficiency Cost Recovery Factor
|
Enable
|
|
Enable Midstream Partners, LP
|
ERCOT
|
|
Electric Reliability Council of Texas
|
FASB
|
|
Financial Accounting Standards Board
|
Fitch
|
|
Fitch, Inc.
|
Form 10-Q
|
|
Quarterly Report on Form 10-Q
|
FRP
|
|
Formula Rate Plan
|
Gas Daily
|
|
Platt’s gas daily indices
|
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
|
MLP
|
|
Master Limited Partnership
|
MMBtu
|
|
One million British thermal units
|
•
|
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;
|
•
|
industrial, commercial and residential growth in our service territories and changes in market demand, including the effects of energy efficiency measures and demographic patterns;
|
•
|
timely and appropriate rate actions that allow recovery of costs and a reasonable return on investment;
|
•
|
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;
|
•
|
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 and changes in regulation and legislation pertaining to trade, health care, finance and actions regarding the rates charged by our regulated businesses;
|
•
|
tax reform and legislation;
|
•
|
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;
|
•
|
the extent and effectiveness of our risk management and hedging activities, including, but not limited to, our financial hedges and weather hedges;
|
•
|
timely and appropriate regulatory actions allowing securitization or other recovery of costs associated with Hurricane Harvey and any future hurricanes or natural disasters;
|
•
|
our or Enable’s potential business strategies and strategic initiatives, including restructurings, joint ventures and acquisitions or dispositions of assets or businesses (including a reduction of our interests in Enable, whether through our election to sell the common units we own in the public equity markets or otherwise, subject to certain limitations), which we cannot assure you will be completed or will have the anticipated benefits to us or Enable;
|
•
|
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, currently the subject of bankruptcy proceedings, to satisfy their obligations to us, including indemnity obligations;
|
•
|
the outcome of litigation;
|
•
|
the ability of REPs, including REP affiliates of NRG and Vistra Energy Corp., formerly known as TCEH 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
2016
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,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Utility revenues
|
$
|
1,233
|
|
|
$
|
1,278
|
|
|
$
|
4,001
|
|
|
$
|
4,003
|
|
Non-utility revenues
|
865
|
|
|
611
|
|
|
2,975
|
|
|
1,444
|
|
||||
Total
|
2,098
|
|
|
1,889
|
|
|
6,976
|
|
|
5,447
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Expenses:
|
|
|
|
|
|
|
|
||||||||
Utility natural gas
|
106
|
|
|
99
|
|
|
706
|
|
|
663
|
|
||||
Non-utility natural gas
|
832
|
|
|
584
|
|
|
2,843
|
|
|
1,368
|
|
||||
Operation and maintenance
|
519
|
|
|
505
|
|
|
1,614
|
|
|
1,539
|
|
||||
Depreciation and amortization
|
269
|
|
|
324
|
|
|
749
|
|
|
873
|
|
||||
Taxes other than income taxes
|
93
|
|
|
93
|
|
|
288
|
|
|
288
|
|
||||
Total
|
1,819
|
|
|
1,605
|
|
|
6,200
|
|
|
4,731
|
|
||||
Operating Income
|
279
|
|
|
284
|
|
|
776
|
|
|
716
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Other Income (Expense):
|
|
|
|
|
|
|
|
||||||||
Gain on marketable securities
|
37
|
|
|
77
|
|
|
104
|
|
|
187
|
|
||||
Loss on indexed debt securities
|
(36
|
)
|
|
(72
|
)
|
|
(59
|
)
|
|
(258
|
)
|
||||
Interest and other finance charges
|
(80
|
)
|
|
(83
|
)
|
|
(235
|
)
|
|
(256
|
)
|
||||
Interest on securitization bonds
|
(18
|
)
|
|
(23
|
)
|
|
(58
|
)
|
|
(70
|
)
|
||||
Equity in earnings of unconsolidated affiliate, net
|
68
|
|
|
73
|
|
|
199
|
|
|
164
|
|
||||
Other, net
|
17
|
|
|
20
|
|
|
50
|
|
|
41
|
|
||||
Total
|
(12
|
)
|
|
(8
|
)
|
|
1
|
|
|
(192
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Income Before Income Taxes
|
267
|
|
|
276
|
|
|
777
|
|
|
524
|
|
||||
Income tax expense
|
98
|
|
|
97
|
|
|
281
|
|
|
193
|
|
||||
Net Income
|
$
|
169
|
|
|
$
|
179
|
|
|
$
|
496
|
|
|
$
|
331
|
|
|
|
|
|
|
|
|
|
||||||||
Basic Earnings Per Share
|
$
|
0.39
|
|
|
$
|
0.42
|
|
|
$
|
1.15
|
|
|
$
|
0.77
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted Earnings Per Share
|
$
|
0.39
|
|
|
$
|
0.41
|
|
|
$
|
1.14
|
|
|
$
|
0.76
|
|
|
|
|
|
|
|
|
|
||||||||
Dividends Declared Per Share
|
$
|
0.2675
|
|
|
$
|
0.2575
|
|
|
$
|
0.8025
|
|
|
$
|
0.7725
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted Average Shares Outstanding, Basic
|
431
|
|
|
431
|
|
|
431
|
|
|
431
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Weighted Average Shares Outstanding, Diluted
|
434
|
|
|
433
|
|
|
434
|
|
|
433
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net income
|
$
|
169
|
|
|
$
|
179
|
|
|
$
|
496
|
|
|
$
|
331
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
||||||||
Adjustment related to pension and other postretirement plans (net of tax of $2, $2, $4 and $1)
|
—
|
|
|
1
|
|
|
2
|
|
|
1
|
|
||||
Net deferred gain (loss) from cash flow hedges (net of tax of $2, $1, $2 and $-0-)
|
(2
|
)
|
|
2
|
|
|
(3
|
)
|
|
1
|
|
||||
Total
|
(2
|
)
|
|
3
|
|
|
(1
|
)
|
|
2
|
|
||||
Comprehensive income
|
$
|
167
|
|
|
$
|
182
|
|
|
$
|
495
|
|
|
$
|
333
|
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
Current Assets:
|
|
|
|
||||
Cash and cash equivalents ($200 and $340 related to VIEs, respectively)
|
$
|
201
|
|
|
$
|
341
|
|
Investment in marketable securities
|
1,057
|
|
|
953
|
|
||
Accounts receivable ($65 and $52 related to VIEs, respectively), less bad debt reserve of $16 and $15, respectively
|
783
|
|
|
740
|
|
||
Accrued unbilled revenues
|
213
|
|
|
335
|
|
||
Natural gas inventory
|
252
|
|
|
131
|
|
||
Materials and supplies
|
190
|
|
|
181
|
|
||
Non-trading derivative assets
|
64
|
|
|
51
|
|
||
Taxes receivable
|
—
|
|
|
30
|
|
||
Prepaid expenses and other current assets ($31 and $40 related to VIEs, respectively)
|
175
|
|
|
161
|
|
||
Total current assets
|
2,935
|
|
|
2,923
|
|
||
|
|
|
|
||||
Property, Plant and Equipment:
|
|
|
|
||||
Property, plant and equipment
|
18,581
|
|
|
17,831
|
|
||
Less: accumulated depreciation and amortization
|
5,881
|
|
|
5,524
|
|
||
Property, plant and equipment, net
|
12,700
|
|
|
12,307
|
|
||
|
|
|
|
||||
Other Assets:
|
|
|
|
||||
Goodwill
|
867
|
|
|
862
|
|
||
Regulatory assets ($1,690 and $1,919 related to VIEs, respectively)
|
2,539
|
|
|
2,677
|
|
||
Non-trading derivative assets
|
56
|
|
|
19
|
|
||
Investment in unconsolidated affiliate
|
2,481
|
|
|
2,505
|
|
||
Preferred units – unconsolidated affiliate
|
363
|
|
|
363
|
|
||
Other
|
194
|
|
|
173
|
|
||
Total other assets
|
6,500
|
|
|
6,599
|
|
||
|
|
|
|
||||
Total Assets
|
$
|
22,135
|
|
|
$
|
21,829
|
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
Current Liabilities:
|
|
|
|
||||
Short-term borrowings
|
$
|
48
|
|
|
$
|
35
|
|
Current portion of VIE securitization bonds long-term debt
|
432
|
|
|
411
|
|
||
Indexed debt, net
|
120
|
|
|
114
|
|
||
Current portion of other long-term debt
|
550
|
|
|
500
|
|
||
Indexed debt securities derivative
|
776
|
|
|
717
|
|
||
Accounts payable
|
657
|
|
|
657
|
|
||
Taxes accrued
|
199
|
|
|
172
|
|
||
Interest accrued
|
83
|
|
|
108
|
|
||
Non-trading derivative liabilities
|
17
|
|
|
41
|
|
||
Other
|
339
|
|
|
325
|
|
||
Total current liabilities
|
3,221
|
|
|
3,080
|
|
||
|
|
|
|
||||
Other Liabilities:
|
|
|
|
|
|
||
Deferred income taxes, net
|
5,458
|
|
|
5,263
|
|
||
Non-trading derivative liabilities
|
10
|
|
|
5
|
|
||
Benefit obligations
|
886
|
|
|
913
|
|
||
Regulatory liabilities
|
1,127
|
|
|
1,298
|
|
||
Other
|
284
|
|
|
278
|
|
||
Total other liabilities
|
7,765
|
|
|
7,757
|
|
||
|
|
|
|
||||
Long-term Debt:
|
|
|
|
|
|
||
VIE securitization bonds, net
|
1,500
|
|
|
1,867
|
|
||
Other long-term debt, net
|
6,031
|
|
|
5,665
|
|
||
Total long-term debt, net
|
7,531
|
|
|
7,532
|
|
||
|
|
|
|
||||
Commitments and Contingencies (Note 13)
|
|
|
|
|
|
||
|
|
|
|
||||
Shareholders’ Equity:
|
|
|
|
|
|
||
Cumulative preferred stock, $0.01 par value, 20,000,000 shares authorized, none issued or outstanding
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value, 1,000,000,000 shares authorized, 431,030,884 shares and 430,682,504 shares outstanding, respectively
|
4
|
|
|
4
|
|
||
Additional paid-in capital
|
4,204
|
|
|
4,195
|
|
||
Accumulated deficit
|
(518
|
)
|
|
(668
|
)
|
||
Accumulated other comprehensive loss
|
(72
|
)
|
|
(71
|
)
|
||
Total shareholders’ equity
|
3,618
|
|
|
3,460
|
|
||
|
|
|
|
||||
Total Liabilities and Shareholders’ Equity
|
$
|
22,135
|
|
|
$
|
21,829
|
|
|
Nine Months Ended September 30,
|
||||||
|
2017
|
|
2016
|
||||
Cash Flows from Operating Activities:
|
|
|
|
||||
Net income
|
$
|
496
|
|
|
$
|
331
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
749
|
|
|
873
|
|
||
Amortization of deferred financing costs
|
18
|
|
|
19
|
|
||
Deferred income taxes
|
185
|
|
|
150
|
|
||
Unrealized gain on marketable securities
|
(104
|
)
|
|
(187
|
)
|
||
Loss on indexed debt securities
|
59
|
|
|
258
|
|
||
Write-down of natural gas inventory
|
—
|
|
|
1
|
|
||
Equity in earnings of unconsolidated affiliate, net of distributions
|
(199
|
)
|
|
(164
|
)
|
||
Pension contributions
|
(46
|
)
|
|
(7
|
)
|
||
Changes in other assets and liabilities, excluding acquisitions:
|
|
|
|
||||
Accounts receivable and unbilled revenues, net
|
216
|
|
|
86
|
|
||
Inventory
|
(52
|
)
|
|
(5
|
)
|
||
Taxes receivable
|
30
|
|
|
149
|
|
||
Accounts payable
|
(137
|
)
|
|
(90
|
)
|
||
Fuel cost recovery
|
(30
|
)
|
|
(43
|
)
|
||
Non-trading derivatives, net
|
(53
|
)
|
|
23
|
|
||
Margin deposits, net
|
(49
|
)
|
|
65
|
|
||
Interest and taxes accrued
|
2
|
|
|
(48
|
)
|
||
Net regulatory assets and liabilities
|
(135
|
)
|
|
(26
|
)
|
||
Other current assets
|
21
|
|
|
(9
|
)
|
||
Other current liabilities
|
19
|
|
|
31
|
|
||
Other assets
|
(3
|
)
|
|
—
|
|
||
Other liabilities
|
28
|
|
|
29
|
|
||
Other, net
|
16
|
|
|
19
|
|
||
Net cash provided by operating activities
|
1,031
|
|
|
1,455
|
|
||
Cash Flows from Investing Activities:
|
|
|
|
||||
Capital expenditures
|
(994
|
)
|
|
(1,047
|
)
|
||
Acquisitions, net of cash acquired
|
(132
|
)
|
|
(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
|
|
|
223
|
|
||
Decrease (increase) in restricted cash of Bond Companies
|
8
|
|
|
(2
|
)
|
||
Proceeds from sale of marketable securities
|
—
|
|
|
178
|
|
||
Other, net
|
3
|
|
|
11
|
|
||
Net cash used in investing activities
|
(892
|
)
|
|
(739
|
)
|
||
Cash Flows from Financing Activities:
|
|
|
|
||||
Increase in short-term borrowings, net
|
13
|
|
|
3
|
|
||
Proceeds from (payments of) commercial paper, net
|
(428
|
)
|
|
63
|
|
||
Proceeds from long-term debt, net
|
1,096
|
|
|
600
|
|
||
Payments of long-term debt
|
(597
|
)
|
|
(855
|
)
|
||
Debt issuance costs
|
(13
|
)
|
|
(9
|
)
|
||
Payment of dividends on common stock
|
(346
|
)
|
|
(332
|
)
|
||
Distribution to ZENS note holders
|
—
|
|
|
(178
|
)
|
||
Other, net
|
(4
|
)
|
|
(2
|
)
|
||
Net cash used in financing activities
|
(279
|
)
|
|
(710
|
)
|
||
Net Increase (Decrease) in Cash and Cash Equivalents
|
(140
|
)
|
|
6
|
|
||
Cash and Cash Equivalents at Beginning of Period
|
341
|
|
|
264
|
|
||
Cash and Cash Equivalents at End of Period
|
$
|
201
|
|
|
$
|
270
|
|
Supplemental Disclosure of Cash Flow Information:
|
|
|
|
||||
Cash Payments/Receipts:
|
|
|
|
||||
Interest, net of capitalized interest
|
$
|
306
|
|
|
$
|
324
|
|
Income taxes (refunds), net
|
14
|
|
|
(105
|
)
|
||
Non-cash transactions:
|
|
|
|
||||
Accounts payable related to capital expenditures
|
111
|
|
|
75
|
|
•
|
Houston Electric, which engages in the electric transmission and distribution business in the Texas Gulf Coast area that includes the city of Houston;
|
•
|
CERC Corp., which owns and operates natural gas distribution systems in
six
states; and
|
•
|
CES, which obtains and offers competitive variable and fixed-price physical natural gas supplies and services primarily to commercial and industrial customers and electric and natural gas utilities in
33
states.
|
|
|
Estimate Fair Value
|
|
Estimate Useful Life
|
||
|
|
(in millions)
|
|
(in years)
|
||
Customer relationships
|
|
$
|
25
|
|
|
15
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
|
(in millions)
|
||||||||||||||
Operating Revenue
|
|
$
|
2,098
|
|
|
$
|
2,145
|
|
|
$
|
6,976
|
|
|
$
|
6,161
|
|
Net Income
|
|
169
|
|
|
179
|
|
|
496
|
|
|
335
|
|
|
Three Months Ended September 30,
|
||||||||||||||
|
2017
|
|
2016
|
||||||||||||
|
Pension
Benefits |
|
Postretirement
Benefits |
|
Pension
Benefits |
|
Postretirement
Benefits |
||||||||
|
(in millions)
|
||||||||||||||
Service cost
|
$
|
9
|
|
|
$
|
—
|
|
|
$
|
10
|
|
|
$
|
1
|
|
Interest cost
|
22
|
|
|
4
|
|
|
23
|
|
|
4
|
|
||||
Expected return on plan assets
|
(24
|
)
|
|
(1
|
)
|
|
(26
|
)
|
|
(2
|
)
|
||||
Amortization of prior service cost (credit)
|
2
|
|
|
(1
|
)
|
|
3
|
|
|
(1
|
)
|
||||
Amortization of net loss
|
14
|
|
|
—
|
|
|
15
|
|
|
—
|
|
||||
Net periodic cost
(2)
|
$
|
23
|
|
|
$
|
2
|
|
|
$
|
25
|
|
|
$
|
2
|
|
|
|
|
|
|
|
|
|
||||||||
|
Nine Months Ended September 30,
|
||||||||||||||
|
2017
|
|
2016
|
||||||||||||
|
Pension
Benefits |
|
Postretirement
Benefits |
|
Pension
Benefits |
|
Postretirement
Benefits |
||||||||
|
(in millions)
|
||||||||||||||
Service cost
|
$
|
27
|
|
|
$
|
1
|
|
|
$
|
28
|
|
|
$
|
2
|
|
Interest cost
|
66
|
|
|
12
|
|
|
70
|
|
|
13
|
|
||||
Expected return on plan assets
|
(72
|
)
|
|
(4
|
)
|
|
(76
|
)
|
|
(5
|
)
|
||||
Amortization of prior service cost (credit)
|
7
|
|
|
(3
|
)
|
|
7
|
|
|
(2
|
)
|
||||
Amortization of net loss
|
43
|
|
|
—
|
|
|
47
|
|
|
—
|
|
||||
Curtailment gain
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
||||
Net periodic cost
(2)
|
$
|
71
|
|
|
$
|
6
|
|
|
$
|
76
|
|
|
$
|
5
|
|
(1)
|
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. In 2016, 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.
|
(2)
|
Net periodic cost in this table is before considering amounts subject to overhead allocations for capital expenditure projects or for amounts subject to deferral for regulatory purposes.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(in millions)
|
||||||||||||||
Beginning Balance
|
$
|
(70
|
)
|
|
$
|
(65
|
)
|
|
$
|
(72
|
)
|
|
$
|
(65
|
)
|
Other comprehensive income (loss) before reclassifications
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
||||
Amounts reclassified from accumulated other comprehensive loss:
|
|
|
|
|
|
|
|
||||||||
Prior service cost
(2)
|
—
|
|
|
1
|
|
|
1
|
|
|
1
|
|
||||
Actuarial losses
(2)
|
2
|
|
|
2
|
|
|
5
|
|
|
5
|
|
||||
Tax expense
|
(2
|
)
|
|
(2
|
)
|
|
(4
|
)
|
|
(1
|
)
|
||||
Net current period other comprehensive income
|
—
|
|
|
1
|
|
|
2
|
|
|
1
|
|
||||
Ending Balance
|
$
|
(70
|
)
|
|
$
|
(64
|
)
|
|
$
|
(70
|
)
|
|
$
|
(64
|
)
|
(1)
|
Total other comprehensive income (loss) is 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, 2017
|
||||||||
Derivatives designated
as fair value hedges:
|
|
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
|
|
$
|
—
|
|
|
$
|
—
|
|
Natural gas derivatives
(1) (2) (3)
|
|
Current Liabilities: Non-trading derivative liabilities
|
|
5
|
|
|
—
|
|
||
|
|
|
|
|
|
|
||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
||||
Natural gas derivatives
(1) (2) (3)
|
|
Current Assets: Non-trading derivative assets
|
|
65
|
|
|
2
|
|
||
Natural gas derivatives
(1) (2) (3)
|
|
Other Assets: Non-trading derivative assets
|
|
58
|
|
|
2
|
|
||
Natural gas derivatives
(1) (2) (3)
|
|
Current Liabilities: Non-trading derivative liabilities
|
|
27
|
|
|
55
|
|
||
Natural gas derivatives
(1) (2) (3)
|
|
Other Liabilities: Non-trading derivative liabilities
|
|
9
|
|
|
25
|
|
||
Indexed debt securities derivative
|
|
Current Liabilities
|
|
—
|
|
|
776
|
|
||
Total
|
|
$
|
164
|
|
|
$
|
860
|
|
(1)
|
The fair value shown for natural gas contracts is comprised of derivative gross volumes totaling
1,866
Bcf or a net
46
Bcf long position. Certain natural gas contracts hedge basis risk only and lack a fixed price exposure.
|
(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
$93 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, impacted by collateral netting of
$13 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, 2017
|
||||||||||
|
|
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
|
|
$
|
97
|
|
|
$
|
(33
|
)
|
|
$
|
64
|
|
Other Assets: Non-trading derivative assets
|
|
67
|
|
|
(11
|
)
|
|
56
|
|
|||
Current Liabilities: Non-trading derivative liabilities
|
|
(57
|
)
|
|
40
|
|
|
(17
|
)
|
|||
Other Liabilities: Non-trading derivative liabilities
|
|
(27
|
)
|
|
17
|
|
|
(10
|
)
|
|||
Total
|
|
$
|
80
|
|
|
$
|
13
|
|
|
$
|
93
|
|
(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, 2016
|
||||||||
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
|
|
$
|
79
|
|
|
$
|
14
|
|
Natural gas derivatives
(1) (2) (3)
|
|
Other Assets: Non-trading derivative assets
|
|
24
|
|
|
5
|
|
||
Natural gas derivatives
(1) (2) (3)
|
|
Current Liabilities: Non-trading derivative liabilities
|
|
2
|
|
|
43
|
|
||
Natural gas derivatives
(1) (2) (3)
|
|
Other Liabilities: Non-trading derivative liabilities
|
|
—
|
|
|
5
|
|
||
Indexed debt securities derivative
|
|
Current Liabilities
|
|
—
|
|
|
717
|
|
||
Total
(4)
|
|
$
|
105
|
|
|
$
|
784
|
|
(1)
|
The fair value shown for natural gas contracts is comprised of derivative gross volumes totaling
1,035
Bcf or a net
59
Bcf long position. Certain natural gas contracts hedge basis risk only and lack a fixed price exposure.
|
(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
$24 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, impacted by collateral netting of
$14 million
.
|
(3)
|
Derivative Assets and Derivative Liabilities include no material amounts related to physical forward transactions with Enable.
|
(4)
|
No derivatives were designated as fair value hedges as of December 31, 2016.
|
Offsetting of Natural Gas Derivative Assets and Liabilities
|
||||||||||||
|
|
December 31, 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
|
|
$
|
81
|
|
|
$
|
(30
|
)
|
|
$
|
51
|
|
Other Assets: Non-trading derivative assets
|
|
24
|
|
|
(5
|
)
|
|
19
|
|
|||
Current Liabilities: Non-trading derivative liabilities
|
|
(57
|
)
|
|
16
|
|
|
(41
|
)
|
|||
Other Liabilities: Non-trading derivative liabilities
|
|
(10
|
)
|
|
5
|
|
|
(5
|
)
|
|||
Total
|
|
$
|
38
|
|
|
$
|
(14
|
)
|
|
$
|
24
|
|
(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.
|
(1)
|
Hedge ineffectiveness results from the basis ineffectiveness discussed above, and excludes the impact to natural gas expense from timing ineffectiveness. Timing ineffectiveness arises due to changes in the difference between the spot price and the futures price, as well as the difference between the timing of the settlement of the futures and the valuation of the underlying physical commodity. As the commodity contract nears the settlement date, spot-to-forward price differences should converge, which should reduce or eliminate the impact of this ineffectiveness on natural gas expense.
|
(c)
|
Credit Risk Contingent Features
|
|
September 30, 2017
|
||||||||||||||||||
|
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
|
||||||||||
|
|
|
|
|
|||||||||||||||
|
(in millions)
|
||||||||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Corporate equities
|
$
|
1,060
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,060
|
|
Investments, including money
market funds
(2)
|
67
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
67
|
|
|||||
Natural gas derivatives
(3)
|
3
|
|
|
128
|
|
|
33
|
|
|
(44
|
)
|
|
120
|
|
|||||
Hedged portion of natural gas inventory
|
65
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
65
|
|
|||||
Total assets
|
$
|
1,195
|
|
|
$
|
128
|
|
|
$
|
33
|
|
|
$
|
(44
|
)
|
|
$
|
1,312
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Indexed debt securities derivative
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
776
|
|
|
$
|
—
|
|
|
$
|
776
|
|
Natural gas derivatives
(3)
|
3
|
|
|
74
|
|
|
7
|
|
|
(57
|
)
|
|
27
|
|
|||||
Total liabilities
|
$
|
3
|
|
|
$
|
74
|
|
|
$
|
783
|
|
|
$
|
(57
|
)
|
|
$
|
803
|
|
(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
$13 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.
|
|
December 31, 2016
|
||||||||||||||||||
|
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
|
||||||||||
|
|
|
|
|
|||||||||||||||
|
(in millions)
|
||||||||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Corporate equities
|
$
|
956
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
956
|
|
Investments, including money
market funds
(2)
|
77
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
77
|
|
|||||
Natural gas derivatives
(3)
|
11
|
|
|
74
|
|
|
20
|
|
|
(35
|
)
|
|
70
|
|
|||||
Total assets
|
$
|
1,044
|
|
|
$
|
74
|
|
|
$
|
20
|
|
|
$
|
(35
|
)
|
|
$
|
1,103
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Indexed debt securities derivative
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
717
|
|
|
$
|
—
|
|
|
$
|
717
|
|
Natural gas derivatives
(3)
|
4
|
|
|
56
|
|
|
7
|
|
|
(21
|
)
|
|
46
|
|
|||||
Total liabilities
|
$
|
4
|
|
|
$
|
56
|
|
|
$
|
724
|
|
|
$
|
(21
|
)
|
|
$
|
763
|
|
(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
$14 million
held by CES from 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,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(in millions)
|
||||||||||||||
Beginning balance
|
$
|
(712
|
)
|
|
$
|
16
|
|
|
$
|
(704
|
)
|
|
$
|
12
|
|
Purchases
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
12
|
|
||||
Total gains (losses)
|
(38
|
)
|
|
9
|
|
|
(38
|
)
|
|
13
|
|
||||
Total settlements
|
(1
|
)
|
|
(8
|
)
|
|
(5
|
)
|
|
(24
|
)
|
||||
Transfers into Level 3
|
7
|
|
|
—
|
|
|
9
|
|
|
5
|
|
||||
Transfers out of Level 3
|
(6
|
)
|
|
—
|
|
|
(12
|
)
|
|
(1
|
)
|
||||
Ending balance
(2)
|
$
|
(750
|
)
|
|
$
|
17
|
|
|
$
|
(750
|
)
|
|
$
|
17
|
|
The amount of total gains (losses) for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held at the reporting date
(3)
|
$
|
(36
|
)
|
|
$
|
6
|
|
|
$
|
(42
|
)
|
|
$
|
14
|
|
(1)
|
Mark-to-market value of Level 3 derivative assets acquired through the purchase of AEM was
less than $1 million
at the acquisition date.
|
(2)
|
CenterPoint Energy did not have significant Level 3 sales during either of the
three or nine
months ended
September 30, 2017
or
2016
.
|
(3)
|
During 2016, CenterPoint Energy transferred its indexed debt securities from Level 2 to Level 3 to reflect changes in the significance of the unobservable inputs used in the valuation. As of
September 30, 2017
, the indexed debt securities liability was
$776 million
. During the
three and nine
months ended
September 30, 2017
, there was a loss of
$36 million
and
$59 million
, respectively, on the indexed debt securities.
|
|
September 30, 2017
|
|
December 31, 2016
|
||||||||||||
|
Carrying
Amount |
|
Fair
Value |
|
Carrying
Amount
|
|
Fair
Value
|
||||||||
|
(in millions)
|
||||||||||||||
Financial liabilities:
|
|
|
|
|
|
|
|
||||||||
Long-term debt
|
$
|
8,513
|
|
|
$
|
9,005
|
|
|
$
|
8,443
|
|
|
$
|
8,846
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(in millions)
|
||||||||||||||
Reimbursement of transition services
(1)
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
3
|
|
|
$
|
6
|
|
Natural gas expenses, including transportation and storage costs
|
23
|
|
|
22
|
|
|
80
|
|
|
79
|
|
||||
Interest income related to notes receivable from Enable
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
(1)
|
Represents amounts billed under the Transition Agreements for certain support services provided to Enable. Actual transition services costs are recorded net of reimbursement.
|
|
September 30, 2017
|
|
December 31, 2016
|
||||
|
(in millions)
|
||||||
Accounts receivable for amounts billed for transition services
|
$
|
1
|
|
|
$
|
1
|
|
Accounts payable for natural gas purchases from Enable
|
8
|
|
|
10
|
|
|
September 30, 2017
|
|
CenterPoint Energy
|
54.1
|
%
|
OGE
|
25.7
|
%
|
(1)
|
Excluding the Series A Preferred Units owned by CenterPoint Energy.
|
|
September 30, 2017
|
||||
|
Common
|
|
Series A Preferred
|
||
CenterPoint Energy
|
233,856,623
|
|
|
14,520,000
|
|
OGE
|
110,982,805
|
|
|
—
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
|
(in millions)
|
||||||||||||||
Operating revenues
|
|
$
|
705
|
|
|
$
|
620
|
|
|
$
|
1,997
|
|
|
$
|
1,658
|
|
Cost of sales, excluding depreciation and amortization
|
|
349
|
|
|
268
|
|
|
936
|
|
|
717
|
|
||||
Impairment of goodwill and other long-lived assets
|
|
—
|
|
|
8
|
|
|
—
|
|
|
8
|
|
||||
Operating income
|
|
137
|
|
|
139
|
|
|
399
|
|
|
299
|
|
||||
Net income attributable to Enable
|
|
104
|
|
|
110
|
|
|
301
|
|
|
231
|
|
||||
Reconciliation of Equity in Earnings, net:
|
|
|
|
|
|
|
|
|
||||||||
CenterPoint Energy’s interest
|
|
$
|
56
|
|
|
$
|
61
|
|
|
$
|
163
|
|
|
$
|
128
|
|
Basis difference amortization
(1)
|
|
12
|
|
|
12
|
|
|
36
|
|
|
36
|
|
||||
CenterPoint Energy’s equity in earnings, net
|
|
$
|
68
|
|
|
$
|
73
|
|
|
$
|
199
|
|
|
$
|
164
|
|
(1)
|
Equity in earnings 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.
|
|
|
September 30,
2017 |
|
December 31, 2016
|
||||
|
|
(in millions)
|
||||||
Current assets
|
|
$
|
446
|
|
|
$
|
396
|
|
Non-current assets
|
|
10,816
|
|
|
10,816
|
|
||
Current liabilities
|
|
831
|
|
|
362
|
|
||
Non-current liabilities
|
|
2,740
|
|
|
3,056
|
|
||
Non-controlling interest
|
|
12
|
|
|
12
|
|
||
Preferred equity
|
|
362
|
|
|
362
|
|
||
Enable partners’ equity
|
|
7,317
|
|
|
7,420
|
|
||
Reconciliation of Equity Method Investment in Enable:
|
|
|
|
|
||||
CenterPoint Energy’s ownership interest in Enable partners’ capital
|
|
$
|
4,007
|
|
|
$
|
4,067
|
|
CenterPoint Energy’s basis difference
|
|
(1,526
|
)
|
|
(1,562
|
)
|
||
CenterPoint Energy’s equity method investment in Enable
|
|
$
|
2,481
|
|
|
$
|
2,505
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(in millions)
|
||||||||||||||
Investment in Enable’s common units
|
$
|
74
|
|
|
$
|
74
|
|
|
$
|
223
|
|
|
$
|
223
|
|
Investment in Enable’s Series A Preferred Units
|
9
|
|
|
9
|
|
|
27
|
|
|
13
|
|
|
December 31, 2016
|
|
AEM Acquisition (1)
|
|
September 30,
2017 |
|
||||||
|
(in millions)
|
|
||||||||||
Natural Gas Distribution
|
$
|
746
|
|
|
$
|
—
|
|
|
$
|
746
|
|
|
Energy Services
|
105
|
|
(2)
|
5
|
|
|
110
|
|
(2)
|
|||
Other Operations
|
11
|
|
|
—
|
|
|
11
|
|
|
|||
Total
|
$
|
862
|
|
|
$
|
5
|
|
|
$
|
867
|
|
|
(a)
|
Short-term Borrowings
|
(b)
|
Long-term Debt
|
|
|
Issuance Date
|
|
Debt Instrument
|
|
Aggregate Principal Amount
|
|
Interest Rate
|
|
Maturity Date
|
||
|
|
|
|
|
|
(in millions)
|
|
|
|
|
||
Houston Electric
|
|
January 2017
|
|
General mortgage bonds
|
|
$
|
300
|
|
|
3.00%
|
|
2027
|
CenterPoint Energy
|
|
August 2017
|
|
Unsecured senior notes
|
|
500
|
|
|
2.50%
|
|
2022
|
|
CERC Corp.
|
|
August 2017
|
|
Unsecured senior notes
|
|
300
|
|
|
4.10%
|
|
2047
|
|
September 30, 2017
|
|
December 31, 2016
|
|
||||||||||||||||||||||||||||
|
Size of
Facility |
|
Loans
|
|
Letters
of Credit |
|
Commercial
Paper |
|
Size of
Facility |
|
Loans
|
|
Letters
of Credit |
|
Commercial
Paper |
|
||||||||||||||||
|
(in millions)
|
|
||||||||||||||||||||||||||||||
CenterPoint Energy
|
$
|
1,700
|
|
|
$
|
—
|
|
|
$
|
6
|
|
|
$
|
447
|
|
(1)
|
$
|
1,600
|
|
|
$
|
—
|
|
|
$
|
6
|
|
|
$
|
835
|
|
(1)
|
Houston Electric
|
300
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
300
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
||||||||
CERC Corp.
|
900
|
|
|
—
|
|
|
—
|
|
|
529
|
|
(2)
|
600
|
|
|
—
|
|
|
4
|
|
|
569
|
|
(2)
|
||||||||
Total
|
$
|
2,900
|
|
|
$
|
—
|
|
|
$
|
10
|
|
|
$
|
976
|
|
|
$
|
2,500
|
|
|
$
|
—
|
|
|
$
|
14
|
|
|
$
|
1,404
|
|
|
(1)
|
Weighted average interest rate was
1.42%
and
1.04%
as of
September 30, 2017
and
December 31, 2016
, respectively.
|
(2)
|
Weighted average interest rate was
1.43%
and
1.03%
as of
September 30, 2017
and
December 31, 2016
, respectively.
|
Execution
Date
|
|
Company
|
|
Size of
Facility
|
|
Draw Rate of LIBOR plus
(2)
|
|
Financial Covenant Limit on Debt for Borrowed Money to Capital Ratio
|
|
Debt for Borrowed Money to Capital
Ratio as of
September 30, 2017
(3)
|
|
Termination Date
(5)
|
||
|
|
|
|
(in millions)
|
|
|
|
|
|
|
|
|
||
March 3, 2016
|
|
CenterPoint Energy
|
|
$
|
1,700
|
|
(1)
|
1.250%
|
|
65%
|
(4)
|
56.9%
|
|
March 3, 2022
|
March 3, 2016
|
|
Houston Electric
|
|
300
|
|
|
1.125%
|
|
65%
|
(4)
|
49.0%
|
|
March 3, 2022
|
|
March 3, 2016
|
|
CERC Corp.
|
|
900
|
|
(1)
|
1.250%
|
|
65%
|
|
38.6%
|
|
March 3, 2022
|
(1)
|
Amended on June 16, 2017 to increase the aggregate commitment size as noted above.
|
(2)
|
Based on current credit ratings.
|
(3)
|
As defined in the revolving credit facility agreement, excluding Securitization Bonds.
|
(4)
|
The financial covenant limit will temporarily increase from
65%
to
70%
if Houston Electric experiences damage from a natural disaster in its service territory and CenterPoint Energy certifies to the administrative agent that Houston Electric has incurred system restoration costs reasonably likely to exceed
$100 million
in a consecutive
12
-month period, all or part of which Houston Electric intends to seek to recover through securitization financing. Such temporary increase in the financial covenant would be in effect from the date CenterPoint Energy delivers its certification until the earliest to occur of (i) the completion of the securitization financing, (ii) the first anniversary of CenterPoint Energy’s certification or (iii) the revocation of such certification.
|
(5)
|
Amended on June 16, 2017 to extend the termination date as noted above.
|
(a)
|
Natural Gas Supply Commitments
|
(b)
|
Legal, Environmental and Other Matters
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(in millions, except share and per share amounts)
|
||||||||||||||
Net income
|
$
|
169
|
|
|
$
|
179
|
|
|
$
|
496
|
|
|
$
|
331
|
|
|
|
|
|
|
|
|
|
||||||||
Basic weighted average shares outstanding
|
431,026,000
|
|
|
430,682,000
|
|
|
430,939,000
|
|
|
430,581,000
|
|
||||
Plus: Incremental shares from assumed conversions:
|
|
|
|
|
|
|
|
||||||||
Restricted stock
|
3,060,000
|
|
|
2,714,000
|
|
|
3,060,000
|
|
|
2,714,000
|
|
||||
Diluted weighted average shares
|
434,086,000
|
|
|
433,396,000
|
|
|
433,999,000
|
|
|
433,295,000
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Basic earnings per share
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
0.39
|
|
|
$
|
0.42
|
|
|
$
|
1.15
|
|
|
$
|
0.77
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted earnings per share
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
0.39
|
|
|
$
|
0.41
|
|
|
$
|
1.14
|
|
|
$
|
0.76
|
|
|
For the Three Months Ended September 30, 2017
|
||||||||||
|
Revenues from
External Customers |
|
Net
Intersegment Revenues |
|
Operating
Income |
||||||
|
(in millions)
|
||||||||||
Electric Transmission & Distribution
|
$
|
843
|
|
(1)
|
$
|
—
|
|
|
$
|
247
|
|
Natural Gas Distribution
|
390
|
|
|
8
|
|
|
19
|
|
|||
Energy Services
|
861
|
|
|
10
|
|
|
7
|
|
|||
Midstream Investments
(2)
|
—
|
|
|
—
|
|
|
—
|
|
|||
Other Operations
|
4
|
|
|
—
|
|
|
6
|
|
|||
Eliminations
|
—
|
|
|
(18
|
)
|
|
—
|
|
|||
Consolidated
|
$
|
2,098
|
|
|
$
|
—
|
|
|
$
|
279
|
|
|
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 Nine Months Ended September 30, 2017
|
|
|
|
||||||||||||
|
Revenues from
External
Customers
|
|
Net
Intersegment
Revenues
|
|
Operating
Income
|
|
Total Assets as of September 30, 2017
|
|
||||||||
|
(in millions)
|
|
||||||||||||||
Electric Transmission & Distribution
|
$
|
2,234
|
|
(1)
|
$
|
—
|
|
|
$
|
489
|
|
|
$
|
10,289
|
|
|
Natural Gas Distribution
|
1,767
|
|
|
24
|
|
|
220
|
|
|
6,067
|
|
|
||||
Energy Services
|
2,964
|
|
|
34
|
|
|
58
|
|
|
1,337
|
|
|
||||
Midstream Investments
(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
2,481
|
|
|
||||
Other Operations
|
11
|
|
|
—
|
|
|
9
|
|
|
2,694
|
|
(3)
|
||||
Eliminations
|
—
|
|
|
(58
|
)
|
|
—
|
|
|
(733
|
)
|
|
||||
Consolidated
|
$
|
6,976
|
|
|
$
|
—
|
|
|
$
|
776
|
|
|
$
|
22,135
|
|
|
|
For the Nine Months Ended September 30, 2016
|
|
|
|
||||||||||||
|
Revenues from
External Customers |
|
Net
Intersegment Revenues |
|
Operating
Income |
|
Total Assets as of December 31, 2016
|
|
||||||||
|
(in millions)
|
|
||||||||||||||
Electric Transmission & Distribution
|
$
|
2,331
|
|
(1)
|
$
|
—
|
|
|
$
|
498
|
|
|
$
|
10,211
|
|
|
Natural Gas Distribution
|
1,672
|
|
|
21
|
|
|
202
|
|
|
6,099
|
|
|
||||
Energy Services
|
1,433
|
|
|
17
|
|
|
11
|
|
|
1,102
|
|
|
||||
Midstream Investments
(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
2,505
|
|
|
||||
Other Operations
|
11
|
|
|
—
|
|
|
5
|
|
|
2,681
|
|
(3)
|
||||
Eliminations
|
—
|
|
|
(38
|
)
|
|
—
|
|
|
(769
|
)
|
|
||||
Consolidated
|
$
|
5,447
|
|
|
$
|
—
|
|
|
$
|
716
|
|
|
$
|
21,829
|
|
|
(1)
|
Electric Transmission & Distribution revenues from major customers are as follows:
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
|
(in millions)
|
||||||||||||||
Affiliates of NRG
|
|
$
|
221
|
|
|
$
|
223
|
|
|
$
|
540
|
|
|
$
|
527
|
|
Affiliates of Vistra Energy Corp.
|
|
72
|
|
|
71
|
|
|
172
|
|
|
166
|
|
(2)
|
Midstream Investments’ equity earnings are as follows:
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
|
(in millions)
|
||||||||||||||
Enable
|
|
$
|
68
|
|
|
$
|
73
|
|
|
$
|
199
|
|
|
$
|
164
|
|
(3)
|
Included in total assets of Other Operations as of
September 30, 2017
and
December 31, 2016
are pension and other postemployment-related regulatory assets of
$715 million
and
$759 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,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(in millions, except per share amounts)
|
||||||||||||||
Revenues
|
$
|
2,098
|
|
|
$
|
1,889
|
|
|
$
|
6,976
|
|
|
$
|
5,447
|
|
Expenses
|
1,819
|
|
|
1,605
|
|
|
6,200
|
|
|
4,731
|
|
||||
Operating Income
|
279
|
|
|
284
|
|
|
776
|
|
|
716
|
|
||||
Interest and Other Finance Charges
|
(80
|
)
|
|
(83
|
)
|
|
(235
|
)
|
|
(256
|
)
|
||||
Interest on Securitization Bonds
|
(18
|
)
|
|
(23
|
)
|
|
(58
|
)
|
|
(70
|
)
|
||||
Equity in Earnings of Unconsolidated Affiliate, net
|
68
|
|
|
73
|
|
|
199
|
|
|
164
|
|
||||
Other Income, net
|
18
|
|
|
25
|
|
|
95
|
|
|
(30
|
)
|
||||
Income Before Income Taxes
|
267
|
|
|
276
|
|
|
777
|
|
|
524
|
|
||||
Income Tax Expense
|
98
|
|
|
97
|
|
|
281
|
|
|
193
|
|
||||
Net Income
|
$
|
169
|
|
|
$
|
179
|
|
|
$
|
496
|
|
|
$
|
331
|
|
|
|
|
|
|
|
|
|
||||||||
Basic Earnings Per Share
|
$
|
0.39
|
|
|
$
|
0.42
|
|
|
$
|
1.15
|
|
|
$
|
0.77
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted Earnings Per Share
|
$
|
0.39
|
|
|
$
|
0.41
|
|
|
$
|
1.14
|
|
|
$
|
0.76
|
|
•
|
a $40 million decrease in the gain on marketable securities included in Other Income, net shown above;
|
•
|
a $5 million decrease in operating income discussed below by segment;
|
•
|
a $5 million decrease in equity earnings from our investment in Enable, discussed further in Note 8 to our Interim Condensed Financial Statements; and
|
•
|
a $3 million decrease in miscellaneous other non-operating income included in Other Income, net shown above.
|
•
|
a $36 million decrease in the loss on the underlying value of the indexed debt securities related to the ZENS included in Other Income, net shown above;
|
•
|
a $5 million decrease in interest expense related to lower outstanding balances of our Securitization Bonds; and
|
•
|
a $3 million decrease in interest expense due to lower weighted average interest rates on outstanding debt.
|
•
|
a $199 million decrease in the loss on indexed debt securities related to the ZENS included in Other Income, net shown above, resulting from decreased losses of $82 million in the underlying value of the indexed debt securities and a loss of $117 million from the Charter merger in 2016;
|
•
|
a $60 million increase in operating income discussed below by segment;
|
•
|
a $35 million increase in equity earnings from our investment in Enable, discussed further in Note 8 to our Interim Condensed Financial Statements;
|
•
|
a $21 million decrease in interest expense due to lower weighted average interest rates on outstanding debt;
|
•
|
a $14 million increase in cash distributions on Series A Preferred Units included in Other Income, net shown above; and
|
•
|
a $12 million decrease in interest expense related to lower outstanding balances of our Securitization Bonds.
|
•
|
an $88 million increase in income tax expense due to higher net income;
|
•
|
an $83 million decrease in the gain on marketable securities included in Other Income, net shown above; and
|
•
|
a $5 million decrease in miscellaneous other non-operating income included in Other Income, net shown above.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(in millions)
|
||||||||||||||
Electric Transmission & Distribution
|
$
|
247
|
|
|
$
|
257
|
|
|
$
|
489
|
|
|
$
|
498
|
|
Natural Gas Distribution
|
19
|
|
|
22
|
|
|
220
|
|
|
202
|
|
||||
Energy Services
|
7
|
|
|
5
|
|
|
58
|
|
|
11
|
|
||||
Other Operations
|
6
|
|
|
—
|
|
|
9
|
|
|
5
|
|
||||
Total Consolidated Operating Income
|
$
|
279
|
|
|
$
|
284
|
|
|
$
|
776
|
|
|
$
|
716
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(in millions, except throughput and customer data)
|
||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
TDU
|
$
|
729
|
|
|
$
|
725
|
|
|
$
|
1,944
|
|
|
$
|
1,881
|
|
Bond Companies
|
114
|
|
|
183
|
|
|
290
|
|
|
450
|
|
||||
Total revenues
|
843
|
|
|
908
|
|
|
2,234
|
|
|
2,331
|
|
||||
Expenses:
|
|
|
|
|
|
|
|
||||||||
Operation and maintenance, excluding Bond Companies
|
344
|
|
|
336
|
|
|
1,040
|
|
|
995
|
|
||||
Depreciation and amortization, excluding Bond Companies
|
97
|
|
|
96
|
|
|
296
|
|
|
285
|
|
||||
Taxes other than income taxes
|
59
|
|
|
59
|
|
|
177
|
|
|
173
|
|
||||
Bond Companies
|
96
|
|
|
160
|
|
|
232
|
|
|
380
|
|
||||
Total expenses
|
596
|
|
|
651
|
|
|
1,745
|
|
|
1,833
|
|
||||
Operating Income
|
$
|
247
|
|
|
$
|
257
|
|
|
$
|
489
|
|
|
$
|
498
|
|
Operating Income:
|
|
|
|
|
|
|
|
||||||||
TDU
|
$
|
229
|
|
|
$
|
234
|
|
|
$
|
431
|
|
|
$
|
428
|
|
Bond Companies
(1)
|
18
|
|
|
23
|
|
|
58
|
|
|
70
|
|
||||
Total segment operating income
|
$
|
247
|
|
|
$
|
257
|
|
|
$
|
489
|
|
|
$
|
498
|
|
Throughput (in GWh):
|
|
|
|
|
|
|
|
||||||||
Residential
|
10,419
|
|
|
10,776
|
|
|
23,512
|
|
|
23,427
|
|
||||
Total
|
26,453
|
|
|
26,518
|
|
|
67,956
|
|
|
66,839
|
|
||||
Number of metered customers at end of period:
|
|
|
|
|
|
|
|
||||||||
Residential
|
2,156,624
|
|
|
2,116,312
|
|
|
2,156,624
|
|
|
2,116,312
|
|
||||
Total
|
2,435,558
|
|
|
2,389,014
|
|
|
2,435,558
|
|
|
2,389,014
|
|
(1)
|
Represents the amount necessary to pay interest on the Securitization Bonds.
|
•
|
lower usage of $12 million, largely due to a return to more normal weather in 2017;
|
•
|
lower equity return of $9 million, primarily related to the annual true-up of transition charges correcting for over-collections that occurred during 2016; and
|
•
|
lower miscellaneous revenues, including right-of-way, of $7 million.
|
•
|
rate increases of $12 million related to distribution capital investments;
|
•
|
lower operation and maintenance expenses of $4 million; and
|
•
|
customer growth of $9 million from the addition of over 46,000 new customers.
|
•
|
rate increases of $39 million related to distribution capital investments; and
|
•
|
customer growth of $26 million from the addition of over 46,000 new customers.
|
•
|
lower equity return of $22 million, primarily related to the annual true-up of transition charges correcting for over-collections that occurred during 2016;
|
•
|
higher depreciation and amortization expense, primarily because of ongoing additions to plant in service, and other taxes of $14 million;
|
•
|
lower usage of $14 million;
|
•
|
lower miscellaneous revenues, including right-of-way, of $9 million;
|
•
|
higher operation and maintenance expenses of $2 million; and
|
•
|
increased transmission costs billed by transmission providers of $47 million, which were partially offset by higher transmission-related revenues of $46 million.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(in millions, except throughput and customer data)
|
||||||||||||||
Revenues
|
$
|
398
|
|
|
$
|
377
|
|
|
$
|
1,791
|
|
|
$
|
1,693
|
|
Expenses:
|
|
|
|
|
|
|
|
||||||||
Natural gas
|
117
|
|
|
104
|
|
|
742
|
|
|
679
|
|
||||
Operation and maintenance
|
163
|
|
|
159
|
|
|
531
|
|
|
526
|
|
||||
Depreciation and amortization
|
66
|
|
|
61
|
|
|
194
|
|
|
180
|
|
||||
Taxes other than income taxes
|
33
|
|
|
31
|
|
|
104
|
|
|
106
|
|
||||
Total expenses
|
379
|
|
|
355
|
|
|
1,571
|
|
|
1,491
|
|
||||
Operating Income
|
$
|
19
|
|
|
$
|
22
|
|
|
$
|
220
|
|
|
$
|
202
|
|
Throughput (in Bcf):
|
|
|
|
|
|
|
|
||||||||
Residential
|
13
|
|
|
12
|
|
|
94
|
|
|
105
|
|
||||
Commercial and industrial
|
50
|
|
|
51
|
|
|
189
|
|
|
193
|
|
||||
Total Throughput
|
63
|
|
|
63
|
|
|
283
|
|
|
298
|
|
||||
Number of customers at end of period:
|
|
|
|
|
|
|
|
||||||||
Residential
|
3,179,284
|
|
|
3,143,357
|
|
|
3,179,284
|
|
|
3,143,357
|
|
||||
Commercial and industrial
|
253,041
|
|
|
251,043
|
|
|
253,041
|
|
|
251,043
|
|
||||
Total
|
3,432,325
|
|
|
3,394,400
|
|
|
3,432,325
|
|
|
3,394,400
|
|
•
|
increased depreciation and amortization expense, primarily due to ongoing additions to plant-in-service, and other taxes of $6 million;
|
•
|
lower usage of $4 million, primarily due to the timing of a decoupling normalization adjustment; and
|
•
|
higher operation and maintenance expenses of $3 million.
|
•
|
rate relief increased $5 million, primarily from Texas jurisdictions of $2 million, Arkansas rate case filing of $1 million and Mississippi RRA of $1 million; and
|
•
|
customer growth of $2 million associated with the addition of approximately 38,000 new customers.
|
•
|
rate increases of $25 million, primarily from Texas jurisdictions of $12 million, Arkansas rate case filing of $10 million and Mississippi RRA of $3 million;
|
•
|
labor and benefits were favorable by $11 million resulting primarily from the recording of a regulatory asset (and a corresponding reduction in expense) to recover $16 million of prior postretirement expenses in future rates established in the Texas Gulf rate order; and
|
•
|
customer growth of $3 million associated with the addition of approximately 38,000 new customers.
|
•
|
increased depreciation and amortization expense, primarily due to ongoing additions to plant-in-service, and other taxes of $10 million;
|
•
|
higher operation and maintenance expenses of $9 million partially resulting from an adjustment associated with the Texas Gulf rate order of $4 million, which is timing related; and
|
•
|
lower usage of $7 million primarily due to milder weather effects, partially mitigated by decoupling and weather normalization adjustments.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(in millions, except throughput and customer data)
|
||||||||||||||
Revenues
|
$
|
871
|
|
|
$
|
614
|
|
|
$
|
2,998
|
|
|
$
|
1,450
|
|
Expenses:
|
|
|
|
|
|
|
|
||||||||
Natural gas
|
839
|
|
|
591
|
|
|
2,865
|
|
|
1,389
|
|
||||
Operation and maintenance
|
22
|
|
|
16
|
|
|
65
|
|
|
43
|
|
||||
Depreciation and amortization
|
3
|
|
|
1
|
|
|
9
|
|
|
5
|
|
||||
Taxes other than income taxes
|
—
|
|
|
1
|
|
|
1
|
|
|
2
|
|
||||
Total expenses
|
864
|
|
|
609
|
|
|
2,940
|
|
|
1,439
|
|
||||
Operating Income
|
$
|
7
|
|
|
$
|
5
|
|
|
$
|
58
|
|
|
$
|
11
|
|
|
|
|
|
|
|
|
|
||||||||
Timing impacts related to mark-to-market gain (loss)
(1)
|
$
|
2
|
|
|
$
|
(2
|
)
|
|
$
|
23
|
|
|
$
|
(18
|
)
|
|
|
|
|
|
|
|
|
||||||||
Throughput (in Bcf)
|
272
|
|
|
200
|
|
|
864
|
|
|
570
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Number of customers at end of period
(2)
|
30,817
|
|
|
31,669
|
|
|
30,817
|
|
|
31,669
|
|
(1)
|
Includes the change in unrealized mark-to-market value and the impact from derivative assets and liabilities acquired through the purchase of Continuum and AEM.
|
(2)
|
Does not include approximately 66,100 natural gas customers as of
September 30, 2017
that are under residential and small commercial choice programs invoiced by their host utility.
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
|
(in millions)
|
||||||||||||||
Enable
|
|
$
|
68
|
|
|
$
|
73
|
|
|
$
|
199
|
|
|
$
|
164
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(in millions)
|
||||||||||||||
Revenues
|
$
|
4
|
|
|
$
|
3
|
|
|
$
|
11
|
|
|
$
|
11
|
|
Expenses
|
(2
|
)
|
|
3
|
|
|
2
|
|
|
6
|
|
||||
Operating Income
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
9
|
|
|
$
|
5
|
|
|
Nine Months Ended September 30,
|
||||||
|
2017
|
|
2016
|
||||
|
(in millions)
|
||||||
Cash provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
1,031
|
|
|
$
|
1,455
|
|
Investing activities
|
(892
|
)
|
|
(739
|
)
|
||
Financing activities
|
(279
|
)
|
|
(710
|
)
|
•
|
capital expenditures of approximately $473 million;
|
•
|
maturing senior notes of $250 million;
|
•
|
scheduled principal payments on Securitization Bonds of $64 million;
|
•
|
restoration costs associated with Hurricane Harvey;
|
•
|
dividend payments on CenterPoint Energy, Inc. common stock; and
|
•
|
interest payments on debt.
|
Mechanism
|
|
Annual Increase
(1)
(in millions)
|
|
Filing
Date
|
|
Effective Date
|
|
Approval Date
|
|
Additional Information
|
Houston Electric (PUCT)
|
||||||||||
AMS
|
|
N/A
|
|
June
2017
|
|
TBD
|
|
TBD
|
|
Final reconciliation of AMS surcharge proposing a $28.7 million refund for AMS revenue in excess of expenses, for which a reserve has been recorded. Refunds began in September 2017.
|
EECRF (2)
|
|
$11.0
|
|
June
2017
|
|
TBD
|
|
TBD
|
|
Annual reconciliation filing for program year 2016 and includes proposed performance bonus of $11 million. Anticipated effective date of March 2018.
|
DCRF
|
|
41.8
|
|
April
2017
|
|
September
2017
|
|
July
2017
|
|
Based on an increase in eligible distribution-invested capital for 2016 of $479 million. Unanimous Stipulation and Settlement Agreement was filed in June 2017 for $86.8 million (a $41.8 million annual increase). The settlement agreement also included the AMS refund referenced above.
|
TCOS
|
|
7.8
|
|
December 2016
|
|
February
2017
|
|
February
2017 |
|
Based on an incremental increase in total rate base of $109.6 million.
|
TCOS
|
|
39.3
|
|
September 2017
|
|
TBD
|
|
TBD
|
|
Based on an incremental increase in total rate base of $263.4 million.
|
South Texas and Beaumont/East Texas (Railroad Commission)
|
||||||||||
GRIP
|
|
7.6
|
|
March
2017
|
|
July
2017
|
|
June
2017
|
|
Based on net change in invested capital of $46.5 million.
|
Houston and Texas Coast (Railroad Commission)
|
||||||||||
Rate Case
|
|
16.5
|
|
November 2016
|
|
May
2017
|
|
May
2017
|
|
The Railroad Commission approved a unanimous settlement agreement establishing parameters for future GRIP filings, including a 9.6% ROE on a 55.15% equity ratio.
|
Texarkana, Texas Service Area (Multiple City Jurisdictions)
|
||||||||||
Rate Case
|
|
1.1
|
|
July
2017
|
|
September
2017
|
|
August 2017
|
|
Approved rates are consistent with Arkansas rates approved in 2016.
|
Arkansas (APSC)
|
||||||||||
EECR (2)
|
|
0.5
|
|
May
2017
|
|
January 2018
|
|
September 2017
|
|
Recovers $11.0 million, including an incentive of $0.5 million based on 2016 program performance.
|
FRP
|
|
7.6
|
|
April
2017 |
|
October
2017 |
|
September 2017
|
|
Based on ROE of 9.5% as approved in the last rate case. Unanimous Settlement Agreement was filed in July 2017 for $7.6 million and was subsequently approved.
|
BDA
|
|
3.9
|
|
March
2017
|
|
June
2017
|
|
June
2017
|
|
For the evaluation period between January 2016 and August 2016. Amounts are recorded during the evaluation period.
|
Minnesota (MPUC)
|
||||||||||
Rate Case
|
|
56.5
|
|
August 2017
|
|
TBD
|
|
TBD
|
|
Reflects a proposed 10.0% ROE on a 52.18% equity ratio. Includes a proposal to extend decoupling beyond current expiration date of June 2018. Interim rates reflecting an annual increase of $47.8 million were effective October 1, 2017.
|
CIP (2)
|
|
13.8
|
|
May
2017
|
|
August 2017
|
|
August 2017
|
|
Annual reconciliation filing for program year 2016 and includes performance bonus of $13.8 million.
|
Decoupling
|
|
20.4
|
|
September 2017
|
|
September
2017
|
|
TBD
|
|
Reflects revenue under recovery for the period July 1, 2016 through June 30, 2017 and $3.0 million related to the under recovery of prior period adjustment factor. $9.2 million was recognized in 2016 and $11.2 million has been recognized in 2017.
|
Mississippi (MPSC)
|
||||||||||
RRA
|
|
2.3
|
|
May
2017
|
|
July
2017
|
|
July
2017
|
|
Authorized ROE of 9.59% and a capital structure of 50% debt and 50% equity.
|
Louisiana (LPSC)
|
||||||||||
RSP
|
|
1.0
|
|
September 2016
|
|
December 2016
|
|
April
2017
|
|
Authorized ROE of 9.95% and a capital structure of 48% debt and 52% equity.
|
RSP
|
|
3.4
|
|
September 2017
|
|
December 2017
|
|
TBD
|
|
Authorized ROE of 9.95% and a capital structure of 48% debt and 52% equity.
|
Oklahoma (OCC)
|
||||||||||
EECR (2)
|
|
0.4
|
|
March
2017
|
|
November 2017
|
|
October 2017
|
|
Recovers $2.6 million, including an incentive of $0.4 million based on 2016 program performance.
|
PBRC
|
|
2.2
|
|
March
2017
|
|
November 2017
|
|
October 2017
|
|
Based on ROE of 10%.
|
(1)
|
Represents proposed increases when effective date and/or approval date is not yet determined. Approved rates could differ materially from proposed rates.
|
(2)
|
Amounts are recorded when approved.
|
Company
|
|
Size of
Facility
|
|
Amount
Utilized at
October 26, 2017 (1)
|
|
Termination Date
|
||||
(in millions)
|
||||||||||
CenterPoint Energy
|
|
$
|
1,700
|
|
|
$
|
403
|
|
(2)
|
March 3, 2022
|
Houston Electric
|
|
300
|
|
|
4
|
|
(3)
|
March 3, 2022
|
||
CERC Corp.
|
|
900
|
|
|
561
|
|
(4)
|
March 3, 2022
|
(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 $2.9 billion as of
September 30, 2017
.
|
(2)
|
Represents outstanding commercial paper of $397 million and outstanding letters of credit of $6 million.
|
(3)
|
Represents outstanding letters of credit.
|
(4)
|
Represents outstanding commercial paper.
|
|
|
Moody’s
|
|
S&P
|
|
Fitch
|
||||||
Company/Instrument
|
|
Rating
|
|
Outlook (1)
|
|
Rating
|
|
Outlook (2)
|
|
Rating
|
|
Outlook (3)
|
CenterPoint Energy Senior
Unsecured Debt
|
|
Baa1
|
|
Stable
|
|
BBB+
|
|
Positive
|
|
BBB
|
|
Positive
|
Houston Electric Senior
Secured Debt |
|
A1
|
|
Stable
|
|
A
|
|
Positive
|
|
A+
|
|
Stable
|
CERC Corp. Senior Unsecured
Debt
|
|
Baa2
|
|
Stable
|
|
A-
|
|
Positive
|
|
BBB
|
|
Positive
|
(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, currently the subject of bankruptcy proceedings, to satisfy their obligations in respect of GenOn’s indemnity obligations to us and our subsidiaries;
|
•
|
the ability of REPs, including REP affiliates of NRG and Vistra Energy Corp., formerly known as TCEH 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
2016
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
|
|
|
CenterPoint Energy’s Form 8-K dated July 24, 2008
|
|
1-31447
|
|
3.2
|
|
3.2
|
|
|
CenterPoint Energy’s Form 8-K dated February 21, 2017
|
|
1-31447
|
|
3.1
|
|
3.3
|
|
|
CenterPoint Energy’s Form 10-K for the year ended December 31, 2011
|
|
1-31447
|
|
3(c)
|
|
4.1
|
|
|
CenterPoint Energy’s Registration Statement on Form S-4
|
|
3-69502
|
|
4.1
|
|
4.2
|
|
|
CenterPoint Energy’s Form 8-K dated March 3, 2016
|
|
1-31447
|
|
4.1
|
Exhibit
Number
|
|
Description
|
|
Report or Registration
Statement
|
|
SEC File or
Registration
Number
|
|
Exhibit
Reference
|
4.3
|
|
|
CenterPoint Energy’s Form 8-K dated March 3, 2016
|
|
1-31447
|
|
4.2
|
|
4.4
|
|
|
CenterPoint Energy’s Form 8-K dated March 3, 2016
|
|
1-31447
|
|
4.3
|
|
4.5
|
|
|
CenterPoint Energy’s Form 8-K dated June 16, 2017
|
|
1-31447
|
|
4.1
|
|
4.6
|
|
|
CenterPoint Energy’s Form 8-K dated June 16, 2017
|
|
1-31447
|
|
4.2
|
|
4.7
|
|
|
CenterPoint Energy’s Form 8-K dated June 16, 2017
|
|
1-31447
|
|
4.3
|
|
4.8
|
|
Indenture, dated as of May 19, 2003, between CenterPoint Energy and JPMorgan Chase Bank, as Trustee
|
|
CenterPoint Energy’s Form 8-K dated May 19, 2003
|
|
1-31447
|
|
4.1
|
+4.9
|
|
|
|
|
|
|
|
|
4.10
|
|
Indenture, dated as of February 1, 1998, between Reliant Energy Resources Corp. and Chase Bank of Texas, National Association, as Trustee
|
|
CERC Corp.’s Form 8-K dated February 5, 1998
|
|
1-13265
|
|
4.1
|
+4.11
|
|
|
|
|
|
|
|
|
+12
|
|
|
|
|
|
|
|
|
+31.1
|
|
|
|
|
|
|
|
|
+31.2
|
|
|
|
|
|
|
|
|
+32.1
|
|
|
|
|
|
|
|
|
+32.2
|
|
|
|
|
|
|
|
|
+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
|
|
|
|
|
CENTERPOINT ENERGY, INC.
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ William D. Rogers
|
|
|
|
William D. Rogers
|
|
|
|
Executive Vice President and
|
|
|
|
Chief Financial Officer
|
Attest:
|
|
|
|
|
|
|
|
/s/ Vincent A. Mercaldi
|
|
||
Vincent A. Mercaldi
|
|
||
Assistant Corporate Secretary
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
(SEAL)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THE BANK OF NEW YORK MELLON TRUST
|
|
|
|
COMPANY, NATIONAL ASSOCIATION,
|
|
|
|
As Trustee
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ R. Tarnas
|
|
|
|
Name: R. Tarnas
|
|
|
|
Title: Vice President
|
|
|
|
|
Original Interest Accrual Date: August 10, 2017
Stated Maturity: September 1, 2022
Interest Rate: 2.50%
Interest Payment Dates: March 1 and September 1
Regular Record Dates: February 15 and August 15 immediately preceding the respective Interest Payment Date
Initial Interest Payment Date: March 1, 2018
|
Redeemable: Yes [X] No [ ]
Redemption Date: At any time.
Redemption Price: 1) On any date prior to August 1, 2022 (the “Par Call Date”) 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 the Par Call Date 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 12.5 basis points; plus, in each case, accrued and unpaid interest on the principal amount being redeemed to, but excluding, the Redemption Date; 2) or on or after the Par Call Date, 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 on the principal amount being redeemed to, but excluding, the Redemption Date.
|
Principal Amount
|
|
Registered No. T-1
|
$______________*
|
|
CUSIP 15189T AR8
|
|
|
|
THE BANK OF NEW YORK MELLON
|
|
|
|
|
TRUST COMPANY, NATIONAL
|
|
|
|
|
ASSOCIATION
|
|
|
|
|
As Trustee
|
|
|
|
|
|
|
Dated:
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
Authorized Signatory
|
|
|
|
|
|
|
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
|
By:
|
/s/ Carla A. Kneipp
|
|
Carla A. Kneipp
|
|
Vice President and Treasurer
|
Attest:
|
|
/s/ Vincent A. Mercaldi
|
Assistant Corporate Secretary
|
THE BANK OF NEW YORK MELLON TRUST
|
|
COMPANY, NATIONAL ASSOCIATION,
|
|
As Trustee
|
|
|
|
|
|
By:
|
/s/ Karen Yu
|
|
Karen Yu
|
|
Vice President
|
Original Interest Accrual Date: August 23, 2017
Stated Maturity: September 1, 2047
Interest Rate: 4.10%
Interest Payment Dates: March 1 and September 1
Initial Interest Payment Date: March 1, 2018
Regular Record Dates: February 15 and August 15 immediately preceding the respective Interest Payment Date
|
Redeemable: Yes [X] No [ ]
Redemption Date: At any time.
Redemption Price: 1) On any date prior to March 1, 2047 (the “Par Call Date”) 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 the Par Call Date 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 20 basis points; plus, in each case, accrued and unpaid interest on the principal amount being redeemed to, but excluding, the Redemption Date; or 2) on or after the Par Call Date, 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 on the principal amount being redeemed to, but excluding, the Redemption Date.
|
Principal Amount
|
|
Registered No. T-1
|
$______________*
|
|
CUSIP 15189W AJ9
|
Dated:
|
|
|
CENTERPOINT ENERGY RESOURCES
|
|
|
|
|
CORP.
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
Name: Carla A. Kneipp
|
|
|
|
|
Title: Vice President and Treasurer
|
|
|
|
|
|
|
|
|
|
|
|
(SEAL)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attest:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name: Vincent A. Mercaldi
|
|
|
||
Title: Assistant Corporate Secretary
|
|
|
|
|
|
THE BANK OF NEW YORK MELLON
|
|
|
|
|
TRUST COMPANY, NATIONAL
|
|
|
|
|
ASSOCIATION,
|
|
|
|
|
As Trustee
|
|
|
|
|
|
|
Dated:
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
Authorized Signatory
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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,
|
||||||
|
2017
|
|
2016
|
||||
|
(in millions, except ratios)
|
||||||
Net income
|
$
|
496
|
|
|
$
|
331
|
|
Equity in earnings of unconsolidated affiliates, net of distributions
|
24
|
|
|
59
|
|
||
Income tax expense
|
281
|
|
|
193
|
|
||
Capitalized interest
|
(6
|
)
|
|
(5
|
)
|
||
|
795
|
|
|
578
|
|
||
|
|
|
|
||||
Fixed charges, as defined:
|
|
|
|
|
|
||
|
|
|
|
||||
Interest
|
293
|
|
|
326
|
|
||
Capitalized interest
|
6
|
|
|
5
|
|
||
Interest component of rentals charged to operating expense
|
3
|
|
|
3
|
|
||
Total fixed charges
|
302
|
|
|
334
|
|
||
|
|
|
|
||||
Earnings, as defined
|
$
|
1,097
|
|
|
$
|
912
|
|
|
|
|
|
||||
Ratio of earnings to fixed charges
|
3.63
|
|
|
2.73
|
|
(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 3, 2017
|
|
/s/ William D. Rogers
|
|
William D. Rogers
|
|
Executive Vice President and Chief Financial Officer
|
|
November 3, 2017
|
|