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(Mark One)
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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2018
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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FOR THE TRANSITION PERIOD FROM __________________ TO __________________
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Registrant, State or Other Jurisdiction of Incorporation or Organization
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Commission file number
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Address of Principal Executive Offices, Zip Code and Telephone Number
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I.R.S. Employer Identification No.
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1-31447
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CenterPoint Energy, Inc.
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74-0694415
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(a Texas corporation)
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1111 Louisiana
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Houston, Texas 77002
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(713-207-1111)
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1-3187
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CenterPoint Energy Houston Electric, LLC
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22-3865106
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(a Texas limited liability company)
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1111 Louisiana
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Houston, Texas 77002
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(713-207-1111)
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1-13265
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CenterPoint Energy Resources Corp.
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76-0511406
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(a Delaware corporation)
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1111 Louisiana
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Houston, Texas 77002
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(713-207-1111)
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CenterPoint Energy, Inc.
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501,191,387 shares of common stock outstanding, excluding 166 shares held as treasury stock
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CenterPoint Energy Houston Electric, LLC
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1,000 common shares outstanding, all held by Utility Holding, LLC, a wholly-owned subsidiary of CenterPoint Energy, Inc.
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CenterPoint Energy Resources Corp.
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1,000 shares of common stock outstanding, all held by Utility Holding, LLC, a wholly-owned subsidiary of CenterPoint Energy, Inc.
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PART I.
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FINANCIAL INFORMATION
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Item 1.
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CenterPoint Energy, Inc. Financial Statements
(unaudited)
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Item 2.
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Item 3.
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Item 4.
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PART II.
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OTHER INFORMATION
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Item 1.
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Item 1A.
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Item 6.
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GLOSSARY
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AEM
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Atmos Energy Marketing, LLC, previously a wholly-owned subsidiary of Atmos Energy Holdings, Inc., a wholly-owned subsidiary of Atmos Energy Corporation
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AMA
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Asset Management Agreement
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AMS
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Advanced Metering System
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APSC
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Arkansas Public Service Commission
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ARAM
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Average rate assumption method
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ARP
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Alternative revenue program
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ASC
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Accounting Standards Codification
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ASU
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Accounting Standards Update
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AT&T
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AT&T Inc.
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AT&T Common
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AT&T common stock
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Bcf
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Billion cubic feet
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Bond Companies
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Bond Company II, Bond Company III, Bond Company IV and Restoration Bond Company, each a wholly-owned, bankruptcy remote entity formed solely for the purpose of purchasing and owning transition or system restoration property through the issuance of Securitization Bonds
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Bond Company II
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CenterPoint Energy Transition Bond Company II, LLC, a wholly-owned subsidiary of Houston Electric
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Bond Company III
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CenterPoint Energy Transition Bond Company III, LLC, a wholly-owned subsidiary of Houston Electric
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Bond Company IV
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CenterPoint Energy Transition Bond Company IV, LLC, a wholly-owned subsidiary of Houston Electric
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Brazos Valley Connection
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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
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Bridge Facility
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A $5 billion 364-day senior unsecured bridge term loan facility
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CECL
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Current expected credit losses
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CenterPoint Energy
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CenterPoint Energy, Inc., and its subsidiaries
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CERC Corp.
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CenterPoint Energy Resources Corp.
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CERC
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CERC Corp., together with its subsidiaries
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CES
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CenterPoint Energy Services, Inc., a wholly-owned subsidiary of CERC Corp.
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Charter Common
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Charter Communications, Inc. common stock
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CIP
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Conservation Improvement Program
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CNP Midstream
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CenterPoint Energy Midstream, Inc., a wholly-owned subsidiary of CenterPoint Energy
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COLI
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Corporate-owned life insurance
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Common Stock
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CenterPoint Energy, Inc. common stock, par value $0.01 per share
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Continuum
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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
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DCRF
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Distribution Cost Recovery Factor
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EDIT
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Excess deferred income taxes
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EECR
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Energy Efficiency Cost Recovery
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EECRF
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Energy Efficiency Cost Recovery Factor
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Enable
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Enable Midstream Partners, LP
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Enable GP
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Enable GP, LLC, Enable’s general partner
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Enable Series A Preferred Units
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Enable’s 10% Series A Fixed-to-Floating Non-Cumulative Redeemable Perpetual Preferred Units, representing limited partner interests in Enable
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GLOSSARY
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EPA
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Environmental Protection Agency
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ERCOT
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Electric Reliability Council of Texas
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FCC
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Federal Communications Commission
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FERC
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Federal Energy Regulatory Commission
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Fitch
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Fitch, Inc.
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Form 10-Q
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Quarterly Report on Form 10-Q
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FRP
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Formula Rate Plan
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FTC
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Federal Trade Commission
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Gas Daily
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Platts gas daily indices
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GenOn
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GenOn Energy, Inc.
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GMES
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Government Mandated Expenditure Surcharge
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GRIP
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Gas Reliability Infrastructure Program
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GWh
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Gigawatt-hours
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Houston Electric
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CenterPoint Energy Houston Electric, LLC and its subsidiaries
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HSR
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Hart-Scott-Rodino
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Interim Condensed Financial Statements
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Unaudited condensed consolidated interim financial statements and combined notes
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IRS
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Internal Revenue Service
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kV
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Kilovolt
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LIBOR
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London Interbank Offered Rate
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LPSC
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Louisiana Public Service Commission
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Meredith
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Meredith Corporation
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Merger
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The merger of Merger Sub with and into Vectren on the terms and subject to the conditions set forth in the Merger Agreement, with Vectren continuing as the surviving corporation and as a wholly-owned subsidiary of CenterPoint Energy, Inc.
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Merger Agreement
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Agreement and Plan of Merger, dated as of April 21, 2018, among CenterPoint Energy, Vectren and Merger Sub
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Merger Sub
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Pacer Merger Sub, Inc., an Indiana corporation and wholly-owned subsidiary of CenterPoint Energy
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MGP
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Manufactured gas plant
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MLP
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Master Limited Partnership
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MMBtu
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One million British thermal units
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Moody’s
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Moody’s Investors Service, Inc.
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MPSC
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Mississippi Public Service Commission
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MPUC
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Minnesota Public Utilities Commission
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NGD
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Natural gas distribution business
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NGLs
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Natural gas liquids
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NOPR
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Notice of Proposed Rulemaking
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NRG
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NRG Energy, Inc.
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NYMEX
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New York Mercantile Exchange
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NYSE
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New York Stock Exchange
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OCC
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Oklahoma Corporation Commission
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OGE
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OGE Energy Corp.
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PBRC
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Performance Based Rate Change
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PRPs
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Potentially responsible parties
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PUCT
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Public Utility Commission of Texas
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Railroad Commission
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Railroad Commission of Texas
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Registrants
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CenterPoint Energy, Houston Electric and CERC, collectively
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Reliant Energy
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Reliant Energy, Incorporated
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GLOSSARY
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REP
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Retail electric provider
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Restoration Bond Company
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CenterPoint Energy Restoration Bond Company, LLC, a wholly-owned subsidiary of Houston Electric
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Revised Policy Statement
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Revised Policy Statement on Treatment of Income Taxes
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ROE
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Return on equity
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RRA
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Rate Regulation Adjustment
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RRI
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Reliant Resources, Inc.
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RSP
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Rate Stabilization Plan
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SEC
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Securities and Exchange Commission
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Securitization Bonds
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Transition and system restoration bonds
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Series A Preferred Stock
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CenterPoint Energy’s 6.125% Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Stock, par value $0.01 per share, with a liquidation preference of $1,000 per share
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Series B Preferred Stock
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CenterPoint Energy’s 7.00% Series B Mandatory Convertible Preferred Stock, par value $0.01 per share, with a liquidation preference of $1,000 per share
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S&P
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Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies
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TBD
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To be determined
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TCEH Corp.
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Formerly Texas Competitive Electric Holdings Company LLC, predecessor to Vistra Energy Corp. whose major subsidiaries include Luminant and TXU Energy
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TCJA
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Tax reform legislation informally called the Tax Cuts and Jobs Act of 2017
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TCOS
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Transmission Cost of Service
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TDU
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Transmission and distribution utility
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Time
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Time Inc.
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Time Common
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Time common stock
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Transition Agreements
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Services Agreement, Employee Transition Agreement, Transitional Seconding Agreement and other agreements entered into in connection with the formation of Enable
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TW
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Time Warner Inc.
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TW Common
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TW common stock
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Utility Holding
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Utility Holding, LLC, a wholly-owned subsidiary of CenterPoint Energy
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Vectren
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Vectren Corporation, an Indiana corporation
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VIE
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Variable interest entity
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Vistra Energy Corp.
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Texas-based energy company focused on the competitive energy and power generation markets
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WACC
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Weighted average cost of capital
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ZENS
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2.0% Zero-Premium Exchangeable Subordinated Notes due 2029
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ZENS-Related Securities
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As of September 30, 2018, consisted of AT&T Common and Charter Common and as of December 31, 2017, consisted of Charter Common, Time Common and TW Common
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2017 Form 10-K
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Annual Report on Form 10-K for the fiscal year ended December 31, 2017
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•
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the performance of Enable, the amount of cash distributions CenterPoint Energy receives from Enable, Enable’s ability to redeem the Enable Series A Preferred Units in certain circumstances and the value of CenterPoint Energy’s interest in Enable, and factors that may have a material impact on such performance, cash distributions and value, including factors such as:
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◦
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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;
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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;
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the demand for crude oil, natural gas, NGLs and transportation and storage services;
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environmental and other governmental regulations, including the availability of drilling permits and the regulation of hydraulic fracturing;
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recording of non-cash goodwill, long-lived asset or other than temporary impairment charges by or related to Enable;
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changes in tax status;
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access to debt and equity capital; and
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the availability and prices of raw materials and services for current and future construction projects;
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•
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industrial, commercial and residential growth in our service territories and changes in market demand, including the demand for our non-rate regulated products and services and effects of energy efficiency measures and demographic patterns;
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•
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timely and appropriate rate actions that allow recovery of costs and a reasonable return on investment;
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•
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future economic conditions in regional and national markets and their effect on sales, prices and costs;
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weather variations and other natural phenomena, including the impact of severe weather events on operations and capital;
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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;
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•
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CenterPoint Energy’s expected timing, likelihood and benefits of completion of the Merger, including the timing, receipt and terms and conditions of any required approvals by regulatory agencies or the outcome of shareholder litigation filed against Vectren that could reduce anticipated benefits or cause the parties to delay or abandon the Merger, as well as the ability to successfully integrate the businesses and realize anticipated benefits and the risk that the credit ratings of the combined company or its subsidiaries may be different from what CenterPoint Energy expects;
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•
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tax legislation, including the effects of the TCJA (which includes any potential changes to interest deductibility) and uncertainties involving state commissions’ and local municipalities’ regulatory requirements and determinations regarding the treatment of EDIT and our rates;
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•
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CenterPoint Energy’s and CERC’s ability to mitigate weather impacts through normalization or rate mechanisms, and the effectiveness of such mechanisms;
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•
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the timing and extent of changes in commodity prices, particularly natural gas, and the effects of geographic and seasonal commodity price differentials on CERC and Enable
;
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•
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actions by credit rating agencies, including any potential downgrades to credit ratings;
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•
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changes in interest rates and their impact on costs of borrowing and the valuation of CenterPoint Energy’s pension benefit obligation;
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•
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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;
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•
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local, state and federal legislative and regulatory actions or developments relating to the environment, including those related to global climate change;
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•
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the impact of unplanned facility outages;
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•
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any direct or indirect effects on our or Enable’s 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;
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•
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our ability to invest planned capital and the timely recovery of our investments;
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our ability to control operation and maintenance costs;
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the sufficiency of our insurance coverage, including availability, cost, coverage and terms and ability to recover claims;
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the investment performance of CenterPoint Energy’s pension and postretirement benefit plans;
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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;
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changes in rates of inflation;
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inability of various counterparties to meet their obligations to us;
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•
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non-payment for our services due to financial distress of our customers;
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the extent and effectiveness of our and Enable’s risk management and hedging activities, including, but not limited to financial and weather hedges and commodity risk management activities;
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timely and appropriate regulatory actions, which include actions allowing securitization, for any future hurricanes or natural disasters or other recovery of costs, including costs associated with Hurricane Harvey;
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•
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CenterPoint Energy’s 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 CenterPoint Energy’s interest in Enable, if any, whether through its decision to sell all or a portion of the Enable common units it owns in the public equity markets or otherwise, subject to certain limitations), which CenterPoint Energy and Enable cannot assure will be completed or will have the anticipated benefits to CenterPoint Energy or Enable;
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•
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acquisition and merger activities involving us or our competitors, including the ability to successfully complete merger, acquisition and divestiture plans;
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•
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our or Enable’s ability to recruit, effectively transition and retain management and key employees and maintain good labor relations;
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•
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the outcome of litigation;
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•
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the ability of REPs, including REP affiliates of NRG and Vistra Energy Corp., formerly known as TCEH Corp., to satisfy their obligations to CenterPoint Energy and Houston Electric;
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•
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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, which may be contested by GenOn;
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•
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changes in technology, particularly with respect to efficient battery storage or the emergence or growth of new, developing or alternative sources of generation;
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•
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the timing and outcome of any audits, disputes and other proceedings related to taxes;
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•
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the effective tax rates;
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•
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the effect of changes in and application of accounting standards and pronouncements; and
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•
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other factors discussed in “Risk Factors” in Item 1A of Part I of each of the Registrants’
2017
Form 10-K and in Item 1A of Part II of CenterPoint Energy’s First Quarter 2018 Form 10-Q, which are incorporated herein by reference, and other reports the Registrants file from time to time with the SEC.
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Three Months Ended
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Nine Months Ended
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September 30,
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September 30,
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2018
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2017
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2018
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2017
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Revenues:
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Utility revenues
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$
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1,299
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$
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1,233
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$
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4,534
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$
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4,001
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Non-utility revenues
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913
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865
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3,019
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2,975
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Total
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2,212
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2,098
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7,553
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6,976
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Expenses:
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Utility natural gas
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134
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|
|
106
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|
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959
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|
706
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Non-utility natural gas
|
864
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|
|
832
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2,927
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2,843
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Operation and maintenance
|
567
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|
|
501
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|
|
1,714
|
|
|
1,562
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Depreciation and amortization
|
326
|
|
|
269
|
|
|
982
|
|
|
749
|
|
||||
Taxes other than income taxes
|
95
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|
|
93
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|
|
307
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|
|
288
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|
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Total
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1,986
|
|
|
1,801
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|
6,889
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|
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6,148
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Operating Income
|
226
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|
|
297
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|
|
664
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|
828
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||||
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Other Income (Expense):
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Gain on marketable securities
|
43
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37
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|
|
66
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|
|
104
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Loss on indexed debt securities
|
(44
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)
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(36
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)
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(316
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)
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(59
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)
|
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Interest and other finance charges
|
(90
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)
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|
(80
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)
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(259
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)
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(235
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)
|
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Interest on Securitization Bonds
|
(16
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)
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(18
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)
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(46
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)
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(58
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)
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||||
Equity in earnings of unconsolidated affiliate, net
|
81
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|
|
68
|
|
|
208
|
|
|
199
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|
||||
Other, net
|
9
|
|
|
(1
|
)
|
|
16
|
|
|
(2
|
)
|
||||
Total
|
(17
|
)
|
|
(30
|
)
|
|
(331
|
)
|
|
(51
|
)
|
||||
|
|
|
|
|
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|
|
||||||||
Income Before Income Taxes
|
209
|
|
|
267
|
|
|
333
|
|
|
777
|
|
||||
Income tax expense
|
51
|
|
|
98
|
|
|
85
|
|
|
281
|
|
||||
Net Income
|
158
|
|
|
169
|
|
|
248
|
|
|
496
|
|
||||
Series A Preferred Stock dividend requirement
|
5
|
|
|
—
|
|
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5
|
|
|
—
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|
||||
Income Available to Common Shareholders
|
$
|
153
|
|
|
$
|
169
|
|
|
$
|
243
|
|
|
$
|
496
|
|
|
|
|
|
|
|
|
|
||||||||
Basic Earnings Per Common Share
|
$
|
0.35
|
|
|
$
|
0.39
|
|
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$
|
0.56
|
|
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$
|
1.15
|
|
|
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||||||||
Diluted Earnings Per Common Share
|
$
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0.35
|
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$
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0.39
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$
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0.56
|
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$
|
1.14
|
|
|
|
|
|
|
|
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|
||||||||
Weighted Average Common Shares Outstanding, Basic
|
432
|
|
|
431
|
|
|
431
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|
|
431
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|
||||
|
|
|
|
|
|
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|
||||||||
Weighted Average Common Shares Outstanding, Diluted
|
435
|
|
|
434
|
|
|
435
|
|
|
434
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net income
|
$
|
158
|
|
|
$
|
169
|
|
|
$
|
248
|
|
|
$
|
496
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Adjustment to pension and other postretirement plans (net of tax of $1, $2, $2 and $4)
|
1
|
|
|
—
|
|
|
4
|
|
|
2
|
|
||||
Net deferred gain (loss) from cash flow hedges (net of tax of $1, $2, $2 and $2)
|
3
|
|
|
(2
|
)
|
|
6
|
|
|
(3
|
)
|
||||
Total
|
4
|
|
|
(2
|
)
|
|
10
|
|
|
(1
|
)
|
||||
Comprehensive income
|
$
|
162
|
|
|
$
|
167
|
|
|
$
|
258
|
|
|
$
|
495
|
|
|
September 30,
2018 |
|
December 31,
2017 |
||||
Current Assets:
|
|
|
|
||||
Cash and cash equivalents ($278 and $230 related to VIEs, respectively)
|
$
|
293
|
|
|
$
|
260
|
|
Investment in marketable securities
|
627
|
|
|
960
|
|
||
Accounts receivable ($92 and $73 related to VIEs, respectively), less bad debt reserve of $15 and $19, respectively
|
918
|
|
|
1,000
|
|
||
Accrued unbilled revenues
|
212
|
|
|
427
|
|
||
Natural gas inventory
|
207
|
|
|
222
|
|
||
Materials and supplies
|
198
|
|
|
175
|
|
||
Non-trading derivative assets
|
76
|
|
|
110
|
|
||
Taxes receivable
|
38
|
|
|
—
|
|
||
Prepaid expenses and other current assets ($37 and $35 related to VIEs, respectively)
|
157
|
|
|
241
|
|
||
Total current assets
|
2,726
|
|
|
3,395
|
|
||
|
|
|
|
||||
Property, Plant and Equipment:
|
|
|
|
||||
Property, plant and equipment
|
19,861
|
|
|
19,031
|
|
||
Less: accumulated depreciation and amortization
|
6,208
|
|
|
5,974
|
|
||
Property, plant and equipment, net
|
13,653
|
|
|
13,057
|
|
||
|
|
|
|
||||
Other Assets:
|
|
|
|
||||
Goodwill
|
867
|
|
|
867
|
|
||
Regulatory assets ($1,146 and $1,590 related to VIEs, respectively)
|
1,934
|
|
|
2,347
|
|
||
Non-trading derivative assets
|
38
|
|
|
44
|
|
||
Investment in unconsolidated affiliate
|
2,457
|
|
|
2,472
|
|
||
Preferred units – unconsolidated affiliate
|
363
|
|
|
363
|
|
||
Other
|
190
|
|
|
191
|
|
||
Total other assets
|
5,849
|
|
|
6,284
|
|
||
|
|
|
|
||||
Total Assets
|
$
|
22,228
|
|
|
$
|
22,736
|
|
|
September 30,
2018 |
|
December 31,
2017 |
||||
Current Liabilities:
|
|
|
|
||||
Short-term borrowings
|
$
|
—
|
|
|
$
|
39
|
|
Current portion of VIE Securitization Bonds long-term debt
|
456
|
|
|
434
|
|
||
Indexed debt, net
|
25
|
|
|
122
|
|
||
Current portion of other long-term debt
|
50
|
|
|
50
|
|
||
Indexed debt securities derivative
|
685
|
|
|
668
|
|
||
Accounts payable
|
708
|
|
|
963
|
|
||
Taxes accrued
|
152
|
|
|
181
|
|
||
Interest accrued
|
80
|
|
|
104
|
|
||
Dividends accrued
|
—
|
|
|
120
|
|
||
Non-trading derivative liabilities
|
33
|
|
|
20
|
|
||
Other
|
392
|
|
|
368
|
|
||
Total current liabilities
|
2,581
|
|
|
3,069
|
|
||
|
|
|
|
||||
Other Liabilities:
|
|
|
|
|
|
||
Deferred income taxes, net
|
3,220
|
|
|
3,174
|
|
||
Non-trading derivative liabilities
|
6
|
|
|
4
|
|
||
Benefit obligations
|
722
|
|
|
785
|
|
||
Regulatory liabilities
|
2,506
|
|
|
2,464
|
|
||
Other
|
433
|
|
|
357
|
|
||
Total other liabilities
|
6,887
|
|
|
6,784
|
|
||
|
|
|
|
||||
Long-term Debt:
|
|
|
|
|
|
||
VIE Securitization Bonds, net
|
1,045
|
|
|
1,434
|
|
||
Other long-term debt, net
|
6,207
|
|
|
6,761
|
|
||
Total long-term debt, net
|
7,252
|
|
|
8,195
|
|
||
|
|
|
|
||||
Commitments and Contingencies (Note 14)
|
|
|
|
|
|
||
|
|
|
|
||||
Shareholders’ Equity:
|
|
|
|
|
|
||
Cumulative preferred stock, $0.01 par value, 20,000,000 shares authorized
|
|
|
|
|
|
||
Series A Preferred Stock, $0.01 par value, $800,000 aggregate liquidation preference, 800,000 shares outstanding
|
790
|
|
|
—
|
|
||
Common stock, $0.01 par value, 1,000,000,000 shares authorized, 431,555,853 shares and 431,044,845 shares outstanding, respectively
|
4
|
|
|
4
|
|
||
Additional paid-in capital
|
4,221
|
|
|
4,209
|
|
||
Retained earnings
|
551
|
|
|
543
|
|
||
Accumulated other comprehensive loss
|
(58
|
)
|
|
(68
|
)
|
||
Total shareholders’ equity
|
5,508
|
|
|
4,688
|
|
||
|
|
|
|
||||
Total Liabilities and Shareholders’ Equity
|
$
|
22,228
|
|
|
$
|
22,736
|
|
|
Nine Months Ended September 30,
|
||||||
|
2018
|
|
2017
|
||||
Cash Flows from Operating Activities:
|
|
|
|
||||
Net income
|
$
|
248
|
|
|
$
|
496
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
982
|
|
|
749
|
|
||
Amortization of deferred financing costs
|
34
|
|
|
18
|
|
||
Deferred income taxes
|
33
|
|
|
185
|
|
||
Unrealized gain on marketable securities
|
(66
|
)
|
|
(104
|
)
|
||
Loss on indexed debt securities
|
316
|
|
|
59
|
|
||
Write-down of natural gas inventory
|
2
|
|
|
—
|
|
||
Equity in earnings of unconsolidated affiliate, net of distributions
|
(15
|
)
|
|
(199
|
)
|
||
Pension contributions
|
(67
|
)
|
|
(46
|
)
|
||
Changes in other assets and liabilities, excluding acquisitions:
|
|
|
|
||||
Accounts receivable and unbilled revenues, net
|
355
|
|
|
216
|
|
||
Inventory
|
(10
|
)
|
|
(52
|
)
|
||
Taxes receivable
|
(38
|
)
|
|
30
|
|
||
Accounts payable
|
(262
|
)
|
|
(137
|
)
|
||
Fuel cost recovery
|
53
|
|
|
(30
|
)
|
||
Non-trading derivatives, net
|
63
|
|
|
(53
|
)
|
||
Margin deposits, net
|
2
|
|
|
(49
|
)
|
||
Interest and taxes accrued
|
(53
|
)
|
|
2
|
|
||
Net regulatory assets and liabilities
|
44
|
|
|
(135
|
)
|
||
Other current assets
|
11
|
|
|
18
|
|
||
Other current liabilities
|
16
|
|
|
19
|
|
||
Other assets
|
(3
|
)
|
|
(3
|
)
|
||
Other liabilities
|
24
|
|
|
28
|
|
||
Other, net
|
10
|
|
|
16
|
|
||
Net cash provided by operating activities
|
1,679
|
|
|
1,028
|
|
||
Cash Flows from Investing Activities:
|
|
|
|
||||
Capital expenditures
|
(1,121
|
)
|
|
(994
|
)
|
||
Acquisitions, net of cash acquired
|
—
|
|
|
(132
|
)
|
||
Distributions from unconsolidated affiliate in excess of cumulative earnings
|
30
|
|
|
223
|
|
||
Proceeds from sale of marketable securities
|
398
|
|
|
—
|
|
||
Other, net
|
19
|
|
|
6
|
|
||
Net cash used in investing activities
|
(674
|
)
|
|
(897
|
)
|
||
Cash Flows from Financing Activities:
|
|
|
|
||||
Increase (decrease) in short-term borrowings, net
|
(39
|
)
|
|
13
|
|
||
Payments of commercial paper, net
|
(1,551
|
)
|
|
(428
|
)
|
||
Proceeds from long-term debt, net
|
997
|
|
|
1,096
|
|
||
Payments of long-term debt
|
(368
|
)
|
|
(597
|
)
|
||
Debt issuance costs
|
(36
|
)
|
|
(13
|
)
|
||
Payment of dividends on Common Stock
|
(360
|
)
|
|
(346
|
)
|
||
Proceeds from issuance of Series A Preferred Stock, net
|
790
|
|
|
—
|
|
||
Distribution to ZENS note holders
|
(398
|
)
|
|
—
|
|
||
Other, net
|
(5
|
)
|
|
(4
|
)
|
||
Net cash used in financing activities
|
(970
|
)
|
|
(279
|
)
|
||
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash
|
35
|
|
|
(148
|
)
|
||
Cash, Cash Equivalents and Restricted Cash at Beginning of Period
|
296
|
|
|
381
|
|
||
Cash, Cash Equivalents and Restricted Cash at End of Period
|
$
|
331
|
|
|
$
|
233
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
||||||||||||||
Revenues
|
$
|
897
|
|
|
$
|
843
|
|
|
$
|
2,506
|
|
|
$
|
2,233
|
|
|
|
|
|
|
|
|
|
||||||||
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operation and maintenance
|
369
|
|
|
337
|
|
|
1,062
|
|
|
1,021
|
|
||||
Depreciation and amortization
|
242
|
|
|
193
|
|
|
737
|
|
|
525
|
|
||||
Taxes other than income taxes
|
59
|
|
|
59
|
|
|
180
|
|
|
177
|
|
||||
Total
|
670
|
|
|
589
|
|
|
1,979
|
|
|
1,723
|
|
||||
Operating Income
|
227
|
|
|
254
|
|
|
527
|
|
|
510
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest and other finance charges
|
(32
|
)
|
|
(32
|
)
|
|
(101
|
)
|
|
(97
|
)
|
||||
Interest on Securitization Bonds
|
(16
|
)
|
|
(18
|
)
|
|
(46
|
)
|
|
(58
|
)
|
||||
Other, net
|
—
|
|
|
(3
|
)
|
|
(6
|
)
|
|
(9
|
)
|
||||
Total
|
(48
|
)
|
|
(53
|
)
|
|
(153
|
)
|
|
(164
|
)
|
||||
Income Before Income Taxes
|
179
|
|
|
201
|
|
|
374
|
|
|
346
|
|
||||
Income tax expense
|
36
|
|
|
71
|
|
|
78
|
|
|
123
|
|
||||
Net Income
|
$
|
143
|
|
|
$
|
130
|
|
|
$
|
296
|
|
|
$
|
223
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net income
|
$
|
143
|
|
|
$
|
130
|
|
|
$
|
296
|
|
|
$
|
223
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
||||||||
Net deferred gain (loss) from cash flow hedges (net of tax of $1, $-0-, $2 and $-0-)
|
3
|
|
|
—
|
|
|
7
|
|
|
(1
|
)
|
||||
Total
|
3
|
|
|
—
|
|
|
7
|
|
|
(1
|
)
|
||||
Comprehensive income
|
$
|
146
|
|
|
$
|
130
|
|
|
$
|
303
|
|
|
$
|
222
|
|
|
September 30,
2018 |
|
December 31,
2017 |
||||
Current Assets:
|
|
|
|
||||
Cash and cash equivalents ($278 and $230 related to VIEs, respectively)
|
$
|
279
|
|
|
$
|
238
|
|
Accounts and notes receivable ($92 and $73 related to VIEs, respectively), less bad debt reserve of $1 and $1, respectively
|
389
|
|
|
284
|
|
||
Accounts and notes receivable–affiliated companies
|
13
|
|
|
7
|
|
||
Accrued unbilled revenues
|
122
|
|
|
120
|
|
||
Materials and supplies
|
129
|
|
|
119
|
|
||
Taxes receivable
|
9
|
|
|
—
|
|
||
Non-trading derivative assets
|
3
|
|
|
—
|
|
||
Prepaid expenses and other current assets ($37 and $35 related to VIEs, respectively)
|
50
|
|
|
62
|
|
||
Total current assets
|
994
|
|
|
830
|
|
||
|
|
|
|
||||
Property, Plant and Equipment:
|
|
|
|
||||
Property, plant and equipment
|
11,962
|
|
|
11,496
|
|
||
Less: accumulated depreciation and amortization
|
3,742
|
|
|
3,633
|
|
||
Property, plant and equipment, net
|
8,220
|
|
|
7,863
|
|
||
|
|
|
|
||||
Other Assets:
|
|
|
|
|
|
||
Regulatory assets ($1,146 and $1,590 related to VIEs, respectively)
|
1,202
|
|
|
1,570
|
|
||
Other
|
20
|
|
|
29
|
|
||
Total other assets
|
1,222
|
|
|
1,599
|
|
||
|
|
|
|
||||
Total Assets
|
$
|
10,436
|
|
|
$
|
10,292
|
|
|
September 30,
2018 |
|
December 31,
2017 |
||||
Current Liabilities:
|
|
|
|
|
|
||
Current portion of VIE Securitization Bonds long-term debt
|
$
|
456
|
|
|
$
|
434
|
|
Accounts payable
|
220
|
|
|
243
|
|
||
Accounts and notes payable–affiliated companies
|
113
|
|
|
104
|
|
||
Taxes accrued
|
88
|
|
|
116
|
|
||
Interest accrued
|
43
|
|
|
65
|
|
||
Other
|
111
|
|
|
120
|
|
||
Total current liabilities
|
1,031
|
|
|
1,082
|
|
||
Other Liabilities:
|
|
|
|
|
|
||
Deferred income taxes, net
|
1,044
|
|
|
1,059
|
|
||
Benefit obligations
|
142
|
|
|
146
|
|
||
Regulatory liabilities
|
1,265
|
|
|
1,263
|
|
||
Other
|
79
|
|
|
54
|
|
||
Total other liabilities
|
2,530
|
|
|
2,522
|
|
||
Long-term Debt:
|
|
|
|
|
|
||
VIE Securitization Bonds, net
|
1,045
|
|
|
1,434
|
|
||
Other, net
|
3,281
|
|
|
2,885
|
|
||
Total long-term debt, net
|
4,326
|
|
|
4,319
|
|
||
|
|
|
|
||||
Commitments and Contingencies (Note 14)
|
|
|
|
||||
|
|
|
|
||||
Member’s Equity:
|
|
|
|
||||
Common stock
|
—
|
|
|
—
|
|
||
Paid-in capital
|
1,696
|
|
|
1,696
|
|
||
Retained earnings
|
846
|
|
|
673
|
|
||
Accumulated other comprehensive income
|
7
|
|
|
—
|
|
||
Total member’s equity
|
2,549
|
|
|
2,369
|
|
||
|
|
|
|
||||
Total Liabilities and Member’s Equity
|
$
|
10,436
|
|
|
$
|
10,292
|
|
|
Nine Months Ended September 30,
|
||||||
|
2018
|
|
2017
|
||||
Cash Flows from Operating Activities:
|
|
|
|
||||
Net income
|
$
|
296
|
|
|
$
|
223
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||
Depreciation and amortization
|
737
|
|
|
525
|
|
||
Amortization of deferred financing costs
|
8
|
|
|
10
|
|
||
Deferred income taxes
|
(24
|
)
|
|
29
|
|
||
Changes in other assets and liabilities:
|
|
|
|
|
|
||
Accounts and notes receivable, net
|
(95
|
)
|
|
(131
|
)
|
||
Accounts receivable/payable–affiliated companies
|
(12
|
)
|
|
(49
|
)
|
||
Inventory
|
(10
|
)
|
|
(3
|
)
|
||
Accounts payable
|
(6
|
)
|
|
105
|
|
||
Taxes receivable
|
(9
|
)
|
|
6
|
|
||
Interest and taxes accrued
|
(50
|
)
|
|
(28
|
)
|
||
Net regulatory assets and liabilities
|
(66
|
)
|
|
(149
|
)
|
||
Other current assets
|
13
|
|
|
8
|
|
||
Other current liabilities
|
(9
|
)
|
|
25
|
|
||
Other assets
|
4
|
|
|
1
|
|
||
Other liabilities
|
16
|
|
|
(1
|
)
|
||
Other, net
|
(5
|
)
|
|
(4
|
)
|
||
Net cash provided by operating activities
|
788
|
|
|
567
|
|
||
Cash Flows from Investing Activities:
|
|
|
|
|
|
||
Capital expenditures
|
(678
|
)
|
|
(603
|
)
|
||
Decrease in notes receivable–affiliated companies
|
—
|
|
|
29
|
|
||
Other, net
|
15
|
|
|
5
|
|
||
Net cash used in investing activities
|
(663
|
)
|
|
(569
|
)
|
||
Cash Flows from Financing Activities:
|
|
|
|
|
|
||
Proceeds from long-term debt, net
|
398
|
|
|
298
|
|
||
Payments of long-term debt
|
(368
|
)
|
|
(347
|
)
|
||
Decrease in notes payable–affiliated companies
|
15
|
|
|
—
|
|
||
Dividend to parent
|
(123
|
)
|
|
(87
|
)
|
||
Debt issuance costs
|
(4
|
)
|
|
(3
|
)
|
||
Other, net
|
—
|
|
|
—
|
|
||
Net cash used in financing activities
|
(82
|
)
|
|
(139
|
)
|
||
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash
|
43
|
|
|
(141
|
)
|
||
Cash, Cash Equivalents and Restricted Cash at Beginning of Period
|
274
|
|
|
381
|
|
||
Cash, Cash Equivalents and Restricted Cash at End of Period
|
$
|
317
|
|
|
$
|
240
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Utility revenues
|
$
|
402
|
|
|
$
|
390
|
|
|
$
|
2,032
|
|
|
$
|
1,767
|
|
Non-utility revenues
|
910
|
|
|
861
|
|
|
3,008
|
|
|
2,964
|
|
||||
Total
|
1,312
|
|
|
1,251
|
|
|
5,040
|
|
|
4,731
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Utility natural gas
|
134
|
|
|
106
|
|
|
959
|
|
|
706
|
|
||||
Non-utility natural gas
|
864
|
|
|
832
|
|
|
2,927
|
|
|
2,843
|
|
||||
Operation and maintenance
|
211
|
|
|
182
|
|
|
666
|
|
|
587
|
|
||||
Depreciation and amortization
|
77
|
|
|
68
|
|
|
222
|
|
|
202
|
|
||||
Taxes other than income taxes
|
33
|
|
|
32
|
|
|
120
|
|
|
104
|
|
||||
Total
|
1,319
|
|
|
1,220
|
|
|
4,894
|
|
|
4,442
|
|
||||
Operating Income (Loss)
|
(7
|
)
|
|
31
|
|
|
146
|
|
|
289
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest and other finance charges
|
(30
|
)
|
|
(32
|
)
|
|
(92
|
)
|
|
(92
|
)
|
||||
Other, net
|
—
|
|
|
(4
|
)
|
|
(5
|
)
|
|
(13
|
)
|
||||
Total
|
(30
|
)
|
|
(36
|
)
|
|
(97
|
)
|
|
(105
|
)
|
||||
Income (Loss) From Continuing Operations Before Income Taxes
|
(37
|
)
|
|
(5
|
)
|
|
49
|
|
|
184
|
|
||||
Income tax expense (benefit)
|
(2
|
)
|
|
(1
|
)
|
|
14
|
|
|
69
|
|
||||
Income (Loss) From Continuing Operations
|
(35
|
)
|
|
(4
|
)
|
|
35
|
|
|
115
|
|
||||
Income from discontinued operations (net of tax of $13, $26, $44 and $75, respectively)
|
44
|
|
|
42
|
|
|
140
|
|
|
124
|
|
||||
Net Income
|
$
|
9
|
|
|
$
|
38
|
|
|
$
|
175
|
|
|
$
|
239
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
9
|
|
|
$
|
38
|
|
|
$
|
175
|
|
|
$
|
239
|
|
Comprehensive income
|
$
|
9
|
|
|
$
|
38
|
|
|
$
|
175
|
|
|
$
|
239
|
|
|
September 30,
2018 |
|
December 31,
2017 |
||||
Current Assets
:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
1
|
|
|
$
|
12
|
|
Accounts receivable, less bad debt reserve of $14 and $18, respectively
|
527
|
|
|
713
|
|
||
Accrued unbilled revenues
|
90
|
|
|
307
|
|
||
Accounts and notes receivable–affiliated companies
|
9
|
|
|
6
|
|
||
Materials and supplies
|
69
|
|
|
56
|
|
||
Natural gas inventory
|
206
|
|
|
222
|
|
||
Non-trading derivative assets
|
73
|
|
|
110
|
|
||
Prepaid expenses and other current assets
|
85
|
|
|
166
|
|
||
Total current assets
|
1,060
|
|
|
1,592
|
|
||
|
|
|
|
||||
Property, Plant and Equipment:
|
|
|
|
||||
Property, plant and equipment
|
7,260
|
|
|
6,888
|
|
||
Less: accumulated depreciation and amortization
|
2,185
|
|
|
2,036
|
|
||
Property, plant and equipment, net
|
5,075
|
|
|
4,852
|
|
||
|
|
|
|
||||
Other Assets:
|
|
|
|
|
|
||
Goodwill
|
867
|
|
|
867
|
|
||
Regulatory assets
|
170
|
|
|
181
|
|
||
Non-trading derivative assets
|
38
|
|
|
44
|
|
||
Investment in unconsolidated affiliate - discontinued operations
|
—
|
|
|
2,472
|
|
||
Other
|
95
|
|
|
104
|
|
||
Total other assets
|
1,170
|
|
|
3,668
|
|
||
|
|
|
|
||||
Total Assets
|
$
|
7,305
|
|
|
$
|
10,112
|
|
|
September 30,
2018 |
|
December 31,
2017 |
||||
Current Liabilities:
|
|
|
|
|
|
||
Short-term borrowings
|
$
|
—
|
|
|
$
|
39
|
|
Accounts payable
|
429
|
|
|
669
|
|
||
Accounts and notes payable–affiliated companies
|
44
|
|
|
611
|
|
||
Taxes accrued
|
64
|
|
|
75
|
|
||
Interest accrued
|
31
|
|
|
32
|
|
||
Customer deposits
|
74
|
|
|
76
|
|
||
Non-trading derivative liabilities
|
33
|
|
|
20
|
|
||
Other
|
171
|
|
|
137
|
|
||
Total current liabilities
|
846
|
|
|
1,659
|
|
||
|
|
|
|
||||
Other Liabilities:
|
|
|
|
|
|
||
Deferred income taxes, net
|
370
|
|
|
362
|
|
||
Deferred income taxes, net - discontinued operations
|
—
|
|
|
927
|
|
||
Non-trading derivative liabilities
|
6
|
|
|
4
|
|
||
Benefit obligations
|
98
|
|
|
97
|
|
||
Regulatory liabilities
|
1,241
|
|
|
1,201
|
|
||
Other
|
350
|
|
|
297
|
|
||
Total other liabilities
|
2,065
|
|
|
2,888
|
|
||
|
|
|
|
||||
Long-Term Debt
|
2,257
|
|
|
2,457
|
|
||
|
|
|
|
||||
Commitments and Contingencies (Note 14)
|
|
|
|
|
|
||
|
|
|
|
||||
Stockholder’s Equity:
|
|
|
|
||||
Common stock
|
—
|
|
|
—
|
|
||
Paid-in capital
|
1,668
|
|
|
2,528
|
|
||
Retained earnings (accumulated deficit)
|
463
|
|
|
574
|
|
||
Accumulated other comprehensive income
|
6
|
|
|
6
|
|
||
Total stockholder’s equity
|
2,137
|
|
|
3,108
|
|
||
|
|
|
|
||||
Total Liabilities and Stockholder’s Equity
|
$
|
7,305
|
|
|
$
|
10,112
|
|
|
Nine Months Ended September 30,
|
||||||
|
2018
|
|
2017
|
||||
Cash Flows from Operating Activities:
|
|
|
|
||||
Net income
|
$
|
175
|
|
|
$
|
239
|
|
Less: Income from discontinued operations, net of tax
|
140
|
|
|
124
|
|
||
Income from continuing operations
|
35
|
|
|
115
|
|
||
Adjustments to reconcile income from continuing operations to net cash provided by operating activities:
|
|
|
|
|
|
||
Depreciation and amortization
|
222
|
|
|
202
|
|
||
Amortization of deferred financing costs
|
7
|
|
|
7
|
|
||
Deferred income taxes
|
6
|
|
|
69
|
|
||
Write-down of natural gas inventory
|
2
|
|
|
—
|
|
||
Changes in other assets and liabilities, excluding acquisitions:
|
|
|
|
|
|
||
Accounts receivable and unbilled revenues, net
|
449
|
|
|
346
|
|
||
Accounts receivable/payable–affiliated companies
|
—
|
|
|
(1
|
)
|
||
Inventory
|
1
|
|
|
(49
|
)
|
||
Accounts payable
|
(261
|
)
|
|
(227
|
)
|
||
Fuel cost recovery
|
53
|
|
|
(30
|
)
|
||
Interest and taxes accrued
|
(9
|
)
|
|
(13
|
)
|
||
Non-trading derivatives, net
|
60
|
|
|
(51
|
)
|
||
Margin deposits, net
|
2
|
|
|
(49
|
)
|
||
Net regulatory assets and liabilities
|
73
|
|
|
(28
|
)
|
||
Other current assets
|
7
|
|
|
16
|
|
||
Other current liabilities
|
24
|
|
|
(5
|
)
|
||
Other assets
|
5
|
|
|
5
|
|
||
Other liabilities
|
(2
|
)
|
|
4
|
|
||
Other, net
|
—
|
|
|
1
|
|
||
Net cash provided by operating activities from continuing operations
|
674
|
|
|
312
|
|
||
Net cash provided by operating activities from discontinued operations
|
176
|
|
|
—
|
|
||
Net cash provided by operating activities
|
850
|
|
|
312
|
|
||
Cash Flows from Investing Activities:
|
|
|
|
|
|
||
Capital expenditures
|
(411
|
)
|
|
(373
|
)
|
||
Acquisitions, net of cash acquired
|
—
|
|
|
(132
|
)
|
||
Other, net
|
5
|
|
|
2
|
|
||
Net cash used in investing activities from continuing operations
|
(406
|
)
|
|
(503
|
)
|
||
Net cash provided by investing activities from discontinued operations
|
47
|
|
|
223
|
|
||
Net cash used in investing activities
|
(359
|
)
|
|
(280
|
)
|
||
Cash Flows from Financing Activities:
|
|
|
|
|
|
||
Increase (decrease) in short-term borrowings, net
|
(39
|
)
|
|
13
|
|
||
Payments of commercial paper, net
|
(800
|
)
|
|
(40
|
)
|
||
Proceeds from long-term debt
|
599
|
|
|
298
|
|
||
Dividends to parent
|
(286
|
)
|
|
(337
|
)
|
||
Debt issuance costs
|
(5
|
)
|
|
(4
|
)
|
||
Decrease in notes payable–affiliated companies
|
(570
|
)
|
|
—
|
|
||
Contribution from parent
|
600
|
|
|
38
|
|
||
Other, net
|
(1
|
)
|
|
—
|
|
||
Net cash used in financing activities from continuing operations
|
(502
|
)
|
|
(32
|
)
|
||
Net cash provided by financing activities from discontinued operations
|
—
|
|
|
—
|
|
||
Net cash used in financing activities
|
(502
|
)
|
|
(32
|
)
|
||
Net Decrease in Cash and Cash Equivalents
|
(11
|
)
|
|
—
|
|
||
Cash and Cash Equivalents at Beginning of Period
|
12
|
|
|
1
|
|
||
Cash and Cash Equivalents at End of Period
|
$
|
1
|
|
|
$
|
1
|
|
•
|
Houston Electric engages in the electric transmission and distribution business in the Texas Gulf Coast area that includes the city of Houston; and
|
•
|
CERC Corp. (i) owns and operates natural gas distribution systems in
six
states and (ii) 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 through its wholly-owned subsidiary, CES.
|
Recently Adopted Accounting Standards
|
||||||
ASU Number and Name
|
|
Description
|
|
Date of Adoption
|
|
Financial Statement Impact
upon Adoption
|
ASU 2016-18- Statement of Cash Flows (Topic 230): Restricted Cash
|
|
This standard requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, restricted cash and restricted cash equivalents. As a result, the statement of cash flows will no longer present transfers between cash and cash equivalents and restricted cash and restricted cash equivalents. When cash, cash equivalents, restricted cash and restricted cash equivalents are presented in more than one line item on the balance sheet, the new guidance requires a reconciliation of the totals in the statement of cash flows to the related captions in the balance sheet.
Transition method:
retrospective
|
|
January 1, 2018
|
|
The adoption of this standard did not have an impact on the Registrants’ financial position, results of operations or disclosures. However, CenterPoint Energy’s and Houston Electric’s Condensed Statements of Consolidated Cash Flows are reconciled to cash, cash equivalents and restricted cash, resulting in a decrease in investing activities of $2 million and an increase in investing activities of $8 million for the nine months ended September 30, 2018 and 2017, respectively. See Note 17 for further discussion.
|
ASU 2017-01- Business Combinations (Topic 805): Clarifying the Definition of a Business
|
|
This standard revises the definition of a business. If substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets, then under ASU 2017-01, the asset or group of assets is not a business. The guidance also requires a business to include at least one substantive process and narrows the definition of outputs to be more closely aligned with how outputs are described in ASC 606.
Transition method:
prospective
|
|
January 1, 2018
|
|
The adoption of this revised definition will reduce the number of transactions that are accounted for as a business combination, and therefore may have a potential impact on the Registrants’ accounting for future acquisitions.
|
ASU 2017-04- Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment
|
|
This standard eliminates Step 2 of the goodwill impairment test, which required a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.
Transition method:
prospective
|
|
January 1, 2018
|
|
The adoption of this standard will have an impact on CenterPoint Energy’s and CERC’s future calculation of goodwill impairments if an impairment is identified.
|
ASU 2017-07- Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost
|
|
This standard requires an employer to report the service cost component of the net periodic pension cost and postretirement benefit cost in the same line item(s) as other employee compensation costs arising from services rendered during the period; all other components will be presented separately from the line item(s) that includes the service cost and outside of any subtotal of operating income. In addition, only the service cost component will be eligible for capitalization in assets.
Transition method:
retrospective for the presentation of the service cost component and other components; prospective for the capitalization of the service cost component
|
|
January 1, 2018
|
|
The adoption of this standard did not have a material impact on the Registrants’ financial position, results of operations, cash flows or disclosures; however, it resulted in the increases to operating income and corresponding decreases to other income reported in the table below. Other components previously capitalized in assets will be recorded as regulatory assets in the Registrants’ rate-regulated businesses, prospectively.
|
ASU 2017-09- Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting
|
|
This standard clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as a modification. Entities will apply the modification accounting guidance if the value, vesting conditions or classification of the award changes.
Transition method:
prospective
|
|
January 1, 2018
|
|
The adoption of this standard will have an impact on CenterPoint Energy’s accounting for future changes to share-based payment awards.
|
ASU 2017-12- Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities
|
|
This standard expands an entity’s ability to hedge and account for risk components, reduces the complexity of applying certain aspects of hedge accounting and updates the presentation and disclosure requirements. The guidance eliminates the requirement to separately measure and report hedge ineffectiveness.
Transition method
: cumulative-effect adjustment for elimination of the separate measurement of ineffectiveness; prospective for presentation and disclosure
|
|
July 1, 2018
Applicable January 1, 2018
|
|
The adoption of this standard did not have a material impact on the Registrants’ financial position, results of operations or cash flows. As a result of the adoption, the Registrants will no longer recognize ineffectiveness for derivatives designated as cash flow hedges; all changes in fair value will flow through other comprehensive income. As the Registrants did not have existing cash flow hedges as of the initial application date and the adoption date, no cumulative effective adjustment was recorded. Note 7 reflects disclosures modified upon adoption.
|
ASU 2018-13- Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement
|
|
This standard eliminates, modifies and adds certain disclosure requirements for fair value measurements.
Transition method : prospective for additions and one modification and retrospective for all other amendments |
|
Adoption of eliminations and modifications as of September 30, 2018; Additions will be adopted January 1, 2020
|
|
The adoption of this standard did not impact the Registrants’ financial position, results of operations or cash flows. Note 8 reflects the disclosures modified upon adoption.
|
|
Three Months Ended September 30,
|
||||||||||||||||||||||
|
2018
|
|
2017
|
||||||||||||||||||||
|
CenterPoint Energy
|
|
Houston Electric
|
|
CERC
|
|
CenterPoint Energy
|
|
Houston Electric
|
|
CERC
|
||||||||||||
|
(in millions)
|
||||||||||||||||||||||
Increase to operating income
|
$
|
9
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
18
|
|
|
$
|
7
|
|
|
$
|
5
|
|
Decrease to other income
|
9
|
|
|
3
|
|
|
—
|
|
|
18
|
|
|
7
|
|
|
5
|
|
||||||
|
Nine Months Ended September 30,
|
||||||||||||||||||||||
|
2018
|
|
2017
|
||||||||||||||||||||
|
CenterPoint Energy
|
|
Houston Electric
|
|
CERC
|
|
CenterPoint Energy
|
|
Houston Electric
|
|
CERC
|
||||||||||||
|
(in millions)
|
||||||||||||||||||||||
Increase to operating income
|
$
|
38
|
|
|
$
|
18
|
|
|
$
|
8
|
|
|
$
|
52
|
|
|
$
|
22
|
|
|
$
|
16
|
|
Decrease to other income
|
38
|
|
|
18
|
|
|
8
|
|
|
52
|
|
|
22
|
|
|
16
|
|
Issued, Not Yet Effective Accounting Standards
|
||||||
ASU Number and Name
|
|
Description
|
|
Date of Adoption
|
|
Financial Statement Impact
upon Adoption
|
ASU 2018-14-Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20): Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans
|
|
This standard eliminates, modifies and adds certain disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans.
Transition method : retrospective |
|
January 1, 2021
Early adoption is permitted |
|
The adoption of this standard will impact the Registrants’ annual disclosures and is not expected to have an impact on their financial position, results of operations, and cash flows. The Registrants are currently assessing the standard’s impact on the Stock-Based Incentive Compensation Plans and Employee Benefit Plans footnote.
|
ASU 2018-15- Intangibles-Goodwill and Other- Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract
|
|
This standard aligns accounting for implementation costs incurred in a cloud computing arrangement that is accounted for as a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The update also prescribes the balance sheet, income statement, and cash flow classification of the capitalized implementation costs and related amortization expense, and requires additional quantitative and qualitative disclosures.
Transition method : retrospective or prospective |
|
January 1, 2020
Early adoption is permitted
|
|
The adoption of this standard will allow the Registrants to capitalize certain implementation costs incurred in cloud computing arrangements that are accounted for as service contracts. The Registrants are currently assessing the impact that adoption of this standard will have on their financial position, results of operations, cash flows and disclosures.
|
|
|
Three Months Ended September 30,
|
||||||||||||||||||||||||||||||||||||||
|
|
2018
|
|
2017
|
||||||||||||||||||||||||||||||||||||
|
|
Electric Transmission & Distribution (1)
|
|
Natural Gas Distribution (1)
|
|
Energy
Services
(2)
|
|
Other Operations (2)
|
|
Total
|
|
Electric Transmission & Distribution (1)
|
|
Natural Gas Distribution (1)
|
|
Energy
Services
(2)
|
|
Other Operations (2)
|
|
Total
|
||||||||||||||||||||
|
|
(in millions)
|
||||||||||||||||||||||||||||||||||||||
Revenue from contracts
|
|
$
|
904
|
|
|
$
|
398
|
|
|
$
|
82
|
|
|
$
|
1
|
|
|
$
|
1,385
|
|
|
$
|
852
|
|
|
$
|
396
|
|
|
$
|
97
|
|
|
$
|
2
|
|
|
$
|
1,347
|
|
Derivatives income
|
|
—
|
|
|
—
|
|
|
838
|
|
|
—
|
|
|
838
|
|
|
—
|
|
|
—
|
|
|
774
|
|
|
—
|
|
|
774
|
|
||||||||||
Other (3)
|
|
(7
|
)
|
|
12
|
|
|
—
|
|
|
2
|
|
|
7
|
|
|
(9
|
)
|
|
2
|
|
|
—
|
|
|
2
|
|
|
(5
|
)
|
||||||||||
Eliminations
|
|
—
|
|
|
(8
|
)
|
|
(10
|
)
|
|
—
|
|
|
(18
|
)
|
|
—
|
|
|
(8
|
)
|
|
(10
|
)
|
|
—
|
|
|
(18
|
)
|
||||||||||
Total revenues
|
|
$
|
897
|
|
|
$
|
402
|
|
|
$
|
910
|
|
|
$
|
3
|
|
|
$
|
2,212
|
|
|
$
|
843
|
|
|
$
|
390
|
|
|
$
|
861
|
|
|
$
|
4
|
|
|
$
|
2,098
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||||||||||||||||||||
|
|
2018
|
|
2017
|
||||||||||||||||||||||||||||||||||||
|
|
Electric Transmission & Distribution (1)
|
|
Natural Gas Distribution (1)
|
|
Energy
Services
(2)
|
|
Other Operations (2)
|
|
Total
|
|
Electric Transmission & Distribution (1)
|
|
Natural Gas Distribution (1)
|
|
Energy
Services
(2)
|
|
Other Operations (2)
|
|
Total
|
||||||||||||||||||||
|
|
(in millions)
|
||||||||||||||||||||||||||||||||||||||
Revenue from contracts
|
|
$
|
2,525
|
|
|
$
|
2,093
|
|
|
$
|
338
|
|
|
$
|
4
|
|
|
$
|
4,960
|
|
|
$
|
2,254
|
|
|
$
|
1,784
|
|
|
$
|
355
|
|
|
$
|
4
|
|
|
$
|
4,397
|
|
Derivatives income
|
|
(4
|
)
|
|
—
|
|
|
2,727
|
|
|
—
|
|
|
2,723
|
|
|
1
|
|
|
—
|
|
|
2,643
|
|
|
—
|
|
|
2,644
|
|
||||||||||
Other (3)
|
|
(19
|
)
|
|
(35
|
)
|
|
—
|
|
|
7
|
|
|
(47
|
)
|
|
(21
|
)
|
|
7
|
|
|
—
|
|
|
7
|
|
|
(7
|
)
|
||||||||||
Eliminations
|
|
—
|
|
|
(26
|
)
|
|
(57
|
)
|
|
—
|
|
|
(83
|
)
|
|
—
|
|
|
(24
|
)
|
|
(34
|
)
|
|
—
|
|
|
(58
|
)
|
||||||||||
Total revenues
|
|
$
|
2,502
|
|
|
$
|
2,032
|
|
|
$
|
3,008
|
|
|
$
|
11
|
|
|
$
|
7,553
|
|
|
$
|
2,234
|
|
|
$
|
1,767
|
|
|
$
|
2,964
|
|
|
$
|
11
|
|
|
$
|
6,976
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
(in millions)
|
||||||||||||||
Revenue from contracts
|
|
$
|
904
|
|
|
$
|
852
|
|
|
$
|
2,525
|
|
|
$
|
2,254
|
|
Other (3)
|
|
(7
|
)
|
|
(9
|
)
|
|
(19
|
)
|
|
(21
|
)
|
||||
|
|
$
|
897
|
|
|
$
|
843
|
|
|
$
|
2,506
|
|
|
$
|
2,233
|
|
|
|
Three Months Ended September 30,
|
||||||||||||||||||||||
|
|
2018
|
|
2017
|
||||||||||||||||||||
|
|
Natural Gas Distribution (1)
|
|
Energy
Services
(2)
|
|
Total
|
|
Natural Gas Distribution (1)
|
|
Energy
Services
(2)
|
|
Total
|
||||||||||||
|
|
(in millions)
|
||||||||||||||||||||||
Revenue from contracts
|
|
$
|
398
|
|
|
$
|
82
|
|
|
$
|
480
|
|
|
$
|
396
|
|
|
$
|
97
|
|
|
$
|
493
|
|
Derivatives income
|
|
—
|
|
|
838
|
|
|
838
|
|
|
—
|
|
|
774
|
|
|
774
|
|
||||||
Other (3)
|
|
12
|
|
|
—
|
|
|
12
|
|
|
2
|
|
|
—
|
|
|
2
|
|
||||||
Eliminations
|
|
(8
|
)
|
|
(10
|
)
|
|
(18
|
)
|
|
(8
|
)
|
|
(10
|
)
|
|
(18
|
)
|
||||||
Total revenues
|
|
$
|
402
|
|
|
$
|
910
|
|
|
$
|
1,312
|
|
|
$
|
390
|
|
|
$
|
861
|
|
|
$
|
1,251
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||||
|
|
2018
|
|
2017
|
||||||||||||||||||||
|
|
Natural Gas Distribution (1)
|
|
Energy
Services
(2)
|
|
Total
|
|
Natural Gas Distribution (1)
|
|
Energy
Services
(2)
|
|
Total
|
||||||||||||
|
|
(in millions)
|
||||||||||||||||||||||
Revenue from contracts
|
|
$
|
2,093
|
|
|
$
|
338
|
|
|
$
|
2,431
|
|
|
$
|
1,784
|
|
|
$
|
355
|
|
|
$
|
2,139
|
|
Derivatives income
|
|
—
|
|
|
2,727
|
|
|
2,727
|
|
|
—
|
|
|
2,643
|
|
|
2,643
|
|
||||||
Other (3)
|
|
(35
|
)
|
|
—
|
|
|
(35
|
)
|
|
7
|
|
|
—
|
|
|
7
|
|
||||||
Eliminations
|
|
(26
|
)
|
|
(57
|
)
|
|
(83
|
)
|
|
(24
|
)
|
|
(34
|
)
|
|
(58
|
)
|
||||||
Total revenues
|
|
$
|
2,032
|
|
|
$
|
3,008
|
|
|
$
|
5,040
|
|
|
$
|
1,767
|
|
|
$
|
2,964
|
|
|
$
|
4,731
|
|
(1)
|
Reflected in Utility revenues in the Condensed Statements of Consolidated Income.
|
(2)
|
Reflected in Non-utility revenues in the Condensed Statements of Consolidated Income.
|
(3)
|
Primarily consists of income from ARPs and leases. ARPs are contracts between the utility and its regulators, not between the utility and a customer. The Registrants recognize ARP revenue as other revenues when the regulator-specified conditions for recognition have been met. Upon recovery of ARP revenue through incorporation in rates charged for utility service to customers, ARP revenue is reversed and recorded as revenue from contracts with customers. The recognition of ARP revenues and the reversal of ARP revenues upon recovery through rates charged for utility service may not occur in the same period.
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
(in millions)
|
||||||||||||||
Service cost (1)
|
|
$
|
10
|
|
|
$
|
9
|
|
|
$
|
28
|
|
|
$
|
27
|
|
Interest cost (2)
|
|
20
|
|
|
22
|
|
|
59
|
|
|
66
|
|
||||
Expected return on plan assets (2)
|
|
(27
|
)
|
|
(24
|
)
|
|
(80
|
)
|
|
(72
|
)
|
||||
Amortization of prior service cost (2)
|
|
3
|
|
|
2
|
|
|
7
|
|
|
7
|
|
||||
Amortization of net loss (2)
|
|
10
|
|
|
14
|
|
|
32
|
|
|
43
|
|
||||
Net periodic cost
|
|
$
|
16
|
|
|
$
|
23
|
|
|
$
|
46
|
|
|
$
|
71
|
|
|
Three Months Ended September 30,
|
||||||||||||||||||||||
|
2018
|
|
2017
|
||||||||||||||||||||
|
CenterPoint Energy
|
|
Houston Electric
|
|
CERC
|
|
CenterPoint Energy
|
|
Houston Electric
|
|
CERC
|
||||||||||||
|
(in millions)
|
||||||||||||||||||||||
Service cost (1)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1
|
|
Interest cost (2)
|
3
|
|
|
2
|
|
|
1
|
|
|
4
|
|
|
3
|
|
|
1
|
|
||||||
Expected return on plan assets (2)
|
(1
|
)
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|
(1
|
)
|
||||||
Amortization of prior service credit (2)
|
(1
|
)
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|
(2
|
)
|
|
—
|
|
||||||
Net periodic cost
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Nine Months Ended September 30,
|
||||||||||||||||||||||
|
2018
|
|
2017
|
||||||||||||||||||||
|
CenterPoint Energy
|
|
Houston Electric
|
|
CERC
|
|
CenterPoint Energy
|
|
Houston Electric
|
|
CERC
|
||||||||||||
|
(in millions)
|
||||||||||||||||||||||
Service cost (1)
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
1
|
|
Interest cost (2)
|
10
|
|
|
6
|
|
|
3
|
|
|
12
|
|
|
7
|
|
|
3
|
|
||||||
Expected return on plan assets (2)
|
(4
|
)
|
|
(3
|
)
|
|
(1
|
)
|
|
(4
|
)
|
|
(3
|
)
|
|
(1
|
)
|
||||||
Amortization of prior service cost (credit) (2)
|
(3
|
)
|
|
(4
|
)
|
|
1
|
|
|
(3
|
)
|
|
(4
|
)
|
|
1
|
|
||||||
Net periodic cost (credit)
|
$
|
4
|
|
|
$
|
(1
|
)
|
|
$
|
4
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
4
|
|
(1)
|
Amounts presented in the table above are included in Operation and maintenance expense in each of the Registrants’ respective Condensed Statements of Consolidated Income, net of amounts capitalized and regulatory deferrals.
|
(2)
|
Amounts presented in the table above are included in Other, net in each of the Registrants’ respective Condensed Statements of Consolidated Income, net of regulatory deferrals.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in millions)
|
||||||||||||||
Beginning Balance
|
$
|
(63
|
)
|
|
$
|
(70
|
)
|
|
$
|
(66
|
)
|
|
$
|
(72
|
)
|
Amounts reclassified from accumulated other comprehensive loss:
|
|
|
|
|
|
|
|
||||||||
Prior service cost (1)
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||
Actuarial losses (1)
|
2
|
|
|
2
|
|
|
5
|
|
|
5
|
|
||||
Tax expense
|
(1
|
)
|
|
(2
|
)
|
|
(2
|
)
|
|
(4
|
)
|
||||
Net current period other comprehensive income
|
1
|
|
|
—
|
|
|
4
|
|
|
2
|
|
||||
Ending Balance
|
$
|
(62
|
)
|
|
$
|
(70
|
)
|
|
$
|
(62
|
)
|
|
$
|
(70
|
)
|
(1)
|
These accumulated other comprehensive components are included in the computation of net periodic cost.
|
|
CenterPoint Energy
|
|
Houston Electric
|
|
CERC
|
||||||
|
(in millions)
|
||||||||||
Expected minimum contribution to pension plans during 2018
|
$
|
67
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Expected contribution to postretirement benefit plan in 2018
|
16
|
|
|
10
|
|
|
5
|
|
|
|
Three Months Ended September 30, 2018
|
|
Nine Months Ended September 30, 2018
|
||||||||||||||||||||
|
|
CenterPoint Energy
|
|
Houston Electric
|
|
CERC
|
|
CenterPoint Energy
|
|
Houston Electric
|
|
CERC
|
||||||||||||
|
|
(in millions)
|
||||||||||||||||||||||
Pension plans
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
67
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Postretirement benefit plan
|
|
4
|
|
|
3
|
|
|
1
|
|
|
11
|
|
|
7
|
|
|
3
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
|
CenterPoint Energy
|
|
Houston Electric
|
|
CERC
|
|
CenterPoint Energy
|
|
Houston Electric
|
|
CERC
|
||||||||||||
Regulatory Assets:
|
(in millions)
|
||||||||||||||||||||||
Current regulatory assets (1)
|
$
|
60
|
|
|
$
|
—
|
|
|
$
|
60
|
|
|
$
|
130
|
|
|
$
|
—
|
|
|
$
|
130
|
|
Non-current regulatory assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Securitized regulatory assets
|
1,146
|
|
|
1,146
|
|
|
—
|
|
|
1,590
|
|
|
1,590
|
|
|
—
|
|
||||||
Unrecognized equity return (2)
|
(225
|
)
|
|
(225
|
)
|
|
—
|
|
|
(287
|
)
|
|
(287
|
)
|
|
—
|
|
||||||
Unamortized loss on reacquired debt
|
70
|
|
|
70
|
|
|
—
|
|
|
75
|
|
|
75
|
|
|
—
|
|
||||||
Pension and postretirement-related regulatory asset (3)
|
609
|
|
|
32
|
|
|
15
|
|
|
646
|
|
|
31
|
|
|
20
|
|
||||||
Hurricane Harvey restoration costs (4)
|
67
|
|
|
61
|
|
|
6
|
|
|
64
|
|
|
58
|
|
|
6
|
|
||||||
Regulatory assets related to TCJA (5)
|
48
|
|
|
34
|
|
|
14
|
|
|
48
|
|
|
33
|
|
|
15
|
|
||||||
Other long-term regulatory assets (6)
|
219
|
|
|
84
|
|
|
135
|
|
|
211
|
|
|
70
|
|
|
140
|
|
||||||
Total non-current regulatory assets
|
1,934
|
|
|
1,202
|
|
|
170
|
|
|
2,347
|
|
|
1,570
|
|
|
181
|
|
||||||
Total regulatory assets
|
1,994
|
|
|
1,202
|
|
|
230
|
|
|
2,477
|
|
|
1,570
|
|
|
311
|
|
||||||
Regulatory Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current regulatory liabilities (7)
|
47
|
|
|
22
|
|
|
25
|
|
|
24
|
|
|
22
|
|
|
2
|
|
||||||
Non-current regulatory liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Regulatory liabilities related to TCJA (5)
|
1,362
|
|
|
858
|
|
|
504
|
|
|
1,354
|
|
|
862
|
|
|
492
|
|
||||||
Estimated removal costs
|
887
|
|
|
275
|
|
|
612
|
|
|
878
|
|
|
285
|
|
|
593
|
|
||||||
Other long-term regulatory liabilities
|
257
|
|
|
132
|
|
|
125
|
|
|
232
|
|
|
116
|
|
|
116
|
|
||||||
Total non-current regulatory liabilities
|
2,506
|
|
|
1,265
|
|
|
1,241
|
|
|
2,464
|
|
|
1,263
|
|
|
1,201
|
|
||||||
Total regulatory liabilities
|
2,553
|
|
|
1,287
|
|
|
1,266
|
|
|
2,488
|
|
|
1,285
|
|
|
1,203
|
|
||||||
Total regulatory assets and liabilities, net
|
$
|
(559
|
)
|
|
$
|
(85
|
)
|
|
$
|
(1,036
|
)
|
|
$
|
(11
|
)
|
|
$
|
285
|
|
|
$
|
(892
|
)
|
(1)
|
Current regulatory assets are included in Prepaid expenses and other current assets in the Registrants’ Condensed Consolidated Balance Sheets.
|
(2)
|
The unrecognized equity return will be recognized as it is recovered in rates through 2024. During the
three
months ended
September 30, 2018
and
2017
, CenterPoint Energy and Houston Electric recognized approximately
$17 million
and
$13 million
, respectively, of the allowed equity return. During the
nine
months ended
September 30, 2018
and
2017
, CenterPoint Energy and Houston Electric recognized approximately
$62 million
and
$30 million
, respectively, of the allowed equity return. The timing of CenterPoint Energy’s and Houston Electric’s recognition of the equity return will vary each period based on amounts actually collected during the period. The actual amounts recognized are adjusted at least annually to correct any over-collections or under-collections during the preceding 12 months.
|
(3)
|
Includes a portion of NGD’s actuarially determined pension and other postemployment expense in excess of the amount being recovered through rates that is being deferred for rate making purposes, of which
$4 million
and
$7 million
as of
September 30, 2018
and
December 31, 2017
, respectively, were not earning a return.
|
(4)
|
The Registrants are not earning a return on Hurricane Harvey restoration costs.
|
(5)
|
The EDIT and deferred revenues will be recovered or refunded to customers as required by tax and regulatory authorities.
|
(6)
|
Other long-term regulatory assets that are not earning a return were not material as of
September 30, 2018
and
December 31, 2017
.
|
(7)
|
Current regulatory liabilities are included in Other current liabilities in each of the Registrants’ respective Condensed Consolidated Balance Sheets.
|
(a)
|
Non-Trading Activities
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||
Jurisdiction
|
|
Winter Season
|
|
Bilateral Cap
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||||
|
|
|
|
(in millions)
|
||||||||||||||||||
Certain NGD jurisdictions
|
|
2018 – 2019
|
|
$
|
9
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Certain NGD jurisdictions
|
|
2017 – 2018
|
|
8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total CERC (1)
|
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Electric operations’ service territory
|
|
2018 – 2019
|
|
8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Electric operations’ service territory
|
|
2017 – 2018
|
|
9
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|||||
Electric operations’ service territory
|
|
2016 – 2017
|
|
9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
Total CenterPoint Energy (1)
|
|
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(4
|
)
|
|
$
|
1
|
|
(1)
|
Weather hedge gains (losses) are recorded in Revenues in the Condensed Statements of Consolidated Income.
|
(b)
|
Derivative Fair Values and Income Statement Impacts
|
|
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||||
|
|
Balance Sheet Location
|
|
Derivative
Assets
Fair Value
|
|
Derivative
Liabilities
Fair Value
|
|
Derivative
Assets
Fair Value
|
|
Derivative
Liabilities
Fair Value
|
||||||||
Derivatives designated as cash flow hedges:
|
|
(in millions)
|
||||||||||||||||
Interest rate derivatives
|
|
Current Assets: Non-trading derivative assets
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total Houston Electric
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Derivatives designated as fair value hedges:
|
|
|
|
|
|
|
|
|
||||||||||
Natural gas derivatives (1) (2) (3)
|
|
Current Liabilities: Non-trading derivative liabilities
|
|
—
|
|
|
2
|
|
|
13
|
|
|
1
|
|
||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
||||||||||
Natural gas derivatives (1) (2) (3)
|
|
Current Assets: Non-trading derivative assets
|
|
76
|
|
|
3
|
|
|
114
|
|
|
4
|
|
||||
Natural gas derivatives (1) (2) (3)
|
|
Other Assets: Non-trading derivative assets
|
|
38
|
|
|
—
|
|
|
44
|
|
|
—
|
|
||||
Natural gas derivatives (1) (2) (3)
|
|
Current Liabilities: Non-trading derivative liabilities
|
|
31
|
|
|
72
|
|
|
38
|
|
|
78
|
|
||||
Natural gas derivatives (1) (2) (3)
|
|
Other Liabilities: Non-trading derivative liabilities
|
|
16
|
|
|
33
|
|
|
9
|
|
|
24
|
|
||||
Total CERC
|
|
161
|
|
|
110
|
|
|
218
|
|
|
107
|
|
||||||
Indexed debt securities derivative
|
|
Current Liabilities
|
|
—
|
|
|
685
|
|
|
—
|
|
|
668
|
|
||||
Total CenterPoint Energy
|
|
$
|
164
|
|
|
$
|
795
|
|
|
$
|
218
|
|
|
$
|
775
|
|
(1)
|
The fair value shown for natural gas contracts is comprised of derivative gross volumes totaling
1,865
Bcf or a net
310
Bcf long position and
1,795
Bcf or a net
224
Bcf long position as of
September 30, 2018
and
December 31, 2017
, respectively. 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
$72 million
asset and a
$130 million
asset as of
September 30, 2018
and
December 31, 2017
, respectively, as shown on CenterPoint Energy’s and CERC’s Condensed Consolidated Balance Sheets (and as detailed in the Offsetting of Natural Gas Derivative Assets and Liabilities table below), and was comprised of the natural gas contracts derivative assets and liabilities separately shown above, impacted by collateral netting of
$21 million
and
$19 million
, respectively.
|
(3)
|
Derivative Assets and Derivative Liabilities include no material amounts related to physical forward transactions with Enable.
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
|
|
Gross Amounts
Recognized (1)
|
|
Gross Amounts Offset in the Consolidated Balance Sheets
|
|
Net Amount Presented in the Consolidated Balance Sheets (2)
|
|
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
|
|
$
|
107
|
|
|
$
|
(34
|
)
|
|
$
|
73
|
|
|
$
|
165
|
|
|
$
|
(55
|
)
|
|
$
|
110
|
|
Other Assets: Non-trading derivative assets
|
|
54
|
|
|
(16
|
)
|
|
38
|
|
|
53
|
|
|
(9
|
)
|
|
44
|
|
||||||
Current Liabilities: Non-trading derivative liabilities
|
|
(77
|
)
|
|
44
|
|
|
(33
|
)
|
|
(83
|
)
|
|
63
|
|
|
(20
|
)
|
||||||
Other Liabilities: Non-trading derivative liabilities
|
|
(33
|
)
|
|
27
|
|
|
(6
|
)
|
|
(24
|
)
|
|
20
|
|
|
(4
|
)
|
||||||
Total
|
|
$
|
51
|
|
|
$
|
21
|
|
|
$
|
72
|
|
|
$
|
111
|
|
|
$
|
19
|
|
|
$
|
130
|
|
(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.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
Location and Amount of Gain (Loss) recognized in Income on Hedging Relationship (2)
|
||||||||||||||
|
Non-utility natural gas expense
|
|
Non-utility natural gas expense
|
||||||||||||
|
(in millions)
|
||||||||||||||
Total amounts presented in the statements of income in which the effects of hedges are recorded
|
$
|
864
|
|
|
$
|
832
|
|
|
$
|
2,927
|
|
|
$
|
2,843
|
|
|
|
|
|
|
|
|
|
||||||||
Gain (loss) on fair value hedging relationships:
|
|
|
|
|
|
|
|
||||||||
Commodity contracts:
|
|
|
|
|
|
|
|
||||||||
Hedged items - Natural gas inventory
|
1
|
|
|
4
|
|
|
(13
|
)
|
|
(10
|
)
|
||||
Derivatives designated as hedging instruments
|
(1
|
)
|
|
(4
|
)
|
|
13
|
|
|
10
|
|
||||
Amounts excluded from effectiveness testing recognized in earnings immediately (1)
|
6
|
|
|
(9
|
)
|
|
(73
|
)
|
|
(93
|
)
|
(1)
|
As a result of the adoption of ASU 2017-12 effective January 1, 2018 (see Note 2 for additional information), CenterPoint Energy and CERC exclude from their assessment of hedge effectiveness the natural gas market price difference between locations of the hedged inventory and the delivery location specified in the hedge instruments. Prior to the adoption of this accounting guidance, the timing 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, was excluded from the assessment of effectiveness for CenterPoint Energy’s and CERC’s existing fair value hedges and will continue to be excluded from the assessment of hedge effectiveness. CenterPoint Energy and CERC elected to continue to
|
(2)
|
Income statement impact associated with cash flow hedge activity is related to gains and losses reclassified from accumulated other comprehensive income into income. Amounts are immaterial for the Registrants for both the three and nine months ended September 30, 2018 and 2017, respectively.
|
|
Amount of Gain (Loss) Recognized in Other Comprehensive Income, Net of Tax on Derivative
|
||||||||||||||
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in millions)
|
||||||||||||||
Effects of cash flow hedging
|
|
|
|
|
|
|
|
||||||||
Interest rate derivatives (1)
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
7
|
|
|
$
|
(1
|
)
|
Total Houston Electric
|
3
|
|
|
—
|
|
|
7
|
|
|
(1
|
)
|
||||
Interest rate derivatives (1)
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
||||
Total CERC
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
||||
Interest rate derivatives (1)
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|
(1
|
)
|
||||
Total CenterPoint Energy
|
$
|
3
|
|
|
$
|
(2
|
)
|
|
$
|
6
|
|
|
$
|
(3
|
)
|
(1)
|
Gains and losses are reclassified from accumulated other comprehensive income into income when the hedged transactions affect earnings. The reclassification amounts are included in Interest and other finance charges in the Condensed Statements of Consolidated Income. Amounts are less than
$1 million
for each of the three and nine months ended September 30, 2018 and 2017. Over the next twelve months, estimated amortization of accumulated other comprehensive income into related income is expected to be immaterial.
|
(c)
|
Credit Risk Contingent Features
|
|
|
September 30,
2018 |
|
December 31, 2017
|
||||
|
|
(in millions)
|
||||||
Aggregate fair value of derivatives containing material adverse change provisions in a net liability position
|
|
$
|
2
|
|
|
$
|
2
|
|
Fair value of collateral already posted
|
|
—
|
|
|
—
|
|
||
Additional collateral required to be posted if credit risk contingent features triggered
|
|
1
|
|
|
2
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||||||||||||||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Netting
(1)
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Netting
(1)
|
|
Total
|
||||||||||||||||||||
Assets
|
(in millions)
|
||||||||||||||||||||||||||||||||||||||
Corporate equities
|
$
|
630
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
630
|
|
|
$
|
963
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
963
|
|
Investments, including money market funds (2)
|
70
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
70
|
|
|
68
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
68
|
|
||||||||||
Interest rate derivatives
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||
Natural gas derivatives (3)
|
—
|
|
|
134
|
|
|
27
|
|
|
(50
|
)
|
|
111
|
|
|
—
|
|
|
161
|
|
|
57
|
|
|
(64
|
)
|
|
154
|
|
||||||||||
Hedged portion of natural gas inventory
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
14
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14
|
|
||||||||||
Total assets
|
$
|
704
|
|
|
$
|
134
|
|
|
$
|
27
|
|
|
$
|
(50
|
)
|
|
$
|
815
|
|
|
$
|
1,045
|
|
|
$
|
161
|
|
|
$
|
57
|
|
|
$
|
(64
|
)
|
|
$
|
1,199
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Indexed debt securities derivative
|
$
|
—
|
|
|
$
|
685
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
685
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
668
|
|
|
$
|
—
|
|
|
$
|
668
|
|
Natural gas derivatives (3)
|
—
|
|
|
105
|
|
|
5
|
|
|
(71
|
)
|
|
39
|
|
|
—
|
|
|
96
|
|
|
11
|
|
|
(83
|
)
|
|
24
|
|
||||||||||
Total liabilities
|
$
|
—
|
|
|
$
|
790
|
|
|
$
|
5
|
|
|
$
|
(71
|
)
|
|
$
|
724
|
|
|
$
|
—
|
|
|
$
|
96
|
|
|
$
|
679
|
|
|
$
|
(83
|
)
|
|
$
|
692
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||||||||||||||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Netting
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Netting
|
|
Total
|
||||||||||||||||||||
Assets
|
(in millions)
|
||||||||||||||||||||||||||||||||||||||
Investments, including money market funds (2)
|
$
|
52
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
52
|
|
|
$
|
51
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
51
|
|
Interest rate derivatives
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||
Total assets
|
$
|
55
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
55
|
|
|
$
|
51
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
51
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||||||||||||||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Netting
(1)
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Netting
(1)
|
|
Total
|
||||||||||||||||||||
Assets
|
(in millions)
|
||||||||||||||||||||||||||||||||||||||
Corporate equities
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3
|
|
Investments, including money market funds (2)
|
10
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|
11
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11
|
|
||||||||||
Natural gas derivatives (3)
|
—
|
|
|
134
|
|
|
27
|
|
|
(50
|
)
|
|
111
|
|
|
—
|
|
|
161
|
|
|
57
|
|
|
(64
|
)
|
|
154
|
|
||||||||||
Hedged portion of natural gas inventory
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
14
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14
|
|
||||||||||
Total assets
|
$
|
14
|
|
|
$
|
134
|
|
|
$
|
27
|
|
|
$
|
(50
|
)
|
|
$
|
125
|
|
|
$
|
28
|
|
|
$
|
161
|
|
|
$
|
57
|
|
|
$
|
(64
|
)
|
|
$
|
182
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Natural gas derivatives (3)
|
$
|
—
|
|
|
$
|
105
|
|
|
$
|
5
|
|
|
$
|
(71
|
)
|
|
$
|
39
|
|
|
$
|
—
|
|
|
$
|
96
|
|
|
$
|
11
|
|
|
$
|
(83
|
)
|
|
$
|
24
|
|
Total liabilities
|
$
|
—
|
|
|
$
|
105
|
|
|
$
|
5
|
|
|
$
|
(71
|
)
|
|
$
|
39
|
|
|
$
|
—
|
|
|
$
|
96
|
|
|
$
|
11
|
|
|
$
|
(83
|
)
|
|
$
|
24
|
|
(1)
|
Amounts represent the impact of legally enforceable master netting arrangements that allow CenterPoint Energy and CERC to settle positive and negative positions and also include cash collateral of
$21 million
and
$19 million
as of
September 30, 2018
and
December 31, 2017
, respectively, 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.
|
(1)
|
As of
September 30, 2018
, CenterPoint Energy transferred its indexed debt securities derivative from Level 3 to Level 2 to reflect changes in the significance of the unobservable inputs used in the valuation.
|
(2)
|
CenterPoint Energy and CERC did not have significant Level 3 sales or purchases during either of the
three or nine
months ended
September 30, 2018
or
2017
.
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
|
CenterPoint Energy
(1)
|
|
Houston Electric
(1)
|
|
CERC
|
|
CenterPoint Energy
(1)
|
|
Houston Electric
(1)
|
|
CERC
|
||||||||||||
Long-term debt, including current maturities
|
(in millions)
|
||||||||||||||||||||||
Carrying amount
|
$
|
7,758
|
|
|
$
|
4,782
|
|
|
$
|
2,257
|
|
|
$
|
8,679
|
|
|
$
|
4,753
|
|
|
$
|
2,457
|
|
Fair value
|
7,888
|
|
|
4,813
|
|
|
2,367
|
|
|
9,220
|
|
|
5,034
|
|
|
2,708
|
|
(1)
|
Includes Securitization Bond debt.
|
|
September 30, 2018
|
|||||||
|
Limited Partner Interest
(1)
|
|
Common Units
|
|
Enable Series A Preferred Units
(2)
|
|||
CenterPoint Energy
(3)
|
54.0
|
%
|
|
233,856,623
|
|
|
14,520,000
|
|
OGE
|
25.6
|
%
|
|
110,982,805
|
|
|
—
|
|
Public unitholders
|
20.4
|
%
|
|
88,376,728
|
|
|
—
|
|
Total units outstanding
|
100.0
|
%
|
|
433,216,156
|
|
|
14,520,000
|
|
(1)
|
Excludes the Enable Series A Preferred Units owned by CenterPoint Energy.
|
(2)
|
The carrying amount of the Enable Series A Preferred Units, reflected as Preferred units - unconsolidated affiliate on CenterPoint Energy’s Condensed Consolidated Balance Sheets, was
$363 million
as of both
September 30, 2018
and
December 31, 2017
. No impairment charges or adjustment due to observable price changes were made during the current or prior reporting periods. See
Note 2
for further discussion.
|
(3)
|
Includes Enable Series A Preferred Units held directly by CenterPoint Energy and common units held indirectly through CNP Midstream.
|
|
September 30, 2018
|
||||
|
Management Rights
(1)
|
|
Incentive Distribution Rights
(2)
|
||
CenterPoint Energy
(3)
|
50
|
%
|
|
40
|
%
|
OGE
|
50
|
%
|
|
60
|
%
|
(1)
|
Enable is controlled jointly by CenterPoint Energy and OGE. Sale of CenterPoint Energy’s or OGE’s ownership interests in Enable GP to a third party is subject to mutual rights of first offer and first refusal, and CenterPoint Energy is not permitted to dispose of less than all of its interest in Enable GP.
|
(2)
|
Enable is expected to pay a minimum quarterly distribution of
$0.2875
per common unit on its outstanding common units to the extent it has sufficient cash from operations after establishment of cash reserves and payment of fees and expenses, including payments to Enable GP and its affiliates, within 60 days after the end of each quarter. If cash distributions to Enable’s unitholders exceed
$0.330625
per common unit in any quarter, Enable GP will receive increasing percentages or incentive distributions rights, up to
50%
, of the cash Enable distributes in excess of that amount. In certain circumstances Enable GP will have the right to reset the minimum quarterly distribution and the target distribution levels at which the incentive distributions receive increasing percentages to higher levels based on Enable’s cash distributions at the time of the exercise of this reset election. To date, no incentive distributions have been made.
|
(3)
|
Includes interests held through CNP Midstream.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in millions)
|
||||||||||||||
Investment in Enable common units
(1)
|
$
|
74
|
|
|
$
|
74
|
|
|
$
|
223
|
|
|
$
|
223
|
|
Total CERC
(2)
|
74
|
|
|
74
|
|
|
223
|
|
|
223
|
|
||||
Investment in Enable Series A Preferred Units
(3)
|
9
|
|
|
9
|
|
|
27
|
|
|
27
|
|
||||
Total CenterPoint Energy
|
$
|
83
|
|
|
$
|
83
|
|
|
$
|
250
|
|
|
$
|
250
|
|
(1)
|
Reflects cash distributions of
$0.318
and
$0.954
per common unit for the three and nine months ended September 30, 2018 and 2017, respectively.
|
(2)
|
On September 4, 2018, CERC completed the Internal Spin. After such date, CNP Midstream owned the Enable common units previously owned by CERC.
|
(3)
|
Reflects cash distributions of
$0.625
and
$1.875
per Enable Series A Preferred Unit for the three and nine months ended September 30, 2018 and 2017, respectively.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in millions)
|
||||||||||||||
Reimbursement of transition services (1)
(CenterPoint Energy)
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
4
|
|
|
$
|
3
|
|
Natural gas expenses, including transportation and storage costs
(CenterPoint Energy and CERC)
|
23
|
|
|
23
|
|
|
89
|
|
|
80
|
|
(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, 2018
|
|
December 31, 2017
|
||||
|
(in millions)
|
||||||
Accounts receivable for amounts billed for transition services
(CenterPoint Energy)
|
$
|
3
|
|
|
$
|
1
|
|
Accounts payable for natural gas purchases from Enable
(CenterPoint Energy and CERC)
|
8
|
|
|
13
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
(in millions)
|
||||||||||||||
Operating revenues
|
|
$
|
928
|
|
|
$
|
705
|
|
|
$
|
2,481
|
|
|
$
|
1,997
|
|
Cost of sales, excluding depreciation and amortization
|
|
516
|
|
|
349
|
|
|
1,335
|
|
|
936
|
|
||||
Depreciation and amortization
|
|
100
|
|
|
90
|
|
|
292
|
|
|
267
|
|
||||
Operating income
|
|
171
|
|
|
137
|
|
|
436
|
|
|
399
|
|
||||
Net income attributable to Enable common units
|
|
129
|
|
|
104
|
|
|
320
|
|
|
301
|
|
||||
Reconciliation of Equity in Earnings, net:
|
|
|
|
|
|
|
|
|
||||||||
CenterPoint Energy’s interest
|
|
$
|
70
|
|
|
$
|
56
|
|
|
$
|
173
|
|
|
$
|
163
|
|
Basis difference amortization (1)
|
|
11
|
|
|
12
|
|
|
35
|
|
|
36
|
|
||||
CenterPoint Energy’s equity in earnings, net
|
|
$
|
81
|
|
|
$
|
68
|
|
|
$
|
208
|
|
|
$
|
199
|
|
(1)
|
Equity in earnings of unconsolidated affiliate 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 their underlying equity in Enable’s net assets. The basis difference is amortized over approximately
31
years, the average life of the assets to which the basis difference is attributed.
|
|
|
September 30,
2018 |
|
December 31, 2017
|
||||
|
|
(in millions)
|
||||||
Current assets
|
|
$
|
481
|
|
|
$
|
416
|
|
Non-current assets
|
|
11,454
|
|
|
11,177
|
|
||
Current liabilities
|
|
1,403
|
|
|
1,279
|
|
||
Non-current liabilities
|
|
2,964
|
|
|
2,660
|
|
||
Non-controlling interest
|
|
11
|
|
|
12
|
|
||
Preferred equity
|
|
362
|
|
|
362
|
|
||
Enable partners’ equity
|
|
7,195
|
|
|
7,280
|
|
||
Reconciliation of Investment in Enable:
|
|
|
|
|
||||
CenterPoint Energy’s ownership interest in Enable partners’ equity
|
|
$
|
3,883
|
|
|
$
|
3,935
|
|
CenterPoint Energy’s basis difference
|
|
(1,426
|
)
|
|
(1,463
|
)
|
||
CenterPoint Energy’s equity method investment in Enable
|
|
$
|
2,457
|
|
|
$
|
2,472
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in millions)
|
||||||||||||||
Equity in earnings of unconsolidated affiliate, net
|
$
|
57
|
|
|
$
|
68
|
|
|
$
|
184
|
|
|
$
|
199
|
|
Income tax expense
|
13
|
|
|
26
|
|
|
44
|
|
|
75
|
|
||||
Income from discontinued operations, net of tax
|
$
|
44
|
|
|
$
|
42
|
|
|
$
|
140
|
|
|
$
|
124
|
|
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
|
Useful Lives
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Balance
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Balance
|
||||||||||||
|
(in years)
|
|
(in millions)
|
||||||||||||||||||||||
Customer relationships
|
15
|
|
$
|
86
|
|
|
$
|
(26
|
)
|
|
$
|
60
|
|
|
$
|
86
|
|
|
$
|
(21
|
)
|
|
$
|
65
|
|
Covenants not to compete
|
4
|
|
4
|
|
|
(2
|
)
|
|
2
|
|
|
4
|
|
|
(2
|
)
|
|
2
|
|
||||||
Other
|
Various
|
|
15
|
|
|
(10
|
)
|
|
5
|
|
|
15
|
|
|
(8
|
)
|
|
7
|
|
||||||
Total
|
|
|
$
|
105
|
|
|
$
|
(38
|
)
|
|
$
|
67
|
|
|
$
|
105
|
|
|
$
|
(31
|
)
|
|
$
|
74
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in millions)
|
||||||||||||||
Amortization expense of intangible assets
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
7
|
|
|
$
|
5
|
|
|
|
Shares Held
|
||||
|
|
September 30, 2018
|
|
December 31, 2017
|
||
AT&T Common
|
|
10,212,945
|
|
|
—
|
|
Charter Common
|
|
872,503
|
|
|
872,503
|
|
Time Common
|
|
—
|
|
|
888,392
|
|
TW Common
|
|
—
|
|
|
7,107,130
|
|
|
Meredith/Time
|
|
AT&T/TW
|
||||
|
(in millions)
|
||||||
Cash payment to ZENS note holders
|
$
|
16
|
|
|
$
|
382
|
|
Indexed debt – reduction
|
(4
|
)
|
|
(95
|
)
|
||
Indexed debt securities derivative – reduction
|
(1
|
)
|
|
(45
|
)
|
||
Loss on indexed debt securities
|
$
|
11
|
|
|
$
|
242
|
|
(a)
|
Short-term Borrowings (CenterPoint Energy and CERC)
|
(b)
|
Long-term Debt
|
|
|
Issuance Date
|
|
Debt Instrument
|
|
Aggregate Principal Amount
|
|
Interest Rate
|
|
Maturity Date
|
||
|
|
|
|
|
|
(in millions)
|
|
|
|
|
||
Houston Electric
|
|
February 2018
|
|
General mortgage bonds
|
|
$
|
400
|
|
|
3.95%
|
|
2048
|
CERC Corp.
|
|
March 2018
|
|
Unsecured senior notes
|
|
300
|
|
|
3.55%
|
|
2023
|
|
CERC Corp.
|
|
March 2018
|
|
Unsecured senior notes
|
|
300
|
|
|
4.00%
|
|
2028
|
|
|
Debt Instrument
|
|
Aggregate Principal Amount
|
|
Interest Rate
|
|
Maturity Date
|
||
|
|
|
|
(in millions)
|
|
|
|
|
||
CenterPoint Energy
|
|
Unsecured senior notes
|
|
$
|
500
|
|
|
3.60%
|
|
2021
|
CenterPoint Energy
|
|
Unsecured senior notes
|
|
500
|
|
|
3.85%
|
|
2024
|
|
CenterPoint Energy
|
|
Unsecured senior notes
|
|
500
|
|
|
4.25%
|
|
2028
|
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||||||||||||||||||||
|
Size of
Facility |
|
Loans
|
|
Letters
of Credit |
|
Commercial
Paper |
|
Weighted Average Interest Rate
|
|
Loans
|
|
Letters
of Credit |
|
Commercial
Paper |
|
Weighted Average Interest Rate
|
||||||||||||||||
|
(in millions, except weighted average interest rate)
|
||||||||||||||||||||||||||||||||
CenterPoint Energy
|
$
|
1,700
|
|
(1)
|
$
|
—
|
|
|
$
|
6
|
|
|
$
|
104
|
|
|
2.42
|
%
|
|
$
|
—
|
|
|
$
|
6
|
|
|
$
|
855
|
|
|
1.88
|
%
|
Houston Electric
|
300
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|||||||
CERC Corp.
|
900
|
|
|
—
|
|
|
1
|
|
|
98
|
|
|
2.43
|
%
|
|
—
|
|
|
1
|
|
|
898
|
|
|
1.72
|
%
|
|||||||
Total
|
$
|
2,900
|
|
|
$
|
—
|
|
|
$
|
11
|
|
|
$
|
202
|
|
|
|
|
$
|
—
|
|
|
$
|
11
|
|
|
$
|
1,753
|
|
|
|
(1)
|
Pursuant to the amendment entered into in May 2018, the aggregate commitments under the CenterPoint Energy revolving credit facility increased to
$3.3 billion
on October 5, 2018 as a result of the satisfaction of certain conditions described above.
|
Execution
Date
|
|
Company
|
|
Size of
Facility
|
|
Draw Rate of LIBOR plus
(1)
|
|
Financial Covenant Limit on Debt for Borrowed Money to Capital Ratio
|
|
Debt for Borrowed Money to Capital
Ratio as of
September 30, 2018
(2)
|
|
Termination Date
|
||
|
|
|
|
(in millions)
|
|
|
|
|
|
|
|
|
||
March 3, 2016
|
|
CenterPoint Energy
|
|
$
|
1,700
|
|
(3)
|
1.250%
|
|
75%
|
(4) (5)
|
47.5%
|
|
March 3, 2022
|
March 3, 2016
|
|
Houston Electric
|
|
300
|
|
|
1.125%
|
|
65%
|
(5)
|
50.7%
|
|
March 3, 2022
|
|
March 3, 2016
|
|
CERC Corp.
|
|
900
|
|
|
1.125%
|
|
65%
|
|
48.6%
|
|
March 3, 2022
|
(1)
|
Based on current credit ratings.
|
(2)
|
As defined in the revolving credit facility agreement, excluding Securitization Bonds.
|
(3)
|
Pursuant to the amendment entered into in May 2018, the aggregate commitments under the CenterPoint Energy revolving credit facility increased to
$3.3 billion
on October 5, 2018 as a result of the satisfaction of certain conditions described above.
|
(4)
|
On October 5, 2018, CenterPoint Energy’s financial covenant limit returned to
65%
due to the termination of all commitments in respect of the Bridge Facility without any borrowing thereunder.
|
(5)
|
For CenterPoint Energy (whenever its financial covenant limit is
65%
) and Houston Electric, 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
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||
CenterPoint Energy
(1)
|
24
|
%
|
|
37
|
%
|
|
26
|
%
|
|
36
|
%
|
Houston Electric
(2)
|
20
|
%
|
|
35
|
%
|
|
21
|
%
|
|
36
|
%
|
CERC - Continuing operations
(3) (4)
|
5
|
%
|
|
20
|
%
|
|
29
|
%
|
|
38
|
%
|
CERC - Discontinued operations
(5)
|
23
|
%
|
|
38
|
%
|
|
24
|
%
|
|
38
|
%
|
(1)
|
CenterPoint Energy’s lower effective tax rate for the three and nine months ended September 30, 2018 compared to the same periods for 2017 was primarily due to the reduction in the federal corporate income tax rate from
35%
to
21%
effective January 1, 2018 as prescribed by the TCJA. The effective tax rate decreased by
5%
and
4%
, respectively, for the three and nine months ended September 30, 2018 due to the amortization of EDIT. These decreases were partially offset by an increase to the effective tax rate of
5%
for the three-month period ended September 30, 2018 as a result of the establishment of a state valuation allowance on certain net operating loss deferred tax assets that are no longer expected to be utilized prior to expiration after the Internal Spin. The effective tax rate increased by
7%
for the nine-month period ended September 30, 2018 due to state law changes and the state valuation allowance. See Note 9 for further discussion on the Internal Spin.
|
(2)
|
Houston Electric’s lower effective tax rate for the three and nine months ended September 30, 2018 compared to the same periods for 2017 was primarily due to the reduction in the federal corporate income tax rate from
35%
to
21%
effective January 1, 2018 as prescribed by the TCJA. The effective tax rate was further reduced by
2%
for both periods due to the amortization of EDIT.
|
(3)
|
CERC’s lower effective tax rate on the loss from continuing operations for the three months ended September 30, 2018 compared to the same period in 2017 was primarily due to the reduction in the federal corporate income tax rate from
35%
to
21%
effective January 1, 2018 as prescribed by the TCJA. The effective tax rate decreased by
18%
due to state taxes as a result of the establishment of a state valuation allowance on certain net operating loss deferred tax assets that are no longer expected to be utilized prior to expiration after the Internal Spin. These decreases were partially offset by an increase to the effective tax rate of
15%
due to the amortization of EDIT. See Note 9 for further discussion on the Internal Spin.
|
(4)
|
CERC’s lower effective tax rate on income from continuing operations for the nine months ended September 30, 2018 compared to the same period in 2017 was primarily due to the reduction in the federal corporate income tax rate from
35%
to
21%
effective January 1, 2018 as prescribed by the TCJA. The effective tax rate decreased by
20%
due to the amortization of EDIT. These decreases were partially offset by an increase to the effective tax rate of
22%
as a result of an increase in state tax rates and the establishment of a state valuation allowance on certain net operating loss deferred tax assets that are no longer expected to be utilized prior to expiration after the Internal Spin. See Note 9 for further discussion on the Internal Spin.
|
(5)
|
CERC’s lower effective tax rate on income from discontinued operations for the three and nine months ended September 30, 2018 compared to the same periods in 2017 was primarily due to the reduction in the federal corporate income tax rate from
35%
to
21%
effective January 1, 2018 as prescribed by the TCJA. See Note 9 for further discussion on the Internal Spin and the associated discontinued operations presentation.
|
(a)
|
Natural Gas Supply Commitments (CenterPoint Energy and CERC)
|
(b)
|
Legal, Environmental and Other Matters
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in millions, except share and per share amounts)
|
||||||||||||||
Income available to common shareholders
|
$
|
153
|
|
|
$
|
169
|
|
|
$
|
243
|
|
|
$
|
496
|
|
|
|
|
|
|
|
|
|
||||||||
Basic weighted average common shares outstanding
|
431,554,000
|
|
|
431,026,000
|
|
|
431,437,000
|
|
|
430,939,000
|
|
||||
Plus: Incremental shares from assumed conversions:
|
|
|
|
|
|
|
|
||||||||
Restricted stock
|
3,337,000
|
|
|
3,060,000
|
|
|
3,337,000
|
|
|
3,060,000
|
|
||||
Diluted weighted average common shares
|
434,891,000
|
|
|
434,086,000
|
|
|
434,774,000
|
|
|
433,999,000
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Basic earnings per common share
|
$
|
0.35
|
|
|
$
|
0.39
|
|
|
$
|
0.56
|
|
|
$
|
1.15
|
|
Diluted earnings per common share
|
$
|
0.35
|
|
|
$
|
0.39
|
|
|
$
|
0.56
|
|
|
$
|
1.14
|
|
|
|
Electric Transmission & Distribution
|
|
Natural Gas Distribution
|
|
Energy
Services
|
|
Midstream Investments
|
|
Other Operations
|
CenterPoint Energy
|
|
X
|
|
X
|
|
X
|
|
X
|
|
X
|
Houston Electric
|
|
X
|
|
|
|
|
|
|
|
|
CERC
|
|
|
|
X
|
|
X
|
|
(1)
|
|
X
|
(1)
|
In the three months ended September 30, 2018, CERC completed the Internal Spin. Previously, CERC’s equity method investment in Enable was included in the Midstream Investments segment. CERC’s equity in earnings in Enable, net of basis difference amortization and income tax, has been classified as discontinued operations for all periods presented. See Note 9 for further discussion on the Internal Spin and the associated discontinued operations presentation.
|
|
Three Months Ended September 30,
|
||||||||||||||||||||||
|
2018
|
|
2017
|
||||||||||||||||||||
|
Revenues from
External Customers |
|
Net
Intersegment Revenues |
|
Operating
Income
(Loss)
|
|
Revenues from
External Customers |
|
Net
Intersegment Revenues |
|
Operating
Income |
||||||||||||
|
(in millions)
|
||||||||||||||||||||||
Electric Transmission & Distribution
|
$
|
897
|
|
(1)
|
$
|
—
|
|
|
$
|
227
|
|
|
$
|
843
|
|
(1)
|
$
|
—
|
|
|
$
|
254
|
|
Natural Gas Distribution
|
402
|
|
|
8
|
|
|
3
|
|
|
390
|
|
|
8
|
|
|
25
|
|
||||||
Energy Services
|
910
|
|
|
10
|
|
|
(9
|
)
|
|
861
|
|
|
10
|
|
|
7
|
|
||||||
Midstream Investments
(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Other Operations
|
3
|
|
|
—
|
|
|
5
|
|
|
4
|
|
|
—
|
|
|
11
|
|
||||||
Eliminations
|
—
|
|
|
(18
|
)
|
|
—
|
|
|
—
|
|
|
(18
|
)
|
|
—
|
|
||||||
Consolidated
|
$
|
2,212
|
|
|
$
|
—
|
|
|
$
|
226
|
|
|
$
|
2,098
|
|
|
$
|
—
|
|
|
$
|
297
|
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||||
|
2018
|
|
2017
|
||||||||||||||||||||
|
Revenues from
External
Customers
|
|
Net
Intersegment
Revenues
|
|
Operating
Income
(Loss)
|
|
Revenues from
External
Customers
|
|
Net
Intersegment
Revenues
|
|
Operating
Income |
||||||||||||
|
(in millions)
|
||||||||||||||||||||||
Electric Transmission & Distribution
|
$
|
2,502
|
|
(1)
|
$
|
—
|
|
|
$
|
523
|
|
|
$
|
2,234
|
|
(1)
|
$
|
—
|
|
|
$
|
511
|
|
Natural Gas Distribution
|
2,032
|
|
|
26
|
|
|
166
|
|
|
1,767
|
|
|
24
|
|
|
235
|
|
||||||
Energy Services
|
3,008
|
|
|
57
|
|
|
(20
|
)
|
|
2,964
|
|
|
34
|
|
|
58
|
|
||||||
Midstream Investments
(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Other Operations
|
11
|
|
|
—
|
|
|
(5
|
)
|
|
11
|
|
|
—
|
|
|
24
|
|
||||||
Eliminations
|
—
|
|
|
(83
|
)
|
|
—
|
|
|
—
|
|
|
(58
|
)
|
|
—
|
|
||||||
Consolidated
|
$
|
7,553
|
|
|
$
|
—
|
|
|
$
|
664
|
|
|
$
|
6,976
|
|
|
$
|
—
|
|
|
$
|
828
|
|
(1)
|
CenterPoint Energy’s and Houston Electric’s Electric Transmission & Distribution revenues from major customers are as follows:
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
(in millions)
|
||||||||||||||
Affiliates of NRG
|
|
$
|
213
|
|
|
$
|
221
|
|
|
$
|
543
|
|
|
$
|
540
|
|
Affiliates of Vistra Energy Corp.
|
|
79
|
|
|
72
|
|
|
192
|
|
|
172
|
|
(2)
|
CenterPoint Energy’s Midstream Investments’ equity earnings, net are as follows:
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
(in millions)
|
||||||||||||||
Enable
|
|
$
|
81
|
|
|
$
|
68
|
|
|
$
|
208
|
|
|
$
|
199
|
|
|
Three Months Ended September 30,
|
||||||||||||||||||||||
|
2018
|
|
2017
|
||||||||||||||||||||
|
Revenues from
External Customers |
|
Net
Intersegment Revenues |
|
Operating
Income (Loss) |
|
Revenues from
External Customers |
|
Net
Intersegment Revenues |
|
Operating
Income (Loss) |
||||||||||||
|
(in millions)
|
||||||||||||||||||||||
Natural Gas Distribution
|
$
|
402
|
|
|
$
|
8
|
|
|
$
|
3
|
|
|
$
|
390
|
|
|
$
|
8
|
|
|
$
|
25
|
|
Energy Services
|
910
|
|
|
10
|
|
|
(9
|
)
|
|
861
|
|
|
10
|
|
|
7
|
|
||||||
Other Operations
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
||||||
Eliminations
|
—
|
|
|
(18
|
)
|
|
—
|
|
|
—
|
|
|
(18
|
)
|
|
—
|
|
||||||
Consolidated
|
$
|
1,312
|
|
|
$
|
—
|
|
|
$
|
(7
|
)
|
|
$
|
1,251
|
|
|
$
|
—
|
|
|
$
|
31
|
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||||
|
2018
|
|
2017
|
||||||||||||||||||||
|
Revenues from
External
Customers
|
|
Net
Intersegment
Revenues
|
|
Operating
Income
(Loss)
|
|
Revenues from
External
Customers
|
|
Net
Intersegment
Revenues
|
|
Operating
Income
(Loss)
|
||||||||||||
|
(in millions)
|
||||||||||||||||||||||
Natural Gas Distribution
|
$
|
2,032
|
|
|
$
|
26
|
|
|
$
|
166
|
|
|
$
|
1,767
|
|
|
$
|
24
|
|
|
$
|
235
|
|
Energy Services
|
3,008
|
|
|
57
|
|
|
(20
|
)
|
|
2,964
|
|
|
34
|
|
|
58
|
|
||||||
Other Operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
||||||
Eliminations
|
—
|
|
|
(83
|
)
|
|
—
|
|
|
—
|
|
|
(58
|
)
|
|
—
|
|
||||||
Consolidated
|
$
|
5,040
|
|
|
$
|
—
|
|
|
$
|
146
|
|
|
$
|
4,731
|
|
|
$
|
—
|
|
|
$
|
289
|
|
|
Total Assets
|
|
||||||||||||||
|
September 30, 2018
|
|
December 31, 2017
|
|
||||||||||||
|
CenterPoint
Energy
|
|
CERC
|
|
CenterPoint
Energy |
|
CERC
|
|
||||||||
|
(in millions)
|
|
||||||||||||||
Electric Transmission & Distribution
|
$
|
10,436
|
|
|
$
|
—
|
|
|
$
|
10,292
|
|
|
$
|
—
|
|
|
Natural Gas Distribution
|
6,557
|
|
|
6,557
|
|
|
6,608
|
|
|
6,608
|
|
|
||||
Energy Services
|
1,253
|
|
|
1,253
|
|
|
1,521
|
|
|
1,521
|
|
|
||||
Midstream Investments
|
2,457
|
|
|
—
|
|
|
2,472
|
|
|
—
|
|
|
||||
Assets of discontinued operations
|
—
|
|
|
—
|
|
(1)
|
—
|
|
|
2,472
|
|
(1)
|
||||
Other Operations
|
2,206
|
|
(2)
|
110
|
|
|
2,497
|
|
(2)
|
70
|
|
|
||||
Eliminations
|
(681
|
)
|
|
(615
|
)
|
|
(654
|
)
|
|
(559
|
)
|
|
||||
Consolidated
|
$
|
22,228
|
|
|
$
|
7,305
|
|
|
$
|
22,736
|
|
|
$
|
10,112
|
|
|
(1)
|
On September 4, 2018, CERC completed the Internal Spin. For further information regarding the Internal Spin, see Note 9.
|
(2)
|
Includes pension and other postemployment-related regulatory assets of
$566 million
and
$600 million
, respectively, as of
September 30, 2018
and
December 31, 2017
.
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||||
|
2018
|
|
2017
|
||||||||||||||||||||
|
CenterPoint Energy
|
|
Houston Electric
|
|
CERC
|
|
CenterPoint Energy
|
|
Houston Electric
|
|
CERC
|
||||||||||||
|
(in millions)
|
||||||||||||||||||||||
Cash Payments/Receipts:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest, net of capitalized interest
|
$
|
301
|
|
|
$
|
173
|
|
|
$
|
85
|
|
|
$
|
306
|
|
|
$
|
176
|
|
|
$
|
86
|
|
Income taxes, net
|
89
|
|
|
122
|
|
|
3
|
|
|
14
|
|
|
76
|
|
|
4
|
|
||||||
Non-cash transactions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Accounts payable related to capital expenditures
|
140
|
|
|
87
|
|
|
66
|
|
|
111
|
|
|
70
|
|
|
53
|
|
||||||
Capital distribution associated with the Internal Spin
|
—
|
|
|
—
|
|
|
1,460
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||||
|
CenterPoint Energy
|
|
Houston Electric
|
|
CenterPoint Energy
|
|
Houston Electric
|
||||||||
|
(in millions)
|
||||||||||||||
Cash and cash equivalents
|
$
|
293
|
|
|
$
|
279
|
|
|
$
|
260
|
|
|
$
|
238
|
|
Restricted cash included in Prepaid expenses and other current assets
|
37
|
|
|
37
|
|
|
35
|
|
|
35
|
|
||||
Restricted cash included in Other
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
||||
Total cash, cash equivalents and restricted cash shown in Condensed Statements of Consolidated Cash Flows
|
$
|
331
|
|
|
$
|
317
|
|
|
$
|
296
|
|
|
$
|
274
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||||
|
Houston Electric
|
|
CERC
|
|
Houston Electric
|
|
CERC
|
||||||||
|
(in millions)
|
||||||||||||||
Money pool investments (borrowings)
(1)
|
$
|
(75
|
)
|
|
$
|
—
|
|
|
$
|
(60
|
)
|
|
$
|
(570
|
)
|
Weighted average interest rate
|
2.45
|
%
|
|
2.45
|
%
|
|
1.90
|
%
|
|
1.90
|
%
|
(1)
|
Included in Accounts and notes receivable (payable)–affiliated companies in the Condensed Consolidated Balance Sheets.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||||||||||||||||||
|
Houston Electric
|
|
CERC
|
|
Houston Electric
|
|
CERC
|
|
Houston Electric
|
|
CERC
|
|
Houston Electric
|
|
CERC
|
||||||||||||||||
|
|
|
|
|
(in millions)
|
|
|
|
|
||||||||||||||||||||||
Interest income (expense) (1)
|
$
|
1
|
|
|
$
|
(2
|
)
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
(4
|
)
|
|
$
|
3
|
|
|
$
|
—
|
|
(1)
|
Interest income is included in Other, net and interest expense is included in Interest and other finance charges on the Condensed Statements of Consolidated Income.
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||||||||||||||||||
|
|
Houston Electric
|
|
CERC
|
|
Houston Electric
|
|
CERC
|
|
Houston Electric
|
|
CERC
|
|
Houston Electric
|
|
CERC
|
||||||||||||||||
|
|
(in millions)
|
||||||||||||||||||||||||||||||
Corporate service charges
|
|
$
|
47
|
|
|
$
|
36
|
|
|
$
|
41
|
|
|
$
|
30
|
|
|
$
|
138
|
|
|
$
|
105
|
|
|
$
|
127
|
|
|
$
|
93
|
|
Net affiliate service charges (billings)
|
|
(3
|
)
|
|
3
|
|
|
(1
|
)
|
|
1
|
|
|
(8
|
)
|
|
8
|
|
|
(6
|
)
|
|
6
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||||||||||||||||||
|
|
Houston Electric
|
|
CERC
|
|
Houston Electric
|
|
CERC
|
|
Houston Electric
|
|
CERC
|
|
Houston Electric
|
|
CERC
|
||||||||||||||||
|
|
(in millions)
|
||||||||||||||||||||||||||||||
Cash dividends paid to parent
|
|
$
|
60
|
|
|
$
|
75
|
|
|
$
|
45
|
|
|
$
|
89
|
|
|
$
|
123
|
|
|
$
|
286
|
|
|
$
|
87
|
|
|
$
|
337
|
|
Cash contribution from parent
|
|
—
|
|
|
600
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
600
|
|
|
—
|
|
|
38
|
|
||||||||
Capital distribution to parent associated with the Internal Spin
|
|
—
|
|
|
1,460
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,460
|
|
|
—
|
|
|
—
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
Equity Instrument
|
|
2018
|
|
2017
|
|
2018
(1)
|
|
2017
|
||||||||
|
|
(per share)
|
||||||||||||||
Common Stock
|
|
$
|
0.2775
|
|
|
$
|
0.2675
|
|
|
$
|
0.5550
|
|
|
$
|
0.8025
|
|
(1)
|
On December 13, 2017, CenterPoint Energy’s Board of Directors declared a regular quarterly cash dividend of
$0.2775
per share of Common Stock, payable on March 8, 2018 to shareholders of record as of the close of business on February 15, 2018.
|
•
|
senior to Common Stock and to each other class or series of capital stock established after the initial issue date of the Series A Preferred Stock that is expressly made subordinated to the Series A Preferred Stock;
|
•
|
on a parity with any class or series of capital stock established after the initial issue date of the Series A Preferred Stock that is not expressly made senior or subordinated to the Series A Preferred Stock, including the Series B Preferred Stock;
|
•
|
junior to any class or series of capital stock established after the initial issue date of the Series A Preferred Stock that is expressly made senior to the Series A Preferred Stock;
|
•
|
junior to all existing and future indebtedness (including indebtedness outstanding under CenterPoint Energy’s credit facilities, senior notes and commercial paper) and other liabilities with respect to assets available to satisfy claims against CenterPoint Energy; and
|
•
|
structurally subordinated to any existing and future indebtedness and other liabilities of CenterPoint Energy’s subsidiaries and capital stock of CenterPoint Energy’s subsidiaries held by third parties.
|
Applicable Market Value of the Common Stock
|
|
Conversion Rate per Share of Series B Preferred Stock
|
Greater than $32.6990 (threshold appreciation price)
|
|
30.5820 shares of Common Stock
|
Equal to or less than $32.6990 but greater than or equal to $27.2494
|
|
Between 30.5820 and 36.6980 shares of Common Stock, determined by dividing $1,000 by the applicable market value
|
Less than $27.2494 (initial price)
|
|
36.6980 shares of Common Stock
|
Applicable Market Value of the Common Stock
|
|
Conversion Rate per Depository Share
|
Greater than $32.6990 (threshold appreciation price)
|
|
1.5291 shares of Common Stock
|
Equal to or less than $32.6990 but greater than or equal to $27.2494
|
|
Between 1.5291 and 1.8349 shares of Common Stock, determined by dividing $50 by the applicable market value
|
Less than $27.2494 (initial price)
|
|
1.8349 shares of Common Stock
|
•
|
senior to Common Stock and to each other class or series of capital stock established after the initial issue date of the Series B Preferred Stock that is expressly made subordinated to the Series B Preferred Stock;
|
•
|
on a parity with the Series A Preferred Stock and any class or series of capital stock established after the initial issue date that is not expressly made senior or subordinated to the Series B Preferred Stock;
|
•
|
junior to any class or series of capital stock established after the initial issue date that is expressly made senior to the Series B Preferred Stock;
|
•
|
junior to all existing and future indebtedness (including indebtedness outstanding under CenterPoint Energy’s credit facilities, senior notes and commercial paper) and other liabilities with respect to assets available to satisfy claims against CenterPoint Energy; and
|
•
|
structurally subordinated to any existing and future indebtedness and other liabilities of CenterPoint Energy’s subsidiaries and capital stock of CenterPoint Energy’s subsidiaries held by third parties.
|
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,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in millions, except per share amounts)
|
||||||||||||||
Revenues
|
$
|
2,212
|
|
|
$
|
2,098
|
|
|
$
|
7,553
|
|
|
$
|
6,976
|
|
Expenses
|
1,986
|
|
|
1,801
|
|
|
6,889
|
|
|
6,148
|
|
||||
Operating Income
|
226
|
|
|
297
|
|
|
664
|
|
|
828
|
|
||||
Interest and Other Finance Charges
|
(90
|
)
|
|
(80
|
)
|
|
(259
|
)
|
|
(235
|
)
|
||||
Interest on Securitization Bonds
|
(16
|
)
|
|
(18
|
)
|
|
(46
|
)
|
|
(58
|
)
|
||||
Equity in Earnings of Unconsolidated Affiliate, net
|
81
|
|
|
68
|
|
|
208
|
|
|
199
|
|
||||
Other Income (Expense), net
|
8
|
|
|
—
|
|
|
(234
|
)
|
|
43
|
|
||||
Income Before Income Taxes
|
209
|
|
|
267
|
|
|
333
|
|
|
777
|
|
||||
Income Tax Expense
|
51
|
|
|
98
|
|
|
85
|
|
|
281
|
|
||||
Net Income
|
158
|
|
|
169
|
|
|
248
|
|
|
496
|
|
||||
Series A Preferred Stock dividend requirement
|
5
|
|
|
—
|
|
|
5
|
|
|
—
|
|
||||
Income Available to Common Shareholders
|
$
|
153
|
|
|
$
|
169
|
|
|
$
|
243
|
|
|
$
|
496
|
|
Basic Earnings Per Share
|
$
|
0.35
|
|
|
$
|
0.39
|
|
|
$
|
0.56
|
|
|
$
|
1.15
|
|
Diluted Earnings Per Share
|
$
|
0.35
|
|
|
$
|
0.39
|
|
|
$
|
0.56
|
|
|
$
|
1.14
|
|
•
|
a $71 million decrease in operating income discussed below by segment in Results of Operations by Business Segment;
|
•
|
a $10 million increase in interest expense primarily due to the amortization of Bridge Facility fees;
|
•
|
an $8 million increase in losses on the underlying value of the indexed debt securities related to the ZENS included in Other Income (Expense), net shown above; and
|
•
|
a $5 million increase in preferred dividend requirements on our Series A Preferred Stock.
|
•
|
a $47 million decrease in income tax expense due to lower net income and a reduction in the corporate income tax rate resulting from the TCJA;
|
•
|
a $13 million increase in equity earnings from our investment in Enable, discussed further in Note 9 to the Interim Condensed Financial Statements;
|
•
|
a $9 million decrease in non-service cost components of net periodic pension and post-retirement costs included in Other Income (Expense), net shown above;
|
•
|
a $6 million increase in gains on marketable securities included in Other Income (Expense), net shown above;
|
•
|
a $2 million decrease in interest expense related to lower outstanding balances of our Securitization Bonds; and
|
•
|
a $1 million increase in miscellaneous other non-operating income included in Other Income (Expense), net shown above.
|
•
|
a $257 million increase in losses on indexed debt securities related to the ZENS included in Other Income (Expense), net shown above, resulting from a loss of $11 million from Meredith’s acquisition of Time in March 2018, a loss of $242 million from AT&T’s acquisition of TW in June 2018 and increased losses of $4 million in the underlying value of the indexed debt securities;
|
•
|
a $164 million decrease in operating income discussed below by segment in Results of Operations by Business Segment;
|
•
|
a $38 million decrease in gains on marketable securities included in Other Income (Expense), net shown above;
|
•
|
a $24 million increase in interest expense due to higher outstanding other long-term debt and the amortization of Bridge Facility fees of $17 million; and
|
•
|
a $5 million increase in preferred dividend requirements on our Series A Preferred Stock.
|
•
|
a $196 million decrease in income tax expense due to lower net income and a reduction in the corporate income tax rate resulting from the TCJA;
|
•
|
a $14 million decrease in non-service cost components of net periodic pension and post-retirement costs included in Other Income (Expense), net shown above;
|
•
|
a $12 million decrease in interest expense related to lower outstanding balances of our Securitization Bonds;
|
•
|
a $9 million increase in equity earnings from our investment in Enable, discussed further in Note 9 to the Interim Condensed Financial Statements; and
|
•
|
a $4 million increase in miscellaneous other non-operating income included in Other Income (Expense), net shown above.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in millions, except throughput and customer data)
|
||||||||||||||
Revenues
|
$
|
897
|
|
|
$
|
843
|
|
|
$
|
2,506
|
|
|
$
|
2,233
|
|
Expenses
|
670
|
|
|
589
|
|
|
1,979
|
|
|
1,723
|
|
||||
Operating income
|
227
|
|
|
254
|
|
|
527
|
|
|
510
|
|
||||
Interest and other finance charges
|
(32
|
)
|
|
(32
|
)
|
|
(101
|
)
|
|
(97
|
)
|
||||
Interest on Securitization Bonds
|
(16
|
)
|
|
(18
|
)
|
|
(46
|
)
|
|
(58
|
)
|
||||
Other expense, net
|
—
|
|
|
(3
|
)
|
|
(6
|
)
|
|
(9
|
)
|
||||
Income before income taxes
|
179
|
|
|
201
|
|
|
374
|
|
|
346
|
|
||||
Income tax expense
|
36
|
|
|
71
|
|
|
78
|
|
|
123
|
|
||||
Net income
|
$
|
143
|
|
|
$
|
130
|
|
|
$
|
296
|
|
|
$
|
223
|
|
•
|
a $45 million decrease in income tax expense due to lower net income and a reduction in the corporate income tax rate resulting from the TCJA; and
|
•
|
a $32 million increase in TDU operating income resulting from a $27 million increase discussed below in Results of Operations by Business Segment and increased usage of $5 million, primarily due to a return to more normal weather, which was not offset by the weather hedge loss recorded on CenterPoint Energy.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in millions)
|
||||||||||||||
Revenues
|
$
|
1,312
|
|
|
$
|
1,251
|
|
|
$
|
5,040
|
|
|
$
|
4,731
|
|
Expenses
|
1,319
|
|
|
1,220
|
|
|
4,894
|
|
|
4,442
|
|
||||
Operating Income (Loss)
|
(7
|
)
|
|
31
|
|
|
146
|
|
|
289
|
|
||||
Interest and other finance charges
|
(30
|
)
|
|
(32
|
)
|
|
(92
|
)
|
|
(92
|
)
|
||||
Other expense, net
|
—
|
|
|
(4
|
)
|
|
(5
|
)
|
|
(13
|
)
|
||||
Income (loss) from continuing operations before income taxes
|
(37
|
)
|
|
(5
|
)
|
|
49
|
|
|
184
|
|
||||
Income tax expense (benefit)
|
(2
|
)
|
|
(1
|
)
|
|
14
|
|
|
69
|
|
||||
Income (loss) from continuing operations
|
(35
|
)
|
|
(4
|
)
|
|
35
|
|
|
115
|
|
||||
Income from discontinued operations, net of tax
|
44
|
|
|
42
|
|
|
140
|
|
|
124
|
|
||||
Net Income
|
$
|
9
|
|
|
$
|
38
|
|
|
$
|
175
|
|
|
$
|
239
|
|
•
|
a $4 million increase in miscellaneous other non-operating income included in Other expense, net shown above, primarily due to lower non-service cost components of net periodic postretirement costs;
|
•
|
a $2 million decrease in interest expense due to lower outstanding long-term debt;
|
•
|
a $2 million increase in income from discontinued operations, net of tax, discussed further in Notes 9 and 13 to the Interim Condensed Financial Statements; and
|
•
|
a $1 million decrease in income tax expense due to lower income from continuing operations and a reduction in the corporate income tax rate resulting from the TCJA, partially offset by an increase in the state tax valuation allowance.
|
•
|
a $55 million decrease in income tax expense due to lower income from continuing operations and a reduction in the corporate income tax rate resulting from the TCJA, partially offset by an increase in the state tax valuation allowance;
|
•
|
a $16 million increase in income from discontinued operations, net of tax, discussed further in Notes 9 and 13 to the Interim Condensed Financial Statements; and
|
•
|
an $8 million increase in miscellaneous other non-operating income included in Other expense, net shown above, primarily due to lower non-service cost components of net periodic postretirement costs.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in millions)
|
||||||||||||||
Electric Transmission & Distribution
|
$
|
227
|
|
|
$
|
254
|
|
|
$
|
523
|
|
|
$
|
511
|
|
Natural Gas Distribution
|
3
|
|
|
25
|
|
|
166
|
|
|
235
|
|
||||
Energy Services
|
(9
|
)
|
|
7
|
|
|
(20
|
)
|
|
58
|
|
||||
Other Operations
|
5
|
|
|
11
|
|
|
(5
|
)
|
|
24
|
|
||||
Total Consolidated Operating Income
|
$
|
226
|
|
|
$
|
297
|
|
|
$
|
664
|
|
|
$
|
828
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in millions, except throughput and customer data)
|
||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
TDU
|
$
|
735
|
|
|
$
|
729
|
|
|
$
|
2,009
|
|
|
$
|
1,944
|
|
Bond Companies
|
162
|
|
|
114
|
|
|
493
|
|
|
290
|
|
||||
Total revenues
|
897
|
|
|
843
|
|
|
2,502
|
|
|
2,234
|
|
||||
Expenses:
|
|
|
|
|
|
|
|
||||||||
Operation and maintenance, excluding Bond Companies
|
367
|
|
|
337
|
|
|
1,056
|
|
|
1,018
|
|
||||
Depreciation and amortization, excluding Bond Companies
|
95
|
|
|
97
|
|
|
293
|
|
|
296
|
|
||||
Taxes other than income taxes
|
59
|
|
|
59
|
|
|
180
|
|
|
177
|
|
||||
Bond Companies
|
149
|
|
|
96
|
|
|
450
|
|
|
232
|
|
||||
Total expenses
|
670
|
|
|
589
|
|
|
1,979
|
|
|
1,723
|
|
||||
Operating Income
|
$
|
227
|
|
|
$
|
254
|
|
|
$
|
523
|
|
|
$
|
511
|
|
Operating Income:
|
|
|
|
|
|
|
|
||||||||
TDU
|
$
|
214
|
|
|
$
|
236
|
|
|
$
|
480
|
|
|
$
|
453
|
|
Bond Companies
(1)
|
13
|
|
|
18
|
|
|
43
|
|
|
58
|
|
||||
Total segment operating income
|
$
|
227
|
|
|
$
|
254
|
|
|
$
|
523
|
|
|
$
|
511
|
|
Throughput (in GWh):
|
|
|
|
|
|
|
|
||||||||
Residential
|
10,555
|
|
|
10,419
|
|
|
24,486
|
|
|
23,512
|
|
||||
Total
|
27,015
|
|
|
26,453
|
|
|
70,347
|
|
|
67,956
|
|
||||
Number of metered customers at end of period:
|
|
|
|
|
|
|
|
||||||||
Residential
|
2,188,211
|
|
|
2,156,624
|
|
|
2,188,211
|
|
|
2,156,624
|
|
||||
Total
|
2,475,018
|
|
|
2,435,558
|
|
|
2,475,018
|
|
|
2,435,558
|
|
(1)
|
Together with
$3 million
of interest income for each of the three and nine months ended September 30, 2018, represents the amount necessary to pay interest on the Securitization Bonds.
|
•
|
increased operation and maintenance expenses, excluding transmission costs billed by transmission providers, of
$38 million
primarily due to the following:
|
◦
|
contract services of
$10 million
, largely due to increased vegetation management and preventative maintenance resiliency spend;
|
◦
|
support services of
$9 million
, primarily related to technology projects;
|
◦
|
other miscellaneous operation and maintenance expenses of
$9 million
;
|
◦
|
labor and benefits costs of
$6 million
; and
|
◦
|
damage claims from third parties of
$4 million
;
|
•
|
lower revenues of
$22 million
due to the recording of a regulatory liability and a corresponding decrease to revenue of
$6 million
reflecting the difference in revenues collected under existing customer rates and the revenues that would have been collected had existing rates been set using the lower corporate tax rate from the TCJA and lower revenues of
$16 million
due to lower transmission and distribution rate filings as a result of the TCJA; and
|
•
|
higher depreciation and amortization expense, primarily because of ongoing additions to plant in service, and other taxes of
$5 million
.
|
•
|
higher transmission-related revenues of
$14 million
, exclusive of the TCJA impact discussed above, and lower transmission costs billed by transmission providers of
$8 million
;
|
•
|
customer growth of
$9 million
from the addition of over
39,000
customers;
|
•
|
rate increases of
$8 million
related to distribution capital investments, exclusive of the TCJA impact discussed above; and
|
•
|
higher equity return of
$4 million
, primarily related to the annual true-up of transition charges correcting for under-collections that occurred during the preceding 12 months.
|
•
|
higher equity return of
$33 million
, primarily related to the annual true-up of transition charges correcting for under-collections that occurred during the preceding 12 months;
|
•
|
rate increases of
$29 million
related to distribution capital investments, exclusive of the TCJA impact discussed below;
|
•
|
higher transmission-related revenues of
$28 million
, exclusive of the TCJA impact discussed below, and lower transmission costs billed by transmission providers of
$22 million
;
|
•
|
customer growth of
$23 million
from the addition of over
39,000
customers;
|
•
|
higher usage of
$12 million
, primarily due to a return to more normal weather; and
|
•
|
increased miscellaneous revenues, including right-of-way, of
$5 million
.
|
•
|
increased operation and maintenance expenses, excluding transmission costs billed by transmission providers, of
$60 million
primarily due to the following:
|
◦
|
support services of
$17 million
, primarily related to technology projects;
|
◦
|
other miscellaneous operation and maintenance expenses of
$14 million
;
|
◦
|
contract services of
$15 million
, largely due to increase in vegetation management and preventative maintenance resiliency spend;
|
◦
|
labor and benefits costs of
$10 million
; and
|
◦
|
damage claims from third parties of
$4 million
;
|
•
|
lower revenues of
$53 million
due to the recording of a regulatory liability and a corresponding decrease to revenue of
$30 million
reflecting the difference in revenues collected under existing customer rates and the revenues that would have been collected had existing rates been set using the lower corporate tax rate from the TCJA and lower revenues of
$23 million
due to lower transmission and distribution rate filings as a result of the TCJA; and
|
•
|
higher depreciation and amortization expense, primarily because of ongoing additions to plant in service, and other taxes of
$11 million
.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in millions, except throughput and customer data)
|
||||||||||||||
Revenues
|
$
|
410
|
|
|
$
|
398
|
|
|
$
|
2,058
|
|
|
$
|
1,791
|
|
Expenses:
|
|
|
|
|
|
|
|
||||||||
Natural gas
|
120
|
|
|
117
|
|
|
972
|
|
|
742
|
|
||||
Operation and maintenance
|
183
|
|
|
157
|
|
|
592
|
|
|
516
|
|
||||
Depreciation and amortization
|
73
|
|
|
66
|
|
|
210
|
|
|
194
|
|
||||
Taxes other than income taxes
|
31
|
|
|
33
|
|
|
118
|
|
|
104
|
|
||||
Total expenses
|
407
|
|
|
373
|
|
|
1,892
|
|
|
1,556
|
|
||||
Operating Income
|
$
|
3
|
|
|
$
|
25
|
|
|
$
|
166
|
|
|
$
|
235
|
|
Throughput (in Bcf):
|
|
|
|
|
|
|
|
||||||||
Residential
|
13
|
|
|
13
|
|
|
123
|
|
|
94
|
|
||||
Commercial and industrial
|
53
|
|
|
50
|
|
|
208
|
|
|
189
|
|
||||
Total Throughput
|
66
|
|
|
63
|
|
|
331
|
|
|
283
|
|
||||
Number of customers at end of period:
|
|
|
|
|
|
|
|
||||||||
Residential
|
3,205,916
|
|
|
3,179,284
|
|
|
3,205,916
|
|
|
3,179,284
|
|
||||
Commercial and industrial
|
255,244
|
|
|
253,041
|
|
|
255,244
|
|
|
253,041
|
|
||||
Total
|
3,461,160
|
|
|
3,432,325
|
|
|
3,461,160
|
|
|
3,432,325
|
|
•
|
higher operation and maintenance expenses of
$25 million
, primarily consisting of:
|
◦
|
support services expense of
$7 million
, primarily related to technology projects;
|
◦
|
contracts and services, materials and supplies and damage claims from third parties of
$6 million
;
|
◦
|
labor and benefits costs of
$6 million
; and
|
◦
|
other miscellaneous operation and maintenance expenses of
$6 million
;
|
•
|
increased depreciation and amortization expenses of
$7 million
, due to ongoing additions to plant-in-service; and
|
•
|
lower revenue of
$6 million
related to the lower corporate tax rate from the TCJA.
|
•
|
a
$6 million
increase from weather and usage, driven by the timing of the decoupling mechanism in Minnesota;
|
•
|
a
$5 million
increase in rate relief, primarily in the Texas, Arkansas, Mississippi and Minnesota jurisdictions, exclusive of the TCJA impact discussed above; and
|
•
|
a
$2 million
increase associated with customer growth from the addition of almost
29,000
customers.
|
•
|
higher operation and maintenance expenses of
$35 million
, primarily consisting of:
|
◦
|
contracts and services, materials and supplies, bad debt and damage claims from third parties of
$19 million
;
|
◦
|
support services expenses of
$12 million
, primarily related to technology projects; and
|
◦
|
other miscellaneous operation and maintenance expenses of
$10 million
;
|
◦
|
which decreases were partially offset by a timing-related adjustment associated with the Texas Gulf rate order of
$6 million
;
|
•
|
higher labor and benefits costs of
$28 million
, resulting primarily from the recording of regulatory assets (and a corresponding reduction in expense) to recover
$16 million
of prior post-retirement expenses in future rates established in the Texas Gulf rate order in 2017;
|
•
|
lower revenue of
$26 million
, associated with the recording of a regulatory liability and a corresponding decrease to revenue in certain jurisdictions of
$15 million
reflecting the difference in revenues collected under existing customer rates and the revenues that would have been collected had existing rates been set using the lower corporate tax rate from the TCJA and lower filing amounts in Minnesota and south Texas of
$11 million
associated with the lower corporate tax rate as a result of the TCJA;
|
•
|
increased depreciation and amortization expense of
$16 million
, primarily due to ongoing additions to plant-in-service; and
|
•
|
higher other taxes of
$9 million
, primarily due to the 2017 Minnesota property tax refund.
|
•
|
rate increases of
$35 million
, primarily in the Texas, Minnesota and Arkansas jurisdictions, exclusive of the TCJA impact discussed above;
|
•
|
an increase in non-volumetric revenues of
$8 million
; and
|
•
|
a
$6 million
increase associated with customer growth from the addition of almost
29,000
customers.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in millions, except throughput and customer data)
|
||||||||||||||
Revenues
|
$
|
920
|
|
|
$
|
871
|
|
|
$
|
3,065
|
|
|
$
|
2,998
|
|
Expenses:
|
|
|
|
|
|
|
|
||||||||
Natural gas
|
897
|
|
|
839
|
|
|
2,998
|
|
|
2,865
|
|
||||
Operation and maintenance
|
28
|
|
|
22
|
|
|
74
|
|
|
65
|
|
||||
Depreciation and amortization
|
4
|
|
|
3
|
|
|
12
|
|
|
9
|
|
||||
Taxes other than income taxes
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||
Total expenses
|
929
|
|
|
864
|
|
|
3,085
|
|
|
2,940
|
|
||||
Operating Income (Loss)
|
$
|
(9
|
)
|
|
$
|
7
|
|
|
$
|
(20
|
)
|
|
$
|
58
|
|
|
|
|
|
|
|
|
|
||||||||
Timing impacts related to mark-to-market gain (loss)
(1)
|
$
|
1
|
|
|
$
|
2
|
|
|
$
|
(71
|
)
|
|
$
|
23
|
|
Throughput (in Bcf)
|
307
|
|
|
272
|
|
|
993
|
|
|
864
|
|
||||
Approximate number of customers at end of period
(2)
|
30,000
|
|
|
31,000
|
|
|
30,000
|
|
|
31,000
|
|
(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
67,000
and
66,000
natural gas customers as of
September 30, 2018
and
2017
, respectively, that are under residential and small commercial choice programs invoiced by their host utility.
|
•
|
a
$9 million
decrease in margin due to reduced opportunities to optimize natural gas supply costs and timing impacts related to natural gas storage activity, which offset favorable margins from incremental sales volumes. Lower storage balances resulting from first quarter storage activity reduced opportunities to optimize natural gas supply costs in the third quarter;
|
•
|
a
$6 million
increase in operation and maintenance expenses, primarily due to higher legal, technology and support services expenses; and
|
•
|
a
$1 million
decrease from mark-to-market accounting for derivatives associated with certain natural gas purchases and sales used to lock in economic margins.
|
•
|
a
$94 million
decrease from mark-to-market accounting for derivatives associated with certain natural gas purchases and sales used to lock in economic margins; and
|
•
|
a
$9 million
increase in operation and maintenance expenses, attributable to increased technology expenses, higher contract and services expense related to pipeline integrity testing, higher support services and legal expenses.
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
(in millions)
|
||||||||||||||
Equity earnings from Enable, net
|
|
$
|
81
|
|
|
$
|
68
|
|
|
$
|
208
|
|
|
$
|
199
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in millions)
|
||||||||||||||
Revenues
|
$
|
3
|
|
|
$
|
4
|
|
|
$
|
11
|
|
|
$
|
11
|
|
Expenses
|
(2
|
)
|
|
(7
|
)
|
|
16
|
|
|
(13
|
)
|
||||
Operating Income (Loss)
|
$
|
5
|
|
|
$
|
11
|
|
|
$
|
(5
|
)
|
|
$
|
24
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in millions)
|
||||||||||||||
Revenues
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Expenses
|
1
|
|
|
1
|
|
|
—
|
|
|
4
|
|
||||
Operating Income (Loss)
|
$
|
(1
|
)
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
(4
|
)
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||||
|
2018
|
|
2017
|
||||||||||||||||||||
|
CenterPoint Energy
|
|
Houston Electric
|
|
CERC
|
|
CenterPoint Energy
|
|
Houston Electric
|
|
CERC
|
||||||||||||
|
(in millions)
|
||||||||||||||||||||||
Cash provided by (used in):
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Operating activities
|
$
|
1,679
|
|
|
$
|
788
|
|
|
$
|
850
|
|
|
$
|
1,028
|
|
|
$
|
567
|
|
|
$
|
312
|
|
Investing activities
|
(674
|
)
|
|
(663
|
)
|
|
(359
|
)
|
|
(897
|
)
|
|
(569
|
)
|
|
(280
|
)
|
||||||
Financing activities
|
(970
|
)
|
|
(82
|
)
|
|
(502
|
)
|
|
(279
|
)
|
|
(139
|
)
|
|
(32
|
)
|
|
CenterPoint Energy
|
|
Houston
Electric
|
|
CERC
|
||||||
|
(in millions)
|
||||||||||
Changes in net income after adjusting for non-cash items
|
$
|
146
|
|
|
$
|
230
|
|
|
$
|
(121
|
)
|
Changes in working capital
|
352
|
|
|
(28
|
)
|
|
490
|
|
|||
Change in equity in earnings from Enable, net of distributions
(1)
|
184
|
|
|
—
|
|
|
—
|
|
|||
Changes related to discontinued operations
|
—
|
|
|
—
|
|
|
176
|
|
|||
Higher pension contribution
|
(21
|
)
|
|
—
|
|
|
—
|
|
|||
Other
|
(10
|
)
|
|
19
|
|
|
(7
|
)
|
|||
|
$
|
651
|
|
|
$
|
221
|
|
|
$
|
538
|
|
(1)
|
This change is partially offset by the change in distributions from Enable in excess of cumulative earnings in investing activities noted in the table below.
|
|
CenterPoint Energy
|
|
Houston
Electric
|
|
CERC
|
||||||
|
(in millions)
|
||||||||||
Proceeds from the sale of marketable securities
|
$
|
398
|
|
|
$
|
—
|
|
|
$
|
—
|
|
AEM acquisition in 2017
|
132
|
|
|
—
|
|
|
132
|
|
|||
Higher capital expenditures
|
(127
|
)
|
|
(75
|
)
|
|
(38
|
)
|
|||
Net change in notes receivable from unconsolidated affiliates
|
—
|
|
|
(29
|
)
|
|
—
|
|
|||
Change in distributions from Enable in excess of cumulative earnings
|
(193
|
)
|
|
—
|
|
|
—
|
|
|||
Changes related to discontinued operations
|
—
|
|
|
—
|
|
|
(176
|
)
|
|||
Other
|
13
|
|
|
10
|
|
|
3
|
|
|||
|
$
|
223
|
|
|
$
|
(94
|
)
|
|
$
|
(79
|
)
|
|
CenterPoint Energy
|
|
Houston
Electric
|
|
CERC
|
||||||
|
(in millions)
|
||||||||||
Net changes in commercial paper outstanding
|
$
|
(1,123
|
)
|
|
$
|
—
|
|
|
$
|
(760
|
)
|
Increased proceeds from issuance of Series A Preferred Stock
|
790
|
|
|
|
|
|
|||||
Net changes in long-term debt outstanding, excluding commercial paper
|
130
|
|
|
79
|
|
|
301
|
|
|||
Net changes in debt issuance costs
|
(23
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|||
Net changes in short-term borrowings
|
(52
|
)
|
|
—
|
|
|
(52
|
)
|
|||
Distributions to ZENS note holders
|
(398
|
)
|
|
—
|
|
|
—
|
|
|||
Increased payment of Common Stock dividends
|
(14
|
)
|
|
—
|
|
|
—
|
|
|||
Net change in notes payable from affiliated companies
|
—
|
|
|
15
|
|
|
(570
|
)
|
|||
Contribution from parent
|
—
|
|
|
—
|
|
|
562
|
|
|||
Dividend to parent
|
—
|
|
|
(36
|
)
|
|
51
|
|
|||
Other
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||
|
$
|
(691
|
)
|
|
$
|
57
|
|
|
$
|
(470
|
)
|
|
|
CenterPoint Energy
|
|
Houston Electric
|
|
CERC
|
||||||
|
|
(in millions)
|
||||||||||
Estimated capital expenditures
(1)
|
|
$
|
538
|
|
|
$
|
280
|
|
|
$
|
232
|
|
Maturing collateralized pollution control bonds
|
|
50
|
|
|
—
|
|
|
—
|
|
|||
Scheduled principal payments on Securitization Bonds
|
|
66
|
|
|
66
|
|
|
—
|
|
(1)
|
Represents remaining capital expenditures based on anticipated 2018 capital expenditures as previously disclosed in CenterPoint Energy’s 2017 Form 10-K.
|
Mechanism
|
|
Annual Increase (Decrease)
(1)
(in millions)
|
|
Filing
Date
|
|
Effective Date
|
|
Approval Date
|
|
Additional Information
|
CERC - Minnesota (MPUC)
|
||||||||||
Rate Case
|
|
3.9
|
|
August 2017
|
|
November 2018
|
|
July
2018
|
|
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. A unanimous settlement agreement was filed in March 2018, subject to MPUC approval. The settlement agreement increases base rates by $3.9 million, makes decoupling a permanent part of the tariff, incorporates the impact of the decrease in the federal income tax rate and amortization of EDIT balances (approximately $20 million) and establishes or continues tracker recovery mechanisms that account for approximately $13.3 million in the initial filing. The MPUC voted to approve the settlement and a formal order was issued on July 20, 2018. Final rates (and the refund of interim rates that exceed final rates) will be implemented beginning November 1, 2018.
|
Decoupling
|
|
(13.8)
|
|
September 2018
|
|
September 2018
|
|
TBD
|
|
Represents revenue over-recovery of $21.9 million recorded for and during the period July 1, 2017 through June 30, 2018 offset by the rate and prior period adjustments totaling $8.1 million recorded in third quarter 2018.
|
CIP
|
|
12.5
|
|
May
2018
|
|
September 2018
|
|
September 2018
|
|
Annual reconciliation filing for program year 2017 and includes performance bonus of $12.5 million which was recorded in September 2018.
|
CERC - Mississippi (MPSC)
|
||||||||||
RRA
|
|
3.2
|
|
May
2018
|
|
November 2018
|
|
November 2018
|
|
Based on authorized ROE of 9.144% and a capital structure of 50% debt and 50% equity and reflects a $3.2 million annual increase in revenues.
|
CERC - Oklahoma (OCC)
|
||||||||||
PBRC
|
|
5.4
|
|
March
2018
|
|
October 2018
|
|
October 2018
|
|
Based on ROE of 10% and reflects a $5.4 million annual increase in revenues. As a result of the final order, all EDIT was removed from the PBRC calculation. Protected EDIT amortization will begin to be refunded in April 2019 via one-time annual bill credits. Unprotected EDIT will be refunded over a five-year period via annual bill credits beginning in October 2018.
|
(1)
|
Represents proposed increases (decreases) when effective date and/or approval date is not yet determined. Approved rates could differ materially from proposed rates.
|
Registrant
|
|
Size of Facility
|
|
Amount Utilized
(1)
|
|
Termination Date
|
||||
(in millions)
|
||||||||||
CenterPoint Energy
|
|
$
|
3,300
|
|
(2)
|
$
|
6
|
|
(3)
|
March 3, 2022
|
Houston Electric
|
|
300
|
|
|
4
|
|
(3)
|
March 3, 2022
|
||
CERC Corp.
|
|
900
|
|
|
26
|
|
(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 currently aggregate
$4.5 billion
.
|
(2)
|
Pursuant to the amendment entered into in May 2018, the aggregate commitments under the CenterPoint Energy revolving credit facility increased to
$3.3 billion
on October 5, 2018 due to the satisfaction of certain conditions, including the termination of the Bridge Facility. For further information, see Note 12 to the Interim Condensed Financial Statements.
|
(3)
|
Represents outstanding letters of credit.
|
(4)
|
Represents outstanding commercial paper of
$25 million
and outstanding letters of credit of
$1 million
.
|
Company
|
|
Aggregate Principal Amount Outstanding
|
||
|
|
(in millions)
|
||
Bond Company II
|
|
$
|
208
|
|
Bond Company III
|
|
85
|
|
|
Bond Company IV
|
|
955
|
|
|
Restoration Bond Company
|
|
256
|
|
|
Total
|
|
$
|
1,504
|
|
|
|
Moody’s
|
|
S&P
|
|
Fitch
|
||||||
Company/Instrument
|
|
Rating
|
|
Outlook (1)
|
|
Rating
|
|
CreditWatch (2)
|
|
Rating
|
|
Outlook (3)
|
CenterPoint Energy Senior Unsecured Debt
|
|
Baa1
|
|
Negative
|
|
BBB+
|
|
Negative
|
|
BBB
|
|
Stable
|
Houston Electric Senior Secured Debt
|
|
A1
|
|
Stable
|
|
A
|
|
Negative
|
|
A+
|
|
Stable
|
CERC Corp. Senior Unsecured Debt
|
|
Baa1
|
|
Positive
|
|
A-
|
|
Negative
|
|
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 CreditWatch assesses the potential direction of a short-term or long-term credit rating.
|
(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 weather hedging arrangements, and natural gas purchases, natural gas price and natural gas storage activities of the 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 natural 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 to us, including indemnity obligations, which may be contested by GenOn;
|
•
|
the ability of REPs, including REP affiliates of NRG and Vistra Energy Corp., formerly known as TCEH Corp., to satisfy their obligations to CenterPoint Energy and Houston Electric;
|
•
|
slower customer payments and increased write-offs of receivables due to higher natural gas prices or changing economic conditions;
|
•
|
the outcome of litigation;
|
•
|
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 each of the Registrants’
2017
Form 10-K and Item 1A of Part II of CenterPoint Energy’s First Quarter 2018 Form 10-Q.
|
Item 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
Item 4.
|
CONTROLS AND PROCEDURES
|
Item 1.
|
LEGAL PROCEEDINGS
|
Item 1A.
|
RISK FACTORS
|
Item 6.
|
EXHIBITS
|
Exhibit
Number
|
|
Description
|
|
Report or Registration
Statement
|
|
SEC File or
Registration
Number
|
|
Exhibit
Reference
|
|
CenterPoint Energy
|
|
Houston Electric
|
|
CERC
|
2.1*
|
|
|
CenterPoint Energy’s Form 8-K dated April 21, 2018
|
|
1-31447
|
|
2.1
|
|
x
|
|
|
|
|
|
3.1
|
|
|
CenterPoint Energy’s Form 8-K dated July 24, 2008
|
|
1-31447
|
|
3.2
|
|
x
|
|
|
|
|
|
3.2
|
|
|
Houston Electric’s Form 10-Q for the quarter ended June 30, 2011
|
|
1-3187
|
|
3.1
|
|
|
|
x
|
|
|
|
3.3
|
|
Certificate of Incorporation of RERC Corp.
|
|
CERC Form 10-K for the year ended December 31, 1997
|
|
1-13265
|
|
3(a)(1)
|
|
|
|
|
|
x
|
3.4
|
|
Certificate of Merger merging former NorAm Energy Corp. with and into HI Merger, Inc. dated August 6, 1997
|
|
CERC Form 10-K for the year ended December 31, 1997
|
|
1-13265
|
|
3(a)(2)
|
|
|
|
|
|
x
|
3.5
|
|
Certificate of Amendment changing the name to Reliant Energy Resources Corp.
|
|
CERC Form 10-K for the year ended December 31, 1998
|
|
1-13265
|
|
3(a)(3)
|
|
|
|
|
|
x
|
3.6
|
|
|
CERC Form 10-Q for the quarter ended June 30, 2003
|
|
1-13265
|
|
3(a)(4)
|
|
|
|
|
|
x
|
|
3.7
|
|
|
CenterPoint Energy’s Form 8-K dated February 21, 2017
|
|
1-31447
|
|
3.1
|
|
x
|
|
|
|
|
|
3.8
|
|
|
Houston Electric’s Form 10-Q for the quarter ended June 30, 2011
|
|
1-3187
|
|
3.2
|
|
|
|
x
|
|
|
|
3.9
|
|
Bylaws of RERC Corp.
|
|
CERC Form 10-K for the year ended December 31, 1997
|
|
1-13265
|
|
3(b)
|
|
|
|
|
|
x
|
Exhibit
Number
|
|
Description
|
|
Report or Registration
Statement
|
|
SEC File or
Registration
Number
|
|
Exhibit
Reference
|
|
CenterPoint Energy
|
|
Houston Electric
|
|
CERC
|
3.10
|
|
|
CenterPoint Energy’s Form 10-K for the year ended December 31, 2011
|
|
1-31447
|
|
3(c)
|
|
x
|
|
|
|
|
|
3.11
|
|
|
CenterPoint Energy’s Form 8-K dated August 22, 2018
|
|
1-31447
|
|
3.1
|
|
x
|
|
|
|
|
|
3.12
|
|
|
CenterPoint Energy’s Form 8-K dated September 25, 2018
|
|
1-31447
|
|
3.1
|
|
x
|
|
|
|
|
|
4.1
|
|
|
CenterPoint Energy’s Registration Statement on Form S-4
|
|
3-69502
|
|
4.1
|
|
x
|
|
|
|
|
|
4.2
|
|
|
CenterPoint Energy’s Form 8-K dated August 22, 2018
|
|
1-31447
|
|
4.1
|
|
x
|
|
|
|
|
|
4.3
|
|
|
CenterPoint Energy’s Form 8-K dated September 25, 2018
|
|
1-31447
|
|
4.1
|
|
x
|
|
|
|
|
|
4.4
|
|
|
CenterPoint Energy’s Form 8-K dated September 25, 2018
|
|
1-31447
|
|
4.2
|
|
x
|
|
|
|
|
|
4.5
|
|
|
CenterPoint Energy’s Form 8-K dated September 25, 2018
|
|
1-31447
|
|
4.3
|
|
x
|
|
|
|
|
|
4.6
|
|
|
CenterPoint Energy’s Form 8-K dated March 3, 2016
|
|
1-31447
|
|
4.1
|
|
x
|
|
|
|
|
|
4.7
|
|
|
CenterPoint Energy’s Form 8-K dated March 3, 2016
|
|
1-31447
|
|
4.2
|
|
x
|
|
x
|
|
|
|
4.8
|
|
|
CenterPoint Energy’s Form 8-K dated March 3, 2016
|
|
1-31447
|
|
4.3
|
|
x
|
|
|
|
x
|
|
4.9
|
|
|
CenterPoint Energy’s Form 8-K dated June 16, 2017
|
|
1-31447
|
|
4.1
|
|
x
|
|
|
|
|
|
4.10
|
|
|
CenterPoint Energy’s Form 8-K dated May 25, 2018
|
|
1-31447
|
|
4.1
|
|
x
|
|
|
|
|
|
4.11
|
|
|
CenterPoint Energy’s Form 8-K dated June 16, 2017
|
|
1-31447
|
|
4.2
|
|
x
|
|
x
|
|
|
|
4.12
|
|
|
CenterPoint Energy’s Form 8-K dated June 16, 2017
|
|
1-31447
|
|
4.3
|
|
x
|
|
|
|
x
|
|
4.13
|
|
|
CenterPoint Energy’s Form 8-K dated May 19, 2003
|
|
1-31447
|
|
4.1
|
|
x
|
|
|
|
|
Exhibit
Number
|
|
Description
|
|
Report or Registration
Statement
|
|
SEC File or
Registration
Number
|
|
Exhibit
Reference
|
|
CenterPoint Energy
|
|
Houston Electric
|
|
CERC
|
+4.14
|
|
|
|
|
|
|
|
|
x
|
|
|
|
|
|
+31.1.1
|
|
|
|
|
|
|
|
|
x
|
|
|
|
|
|
+31.1.2
|
|
|
|
|
|
|
|
|
|
|
x
|
|
|
|
+31.1.3
|
|
|
|
|
|
|
|
|
|
|
|
|
x
|
|
+31.2.1
|
|
|
|
|
|
|
|
|
x
|
|
|
|
|
|
+31.2.2
|
|
|
|
|
|
|
|
|
|
|
x
|
|
|
|
+31.2.3
|
|
|
|
|
|
|
|
|
|
|
|
|
x
|
|
+32.1.1
|
|
|
|
|
|
|
|
|
x
|
|
|
|
|
|
+32.1.2
|
|
|
|
|
|
|
|
|
|
|
x
|
|
|
|
+32.1.3
|
|
|
|
|
|
|
|
|
|
|
|
|
x
|
|
+32.2.1
|
|
|
|
|
|
|
|
|
x
|
|
|
|
|
|
+32.2.2
|
|
|
|
|
|
|
|
|
|
|
x
|
|
|
|
+32.2.3
|
|
|
|
|
|
|
|
|
|
|
|
|
x
|
|
+101.INS
|
|
XBRL Instance Document
|
|
|
|
|
|
|
|
x
|
|
x
|
|
x
|
+101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
|
|
|
|
x
|
|
x
|
|
x
|
+101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
|
|
|
x
|
|
x
|
|
x
|
+101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
|
|
|
x
|
|
x
|
|
x
|
+101.LAB
|
|
XBRL Taxonomy Extension Labels Linkbase Document
|
|
|
|
|
|
|
|
x
|
|
x
|
|
x
|
+101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
|
|
|
x
|
|
x
|
|
x
|
*
|
Schedules to this agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. A copy of any omitted schedules will be furnished supplementally to the SEC upon request; provided, however, that the parties may request confidential treatment pursuant to Rule 24b-2 of the Exchange Act for any document so furnished.
|
|
CENTERPOINT ENERGY, INC.
|
|
CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC
|
|
CENTERPOINT ENERGY RESOURCES CORP.
|
|
|
|
|
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
|
|
|
Corporate Secretary
|
|
|
|
|
|
|
|
|
|
|
|
(SEAL)
|
|
|
|
|
|
|
|
|
|
|
|
|
THE BANK OF NEW YORK MELLON TRUST
|
|
|
COMPANY, NATIONAL ASSOCIATION,
|
|
|
As Trustee
|
|
|
|
|
|
|
|
|
By:
|
/s/ Karen Yu
|
|
|
Name: Karen Yu
|
|
|
Title: Vice President
|
|
|
|
Original Interest Accrual Date: October 5, 2018
Stated Maturity: November 1, 2021 (the “Maturity Date”)
Interest Rate: 3.60%
Interest Payment Dates: May 1 and November 1
Initial Interest Payment Date: May 1, 2019
Regular Record Dates: April 15 and October 15 immediately preceding the respective Interest Payment Date
|
Redeemable: Yes [X] No [ ]
Redemption Date: At any time.
Redemption Price: 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 (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.
|
Principal Amount
|
|
Registered No. T-1
|
$ *
|
|
CUSIP 15189T AT4
|
|
THE BANK OF NEW YORK MELLON
|
|
|
TRUST COMPANY, NATIONAL
|
|
|
ASSOCIATION
|
|
|
As Trustee
|
|
|
|
|
Dated: October
, 2018
|
|
|
|
By:
|
|
|
|
Authorized Signatory
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate Principal
|
|
|
|
|
Decrease
|
|
Increase
|
|
Amount of Securities
|
|
Notation
|
|
|
in Aggregate
|
|
in Aggregate
|
|
Remaining After
|
|
by
|
Date of
|
|
Principal Amount of
|
|
Principal Amount of
|
|
Such Decrease or
|
|
Security
|
Adjustment
|
|
Securities
|
|
Securities
|
|
Increase
|
|
Registrar
|
Original Interest Accrual Date: October 5, 2018
Stated Maturity: February 1, 2024
Interest Rate: 3.85%
Interest Payment Dates: February 1 and August 1
Initial Interest Payment Date: February 1, 2019
Regular Record Dates: January 15 and July 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 January 1, 2024 (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 15 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
|
$
2
|
|
CUSIP 15189T AU1
|
|
THE BANK OF NEW YORK MELLON
|
|
|
TRUST COMPANY, NATIONAL
|
|
|
ASSOCIATION
|
|
|
As Trustee
|
|
|
|
|
Dated: October
, 2018
|
|
|
|
By:
|
|
|
|
Authorized Signatory
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate Principal
|
|
|
|
|
Decrease
|
|
Increase
|
|
Amount of Securities
|
|
Notation
|
|
|
in Aggregate
|
|
in Aggregate
|
|
Remaining After
|
|
by
|
Date of
|
|
Principal Amount of
|
|
Principal Amount of
|
|
Such Decrease or
|
|
Security
|
Adjustment
|
|
Securities
|
|
Securities
|
|
Increase
|
|
Registrar
|
Original Interest Accrual Date: October 5, 2018
Stated Maturity: November 1, 2028
Interest Rate: 4.25%
Interest Payment Dates: May 1 and November 1
Initial Interest Payment Date: May 1, 2019
Regular Record Dates: April 15 and October 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 August 1, 2028 (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 15189T AV9
|
|
THE BANK OF NEW YORK MELLON
|
|
|
TRUST COMPANY, NATIONAL
|
|
|
ASSOCIATION
|
|
|
As Trustee
|
|
|
|
|
Dated: October
, 2018
|
|
|
|
By:
|
|
|
|
Authorized Signatory
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate Principal
|
|
|
|
|
Decrease
|
|
Increase
|
|
Amount of Securities
|
|
Notation
|
|
|
in Aggregate
|
|
in Aggregate
|
|
Remaining After
|
|
by
|
Date of
|
|
Principal Amount of
|
|
Principal Amount of
|
|
Such Decrease or
|
|
Security
|
Adjustment
|
|
Securities
|
|
Securities
|
|
Increase
|
|
Registrar
|
(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
|
1.
|
I have reviewed this quarterly report on Form 10-Q of CenterPoint Energy Houston Electric, LLC;
|
(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
|
|
Chairman (Principal 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/ 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
|
(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
|
(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 8, 2018
|
|
/s/ Scott M. Prochazka
|
|
Scott M. Prochazka
|
|
Chairman (Principal Executive Officer)
|
|
November 8, 2018
|
|
/s/ Scott M. Prochazka
|
Scott M. Prochazka
|
President and Chief Executive Officer
|
November 8, 2018
|
/s/ William D. Rogers
|
|
William D. Rogers
|
|
Executive Vice President and Chief Financial Officer
|
|
November 8, 2018
|
|
/s/ William D. Rogers
|
|
William D. Rogers
|
|
Executive Vice President and Chief Financial Officer
|
|
November 8, 2018
|
|
/s/ William D. Rogers
|
William D. Rogers
|
Executive Vice President and Chief Financial Officer
|
November 8, 2018
|