Utility Confirms that 80 percent of funding for capital expenditures comes through interim rate mechanisms.
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CenterPoint has added $2.3 billion to its 10-year capital spending plans, bringing the total to $43 billion through 2030, according to a third quarter earnings call with financial analysts.
The company’s 10-year plan includes $26 billion on its electric system, including $2.9 billion during the 2022 fiscal year; and $17 billion on its natural gas system, including $1.7 billion for FY 2022, according to information provided during the Nov. 1 call.
CenterPoint confirmed that 80 percent of the funding for its capital expenditures will come through interim rate mechanisms that allow for comparatively quick rate recovery and consumer rate increases. In Texas, such interim mechanisms include the Distribution Cost Recovery Factor process for electric utilities, and the Gas Reliability Infrastructure Program for gas utilities.
CenterPoint, a multi-state mostly-regulated energy corporation headquartered in Houston, reported income of $189 million for the third quarter of 2022. This includes a 10-percent increase in earnings per share from 2021, when adjusted for one-time items.
The positive variance was primarily driven by capital recovery through various regulatory actions as well as favorable weather in the Houston Electric service territory, according to the company.
Revenue Drivers
CEO Dave Lesar told analysts during the call that CenterPoint remains on track to deliver 8 percent annual growth through 2024, and 6-8 percent growth each year thereafter through 2030. He said much of the growth will come from storm hardening and system resiliency efforts, particularly around the fast-growing Houston area where one day without power equates to $1.4 billion in gross domestic product losses.
Of the $2.3 billion in new capital expenditures announced by the company, $1.6 billion to 1.8 billion will be dedicated to the distribution system, reliability improvements, expanded grid modernization, burying some lines and pole replacements. In addition, the company plans to spend $300 million in transmission upgrades in 2022, and $600 million to $800 million shortly thereafter. Lesar noted the transmission upgrades are important given that the Houston area receives 60 percent of its power from outside generators.
Lesar said the company has identified another $5 billion in potential capital projects, but has not yet included those projects in the company’s 10-year capital spending plans. CenterPoint could announce the inclusion of those items during a future quarter. Lesar likewise noted the potential for dramatic growth in electric vehicle usage, and that such growth also does not yet figure in the company’s 10-year spending plans. CenterPoint estimates that each new electric vehicle on the road could add $80 to its annual margins, according to documents.
Texas Operations
Regarding its Texas operations, the company noted the following:
- Supporting the company’s electric side revenues are two Distribution Cost Recovery Factor settlements, one for $142 million and the other for $78 million.
- With regard to revenues from its gas operations, the company expects to receive $1.1 billion by the end of 2022 as the result of Railroad Commission regulatory approval of a securitization deal related to Winter Storm Uri.
About CenterPoint
CenterPoint Energy is an energy delivery company with electric transmission and distribution, power generation and natural gas distribution operations that serve more than 7 million metered customers in Indiana, Louisiana, Minnesota, Mississippi, Ohio and Texas. As of September 30, 2022, the company owned approximately $35 billion in assets, and employed about approximately 8,900 people.
More information regarding the company’s Third Quarter Earnings Call, including an associated presentation, can be found at https://investors.centerpointenergy.com/events/event-details/centerpoint-energy-inc-third-quarter-2022-earnings-conference-call