CenterPoint Energy, Atmos Energy and Oncor Electric have reported increased earnings and capital spending.
Several energy utilities with major operations in Texas released their quarterly earnings reports this week. These utilities include CenterPoint Energy, Atmos Energy and Oncor Electric. As summarized below, the utilities in each case have reported increased earnings and capital spending.
CenterPoint Energy on August 2 reported income available to common shareholders of $179 million for the quarter ending on June 30, as well as an 11 percent increase in earnings per share as compared to the same quarter of 2021.
The company credited the positive change to favorable weather, increased system-wide usage and continued organic growth across the Houston Electric service territory. After recent mid-stream divestitures, the company now receives 95 percent of its earnings from regulated utilities, with 62 percent of its rate base from its electric holdings.
The company now is in the second year of a 10-year, $40 billion-plus capital investment plan that includes more than $23 billion in projected spending on the company’s electric holdings, and $16 billion for gas infrastructure.
Although based in Texas and with major regulated gas and electric holdings around the Houston area, CenterPoint Energy also serves customers in Indiana, Louisiana, Minnesota, Mississippi and Ohio. As of June 30, CenterPoint owned approximately $35 billion in assets, served more than 7 million metered customers, and employed approximately 8,900 people.
- The company announced that securitization charges for its Houston Electric customers will start rolling off bills in 2024. Those charges amount to about 5 percent of an average bill.
- The company anticipated annual organic growth of its Houston electric business of about 1 to 2 percent, much of it driven by new electric vehicle deployment.
- Recent regulatory developments include the filing in April for the recovery of $146 million in net revenues through the interim Distribution Rate Recovery Mechanism (“DCRF”) process. However, the company settled in July for $78 million, and excluded from that settlement an amount to pay for its new mobile generation investment. The company made an amended DCRF filing on July 1 that included only its mobile generation expenditures.
- CenterPoint Electric expects two Transmission Cost of Service (“TCOS”) filings this year, but doesn’t expect a major rate case until late 2023 or early 2024.
- CenterPoint Gas does not expect a major rate case until late 2022.
- CenterPoint Gas has received financing approval for securitization debt of $1.1 billion relating to the incremental cost of gas consumed by its customers during Winter Storm Uri. The securitization is expected to flow into bills within the coming months.
More details of the CenterPoint Quarterly Report can be found here.
Atmos Energy has reported net income of $129 million for the quarter ending June 30, as compared to $102 million for the same period during 2021. The company attributed $58 million of its recent quarterly income to its distribution operations, and $71 million to its pipeline and storage operations.
Key drivers of the company’s quarterly distribution income include a $30.5 million net increase due to rate case outcomes, $3.3 million increase due to enhanced gas consumption, and $2.6 million due to customer growth. Among key drivers for its recently quarterly income for its pipeline and storage sectors are $31 million increase due to rate case outcomes, and a $6.1 million decrease due to system maintenance expenses.
The company also reported $536 million of capital expenditures during the most recent quarter, as compared to $512 million during the same period in 2021. In addition, it reported, $1.726 billion in capital expenditures for the nine months ending June 30, as compared to $1.358 billion for the same period in 2021.
Highlights of its fiscal year-to-date capital spending include $790 million spent to repair and replace transmission and distribution pipelines, $193 million spent to install and replace measuring and regulating equipment, $183 million spent in pipeline integrity management projects and $175 million spent for service line replacement.
The company also provided an update of its recent interim rate adjustments for its Texas-based customers. They include the following:
- $78.8 million from an Atmos Pipeline Texas Gas Reliability Infrastructure Program “GRIP” filing, implemented during the third fiscal quarter.
- $21.9 million Atmos Mid-Tex and West Texas Rate Review Mechanism (RRM) filings, implemented during the first fiscal quarter.
- $18.5 million in Mid-Tex GRIP filing, implemented during the third fiscal quarter.
Headquartered in Dallas, Atmos Energy is the country’s largest natural gas-only distributor. Atmos has more than 3 million distribution customers across eight primarily southern states. Atmos also manages proprietary pipeline and storage assets, including one of the largest intrastate natural gas pipeline systems in Texas.
More details of the Atmos quarterly report can be found here.
Oncor Electric on August 4 reported a net income of $229 million for the three months ending June 30, as compared to net income of $169 million for the same financial quarter in 2021.
The company attributed the $60 million quarter-over-quarter increase to higher weather-related consumption, increases in transmission and distribution rates, customer growth and other factors. However, those gains were partially offset by increases in operation and maintenance expenses.
Oncor reported that its distribution base revenues during the most recent quarter increased by 16.1 percent over the same quarter in 2021. This change included a 23.9 percent increase in distribution base revenues from residential customers, and an 11.2 percent increase in distribution base revenues from large commercial and industrial customers.
In comments released to financial analysts on August 4, Oncor chief executive officer Allen Nye noted that Texas is in the middle of one of the hottest summers on record and as a consequence the grid has set several new peak demand records and that, in turn, has led to an increase in power consumption.
During the second quarter, Oncor added 19,000 additional premises to its system, and saw a 73 percent increase in new transmission point-of-interconnection requests, according to Nye. “This represents an all-time record for new transmission interconnection requests,” he said.
SIX-MONTH LOOK BACK
Oncor also provided six-month look-back data, as opposed to data for a single quarter. For example, it reported net income of $423 million during the six months ending June 30, which was an increase from the net income of $337 million over the same six month period from 2021.
Also, during the six months ending June 30, Oncor spent $1.4 billion of its $3 billion 2022 capital plan. Much of this money was spent on the upgrade of approximately 480 miles of power lines, placing in service seven switching stations, and placing in service $239 million of transmission projects.
Oncor provided data regarding transmission interconnections. For example, Oncor reported approximately 525 active transmission point-of-interconnection (“POI”) requests in queue as of June 30, which represents an approximately 62 percent increase in active POI requests compared to June 30, 2021. Of the active generation requests in queue, approximately 51 percent are for solar generators, 35 percent for storage, 9 percent for wind and 4 percent gas, according to the company.
Oncor also noted that during the three months ending June 30 that it had approximately 90 new POI requests, representing an approximately 73 percent increase compared to the prior-year period. If new requests continue at this pace, Oncor projects it will set a company record for new annual transmission interconnection requests during 2022.
BASE RATE CASE
The company noted that on May 13 it filed a base rate case calling for a 4.5 increase in its annual revenue requirement. If approved by the Public Utility Commission, the rate adjustment would increase Oncor’s aggregated annual revenue requirement by approximately $251 million. Oncor anticipates the new rates would go into effect by the end of the first quarter of 2023.
Headquartered in Dallas, Oncor operates the state’s largest distribution and transmission system. The company delivers power to more than 3.8 million homes and businesses and operates more than 140,000 miles of transmission and distribution lines. The regulated utility has two investor owners — majority owner Sempra Energy, and minority owner Texas Transmission Investment — but is overseen by an independent board.
More information about Oncor’s financial results can be found here.