UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 26, 2015
CENTERPOINT ENERGY, INC.
(Exact name of registrant as specified in its charter)
| Texas | 1-31447 | 74-0694415 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
| 1111 Louisiana Houston, Texas |
77002 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (713) 207-1111
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 2.02 | Results of Operations and Financial Conditions. |
On February 26, 2015, CenterPoint Energy, Inc. (“CenterPoint Energy”) reported fourth quarter and full year 2014 earnings. For additional information regarding CenterPoint Energy’s fourth quarter and full year 2014 earnings, please refer to CenterPoint Energy’s press release attached to this report as Exhibit 99.1 (the “Press Release”), which Press Release is incorporated by reference herein.
| Item 7.01 | Regulation FD Disclosure. |
CenterPoint Energy is holding a conference call to discuss its fourth quarter and full year 2014 earnings on February 26, 2015. Information about the call can be found in the press release furnished herewith as Exhibit 99.1. For additional information regarding CenterPoint Energy’s 2014 earnings, please refer to the supplemental materials which are being posted on CenterPoint Energy’s website and are attached to this report as Exhibit 99.2 (the “Supplemental Materials”), which Supplemental Materials are incorporated by reference herein.
| Item 9.01 | Financial Statements and Exhibits. |
The information in the Press Release and the Supplemental Materials is being furnished, not filed, pursuant to Items 2.02 and 7.01, respectively. Accordingly, the information in the Press Release and the Supplemental Materials will not be incorporated by reference into any registration statement filed by CenterPoint Energy under the Securities Act of 1933, as amended, unless specifically identified as being incorporated therein by reference.
| (d) | Exhibits. |
| EXHIBIT NUMBER |
EXHIBIT DESCRIPTION | |
| 99.1 | Press Release issued February 26, 2015 regarding CenterPoint Energy, Inc.’s fourth quarter and full year 2014 earnings. | |
| 99.2 | Supplemental Materials regarding CenterPoint Energy, Inc.’s 2014 earnings | |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| CENTERPOINT ENERGY, INC. | ||||||
| Date: February 26, 2015 | By: | /s/ Kristie L. Colvin | ||||
| Kristie L. Colvin | ||||||
| Senior Vice President and Chief Accounting Officer | ||||||
EXHIBIT INDEX
| EXHIBIT NUMBER |
EXHIBIT DESCRIPTION | |
| 99.1 | Press Release issued February 26, 2015 regarding CenterPoint Energy, Inc.’s fourth quarter and full year 2014 earnings. | |
| 99.2 | Supplemental Materials regarding CenterPoint Energy, Inc.’s 2014 earnings | |
Exhibit 99.1
|
For more information contact Media: Leticia Lowe Phone 713.207.7702 Investors: Carla Kneipp Phone 713.207.6500 |
| For Immediate Release
|
Page 1 of 6
|
CENTERPOINT ENERGY REPORTS FOURTH QUARTER AND
FULL YEAR 2014 EARNINGS
| • | Strong financial and operational performance |
| • | Customer growth continues: nearly 55,000 new metered electric customers and 36,000 new gas customers |
| • | 2014 utility operations capital spending up 14% versus 2013 |
Houston, TX – February 26, 2015 - CenterPoint Energy, Inc. (NYSE: CNP) today reported net income of $176 million, or $0.41 per diluted share, for the fourth quarter of 2014, which included a tax benefit of $0.07 per diluted share, compared to $113 million, or $0.26 per diluted share the previous year. Operating income for the fourth quarter of 2014 was $221 million, compared to $211 million in the prior year. CenterPoint Energy reports its investment in midstream operations as equity income rather than operating income. Midstream Investments equity income for the fourth quarter of 2014 was $67 million, compared to $66 million in the prior year.
For the year ended December 31, 2014, net income was $611 million, or $1.42 per diluted share, including the tax benefit referenced above. For the year ended December 31, 2013, net income was $311 million, or $0.72 per diluted share. The results for 2013 include two unusual items related to the formation of the midstream partnership: (i) a $225 million non-cash deferred tax charge and (ii) $13 million of pre-tax partnership formation expenses. Excluding the effects of these unusual items, net income for 2013 would have been $544 million, or $1.26 per diluted share.
Operating income for the year ended December 31, 2014, was $935 million. As a result of the May 1, 2013, formation of Enable Midstream Partners, operating income for full year 2014 is not comparable to prior results.
“I am very pleased with our performance in 2014. Our Utility Operations delivered solid results, with a particularly strong financial performance from Gas Operations. Enable Midstream performed well in their first full year of operations delivering financial results in line with our expectations,” said Scott M. Prochazka, president and chief executive officer of CenterPoint Energy. “We will continue to execute our utility strategy focused on organic capital investment in support of enhanced system reliability, ongoing system maintenance and upgrades, and continued growth in our service territories. This investment, along with timely recovery, will position us well for future utility operations earnings growth. Further, we remain confident in Enable Midstream’s ability to execute their business plan and continue to pursue growth opportunities in a lower energy commodity price environment.”
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Electric Transmission & Distribution
The electric transmission & distribution segment reported operating income of $113 million for the fourth quarter of 2014, consisting of $85 million from the regulated electric transmission & distribution utility operations (TDU) and $28 million related to securitization bonds. Operating income for the fourth quarter of 2013 was $119 million, consisting of $87 million from the TDU and $32 million related to securitization bonds.
Fourth quarter operating income for the TDU benefited from continued strong customer growth, as well as a higher energy efficiency performance bonus, equity return primarily related to true-up proceeds and net transmission related revenue. These increases were more than offset by higher operation and maintenance expenses, decreased usage due to milder weather and lower right-of-way revenue.
Operating income for the year ended December 31, 2014, was $595 million, consisting of $477 million from the TDU and $118 million related to securitization bonds. Operating income for the same period of 2013 was $607 million, consisting of $474 million from the TDU and $133 million related to securitization bonds.
Full year 2014 operating income for the TDU benefited from revenue increases associated with the growth of nearly 55,000 metered customers, as well as a higher energy efficiency performance bonus and equity return primarily related to true-up proceeds. These increases were partially offset by milder weather, as well as higher operation and maintenance expenses, and depreciation.
Natural Gas Distribution
The natural gas distribution segment reported operating income of $103 million for the fourth quarter of 2014, compared to $94 million for the same period of 2013. Operating income benefited from rate changes and increased economic activity across its footprint as well as a higher conservation improvement performance bonus. These increases were partially offset by higher operation and maintenance expenses, depreciation and other taxes.
Operating income for the year ended December 31, 2014, was $287 million, compared to $263 million for the same period of 2013. Operating income benefited from colder weather compared to the previous year as well as rate changes and increased economic activity across its footprint, including growth of nearly 36,000 customers. Increases in operation and maintenance expenses as well as depreciation and other taxes partially offset these improvements.
Energy Services
The energy services segment reported operating income of $9 million for the fourth quarter of 2014, compared to $1 million for the same period of 2013. Fourth quarter operating income for 2014 included a mark-to-market accounting gain of $6 million, compared to a charge of $9 million for the same period of 2013.
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Operating income for the year ended December 31, 2014, was $52 million, compared to $13 million for the same period of 2013. Operating income for the year ended December 31, 2014, included a mark-to-market accounting gain of $29 million, compared to a charge of $2 million for the same period of 2013. The increase in operating income was primarily due to improved margins resulting from optimization of existing gas transportation assets, reduced fixed costs and increased throughput and price volatility due to colder weather.
Other Operations
The other operations segment reported an operating loss of $4 million for the fourth quarter of 2014, compared to an operating loss of $3 million for the same period of 2013. The results for the fourth quarter 2014 included a pension curtailment loss associated with the transfer of seconded employees to Enable Midstream Partners. For the year ended December 31, 2014, this segment reported operating income of $1 million, compared to an operating loss of $18 million for the same period of 2013. The results for 2013 included one-time expenses associated with the formation of Enable Midstream as well as higher property taxes.
Interstate Pipelines/ Field Services
In May 2013, the company contributed substantially all of its midstream assets to Enable Midstream Partners. For the year ended December 31, 2014, this segment reported no operating income. Prior to the formation of Enable Midstream on May 1, 2013, the interstate pipelines segment reported operating income of $72 million and equity earnings of $7 million from its 50 percent interest in the Southeast Supply Header (SESH) and the field services segment reported operating income of $73 million during 2013.
Midstream Investments
The midstream investment segment reported $67 million of equity income for the fourth quarter of 2014, compared to $66 million in the prior year. For the year ended December 31, 2014, this segment reported equity income of $308 million. See Enable Midstream’s earnings press release issued on February 18, 2015, for detailed results of operations.
Dividend Declaration
On January 22, 2015, CenterPoint Energy’s board of directors declared a regular quarterly cash dividend of $0.2475 per share of common stock payable on March 10, 2015, to shareholders of record as of the close of business on February 13, 2015. This represents a 4.2 percent increase from the previous quarterly dividend of $0.2375 and a 19 percent increase since the formation of Enable Midstream in May 2013.
Outlook for 2015
CenterPoint Energy expects earnings on a guidance basis for 2015 Utility Operations to be in the range of $0.71 to $0.75 per diluted share. The Utility Operations guidance range considers
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performance to date and certain significant variables that may impact earnings, such as weather, regulatory and judicial proceedings, throughput, commodity prices, effective tax rates, and financing activities. In providing this guidance, the company does not include other potential impacts, such as changes in accounting standards or unusual items, earnings from the change in the value of the ZENS securities and the related stocks, or the timing effects of mark-to-market accounting in the company’s energy service business.
The company expects its 2015 earnings estimate from Midstream Investments to be in the range of $0.29 to $0.35 per diluted share. In providing this guidance, the company assumes a 55.4 percent limited partner ownership interest in Enable Midstream and includes the amortization of our basis differential in Enable Midstream. The company’s guidance takes into account such factors as Enable Midstream’s most recent public outlook for 2015 dated February 18, 2015, effective tax rates, and other factors. The company does not include other potential impacts, such as the impact of any changes in accounting standards or Enable Midstream’s unusual items.
On a consolidated basis, CenterPoint Energy expects earnings on a guidance basis for 2015 to be in the range of $1.00 to $1.10 per diluted share.
CenterPoint Energy, Inc. and Subsidiaries
Reconciliation of Net Income and diluted EPS to the basis used in providing 2014 annual earnings guidance
| Quarter Ended December 31, 2014 |
Twelve Months Ended December 31, 2014 |
|||||||||||||||
| Net Income (in millions) |
EPS | Net Income (in millions) |
EPS | |||||||||||||
| Consolidated as reported |
$ | 176 | $ | 0.41 | $ | 611 | $ | 1.42 | ||||||||
| Midstream Investments |
(40 | ) | (0.09 | ) | (190 | ) | (0.44 | ) | ||||||||
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| Utility Operations (1) |
136 | $ | 0.32 | 421 | $ | 0.98 | ||||||||||
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| Timing effects impacting CES(2): |
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| Mark-to-market (gain) losses |
(4 | ) | $ | (0.01 | ) | (19 | ) | $ | (0.04 | ) | ||||||
| ZENS-related mark-to-market (gains) losses: |
||||||||||||||||
| Marketable securities (3) |
(58 | ) | (0.14 | ) | (106 | ) | (0.25 | ) | ||||||||
| Indexed debt securities |
37 | 0.09 | 56 | 0.13 | ||||||||||||
| Other: |
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| Pension curtailment loss (4) |
4 | 0.01 | 4 | 0.01 | ||||||||||||
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| Utility operations earnings on an adjusted guidance basis |
$ | 115 | $ | 0.27 | $ | 356 | $ | 0.83 | ||||||||
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| Per the basis used in providing 2014 earnings guidance: |
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| Utility Operations on a guidance basis |
$ | 115 | $ | 0.27 | $ | 356 | $ | 0.83 | ||||||||
| Midstream Investments |
40 | 0.09 | 190 | 0.44 | ||||||||||||
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| 2014 Consolidated on guidance basis |
$ | 155 | $ | 0.36 | $ | 546 | $ | 1.27 | ||||||||
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| (1) | CenterPoint earnings excluding Midstream Investments |
| (2) | Energy Services segment |
| (3) | Time Warner Inc., Time Warner Cable Inc., Time Inc. and AOL Inc. |
| (4) | Pension curtailment loss associated with transfer of seconded employees to Enable |
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Filing of Form 10-K for CenterPoint Energy, Inc.
Today, CenterPoint Energy, Inc. filed with the Securities and Exchange Commission (SEC) its Annual Report on Form 10-K for the period ended December 31, 2014. A copy of that report is available on the company’s website, under the Investors section. Other filings the company makes with the SEC and other documents relating to its corporate governance can also be found on that site.
Webcast of Earnings Conference Call
CenterPoint Energy’s management will host an earnings conference call on Thursday, February 26, 2015, at 10:30 a.m. Central time or 11:30 a.m. Eastern time. Interested parties may listen to a live audio broadcast of the conference call on the company’s website under the Investors section. A replay of the call can be accessed approximately two hours after the completion of the call and will be archived on the website for at least one year.
CenterPoint Energy, Inc., headquartered in Houston, Texas, is a domestic energy delivery company that includes electric transmission & distribution, natural gas distribution and energy services operations. The company serves more than five million metered customers primarily in Arkansas, Louisiana, Minnesota, Mississippi, Oklahoma, and Texas. The company also owns a 55.4 percent limited partner interest in Enable Midstream Partners, a publicly traded master limited partnership it jointly controls with OGE Energy Corp., which owns, operates and develops natural gas and crude oil infrastructure assets. With more than 7,400 employees, CenterPoint Energy and its predecessor companies have been in business for more than 140 years. For more information, visit the website at www.CenterPointEnergy.com.
This news release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based upon assumptions of management which are believed to be reasonable at the time made and are subject to significant risks and uncertainties. Actual events and results may differ materially from those expressed or implied by these forward-looking statements. Any statements in this news release regarding future earnings, and future financial performance and results of operations, including, but not limited to earnings guidance, and any other statements that are not historical facts are forward-looking statements. Each forward-looking statement contained in this news release speaks only as of the date of this release. Factors that could affect actual results include (1) state and federal legislative and regulatory actions or developments affecting various aspects of CenterPoint Energy’s businesses (including the businesses of Enable Midstream Partners (Enable Midstream)), including, among others, energy deregulation or re-regulation, pipeline integrity and safety, health care reform, financial reform, tax legislation, and actions regarding the rates charged by CenterPoint Energy’s regulated businesses; (2) state and federal legislative and regulatory actions or developments relating to the environment, including those related to global climate change; (3) timely and appropriate rate actions that allow recovery of costs and a reasonable return on investment; (4) the timing and outcome of any audits, disputes or other proceedings related to taxes; (5) problems with 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; (6) industrial, commercial and residential growth in CenterPoint Energy’s service territories and changes in market demand, including the effects of energy efficiency measures and demographic patterns; (7) the timing and extent of changes in commodity prices, particularly natural gas and natural gas liquids, and the effects of geographic and seasonal commodity price differentials, and the impact of commodity changes on producer related activities; (8) weather variations and other natural phenomena, including the impact on operations and capital from severe weather events; (9) any direct or indirect effects on CenterPoint Energy’s facilities, operations and financial condition resulting from terrorism, cyber-attacks, data security breaches or other attempts to disrupt its businesses or the businesses of third parties, or other catastrophic events; (10) the impact of unplanned facility outages; (11) timely and appropriate regulatory actions allowing securitization or other recovery of costs associated with any future hurricanes or natural disasters; (12) changes in interest rates or rates of inflation; (13) commercial bank and
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financial market conditions, CenterPoint Energy’s access to capital, the cost of such capital, and the results of its financing and refinancing efforts, including availability of funds in the debt capital markets; (14) actions by credit rating agencies; (15) effectiveness of CenterPoint Energy’s risk management activities; (16) inability of various counterparties to meet their obligations; (17) non-payment for services due to financial distress of CenterPoint Energy’s customers; (18) the ability of GenOn Energy, Inc. (formerly known as RRI Energy, Inc.), a wholly owned subsidiary of NRG Energy, Inc., and its subsidiaries to satisfy their obligations to CenterPoint Energy and its subsidiaries; (19) the ability of retail electric providers, and particularly the largest customers of the TDU, to satisfy their obligations to CenterPoint Energy and its subsidiaries; (20) the outcome of litigation brought by or against CenterPoint Energy or its subsidiaries; (21) CenterPoint Energy’s ability to control costs, invest planned capital, or execute growth projects; (22) the investment performance of pension and postretirement benefit plans; (23) potential business strategies, including restructurings, joint ventures, and acquisitions or dispositions of assets or businesses, for which no assurance can be given that they will be completed or will provide the anticipated benefits to CenterPoint Energy; (24) acquisition and merger activities involving CenterPoint Energy or its competitors; (25) future economic conditions in regional and national markets and their effects on sales, prices and costs; (26) the performance of Enable Midstream, the amount of cash distributions CenterPoint Energy receives from Enable Midstream, and the value of its interest in Enable Midstream, and factors that may have a material impact on such performance, cash distributions and value, including certain of the factors specified above and: (A) the integration of the operations of the businesses contributed to Enable Midstream; (B) the achievement of anticipated operational and commercial synergies and expected growth opportunities, and the successful implementation of Enable Midstream’s business plan; (C) competitive conditions in the midstream industry, and actions taken by Enable Midstream’s customers and competitors, including the extent and timing of the entry of additional competition in the markets served by Enable Midstream; (D) the timing and extent of changes in the supply of natural gas and associated commodity prices, particularly natural gas and natural gas liquids, the competitive effects of the available pipeline capacity in the regions served by Enable Midstream, and the effects of geographic and seasonal commodity price differentials, including the effects of these circumstances on re-contracting available capacity on Enable Midstream’s interstate pipelines; (E) the demand for natural gas, NGLs and transportation and storage services; (F) changes in tax status; (G) access to growth capital; and (H) the availability and prices of raw materials for current and future construction projects; and (27) other factors discussed in CenterPoint Energy’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014, and other reports CenterPoint Energy or its subsidiaries may file from time to time with the Securities and Exchange Commission.
Use of Non-GAAP Financial Measures
In addition to presenting its financial results in accordance with generally accepted accounting principles (GAAP), CenterPoint Energy also provides guidance based on adjusted diluted earnings per share, which is a non-GAAP financial measure. Generally, a non-GAAP financial measure is a numerical measure of a company’s historical or future financial performance that excludes or includes amounts that are not normally excluded or included in the most directly comparable GAAP financial measure. A reconciliation of net income and diluted earnings per share to the basis used in providing 2014 guidance is provided in this news release.
Management evaluates financial performance in part based on adjusted diluted earnings per share and believes that presenting this non-GAAP financial measure enhances an investor’s understanding of CenterPoint Energy’s overall financial performance by providing them with an additional meaningful and relevant comparison of current and anticipated future results across periods by excluding items that Management does not believe most accurately reflect its fundamental business performance, which items include the items reflected in the reconciliation table of this news release. This non-GAAP financial measure should be considered as a supplement and complement to, and not as a substitute for, or superior to, the most directly comparable GAAP financial measure and may be different than non-GAAP financial measures used by other companies.
###
CenterPoint Energy, Inc. and Subsidiaries
Statements of Consolidated Income
(Millions of Dollars)
(Unaudited)
| Quarter Ended | Year Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Revenues: |
||||||||||||||||
| Electric Transmission & Distribution |
$ | 679 | $ | 637 | $ | 2,845 | $ | 2,570 | ||||||||
| Natural Gas Distribution |
900 | 902 | 3,301 | 2,863 | ||||||||||||
| Energy Services |
815 | 656 | 3,179 | 2,401 | ||||||||||||
| Interstate Pipelines |
— | — | — | 186 | ||||||||||||
| Field Services |
— | — | — | 196 | ||||||||||||
| Other Operations |
4 | 4 | 15 | 14 | ||||||||||||
| Eliminations |
(26 | ) | (15 | ) | (114 | ) | (124 | ) | ||||||||
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| Total |
2,372 | 2,184 | 9,226 | 8,106 | ||||||||||||
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| Expenses: |
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| Natural gas |
1,296 | 1,167 | 4,921 | 3,908 | ||||||||||||
| Operation and maintenance |
528 | 495 | 1,969 | 1,847 | ||||||||||||
| Depreciation and amortization |
229 | 213 | 1,013 | 954 | ||||||||||||
| Taxes other than income taxes |
98 | 98 | 388 | 387 | ||||||||||||
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| Total |
2,151 | 1,973 | 8,291 | 7,096 | ||||||||||||
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| Operating Income |
221 | 211 | 935 | 1,010 | ||||||||||||
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| Other Income (Expense) : |
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| Gain on marketable securities |
90 | 78 | 163 | 236 | ||||||||||||
| Loss on indexed debt securities |
(57 | ) | (73 | ) | (86 | ) | (193 | ) | ||||||||
| Interest and other finance charges |
(92 | ) | (82 | ) | (353 | ) | (351 | ) | ||||||||
| Interest on transition and system restoration bonds |
(28 | ) | (32 | ) | (118 | ) | (133 | ) | ||||||||
| Equity in earnings of unconsolidated affiliates |
67 | 66 | 308 | 188 | ||||||||||||
| Other - net |
8 | 7 | 36 | 24 | ||||||||||||
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| Total |
(12 | ) | (36 | ) | (50 | ) | (229 | ) | ||||||||
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| Income Before Income Taxes |
209 | 175 | 885 | 781 | ||||||||||||
| Income Tax Expense |
33 | 62 | 274 | 470 | ||||||||||||
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| Net Income |
$ | 176 | $ | 113 | $ | 611 | $ | 311 | ||||||||
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Reference is made to the Notes to the Consolidated Financial Statements
contained in the Annual Report on Form 10-K of CenterPoint Energy, Inc.
CenterPoint Energy, Inc. and Subsidiaries
Selected Data From Statements of Consolidated Income
(Millions of Dollars, Except Share and Per Share Amounts)
(Unaudited)
| Quarter Ended | Year Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Basic Earnings (Loss) Per Common Share |
$ | 0.41 | $ | 0.26 | $ | 1.42 | $ | 0.73 | ||||||||
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| Diluted Earnings (Loss) Per Common Share |
$ | 0.41 | $ | 0.26 | $ | 1.42 | $ | 0.72 | ||||||||
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| Dividends Declared per Common Share |
$ | 0.2375 | $ | 0.2075 | 0.9500 | $ | 0.8300 | |||||||||
| Weighted Average Common Shares Outstanding (000): |
||||||||||||||||
| - Basic |
429,796 | 428,694 | 429,634 | 428,466 | ||||||||||||
| - Diluted |
431,830 | 431,159 | 431,668 | 430,930 | ||||||||||||
| Operating Income (Loss) by Segment |
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| Electric Transmission & Distribution: |
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| Electric Transmission and Distribution Operations |
$ | 85 | $ | 87 | $ | 477 | $ | 474 | ||||||||
| Transition and System Restoration Bond Companies |
28 | 32 | 118 | 133 | ||||||||||||
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| Total Electric Transmission & Distribution |
113 | 119 | 595 | 607 | ||||||||||||
| Natural Gas Distribution |
103 | 94 | 287 | 263 | ||||||||||||
| Energy Services |
9 | 1 | 52 | 13 | ||||||||||||
| Interstate Pipelines |
— | — | — | 72 | ||||||||||||
| Field Services |
— | — | — | 73 | ||||||||||||
| Other Operations |
(4 | ) | (3 | ) | 1 | (18 | ) | |||||||||
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| Total |
$ | 221 | $ | 211 | $ | 935 | $ | 1,010 | ||||||||
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Reference is made to the Notes to the Consolidated Financial Statements
contained in the Annual Report on Form 10-K of CenterPoint Energy, Inc.
CenterPoint Energy, Inc. and Subsidiaries
Results of Operations by Segment
(Millions of Dollars)
(Unaudited)
| Electric Transmission & Distribution | ||||||||||||||||||||||||
| Quarter Ended | Year Ended | |||||||||||||||||||||||
| December 31, | % Diff | December 31, | % Diff | |||||||||||||||||||||
| 2014 | 2013 | Fav/(Unfav) | 2014 | 2013 | Fav/(Unfav) | |||||||||||||||||||
| Results of Operations: |
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| Revenues: |
||||||||||||||||||||||||
| Electric transmission and distribution utility |
$ | 563 | $ | 529 | 6 | % | $ | 2,279 | $ | 2,063 | 10 | % | ||||||||||||
| Transition and system restoration bond companies |
116 | 108 | 7 | % | 566 | 507 | 12 | % | ||||||||||||||||
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| Total |
679 | 637 | 7 | % | 2,845 | 2,570 | 11 | % | ||||||||||||||||
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| Expenses: |
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| Operation and maintenance |
344 | 305 | (13 | %) | 1,251 | 1,045 | (20 | %) | ||||||||||||||||
| Depreciation and amortization |
80 | 81 | 1 | % | 327 | 319 | (3 | %) | ||||||||||||||||
| Taxes other than income taxes |
54 | 56 | 4 | % | 224 | 225 | — | |||||||||||||||||
| Transition and system restoration bond companies |
88 | 76 | (16 | %) | 448 | 374 | (20 | %) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total |
566 | 518 | (9 | %) | 2,250 | 1,963 | (15 | %) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Operating Income |
$ | 113 | $ | 119 | (5 | %) | $ | 595 | $ | 607 | (2 | %) | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Operating Income: |
||||||||||||||||||||||||
| Electric transmission and distribution operations |
$ | 85 | $ | 87 | (2 | %) | $ | 477 | $ | 474 | 1 | % | ||||||||||||
| Transition and system restoration bond companies |
28 | 32 | (13 | %) | 118 | 133 | (11 | %) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total Segment Operating Income |
$ | 113 | $ | 119 | (5 | %) | $ | 595 | $ | 607 | (2 | %) | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Electric Transmission & Distribution Operating Data: |
||||||||||||||||||||||||
| Actual MWH Delivered |
||||||||||||||||||||||||
| Residential |
5,497,638 | 5,748,900 | (4 | %) | 27,497,882 | 27,485,119 | — | |||||||||||||||||
| Total |
18,710,321 | 18,441,058 | 1 | % | 81,839,060 | 79,984,965 | 2 | % | ||||||||||||||||
| Weather (average for service area): |
||||||||||||||||||||||||
| Percentage of 10-year average: |
||||||||||||||||||||||||
| Cooling degree days |
86 | % | 84 | % | 2 | % | 91 | % | 98 | % | (7 | %) | ||||||||||||
| Heating degree days |
99 | % | 141 | % | (42 | %) | 123 | % | 111 | % | 12 | % | ||||||||||||
| Number of metered customers - end of period: |
||||||||||||||||||||||||
| Residential |
2,033,027 | 1,982,699 | 3 | % | 2,033,027 | 1,982,699 | 3 | % | ||||||||||||||||
| Total |
2,299,247 | 2,244,289 | 2 | % | 2,299,247 | 2,244,289 | 2 | % | ||||||||||||||||
| Natural Gas Distribution | ||||||||||||||||||||||||
| Quarter Ended | Year Ended | |||||||||||||||||||||||
| December 31, | % Diff | December 31, | % Diff | |||||||||||||||||||||
| 2014 | 2013 | Fav/(Unfav) | 2014 | 2013 | Fav/(Unfav) | |||||||||||||||||||
| Results of Operations: |
||||||||||||||||||||||||
| Revenues |
$ | 900 | $ | 902 | — | $ | 3,301 | $ | 2,863 | 15 | % | |||||||||||||
| Natural gas |
529 | 541 | 2 | % | 1,961 | 1,607 | (22 | %) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Gross Margin |
371 | 361 | 3 | % | 1,340 | 1,256 | 7 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Expenses: |
||||||||||||||||||||||||
| Operation and maintenance |
176 | 179 | 2 | % | 700 | 667 | (5 | %) | ||||||||||||||||
| Depreciation and amortization |
52 | 47 | (11 | %) | 201 | 185 | (9 | %) | ||||||||||||||||
| Taxes other than income taxes |
40 | 41 | 2 | % | 152 | 141 | (8 | %) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total |
268 | 267 | — | 1,053 | 993 | (6 | %) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Operating Income (Loss) |
$ | 103 | $ | 94 | 10 | % | $ | 287 | $ | 263 | 9 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Natural Gas Distribution Operating Data: |
||||||||||||||||||||||||
| Throughput data in BCF |
||||||||||||||||||||||||
| Residential |
57 | 64 | (11 | %) | 197 | 182 | 8 | % | ||||||||||||||||
| Commercial and Industrial |
71 | 75 | (5 | %) | 270 | 265 | 2 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total Throughput |
128 | 139 | (8 | %) | 467 | 447 | 4 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Weather (average for service area) |
||||||||||||||||||||||||
| Percentage of 10-year average: |
||||||||||||||||||||||||
| Heating degree days |
107 | % | 119 | % | (12 | %) | 120 | % | 110 | % | 10 | % | ||||||||||||
| Number of customers - end of period: |
||||||||||||||||||||||||
| Residential |
3,124,542 | 3,090,966 | 1 | % | 3,124,542 | 3,090,966 | 1 | % | ||||||||||||||||
| Commercial and Industrial |
249,272 | 247,100 | 1 | % | 249,272 | 247,100 | 1 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total |
3,373,814 | 3,338,066 | 1 | % | 3,373,814 | 3,338,066 | 1 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Reference is made to the Notes to the Consolidated Financial Statements
contained in the Annual Report on Form 10-K of CenterPoint Energy, Inc.
CenterPoint Energy, Inc. and Subsidiaries
Results of Operations by Segment
(Millions of Dollars)
(Unaudited)
| Energy Services | ||||||||||||||||||||||||
| Quarter Ended | Year Ended | |||||||||||||||||||||||
| December 31, | % Diff | December 31, | % Diff | |||||||||||||||||||||
| 2014 | 2013 | Fav/(Unfav) | 2014 | 2013 | Fav/(Unfav) | |||||||||||||||||||
| Results of Operations: |
||||||||||||||||||||||||
| Revenues |
$ | 815 | $ | 656 | 24 | % | $ | 3,179 | $ | 2,401 | 32 | % | ||||||||||||
| Natural gas |
793 | 643 | (23 | %) | 3,073 | 2,336 | (32 | %) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Gross Margin |
22 | 13 | 69 | % | 106 | 65 | 63 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Expenses: |
||||||||||||||||||||||||
| Operation and maintenance |
11 | 11 | — | 47 | 46 | (2 | %) | |||||||||||||||||
| Depreciation and amortization |
1 | 1 | — | 5 | 5 | — | ||||||||||||||||||
| Taxes other than income taxes |
1 | — | — | 2 | 1 | (100 | %) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total |
13 | 12 | (8 | %) | 54 | 52 | (4 | %) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Operating Income |
$ | 9 | $ | 1 | 800 | % | $ | 52 | $ | 13 | 300 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Energy Services Operating Data: |
||||||||||||||||||||||||
| Throughput data in BCF |
168 | 167 | 1 | % | 631 | 600 | 5 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Number of customers - end of period |
17,964 | 17,510 | 3 | % | 17,964 | 17,510 | 3 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Other Operations | ||||||||||||||||||||||||
| Quarter Ended | Year Ended | |||||||||||||||||||||||
| December 31, | % Diff | December 31, | % Diff | |||||||||||||||||||||
| 2014 | 2013 | Fav/(Unfav) | 2014 | 2013 | Fav/(Unfav) | |||||||||||||||||||
| Results of Operations: |
||||||||||||||||||||||||
| Revenues |
$ | 4 | $ | 4 | — | $ | 15 | $ | 14 | 7 | % | |||||||||||||
| Expenses |
8 | 7 | (14 | %) | 14 | 32 | 56 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Operating Income (Loss) |
$ | (4 | ) | $ | (3 | ) | (33 | %) | $ | 1 | $ | (18 | ) | 106 | % | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Capital Expenditures by Segment
(Millions of Dollars)
(Unaudited)
| Quarter Ended December 31, |
Year Ended December 31, |
|||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Capital Expenditures by Segment |
||||||||||||||||
| Electric Transmission & Distribution |
$ | 245 | $ | 244 | $ | 818 | $ | 759 | ||||||||
| Natural Gas Distribution |
147 | 117 | 525 | 430 | ||||||||||||
| Energy Services |
1 | — | 3 | 3 | ||||||||||||
| Interstate Pipelines |
— | — | — | 29 | ||||||||||||
| Field Services |
— | — | — | 16 | ||||||||||||
| Other Operations |
22 | 4 | 56 | 35 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total |
$ | 415 | $ | 365 | $ | 1,402 | $ | 1,272 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
Interest Expense Detail
(Millions of Dollars)
(Unaudited)
| Quarter Ended December 31, |
Year Ended December 31, |
|||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Interest Expense Detail |
||||||||||||||||
| Amortization of Deferred Financing Cost |
$ | 6 | $ | 6 | $ | 25 | $ | 26 | ||||||||
| Capitalization of Interest Cost |
(3 | ) | (3 | ) | (11 | ) | (11 | ) | ||||||||
| Transition and System Restoration Bond Interest Expense |
28 | 32 | 118 | 133 | ||||||||||||
| Other Interest Expense |
89 | 79 | 339 | 336 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total Interest Expense |
$ | 120 | $ | 114 | $ | 471 | $ | 484 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
Reference is made to the Notes to the Consolidated Financial Statements
contained in the Annual Report on Form 10-K of CenterPoint Energy, Inc.
CenterPoint Energy, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Millions of Dollars)
(Unaudited)
| December 31, | December 31, | |||||||
| 2014 | 2013 | |||||||
| ASSETS | ||||||||
| Current Assets: |
||||||||
| Cash and cash equivalents |
$ | 298 | $ | 208 | ||||
| Other current assets |
2,970 | 2,450 | ||||||
|
|
|
|
|
|||||
| Total current assets |
3,268 | 2,658 | ||||||
|
|
|
|
|
|||||
| Property, Plant and Equipment, net |
10,502 | 9,593 | ||||||
|
|
|
|
|
|||||
| Other Assets: |
||||||||
| Goodwill |
840 | 840 | ||||||
| Regulatory assets |
3,527 | 3,726 | ||||||
| Investment in unconsolidated affiliates |
4,521 | 4,518 | ||||||
| Other non-current assets |
542 | 535 | ||||||
|
|
|
|
|
|||||
| Total other assets |
9,430 | 9,619 | ||||||
|
|
|
|
|
|||||
| Total Assets |
$ | 23,200 | $ | 21,870 | ||||
|
|
|
|
|
|||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current Liabilities: |
||||||||
| Short-term borrowings |
$ | 53 | $ | 43 | ||||
| Current portion of transition and system restoration bonds long-term debt |
372 | 354 | ||||||
| Indexed debt |
152 | 143 | ||||||
| Current portion of other long-term debt |
271 | — | ||||||
| Other current liabilities |
2,627 | 2,479 | ||||||
|
|
|
|
|
|||||
| Total current liabilities |
3,475 | 3,019 | ||||||
|
|
|
|
|
|||||
| Other Liabilities: |
||||||||
| Accumulated deferred income taxes, net |
4,757 | 4,542 | ||||||
| Regulatory liabilities |
1,206 | 1,152 | ||||||
| Other non-current liabilities |
1,205 | 1,011 | ||||||
|
|
|
|
|
|||||
| Total other liabilities |
7,168 | 6,705 | ||||||
|
|
|
|
|
|||||
| Long-term Debt: |
||||||||
| Transition and system restoration bonds |
2,674 | 3,046 | ||||||
| Other |
5,335 | 4,771 | ||||||
|
|
|
|
|
|||||
| Total long-term debt |
8,009 | 7,817 | ||||||
|
|
|
|
|
|||||
| Shareholders’ Equity |
4,548 | 4,329 | ||||||
|
|
|
|
|
|||||
| Total Liabilities and Shareholders’ Equity |
$ | 23,200 | $ | 21,870 | ||||
|
|
|
|
|
|||||
Reference is made to the Notes to the Consolidated Financial Statements
contained in the Annual Report on Form 10-K of CenterPoint Energy, Inc.
CenterPoint Energy, Inc. and Subsidiaries
Condensed Statements of Consolidated Cash Flows
(Millions of Dollars)
(Unaudited)
| Year Ended December 31, | ||||||||
| 2014 | 2013 | |||||||
| Cash Flows from Operating Activities: |
||||||||
| Net income |
$ | 611 | $ | 311 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
1,041 | 984 | ||||||
| Deferred income taxes |
280 | 356 | ||||||
| Write-down of natural gas inventory |
8 | 4 | ||||||
| Changes in net regulatory assets |
22 | 61 | ||||||
| Changes in other assets and liabilities |
(578 | ) | (127 | ) | ||||
| Other, net |
13 | 24 | ||||||
|
|
|
|
|
|||||
| Net Cash Provided by Operating Activities |
1,397 | 1,613 | ||||||
| Net Cash Used in Investing Activities |
(1,384 | ) | (1,300 | ) | ||||
| Net Cash Provided by (Used in) Financing Activities |
77 | (751 | ) | |||||
|
|
|
|
|
|||||
| Net Increase (Decrease) in Cash and Cash Equivalents |
90 | (438 | ) | |||||
| Cash and Cash Equivalents at Beginning of Period |
208 | 646 | ||||||
|
|
|
|
|
|||||
| Cash and Cash Equivalents at End of Period |
$ | 298 | $ | 208 | ||||
|
|
|
|
|
|||||
Reference is made to the Notes to the Consolidated Financial Statements
contained in the Annual Report on Form 10-K of CenterPoint Energy, Inc.
 The Benefits of
a Diversified Electric & Natural Gas Portfolio Full Year 2014 Earnings
Supplemental Materials
February 26, 2015
Exhibit 99.2 |
 investors.centerpointenergy.com
February 26, 2015
Cautionary Statement Regarding
Forward-Looking Information
This presentation contains statements concerning our expectations, beliefs, plans, objectives, goals,
strategies, future events or performance and underlying assumptions
and
other
statements
that
are
not
historical
facts.
These
statements
are
“forward-looking
statements”
within
the
meaning
of
the
Private
Securities
Litigation Reform Act of 1995. You should not place undue reliance on forward-looking statements.
Actual results may differ materially from those expressed or implied
by
these
statements.
You
can
generally
identify
our
forward-looking
statements
by
the
words
“anticipate,”
“believe,”
“continue,”
“could,”
“estimate,”
“expect,”
“forecast,”
“goal,”
“intend,”
“may,”
“objective,”
“plan,”
“potential,”
“predict,”
“projection,”
“should,”
“will,”
or other similar words. The absence of these words, however,
does not mean that the statements are not forward-looking.
We have based our forward-looking statements on our management's beliefs and assumptions based on
information currently available to our management at the time the statements are made. We
caution you that assumptions, beliefs, expectations, intentions, and projections about future events may and often do vary
materially
from
actual
results.
Therefore,
we
cannot
assure
you
that
actual
results
will
not
differ
materially
from
those
expressed
or
implied
by
our
forward-looking
statements.
Some of the factors that could cause actual results to differ from those expressed or implied by our
forward-looking statements include but are not limited to the timing and impact of future
regulatory, legislative and IRS decisions, financial market conditions, future market conditions, and other factors described in CenterPoint
Energy,
Inc.’s
Form
10-K
for
the
period
ended
December
31,
2014
under
“cautionary
statement
regarding
forward-looking
information,”
“Risk
Factors”
and
“
–
Liquidity and Capital Resources –
Other Matters –
Other Factors That Could Affect Cash Requirements”
and “Management’s Discussion and Analysis of Financial
Condition and Results of Operations -
Certain Factors Affecting Future Earnings,”
and in other filings with the SEC by CenterPoint Energy, which can be found at
www.centerpointenergy.com
on
the
Investor
Relations
page
or
on
the
SEC’s
website
at
www.sec.gov
.
This presentation contains time sensitive information that is accurate as of the date hereof.
Some of the information in this presentation in unaudited and may be subject to change.
We undertake no obligation to update the information presented herein except as required by law.
Investors and others should note that we may announce material information using SEC filings, press
releases, public conference calls, webcasts and the Investors page of our website. In the
future, we will continue to use these channels to distribute material information about the Company and to communicate
important information about the Company, key personnel, corporate initiatives, regulatory updates and
other matters. Information that we post on our website could be deemed material;
therefore, we encourage investors, the media, our customers, business partners and others interested in our Company to review the information
we post on our website.
Use
of
Non-GAAP
Financial
Measures
In addition to presenting its financial results in accordance with generally accepted accounting
principles (“GAAP”), CenterPoint Energy also provides guidance based
on
adjusted
diluted
earnings
per
share,
which
is
a
non-GAAP
financial
measure.
Generally,
a
non-GAAP
financial
measure
is
a
numerical
measure
of a
company’s
historical
or
future
financial
performance
that
excludes
or
includes
amounts
that
are
not
normally
excluded
or
included
in
the
most
directly
comparable
GAAP financial measure.
A reconciliation of net income and diluted earnings per share to the basis used in providing 2014
guidance is provided in this presentation on slide 5.
Management evaluates financial performance in part based on adjusted diluted earnings per share and
believes that presenting this non-GAAP financial measure enhances an investor’s
understanding of CenterPoint Energy’s overall financial performance by providing them with an additional meaningful and relevant
comparison of current and anticipated future results across periods by excluding items that Management
does not believe most accurately reflect its fundamental business performance, which items
include the items reflected in the reconciliation table on page 5 of this presentation.
This non-GAAP financial measure should be
considered as a supplement and complement to, and not as a substitute for, or superior to, the most
directly comparable GAAP financial measure and may be different than non-GAAP financial
measures used by other companies. 2 |
 investors.centerpointenergy.com
February 26, 2015
2014 Year Highlights
3
•
New management team in place with the right mix of industry experience and functional knowledge
•
Utility
Operations:
Strong
financial
and
operational
performances
Sustained strong economic activity with the addition of nearly 55,000 new meters for Houston
Electric and nearly 36,000 new Gas Utility customers
Continued interest in our transmission rights-of-way for our electric utility
Rate changes and cost management efforts led to a record performance for our natural gas
utilities
Invested over $1.4 billion in our utility operations, up 14 percent from 2013, to address
increasing demands associated with system safety, reliability, growth and ongoing
maintenance ERCOT endorsed an approximately $300 MM transmission line, the Brazos
Valley Connection, expected to be in service by summer of 2018
•
Enable Midstream Partners:
Completed their initial public offering
Contributed substantially all of CenterPoint’s remaining interest in Southeast Supply
Header, LLC (SESH) to Enable in May of 2014, increasing CenterPoint Energy’s
limited partner interest in Enable from approximately 54.7% to approximately
55.4% •
Increased dividend 4.2% in January 2015; a 19% increase in the quarterly dividend since the
formation of Enable in May 2013 |
 investors.centerpointenergy.com
February 26, 2015
2014 Forecast Summary
4
Compound Annual Growth Rates
2013 -2018 Forecast
(Provided June 2014)
1
2014 –
2019 Forecast
(Provided Feb 2015)
2
Houston Electric Rate Base
7-10%
8-10%
Houston Electric Operating Income
5-7%
5-7%
4
Gas Utilities Rate Base
8-10%
8-10%
Gas Utilities Operating Income
4-6%
4-6%
4
Consolidated Rate Base
7-10%
8-10%
Utility Operations Earnings
4-6%
3
4-6%
3, 4
1
The 2013 –
2018 forecast does not assume the utilization of bonus depreciation
2
The 2014 –
2019 forecast does not assume bonus depreciation for 2015 and beyond
3
Earnings are expected to be lower during initial years and higher during later years of the
forecast 4
The operating and earnings growth rates utilize the same adjustment methodology used to
determine the 2014 $0.70 utility operations baseline 5-Year Capital Investment
2014 -2018 Forecast
(Provided June 2014)
2015 –
2019 Forecast
(Provided Feb 2015)
Houston Electric
$3.7 -
$4.5 B
$4.4 B
Gas Utilities
$2.2 -
$2.6 B
$2.7 B
Utility Operations
$6.2 -
$7.4 B
$7.4 B
shown on the next slide |
 investors.centerpointenergy.com
February 26, 2015
2014 EPS Reconciliation to 2015 Utility Operations Guidance
Range of $0.71 to $0.75 per diluted share
5
2014 Fully Diluted EPS
$ 1.42
On an adjusted guidance basis:
ZENS-related mark to market gains
(0.12)
CES MTM gain
(0.04)
Pension Curtailment loss
0.01
2014 Consolidated EPS on a guidance basis
$ 1.27
Deferred Tax Benefit
(0.07)
2014 Fully Adjusted EPS
$ 1.20
Midstream Investments
(0.44)
2014 Fully Adjusted Utility Operations EPS
$ 0.76
1
2
(1)
The Equity Amortization schedule on page 19 details the decrease between the
2014 actual and 2015 projected equity returns
(2)
2008 Energy Efficiency Cost Recovery Factor Appeal details are provided in the
2014 10-K |
 investors.centerpointenergy.com
February 26, 2015
Electric Transmission and Distribution Utility
2014 Operating Income Drivers
6 |
 investors.centerpointenergy.com
February 26, 2015
Electric Transmission and Distribution Utility
Capital Investment Growth
7
$4.4 Billion 2015 –
2019 Capital Plan
Capital Plan Includes:
1
A portion of the Houston Import Project
Brazos Valley Connection ¹
Reliability/Resiliency
Technology
Customer Growth
Infrastructure improvements
Reliability and Technology |
 investors.centerpointenergy.com
February 26, 2015
Electric Transmission & Distribution Utility
Capital Expenditures
2014A
2015E
2016E
2017E
2018E
2019E
Transmission
37%
36%
41%
40%
33%
24%
Distribution
59%
63%
56%
55%
63%
74%
8 |
 investors.centerpointenergy.com
February 26, 2015
$6.3 Billion Projected 2019 Rate Base
Electric Transmission and Distribution Utility
9
Note: The estimated average annual rate base is subject to change due to actual capital
investment, effects of bonus depreciation, deferred taxes, and actual rate base
authorized. As an example of the impact of bonus depreciation, 2018 rate base was reduced by approximately $100 MM as a result of the bonus
depreciation passed for 2014. Forecasts do not assume bonus depreciation is passed in
2015 and beyond. Projected Average Rate Base |
 investors.centerpointenergy.com
February 26, 2015
Natural Gas Utilities
2014 Operating Income Drivers
10 |
 investors.centerpointenergy.com
February 26, 2015
Natural Gas Utilities
Capital Investment Growth
11
$2.7 Billion 2015 –
2019 Capital Plan
Replacing aging infrastructure
Customer growth investment
System-wide AMR; 3.4 million meters by Q4 2015
Minnesota Belt Line Project; $400 million over 12
years
Capital Plan Includes: |
 investors.centerpointenergy.com
February 26, 2015
Natural Gas Utilities
Capital Expenditures
12
Capital Recovery Method
2014A
2015E
2016E
2017E
2018E
2019E
Annual Mechanisms
48%
52%
43%
55%
59%
59%
Rate Cases
52%
48%
57%
45%
41%
41%
Note: Annual mechanisms reduce the recovery lag time versus traditional rate cases.
|
 investors.centerpointenergy.com
February 26, 2015
$3.5 Billion Projected 2019 Rate Base
Natural Gas Utilities
13
Note: The estimated average annual rate base is subject to change due to actual capital
investment, effects of bonus depreciation, deferred taxes, and actual rate base
authorized. As an example of the impact of bonus depreciation, 2018 rate base was reduced by approximately $64 MM as a result of the bonus depreciation
passed for 2014. Forecasts do not assume bonus depreciation is passed in 2015 and
beyond. Projected Average Rate Base |
 investors.centerpointenergy.com
February 26, 2015
CenterPoint Energy Services (CES)
2014 Operating Income Drivers
14 |
 investors.centerpointenergy.com
February 26, 2015
Rate Mechanism and Estimated Timing
15
Estimated rate filing timelines as of December 31, 2014:
* MRP (not shown) is filed monthly. Texarkana TX is not included in Act 310
filings. Natural Gas Utilities
Houston Electric
Note:
Assumes
DCRF
or
similar
mechanisms
will
be
in
place
after
original
DCRF
sunsets
on
January
1,
2017
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Minnesota
Arkansas
& Texarkana TX *
Oklahoma
PBRC
PBRC
PBRC
PBRC
PBRC
Louisiana
RSP
RSP
RSP
RSP
RSP
RRA
RRA
RRA
RRA
RRA
Jurisdiction
2015
2016
2017
2018
2019
Mississippi
East Texas
Texas Coast
Rate Case
Rate Case
Rate Case
Houston Gas
South Texas
Rate Case
cont. 2020
Rate Case
Rate Case
Rate Case
Rate Case
cont. in 2020
Rate Case
BDA
BDA
310
310
GRIP
310
GRIP
GRIP
GRIP
GRIP
GRIP
GRIP
GRIP
GRIP
Interim
Rates
BDA
310
Interim
Rates
GRIP
BDA
310
GRIP
GRIP
GRIP
GRIP
GRIP
GRIP
GRIP
GRIP
GRIP
GRIP
GRIP
BDA
GRIP
GRIP
310
GRIP
Interim
Rates
GRIP
GRIP |
 investors.centerpointenergy.com
February 26, 2015
2014 Financial Results
Midstream Operating Income moved to Equity Income on May 1, 2013
16
Operating Income
Equity Income
As reported, 12 months ended December 31
Note: Both 2013 and 2014 had $5 million in basis difference accretion
Key Enable Midstream Dates
•
For the four months ended April 30, 2013,
CenterPoint Energy maintained a 50%
ownership interest in SESH and reported its
results as Equity Income
•
Enable Midstream Partners, formed May 1,
2013, which includes CenterPoint Energy’s
former Interstate Pipelines and Field Services
segments and a 24.95% interest in SESH
•
Effective May 1, 2013 midstream operations
are reported as
Equity Income as part of
CenterPoint Energy’s midstream investment
segment
•
On April 16, 2014, Enable completed its IPO,
reducing CenterPoint Energy’s interest in
Enable from approximately 58.3% to 54.7%
•
Between May 1, 2013 and May 30, 2014,
CenterPoint
maintained a 25.05% ownership
interest in SESH
•
On May 30, 2014, CenterPoint contributed to
Enable a 24.95% interest in SESH, which
increased CenterPoint
Energy’s limited
partner interest in Enable from approximately
54.7% to approximately 55.4% |
 investors.centerpointenergy.com
February 26, 2015
17
Debt and Capitalization Ratios
Excluding Transition and System Restoration Bonds
($ in millions)
December 31,
December 31,
2014
2013
Short-term Debt:
Short-term borrowings
53
$
43
$
Current portion of transition and system restoration bonds*
372
354
Indexed debt (ZENS)**
152
143
Current portion of other long-term debt
271
-
Long-term Debt:
Transition and system restoration bonds*
2,674
3,046
Other
5,335
4,771
Total Debt
8,857
$
8,357
$
Less: Transition and system restoration bonds (including current portion)*
3,046
3,400
Total Debt, excluding transition and system restoration bonds
5,811
$
4,957
$
Total Shareholders' Equity
4,548
$
4,329
$
Total Capitalization, excluding transition and system restoration bonds
10,359
$
9,286
$
Total Debt/Total Capitalization, excluding transition and system restoration bonds
56.1%
53.4%
*
**
The debt component reflected on the financial statements was $152 million and $143 million as of
December 31, 2014 and December 31, 2013, respectively. The principal amount on which 2%
interest is paid was $828 million on each of December 31, 2014 and December 31, 2013.
The contingent principal amount was $751 million and $763 million as of December 31, 2014 and December 31, 2013, respectively. At
maturity or upon redemption, holders of ZENS will receive cash at the higher of the contingent
principal amount or the value of the reference shares of Time Warner Inc., Time Warner Cable
Inc., AOL Inc. and Time Inc. The value of the reference shares was $930 million and $767
million as of December 31, 2014 and December 31, 2013, respectively.
The transition and system restoration bonds are serviced with dedicated revenue streams, and the
bonds are non-recourse to CenterPoint Energy and CenterPoint Energy Houston
Electric. |
 investors.centerpointenergy.com
February 26, 2015
Liquidity and Credit Ratings
18
Moody's
S&P
Fitch
Debt Rated
Rating
Outlook
a
Rating
Outlook
b
Rating
Outlook
CenterPoint Energy Sr Unsecured
Baa1
Stable
BBB+
Stable
BBB
Stable
CenterPoint Energy Houston Electric Sr Secured
A1
Stable
A
Stable
A
Stable
CenterPoint Energy Resources Corp. Sr Unsecured
Baa2
Stable
A-
Stable
BBB
Stable
a
A
Moody’s
rating
outlook
is
an
opinion
regarding
the
likely
direction
of
an
issuer's
rating
over
the
medium
term.
b
An S&P rating outlook assesses the potential direction of long-term credit rating over the
intermediate to longer term. c
A
Fitch
rating
outlook
indicates
the
direction
a
rating
is
likely
to
move
over
a
one-
to
two-year
period.
(in millions)
Source of Liquidity on 02/17/2015
Facility
Size
Amount
Utilized
1
Amount
Unutilized
CenterPoint Energy, Inc. Revolver
$ 1,200
$ 170
2
$ 1,030
CenterPoint Houston Electric, LLC Revolver
300
4
3
296
CenterPoint Energy Resources Corp. Revolver
600
248
4
352
Total Bank Facilities
$ 2,100
$ 422
$ 1,678
Investments in Money Market Funds
0
Available Liquidity
$ 1,678
1
Based on the consolidated debt to capitalization covenant in the CenterPoint Energy, Inc. revolving
credit facility and the revolving credit facility of each of CenterPoint Energy Houston
Electric, LLC and CenterPoint Energy Resources Corp., the full capacity of such revolving
credit facilities, which aggregated $2.1 billion, could have been utilized at December 31,
2014. 2
Represents outstanding letters of credit of $6 million and outstanding commercial paper of $164
million. 3
Represents outstanding letters of credit.
4
Represents outstanding commercial paper.
C |
  investors.centerpointenergy.com
February 26, 2015
19
Estimated Amortization for Pre-Tax Equity Earnings
Associated
with
the
Recovery
of
Certain
Qualified
Cost
and
Storm
Restoration
Costs
The
amounts
reflected
for
2015
through
2024
are
based
on
CenterPoint
Energy’s
estimates
as
of
December
31,
2014.
However,
the
equity
returns
to
be
recognized
in
future periods with respect to each series of transition or system restoration bonds, as applicable,
will be periodically subject to adjustment based on tariff adjustments for any overcollections
or undercollections of transition charges or system restoration charges, as applicable. The equity return amounts reflected in the table are
reported in the financial statements of CenterPoint Energy and CenterPoint Energy Houston Electric as
revenues from electric transmission and distribution utility. TBC II
TBC III
TBC IV
SRBC
Total
2005
213,804
$
-
$
-
$
-
$
213,804
$
2006
6,644,004
-
-
-
6,644,004
2007
7,140,194
-
-
-
7,140,194
2008
6,673,765
4,743,048
-
-
11,416,813
2009
7,279,677
6,074,697
-
95,841
13,450,215
2010
9,071,326
5,745,580
-
2,657,384
17,474,291
2011
9,902,590
6,994,650
-
2,840,737
19,737,978
2012
9,717,059
6,837,290
27,873,514
2,473,992
46,901,855
2013
10,383,183
7,251,470
24,082,419
2,235,567
43,952,640
2014
11,442,612
8,699,455
42,944,063
3,680,587
66,766,717
2015
12,386,321
11,321,735
18,385,219
1,847,199
43,940,475
2016
11,998,830
8,301,168
29,248,671
2,795,079
52,343,747
2017
12,939,614
8,587,569
29,899,025
2,944,601
54,370,809
2018
13,946,918
9,293,326
30,817,623
3,115,549
57,173,417
2019
7,910,151
9,643,393
31,870,399
3,311,435
52,735,378
2020
-
842,583
32,937,717
3,506,718
37,287,017
2021
-
-
34,186,583
3,705,250
37,891,833
2022
-
-
35,552,782
2,244,613
37,797,395
2023
-
-
36,978,374
36,978,374
2024
-
-
30,008,722
30,008,722
137,650,048
$
94,335,964
$
404,785,110
$
37,454,553
$
674,225,675
$
As of December 31, 2014
The table provides
1)
the pre-tax equity return recognized by
CenterPoint
Energy, Inc. (CenterPoint
Energy)
during each of the years 2005 through 2014
related to CenterPoint
Energy Houston Electric,
LLC’s (CEHE) recovery of certain qualified costs
or storm restoration costs, as applicable,
pursuant to the past issuance of transition
bonds by CenterPoint
Energy Transition Bond
Company II, LLC (Transition BondCo
II) and
CenterPoint
Energy Transition Bond Company
III, LLC (Transition BondCo
III) or CenterPoint
Energy Transition Bond Company IV, LLC
(Transition BondCo
IV) or system restoration
bonds by CenterPoint
Energy Restoration Bond
Company, LLC (System Restoration BondCo), as
applicable and
2)
the estimated pre-tax equity return currently
expected to be recognized in each of the years
2015 through 2024 related to CEHE’s recovery
of certain qualified costs or storm restoration
costs, as applicable, pursuant to the past
issuance of transition bonds by Transition
BondCo
II, Transition BondCo
III or Transition
BondCo
IV or system restoration bonds by
System Restoration BondCo, as applicable. |