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): August 2, 2022
CENTERPOINT ENERGY, INC.
(Exact name of registrant as specified in its charter)
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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):
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2).
Emerging Growth Company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Item 2.02. Results of Operations and Financial Conditions.
On August 2, 2022, CenterPoint Energy, Inc. (“CenterPoint Energy”) reported second quarter 2022 earnings. For additional information regarding CenterPoint Energy’s second quarter 2022 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 second quarter 2022 earnings on August 2, 2022. Information about the call can be found in the Press Release furnished herewith as Exhibit 99.1. For additional information regarding CenterPoint Energy’s second quarter 2022 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 therein as being incorporated therein by reference.
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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: August 2, 2022 | By: | /s/ Stacey L. Peterson | ||||||
| Stacey L. Peterson | ||||||||
| Senior Vice President and Chief Accounting Officer | ||||||||
1 CenterPoint Energy reports strong second quarter results and raises full year earnings guidance • Reported Q2 2022 earnings of $0.28 and $0.31 per diluted share on a GAAP and non-GAAP basis, respectively • Full year 2022 non-GAAP EPS guidance increased to $1.37-$1.39, representing an increase of 9% at the midpoint compared to full year 2021 • From this higher $1.37-$1.39 guidance, CNP is reaffirming industry leading non-GAAP EPS growth of 8% annually for 2023 and 2024 and mid to high-end of the 6-8% annually range from 2025 through 2030 • Capital spending on track for year with ~$2 billion invested as of the end of Q2 for the benefit of customers • Continued 30-year trend of at least 2% average annual customer growth in Houston area supporting customer affordability Houston – August 2, 2022 - CenterPoint Energy, Inc. (NYSE: CNP) or “CenterPoint” today reported income available to common shareholders of $179 million, or $0.28 per diluted share on a GAAP basis, for the second quarter of 2022 compared to $0.37 of diluted earnings per share, including $0.09 of midstream for the second quarter of 2021. On a non-GAAP basis, EPS for the second quarter was $0.31, an 11% increase to the comparable quarter in 2021. The positive variance was primarily driven by favorable weather, usage and continued organic growth across the Houston Electric service territory, which represented an increase of approximately $0.03 per share over second quarter of 2021. “The full year 2022 guidance raise is driven by the increased confidence around our business performance, primarily driven by the performance of our Houston Electric business. This is the fifth time we have increased our guidance under this management team. We are now on track to meet $1.37-$1.39 non-GAAP EPS guidance for the full year 2022, a 9% increase over 2021, setting a new and higher baseline for future earnings growth,” said Dave Lesar, President and Chief Executive Officer of CenterPoint. “We are in year two of our ten-year, $40 billion-plus capital plan and have invested nearly 50% of our 2022 investment plan as of the second quarter. We expect to be in a position to update our investment plan on our third quarter earnings call, focused on incremental customer driven capital opportunities to continue our investment in the For more information contact Media: Communications Media.Relations@CenterPointEnergy.com Investors: Jackie Richert / Ben Vallejo Phone 713.207.6500
2 resiliency, safety, and growth across our system. We are committed to executing this plan with a continued focus on customer affordability.” continued Lesar. Lesar added. “We remain steadfast on delivering on our premium value proposition quarter after quarter, underpinned by our pure play regulated utility model, to the benefit of our customers, investors and other stakeholders.” Earnings Outlook Given the merger between Enable and Energy Transfer and CenterPoint’s divestiture of its remaining midstream investments during 2022, CenterPoint will be presenting a consolidated non-GAAP EPS guidance range for 2022, which is the comparable measure to non-GAAP Utility EPS reported in 2021. In addition to presenting its financial results in accordance with GAAP, including presentation of income (loss) available to common shareholders and diluted earnings (loss) per share, CenterPoint provides guidance based on non-GAAP income and non-GAAP diluted earnings per share. 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. Management evaluates CenterPoint’s financial performance in part based on non-GAAP income and non-GAAP earnings per share. Management believes that presenting these non-GAAP financial measures enhances an investor’s understanding of CenterPoint’s overall financial performance by providing them with an additional meaningful and relevant comparison of current and anticipated future results across periods. The adjustments made in these non-GAAP financial measures exclude items that management believes do not most accurately reflect the company’s fundamental business performance. These excluded items are reflected in the reconciliation tables of this news release, where applicable. CenterPoint’s non-GAAP income and non-GAAP diluted earnings per share measures should be considered as a supplement to, and not as a substitute for, or superior to, income available to common shareholders and diluted earnings per share, which respectively are the most directly comparable GAAP financial measures. These non-GAAP financial measures also may be different than non-GAAP financial measures used by other companies. 2021 non-GAAP Utility EPS “Utility EPS” (a non-GAAP financial measure) included net income from the company’s Electric and Natural Gas segments, as well as after-tax Corporate and Other operating income and an allocation of corporate overhead based upon Electric’s and Natural Gas’s relative earnings contribution. Corporate overhead consisted primarily of interest expense, preferred stock dividend requirements, and other items directly attributable to the parent along with the associated income taxes. • 2021 Utility EPS excluded: ◦ Earnings or losses from the change in value of the CenterPoint 2.0% Zero-Premium Exchangeable Subordinated Notes due 2029 (“ZENS”) and related securities ◦ Earnings and losses associated with the ownership and disposal of midstream common and preferred units (including amounts reported in discontinued operations), net gain associated with the consummation of the merger between Enable Midstream Partners, LP and Energy Transfer LP, a corresponding amount of debt related to midstream common and preferred units, and an allocation of associated corporate overhead
3 ◦ Cost associated with the early extinguishment of debt ◦ Impacts associated with Arkansas and Oklahoma gas LDC sales ◦ Certain impacts associated with other mergers and divestitures 2022 non-GAAP EPS guidance range Beginning in 2022, CenterPoint no longer separates utility and midstream operations and will report on a consolidated non-GAAP EPS basis. • 2022 non-GAAP EPS guidance excludes: ◦ Earnings or losses from the change in value of ZENS and related securities ◦ Gain and impact, including related expenses, associated with mergers and divestitures, primarily the Arkansas and Oklahoma gas LDC sales ◦ Income and expense related to ownership and disposal of Energy Transfer common and Series G preferred units, and a corresponding amount of debt related to the units In providing 2022 non-GAAP EPS guidance, CenterPoint does not consider the items noted above and other potential impacts such as changes in accounting standards, impairments, or other unusual items, which could have a material impact on GAAP reported results for the applicable guidance period. The 2022 non-GAAP EPS guidance range also considers assumptions for certain significant variables that may impact earnings, such as customer growth and usage including normal weather, throughput, recovery of capital invested, effective tax rates, financing activities and related interest rates, and regulatory and judicial proceedings. To the extent actual results deviate from these assumptions, the 2022 non-GAAP EPS guidance range may not be met, or the projected annual non-GAAP EPS growth rate may change. CenterPoint is unable to present a quantitative reconciliation of forward-looking non- GAAP diluted earnings per share because changes in the value of ZENS and related securities, future impairments, and other unusual items are not estimable and are difficult to predict due to various factors outside of management’s control.
4 Reconciliation of Consolidated income (loss) available to common shareholders and diluted earnings (loss) per share (GAAP) to non-GAAP income and non-GAAP diluted earnings per share Quarter Ended June 30, 2022 Dollars in millions Diluted EPS (1) Consolidated income (loss) available to common shareholders and diluted EPS $ 179 $ 0.28 ZENS-related mark-to-market (gains) losses: Equity securities (net of taxes of $22) (2)(3) 49 0.08 Indexed debt securities (net of taxes of $22) (2) (52) (0.08) Midstream-related earnings (net of taxes of $10) (2)(4) (1) - Impacts associated with gas LDC sales (net of taxes of $112) (2) 19 0.03 Consolidated Income on a non-GAAP basis $ 194 $ 0.31 1) Quarterly diluted EPS on both a GAAP and non-GAAP basis are based on the weighted average number of shares of common stock outstanding during the quarter, and the sum of the quarters may not equal year-to-date diluted EPS 2) Taxes are computed based on the impact removing such item would have on tax expense. Taxes related to the gas LDC sales, and the midstream-related earnings are booked proportionately by applying the projected annual effective tax rate percentage to income earned each quarter in accordance with GAAP. Additional tax expense related primarily to the write- off of non-deductible goodwill will be reflected in tax expense over the remainder of 2022 and excluded from non-GAAP EPS 3) Comprised of common stock of AT&T Inc., Charter Communications, Inc. and Warner Brothers Discovery, Inc. 4) Includes earnings and expenses related to ownership and disposal of Energy Transfer units, a corresponding amount of debt related to the units and an allocation of associated corporate overhead.
5 Reconciliation of Consolidated income (loss) available to common shareholders and diluted earnings (loss) per share (GAAP) to non-GAAP income and non-GAAP diluted earnings per share Quarter ended June 30, 2021 Utility Operations Midstream Investments Corporate and Other (4) Consolidated Dollars in millions Diluted EPS (1) Dollars in millions Diluted EPS (1) Dollars in millions Diluted EPS (1) Dollars in millions Diluted EPS (1) Consolidated income (loss) available to common shareholders and diluted EPS (1) $ 199 $ 0.33 $ 51 $ 0.09 $ (29) $ (0.05) $ 221 $ 0.37 ZENS-related mark-to-market (gains) losses: Marketable securities (net of taxes of $15) (2)(3) — — — — (60) (0.10) (60) (0.10) Indexed debt securities (net of taxes of $15) (3) — — — — 62 0.10 62 0.10 Impacts associated with the Vectren merger (net of taxes of $0)(2) 2 0.01 — — — — 2 0.01 Impacts associated with gas LDC sales(2) (11) (0.02) — — (6) (0.01) (17) (0.03) Cost associated with the early extinguishment of debt (net of taxes of $1)(2) — — — — 6 0.01 6 0.01 Corporate and Other Allocation (25) (0.04) (2) (0.01) 30 0.05 — — Consolidated on a non-GAAP basis $ 165 $ 0.28 $ 49 $ 0.08 $ — $ — $ 214 $ 0.36 (1) Quarterly diluted EPS on both a GAAP and non-GAAP basis are based on the weighted average number of shares of common stock outstanding during the quarter, and the sum of the quarters may not equal year-to-date diluted EPS. EPS figures for Utility Operations, Corporate and Other and Discontinued Operations are non-GAAP financial measures (2) Taxes are computed based on the impact removing such item would have on tax expense (3) Comprised of common stock of AT&T Inc. and Charter Communications (4) Corporate and Other, plus income allocated to preferred shareholders.
6 Filing of Form 10-Q for CenterPoint Energy, Inc. Today, CenterPoint Energy, Inc. filed with the Securities and Exchange Commission (SEC) its Quarterly Report on Form 10-Q for the quarter ended June 30, 2022. A copy of that report is available on the company’s website, under the Investors section. Investors and others should note that we may announce material information using SEC filings, press releases, public conference calls, webcasts, and the Investor Relations 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. Webcast of Earnings Conference Call CenterPoint’s management will host an earnings conference call on August 2, 2022, at 7:00 a.m. Central time / 8:00 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. About CenterPoint Energy, Inc. As the only investor owned electric and gas utility based in Texas, CenterPoint Energy, Inc. (NYSE: CNP) 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 June 30, 2022, the company owned approximately $35 billion in assets. With approximately 8,900 employees, CenterPoint Energy and its predecessor companies have been in business for more than 150 years. For more information, visit CenterPointEnergy.com. Forward-looking Statements This news release includes, and the earnings conference call will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this news release, the words "anticipate," "believe," "continue," "could," "estimate," "expect," "forecast," "goal," "intend," "may," "objective," "plan," "potential," "predict," "projection," "should," "target," "will" or other similar words are intended to identify forward-looking statements. 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. Examples of forward-looking statements in this news release or on the earnings conference call include statements regarding capital investments (including with respect to expected updates to our 10-year capital plan, renewables projects, mobile generation spend and the City of Houston’s Master Energy Plan and Resilient Now), the impacts of the February 2021 winter storm event on our business and service territories, the recovery and timing of recovery of associated gas costs and related litigation, future earnings and guidance, including long-term growth rate, operations and maintenance expense reductions, financing plans (including the timing of any future equity issuances, securitization, credit metrics and parent level debt), the impact of disruptions to the global supply chain on our business, including our generation transition plan, ZENS and impacts of the maturity of ZENS, tax planning opportunities (such as any potential use of the repairs expense deduction), future financial performance and results of operations, including with respect to regulatory actions and recoverability of capital investments, customer rate affordability, value creation, opportunities and expectations, ESG strategy, including transition to Net Zero, and any other statements that are not historical facts are forward-looking statements. Each forward-looking statement contained in this news release or discussed on the earnings conference call speaks only as of the date of this release or the earnings conference call. Important factors that could cause actual results to differ materially from those indicated by the provided forward-looking information include, but are not limited to, risks and uncertainties relating to: (1) CenterPoint’s business strategies and strategic initiatives, restructurings, joint ventures and acquisitions or dispositions of assets or businesses, including the completed sale of our Natural Gas businesses in Arkansas and Oklahoma, the exit from midstream and the internal restructuring of certain subsidiaries, which we cannot assure you will have the anticipated benefits to us; (2) industrial, commercial and residential growth in CenterPoint’s service territories and changes in market demand; (3) CenterPoint’s ability to fund and invest planned
7 capital, and the timely recovery of its investments; (4) financial market and general economic conditions, including access to debt and equity capital and the effect on sales, prices and costs; (5) continued disruptions to the global supply chain and increases in commodity prices; (6) actions by credit rating agencies, including any potential downgrades to credit ratings; (7) the timing and impact of regulatory proceedings and actions and legal proceedings, including those related to Houston Electric’s mobile generation and the February 2021 winter storm event; (8) legislative decisions, including tax and developments related to the environment such as global climate change, air emissions, carbon, waste water discharges and the handling of coal combustion residuals, among others, and CenterPoint’s Net Zero and carbon emissions reduction goals; (9) the impact of the COVID-19 pandemic; (10) the recording of impairment charges; (11) weather variations and CenterPoint’s ability to mitigate weather impacts, including impacts from the February 2021 winter storm event; (12) changes in business plans; (13) CenterPoint’s ability to execute on its initiatives, targets and goals, including its Net Zero and carbon emissions reduction goals and operations and maintenance goals; and (14) other factors discussed CenterPoint’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 and CenterPoint’s Quarterly Reports on Form 10-Q for the quarters ended March 31, 2022 and June 30, 2022, including in the “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Information” sections of such reports, and other reports CenterPoint or its subsidiaries may file from time to time with the Securities and Exchange Commission.
Establishing a path towards PREMIUM T h r o u g h S u s t a i n a b l e G r o w t h … SECOND QUARTER 2022 INVESTOR UPDATE AUGUST 2, 2022
Cautionary Statement and Other Disclaimers 2 This presentation and the oral statements made in connection herewith contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact included in this presentation and the oral statements made in connection herewith are forward-looking statements made in good faith by CenterPoint Energy, Inc. (“CenterPoint Energy” or the “Company”) and are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995, including statements concerning CenterPoint Energy’s expectations, beliefs, plans, objectives, goals, strategies, future operations, events, financial position, earnings and guidance, growth, impact of COVID- 19, costs, prospects, capital investments or performance or underlying assumptions and other statements that are not historical facts. You should not place undue reliance on forward-looking 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,” “target,” “will,” or other similar words. The absence of these words, however, does not mean that the statements are not forward-looking. Examples of forward-looking statements in this presentation and the oral statements made in connection herewith include statements about capital investments (including with respect to expected updates to our 10-year capital plan, renewables projects, mobile generation spend and the City of Houston’s Master Energy Plan and Resilient Now), the impacts of the February 2021 winter storm event on our business and service territories and the recovery and timing of recovery of associated gas costs, future earnings and guidance, including long-term growth rate, operations and maintenance expense reductions, financing plans (including the timing of any future equity issuances, credit metrics and parent level debt), the impact of disruptions to the global supply chain on our business, including our generation transition plan, the Company’s 2.0% Zero-Premium Exchangeable Subordinated Notes due 2029 (“ZENS”) and impacts of the maturity of ZENS, tax planning opportunities (such as any potential use of the repairs expense deduction), future financial performance and results of operations, including with respect to regulatory actions and recoverability of capital investments, customer rate affordability, value creation, opportunities and expectations, and ESG strategy, including transition to Net Zero. 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, risks and uncertainties relating to: (1) CenterPoint Energy’s business strategies and strategic initiatives, restructurings, joint ventures and acquisitions or dispositions of assets or businesses, including the completed sale of our Natural Gas businesses in Arkansas and Oklahoma, the exit from midstream, and the internal restructuring of certain subsidiaries which we cannot assure you will have the anticipated benefits to us; (2) industrial, commercial and residential growth in CenterPoint Energy’s service territories and changes in market demand; (3) CenterPoint Energy’s ability to fund and invest planned capital, and the timely recovery of its investments; (4) financial market and general economic conditions, including access to debt and equity capital and the effect on sales, prices and costs; (5) continued disruptions to the global supply chain and increases in commodity prices; (6) actions by credit rating agencies, including any potential downgrades to credit ratings; (7) the timing and impact of regulatory proceedings and actions and legal proceedings, including those related to Houston Electric’s mobile generation; (8) legislative decisions, including tax and developments related to the environment such as global climate change, air emissions, carbon, waste water discharges and the handling of coal combustion residuals, among others, and CenterPoint Energy’s Net Zero and carbon emissions reduction goals; (9) the impact of the COVID-19 pandemic; (10) the recording of impairment charges; (11) weather variations and CenterPoint Energy’s ability to mitigate weather impacts, including impacts from the February 2021 winter storm event; (12) changes in business plans; (13) CenterPoint Energy’s ability to execute on its initiatives, targets and goals, including its Net Zero and carbon emissions reduction goals and operations and maintenance goals; and (14) other factors discussed CenterPoint Energy’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 and CenterPoint Energy’s Quarterly Reports on Form 10-Q for the quarters ended March 31, 2022 and June 30, 2022, including under “Risk Factors,” “Cautionary Statements Regarding Forward-Looking Information” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Certain Factors Affecting Future Earnings” in such reports and in other filings with the Securities and Exchange Commission (“SEC”) by the Company, which can be found at www.centerpointenergy.com on the Investor Relations page or on the SEC website at www.sec.gov. This presentation contains time sensitive information that is accurate as of the date hereof (unless otherwise specified as accurate as of another date). Some of the information in this presentation is 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 Investor Relations 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), including presentation of income (loss) available to common shareholders and diluted earnings (loss) per share, the Company also provides guidance based on non-GAAP income and non-GAAP diluted earnings per share. 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. Please refer to the Appendix for detailed discussion of the use of non-GAAP financial measures presented herein.
Achieved Premium Value Proposition: Tracking Delivery Raising 2022 full-year guidance to $1.37-$1.39 non-GAAP EPS – 9% growth over 2021 at the midpoint; 5th raise under this management team Executing our 5-year capital plan of $19.3B (2) , and executing 10-year Capital Plan of $40B+ (2) , update expected to be provided on Q3 earnings call Now a pure-play regulated utility with a consistent track record of delivery (5) Maintaining balance sheet health; long term FFO/Debt (6) target of 14%-15% through 2030 Keeping rates affordable; maintained O&M discipline (7) , securitization rolling off or extending cost recovery (8) , and customer growth (9) Recycling capital utilizing >$3B in proceeds (3) ; No external equity issuance planned through 2030 (4) Note: Refer to slide 2 for information on forward-looking statements and slide 21 for information on non-GAAP EPS assumptions, non-GAAP measures and for the Net Zero disclaimer. (1) Refers to non-GAAP EPS annual growth rate for 2022A – 2030E (2) Refers to 5-year capital plan from 2021A to 2025E and 10-year capital plan from 2021A-2030E (3) Refers to proceeds received from recent transactions, anticipated coal asset securitization proceeds, and cash savings from repairs tax deduction (4) Not including small issuance through employee incentive plan and employee savings plan (5) Over 95% of consolidated earnings are from regulated utility earnings 3 Sustainable Growth for Shareholders 9 quarters of meeting/exceeding expectations In Year 2 of 10-yr plan No issuance since May 2020 (4) On track In Year 2 of 10-yr plan On track 10-Year Plan Deliverables Progress ✓ ✓ ✓ ✓ ✓ ✓ ✓ Sustainable Positive Impact on our Environment Sustainable, Resilient, and Affordable Service for Customers Focused on achieving Net Zero Scope 1 emissions across all jurisdictions by 2035 goal; nearly 15 years ahead of peer average (10) CNP Value Proposition (6) Consistent with Moody’s methodology; FFO is a non-GAAP measure (7) O&M includes Electric and Natural Gas business, excludes utility costs to achieve, severance costs and amounts with revenue offsets. (8) Securitization includes CEHE bonds ending by 2024 and proposed SIGECO bonds (9) Internal projection through 2030 (10) Peer group includes operators owning large scale generation, including CMS, AEE, D, DTE, DUK, LNT, PPL, SO, WEC, XEL as of Analyst Day 2021 Targeting industry-leading growth of 8% non-GAAP EPS in 2023 and 2024 and mid to high-end of 6%-8% annually through 2030 (1) On track✓
4 Pure-Play Regulated Utility(5) Over 95% of consolidated earnings are from regulated utility operations (5) with a projected rate base composition that is ~62% electric. Execution of Generation Transition Plan Filed for securitization proceeds of $360M related to AB Brown coal plant in May; received approval for 460MW gas CT in June; received approval of 335MWs of solar PPAs Successful Execution of Capital Plan – Currently in Year 2 of Plan (2) 5-year $19.3B and 10-year $40B+ plan; Customers continue to identify incremental needs above current plan; Currently developing Houston regional master energy plan with incremental capital expected to be announced on Q3 earnings call Note: Refer to slide 2 for information on forward-looking statements and slide 21 for information on non-GAAP EPS assumptions and non-GAAP measures. CT – Combustion Turbine; PPA – Power Purchase Agreement (1) Refer to slide 16 and slide 18 for reconciliation of non-GAAP measures to GAAP measures. (2) Refers to 5-year capital plan from 2021A to 2025E and 10-year capital plan from 2021A-2030E (3) Internal projection through 2030 (4) Inclusive of Electric and Natural Gas business. Excluding utility costs to achieve, severance costs and amounts with revenue offsets. (5) Refers to percent of earnings as of June 30, 2022, and the projected year end 2022 rate base ….EXTENDING TRACK RECORD OF EXECUTION Continued Focus on Customer Affordability Next CEHE securitization rolls off bill in ’24 (~5% of current average residential customer bill) creates incremental bill headroom for our customers; 1% - 2% annual organic growth (3) ; 1% - 2% annual average O&M savings (4) Constructive Regulatory Environment Received financing order for winter storm related gas cost securitization in TX; filed securitization in Indiana (first of its kind in the state); no other rate cases anticipated until late 2023 Strong Second Quarter 2022 Results; Increasing 2022 Guidance Delivered non-GAAP EPS (1) of $0.31 for Q2; raised full-year guidance range of $1.36 - $1.38 to $1.37 - $1.39 non-GAAP EPS. Reiterate 8% annual non-GAAP EPS growth for 2023 and 2024 and mid to high-end of 6-8% annually through 2030 Takeaways...
$43 $48(3) 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022E Average Monthly CEHE Charges (per 1,000 kWh) Customer Affordability – Houston Electric 5 Rates (Based on new capital plan) Customer Growth Structural Headroom O&M Discipline Effective Rates Future Bill Mitigants 1-2% annual customer growth EV-driven load growth CEHE’s Securitization bonds ending (1) ~5% reduction of vol. charge (2024) 1-2% O&M average reduction (2) per year ….EXECUTING CAPITAL PLAN WHILE KEEPING RATES AFFORDABLE ~1% average annual increase for Houston Electric charges on customer bills over the last 10 years ~2.6% average annual inflation rate for that same period Note: Refer to slide 2 for information on forward-looking statements. (1) Refers to Houston Electric’s securitization bonds. One tranche of storm restoration bonds and one tranche of transitions bonds remain, maturing in 2022 and 2024, respectively (2) Projections based on internal forecast and are based on annual targets across all business segments. Excluding utility costs to achieve, severance costs and amounts with revenue offsets (3) Based on a full year 2022 estimated and reflects: (a) 3 years of investment in distribution (DCRF) going into rates in Sept, (b) Transmission cost recovery factor, and (c) the removal of certain bill credits / refunds (Aug)
Utility $0.28 Consolidated $0.31 $0.03 $0.02 $0.02 $0.00 Midstream (2) $0.08 Q2 2021 Non-GAAP EPS Q2 2022 Non-GAAP EPS Q2 2022 v Q2 2021 Non-GAAP EPS(1) Primary Drivers Note: Refer to slide 2 for information on forward-looking statements and slide 21 for information on non-GAAP Utility EPS, non-GAAP EPS assumptions and non-GAAP measures (1) Refer to slide 16 and slide 18 for reconciliation of non-GAAP measures to GAAP measures (2) Refer to slide 18 of the non-GAAP to GAAP reconciliation tables for Midstream related earnings which includes the effect of share dilution and associated allocation of Corporate & Other based upon relative earnings contribution. Reported under Discontinued Operations (3) Primarily due to interest expenses previously allocated to midstream in 2Q 2021 (4) One time LA NOL benefit (-$0.03) in 2021 partially offset by net deferred tax benefit identified during the VUHI restructuring (+$0.02) 6 Growth and Rate Recovery Weather / Usage$0.36 Other Ongoing Cost Management Electric $0.01 Growth $0.03 Rate recovery $0.01 D&A Natural Gas $0.01 Rate recovery $0.01 D&A $0.01 Other taxes Electric $0.04 Weather and Usage Natural Gas $0.01 Weather and Usage Electric $0.005 Interest Natural Gas $0.005 Interest Corporate $0.01 Interest Expense (3) $0.01 Misc. revenue $0.01 Income taxes (4)
Capital Expenditures by Segment…. FY 1Q 2Q FY 5-YR 10-YR 2021 2022 2022 2022E (3) Plan Plan Electric (4) ~$2.2B ~$0.7B ~$0.6B ~$2.7B $11.5B $23B+ Natural Gas ~$1.4B ~$0.3B ~$0.4B ~$1.6B $7.7B $16B+ Corporate and other ~$40M ~$2M ~$1M ~$10M $0.1B $0.2B Total Capital Expenditures (4) ~$3.6B ~$1.0B ~$1.0B ~$4.3B ~$19.3B $40B+ 7 Note: Refer to slide 2 for information on forward-looking statements (1) Refers to capital plan from 2021A to 2025E (2) Refers to capital plan from 2021A to 2030E (3) Represents 2022 capital estimated as of 06/30/2022 (4) Includes incremental and accelerated investments in 2021 and 2022 related to capital leases for mobile generation units above 2021 Analyst Day estimates and incremental CapEx in 2023 to offset the accelerated investments related to mobile generation. Current 5-Yr Plan (1) 10-Yr Plan (2) Incremental Capital ▪ Regional master energy plan including the “Resilient Now” collaboration with City of Houston could lead to further investments ▪ Plan to provide incremental updates on 3Q 2022 earnings call ▪ ~$1B of additional reserve capital ….EXECUTING YEAR 2 OF PLAN WITH POTENTIAL INCREMENTAL UPSIDE
Rate Case Update ▪ Minnesota Rate Case Settlement: ▪ $48.5M Revenue increase ▪ 9.39% ROE ▪ Subject to MPUC review; Order expected by end of 2022 ▪ $42M Interim rates went into effect 1/1/2022 ▪ Texas DCRF Settlement: ✓ Filed in April with ~$146M Net Revenue Requirement ✓ ~$78M traditional DCRF settlement agreed in July (excluding mobile generation) ▪ Filed amended DCRF for mobile generation only on July 1 Indiana IRP Update ▪ Electric CPCNs: ✓ 400 MW Solar: Approved in October 2021 ▪ BTA downsizing from 300 MW to 200 MW ▪ PPA remains at 100 MW ✓ 130 MW Crosstrack Solar: Filed July 2021 ✓ 460 MW Gas CT: Approved (1) ✓ 335 MW Solar PPAs: Approved in April (2) ▪ Next IRP filing – target 2023 Securitization and other Updates ▪ SIGECO anticipates costs to be securitized (related to coal facility retirements) ✓ Filed securitization application for $359M in May ▪ IURC currently reviewing and if approved, expect financing order either late 2022 or early 2023 ▪ Bonds anticipated to be issued Q1 2023 ▪ TX $1.1B to be securitized (balance related to incremental gas costs) ✓ Financing order approved ▪ Securitization expected in coming months 2022 ▪ MN $324M incremental gas costs to be recovered (3) ✓ Recovery over 63 months, started September 2021 ▪ Ongoing prudence case for all MN gas utilities ▪ ALJ order received; MPUC order expected Q3 2022 ….CONSTRUCTIVE ACROSS OUR FOOTPRINT Note: Refer to slide 2 for information on forward-looking statements. ALJ – Administrative Law Judge; BTA – Build-Transfer Agreement; CPCN – Certificate of Public Convenience and Necessity; CT – Combustion Turbine; DCRF – Distribution Cost Recovery Factor; IRP – Integrated Resource Plan; IURC – Indiana Utility Regulatory Commission; MPUC – Minnesota Public Utility Commission; PPA – Power Purchase Agreement; TPFA – Texas Public Finance Authority (1) A petition for rehearing and reconsideration has been filed with the IURC and notices of appeal of the petition have been filed with the Indiana Court of Appeals by certain third parties (2) See slide 15 for additional information regarding Solar PPAs. (3) $324M is remaining Minnesota balance as of 6/30/2022. Full amount of $409M is subject to ongoing prudence review. Key Regulatory Updates…. 8
✓ VUHI restructuring, combined with recent strategic proceeds, aligns with CNP goal of parent-to-total debt target of ~20% ✓ Greater scale and credit profile of CERC should benefit customers through lower future financing costs over the long term ✓ Paid ~$700M of parent level debt now financed at CERC (more efficient funding) ▪ Remaining balance of ~$640M expected to be repaid when SIGECO finances through first mortgage bonds ✓ VUHI restructuring is complete ✓ $302M of VUHI notes exchanged for CERC notes ✓ Restructuring executed on June 30 Next steps: – Issue new SIGECO first mortgage bonds to recapitalize and reduce intercompany borrowings between VUHI and CNP parent VUHI Restructuring Update…. Four years in the making …ALIGNED ORGANIZATIONAL STRUCTURE WITH MANAGEMENT AND FINANCIAL REPORTING Houston Electric VUH SIGECO IGC VEDO Simplified reporting structure Utility Holding CERC (1) 9 Note: Refer to slide 2 for information on forward-looking statements. (1) CERC also directly owns Texas Gas, Minnesota Gas, Mississippi Gas, and Louisiana Gas LDCs
Contacts Jackie Richert Vice President Investor Relations and Treasurer Tel. (713) 207 – 9380 jackie.richert@centerpointenergy.com Ben Vallejo Director Investor Relations Tel. (713) 207 – 5461 ben.vallejo@centerpointenergy.com General Contact Tel. (713) 207 – 6500 https://investors.centerpointenergy.com/contact-us 10
Appendix 11
Regulatory Schedule Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec TX (E) IN (E) TX (G) MN (G) (Rate case) N. IN (G) OH (G) S. IN (G) LA (G) MS (G) No rate case until late ’23 / early ‘24 – Two TCOS filings, DCRF filed in April No rate case until late 2023 No rate case until late 2023 IT RT EH RB FO IT RT RB EH Phase 2 of GRC No rate case until mid - 2024 Phase 2 of GRC No rate case until post-2025 No rate case until post-2025 Intervenor Testimony Rebuttal Testimony Reply Briefs Evidentiary Hearing FO AF Final Order Amendment Filing CPCN (Posey) CPCN (CT) EH FO CPCN (Origis/den) FO Revenue Requirement ROE / Equity Ratio ’21 Rate Base (3) N/A 9.40% / 42.5% $9.0B N/A 10.40% / 43.5% $1.9B N/A 9.64% / 55.5% (1) $1.7B $48.5M (2) 9.39% / N/A (2) $1.6B N/A 9.80% / 47% $1.7B N/A N/A $1.0B N/A 9.70% / 45.7% $0.5B N/A 9.95% / 52.0% $0.3B N/A 9.81% / 50.0% $0.2B Total $17.9B Note: Refer to slide 2 for information on forward-looking statements. TCOS – Transmission cost of service adjustment; DCRF – Distribution cost recovery factor; GRC – General rate case; CPCN – Certificate of Public Convenience and Necessity 12 Limited regulatory risk in the near term No rate case until post-2025 No rate case until post-2025 CPCN (Crosstrack) EH FO early ‘23 (1) TX Gas regulatory metrics reflect jurisdictional average (2) Represent settlement metrics per the latest rate case filing (3) Represents the latest available information, may differ slightly from regulatory filings
Weather and Throughput Data Note: Data as of 6/30/2022 (1) End of period number of metered customers; Natural Gas throughput in Q2 2021 excluding Arkansas and Oklahoma was 104 Bcf, representing a 13% increase year over year. Natural gas metered customers in Q2 2021 excluding Arkansas and Oklahoma was 4,159,073, representing 1.3% growth year over year. (2) As compared normal weather for service area. Normal weather is based on past 10-year weather in service area. Electric Natural Gas 13 …CEHE incremental margin per Houston CDD - ~$70k 2Q 2022 2Q 2021 2022 vs 2021 T h ro u g h p u t (i n G W h ) Residential 10,036 8,323 21% Total 28,786 26,550 8% M e te re d c u s to m e rs (1 ) Residential 2,513,847 2,464,337 2% Total 2,837,246 2,783,856 2% W e a th e r v s N o rm a l (2 ) Cooling degree days 289 28 261 Heating degree days (19) 15 (34) Houston Cooling degree days 304 35 269 Houston Heating degree days (21) 10 (31) 2Q 2022 2Q 2021 2022 vs 2021 T h ro u g h p u t (i n B c f) Residential 28 30 (7)% Commercial and Industrial 90 88 2% Total 118 118 (1) 0% M e te re d c u s to m e rs (1 ) Residential 3,919,079 4,343,863 (10)% Commercial and Industrial 295,487 351,363 (16)% Total 4,214,566 4,695,226 (1) (10)% W e a th e r v s N o rm a l (2 ) Heating degree days 3 12 (9) Texas Heating degree days (24) 18 (42)
Divested AR/OK LDC EPS History 14 Q1 Q2 Q3 Q4 FY 2022 Impact Non-GAAP EPS Impact (0.03) 0.00 0.03 (0.02) ($0.02) • On Analyst Day, we called out $0.02 for the full year impact to earnings • Divesting these assets has no anticipated impact to our 8% non-GAAP EPS growth for 2022 Note: Refer to slide 2 for information on forward-looking statements and slide 21 for information on non-GAAP EPS assumptions and non-GAAP measures (1) Arkansas and Oklahoma contributed 9 days of earnings in the first quarter of 2022
Indiana Generation Project Updates 15 59% 3% 38% T&D Coal Gen Natural Gas Projected Composition of Rate Base Project Structure Capacity (MW) Targeted In-service Status In Execution: Gas CT Ownership 460 Q4 2024 Approved Troy Solar Ownership 50 Q1 2021 In-service Posey Solar Ownership 200 Q4 2023 Approved / Rescoped Rustic Hills Solar PPA 100 (25 yrs) Q4 2023 Approved Vermillion Solar PPA 185 (15 yrs) Q4 2023 Approved Wheatland Solar PPA 150 (20 yrs) Q4 2023 Approved Crosstrack Solar Ownership 130 Q4 2024 Pending Approval In Process: Wind Ownership ~200 Q4 2024 Commercial Negotiations 61% 1% 38% T&D Coal Gen Natural Gas 2022E 2025E …EXECUTING OUR PLAN TO PROVIDE ~1GW OF RENEWABLES BY 2024 Note: Refer to slide 2 for information on forward-looking statements. ~62% Electric ~62% Electric
Reconciliation: Income (Loss) and Diluted Earnings (Loss) per share to non-GAAP Income and non-GAAP Diluted EPS used in providing annual earnings guidance (1) Quarterly diluted EPS on both a GAAP and non-GAAP basis are based on the weighted average number of shares of common stock outstanding during the quarter, and the sum of the quarters may not equal year-to-date diluted EPS. (2) Taxes are computed based on the impact removing such item would have on tax expense. Taxes related to the gas LDC sales, and the midstream-related earnings are booked proportionately by applying the projected annual effective tax rate percentage to income earned each quarter in accordance with GAAP. Additional tax expense related primarily to the write-off of non-deductible goodwill will be reflected in tax expense over the remainder of 2022 and excluded from non-GAAP EPS. (3) Comprised of common stock of AT&T Inc., Charter Communications, Inc., and Warner Bros. Discovery, Inc. (4) Includes earnings and expenses related to ownership and disposal of Energy Transfer units, a corresponding amount of debt related to the units and an allocation of associated corporate overhead. 16 Quarter Ended June 30, 2022 Dollars in millions Diluted EPS (1) Consolidated income (loss) available to common shareholders and diluted EPS $ 179 $ 0.28 ZENS-related mark-to-market (gains) losses: Equity securities (net of taxes of $13) (2)(3) 49 0.08 Indexed debt securities (net of taxes of $14) (2) (52) (0.08) Midstream-related earnings (net of taxes of $1) (2)(4) (1) - Impacts associated with mergers and divestitures (net of taxes of $16) (2) 19 0.03 Consolidated on a non-GAAP basis $ 194 $ 0.31
Reconciliation: Income (Loss) and Diluted Earnings (Loss) per share to non-GAAP Income and non-GAAP Diluted EPS used in providing annual earnings guidance (1) Quarterly diluted EPS on both a GAAP and non-GAAP basis are based on the weighted average number of shares of common stock outstanding during the quarter, and the sum of the quarters may not equal year-to-date diluted EPS (2) Taxes are computed based on the impact removing such item would have on tax expense. Taxes related to the gas LDC sales and the midstream-related earnings are booked proportionately by applying the projected annual effective tax rate percentage to income earned each quarter in accordance with GAAP. Additional tax expense related primarily to the write-off of non-deductible goodwill will be reflected in tax expense over the remainder of 2022 and excluded from non-GAAP EPS (3) Comprised of common stock of AT&T Inc., Charter Communications, Inc., and Warner Bros. Discovery, Inc. (4) Includes earnings and expenses related to ownership and disposal of Energy Transfer units, a corresponding amount of debt related to the units and an allocation of associated corporate overhead. Includes costs associated with early extinguishment of $600 million debt at CenterPoint Energy, Inc. of approximately $35 million, net of taxes 17 Year-to-Date Ended June 30, 2022 Dollars in millions Diluted EPS (1) Consolidated income (loss) available to common shareholders and diluted EPS $ 697 $ 1.10 ZENS-related mark-to-market (gains) losses: Equity securities (net of taxes of $34) (2)(3) 130 0.21 Indexed debt securities (net of taxes of $36) (2) (135) (0.21) Midstream-related earnings (net of taxes of $13) (2)(4) (33) (0.05) Impacts associated with mergers and divestitures (net of taxes of $128) (2) (170) (0.27) Consolidated on a non-GAAP basis $ 489 $ 0.78
Reconciliation: Income (Loss) and Diluted Earnings (Loss) per share to non-GAAP Income and non-GAAP Diluted EPS used in providing annual earnings guidance (1) Quarterly diluted EPS on both a GAAP and non-GAAP basis are based on the weighted average number of shares of common stock outstanding during the quarter, and the sum of the quarters may not equal year-to-date diluted EPS. EPS figures for Utility Operations, Corporate and Other and Discontinued Operations are non-GAAP financial measures. (2) Taxes are computed based on the impact removing such item would have on tax expense (3) Comprised of common stock of AT&T Inc. and Charter Communications, Inc. (4) Corporate and Other, plus income allocated to preferred shareholders 18 Quarter Ended June 30, 2021 Utility Operations Midstream Investments (Disc. Operations) Corporate and Other (4) Consolidated Dollars in millions Diluted EPS (1) Dollars in millions Diluted EPS (1) Dollars in millions Diluted EPS (1) Dollars in millions Diluted EPS (1) Consolidated income (loss) available to common shareholders - diluted and diluted EPS $ 199 $ 0.33 $ 51 $ 0.09 $ (29) $ (0.05) $ 221 $ 0.37 ZENS-related mark-to-market (gains) losses: Equity securities (net of taxes of $15) (2)(3) — — — — (60) (0.10) (60) (0.10) Indexed debt securities (net of taxes of $15) (3) — — — — 62. 0.10. 62. 0.10. Impacts associated with gas LDC sales (2) (11) (0.02) — — (6) (0.01) (17) (0.03) Cost associated with the early extinguishment of debt (net of taxes of $1) (2) — — — — 6 0.01 6 0.01 Impacts associated with the Vectren merger (net of taxes of $0) (2) 2 0.01 — — — — 2 0.01 Corporate and Other Allocation (25) (0.04) (2) (0.01) 27 0.05 — — Consolidated on a non-GAAP basis $ 165 $ 0.28 $ 49 $ 0.08 $ — $ — $ 214 $ 0.36
Reconciliation: Income (Loss) and Diluted Earnings (Loss) per share to non-GAAP Income and non-GAAP Diluted EPS used in providing annual earnings guidance (1) Quarterly diluted EPS on both a GAAP and non-GAAP basis are based on the weighted average number of shares of common stock outstanding during the quarter, and the sum of the quarters may not equal year-to-date diluted EPS. EPS figures for Utility Operations, Corporate and Other and Discontinued Operations are non-GAAP financial measures. (2) Taxes are computed based on the impact removing such item would have on tax expense (3) Comprised of common stock of AT&T Inc. and Charter Communications, Inc. (4) Corporate and Other, plus income allocated to preferred shareholders 19 Year-to-Date Ended June 30, 2021 Utility Operations Midstream Investments (Disc. Operations) Corporate and Other (4) Consolidated Dollars in millions Diluted EPS (1) Dollars in millions Diluted EPS (1) Dollars in millions Diluted EPS (1) Dollars in millions Diluted EPS (1) Consolidated income (loss) available to common shareholders - diluted and diluted EPS $ 503 $ 0.84 $ 134 $ 0.22 $ (82) $ (0.13) $ 555 $ 0.93 ZENS-related mark-to-market (gains) losses: Equity securities (net of taxes of $11) (2)(3) — — — — (41) (0.07) (41) (0.07) Indexed debt securities (net of taxes of $10) (2) — — — — 41. 0.07. 41. 0.07. Impacts associated with gas LDC sales (2) (11) (0.02) — — (6) (0.01) (17) (0.03) Cost associated with the early extinguishment of debt (net of taxes of $7) (2) — — — — 27 0.05 27 0.05 Impacts associated with the Vectren merger (net of taxes of $1) (2) 4 0.01 — — — — 4 0.01 Corporate and Other Allocation (46) (0.07) (15) (0.02) 61 0.09 — — Consolidated on a non-GAAP basis $ 450 $ 0.76 $ 119 $ 0.20 $ — $ — $ 569 $ 0.96
Regulatory Information Information Location Electric ▪ Estimated 2021 year-end rate base by jurisdiction ▪ Authorized ROE and capital structure by jurisdiction ▪ Definition of regulatory mechanisms ▪ Projected regulatory filing schedule Regulatory Information – Electric Natural Gas ▪ Estimated 2021 year-end rate base by jurisdiction ▪ Authorized ROE and capital structure by jurisdiction ▪ Definition of regulatory mechanisms ▪ Projected regulatory filing schedule Regulatory Information – Gas Estimated amortization for pre-tax equity earnings related to Houston Electric’s securitization bonds Regulatory Information – Electric (Pg. 8) Rate changes and Interim mechanisms filed Form 10-Q – Rate Change Applications section 20
Additional information 21 Use of Non-GAAP Financial Measures In this presentation and the oral statements made in connection herewith, CenterPoint Energy presents, based on diluted earnings per share, non-GAAP income, (in 2021) non-GAAP Utility earnings per share (“Utility EPS”) and (in 2022) non-GAAP earnings per share (“non-GAAP EPS”), as well as non-GAAP long-term funds from operations (“FFO”) which are not generally accepted accounting principles (“GAAP”) financial measures. 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. 2021 Utility EPS included net income from the company’s Electric and Natural Gas segments, as well as after tax Corporate and Other operating income and an allocation of corporate overhead based upon Electric’s and Natural Gas’s relative earnings contribution. Corporate overhead consisted primarily of interest expense, preferred stock dividend requirements, and other items directly attributable to the parent along with the associated income taxes. Utility EPS excluded: (a) Earnings or losses from the change in value of the Company’s 2.0% Zero-Premium Exchangeable Subordinated Notes due 2029 (“ZENS”) and related securities, (b) Earnings and losses associated with the ownership and disposal of midstream common and preferred units (including amounts reported in discontinued operations), net gain associated with the consummation of the merger between Enable and Energy Transfer, a corresponding amount of debt related to midstream common and preferred units, and an allocation of associated corporate overhead, (c) Cost associated with the early extinguishment of debt, (d) Impacts associated with Arkansas and Oklahoma gas LDC sales and (e) Certain impacts associated with other mergers and divestitures. 2022 non-GAAP EPS guidance excludes: (a) Earnings or losses from the change in value of ZENS and related securities, (b) Gain and impact, including related expenses, associated with Arkansas and Oklahoma gas LDC sales and (c) Income and expense related to ownership and disposal of Energy Transfer common and Series G preferred units, and a corresponding amount of debt related to the units. In providing this guidance, CenterPoint Energy does not consider the items noted above and other potential impacts such as changes in accounting standards, impairments or other unusual items, which could have a material impact on GAAP reported results for the applicable guidance period. The 2022 non-GAAP EPS guidance range also considers assumptions for certain significant variables that may impact earnings, such as customer growth and usage including normal weather, throughput, recovery of capital invested, effective tax rates, financing activities and related interest rates, and regulatory and judicial proceedings. To the extent actual results deviate from these assumptions, the 2022 non-GAAP EPS guidance range may not be met or the projected annual non-GAAP EPS growth rate may change. CenterPoint Energy is unable to present a quantitative reconciliation of forward-looking non-GAAP diluted earnings per share because changes in the value of ZENS and related securities, future impairments, and other unusual items are not estimable and are difficult to predict due to various factors outside of management’s control. The appendix to this presentation contains a reconciliation of income (loss) available to common shareholders and diluted earnings (loss) per share to the basis used in providing guidance. Management evaluates the Company’s financial performance in part based on non-GAAP income, (in 2021) Utility EPS, (in 2022) non-GAAP EPS and long-term FFO. Management believes that presenting these non-GAAP financial measures 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. The adjustments made in these non-GAAP financial measures exclude items that Management believes do not most accurately reflect the Company’s fundamental business performance. These excluded items are reflected in the reconciliation tables, where applicable. CenterPoint Energy’s non-GAAP income, Utility EPS, non-GAAP EPS and long-term FFO non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, income available to common shareholders, diluted earnings per share (in the case of Utility EPS and non-GAAP EPS) and net cash provided by operating activities, which, respectively, are the most directly comparable GAAP financial measures. These non-GAAP financial measures also may be different than non-GAAP financial measures used by other companies. Net Zero Disclaimer While we believe that we have a clear path towards achieving our net zero emissions (Scope 1 and Scope 2) by 2035 goals, our analysis and path forward required us to make a number of assumptions. These goals and underlying assumptions involve risks and uncertainties and are not guarantees. Should one or more of our underlying assumptions prove incorrect, our actual results and ability to achieve net zero emissions by 2035 could differ materially from our expectations. Certain of the assumptions that could impact our ability to meet our net zero emissions goals include, but are not limited to: emission levels, service territory size and capacity needs remaining in line with Company expectations (inclusive of changes related to the sale of our Natural Gas businesses in Arkansas and Oklahoma); regulatory approval of Indiana Electric's generation transition plan; impacts of future environmental regulations or legislation; impacts of future carbon pricing regulation or legislation, including a future carbon tax; price, availability and regulation of carbon offsets; price of fuel, such as natural gas; cost of energy generation technologies, such as wind and solar, natural gas and storage solutions; adoption of alternative energy by the public, including adoption of electric vehicles; rate of technology innovation with regards to alternative energy resources; our ability to implement our modernization plans for our pipelines and facilities; the ability to complete and implement generation alternatives to Indiana Electric's coal generation and retirement dates of Indiana Electric's coal facilities by 2035; the ability to construct and/or permit new natural gas pipelines; the ability to procure resources needed to build at a reasonable cost, the lack of scarcity of resources and labor, the lack of any project cancellations, construction delays or overruns and the ability to appropriately estimate costs of new generation; impact of any supply chain disruptions; and enhancement of energy efficiencies. In addition, because Texas in an unregulated market, CenterPoint Energy’s Scope 2 estimates do not take into account Texas electric transmission and distribution assets in the line loss calculation and exclude emissions related to purchased power between 2024E-2026. CenterPoint Energy’s Scope 3 estimates are based on the total natural gas supply delivered to residential and commercial customers as reported in the U.S. Energy Information Administration (EIA) For EIA-176 reports and do not take into account the emissions and transport customers and emissions related to upstream extraction. Please also review the section entitled “Cautionary Statement and Other Disclaimers” included in this presentation