CenterPoint Energy is a holding company that conducts all of its business operations through subsidiaries, primarily Houston Electric, CERC, SIGECO, Indiana Gas and VEDO. CenterPoint Energy also owns interests in Enable. The following, along with any additional legal proceedings identified or incorporated by reference in Item 3 of this combined report on Form 10-K, summarizes the principal risk factors associated with our business.the holding company, the businesses conducted by its subsidiaries and its interests in Enable. However, additional risks and uncertainties either not presently known or not currently believed by management to be material may also adversely affect CenterPoint Energy’s businesses. For other factors that may cause actual results to differ from those indicated in any forward-looking statement or projection contained in this combined report on Form 10-K, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Certain Factors Affecting Future Earnings” in Item 7, which should be read in conjunction with the risk factors contained in this Item 1A. Carefully consider each of the risks described below, including those relating to Houston Electric and CERC, which, along with CenterPoint Energy, are collectively referred to as the Registrants. Unless the context indicates otherwise, where appropriate, information relating to a specific registrant has been segregated and labeled as such and specific references to Houston Electric and CERC in this section also pertain to CenterPoint Energy. In this combined report on Form 10-K, the terms “our,” “we” and “us” are used as abbreviated references to CenterPoint Energy, Inc. together with its subsidiaries.

CenterPoint Energy derives all of its operating income from, and holds all of its assets through, its subsidiaries, including its interests in Enable. As a mannerresult, CenterPoint Energy depends on distributions from its subsidiaries and Enable to meet its payment obligations and to pay dividends on its common and preferred stock. In general, CenterPoint Energy’s subsidiaries are separate and distinct legal entities and have no obligation to provide it with funds for its payment obligations, whether by dividends, distributions, loans or otherwise. In addition, provisions of applicable law, such as those limiting the legal sources of dividends, limit CenterPoint Energy’s subsidiaries’ and Enable’s ability to make payments or other distributions to CenterPoint Energy, and its subsidiaries or Enable could agree to contractual restrictions on their ability to make payments or other distributions. For a description of these restrictions and further information on ring-fencing measures that is adversemay adversely affect CenterPoint Energy’s ability to our interests.receive dividends from Houston Electric as well as other financial impacts, please read “—The imposition of certain

Additionally, CenterPoint Energy. Our management will make determinationsEnergy’s results of operations, future growth and earnings and dividend goals depend on the performance of its utility and non-utility (such as CES, Infrastructure Services and ESG) subsidiaries which contribute to a portion of its consolidated earnings and which may not perform at expected or forecasted levels or do not achieve the projected growth in these businesses as anticipated. As part of their non-utility businesses, CenterPoint Energy and CERC also offer home repair protection plans to natural gas customers in Texas and Louisiana (through a third-party provider) and provide home appliance maintenance and repair services to customers in Minnesota. For a discussion of risks that may impact the amount of cash distributions CenterPoint Energy receives with respect to its interests in Enable, please read “— Additional Risk Factors Affecting CenterPoint Energy’s Interests in Enable Midstream Partners, LP — CenterPoint Energy’s cash flows will be adversely impacted if it receives less cash distributions from Enable than it currently expects.”

CenterPoint Energy’s right to receive any assets of any subsidiary, and therefore the following:

As of December 31, 2016, we2019, Houston Electric had approximately $2.6$4.0 billion aggregate principal amount of general mortgage bonds outstanding under the General Mortgage, including approximately $118$68 million held in trust to secure pollution control bonds for which CenterPoint Energy is obligated. Additionally, as of December 31, 2016, we2019, Houston Electric had approximately $102 million aggregate principal amount of first mortgage bonds outstanding under the Mortgage. WeHouston Electric may issue additional general mortgage bonds on the basis of retired bonds, up to 70% of property additions or cash deposited with the trustee. Approximately $4.1As of December 31, 2019, approximately $3.7 billion of additional first mortgage

OurThe Registrants’ current credit ratings and any changes in credit ratings in 2019 and to date in 2020 are discussed in “Management’s NarrativeDiscussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Other Matters — Impact on Liquidity of a Downgrade in Credit Ratings” in Item 7 of Part II of this report. These credit ratings may not remain in effect for any given period of time and one or more of these ratings may be lowered or withdrawn entirely by a rating agency. WeThe Registrants note that these credit ratings are not recommendations to buy, sell or hold ourtheir securities. Each rating should be evaluated independently of any other rating. Any future reduction or withdrawal of one or more of ourthe Registrants’ credit ratings could have a material adverse impact on ourtheir ability to access capital on acceptable terms.

Certain of CenterPoint Energy’s credit and term loan facilities provide for a mechanism to amend such facility to reflect the establishment of an alternative reference rate upon the inability to determine the LIBOR-based Eurodollar rate or occurrence of certain events related to the phase-out of LIBOR. However, we have not yet pursued any technical amendment or other contractual alternative to address this matter and are currently evaluating the impact of the potential replacement or unavailability of the LIBOR interest rate. In addition, the overall financial markets may be disrupted as a result of the phase-out or replacement of LIBOR. Uncertainty as to the nature of such potential phase-out and alternative reference rates or disruption in the financial markets could have a material adverse effect on our parent companyfinancial condition, results of operations and cash flows.

Goodwill is recorded when the purchase price of a business exceeds the fair market value of the tangible and liquidity.separately measurable intangible net assets. Accounting principles generally accepted in the United States of America require CenterPoint Energy to test goodwill for impairment on an annual basis or when events or circumstances occur indicating that goodwill might be impaired. Long-lived assets, including intangible assets with finite useful lives, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. As a result of the Merger, CenterPoint Energy has increased the amount of goodwill and other intangible assets on its consolidated financial statements that are subject to impairment based on future adverse changes to the acquired businesses or general market conditions.

OurHouston Electric’s rates are regulated by certain municipalities and the PUCT and Indiana Electric’s rates are regulated by the IURC. Their rates are set in comprehensive base rate proceedings (i.e., general rate cases) based on an analysis of ourtheir invested capital, ourtheir expenses and other factors in a designated test year in comprehensive base rate proceedings, subject to periodic review and adjustment using mechanisms like those discussed below.year. Each of these rate proceedings is subject to third-party intervention and appeal, and the timing of a general base rate proceeding may be out of ourHouston Electric’s and Indiana Electric’s control. For Houston Electric, a general base rate proceeding is required 48 months from the date of the order setting rates in its most recent comprehensive rate proceeding, unless the PUCT issues an order extending the deadline to file that general base rate proceeding. For Indiana Electric, a general base rate proceeding is required prior to the expiration of its TDSIC plan, which expires on December 31, 2023. Houston Electric and Indiana Electric can make no assurance that their respective base rate proceedings will result in favorable adjustments to their rates, in full cost recovery or approval of other requested items, including, among other things, capital structure and ROE. Moreover, these base rate proceedings have caused in certain instances, and in the future could cause, Houston Electric and Indiana Electric to recover their investments below their requested levels, below the national average for utilities or below recently approved levels for other utilities in their respective jurisdictions.

The rates that weHouston Electric and Indiana Electric are allowed to charge may not match ourtheir costs at any given time, which isa situation referred to as “regulatory lag.”

Similarly, for Indiana Electric, the TDSIC rate mechanism allows electric utilities (that have an IURC-approved seven-year infrastructure improvement plan) to request incremental rate increases every six months to pay for the projects included in that plan, subject to IURC approval. However, the TDSIC allows the utility to recover 80% of the costs as they are incurred, with the remaining costs to be deferred as regulatory assets to be recovered in the next base rate case. TDSIC rate increases are limited to no more than 2% of the utility’s total retail revenues from the prior year. Indiana Electric recovers transmission costs through a year.FERC-approved formula rate and reflects charges and costs associated with participation in MISO through the MCRA mechanism, which is filed annually. Other non-fuel purchased power costs are recovered annually via the RCRA Mechanism. Electricity suppliers are required to submit energy efficiency plans to the IURC at least once every three years. Indiana Electric recovers program and administrative costs of these plans, including lost revenues and financial incentives, via its annual DSMA mechanism. The DSMA is subject to IURC approval.

WeHouston Electric and Indiana Electric can make no assurance that filings for such mechanisms will result in favorable adjustments to rates. Further,rates or in full cost recovery. Notwithstanding the application of the rate mechanisms discussed above, the regulatory process by which rates are determined is subject to change as a result of the legislative process or rulemaking, as the case may be, and may not always be available or result in rates that will produce recovery of ourHouston Electric’s and Indiana Electric’s costs or enable usthem to earn a reasonablean expected return. In addition, changes to the interim adjustment mechanisms could result in an increase in regulatory lag or otherwise impact ourHouston Electric’s and Indiana Electric’s ability to recover ourtheir costs in a timely manner. Additionally, inherent in the regulatory process is some level of risk that jurisdictional regulatory authorities may initiate investigations of the prudence of operating expenses incurred or capital investments made by Houston Electric or Indiana Electric and deny the full recovery of their cost of service in rates. To the extent the regulatory process does not allow usHouston Electric and Indiana Electric to make a full and timely recovery of appropriate costs, ourtheir results of operations, financial condition and cash flowflows could be materially adversely affected.

We transmitHouston Electric transmits and distributedistributes to customers of REPs electric power that the REPs obtain from power generation facilities owned by third parties. We doHouston Electric does not own or operate any power generation facilities. If power generation is disrupted or if power generation capacity is inadequate, ourHouston Electric’s sales of transmission and distribution services may be diminished or interrupted, and ourits results of operations, financial condition and cash flows could be adversely affected.

A significant portion of ourHouston Electric’s revenues is derived from rates that we collectit collects from each REP based on the amount of electricity we deliverit delivers on behalf of such REP. Thus, ourSimilarly, Indiana Electric’s revenues are derived from rates it charges its customers to provide electricity. Houston Electric’s and Indiana Electric’s revenues and results of operations are subject to seasonality, weather conditions and other changes in electricity usage, withusage. Houston Electric’s revenues are generally being higher during the warmer months. UnusuallyAs in certain past years, unusually mild weather in the warmer months could diminish ourHouston Electric’s results of operations and harm ourits financial condition. Conversely, as in certain past years, extreme warm weather conditions could increase ourHouston Electric’s results of operations in a manner that would not likely be annually recurring.

Indiana requires each electric utility to perform and submit an IRP every three years, unless extended, to the IURC that uses economic modeling to consider the costs and risks associated with available resource options to provide reliable electric service for the next 20-year period on a periodic basis. Indiana Electric’s 2016 IRP modeling projects that the lowest cost and least risk generation portfolio to serve customers over the next 20 years involves retirement of a significant portion of its current generating fleet and replacing that generation capacity with other resources. Implementation of Indiana Electric’s IRP will likely require recovery of new capital investments, as well as costs of retiring the current generation fleet, including any remaining unrecovered costs of retired assets. In February 2018, as part of its electric generation transition plan, Indiana Electric filed a petition seeking authorization from the IURC to construct a new 700-850 MW natural gas combined cycle generating facility to replace certain existing generation capacity at an approximate cost of $900 million, which included the cost of a new natural gas pipeline to serve the facility, among other things. While the IURC approved the construction of a 50 MW universal solar array and the plan to retrofit its largest, most efficient coal-fired generation unit (Culley Unit 3), the IURC denied Indiana Electric’s request to construct a 700-850 MW natural gas combined cycle generating facility. The AMS deployed throughout our service territory may experience unexpected problems withIURC urged Indiana Electric to utilize its next IRP planning cycle to evaluate the merits of a more diverse generation portfolio.

With respect to its upcoming IRP, Indiana Electric has conducted a request for proposals targeting 10 to 700 MW of capacity and unit-contingent energy and anticipates filing its 2019/2020 IRP in mid-2020. While the timely receiptIURC does not approve or reject the IRP, the process involves the issuance of accurate metering data.

Additionally, Indiana Electric’s generating facilities are subject to operational risks that could result in delayed unscheduled plant outages, unanticipated operation and maintenance expenses, increased purchase power costs and inadvertent releases of coal ash and/or inaccurate metering data that might leadother contaminants with a significant environmental impact. These operational risks can arise from circumstances such as facility shutdowns or malfunctions due to delaysequipment failure or inaccuraciesoperator error; interruption of fuel supply or increased prices of fuel as contracts expire; disruptions in the calculation and impositiondelivery of deliveryelectricity; inability to comply with regulatory or other charges,permit requirements; labor disputes; or natural disasters, all of which could haveadversely affect Indiana Electric’s business. Further, Indiana Electric relies on coal for substantially all of its generation capacity. Currently, its coal supply is purchased largely from a material adverse effect on oursingle, unrelated party and, although the coal supply is under long-term contract, the loss of this supplier or transportation interruptions could adversely affect Indiana Electric’s results of operations, financial condition and cash flows.

TheHouston Electric and Indiana Electric are members of ERCOT and MISO, respectively, which serve the electric transmission needs of their applicable regions. As a result of their respective participation in ERCOT and MISO, Houston Electric and Indiana Electric do not have operational control over their transmission facilities and are subject to certain costs for improvements to these regional electric transmission systems. In addition, the FERC has jurisdiction with respect to ensuring the reliability of electric transmission service, including transmission facilities owned by usHouston Electric and other utilities within ERCOT.ERCOT and Indiana Electric and other utilities within MISO, respectively. The FERC has designated the NERC as the ERO to promulgate standards,

OurHouston Electric’s receivables from the distribution of electricity are collected from REPs that supply the electricity we distributeHouston Electric distributes to ourtheir customers. As of December 31, 2016, we2019, Houston Electric did business with approximately 6468 REPs. Adverse economic conditions, structural problems in the market served by ERCOT or financial difficulties of one or more REPs could impair the ability of these REPs to pay for ourHouston Electric’s services or could cause them to delay such payments. We dependHouston Electric depends on these REPs to remit payments on a timely basis. Applicable regulatory provisions require that customers be shifted to another REP or a provider of last resort if a REP cannot make timely payments. Applicable PUCT regulations significantly limit the extent to which weHouston Electric can apply normal commercial terms or otherwise seek credit protection from firms desiring to provide retail electric service in ourits service territory, and weHouston Electric thus remainremains at risk for payments related to services provided prior to the shift to another REP or the provider of last resort. The PUCT revised its regulations in 2009 to (i) increase the financial qualifications required of REPs that began selling power after January 1, 2009, and (ii) authorize utilities to defer bad debts resulting from defaults by REPs for recovery in a future rate case. A significant portion of ourHouston Electric’s billed receivables from REPs are from affiliates of NRG and Vistra Energy Future Holdings. OurCorp., formerly known as TCEH Corp. Houston Electric’s aggregate billed receivables balance from REPs as of December 31, 20162019 was $193$192 million. Approximately 33%32% and 12% of this amount was owed by affiliates of NRG and Vistra Energy Future Holdings,Corp., respectively. In April 2014, Energy Future Holdings publicly disclosed that it and the substantial majority of its direct and indirect subsidiaries, excluding Oncor Electric Delivery Company LLC and its subsidiaries, filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. Any delay or default in payment by REPs could adversely affect ourHouston Electric’s cash flows, financial condition and results of operations. If a REP were unable to meet its obligations, it could consider, among various options, restructuring under the bankruptcy laws, in which event such REP might seek to avoid honoring its obligations, and claims might be made by creditors involving payments weHouston Electric had received from such REP.

Our operations and the operations of Enable are subject to stringent and complex laws and regulations pertaining to the environment. As an owner or operator of natural gas pipelines, distribution systems and storage, steam electric generating facilities

To comply with these requirements, we may need to spend substantial amounts and devote other resources from time to time to:

Failure to comply with these laws and regulations may trigger a variety of administrative, civil and criminal enforcement measures, including the assessment of monetary penalties, revocation of permits, the imposition of remedial actions, and the issuance of orders enjoining future operations. Certain environmental statutes impose strict joint and several liability for costs required to clean, restore and restoremonitor sites where hazardous substances have been stored, disposed or released. Moreover, it is not uncommon for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by the release of hazardous substances or other waste products into the environment.

The recent trend in environmental regulation has been to place more restrictions and limitations on activities that may impact the environment, and thus there can be no assurance as to the amount or timing of future expenditures for environmental compliance or remediation, and actual future expenditures may be greater than the amounts we currently anticipate.

We currently have insurance in place, such as general liability and property insurance, in place to cover certain of our facilities in amounts that we consider appropriate. Such policies are subject to certain limits and deductibles and do not include business interruption coverage. Insurance coverage may not be available in the future at current costs or on commercially reasonable terms, and the insurance proceeds received for any loss of, or any damage to, any of our facilities may not be sufficient to fully cover or restore the loss or damage without negative impact on our results of operations, financial condition and cash flows. Costs, damages and other liabilities related to recent events and incidents that affected other utilities, such as wildfires and explosions, among other things, have exceeded or could exceed such utilities’ insurance coverage. Further, as a result of these recent events and incidents, the marketplace for insurance coverage may be unavailable or limited in capacity or any such available coverage may be deemed by us to be cost prohibitive under current conditions. Any such coverage, if available, may not be eligible for recovery, whether in full or in part, by us through the rates charged by our utility businesses.

In common with other companies in ourits line of business that serve coastal regions, we doHouston Electric does not have insurance covering ourits transmission and distribution system, other than substations, because we believeHouston Electric believes it to be cost prohibitive. In the future, we may notprohibitive and believes insurance capacity to be limited. Historically, Houston Electric has been able to recover the costs incurred in restoring ourits transmission and distribution properties following hurricanes or other disasters through issuance of storm restoration bonds or a change in ourits regulated rates or otherwise, orotherwise. In the future, any such recovery may not be timely granted. Therefore, weHouston Electric may not be able to restore any loss of, or damage to, any of ourits transmission and distribution properties without negative impact on ourits results of operations, financial condition and cash flows.

These risks could result in substantial losses due to personal injury and/or by manmade events, such as cyber-attacksloss of life, severe damage to and destruction of property, plant and equipment and pollution or acts of terrorism,other environmental damage. These risks may disrupt our ability to conduct operations and control assets.

Enable is not fully insured against all risks inherent in its business. Enable currently has general liability and property insurance in place to cover certain of its facilities in amounts that Enable considers appropriate. Such policies are subject to certain limits and deductibles. Enable does not have business interruption insurance coverage for all of its operations. Insurance coverage may not be available in the future at current costs or on commercially reasonable terms, and the insurance proceeds received for any loss of, or any damage to, any of Enable’s facilities may not be sufficient to restore the loss or damage without negative impact on its results of operations financial condition and its ability to make cash flows.distributions.