UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

__________________

FORM 10-Q


(Mark One)
☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2020~~March 31, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			FOR THE TRANSITION PERIOD FROM __________________ TO __________________

Commission file number 1-31447

CenterPoint Energy, Inc.

(Exact name of registrant as specified in its charter)


Texas			74-0694415
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

1111 Louisiana	Houston	Texas	77002
(Address of Principal Executive Offices)			(Zip Code)

(713) 207-1111

Registrant's telephone number, including area code

Commission file number 1-3187

CenterPoint Energy Houston Electric, LLC

(Exact name of registrant as specified in its charter)


Texas			22-3865106
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

1111 Louisiana	Houston	Texas	77002
(Address of Principal Executive Offices)			(Zip Code)

(713) 207-1111

Registrant's telephone number, including area code

Commission file number 1-13265

CenterPoint Energy Resources Corp.

(Exact name of registrant as specified in its charter)


Delaware			76-0511406
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

1111 Louisiana	Houston	Texas	77002
(Address of Principal Executive Offices)			(Zip Code)

(713) 207-1111

Registrant's telephone number, including area code


Securities registered pursuant to Section 12(b) of the Act:
Registrant	Title of each class	Trading Symbol(s)	Name of each exchange on which registered
CenterPoint Energy, Inc.	Common Stock, $0.01 par value	CNP	The New York Stock Exchange
			Chicago Stock Exchange, Inc.
CenterPoint Energy, Inc.	Depositary Shares for 1/20 of 7.00% Series B Mandatory Convertible Preferred Stock, $0.01 par value	CNP/PB	The New York Stock Exchange
CenterPoint Energy Houston Electric, LLC	9.15% First Mortgage Bonds due 2021	n/a	The New York Stock Exchange
CenterPoint Energy Houston Electric, LLC	6.95% General Mortgage Bonds due 2033	n/a	The New York Stock Exchange
CenterPoint Energy Resources Corp.	6.625% Senior Notes due 2037	n/a	The New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

CenterPoint Energy, Inc.

Yes

CenterPoint Energy Houston Electric, LLC

Yes

CenterPoint Energy Resources Corp.

Yes

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

CenterPoint Energy, Inc.

Yes

CenterPoint Energy Houston Electric, LLC

Yes

CenterPoint Energy Resources Corp.

Yes

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

CenterPoint Energy, Inc.

☐

CenterPoint Energy Houston Electric, LLC

☐

CenterPoint Energy Resources Corp.

☐

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

CenterPoint Energy, Inc.

Yes

☐

CenterPoint Energy Houston Electric, LLC

Yes

☐

CenterPoint Energy Resources Corp.

Yes

☐

Indicate the number of shares outstanding of each of the issuers’ classes of common stock as of ~~October 23, 2020:~~April 29, 2021:


CenterPoint Energy, Inc.	~~544,821,120~~580,495,853	shares of common stock outstanding, excluding 166 shares held as treasury stock
CenterPoint Energy Houston Electric, LLC	1,000	common shares outstanding, all held by Utility Holding, LLC, a wholly-owned subsidiary of CenterPoint Energy, Inc.
CenterPoint Energy Resources Corp.	1,000	shares of common stock outstanding, all held by Utility Holding, LLC, a wholly-owned subsidiary of CenterPoint Energy, Inc.

CenterPoint Energy Houston Electric, LLC and CenterPoint Energy Resources Corp. meet the conditions set forth in General Instructions H(1)(a) and (b) of Form 10-Q and are therefore filing this form with the reduced disclosure format specified in General Instruction H(2) of Form 10-Q.

TABLE OF CONTENTS


PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	CenterPoint Energy, Inc. Financial Statements (unaudited)	1




	CenterPoint Energy Houston Electric, LLC Financial Statements (unaudited)	7




	CenterPoint Energy Resources Corp. Financial Statements (unaudited)	13





	Combined Notes to ~~Unaudited~~Interim Condensed ~~Consolidated~~ Financial Statements (unaudited)	19
	(1) Background and Basis of Presentation	19
	(2) New Accounting Pronouncements	2120
	(3) Divestitures	2120
	(4) Revenue Recognition	2622
	(5) Employee Benefit Plans	3025
	(6) Regulatory Accounting	3226
	(7) Derivative Instruments	3328
	(8) Fair Value Measurements	3530
	(9) Unconsolidated Affiliates	3831
	(10) Goodwill and Other Intangibles	4134
	(11) Indexed Debt Securities (ZENS) and Securities Related to ZENS	4335
	(12) Long-term Debt	4336
	(13) Income Taxes	4538
	(14) Commitments and Contingencies	4639
	(15) Earnings Per Share	5144
	(16) Reportable Segments	5345
	(17) Supplemental Disclosure of Cash Flow Information	5547
	(18) Related Party Transactions	5648
	(19) Equity	5749
	(20) Subsequent Events	6050
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	6251
	Recent Events	6251
	Consolidated Results of Operations	6552
	Results of Operations by Reportable Segment	6653
	Certain Factors Affecting Future Earnings	7660
	Liquidity and Capital Resources	7761
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	9372
Item 4.	Controls and Procedures	9473

PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	9473
Item 1A.	Risk Factors	9473

Item 6.	Exhibits	9774
	Signatures	~~101~~79


GLOSSARY
ACE						Affordable Clean Energy
~~ADFIT~~						~~Accumulated deferred federal income taxes~~


AMA						Asset Management Agreement
AMS						Advanced Metering System
APSC						Arkansas Public Service Commission
ARAM						Average rate assumption method
ARO						Asset retirement obligation

ARP						Alternative revenue program
ARPA						American Rescue Plan Act of 2021
ASC						Accounting Standards Codification
Asset Purchase Agreement						Asset Purchase Agreement, dated as of April 29, 2021, by and between CERC Corp. and Southern Col Midco, LLC, a Delaware limited liability company and an affiliate of Summit Utilities, Inc.
ASU						Accounting Standards Update
AT&T Common						AT&T Inc. common stock
~~Bailey to Jones Creek Project~~						A transmission project in the greater Freeport, Texas area, which includes enhancements to two existing substations and the construction of a new 345 kV double-circuit line to be located in the counties of Brazoria, Matagorda and Wharton
Bcf						Billion cubic feet
Bond Companies						~~Bond Company II,~~ Bond Company III, Bond Company IV and Restoration Bond Company, each a wholly-owned, bankruptcy remote entity formed solely for the purpose of purchasing and owning transition or system restoration property through the issuance of Securitization Bonds
~~Bond Company II~~						~~CenterPoint Energy Transition Bond Company II, LLC, a wholly-owned subsidiary of Houston Electric~~
Bond Company III						CenterPoint Energy Transition Bond Company III, LLC, a wholly-owned subsidiary of Houston Electric
Bond Company IV						CenterPoint Energy Transition Bond Company IV, LLC, a wholly-owned subsidiary of Houston Electric
BTA						Build Transfer Agreement
Capital Dynamics						Capital Dynamics, Inc.
CARES Act						Coronavirus Aid, Relief, and Economic Security Act
CCR						Coal Combustion Residuals

~~CECL~~						~~Current expected credit losses~~
CEIP						CenterPoint Energy Intrastate Pipelines, LLC, a wholly-owned subsidiary of CERC Corp.
CenterPoint Energy						CenterPoint Energy, Inc., and its subsidiaries
CERC						CERC Corp., together with its subsidiaries
CERC Corp.						CenterPoint Energy Resources Corp.
CES						CenterPoint Energy Services, Inc. (now known as Symmetry Energy Solutions, LLC), previously a wholly-owned subsidiary of CERC Corp.
Charter Common						Charter Communications, Inc. common stock
CIP						Conservation Improvement Program

CNG						Compressed Natural Gas
CNP Midstream						CenterPoint Energy Midstream, Inc., a wholly-owned subsidiary of CenterPoint Energy

CODM						Chief Operating Decision Maker, who is each Registrant’s Chief Operating Executive
Common Stock						CenterPoint Energy, Inc. common stock, par value $0.01 per share
COVID-19						Novel coronavirus disease 2019 and related global outbreak that was subsequently declared a pandemic by the World Health Organization
COVID-19 ERP						COVID-19 Electricity Relief Program
CPCN						Certificate of Public Convenience and Necessity
CPP						Clean Power Plan
CSIA						Compliance and System Improvement Adjustment
DCRF						Distribution Cost Recovery Factor
DRR						Distribution Replacement Rider
DSMA						Demand Side Management Adjustment


ECA						Environmental Cost Adjustment


GLOSSARY
~~EBITDA~~						~~Earnings before income taxes, depreciation and amortization~~
~~ECA~~						~~Environmental Cost Adjustment~~
EDIT						Excess deferred income taxes
EECR						Energy Efficiency Cost Recovery
EECRF						Energy Efficiency Cost Recovery Factor
EEFC						Energy Efficiency Funding Component
EEFR						Energy Efficiency Funding Rider
ELG						Effluent Limitation Guidelines

Elk GP Merger Sub						Elk GP Merger Sub LLC, a Delaware limited liability company and a direct wholly-owned subsidiary of Energy Transfer
Elk Merger Sub						Elk Merger Sub LLC, a Delaware limited liability company and a direct wholly-owned subsidiary of Energy Transfer
Enable						Enable Midstream Partners, LP
Enable GP						Enable GP, LLC, Enable’s general partner
Enable Merger						The proposed merger of Elk Merger Sub with and into Enable and the merger of Elk GP Merger Sub with and into Enable GP, in each case on the terms and subject to the conditions set forth in the Enable Merger Agreement, with Enable and Enable GP surviving as wholly-owned subsidiaries of Energy Transfer
Enable Merger Agreement						Agreement and Plan of Merger by and among Energy Transfer, Elk Merger Sub LLC, Elk GP Merger Sub, Enable, Enable GP and, solely for the purposes of Section 2.1(a)(i) therein, Energy Transfer GP, and solely for the purposes of Section 1.1(b)(i) therein, CenterPoint Energy
Enable Series A Preferred Units						Enable’s 10% Series A Fixed-to-Floating Non-Cumulative Redeemable Perpetual Preferred Units, representing limited partner interests in Enable
Energy Services						Offered competitive variable and fixed-priced physical natural gas supplies primarily to commercial and industrial customers and electric and natural gas utilities through CES and CEIP
Energy Services Disposal Group						Substantially all of the businesses within CenterPoint Energy’s and CERC’s Energy Services reporting unit that were sold under the Equity Purchase Agreement
Energy Transfer						Energy Transfer LP, a Delaware limited partnership
Energy Transfer GP						LE GP, LLC, a Delaware limited liability company and sole general partner of Energy Transfer
Energy Transfer Series G Preferred Units						Energy Transfer Series G Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Units
EPA						Environmental Protection Agency
Equity Purchase Agreement						Equity Purchase Agreement, dated as of February 24, 2020, by and between CERC Corp. and Symmetry Energy Solutions Acquisition, LLC (f/k/a Athena Energy Services Buyer, LLC)
ERCOT						Electric Reliability Council of Texas
ESG						Energy Systems Group, LLC, a wholly-owned subsidiary of Vectren
February 2021 Winter Storm Event						The extreme and unprecedented winter weather event in February 2021 (Winter Storm Uri) resulting in electricity generation supply shortages, including in Texas, and natural gas supply shortages and increased wholesale prices of natural gas in the United States, primarily due to prolonged freezing temperatures
FERC						Federal Energy Regulatory Commission
Fitch						Fitch Ratings, Inc.
Form 10-Q						Quarterly Report on Form 10-Q
FRP						Formula Rate Plan

GHG						Greenhouse gases

GRIP						Gas Reliability Infrastructure Program
GSR						Gas Supply Rate
GWh						Gigawatt-hours
Houston Electric						CenterPoint Energy Houston Electric, LLC and its subsidiaries
IDEM						Indiana Department of Environmental Management

iii


GLOSSARY
Indiana Electric						Operations of SIGECO’s electric transmission and distribution services, and includes its power generating and wholesale power operations
Indiana Gas						Indiana Gas Company, Inc., a wholly-owned subsidiary of Vectren
Indiana North						Gas operations of Indiana Gas
Indiana South						Gas operations of SIGECO
Indiana Utilities						The combination of Indiana Electric, Indiana North and Indiana South
Infrastructure Services						Provided underground pipeline construction and repair services through VISCO and its wholly-owned subsidiaries, Miller Pipeline, LLC and Minnesota Limited, LLC
Infrastructure Services Disposal Group						Businesses within the Infrastructure Services reporting unit that were sold under the Securities Purchase Agreement
Interim Condensed Financial Statements						Unaudited condensed consolidated interim financial statements and combined notes

IRP						Integrated Resource Plan
IRS						Internal Revenue Service
IURC						Indiana Utility Regulatory Commission
kV						Kilovolt
KW						~~Kilowatts~~
LIBOR						London Interbank Offered Rate

~~iii~~


~~GLOSSARY~~
LNG						Liquefied Natural Gas
LPSC						Louisiana Public Service Commission

Merger						The merger of Merger Sub with and into Vectren on the terms and subject to the conditions set forth in the Merger Agreement, with Vectren continuing as the surviving corporation and as a wholly-owned subsidiary of CenterPoint Energy, Inc.
Merger Agreement						Agreement and Plan of Merger, dated as of April 21, 2018, among CenterPoint Energy, Vectren and Merger Sub

Merger Sub						Pacer Merger Sub, Inc., an Indiana corporation and wholly-owned subsidiary of CenterPoint Energy
MES						CenterPoint Energy Mobile Energy Solutions, Inc., a wholly-owned subsidiary of CERC Corp.
MGP						Manufactured gas plant

MLP						Master Limited Partnership

Moody’s						Moody’s Investors Service, Inc.
MPSC						Mississippi Public Service Commission
MPUC						Minnesota Public Utilities Commission
~~MRT~~						~~Enable Mississippi River Transmission, LLC~~
MW						Megawatts
~~NGD~~NERC						~~Natural gas distribution business~~North American Electric Reliability Corporation

NGLs						Natural gas liquids
NOLs						Net operating losses
NRG						NRG Energy, Inc.


OCC						Oklahoma Corporation Commission
OGE						OGE Energy Corp.
PBRC						Performance Based Rate Change
Posey Solar						Posey Solar, LLC, a special purpose entity
PowerTeam Services						PowerTeam Services, LLC, a Delaware limited liability company, now known as Artera Services, LLC


PPA						Power Purchase Agreement
PRPs						Potentially responsible parties
PUCO						Public Utilities Commission of Ohio
PUCT						Public Utility Commission of Texas
Railroad Commission						Railroad Commission of Texas
RCRA						Resource Conservation and Recovery Act of 1976


GLOSSARY
Registrants						CenterPoint Energy, Houston Electric and CERC, collectively

REP						Retail electric provider
Restoration Bond Company						CenterPoint Energy Restoration Bond Company, LLC, a wholly-owned subsidiary of Houston Electric

ROE						Return on equity
ROU						Right of use
RRA						Rate Regulation Adjustment
RSP						Rate Stabilization Plan
SEC						Securities and Exchange Commission
Securities Purchase Agreement						Securities Purchase Agreement, dated as of February 3, 2020, by and among ~~VUSI,~~Vectren Utility Services, Inc., PowerTeam Services and, solely for purposes of Section 10.17 of the Securities Purchase Agreement, Vectren
Securitization Bonds						Transition and system restoration bonds
Series A Preferred Stock						CenterPoint Energy’s Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Stock, par value $0.01 per share, with a liquidation preference of $1,000 per share
Series B Preferred Stock						CenterPoint Energy’s 7.00% Series B Mandatory Convertible Preferred Stock, par value $0.01 per share, with a liquidation preference of $1,000 per share


~~GLOSSARY~~
Series C Preferred Stock						CenterPoint Energy’s Series C Mandatory Convertible Preferred Stock, par value $0.01 per share, with a liquidation preference of $1,000 per share
SIGECO						Southern Indiana Gas and Electric Company, a wholly-owned subsidiary of Vectren
S&P						S&P Global Ratings
SRC						Sales Reconciliation Component
Symmetry Energy Solutions Acquisition						Symmetry Energy Solutions Acquisition, LLC, a Delaware limited liability company (f/k/a Athena Energy Services Buyer, LLC) and subsidiary of Energy Capital Partners, LLC
TBD						To be determined

TCJA						Tax reform legislation informally called the Tax Cuts and Jobs Act of 2017
TCOS						Transmission Cost of Service
TCRF						Transmission Cost Recovery Factor
TDSIC						Transmission, Distribution and Storage System Improvement Charge
TDU						Transmission and distribution utility


~~TSCR~~Tenaska						~~Tax Savings Credit Rider~~Tenaska Wind Holdings, LLC
Texas RE						Texas Reliability Entity
TOB						Tariffed On Bill
Utility Holding						Utility Holding, LLC, a wholly-owned subsidiary of CenterPoint Energy
~~VCC~~						~~Vectren Capital Corp., a wholly-owned subsidiary of Vectren~~
Vectren						Vectren Corporation, a wholly-owned subsidiary of CenterPoint Energy as of February 1, 2019
VEDO						Vectren Energy Delivery of Ohio, Inc., a wholly-owned subsidiary of Vectren
VIE						Variable interest entity
VISCO						Vectren Infrastructure Services Corporation, formerly a wholly-owned subsidiary of Vectren
Vistra Energy Corp.						Texas-based energy company focused on the competitive energy and power generation markets, whose major subsidiaries include Luminant and TXU Energy
VRP						Voluntary Remediation Program
VUHI						Vectren Utility Holdings, Inc., a wholly-owned subsidiary of Vectren


GLOSSARY
ZENS						2.0% Zero-Premium Exchangeable Subordinated Notes due 2029
ZENS-Related Securities						As of both ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, consisted of AT&T Common and Charter Common
~~2019~~2020 Form 10-K						Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019~~2020 as filed with the SEC on February ~~27, 2020, as recast in the Registrants’ Current Report on Form 8-K dated May 18, 2020, and filed with the SEC on May 19, 2020~~25, 2021

vvi

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

From time to time the Registrants make statements concerning their 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. Actual results may differ materially from those expressed or implied by these statements. You can generally identify 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 Registrants have based their forward-looking statements on management’s beliefs and assumptions based on information reasonably available to management at the time the statements are made. The Registrants caution you that assumptions, beliefs, expectations, intentions and projections about future events may and often do vary materially from actual results. Therefore, the Registrants cannot assure you that actual results will not differ materially from those expressed or implied by the Registrants’ forward-looking statements. In this Form 10-Q, unless context requires otherwise, the terms “our,” “we” and “us” are used as abbreviated references to CenterPoint Energy, Inc. together with its consolidated subsidiaries, including Houston Electric, CERC and Vectren.

The following are some of the factors that could cause actual results to differ from those expressed or implied by the Registrants’ forward-looking statements and apply to all Registrants unless otherwise indicated:

•the performance of Enable, the amount of cash distributions CenterPoint Energy receives from Enable, Enable’s ability to redeem the Enable Series A Preferred Units in certain circumstances and the value of CenterPoint Energy’s interest in Enable, and factors that may have a material impact on such performance, cash distributions and value, including factors such as:

◦competitive conditions in the midstream industry, and actions taken by Enable’s customers and competitors, including drilling, production and capital spending decisions of third parties and the extent and timing of the entry of additional competition in the markets served by Enable;

◦the timing and extent of changes in the supply of natural gas and associated commodity prices, particularly prices of natural gas and NGLs, the competitive effects of the available pipeline capacity in the regions served by Enable, and the effects of geographic and seasonal commodity price differentials, including the effects of these circumstances on re-contracting available capacity on Enable’s interstate pipelines and its commodity risk management activities;

◦economic effects of the actions of ~~Saudi Arabia, Russia~~certain crude oil-exporting countries and ~~other oil-producing countries,~~the Organization of Petroleum Exporting Countries, which have resulted in a substantial decrease in oil and natural gas prices, and the combined impact of these events and COVID-19 on commodity prices;

◦the demand for crude oil, natural gas, NGLs and transportation and storage services;

◦environmental and other governmental regulations, including the availability of drilling permits and the regulation of hydraulic fracturing;

◦recording of goodwill, long-lived asset or other than temporary impairment charges by or related to Enable;

◦the timing of payments from Enable’s customers under existing contracts, including minimum volume commitment payments;

◦changes in tax status; and

◦•access to debt and equity capital;

•the ~~expected benefits~~integration of the businesses acquired in the Merger, ~~and~~including the integration ~~including~~of technology systems; the outcome of shareholder litigation filed against Vectren that could reduce ~~anticipated~~the benefits of the Merger; ~~as well as~~ the ability to ~~successfully integrate the Vectren businesses and to~~ realize ~~anticipated~~additional benefits and commercial ~~opportunities; and~~opportunities from the Merger, including the development of new opportunities and the performance of projects undertaken by ESG, ~~including,~~which are subject to, among other factors, the level of success in bidding contracts and cancellation and/or reductions in the scope of projects by customers, and obligations related to warranties, guarantees and other contractual and legal obligations;

•the recording of impairment charges;

•industrial, commercial and residential growth in our service territories and changes in market demand, including the demand for our non-utility products and services and effects of energy efficiency measures and demographic patterns;

•timely and appropriate rate actions that allow recovery of costs and a reasonable return on ~~investment;~~

investment, including the timing and recovery of natural gas purchase costs associated with the February 2021 Winter Storm Event;

•future economic conditions in regional and national markets and their effect on sales, prices and costs;

•weather variations and other natural phenomena, including the impact of severe weather events on operations and ~~capital;~~capital, including impacts from the February 2021 Winter Storm Event;

•CenterPoint Energy’s or Enable’s business strategies and strategic initiatives, restructurings, joint ventures and acquisitions or dispositions of assets or businesses, including the announced sale of our Natural Gas businesses in

vii

Arkansas and Oklahoma, which we cannot assure will be completed or will have the anticipated benefits to us, and the Enable Merger, which we cannot assure will be completed or will have the anticipated benefits to us or Enable;

•the outcome of litigation, including litigation related to the February 2021 Winter Storm Event;

•the ability of REPs, including REP affiliates of NRG and Vistra Energy Corp., to satisfy their obligations to CenterPoint Energy and Houston Electric, including the negative impact on such ability related to COVID-19 and the February 2021 Winter Storm Event;

•the COVID-19 pandemic and its effect on our and Enable’s operations, business and financial condition, our industries and the communities we serve, U.S. and world financial markets and supply chains, potential regulatory actions and changes in customer and stakeholder behaviors relating thereto;

•volatility and a substantial ~~recent~~ decline in the markets for oil and natural gas as a result of the actions of certain crude-oil exporting ~~nations~~countries and the Organization of Petroleum Exporting Countries and reduced worldwide consumption due to the COVID-19 pandemic;

•state and federal legislative and regulatory actions or developments affecting various aspects of our businesses (including the businesses of Enable), including, among others, energy deregulation or re-regulation, pipeline integrity and safety and changes in regulation and legislation pertaining to trade, health care, finance and actions regarding the rates charged by our regulated businesses;

•tax legislation, including the effects of the CARES Act and of the TCJA (which includes but is not limited to any potential changes to tax rates, tax credits and/or interest deductibility) and uncertainties involving state commissions’ and local municipalities’ regulatory requirements and determinations regarding the treatment of EDIT and our rates;

•~~our ability to mitigate weather impacts through normalization or rate mechanisms, and the effectiveness of such mechanisms;~~

•~~actions by credit rating agencies, including any potential downgrades to credit ratings;~~

•problems with regulatory approval, legislative actions, construction, implementation of necessary technology or other issues with respect to major capital projects that result in delays or cancellation or in cost overruns that cannot be recouped in rates;

•the availability and prices of raw materials and services and changes in labor for current and future construction projects and operations and maintenance costs, including our ability to control such costs;

•local, state and federal legislative and regulatory actions or developments relating to the environment, including, among others, those related to global climate change, air emissions, carbon, waste water discharges and the handling and disposal of CCR that could impact the continued operation, and/or cost recovery of generation plant costs and related assets;

•~~the impact of unplanned facility outages or other closures;~~

•any direct or indirect effects on our or Enable’s facilities, operations and financial condition resulting from terrorism, cyber-attacks, data security breaches or other attempts to disrupt our businesses or the businesses of third parties, or other catastrophic events such as fires, ice, earthquakes, explosions, leaks, floods, droughts, hurricanes, tornadoes, pandemic health events or other occurrences;

•tax legislation, including the effects of the CARES Act and of the TCJA (which includes but is not limited to any potential changes to tax rates, tax credits and/or interest deductibility), as well as any changes in tax laws under the Biden administration, and uncertainties involving state commissions’ and local municipalities’ regulatory requirements and determinations regarding the treatment of EDIT and our rates;

•our ability to mitigate weather impacts through normalization or rate mechanisms, and the effectiveness of such mechanisms;

•actions by credit rating agencies, including any potential downgrades to credit ratings;

•matters affecting regulatory approval, legislative actions, construction, implementation of necessary technology or other issues with respect to major capital projects that result in delays or cancellation or in cost overruns that cannot be recouped in rates;

•local, state and federal legislative and regulatory actions or developments relating to the environment, including, among others, those related to global climate change, air emissions, carbon, waste water discharges and the handling and disposal of CCR that could impact the continued operation, cost recovery of generation plant costs and related assets, and CenterPoint Energy’s carbon emissions reduction targets;

•the impact of unplanned facility outages or other closures;

•our ability to fund and invest planned capital and the timely recovery of our investments, including those related to Indiana Electric’s generation transition plan as part of its most recent IRP;

•our ability to successfully construct and operate electric generating facilities, including complying with applicable environmental standards and the implementation of a well-balanced energy and resource mix, as appropriate;

~~vii~~

•the sufficiency of our insurance coverage, including availability, cost, coverage and terms and ability to recover claims;

•the investment performance of CenterPoint Energy’s pension and postretirement benefit plans;

•changes in interest rates and their impact on costs of borrowing and the valuation of CenterPoint Energy’s pension benefit obligation;

•commercial bank and financial market conditions, our access to capital, the cost of such capital, and the results of our financing and refinancing efforts, including availability of funds in the debt capital markets;

•changes in rates of inflation;

•inability of various counterparties to meet their obligations to us;

•non-payment for our services due to financial distress of our customers;

•the extent and effectiveness of our and Enable’s risk management and hedging activities, including, but not limited to financial and weather hedges;

•timely and appropriate regulatory actions, which include actions allowing securitization, for any future hurricanes or natural disasters or other recovery of costs;

•~~the ability of REPs, including REP affiliates of NRG and Vistra Energy Corp., to satisfy their obligations to CenterPoint Energy and Houston Electric;~~

•CenterPoint Energy’s or Enable’s potential business strategies and strategic initiatives, including any recommendations of the Business Review and Evaluation Committee of the Board of Directors, restructurings, joint ventures and acquisitions or dispositions of assets or businesses, which CenterPoint Energy and Enable cannot assure will be completed or will have the anticipated benefits to CenterPoint Energy or Enable;

•acquisition and merger activities involving us or our competitors, including the ability to successfully complete merger, acquisition and divestiture plans;

•our or Enable’s ability to recruit, effectively transition and retain management and key employees and maintain good labor relations;

viii

•~~the outcome of litigation;~~

•changes in technology, particularly with respect to efficient battery storage or the emergence or growth of new, developing or alternative sources of generation;

•the impact of alternate energy sources on the demand for natural gas;

•the timing and outcome of any audits, disputes and other proceedings related to taxes;

•the effective tax rates;

•political and economic developments, including ~~the outcome of the U.S. presidential election and resulting~~ energy and environmental ~~policies;~~

policies under the Biden administration;

•the transition to a replacement for the LIBOR benchmark interest rate;

•the effect of changes in and application of accounting standards and pronouncements; and

•other factors discussed in “Risk Factors” in Item 1A of Part I of the Registrants’ combined ~~2019~~2020 Form 10-K,which are incorporated herein by reference, and in~~Item 1A of Part II of this combined Form 10-Q~~ ~~and~~ other reports the Registrants file from time to time with the SEC.

~~viii~~

You should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of the particular statement, and the Registrants undertake no obligation to update or revise any forward-looking statements. Investors should note that the Registrants announce material financial information in SEC filings, press releases and public conference calls. Based on guidance from the SEC, the Registrants may use the Investors section of CenterPoint Energy’s website (www.centerpointenergy.com) to communicate with investors about the Registrants. It is possible that the financial and other information posted there could be deemed to be material information. The information on CenterPoint Energy’s website is not part of this combined Form 10-Q.

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

CENTERPOINT ENERGY, INC. AND SUBSIDIARIES

CONDENSED STATEMENTS OF CONSOLIDATED INCOME

(Unaudited)


		Three Months Ended				Nine Months Ended					Three Months Ended
		September 30,				September 30,					March 31,
		2020		2019		2020		2019					2021		2020
		(in millions, except per share amounts)										(in millions, except per share amounts)
Revenues:	Revenues:									Revenues:
Utility revenues	Utility revenues	$	1,538	$	1,548	$	5,087	$	5,284	Utility revenues			$	2,484	$	2,073
Non-utility revenues	Non-utility revenues	84		110		277		261		Non-utility revenues			63		94
Total	Total	1,622		1,658		5,364		5,545		Total			2,547		2,167
Expenses:	Expenses:									Expenses:
Utility natural gas, fuel and purchased power	Utility natural gas, fuel and purchased power	170		171		981		1,228		Utility natural gas, fuel and purchased power			935		609
Non-utility cost of revenues, including natural gas	Non-utility cost of revenues, including natural gas	63		80		196		188		Non-utility cost of revenues, including natural gas			40		64
Operation and maintenance	Operation and maintenance	659		621		1,976		2,042		Operation and maintenance			669		674
Depreciation and amortization	Depreciation and amortization	306		316		885		938		Depreciation and amortization			307		282
Taxes other than income taxes	Taxes other than income taxes	122		113		387		352		Taxes other than income taxes			143		136
Goodwill impairment	Goodwill impairment	0		0		185		0		Goodwill impairment			0		185
Total	Total	1,320		1,301		4,610		4,748		Total			2,094		1,950
Operating Income	Operating Income	302		357		754		797		Operating Income			453		217
Other Income (Expense):	Other Income (Expense):									Other Income (Expense):
Gain on marketable securities		83		59		14		206
Loss on indexed debt securities		(84)		(62)		(25)		(216)
Loss on marketable securities										Loss on marketable securities			(23)		(144)
Gain on indexed debt securities										Gain on indexed debt securities			26		135
Interest expense and other finance charges	Interest expense and other finance charges	(121)		(134)		(388)		(389)		Interest expense and other finance charges			(113)		(139)
Interest expense on Securitization Bonds	Interest expense on Securitization Bonds	(7)		(9)		(22)		(31)		Interest expense on Securitization Bonds			(6)		(8)
Equity in earnings (loss) of unconsolidated affiliates, net	Equity in earnings (loss) of unconsolidated affiliates, net	(67)		77		(1,499)		213		Equity in earnings (loss) of unconsolidated affiliates, net			108		(1,475)
Interest income		1		3		2		16
Interest income from Securitization Bonds		0		1		1		4
Other income, net		10		5		44		20

Other income (expense), net										Other income (expense), net			(8)		14
Total	Total	(185)		(60)		(1,873)		(177)		Total			(16)		(1,617)
Income (Loss) from Continuing Operations Before Income Taxes	Income (Loss) from Continuing Operations Before Income Taxes	117		297		(1,119)		620		Income (Loss) from Continuing Operations Before Income Taxes			437		(1,400)
Income tax expense (benefit)	Income tax expense (benefit)	(10)		46		(328)		75		Income tax expense (benefit)			74		(347)
Income (Loss) from Continuing Operations	Income (Loss) from Continuing Operations	127		251		(791)		545		Income (Loss) from Continuing Operations			363		(1,053)
Income (Loss) from Discontinued Operations (net of tax expense of $-0-, $16, $21 and $38, respectively)		(6)		19		(182)		89
Loss from Discontinued Operations (net of tax benefit of $-0- and $17, respectively)										Loss from Discontinued Operations (net of tax benefit of $-0- and $17, respectively)			0		(146)
Net Income (Loss)	Net Income (Loss)	121		270		(973)		634		Net Income (Loss)			363		(1,199)
Income allocated to preferred shareholders	Income allocated to preferred shareholders	52		29		127		88		Income allocated to preferred shareholders			29		29
Income (Loss) Available to Common Shareholders	Income (Loss) Available to Common Shareholders	$	69	$	241	$	(1,100)	$	546	Income (Loss) Available to Common Shareholders			$	334	$	(1,228)

Basic earnings (loss) per common share - continuing operations	Basic earnings (loss) per common share - continuing operations	$	0.14	$	0.44	$	(1.75)	$	0.91	Basic earnings (loss) per common share - continuing operations			$	0.56	$	(2.15)
Basic earnings (loss) per common share - discontinued operations	Basic earnings (loss) per common share - discontinued operations	(0.01)		0.04		(0.35)		0.18		Basic earnings (loss) per common share - discontinued operations			0		(0.29)
Basic Earnings (Loss) Per Common Share	Basic Earnings (Loss) Per Common Share	0.13		0.48		(2.10)		1.09		Basic Earnings (Loss) Per Common Share			0.56		(2.44)
Diluted earnings (loss) per common share - continuing operations	Diluted earnings (loss) per common share - continuing operations	$	0.14	$	0.44	$	(1.75)	$	0.91	Diluted earnings (loss) per common share - continuing operations			$	0.56	$	(2.15)
Diluted earnings (loss) per common share - discontinued operations	Diluted earnings (loss) per common share - discontinued operations	(0.01)		0.03		(0.35)		0.17		Diluted earnings (loss) per common share - discontinued operations			0		(0.29)
Diluted Earnings (Loss) Per Common Share	Diluted Earnings (Loss) Per Common Share	$	0.13	$	0.47	$	(2.10)	$	1.08	Diluted Earnings (Loss) Per Common Share			$	0.56	$	(2.44)

Weighted Average Common Shares Outstanding, Basic	Weighted Average Common Shares Outstanding, Basic	545		502		525		502		Weighted Average Common Shares Outstanding, Basic			552		502
Weighted Average Common Shares Outstanding, Diluted	Weighted Average Common Shares Outstanding, Diluted	548		505		525		505		Weighted Average Common Shares Outstanding, Diluted			631		502

See Combined Notes to ~~Unaudited~~Interim Condensed ~~Consolidated~~ Financial Statements

Table of Contents

CENTERPOINT ENERGY, INC. AND SUBSIDIARIES

CONDENSED STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME

(Unaudited)


		Three Months Ended				Nine Months Ended					Three Months Ended
		September 30,				September 30,					March 31,
		2020		2019		2020		2019					2021		2020
		(in millions)										(in millions)
Net Income (Loss)	Net Income (Loss)	$	121	$	270	$	(973)	$	634	Net Income (Loss)			$	363	$	(1,199)
Other comprehensive income (loss):	Other comprehensive income (loss):									Other comprehensive income (loss):
Adjustment to pension and other postretirement plans (net of tax of $1, $-0-, $3 and $2)		1		2		3		5
Net deferred gain (loss) from cash flow hedges (net of tax of $-0-, $-0-, $-0- and $-0-)		0		(2)		0		(3)
Reclassification of deferred loss from cash flow hedges realized in net income (net of tax of $-0-, $-0-, $-0- and $-0-)		0		0		0		1
Reclassification of net deferred losses from cash flow hedges (net of tax of $-0-, $-0-, $4 and $-0-)		0		0		15		0
Other comprehensive income (loss) from unconsolidated affiliates (net of tax of $-0-, $-0-, $-0- and $-0-)		1		(2)		(2)		(2)
Adjustment to pension and other postretirement plans (net of tax of $-0- and $1)										Adjustment to pension and other postretirement plans (net of tax of $-0- and $1)			2		1

Other comprehensive income (loss) from unconsolidated affiliates (net of tax of $-0- and $-0-)										Other comprehensive income (loss) from unconsolidated affiliates (net of tax of $-0- and $-0-)			1		(3)
Total	Total	2		(2)		16		1		Total			3		(2)
Comprehensive income (loss)	Comprehensive income (loss)	123		268		(957)		635		Comprehensive income (loss)			366		(1,201)
Income allocated to preferred shareholders	Income allocated to preferred shareholders	52		29		127		88		Income allocated to preferred shareholders			29		29
Comprehensive income (loss) available to common shareholders	Comprehensive income (loss) available to common shareholders	$	71	$	239	$	(1,084)	$	547	Comprehensive income (loss) available to common shareholders			$	337	$	(1,230)

See Combined Notes to ~~Unaudited~~Interim Condensed ~~Consolidated~~ Financial Statements

Table of Contents

CENTERPOINT ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

ASSETS


		September 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
		(in millions)					(in millions)
Current Assets:	Current Assets:					Current Assets:
Cash and cash equivalents ($172 and $216 related to VIEs, respectively)		$	185	$	241
Cash and cash equivalents ($142 and $139 related to VIEs, respectively)						Cash and cash equivalents ($142 and $139 related to VIEs, respectively)	$	146	$	147
Investment in marketable securities	Investment in marketable securities	836		822		Investment in marketable securities	848		871
Accounts receivable ($30 and $26 related to VIEs, respectively), less bad debt reserve of $47 and $21, respectively		731		702
Accrued unbilled revenues, less bad debt reserve of $2 and $-0-, respectively		284		469
Accounts receivable ($24 and $23 related to VIEs, respectively), less allowance for credit losses of $65 and $52, respectively						Accounts receivable ($24 and $23 related to VIEs, respectively), less allowance for credit losses of $65 and $52, respectively	780		676
Accrued unbilled revenues, less allowance for credit losses of $4 and $5, respectively						Accrued unbilled revenues, less allowance for credit losses of $4 and $5, respectively	343		505

Natural gas inventory		234		209
Natural gas and coal inventory						Natural gas and coal inventory	67		203
Materials and supplies	Materials and supplies	300		263		Materials and supplies	310		297

Taxes receivable	Taxes receivable	102		106		Taxes receivable	79		82
Current assets held for sale		0		1,002
Prepaid expenses and other current assets ($16 and $19 related to VIEs, respectively)		113		123

Prepaid expenses and other current assets ($16 and $15 related to VIEs, respectively)						Prepaid expenses and other current assets ($16 and $15 related to VIEs, respectively)	646		139
Total current assets	Total current assets	2,785		3,937		Total current assets	3,219		2,920
Property, Plant and Equipment:	Property, Plant and Equipment:					Property, Plant and Equipment:
Property, plant and equipment	Property, plant and equipment	31,823		30,324		Property, plant and equipment	32,991		32,514
Less: accumulated depreciation and amortization	Less: accumulated depreciation and amortization	10,088		9,700		Less: accumulated depreciation and amortization	10,252		10,152
Property, plant and equipment, net	Property, plant and equipment, net	21,735		20,624		Property, plant and equipment, net	22,739		22,362
Other Assets:	Other Assets:					Other Assets:
Goodwill	Goodwill	4,697		4,882		Goodwill	4,697		4,697
Regulatory assets ($669 and $788 related to VIEs, respectively)		2,150		2,117
Regulatory assets ($597 and $633 related to VIEs, respectively)						Regulatory assets ($597 and $633 related to VIEs, respectively)	3,795		2,094

Investment in unconsolidated affiliates	Investment in unconsolidated affiliates	749		2,408		Investment in unconsolidated affiliates	853		783
Preferred units – unconsolidated affiliate	Preferred units – unconsolidated affiliate	363		363		Preferred units – unconsolidated affiliate	363		363

Non-current assets held for sale		0		962
Other		226		236

Other non-current assets						Other non-current assets	240		252
Total other assets	Total other assets	8,185		10,968		Total other assets	9,948		8,189
Total Assets	Total Assets	$	32,705	$	35,529	Total Assets	$	35,906	$	33,471

See Combined Notes to ~~Unaudited~~Interim Condensed ~~Consolidated~~ Financial Statements

Table of Contents

CENTERPOINT ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS – (continued)

(Unaudited)

LIABILITIES AND SHAREHOLDERS’ EQUITY


		September 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
		(in millions, except share amounts)					(in millions, except share amounts)
Current Liabilities:	Current Liabilities:					Current Liabilities:
Short-term borrowings	Short-term borrowings	$	37	$	0	Short-term borrowings	$	0	$	24
Current portion of VIE Securitization Bonds long-term debt	Current portion of VIE Securitization Bonds long-term debt	208		231		Current portion of VIE Securitization Bonds long-term debt	212		211
Indexed debt, net	Indexed debt, net	16		19		Indexed debt, net	13		15
Current portion of other long-term debt	Current portion of other long-term debt	1,114		618		Current portion of other long-term debt	1,563		1,669
Indexed debt securities derivative	Indexed debt securities derivative	918		893		Indexed debt securities derivative	927		953
Accounts payable	Accounts payable	658		884		Accounts payable	797		853

Taxes accrued	Taxes accrued	212		239		Taxes accrued	229		265
Interest accrued	Interest accrued	117		158		Interest accrued	119		145

Dividends accrued						Dividends accrued	0		136
Customer deposits	Customer deposits	120		124		Customer deposits	120		119
Non-trading derivative liabilities	Non-trading derivative liabilities	1		7		Non-trading derivative liabilities	2		3

Current liabilities held for sale		0		455
Other		429		350

Other current liabilities						Other current liabilities	344		432
Total current liabilities	Total current liabilities	3,830		3,978		Total current liabilities	4,326		4,825
Other Liabilities:	Other Liabilities:					Other Liabilities:
Deferred income taxes, net	Deferred income taxes, net	3,575		3,928		Deferred income taxes, net	3,687		3,603
Non-trading derivative liabilities	Non-trading derivative liabilities	6		15		Non-trading derivative liabilities	14		27
Benefit obligations	Benefit obligations	691		750		Benefit obligations	675		680
Regulatory liabilities	Regulatory liabilities	3,480		3,474		Regulatory liabilities	3,407		3,448
Non-current liabilities held for sale		0		43
Other		789		738

Other non-current liabilities						Other non-current liabilities	1,033		1,019
Total other liabilities	Total other liabilities	8,541		8,948		Total other liabilities	8,816		8,777
Long-term Debt:	Long-term Debt:					Long-term Debt:
VIE Securitization Bonds, net	VIE Securitization Bonds, net	610		746		VIE Securitization Bonds, net	499		536
Other long-term debt, net	Other long-term debt, net	11,336		13,498		Other long-term debt, net	13,549		10,985
Total long-term debt, net	Total long-term debt, net	11,946		14,244		Total long-term debt, net	14,048		11,521
Commitments and Contingencies (Note 14)	Commitments and Contingencies (Note 14)					Commitments and Contingencies (Note 14)	0		0
Shareholders’ Equity:	Shareholders’ Equity:					Shareholders’ Equity:
Cumulative preferred stock, $0.01 par value, 20,000,000 shares authorized
Series A Preferred Stock, $0.01 par value, $800 aggregate liquidation preference, 800,000 shares outstanding		790		790
Series B Preferred Stock, $0.01 par value, $978 aggregate liquidation preference, 977,500 shares outstanding		950		950
Series C Preferred Stock, $0.01 par value, $725 aggregate liquidation preference, 725,000 shares outstanding		716		0
Common stock, $0.01 par value, 1,000,000,000 shares authorized, 544,819,895 shares and 502,242,061 shares outstanding, respectively		5		5
Cumulative preferred stock, $0.01 par value, 20,000,000 shares authorized, 2,402,400 shares outstanding, $2,402 liquidation preference (Note 19)						Cumulative preferred stock, $0.01 par value, 20,000,000 shares authorized, 2,402,400 shares outstanding, $2,402 liquidation preference (Note 19)	2,363		2,363
Common stock, $0.01 par value, 1,000,000,000 shares authorized, 551,865,588 shares and 551,355,861 shares outstanding, respectively						Common stock, $0.01 par value, 1,000,000,000 shares authorized, 551,865,588 shares and 551,355,861 shares outstanding, respectively	6		6
Additional paid-in capital	Additional paid-in capital	6,805		6,080		Additional paid-in capital	6,916		6,914
Retained earnings (accumulated deficit)		(796)		632
Accumulated deficit						Accumulated deficit	(482)		(845)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(82)		(98)		Accumulated other comprehensive loss	(87)		(90)
Total shareholders’ equity	Total shareholders’ equity	8,388		8,359		Total shareholders’ equity	8,716		8,348
Total Liabilities and Shareholders’ Equity	Total Liabilities and Shareholders’ Equity	$	32,705	$	35,529	Total Liabilities and Shareholders’ Equity	$	35,906	$	33,471

See Combined Notes to ~~Unaudited~~Interim Condensed ~~Consolidated~~ Financial Statements

Table of Contents

CENTERPOINT ENERGY, INC. AND SUBSIDIARIES

CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS

(Unaudited)


		Nine Months Ended September 30,					Three Months Ended March 31,
		2020		2019			2021		2020
		(in millions)					(in millions)
Cash Flows from Operating Activities:	Cash Flows from Operating Activities:					Cash Flows from Operating Activities:
Net income (loss)	Net income (loss)	$	(973)	$	634	Net income (loss)	$	363	$	(1,199)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:	Adjustments to reconcile net income (loss) to net cash provided by operating activities:					Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	885		938		Depreciation and amortization	307		282
Depreciation and amortization on assets held for sale		0		49

Amortization of deferred financing costs	Amortization of deferred financing costs	23		22		Amortization of deferred financing costs	7		7
Amortization of intangible assets in non-utility cost of revenues		1		19

Deferred income taxes	Deferred income taxes	(429)		8		Deferred income taxes	66		(377)

Goodwill impairment and loss from reclassification to held for sale	Goodwill impairment and loss from reclassification to held for sale	175		0		Goodwill impairment and loss from reclassification to held for sale	0		214
Goodwill impairment	Goodwill impairment	185		0		Goodwill impairment	0		185
Unrealized loss (gain) on marketable securities		(14)		(206)
Loss (gain) on indexed debt securities		25		216

Unrealized loss on marketable securities						Unrealized loss on marketable securities	23		144
Gain on indexed debt securities						Gain on indexed debt securities	(26)		(135)

Write-down of natural gas inventory	Write-down of natural gas inventory	3		5		Write-down of natural gas inventory	0		3
Equity in (earnings) losses of unconsolidated affiliates	Equity in (earnings) losses of unconsolidated affiliates	1,499		(213)		Equity in (earnings) losses of unconsolidated affiliates	(108)		1,475
Distributions from unconsolidated affiliates	Distributions from unconsolidated affiliates	109		226		Distributions from unconsolidated affiliates	39		70
Pension contributions	Pension contributions	(84)		(94)		Pension contributions	(8)		(2)
Changes in other assets and liabilities, excluding acquisitions:	Changes in other assets and liabilities, excluding acquisitions:					Changes in other assets and liabilities, excluding acquisitions:
Accounts receivable and unbilled revenues, net	Accounts receivable and unbilled revenues, net	326		521		Accounts receivable and unbilled revenues, net	29		236

Inventory	Inventory	(50)		(85)		Inventory	99		110
Taxes receivable	Taxes receivable	4		(69)		Taxes receivable	3		13
Accounts payable	Accounts payable	(251)		(646)		Accounts payable	(55)		(192)
Fuel cost recovery		(5)		68

Non-trading derivatives, net	Non-trading derivatives, net	(14)		(66)		Non-trading derivatives, net	(14)		(53)
Margin deposits, net	Margin deposits, net	65		(33)		Margin deposits, net	0		21
Interest and taxes accrued	Interest and taxes accrued	(53)		(89)		Interest and taxes accrued	(62)		(95)
Net regulatory assets and liabilities	Net regulatory assets and liabilities	(76)		(101)		Net regulatory assets and liabilities	(2,297)		(27)
Other current assets	Other current assets	6		31		Other current assets	0		(5)
Other current liabilities	Other current liabilities	30		(118)		Other current liabilities	(59)		(37)
Other assets		5		81
Other liabilities		46		(22)
Other operating activities, net		1		10
Other non-current assets						Other non-current assets	0		19
Other non-current liabilities						Other non-current liabilities	17		1
Other, net						Other, net	(5)		4

Net cash provided by operating activities		1,439		1,086
Net cash provided by (used in) operating activities						Net cash provided by (used in) operating activities	(1,681)		662
Cash Flows from Investing Activities:	Cash Flows from Investing Activities:					Cash Flows from Investing Activities:
Capital expenditures	Capital expenditures	(1,889)		(1,822)		Capital expenditures	(594)		(664)
Acquisitions, net of cash acquired		0		(5,991)

Distributions from unconsolidated affiliate in excess of cumulative earnings	Distributions from unconsolidated affiliate in excess of cumulative earnings	46		0		Distributions from unconsolidated affiliate in excess of cumulative earnings	0		7

Proceeds from divestitures (Note 3)		1,136		0

Other investing activities, net		24		38

Other, net						Other, net	(10)		3

Net cash used in investing activities	Net cash used in investing activities	(683)		(7,775)		Net cash used in investing activities	(604)		(654)
Cash Flows from Financing Activities:	Cash Flows from Financing Activities:					Cash Flows from Financing Activities:
Increase in short-term borrowings, net		37		0

Proceeds from (payments of) commercial paper, net	Proceeds from (payments of) commercial paper, net	(1,057)		1,584		Proceeds from (payments of) commercial paper, net	38		(828)
Proceeds from long-term debt, net		299		2,916
Proceeds from long-term debt						Proceeds from long-term debt	2,795		0
Payments of long-term debt	Payments of long-term debt	(1,060)		(1,225)		Payments of long-term debt	(388)		(63)

Borrowings from revolving credit facilities						Borrowings from revolving credit facilities	0		1,050

Payment of debt issuance costs	Payment of debt issuance costs	(4)		(19)		Payment of debt issuance costs	(20)		0

Payment of dividends on Common Stock	Payment of dividends on Common Stock	(309)		(433)		Payment of dividends on Common Stock	(88)		(145)
Payment of dividends on Preferred Stock	Payment of dividends on Preferred Stock	(114)		(101)		Payment of dividends on Preferred Stock	(48)		(42)
Proceeds from issuance of Common Stock, net		672		0
Proceeds from issuance of Series C Preferred Stock, net		723		0

Other financing activities, net		(6)		(14)

Other, net						Other, net	(4)		(4)

Net cash provided by (used in) financing activities	Net cash provided by (used in) financing activities	(819)		2,708		Net cash provided by (used in) financing activities	2,285		(32)
Net Decrease in Cash, Cash Equivalents and Restricted Cash	Net Decrease in Cash, Cash Equivalents and Restricted Cash	(63)		(3,981)		Net Decrease in Cash, Cash Equivalents and Restricted Cash	0		(24)
Cash, Cash Equivalents and Restricted Cash at Beginning of Period	Cash, Cash Equivalents and Restricted Cash at Beginning of Period	271		4,278		Cash, Cash Equivalents and Restricted Cash at Beginning of Period	167		271
Cash, Cash Equivalents and Restricted Cash at End of Period	Cash, Cash Equivalents and Restricted Cash at End of Period	$	208	$	297	Cash, Cash Equivalents and Restricted Cash at End of Period	$	167	$	247

See Combined Notes to ~~Unaudited~~Interim Condensed ~~Consolidated~~ Financial Statements

Table of Contents

CENTERPOINT ENERGY, INC. AND SUBSIDIARIES

CONDENSED STATEMENTS OF CONSOLIDATED CHANGES IN EQUITY

(Unaudited)


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended March 31,
		2020			2019			2020			2019					2021		2020
		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount						Shares	Amount		Shares	Amount
		(in millions of dollars and shares, except per share amounts)															(in millions of dollars and shares)
Cumulative Preferred Stock, $0.01 par value; authorized 20,000,000 shares	Cumulative Preferred Stock, $0.01 par value; authorized 20,000,000 shares													Cumulative Preferred Stock, $0.01 par value; authorized 20,000,000 shares
Balance, beginning of period	Balance, beginning of period	3	$	2,441	2	$	1,740	2	$	1,740	2	$	1,740	Balance, beginning of period				3	$	2,363	2	$	1,740

Issuances of Series C Preferred Stock, net of issuance costs and beneficial conversion feature		0	15		0	0		1	716		0	0

Balance, end of period	Balance, end of period	3	2,456		2	1,740		3	2,456		2	1,740		Balance, end of period				3	2,363		2	1,740
Common Stock, $0.01 par value; authorized 1,000,000,000 shares	Common Stock, $0.01 par value; authorized 1,000,000,000 shares													Common Stock, $0.01 par value; authorized 1,000,000,000 shares
Balance, beginning of period	Balance, beginning of period	545	5		502	5		502	5		501	5		Balance, beginning of period				551	6		502	5
Issuances of Common Stock		0	0		0	0		42	0		0	0

Issuances related to benefit and investment plans	Issuances related to benefit and investment plans	0	0		0	0		1	0		1	0		Issuances related to benefit and investment plans				1	0		0	0
Balance, end of period	Balance, end of period	545	5		502	5		545	5		502	5		Balance, end of period				552	6		502	5
Additional Paid-in-Capital	Additional Paid-in-Capital													Additional Paid-in-Capital
Balance, beginning of period	Balance, beginning of period		6,801			6,065			6,080			6,072		Balance, beginning of period					6,914			6,080
Issuances of Common Stock, net of issuance costs			(1)			0			672			0

Issuances related to benefit and investment plans	Issuances related to benefit and investment plans		5			7			21			0		Issuances related to benefit and investment plans					2			6
Recognition of beneficial conversion feature			0			0			32			0

Balance, end of period	Balance, end of period		6,805			6,072			6,805			6,072		Balance, end of period					6,916			6,086
Retained Earnings (Accumulated Deficit)	Retained Earnings (Accumulated Deficit)													Retained Earnings (Accumulated Deficit)
Balance, beginning of period	Balance, beginning of period		(771)			552			632			349		Balance, beginning of period					(845)			632
Net income (loss)	Net income (loss)		121			270			(973)			634		Net income (loss)					363			(1,199)
Common Stock dividends declared (see Note 19)	Common Stock dividends declared (see Note 19)		(82)			(145)			(309)			(289)		Common Stock dividends declared (see Note 19)					0			(145)
Series A Preferred Stock dividends declared (see Note 19)			(24)			(24)			(49)			(24)
Series B Preferred Stock dividends declared (see Note 19)			(17)			(17)			(51)			(34)
Series C Preferred Stock dividends declared (see Note 19)			(7)			0			(14)			0
Preferred Stock dividends declared (see Note 19)														Preferred Stock dividends declared (see Note 19)					0			(42)

Amortization of beneficial conversion feature			(16)			0			(25)			0

Adoption of ASU 2016-13	Adoption of ASU 2016-13		0			0			(7)			0		Adoption of ASU 2016-13					0			(7)
Balance, end of period	Balance, end of period		(796)			636			(796)			636		Balance, end of period					(482)			(761)
Accumulated Other Comprehensive Loss	Accumulated Other Comprehensive Loss													Accumulated Other Comprehensive Loss
Balance, beginning of period	Balance, beginning of period		(84)			(105)			(98)			(108)		Balance, beginning of period					(90)			(98)
Other comprehensive income (loss)	Other comprehensive income (loss)		2			(2)			16			1		Other comprehensive income (loss)					3			(2)
Balance, end of period	Balance, end of period		(82)			(107)			(82)			(107)		Balance, end of period					(87)			(100)
Total Shareholders’ Equity	Total Shareholders’ Equity		$	8,388		$	8,346		$	8,388		$	8,346	Total Shareholders’ Equity					$	8,716		$	6,970

See Combined Notes to ~~Unaudited~~Interim Condensed ~~Consolidated~~ Financial Statements

Table of Contents

CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC AND SUBSIDIARIES

(AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.)

CONDENSED STATEMENTS OF CONSOLIDATED INCOME

(Unaudited)

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
(in millions)
Revenues $ 828 $ 859 $ 2,182 $ 2,310
Expenses:
Operation and maintenance 381 359 1,104 1,086
Depreciation and amortization 151 168 420 519
Taxes other than income taxes 64 63 192 186
Total 596 590 1,716 1,791
Operating Income 232 269 466 519
Other Income (Expense):
Interest expense and other finance charges (43) (41) (127) (123)
Interest expense on Securitization Bonds (7) (9) (22) (31)
Interest income 1 8 2 18
Interest income from Securitization Bonds 0 1 1 4
Other income (expense), net 0 (2) 4 (5)
Total (49) (43) (142) (137)
Income Before Income Taxes 183 226 324 382
Income tax expense 26 41 47 70
Net Income $ 157 $ 185 $ 277 $ 312


	Three Months Ended March 31,
			2021		2020
		(in millions)
Revenues			$	684	$	634
Expenses:
Operation and maintenance			373		359
Depreciation and amortization			141		129
Taxes other than income taxes			63		64
Total			577		552
Operating Income			107		82
Other Income (Expense):
Interest expense and other finance charges			(45)		(41)
Interest expense on Securitization Bonds			(6)		(8)



Other income, net			5		5
Total			(46)		(44)
Income Before Income Taxes			61		38
Income tax expense			8		5
Net Income			$	53	$	33

See Combined Notes to ~~Unaudited~~Interim Condensed ~~Consolidated~~ Financial Statements

Table of Contents

CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC AND SUBSIDIARIES

(AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.)

CONDENSED STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME

(Unaudited)

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
(in millions)
Net income $ 157 $ 185 $ 277 $ 312
Other comprehensive loss:
Net deferred loss from cash flow hedges (net of tax of $-0-, $-0-, $-0- and $-0-) 0 0 0 (1)
Reclassification of net deferred losses from cash flow hedges (net of tax of $-0-, $-0-, $4 and $-0-) 0 0 15 0
Total 0 0 15 (1)
Comprehensive income $ 157 $ 185 $ 292 $ 311


	Three Months Ended March 31,
			2021		2020
		(in millions)
Net income			$	53	$	33




Comprehensive income			$	53	$	33

See Combined Notes to ~~Unaudited~~Interim Condensed ~~Consolidated~~ Financial Statements

Table of Contents

CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC AND SUBSIDIARIES

(AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.)

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

ASSETS


		September 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
		(in millions)					(in millions)
Current Assets:	Current Assets:					Current Assets:
Cash and cash equivalents ($172 and $216 related to VIEs, respectively)		$	172	$	216
Accounts and notes receivable ($30 and $26 related to VIEs, respectively), less bad debt reserve of $1 and $1, respectively		367		238
Cash and cash equivalents ($142 and $139 related to VIEs, respectively)						Cash and cash equivalents ($142 and $139 related to VIEs, respectively)	$	143	$	139
Accounts receivable ($24 and $23 related to VIEs, respectively), less allowance for credit losses of $1 and $1, respectively						Accounts receivable ($24 and $23 related to VIEs, respectively), less allowance for credit losses of $1 and $1, respectively	263		268
Accounts and notes receivable–affiliated companies	Accounts and notes receivable–affiliated companies	41		523		Accounts and notes receivable–affiliated companies	674		7
Accrued unbilled revenues	Accrued unbilled revenues	124		117		Accrued unbilled revenues	83		113
Materials and supplies	Materials and supplies	182		147		Materials and supplies	202		195

Prepaid expenses and other current assets ($16 and $19 related to VIEs, respectively)		32		49
Prepaid expenses and other current assets ($16 and $15 related to VIEs, respectively)						Prepaid expenses and other current assets ($16 and $15 related to VIEs, respectively)	32		47
Total current assets	Total current assets	918		1,290		Total current assets	1,397		769
Property, Plant and Equipment:	Property, Plant and Equipment:					Property, Plant and Equipment:
Property, plant and equipment	Property, plant and equipment	13,354		12,829		Property, plant and equipment	13,889		13,593
Less: accumulated depreciation and amortization	Less: accumulated depreciation and amortization	3,875		3,797		Less: accumulated depreciation and amortization	3,967		3,930
Property, plant and equipment, net	Property, plant and equipment, net	9,479		9,032		Property, plant and equipment, net	9,922		9,663
Other Assets:	Other Assets:					Other Assets:
Regulatory assets ($669 and $788 related to VIEs, respectively)		873		915
Regulatory assets ($597 and $633 related to VIEs, respectively)						Regulatory assets ($597 and $633 related to VIEs, respectively)	828		848

Other		26		25
Other non-current assets						Other non-current assets	38		36
Total other assets	Total other assets	899		940		Total other assets	866		884
Total Assets	Total Assets	$	11,296	$	11,262	Total Assets	$	12,185	$	11,316

See Combined Notes to ~~Unaudited~~Interim Condensed ~~Consolidated~~ Financial Statements

Table of Contents

CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC AND SUBSIDIARIES

(AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.)

CONDENSED CONSOLIDATED BALANCE SHEETS – (continued)

(Unaudited)

LIABILITIES AND MEMBER’S EQUITY


		September 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
		(in millions)					(in millions)
Current Liabilities:	Current Liabilities:					Current Liabilities:
Short-term borrowings		$	5	$	0

Current portion of VIE Securitization Bonds long-term debt	Current portion of VIE Securitization Bonds long-term debt	208		231		Current portion of VIE Securitization Bonds long-term debt	212		211
Current portion of other long-term debt	Current portion of other long-term debt	402		0		Current portion of other long-term debt	300		402
Accounts payable	Accounts payable	256		268		Accounts payable	333		281
Accounts and notes payable–affiliated companies	Accounts and notes payable–affiliated companies	60		76		Accounts and notes payable–affiliated companies	41		96
Taxes accrued	Taxes accrued	155		123		Taxes accrued	103		158
Interest accrued	Interest accrued	45		69		Interest accrued	53		71

Other		127		63
Other current liabilities						Other current liabilities	115		117
Total current liabilities	Total current liabilities	1,258		830		Total current liabilities	1,157		1,336
Other Liabilities:	Other Liabilities:					Other Liabilities:
Deferred income taxes, net	Deferred income taxes, net	1,029		1,030		Deferred income taxes, net	1,051		1,041
Benefit obligations	Benefit obligations	72		75		Benefit obligations	75		75
Regulatory liabilities	Regulatory liabilities	1,285		1,288		Regulatory liabilities	1,187		1,252

Other		87		69
Other non-current liabilities						Other non-current liabilities	95		95
Total other liabilities	Total other liabilities	2,473		2,462		Total other liabilities	2,408		2,463
Long-term Debt:	Long-term Debt:					Long-term Debt:
VIE Securitization Bonds, net	VIE Securitization Bonds, net	610		746		VIE Securitization Bonds, net	499		536
Other, net		3,869		3,973
Other long-term debt, net						Other long-term debt, net	4,957		3,870
Total long-term debt, net	Total long-term debt, net	4,479		4,719		Total long-term debt, net	5,456		4,406
Commitments and Contingencies (Note 14)	Commitments and Contingencies (Note 14)					Commitments and Contingencies (Note 14)	0		0
Member’s Equity:	Member’s Equity:					Member’s Equity:
Common stock	Common stock	0		0		Common stock	0		0
Additional paid-in capital	Additional paid-in capital	2,486		2,486		Additional paid-in capital	2,548		2,548
Retained earnings	Retained earnings	600		780		Retained earnings	616		563
Accumulated other comprehensive loss		0		(15)

Total member’s equity	Total member’s equity	3,086		3,251		Total member’s equity	3,164		3,111
Total Liabilities and Member’s Equity	Total Liabilities and Member’s Equity	$	11,296	$	11,262	Total Liabilities and Member’s Equity	$	12,185	$	11,316

See Combined Notes to ~~Unaudited~~Interim Condensed ~~Consolidated~~ Financial Statements

Table of Contents

CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC AND SUBSIDIARIES

(AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.)

CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS

(Unaudited)


		Nine Months Ended September 30,					Three Months Ended March 31,
		2020		2019			2021		2020
		(in millions)					(in millions)
Cash Flows from Operating Activities:	Cash Flows from Operating Activities:					Cash Flows from Operating Activities:
Net income	Net income	$	277	$	312	Net income	$	53	$	33
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	420		519		Depreciation and amortization	141		129
Amortization of deferred financing costs	Amortization of deferred financing costs	8		8		Amortization of deferred financing costs	3		3
Deferred income taxes	Deferred income taxes	(36)		(39)		Deferred income taxes	(5)		(1)

Changes in other assets and liabilities:	Changes in other assets and liabilities:					Changes in other assets and liabilities:
Accounts and notes receivable, net	Accounts and notes receivable, net	(145)		(84)		Accounts and notes receivable, net	21		19
Accounts receivable/payable–affiliated companies	Accounts receivable/payable–affiliated companies	10		(7)		Accounts receivable/payable–affiliated companies	(49)		(3)
Inventory	Inventory	(35)		(9)		Inventory	(7)		(10)
Accounts payable	Accounts payable	(7)		3		Accounts payable	14		(2)
Taxes receivable		0		5

Interest and taxes accrued	Interest and taxes accrued	16		(28)		Interest and taxes accrued	(73)		(80)
Non-trading derivatives, net		15		(25)

Net regulatory assets and liabilities	Net regulatory assets and liabilities	5		(58)		Net regulatory assets and liabilities	(63)		(11)
Other current assets	Other current assets	13		15		Other current assets	16		13
Other current liabilities	Other current liabilities	21		(3)		Other current liabilities	(2)		8
Other assets	Other assets	(5)		8		Other assets	3		0
Other liabilities	Other liabilities	6		(13)		Other liabilities	0		8
Other operating activities, net		(11)		(9)
Other, net						Other, net	(5)		(3)
Net cash provided by operating activities	Net cash provided by operating activities	552		595		Net cash provided by operating activities	47		103
Cash Flows from Investing Activities:	Cash Flows from Investing Activities:					Cash Flows from Investing Activities:
Capital expenditures	Capital expenditures	(750)		(744)		Capital expenditures	(314)		(286)
Decrease (increase) in notes receivable–affiliated companies	Decrease (increase) in notes receivable–affiliated companies	456		(772)		Decrease (increase) in notes receivable–affiliated companies	(665)		481

Other investing activities, net		11		12
Net cash used in investing activities		(283)		(1,504)
Other, net						Other, net	(3)		(3)
Net cash provided by (used in) investing activities						Net cash provided by (used in) investing activities	(982)		192
Cash Flows from Financing Activities:	Cash Flows from Financing Activities:					Cash Flows from Financing Activities:

Increase in short-term borrowings, net		5		0
Proceeds from long-term debt, net		299		696

Proceeds from long-term debt						Proceeds from long-term debt	1,096		0
Payments of long-term debt	Payments of long-term debt	(160)		(390)		Payments of long-term debt	(138)		(63)
Decrease in notes payable–affiliated companies		0		(1)
Increase (decrease) in notes payable–affiliated companies						Increase (decrease) in notes payable–affiliated companies	(8)		133
Dividend to parent	Dividend to parent	(457)		(100)		Dividend to parent	0		(385)
Contribution from parent		0		590

Payment of debt issuance costs	Payment of debt issuance costs	(3)		(8)		Payment of debt issuance costs	(10)		0
Other financing activities, net		0		(1)

Net cash provided by (used in) financing activities	Net cash provided by (used in) financing activities	(316)		786		Net cash provided by (used in) financing activities	940		(315)
Net Decrease in Cash, Cash Equivalents and Restricted Cash		(47)		(123)
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash						Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash	5		(20)
Cash, Cash Equivalents and Restricted Cash at Beginning of Period	Cash, Cash Equivalents and Restricted Cash at Beginning of Period	235		370		Cash, Cash Equivalents and Restricted Cash at Beginning of Period	154		235
Cash, Cash Equivalents and Restricted Cash at End of Period	Cash, Cash Equivalents and Restricted Cash at End of Period	$	188	$	247	Cash, Cash Equivalents and Restricted Cash at End of Period	$	159	$	215

See Combined Notes to ~~Unaudited~~Interim Condensed ~~Consolidated~~ Financial Statements

Table of Contents

CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC AND SUBSIDIARIES

(AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.)

CONDENSED STATEMENTS OF CONSOLIDATED CHANGES IN EQUITY

(Unaudited)


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended March 31,
		2020			2019			2020			2019					2021		2020
		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount						Shares	Amount		Shares	Amount
		(in millions, except share amounts)															(in millions, except share amounts)

Common Stock	Common Stock													Common Stock
Balance, beginning of period	Balance, beginning of period	1,000	$	0	1,000	$	0	1,000	$	0	1,000	$	0	Balance, beginning of period				1,000	$	0	1,000	$	0
Balance, end of period	Balance, end of period	1,000	0		1,000	0		1,000	0		1,000	0		Balance, end of period				1,000	0		1,000	0
Additional Paid-in-Capital	Additional Paid-in-Capital													Additional Paid-in-Capital
Balance, beginning of period	Balance, beginning of period		2,486			2,486			2,486			1,896		Balance, beginning of period					2,548			2,486
Contribution from Parent			0			0			0			590

Balance, end of period	Balance, end of period		2,486			2,486			2,486			2,486		Balance, end of period					2,548			2,486
Retained Earnings	Retained Earnings													Retained Earnings
Balance, beginning of period	Balance, beginning of period		495			887			780			800		Balance, beginning of period					563			780
Net income	Net income		157			185			277			312		Net income					53			33
Dividend to parent	Dividend to parent		(52)			(60)			(457)			(100)		Dividend to parent					0			(385)
Balance, end of period	Balance, end of period		600			1,012			600			1,012		Balance, end of period					616			428
Accumulated Other Comprehensive Loss	Accumulated Other Comprehensive Loss													Accumulated Other Comprehensive Loss
Balance, beginning of period	Balance, beginning of period		0			(15)			(15)			(14)		Balance, beginning of period					0			(15)
Other comprehensive income (loss)			0			0			15			(1)

Balance, end of period	Balance, end of period		0			(15)			0			(15)		Balance, end of period					0			(15)
Total Member’s Equity	Total Member’s Equity		$	3,086		$	3,483		$	3,086		$	3,483	Total Member’s Equity					$	3,164		$	2,899

See Combined Notes to ~~Unaudited~~Interim Condensed ~~Consolidated~~ Financial Statements

Table of Contents

CENTERPOINT ENERGY RESOURCES CORP. AND SUBSIDIARIES

(AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.)

CONDENSED STATEMENTS OF CONSOLIDATED INCOME

(Unaudited)


		Three Months Ended				Nine Months Ended					Three Months Ended
		September 30,				September 30,					March 31,
		2020		2019		2020		2019					2021		2020
		(in millions)										(in millions)
Revenues:	Revenues:									Revenues:
Utility revenues	Utility revenues	$	415	$	398	$	1,878	$	2,106	Utility revenues			$	1,168	$	996
Non-utility revenues	Non-utility revenues	11		22		42		52		Non-utility revenues			9		15
Total	Total	426		420		1,920		2,158		Total			1,177		1,011
Expenses:	Expenses:									Expenses:
Utility natural gas	Utility natural gas	106		105		715		978		Utility natural gas			623		472
Non-utility cost of revenues, including natural gas	Non-utility cost of revenues, including natural gas	2		11		15		29		Non-utility cost of revenues, including natural gas			2		6

Operation and maintenance	Operation and maintenance	186		181		574		608		Operation and maintenance			198		209
Depreciation and amortization	Depreciation and amortization	78		72		226		218		Depreciation and amortization			80		74
Taxes other than income taxes	Taxes other than income taxes	40		33		134		120		Taxes other than income taxes			56		50

Total	Total	412		402		1,664		1,953		Total			959		811
Operating Income	Operating Income	14		18		256		205		Operating Income			218		200
Other Expense:	Other Expense:									Other Expense:
Interest expense and other finance charges	Interest expense and other finance charges	(28)		(28)		(87)		(87)		Interest expense and other finance charges			(24)		(30)

Interest income		0		1		0		4
Other expense, net	Other expense, net	(1)		(4)		(5)		(10)		Other expense, net			(1)		(4)
Total	Total	(29)		(31)		(92)		(93)		Total			(25)		(34)
Income (Loss) From Continuing Operations Before Income Taxes		(15)		(13)		164		112
Income tax expense (benefit)		(9)		(3)		22		10
Income (Loss) From Continuing Operations		(6)		(10)		142		102
Income (Loss) from Discontinued Operations (net of tax expense (benefit) of $1, $2, $(2) and $15, respectively)		2		3		(66)		57
Net Income (Loss)		$	(4)	$	(7)	$	76	$	159
Income From Continuing Operations Before Income Taxes										Income From Continuing Operations Before Income Taxes			193		166
Income tax expense										Income tax expense			42		35
Income From Continuing Operations										Income From Continuing Operations			151		131
Loss from Discontinued Operations (net of tax benefit of $-0- and $11, respectively)										Loss from Discontinued Operations (net of tax benefit of $-0- and $11, respectively)			0		(64)
Net Income										Net Income			$	151	$	67

See Combined Notes to ~~Unaudited~~Interim Condensed ~~Consolidated~~ Financial Statements

Table of Contents

CENTERPOINT ENERGY RESOURCES CORP. AND SUBSIDIARIES

(AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.)

CONDENSED STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME

(Unaudited)


		Three Months Ended				Nine Months Ended					Three Months Ended
		September 30,				September 30,					March 31,
		2020		2019		2020		2019					2021		2020
		(in millions)										(in millions)
Net income (loss)	Net income (loss)	$	(4)	$	(7)	$	76	$	159	Net income (loss)			$	151	$	67

Comprehensive income (loss)	Comprehensive income (loss)	$	(4)	$	(7)	$	76	$	159	Comprehensive income (loss)			$	151	$	67

See Combined Notes to ~~Unaudited~~Interim Condensed ~~Consolidated~~ Financial Statements

Table of Contents

CENTERPOINT ENERGY RESOURCES CORP. AND SUBSIDIARIES

(AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.)

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

ASSETS


		September 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
		(in millions)					(in millions)
Current Assets:	Current Assets:					Current Assets:
Cash and cash equivalents	Cash and cash equivalents	$	2	$	2	Cash and cash equivalents	$	1	$	1
Accounts receivable, less bad debt reserve of $39 and $15, respectively		231		322
Accrued unbilled revenues, less bad debt reserve of $1 and $-0-, respectively		90		249
Accounts receivable, less allowance for credit losses of $56 and $45, respectively						Accounts receivable, less allowance for credit losses of $56 and $45, respectively	349		233
Accrued unbilled revenues, less allowance for credit losses of $3 and $4, respectively						Accrued unbilled revenues, less allowance for credit losses of $3 and $4, respectively	167		260
Accounts and notes receivable–affiliated companies	Accounts and notes receivable–affiliated companies	14		10		Accounts and notes receivable–affiliated companies	11		8
Materials and supplies	Materials and supplies	68		71		Materials and supplies	64		58
Natural gas inventory	Natural gas inventory	152		135		Natural gas inventory	27		121

Current assets held for sale		0		691

Prepaid expenses and other current assets	Prepaid expenses and other current assets	11		9		Prepaid expenses and other current assets	381		26
Total current assets	Total current assets	568		1,489		Total current assets	1,000		707
Property, Plant and Equipment:	Property, Plant and Equipment:					Property, Plant and Equipment:
Property, plant and equipment	Property, plant and equipment	8,608		8,079		Property, plant and equipment	9,070		8,972
Less: accumulated depreciation and amortization	Less: accumulated depreciation and amortization	2,408		2,270		Less: accumulated depreciation and amortization	2,466		2,414
Property, plant and equipment, net	Property, plant and equipment, net	6,200		5,809		Property, plant and equipment, net	6,604		6,558
Other Assets:	Other Assets:					Other Assets:
Goodwill	Goodwill	757		757		Goodwill	757		757
Regulatory assets	Regulatory assets	206		191		Regulatory assets	1,947		220

Non-current assets held for sale		0		213
Other		48		53

Other non-current assets						Other non-current assets	48		66
Total other assets	Total other assets	1,011		1,214		Total other assets	2,752		1,043
Total Assets	Total Assets	$	7,779	$	8,512	Total Assets	$	10,356	$	8,308

See Combined Notes to ~~Unaudited~~Interim Condensed ~~Consolidated~~ Financial Statements

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CENTERPOINT ENERGY RESOURCES CORP. AND SUBSIDIARIES

(AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.)

CONDENSED CONSOLIDATED BALANCE SHEETS – (continued)

(Unaudited)

LIABILITIES AND STOCKHOLDER’S EQUITY


		September 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
		(in millions)					(in millions)
Current Liabilities:	Current Liabilities:					Current Liabilities:
Short-term borrowings	Short-term borrowings	$	31	$	0	Short-term borrowings	$	0	$	24

Accounts payable	Accounts payable	191		333		Accounts payable	273		296
Accounts and notes payable–affiliated companies	Accounts and notes payable–affiliated companies	44		47		Accounts and notes payable–affiliated companies	48		50
Taxes accrued	Taxes accrued	68		84		Taxes accrued	90		74
Interest accrued	Interest accrued	31		38		Interest accrued	30		28
Customer deposits	Customer deposits	76		74		Customer deposits	76		76

Current liabilities held for sale		0		368
Other		165		167

Other current liabilities						Other current liabilities	137		178
Total current liabilities	Total current liabilities	606		1,111		Total current liabilities	654		726
Other Liabilities:	Other Liabilities:					Other Liabilities:
Deferred income taxes, net	Deferred income taxes, net	509		470		Deferred income taxes, net	632		584

Benefit obligations	Benefit obligations	84		80		Benefit obligations	83		83
Regulatory liabilities	Regulatory liabilities	1,216		1,219		Regulatory liabilities	1,242		1,226
Non-current liabilities held for sale		0		27
Other		437		418

Other non-current liabilities						Other non-current liabilities	678		694
Total other liabilities	Total other liabilities	2,246		2,214		Total other liabilities	2,635		2,587
Long-Term Debt	Long-Term Debt	2,582		2,546		Long-Term Debt	4,349		2,428
Commitments and Contingencies (Note 14)	Commitments and Contingencies (Note 14)					Commitments and Contingencies (Note 14)	0		0
Stockholder’s Equity:	Stockholder’s Equity:					Stockholder’s Equity:
Common stock	Common stock	0		0		Common stock	0		0
Additional paid-in capital	Additional paid-in capital	1,829		2,116		Additional paid-in capital	2,046		2,046
Retained earnings	Retained earnings	506		515		Retained earnings	662		511
Accumulated other comprehensive income	Accumulated other comprehensive income	10		10		Accumulated other comprehensive income	10		10
Total stockholder’s equity	Total stockholder’s equity	2,345		2,641		Total stockholder’s equity	2,718		2,567
Total Liabilities and Stockholder’s Equity	Total Liabilities and Stockholder’s Equity	$	7,779	$	8,512	Total Liabilities and Stockholder’s Equity	$	10,356	$	8,308

See Combined Notes to ~~Unaudited~~Interim Condensed ~~Consolidated~~ Financial Statements

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CENTERPOINT ENERGY RESOURCES CORP. AND SUBSIDIARIES

(AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.)

CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS

(Unaudited)


		Nine Months Ended September 30,					Three Months Ended March 31,
		2020		2019			2021		2020
		(in millions)					(in millions)
Cash Flows from Operating Activities:	Cash Flows from Operating Activities:					Cash Flows from Operating Activities:
Net income	Net income	$	76	$	159	Net income	$	151	$	67
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	226		218		Depreciation and amortization	80		74
Depreciation and amortization on assets held for sale		0		10

Amortization of deferred financing costs	Amortization of deferred financing costs	7		8		Amortization of deferred financing costs	1		3
Deferred income taxes	Deferred income taxes	19		26		Deferred income taxes	41		23
Goodwill impairment and loss from reclassification to held for sale	Goodwill impairment and loss from reclassification to held for sale	93		0		Goodwill impairment and loss from reclassification to held for sale	0		132

Write-down of natural gas inventory	Write-down of natural gas inventory	3		5		Write-down of natural gas inventory	0		3

Changes in other assets and liabilities:	Changes in other assets and liabilities:					Changes in other assets and liabilities:
Accounts receivable and unbilled revenues, net	Accounts receivable and unbilled revenues, net	402		653		Accounts receivable and unbilled revenues, net	(41)		169
Accounts receivable/payable–affiliated companies	Accounts receivable/payable–affiliated companies	(8)		(9)		Accounts receivable/payable–affiliated companies	(5)		0
Inventory	Inventory	(3)		(47)		Inventory	64		114
Taxes receivable		0		(4)

Accounts payable	Accounts payable	(180)		(458)		Accounts payable	(10)		(159)
Fuel cost recovery		(5)		68

Interest and taxes accrued	Interest and taxes accrued	(18)		(23)		Interest and taxes accrued	18		(11)
Non-trading derivatives, net	Non-trading derivatives, net	(13)		(60)		Non-trading derivatives, net	0		(54)
Margin deposits, net	Margin deposits, net	65		(33)		Margin deposits, net	0		21
Net regulatory assets and liabilities	Net regulatory assets and liabilities	(23)		(1)		Net regulatory assets and liabilities	(2,065)		10
Other current assets	Other current assets	4		11		Other current assets	2		(1)
Other current liabilities	Other current liabilities	(7)		(9)		Other current liabilities	(13)		(13)
Other assets	Other assets	7		(3)		Other assets	(2)		18
Other liabilities	Other liabilities	8		2		Other liabilities	(8)		(15)
Other operating activities, net		(7)		0
Net cash provided by operating activities		646		513

Net cash provided by (used in) operating activities						Net cash provided by (used in) operating activities	(1,787)		381
Cash Flows from Investing Activities:	Cash Flows from Investing Activities:					Cash Flows from Investing Activities:
Capital expenditures	Capital expenditures	(624)		(546)		Capital expenditures	(133)		(176)

Decrease (increase) in notes receivable–affiliated companies		(9)		27

Proceeds from divestiture (Note 3)		286		0
Other investing activities, net		8		4

Other, net						Other, net	2		(1)

Net cash used in investing activities	Net cash used in investing activities	(339)		(515)		Net cash used in investing activities	(131)		(177)
Cash Flows from Financing Activities:	Cash Flows from Financing Activities:					Cash Flows from Financing Activities:
Increase in short-term borrowings, net		31		0

Proceeds from commercial paper, net		30		100

Proceeds from (payments of) commercial paper, net						Proceeds from (payments of) commercial paper, net	226		(172)
Proceeds from long-term debt						Proceeds from long-term debt	1,699		0

Dividends to parent	Dividends to parent	(80)		(119)		Dividends to parent	0		(32)
Debt issuance costs						Debt issuance costs	(6)		0

Capital distribution to parent associated with the sale of CES		(286)		0
Other financing activities, net		(2)		(2)
Other, net						Other, net	(1)		(1)

Net cash used in financing activities		(307)		(21)
Net cash provided by (used in) financing activities						Net cash provided by (used in) financing activities	1,918		(205)
Net Decrease in Cash, Cash Equivalents and Restricted Cash	Net Decrease in Cash, Cash Equivalents and Restricted Cash	0		(23)		Net Decrease in Cash, Cash Equivalents and Restricted Cash	0		(1)
Cash, Cash Equivalents and Restricted Cash at Beginning of Period	Cash, Cash Equivalents and Restricted Cash at Beginning of Period	2		25		Cash, Cash Equivalents and Restricted Cash at Beginning of Period	1		2
Cash, Cash Equivalents and Restricted Cash at End of Period	Cash, Cash Equivalents and Restricted Cash at End of Period	$	2	$	2	Cash, Cash Equivalents and Restricted Cash at End of Period	$	1	$	1

See Combined Notes to ~~Unaudited~~Interim Condensed ~~Consolidated~~ Financial Statements

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CENTERPOINT ENERGY RESOURCES CORP. AND SUBSIDIARIES

(AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.)

CONDENSED STATEMENTS OF CONSOLIDATED CHANGES IN EQUITY

(Unaudited)


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended March 31,
		2020			2019			2020			2019					2021		2020
		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount						Shares	Amount		Shares	Amount
		(in millions, except share amounts)															(in millions, except share amounts)
Common Stock	Common Stock													Common Stock
Balance, beginning of period	Balance, beginning of period	1,000	$	0	1,000	$	0	1,000	$	0	1,000	$	0	Balance, beginning of period				1,000	$	0	1,000	$	0
Balance, end of period	Balance, end of period	1,000	0		1,000	0		1,000	0		1,000	0		Balance, end of period				1,000	0		1,000	0
Additional Paid-in-Capital	Additional Paid-in-Capital													Additional Paid-in-Capital
Balance, beginning of period	Balance, beginning of period		1,829			2,015			2,116			2,015		Balance, beginning of period					2,046			2,116
Capital distribution to parent associated with the sale of CES			0			0			(286)			0

Other			0			0			(1)			0

Balance, end of period	Balance, end of period		1,829			2,015			1,829			2,015		Balance, end of period					2,046			2,116
Retained Earnings	Retained Earnings													Retained Earnings
Balance, beginning of period	Balance, beginning of period		518			486			515			423		Balance, beginning of period					511			515
Net income (loss)	Net income (loss)		(4)			(7)			76			159		Net income (loss)					151			67
Dividend to parent	Dividend to parent		(8)			(16)			(80)			(119)		Dividend to parent					0			(32)
Adoption of ASU 2016-13	Adoption of ASU 2016-13		0			0			(5)			0		Adoption of ASU 2016-13					—			(5)
Balance, end of period	Balance, end of period		506			463			506			463		Balance, end of period					662			545
Accumulated Other Comprehensive Income	Accumulated Other Comprehensive Income													Accumulated Other Comprehensive Income
Balance, beginning of period	Balance, beginning of period		10			5			10			5		Balance, beginning of period					10			10

Balance, end of period	Balance, end of period		10			5			10			5		Balance, end of period					10			10
Total Stockholder’s Equity	Total Stockholder’s Equity		$	2,345		$	2,483		$	2,345		$	2,483	Total Stockholder’s Equity					$	2,718		$	2,671

See Combined Notes to ~~Unaudited~~Interim Condensed ~~Consolidated~~ Financial Statements

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CENTERPOINT ENERGY, INC. AND SUBSIDIARIES

CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC AND SUBSIDIARIES

CENTERPOINT ENERGY RESOURCES CORP. AND SUBSIDIARIES

COMBINED NOTES TO ~~UNAUDITED~~INTERIM CONDENSED ~~CONSOLIDATED~~ FINANCIAL STATEMENTS

(1) Background and Basis of Presentation

General. This combined Form 10-Q is filed separately by ~~three~~3 registrants: CenterPoint Energy, Inc., CenterPoint Energy Houston Electric, LLC and CenterPoint Energy Resources Corp. Information contained herein relating to any individual registrant is filed by such registrant solely on its own behalf. Each registrant makes no representation as to information relating exclusively to the other Registrants or the subsidiaries of CenterPoint Energy other than itself or its subsidiaries.

Except as discussed in the last paragraph in Note 12 to the Registrants’ Interim Condensed ~~Consolidated~~ Financial Statements, no registrant has an obligation in respect of any other Registrant’s debt securities, and holders of such debt securities should not consider the financial resources or results of operations of any Registrant other than the obligor in making a decision with respect to such securities.

Included in this combined Form 10-Q are the Interim Condensed Financial Statements of CenterPoint Energy, Houston Electric and CERC, which are referred to collectively as the Registrants. The Combined Notes to the Unaudited Condensed Consolidated Financial Statements apply to all Registrants and specific references to Houston Electric and CERC herein also pertain to CenterPoint Energy, unless otherwise indicated. The Interim Condensed Financial Statements are unaudited, omit certain financial statement disclosures and should be read with the Registrants’ financial statements included in the Registrants’ combined ~~2019~~2020 Form 10-K. The Combined Notes to Interim Condensed Financial Statements apply to all Registrants and specific references to Houston Electric and CERC herein also pertain to CenterPoint Energy, unless otherwise indicated.

Background. CenterPoint Energy, Inc. is a public utility holding company and owns interests in Enable, a publicly traded MLP, as described below. As of ~~September 30, 2020,~~March 31, 2021, CenterPoint Energy’s operating subsidiaries reported as continuing operations were as follows:

•Houston Electric ~~owns and operates~~provides electric transmission service to transmission service customers in the ERCOT region and distribution ~~facilities in~~service to REPs serving the Texas Gulf Coast area that includes the city of Houston.

•CERC (i) owns and operates natural gas distribution systems in 6 states; (ii) owns and operates permanent pipeline connections through interconnects with various interstate and intrastate pipeline companies through CEIP; and (iii) provides temporary delivery of LNG and CNG throughout the contiguous 48 states through MES.

•Vectren holds ~~three~~3 public utilities through its wholly-owned subsidiary, VUHI, a public utility holding company:

•Indiana Gas provides energy delivery services to natural gas customers located in central and southern Indiana;

•SIGECO provides energy delivery services to electric and natural gas customers located in and near Evansville in southwestern Indiana and owns and operates electric generation assets to serve its electric customers and optimizes those assets in the wholesale power market; and

•VEDO provides energy delivery services to natural gas customers located in and near Dayton in west-central Ohio.

•Vectren performs non-utility activities through ESG, which provides energy performance contracting and sustainable infrastructure services, such as renewables, distributed generation and combined heat and power projects.

As of ~~September 30, 2020,~~March 31, 2021, CenterPoint ~~Energy, indirectly through~~Energy’s reportable segments were Electric, Natural Gas and Midstream Investments. Houston Electric and CERC each consist of a single reportable segment. For a description of CenterPoint Energy’s reportable segments, see Note 16.

As of March 31, 2021, CNP Midstream owned approximately 53.7% of the common units representing limited partner interests in Enable, which owns, operates and develops natural gas and crude oil infrastructure assets; CNP Midstream also owned 50% of the management rights and 40% of the incentive distribution rights in Enable GP GP. On February 16, 2021, Enable entered into the Enable Merger Agreement. At the closing of the transactions contemplated by the Enable Merger Agreement, if

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and ~~also directly owned an aggregate~~when it occurs, Energy Transfer will acquire all of Enable’s outstanding equity interests, including all Enable common units and Enable Series A Preferred Units held by CenterPoint Energy, and in return CenterPoint Energy will receive Energy Transfer common units and Energy Transfer Series G Preferred Units. For additional information regarding CenterPoint Energy’s interest in Enable, including the 14,520,000 Enable Series A Preferred ~~Units.~~Units directly owned by CenterPoint Energy, and the Enable ~~owns, operates and develops natural gas and crude oil infrastructure assets.~~Merger, see Note 9.

As of ~~September 30, 2020,~~March 31, 2021, CenterPoint Energy and Houston Electric had VIEs consisting of the Bond Companies, which are consolidated. The consolidated VIEs are wholly-owned, bankruptcy-remote, special purpose entities that were formed solely for the purpose of securitizing transition and system restoration-related property. Creditors of CenterPoint Energy and Houston Electric have no recourse to any assets or revenues of the Bond Companies. The bonds issued by these VIEs are payable only

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from and secured by transition and system restoration property, and the bondholders have no recourse to the general credit of CenterPoint Energy or Houston Electric.

Basis of Presentation. The preparation of the Registrants’ financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The Interim Condensed Financial Statements reflect all normal recurring adjustments that are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows for the respective periods. Amounts reported in the Condensed Statements of Consolidated Income are not necessarily indicative of amounts expected for a full-year period due to the effects of, among other things, (a) seasonal fluctuations in demand for energy and energy services, (b) changes in energy commodity prices, (c) timing of maintenance and other expenditures and (d) acquisitions and dispositions of businesses, assets and other interests. Certain prior year amounts have been reclassified to conform to the current year ~~presentation.~~reportable segment presentation described in the 2020 Form 10-K.

~~Discontinued Operations.~~ On February 3, 2020, CenterPoint Energy, through its subsidiary VUSI, entered into the Securities Purchase Agreement to sell the Infrastructure Services Disposal Group, which provided underground pipeline construction and repair services through wholly-owned subsidiaries Miller Pipeline, LLC and Minnesota Limited, LLC and served natural gas utilities across the United States, focusing on recurring integrity, station and maintenance work and opportunities for large transmission pipeline construction projects. The transaction closed on April 9, 2020. See Note 3 for further information.

Additionally, on February 24, 2020, CenterPoint Energy, through its subsidiary CERC Corp., entered into the Equity Purchase Agreement to sell the Energy Services Disposal Group, which obtained and offered competitive variable and fixed-price physical natural gas supplies and services primarily to commercial and industrial customers and electric and natural gas utilities in over 30 states. The transaction closed on June 1, 2020. See Note 3 for further information.

~~COVID-19 Impacts.~~On March 11, 2020, the World Health Organization declared the current COVID-19 outbreak to be a global pandemic, and on March 13, 2020, the United States declared a national emergency. In response to these declarations and the rapid spread of COVID-19, federal, state and local governments have imposed varying degrees of restrictions on business and social activities to contain COVID-19, including business shutdowns and closures, travel restrictions, quarantines, curfews, shelter in place and “stay-at-home” orders in the Registrants’ service territories. State and local authorities have also implemented multi-step policies with the goal of re-opening various sectors of the economy such as retail establishments, health and personal care businesses, and restaurants, among others. Governing authorities continue to reassess re-opening approaches and decisions for their respective jurisdictions given the number of COVID-19 cases and hospitalizations. The COVID-19 outbreak may significantly worsen in the United States during the upcoming winter months, which may cause federal, state and local governments to reconsider restrictions on business and social activities. In the event governments increase restrictions, the re-opening of the economy may be further curtailed. The Registrants have experienced some resulting disruptions to their business operations, as these restrictions significantly impacted, and may continue to impact, many sectors of the economy with various businesses curtailing or ceasing normal operations. The Registrants’ electric facilities and natural gas distribution systems, as applicable, have remained operational, and their respective customers have continued to receive service. While residential electric usage has increased as individuals continue to stay at home or work remotely, the Registrants have experienced reduced demand and usage among their respective electric and natural gas commercial and industrial customers, as well as a decrease in revenues related to disconnections and reconnections due to the varying disconnect moratoriums across their service territories during 2020 due to COVID-19. Houston Electric is following PUCT orders regarding disconnection practices related to those customers impacted by COVID-19. See Note 6 for further discussion. As a result of the disconnect moratoriums across CenterPoint Energy’s and CERC’s NGD service territories and other payment deferrals or arrangements, days outstanding on receivables and uncollectible accounts have increased, resulting in an increase to allowance for doubtful accounts, which may ultimately increase further. However, CenterPoint Energy’s NGD and CERC’s NGD service territories and Indiana Electric have either (1) received authority from their public utility commissions to defer bad debt expense associated with COVID-19 as a regulatory asset or (2) exercised existing authority to recover bad debt expense through a tracking mechanism. Some of the Registrants also received authority to recover other COVID-19 costs but must offset those costs with any cost reductions attributable to COVID-19. The ultimate impacts of the COVID-19 pandemic on the Registrants’ businesses will depend on future developments and evolving factors, including, among others, the ultimate spread, scope and duration of the pandemic, the consequences of governmental and other measures designed to prevent the spread of COVID-19, the development of effective treatments or vaccines, actions taken by governmental authorities, customers, suppliers and other third parties, workforce availability and the timing and extent to which normal economic and operating conditions resume. While the Registrants continue to assess the COVID-19 situation, they cannot estimate with any degree of certainty the full impact of the COVID-19 pandemic on their liquidity, financial condition and future results of operations at this time. However,

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~~the Registrants expect the COVID-19 situation to adversely impact future quarters. See Notes 5 and 6 for further information on COVID-19’s impact on the Registrants.~~

(2) New Accounting Pronouncements

~~The following table provides an overview of certain recently adopted or issued accounting pronouncements applicable to all the Registrants, unless otherwise noted.~~

~~Recently Adopted Accounting Standards~~

~~ASU Number and Name~~

~~Description~~

~~Date of Adoption~~

Financial Statement Impact
upon Adoption

~~ASU 2016-13- Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments~~

This standard, including standards amending this standard, requires a new model called CECL to estimate credit losses for (1) financial assets subject to credit losses and measured at amortized cost and (2) certain off-balance sheet credit exposures. Upon initial recognition of the exposure, the CECL model requires an entity to estimate the credit losses expected over the life of an exposure based on historical information, current information and reasonable and supportable forecasts, including estimates of prepayments.
~~Transition method:modified retrospective~~

~~January 1, 2020~~

The Registrants adopted the standard and recognized a cumulative-effect adjustment of the transition to opening retained earnings and allowance for doubtful accounts with no impact on results of operations and cash flows. See Note 4 for more information.

~~ASU 2018-13- Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement~~

~~This standard eliminates, modifies and adds certain disclosure requirements for fair value measurements.~~
~~Transition method:~~ ~~prospective for additions and one modification and retrospective for all other amendments~~

~~Adoption of eliminations and modifications as of September 30, 2018 and additions as of January 1, 2020~~

The adoption of this standard did not impact the Registrants’ financial position, results of operations or cash flows. The disclosures modified and added upon adoption are no longer included in Note 8 due to the sale of the Energy Services Disposal Group.

~~ASU 2019-12: Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes~~

This standard simplifies accounting for income taxes by eliminating certain exceptions to the guidance for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. It also simplifies aspects of the accounting for franchise taxes that are partially based on income and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill.

~~Transition method:~~ ~~prospective for all amendments that apply to the Registrants~~

~~January 1, 2020~~

Upon adoption, the Registrants are not required to apply the intraperiod tax allocation exception when there is a current-period loss from continuing operations. Accordingly, CenterPoint Energy determined the tax effect of income from continuing operations without considering the tax effects of items that are not included in continuing operations (i.e., discontinued operations). Additionally, CenterPoint Energy is no longer required to limit the year-to-date tax benefit recognized when the year-to-date benefit exceeds the anticipated full year benefit.

~~Issued, Not Yet Effective Accounting Standards~~

~~ASU Number and Name~~

~~Description~~

~~Effective Date~~

Financial Statement Impact
upon Adoption

ASU 2020-06: Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity

This standard eliminates the cash conversion and beneficial conversion feature models in ASC 470-20 that require separate accounting for embedded features as a component of equity. It simplifies the settlement assessment that entities are required to perform to determine whether a contract qualifies for equity classification. The standard also requires entities to use the if-converted method for all convertible instruments in the diluted earnings per share (EPS) calculation and the average market price to calculate the diluted EPS denominator. Additional disclosures will also be required upon adoption.

~~Transition method: modified retrospective~~

January 1, 2022

Early adoption is permitted starting January 1, 2021

CenterPoint Energy is currently assessing the impact that the adoption of this standard may have on its financial position, results of operations, cash flows and disclosures related to its Series B Preferred Stock and Series C Preferred Stock.

Management believes that ~~other~~ recently adopted and recently issued accounting standards that are not yet effective will not have a material impact on the Registrants’ financial position, results of operations or cash flows upon adoption.

(3) Divestitures (CenterPoint Energy and CERC)

~~Divestiture~~CenterPoint Energy completed the sale of the Infrastructure Services ~~(CenterPoint Energy).~~ ~~On February 3,~~Disposal Group on April 9, 2020 for $850 million and collected a receivable of $4 million from PowerTeam Services in January 2021 for full and final settlement of the working capital adjustment in the Securities Purchase Agreement. CenterPoint Energy, through its subsidiary ~~VUSI, entered into~~CERC Corp., completed the ~~Securities Purchase Agreement to sell~~sale of the Energy Services Disposal Group on June 1, 2020 for $286 million in cash and collected a receivable for $79 million in October 2020 for full and final settlement of the working capital adjustment.. The earnings and expenses directly associated with these dispositions for the three months ended March 31, 2020 are reflected as discontinued operations on CenterPoint Energy’s and CERC’s Condensed Statements of Consolidated Income, as applicable.

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A summary of the Infrastructure Services and Energy Services Disposal ~~Group~~Groups presented in CenterPoint Energy’s and CERC’s Condensed Statements of Consolidated Income, as applicable, is as follows:


	Three Months Ended March 31, 2020
	CenterPoint Energy				CERC
	Infrastructure Services Disposal Group		Energy Services Disposal Group		Total		Energy Services Disposal Group
	(in millions)
Revenues	$	222	$	886	$	1,108	$	886
Expenses:
Non-utility cost of revenues	44		808		852		808
Operation and maintenance	163		20		183		20

Taxes other than income taxes	1		1		2		1
Total expenses	208		829		1,037		829


Income (loss) from Discontinued Operations before income taxes	14		57		71		57
Loss on classification to held for sale, net (1)	(96)		(138)		(234)		(132)
Income tax benefit	(5)		(12)		(17)		(11)
Net loss from Discontinued Operations	$	(77)	$	(69)	$	(146)	$	(64)

(1)Loss from classification to ~~PowerTeam Services. Subject~~held for sale is inclusive of goodwill impairment, gains and losses recognized upon sale, and for CenterPoint Energy, its costs to sell.

CenterPoint Energy and CERC have elected not to separately disclose discontinued operations on their respective Condensed Statements of Consolidated Cash Flows. Unregulated long-lived assets are not depreciated or amortized once they are classified as held for sale. The following table summarizes CenterPoint Energy’s and CERC’s cash flows from discontinued operations and certain supplemental cash flow disclosures related to the ~~terms~~Infrastructure Services and ~~conditions~~Energy Services Disposal Groups, as applicable:


	Three Months Ended March 31, 2020
	CenterPoint Energy				CERC
	Infrastructure Services Disposal Group		Energy Services Disposal Group		Energy Services Disposal Group
	(in millions)


Write-down of natural gas inventory	$	0	$	3	$	3
Capital expenditures	16		1		1
Non-cash transactions:
Accounts payable related to capital expenditures	2		4		4

Other Sale Related Matters (CenterPoint Energy and CERC). CES provided natural gas supply to CenterPoint Energy’s and CERC’s Natural Gas under contracts executed in a competitive bidding process, with the duration of some contracts extending into 2021. In addition, CERC is the natural gas transportation provider for a portion of CES’s customer base and will continue to be the transportation provider for these customers as long as these customers retain a relationship with the divested CES business.

Transactions between CES and CenterPoint Energy’s and CERC’s Natural Gas that were previously eliminated in consolidation have been reflected in continuing operations until June 1, 2020, which was the date of closing of the ~~Securities Purchase Agreement, PowerTeam Services agreed to purchase all~~sale of the ~~outstanding equity interests of VISCO for approximately $850 million, subject to customary adjustments set~~Energy Services Disposal Group. Revenues and expenses included in continuing operations were as follows:








	Three Months Ended March 31, 2020
	CenterPoint Energy		CERC
	(in millions)
Transportation revenue	$	16	$	16
Natural gas expense	45		44

Natural Gas had AMAs associated with their utility distribution service in Arkansas, Louisiana and Oklahoma with the

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~~forth~~Energy Services Disposal Group which expired in March 2021. The expired AMAs were replaced with new third-party AMAs beginning in April 2021. CenterPoint Energy and CERC had outstanding obligations related to the ~~Securities Purchase Agreement, including adjustments based on VISCO’s net working capital at closing, indebtedness, cash~~AMAs of $-0- and ~~cash equivalents and transaction expenses. The transaction closed on April 9, 2020 for $850~~$24 million ~~in cash. Additionally,~~ as of ~~September 30,~~March 31, 2021 and December 31, 2020, ~~CenterPoint Energy had a receivable from PowerTeam Services for working capital and other adjustments set forth in the Security Purchase Agreement.~~respectively.

~~In February 2020, certain assets and liabilities representing the~~The Infrastructure Services Disposal Group ~~met the held for sale criteria~~provided pipeline construction and ~~represented all of the businesses within the reporting unit.~~repair services to CenterPoint Energy’s and CERC’s Natural Gas. In accordance with consolidation guidance in ASC 980—Regulated Operations, costs incurred by Natural Gas utilities for these pipeline construction and repair services are not eliminated in consolidation when capitalized and included in rate base by the ~~Securities Purchase Agreement, VISCO was converted from a wholly-owned corporation to a limited liability company~~Natural Gas utility. Amounts charged for these services that ~~was disregarded for federal income tax purposes immediately prior to the closing of the transaction resulting~~are not capitalized are included primarily in the sale of membership units. The sale was considered an asset sale for tax purposes, requiring net deferred tax liabilities of approximately $127 million as of April 9, 2020, the date the transaction closed, to be recognized as a deferred income tax benefitOperation and maintenance expenses. Fees incurred by CenterPoint ~~Energy. Additionally, CenterPoint Energy recognized a current tax benefit of $2 million~~Energy’s and ~~a current tax expense of $157 million in the three~~CERC’s Natural Gas for pipeline construction and ~~nine months ended September 30, 2020, respectively,~~repair services are as ~~a result of the cash taxes payable upon sale.~~follows:

Upon classifying the Infrastructure Services Disposal Group as held for sale and in connection with the preparation of CenterPoint Energy’s financial statements as of the three months ended March 31, 2020, CenterPoint Energy recorded a goodwill impairment of approximately $82 million, plus an additional loss of $14 million for cost to sell, in the nine months ended September 30, 2020. Additionally, CenterPoint Energy recognized a net pre-tax loss of $9 million and $6 million in connection with the closing of the disposition of the Infrastructure Services Disposal Group during the three and nine months ended September 30, 2020, respectively.








	Three Months Ended March 31, 2020
	CenterPoint Energy		CERC
	(in millions)
Pipeline construction and repair services capitalized	$	34	$	0
Pipeline construction and repair service charges in operations and maintenance expense	1		1

In the Securities Purchase Agreement, CenterPoint Energy agreed to a mechanism to reimburse PowerTeam Services subsequent to closing of the sale for certain amounts of specifically identified change orders that may be ultimately rejected by one of VISCO’s customers as part of on-going audits. CenterPoint Energy’s maximum contractual exposure under the Securities Purchase Agreement, in addition to the amount reflected in the working capital adjustment, for these change orders is $21 million. CenterPoint Energy does not expect the ultimate outcome of this matter to have a material adverse effect on its financial condition, results of operations or cash flows.

~~Divestiture of Energy Services (CenterPoint Energy and CERC).~~ ~~On February 24, 2020,~~ CenterPoint Energy through its subsidiary CERC Corp., entered into the Equity Purchase Agreement to sell the Energy Services Disposal Group to Symmetry Energy Solutions Acquisition. This transaction did not include CEIP and its assets or MES. Symmetry Energy Solutions Acquisition agreed to purchase all of the outstanding equity interests of the Energy Services Disposal Group for approximately $400 million, subject to customary adjustments set forthanticipates this matter will be resolved in the Equity Purchase Agreement, and inclusive of an estimate of the cash adjustment for the Energy Services Disposal Group’s net working capital at closing, indebtedness and transaction expenses. The transaction closed on June 1, 2020 for approximately $286 million in cash. Additionally, as of September 30, 2020, CenterPoint Energy had a receivable of $79 million from Symmetry Energy Solutions Acquisition for working capital and other adjustments set forth in the Equity Purchase Agreement. CenterPoint Energy collected such receivable in October 2020 for full and final settlement of the working capital adjustment under the Equity Purchase Agreement.

In February 2020, certain assets and liabilities representing the Energy Services Disposal Group met the criteria to be classified as held for sale and represented substantially all of the businesses within the reporting unit. In accordance with the Equity Purchase Agreement, CES was converted from a wholly-owned corporation to a limited liability company that is disregarded for federal income tax purposes immediately prior to the closing of the transaction resulting in the sale of membership units. The sale was considered an asset sale for tax purposes, requiring the net deferred tax liability of approximately $3 million as of June 1, 2020, the date the transaction closed, to be recognized as a deferred tax benefit by CenterPoint Energy and CERC upon closing. Additionally, CenterPoint Energy and CERC recognized current tax expense of $1 million and $4 million in the three and nine months ended September 30, 2020, respectively, as a result of the cash taxes payable upon sale.

Upon classifying the Energy Services Disposal Group as held for sale and in connection with the preparation of CenterPoint Energy’s and CERC’s respective financial statements as of the three months ended March 31, 2020, CenterPoint Energy and CERC recorded a goodwill impairment of approximately $62 million in the nine months ended September 30, 2020. Additionally, CenterPoint Energy recognized a loss on assets held for sale of approximately $-0- and $31 million, plus an additional loss of $-0- and $6 million for cost to sell, recorded only at CenterPoint Energy during the three and nine months ended September 30, 2020, respectively. CenterPoint Energy and CERC recognized a gain on sale of $3 million in the three and nine months ended September 30, 2020.

As a result of the sale of the Energy Services and Infrastructure Services Disposal Groups, there were no assets or liabilities classified as held for sale as of September 30, 2020. The assets and liabilities of the Infrastructure Services and Energy Services Disposal Groups as of December 31, 2019 have been recast as assets and liabilities held for sale and retained their current or

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~~long-term classification applicable as of December 31, 2019. Long-lived assets are not depreciated or amortized once they are classified as held for sale.~~ The assets and liabilities of the Infrastructure Services and Energy Services Disposal Groups classified as held for sale in CenterPoint Energy’s and CERC’s Condensed Consolidated Balance Sheets, as applicable, as of December 31, 2019 included the following:

December 31, 2019
CenterPoint Energy CERC
Infrastructure Services Disposal Group Energy Services Disposal Group Total Energy Services Disposal Group
(in millions)
Receivables, net $ 192 $ 445 $ 637 $ 445
Accrued unbilled revenues 109 8 117 8
Natural gas inventory 0 67 67 67
Materials and supplies 6 0 6 0
Non-trading derivative assets 0 136 136 136
Other 4 35 39 35
Total current assets held for sale 311 691 1,002 691
Property, plant and equipment, net 295 26 321 26
Goodwill
220 62 282 62
Non-trading derivative assets 0 58 58 58
Other 234 67 301 67
Total non-current assets held for sale 749 213 962 213
Total assets held for sale $ 1,060 $ 904 $ 1,964 $ 904
Accounts payable $ 45 $ 299 $ 344 $ 299
Taxes accrued 2 0 2 0
Non-trading derivative liabilities 0 44 44 44
Other 40 25 65 25
Total current liabilities held for sale 87 368 455 368
Non-trading derivative liabilities 0 14 14 14
Benefit obligations 0 4 4 4
Other 16 9 25 9
Total non-current liabilities held for sale 16 27 43 27
Total liabilities held for sale $ 103 $ 395 $ 498 $ 395

Because the Infrastructure Services and Energy Services Disposal Groups met the held for sale criteria and their disposals also represent a strategic shift to CenterPoint Energy and CERC, as applicable, the earnings and expenses directly associated with these dispositions, including operating results of the businesses through the date of sale, are reflected as discontinued operations on CenterPoint Energy’s and CERC’s Statements of Consolidated Income, as applicable. As a result, prior periods have also been recast to reflect the earnings or losses from such businesses as income from discontinued operations, net of tax.

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~~A summary of the Infrastructure Services and Energy Services Disposal Groups presented in CenterPoint Energy’s and CERC’s Condensed Statements of Consolidated Income, as applicable, is as follows:~~

Three Months Ended September 30,
2020 2019 2020 2019 2020 2019 2020 2019
CenterPoint Energy CERC
Infrastructure Services Disposal Group Energy Services Disposal Group Total Energy Services Disposal Group
(in millions)
Revenues $ 0 $ 377 $ 0 $ 740 $ 0 $ 1,117 $ 0 $ 740
Expenses:
Non-utility cost of revenues 0 96 0 715 0 811 0 715
Operation and maintenance 0 235 0 17 0 252 0 17
Depreciation and amortization 0 15 0 3 0 18 0 3
Taxes other than income taxes 0 1 0 0 0 1 0 0
Total 0 347 0 735 0 1,082 0 735
Income (loss) from Discontinued Operations before income taxes 0 30 0 5 0 35 0 5
Gain (loss) on classification to held for sale, net (2) (9) 0 3 0 (6) 0 3 0
Income tax expense (benefit) (1) 15 1 1 0 16 1 2
Net income (loss) from Discontinued Operations $ (8) $ 15 $ 2 $ 4 $ (6) $ 19 $ 2 $ 3

Nine Months Ended September 30,
2020
2019 (1)
2020 2019 2020 2019 2020 2019
CenterPoint Energy CERC
Infrastructure Services Disposal Group Energy Services Disposal Group Total Energy Services Disposal Group
(in millions)
Revenues $ 250 $ 849 $ 1,167 $ 2,834 $ 1,417 $ 3,683 $ 1,167 $ 2,834
Expenses:
Non-utility cost of revenues 50 228 1,108 2,701 1,158 2,929 1,108 2,701
Operation and maintenance 184 526 34 51 218 577 34 51
Depreciation and amortization 0 39 0 10 0 49 0 10
Taxes other than income taxes 1 1 3 0 4 1 3 0
Total 235 794 1,145 2,762 1,380 3,556 1,145 2,762
Income (loss) from Discontinued Operations before income taxes 15 55 22 72 37 127 22 72
Gain (loss) on classification to held for sale, net (2) (102) 0 (96) 0 (198) 0 (90) 0
Income tax expense (benefit) 24 21 (3) 17 21 38 (2) 15
Net income (loss) from Discontinued Operations $ (111) $ 34 $ (71) $ 55 $ (182) $ 89 $ (66) $ 57

~~(1)Reflects February 1, 2019 to September 30, 2019 results only due to the Merger.~~

~~(2)Loss from classification to held for sale is inclusive of goodwill impairment, gains and losses recognized upon sale, and for CenterPoint Energy, its costs to sell.~~

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~~CenterPoint Energy and CERC have elected not to separately disclose discontinued operations on their respective Condensed Statements of Consolidated Cash Flows. Long-lived assets are not depreciated or amortized once they are classified as held for sale.~~ The following table summarizes CenterPoint Energy’s and CERC’s cash flows from discontinued operations and certain supplemental cash flow disclosures related to the Infrastructure Services and Energy Services Disposal Groups, as applicable:

Nine Months Ended September 30,
2020
2019 (1)
2020 2019 2020 2019
CenterPoint Energy CERC
Infrastructure Services Disposal Group Energy Services Disposal Group Energy Services Disposal Group
(in millions)
Depreciation and amortization $ 0 $ 39 $ 0 $ 10 $ 0 $ 10
Amortization of intangible assets in Non-utility cost of revenues 0 15 0 0 0 0
Write-down of natural gas inventory 0 0 3 5 3 5
Capital expenditures 16 53 1 12 1 12
Non-cash transactions:
Accounts payable related to capital expenditures 2 1 4 1 4 1

~~(1)Reflects February 1, 2019 to September 30, 2019 results only due to the Merger.~~

~~Other Sale Related Matters (CenterPoint Energy and CERC).~~ ~~CES provided natural gas supply to CenterPoint Energy’s and CERC’s NGD under contracts executed in a competitive bidding process, with the duration of some contracts extending into~~ 2021. In addition, CERC is the natural gas transportation provider for a portion of CES’s customer base and will continue to be the transportation provider for these customers as long as these customers retain a relationship with the divested CES business.

~~Revenues and expenses incurred by CenterPoint Energy and CERC for natural gas transportation and supply until the closing of the sale of the Energy Services Disposal Group were as follows:~~

Three Months Ended September 30,
2020
2019 2020 2019
CenterPoint Energy CERC
(in millions)
Transportation revenue $ 0 $ 33 $ 0 $ 33
Natural gas expense 0 10 0 10
Nine Months Ended September 30,
2020 (1)
2019
2020 (1)
2019
CenterPoint Energy CERC
(in millions)
Transportation revenue $ 34 $ 81 $ 34 $ 81
Natural gas expense 48 90 47 89

~~(1)Represents charges for the period January 1, 2020 until the closing of the sale of the Energy Services Disposal Group.~~

NGD has AMAs associated with its utility distribution service in Arkansas, Louisiana, Mississippi, Oklahoma and Texas. The AMAs are with the Energy Services Disposal Group and will expire in 2021. Pursuant to the provisions of the agreements, NGD sells natural gas and agrees to repurchase an equivalent amount of natural gas during the winter heating seasons at the same cost. These transactions are accounted for as inventory financing. CenterPoint Energy and CERC had outstanding obligations related to the AMAs of $31 million and $-0- as of September 30, 2020 and December 31, 2019, respectively.

The Infrastructure Services Disposal Group provides pipeline construction and repair services to CenterPoint Energy’s and CERC’s NGD. In accordance with consolidation guidance in ASC 980—Regulated Operations, costs incurred by NGD utilities for these pipeline construction and repair services are not eliminated in consolidation when capitalized and included in rate base by the NGD utility. Amounts charged for these services that are not capitalized are included primarily in Operation and maintenance expenses. Fees incurred by CenterPoint Energy’s and CERC’s NGD for pipeline construction and repair services

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~~are as follows:~~

Three Months Ended September 30,
2020 2019 2020 2019
CenterPoint Energy CERC
(in millions)
Pipeline construction and repair services capitalized $ 0 $ 45 $ 0 $ 3
Pipeline construction and repair service charges in operations and maintenance expense 0 1 0 1
Nine Months Ended September 30,
2020 (1)
2019 (2)
2020 2019
CenterPoint Energy CERC
(in millions)
Pipeline construction and repair services capitalized $ 34 $ 112 $ 0 $ 12
Pipeline construction and repair service charges in operations and maintenance expense 1 5 1 2

~~(1)Represents charges for the period January 1, 2020 until the closing of the sale of the Infrastructure Services Disposal Group.~~

~~(2)Represents charges for the period beginning February 1, 2019 due to the Merger.~~

(4) Revenue Recognition and ~~Provision~~Allowance for ~~Doubtful Accounts~~Credit Losses

Revenues from Contracts with Customers

In accordance with ASC 606, Revenue from Contracts with Customers, revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which the Registrants expect to be entitled to receive in exchange for these goods or services. The revenues and related balances in the following tables exclude operating revenues and balances from the Energy Services Disposal Group and the Infrastructure Services Disposal Group, which are reflected as discontinued operations ~~and assets held for sale~~ prior to the date of closing of each transaction. See Note 3 for further information. Certain prior year amounts have been reclassified to conform to the current year reportable segment presentation described in the Registrants’ combined 2020 Form 10-K.

~~The following tables disaggregate revenues by reportable segment and major source:~~

~~CenterPoint Energy~~

Three Months Ended September 30, 2020
Houston Electric
T&D Indiana
Electric Integrated Natural Gas Distribution Corporate
and Other Total
(in millions)
Revenue from contracts $ 828 $ 157 $ 550 $ 75 $ 1,610
Other (1)
0 0 10 2 12
Total revenues $ 828 $ 157 $ 560 $ 77 $ 1,622
Nine Months Ended September 30, 2020
Houston Electric
T&D Indiana
Electric Integrated Natural Gas Distribution Corporate
and Other Total
(in millions)
Revenue from contracts $ 2,188 $ 414 $ 2,475 $ 240 $ 5,317
Other (1)
(2) 0 44 5 47
Total revenues $ 2,186 $ 414 $ 2,519 $ 245 $ 5,364

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Three Months Ended September 30, 2019
Houston Electric
T&D Indiana
Electric Integrated Natural Gas Distribution Corporate
and Other Total
(in millions)
Revenue from contracts $ 861 $ 165 $ 527 $ 91 $ 1,644
Other (1)
(2) 0 14 2 14
Total revenues $ 859 $ 165 $ 541 $ 93 $ 1,658
Nine Months Ended September 30, 2019
Houston Electric
T&D Indiana
Electric Integrated (2) Natural Gas Distribution (2) Corporate
and Other (2) Total
(in millions)
Revenue from contracts $ 2,319 $ 388 $ 2,603 $ 210 $ 5,520
Other (1)
(6) 0 26 5 25
Total revenues $ 2,313 $ 388 $ 2,629 $ 215 $ 5,545

~~(1)Primarily consists of income from ARPs, weather hedge gains (losses) and leases.~~ ARPs are contracts between the utility and its regulators, not between the utility and a customer. The Registrants recognize ARP revenue as other revenues when the regulator-specified conditions for recognition have been met. Upon recovery of ARP revenue through incorporation in rates charged for utility service to customers, ARP revenue is reversed and recorded as revenue from contracts with customers. The recognition of ARP revenues and the reversal of ARP revenues upon recovery through rates charged for utility service may not occur in the same period. Total lease income was $2 million and $4 million for the three months ended September 30, 2020 and 2019, respectively, and $4 million and $5 million for the nine months ended September 30, 2020 and 2019, respectively.

~~(2)Reflects~~The following tables disaggregate revenues ~~from Vectren subsidiaries for the period from February 1, 2019 to September 30, 2019.~~by reportable segment and major source:

~~Houston Electric~~CenterPoint Energy


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31, 2021
		2020		2019		2020		2019			Electric		Natural Gas		Corporate and Other		Total
		(in millions)									(in millions)
Revenue from contracts	Revenue from contracts	$	828	$	861	$	2,188	$	2,319	Revenue from contracts	$	833	$	1,655	$	53	$	2,541
Other (1)	Other (1)	0		(2)		(6)		(9)		Other (1)	(3)		8		1		6

Total revenues	Total revenues	$	828	$	859	$	2,182	$	2,310	Total revenues	$	830	$	1,663	$	54	$	2,547











	Three Months Ended March 31, 2020
	Electric		Natural Gas		Corporate and Other		Total
	(in millions)
Revenue from contracts	$	767	$	1,296	$	78	$	2,141
Other (1)	0		25		1		26

Total revenues	$	767	$	1,321	$	79	$	2,167

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(1)Primarily consists of income from ARPs, weather hedge gains (losses) and leases. Total lease income was $2 million and $1 million for the three months ended March 31, 2021 and 2020, respectively.

Houston Electric


	Three Months Ended March 31,
			2021		2020
		(in millions)
Revenue from contracts			$	687	$	638
Other (1)			(3)		(4)
Total revenues			$	684	$	634

(1)Primarily consists of income from ARPs ~~are contracts between the utility~~ and its regulators, not between the utility and a customer. The Registrants recognize ARP revenue as other revenues when the regulator-specified conditions for recognition have been met. Upon recovery of ARP revenue through incorporation in rates charged for utility service to customers, ARP revenue is reversed and recorded as revenue from contracts with customers. The recognition of ARP revenues and the reversal of ARP revenues upon recovery through rates charged for utility service may not occur in the same period.leases. Lease income was not significant for the three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021 and ~~2019.~~2020.

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CERC


		Three Months Ended September 30,
		2020						2019							Three Months Ended March 31,
		Natural Gas Distribution		Corporate and Other		Total		Natural Gas Distribution		Corporate and Other		Total			2021		2020
		(in millions)													(in millions)
Revenue from contracts	Revenue from contracts	$	414	$	3	$	417	$	403	$	5	$	408	Revenue from contracts	$	1,172	$	984

Other (1)	Other (1)	8		1		9		12		0		12		Other (1)	5		27

Total revenues	Total revenues	$	422	$	4	$	426	$	415	$	5	$	420	Total revenues	$	1,177	$	1,011

		Nine Months Ended September 30,
		2020						2019
		Natural Gas Distribution		Corporate and Other		Total		Natural Gas Distribution		Corporate and Other		Total
		(in millions)
Revenue from contracts		$	1,865	$	8	$	1,873	$	2,123	$	6	$	2,129

Other (1)		45		2		47		29		0		29

Total revenues		$	1,910	$	10	$	1,920	$	2,152	$	6	$	2,158

(1)Primarily consists of income from ARPs, weather hedge gains (losses) and leases. ARPs are contracts between the utility and its regulators, not between the utility and a customer. The Registrants recognize ARP revenue as other revenues when the regulator-specified conditions for recognition have been met. Upon recovery of ARP revenue through incorporation in rates charged for utility service to customers, ARP revenue is reversed and recorded as revenue from contracts with customers. The recognition of ARP revenues and the reversal of ARP revenues upon recovery through rates charged for utility service may not occur in the same period. Lease income was not significant for the three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021 and ~~2019.~~2020.

Revenues from Contracts with Customers

~~Houston~~

Electric ~~T&D~~ (CenterPoint Energy and Houston Electric). Houston Electric distributes electricity to customers over time and customers consume the electricity when delivered. Indiana Electric generates, distributes and transmits electricity to customers over time, and customers consume the electricity when delivered. Revenue, consisting of both volumetric and fixed tariff rates set by state regulators, such as the PUCT and the IURC, is recognized as electricity is delivered and represents amounts both billed and unbilled. Discretionary services requested by customers are provided at a point in time with control transferring upon the completion of the service. Revenue for discretionary services provided by Houston Electric is recognized upon completion of service based on the tariff rates set by the PUCT. Payments for electricity distribution and discretionary services are aggregated and received on a monthly basis. Houston Electric performs transmission services over time as a stand-ready obligation to provide a reliable network of transmission systems. Revenue is recognized upon time elapsed, and the monthly tariff rate set by the ~~PUCT.~~regulator. Payments are received on a monthly basis.

Indiana Electric ~~Integrated (CenterPoint Energy).Indiana Electric generates, distributes and transmits electricity to~~ customers over time, and customers consume the electricity when delivered. Revenue, consisting of both volumetric and fixed tariff rates set by state regulators, is recognized as electricity is delivered and represents amounts both billed and unbilled. Customers are billed monthly and payment terms, set by the regulator, require payment within a month of billing.

Natural Gas ~~Distribution~~ (CenterPoint Energy and CERC). CenterPoint Energy and CERC distribute and transport natural gas to customers over time, and customers consume the natural gas when delivered. Revenue, consisting of both volumetric and fixed tariff rates set by the state governing agency for that service area, is recognized as natural gas is delivered and represents amounts both billed and unbilled. Discretionary services requested by the customer are satisfied at a point in time and revenue is recognized upon completion of service and the tariff rates set by the applicable state regulator. Payments of natural gas distribution, transportation and discretionary services are aggregated and received on a monthly basis.

Contract Balances. When the timing of delivery of service is different from the timing of the payments made by customers and when the right to consideration is conditioned on something other than the passage of time, the Registrants recognize either a contract asset (performance precedes billing) or a contract liability (customer payment precedes performance). Those customers that prepay are represented by contract liabilities until the performance obligations are satisfied. The Registrants’ contract assets are included in Accrued unbilled revenues in their Condensed Consolidated Balance Sheets. As of ~~September 30, 2020,~~March 31, 2021, CenterPoint Energy’s contract assets primarily relate to ESG contracts where revenue is recognized using the input method. The Registrants’ contract liabilities are included in Accounts payable and Other current liabilities in their

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Condensed Consolidated Balance Sheets. As of ~~September 30, 2020,~~March 31, 2021, CenterPoint Energy’s contract liabilities primarily relate to ESG contracts where revenue is recognized using the input method.

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The opening and closing balances of accounts receivable related to ASC 606 revenues, other accrued unbilled revenue, contract assets and contract liabilities from contracts with customers from continuing operations as of December 31, ~~2019~~2020 and ~~September 30, 2020,~~March 31, 2021, respectively, are as follows:

CenterPoint Energy

Accounts Receivable Other Accrued Unbilled Revenues Contract
Assets Contract Liabilities
(in millions)
Opening balance as of December 31, 2019 $ 566 $ 469 $ 6 $ 30
Closing balance as of September 30, 2020 568 285 22 20
Increase (decrease) $ 2 $ (184) $ 16 $ (10)


	Accounts Receivable		Other Accrued Unbilled Revenues		Contract Assets		Contract Liabilities
	(in millions)
Opening balance as of December 31, 2020	$	604	$	505	$	27	$	18
Closing balance as of March 31, 2021	675		343		23		23
Increase (decrease)	$	71	$	(162)	$	(4)	$	5

The amount of revenue recognized in the ~~nine-month~~three-month period ended ~~September 30, 2020~~March 31, 2021 that was included in the opening contract liability was ~~$29~~$11 million. The difference between the opening and closing balances of the contract liabilities primarily results from the timing difference between CenterPoint Energy’s performance and the customer’s payment.

Houston Electric

Accounts Receivable Other Accrued Unbilled Revenues Contract Liabilities
(in millions)
Opening balance as of December 31, 2019 $ 210 $ 117 $ 3
Closing balance as of September 30, 2020 321 124 4
Increase $ 111 $ 7 $ 1


	Accounts Receivable		Other Accrued Unbilled Revenues		Contract Liabilities
	(in millions)
Opening balance as of December 31, 2020	$	225	$	113	$	3
Closing balance as of March 31, 2021	216		83		8
Increase (decrease)	$	(9)	$	(30)	$	5

The amount of revenue recognized in the ~~nine-month~~three-month period ended ~~September 30, 2020~~March 31, 2021 that was included in the opening contract liability was $3$1 million. The difference between the opening and closing balances of the contract liabilities primarily results from the timing difference between Houston Electric’s performance and the customer’s payment.

CERC

Accounts Receivable Other Accrued Unbilled Revenues
(in millions)
Opening balance as of December 31, 2019 $ 222 $ 249
Closing balance as of September 30, 2020 123 91
Decrease $ (99) $ (158)


	Accounts Receivable		Other Accrued Unbilled Revenues
	(in millions)
Opening balance as of December 31, 2020	$	214	$	261
Closing balance as of March 31, 2021	299		168
Increase (decrease)	$	85	$	(93)

CERC does not have any opening or closing contract asset or contract liability balances.

Remaining Performance Obligations (CenterPoint Energy). The table below discloses (1) the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied (or partially unsatisfied) as of the end of the reporting period for contracts and (2) when CenterPoint Energy expects to recognize this revenue. Such contracts include energy performance and sustainable infrastructure services contracts of ESG, which are included in Corporate and Other.


		Rolling 12 Months		Thereafter		Total		Rolling 12 Months		Thereafter		Total
		(in millions)								(in millions)
Revenue expected to be recognized on contracts in place as of September 30, 2020:
Revenue expected to be recognized on contracts in place as of March 31, 2021:									Revenue expected to be recognized on contracts in place as of March 31, 2021:

Corporate and Other	Corporate and Other	$	209	$	590	$	799		Corporate and Other	$	259	$	554	$	813
		$	209	$	590	$	799			$	259	$	554	$	813

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Practical Expedients and Exemption. Sales taxes and other similar taxes collected from customers are excluded from the transaction price. For contracts for which revenue from the satisfaction of the performance obligations is recognized in the amount invoiced, the practical expedient was elected and revenue expected to be recognized on these contracts has not been disclosed.

~~Provision~~

Table of ~~Doubtful Accounts~~Contents

~~The Registrants adopted ASU 2016-13, Financial Instruments—~~Allowance for Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments and all related amendments on January 1, 2020 using a modified retrospective method. ASU 2016-13 replaces the “incurred loss” model with a CECL model for financial assets measured at amortized cost and for certain off-balance sheet credit exposures. Adoption of this standard did not have a material impact on the Registrants’ respective consolidated financial statements. CenterPoint Energy and CERC applied the $5 million cumulative-effect adjustment of the transition to opening retained earnings as of the effective date, which included $2 million related to the Energy Services Disposal Group. There was no material cumulative-effect adjustment for Houston Electric. The disclosures for periods prior to adoption will be presented in accordance with accounting standards in effect for those periods.

CenterPoint Energy and CERC segregate financial assets that fall under the scope of Topic 326, primarily trade receivables due in one year or less, into portfolio segments based on shared risk characteristics, such as geographical location and regulatory environment, for evaluation of expected credit losses. Historical and current information, such as average write-offs, are applied to each portfolio segment to estimate the allowance for losses on uncollectible receivables. Additionally, the allowance for losses on uncollectible receivables is adjusted for reasonable and supportable forecasts of future economic conditions, which can include changing weather, commodity prices, regulations, and macroeconomic factors, among others. Houston Electric ~~had no material changes in its methodology to recognize~~recognizes losses on financial assets that fall under the scope of Topic ~~326,~~326. Losses on financial assets are primarily ~~due to the nature of its customers~~recoverable through regulatory mechanisms and ~~regulatory environment.~~do not materially impact Houston Electric's allowance for credit losses. For a discussion of regulatory deferrals related to COVID-19 and the February 2021 Winter Storm Event, see Note 6.

(5) Employee Benefit Plans

The Registrants’ net periodic cost, before considering amounts subject to overhead allocations for capital expenditure projects or for amounts subject to deferral for regulatory purposes, includes the following components relating to pension and postretirement benefits:

Pension Benefits (CenterPoint Energy)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2020		2019		2020		2019					2021		2020
		(in millions)										(in millions)
Service cost (1)	Service cost (1)	$	10	$	10	$	32	$	30	Service cost (1)			$	10	$	10
Interest cost (2)	Interest cost (2)	18		25		56		73		Interest cost (2)			15		19
Expected return on plan assets (2)	Expected return on plan assets (2)	(28)		(27)		(85)		(79)		Expected return on plan assets (2)			(26)		(28)
Amortization of prior service cost (2)		0		2		0		6

Amortization of net loss (2)	Amortization of net loss (2)	10		13		31		39		Amortization of net loss (2)			9		10

Settlement cost (2) (3)		1		1		2		2
Curtailment gain (2) (4)		0		0		0		(1)

Net periodic cost	Net periodic cost	$	11	$	24	$	36	$	70	Net periodic cost			$	8	$	11

(1)Amounts presented in the table above are included in Operation and maintenance expense in CenterPoint Energy’s Condensed Statements of Consolidated Income, net of amounts capitalized and regulatory deferrals.

(2)Amounts presented in the table above are included in Other income (expense), net in CenterPoint Energy’s Condensed Statements of Consolidated Income, net of regulatory deferrals.

~~(3)~~A one-time, non-cash settlement cost is required when the total lump sum distributions or other settlements of plan benefit obligations during a plan year exceed the service cost and interest cost components of the net periodic cost for that year. In each of the three and nine months ended September 30, 2020 and 2019, CenterPoint Energy recognized non-cash settlement costs due to lump sum settlement payments from Vectren pension plans.

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~~(4)~~A curtailment gain or loss is required when the expected future services of a significant number of employees are reduced or eliminated for the accrual of benefits. In the nine months ended September 30, 2019, CenterPoint Energy recognized a pension curtailment gain related to Vectren employees whose employment was terminated after the Merger closed.

Postretirement Benefits


		Three Months Ended September 30,													Three Months Ended March 31,
		2020						2019							2021						2020
		CenterPoint Energy		Houston Electric		CERC		CenterPoint Energy		Houston Electric		CERC			CenterPoint Energy		Houston Electric		CERC		CenterPoint Energy		Houston Electric		CERC
		(in millions)													(in millions)
Service cost (1)	Service cost (1)	$	1	$	0	$	1	$	2	$	0	$	0	Service cost (1)	$	1	$	0	$	0	$	0	$	0	$	0
Interest cost (2)	Interest cost (2)	2		1		0		4		1		2		Interest cost (2)	2		1		1		3		1		1
Expected return on plan assets (2)	Expected return on plan assets (2)	(1)		(1)		(1)		(3)		(1)		0		Expected return on plan assets (2)	(1)		(1)		0		(1)		(1)		0
Amortization of prior service cost (credit) (2)	Amortization of prior service cost (credit) (2)	(1)		(1)		1		(1)		(1)		0		Amortization of prior service cost (credit) (2)	(1)		(1)		0		(1)		(1)		0

Net periodic cost (income)	Net periodic cost (income)	$	1	$	(1)	$	1	$	2	$	(1)	$	2	Net periodic cost (income)	$	1	$	(1)	$	1	$	1	$	(1)	$	1

		Nine Months Ended September 30,
		2020						2019
		CenterPoint Energy		Houston Electric		CERC		CenterPoint Energy		Houston Electric		CERC
		(in millions)
Service cost (1)		$	2	$	0	$	1	$	3	$	0	$	1
Interest cost (2)		8		4		2		12		5		4
Expected return on plan assets (2)		(4)		(3)		(1)		(6)		(3)		(1)
Amortization of prior service cost (credit) (2)		(3)		(4)		1		(3)		(4)		0

Net periodic cost (income)		$	3	$	(3)	$	3	$	6	$	(2)	$	4

(1)Amounts presented in the tables above are included in Operation and maintenance expense in each of the Registrants’ respective Condensed Statements of Consolidated Income, net of amounts capitalized and regulatory deferrals.

(2)Amounts presented in the tables above are included in Other income (expense), net in each of the Registrants’ respective Condensed Statements of Consolidated Income, net of regulatory deferrals.

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The table below reflects the expected contributions to be made to the pension and postretirement benefit plans during ~~2020:~~2021:

CenterPoint Energy Houston Electric CERC
(in millions)
Expected minimum contribution to pension plans during 2020 $ 84 $ 0 $ 0
Expected contribution to postretirement benefit plans in 2020 11 3 3


	CenterPoint Energy		Houston Electric		CERC
	(in millions)
Expected minimum contribution to pension plans during 2021	$	61	$	0	$	0
Expected contribution to postretirement benefit plans in 2021	9		1		3

On March 11, 2021, the ARPA was signed into law which includes pension plan funding relief for the sponsoring employers. As a result, the expected minimum contribution to pension plans for 2021 as disclosed is likely to be significantly reduced. However, at this time, CenterPoint Energy is not able to quantify the reduction amount until further IRS guidance related to the pension funding relief under the ARPA becomes available.

The table below reflects the contributions made to the pension and postretirement benefit plans during ~~2020:~~2021:

Three Months Ended September 30, 2020 Nine Months Ended September 30, 2020
CenterPoint Energy Houston Electric CERC CenterPoint Energy Houston Electric CERC
(in millions)
Pension plans $ 79 $ 0 $ 0 $ 84 $ 0 $ 0
Postretirement benefit plans 2 1 1 8 3 2

~~COVID-19 Impacts~~. The uncertainties related to the COVID-19 pandemic have had a negative impact on financial markets, which has resulted in volatility of the fair value of plan assets during the nine months ended September 30, 2020. The Registrants remeasure the funded status of each plan as of December 31 each year, and at an interim period when a curtailment, settlement, or material plan amendment occurs. On the measurement date, actuarial gains or losses are recognized in accumulated other comprehensive income, or when cost is recovered through regulated rates, as a regulatory asset or liability. During the nine months ended September 30, 2020, the fair value of pension plan assets increased by approximately $115 million or 5.7% from December 31, 2019, excluding CenterPoint Energy’s contributions to, and benefit distributions

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from, the pension plans. The fair value of pension plan assets on the plan remeasurement date impacts the funded status, net period cost, and the required cash contributions; however, changes to pension plan assets do not impact the Condensed Statements of Consolidated Income or Condensed Consolidated Balance Sheets in interim periods when a plan remeasurement is not required. An interim remeasurement of the plans is not required as a result of plan asset increase or decline in fair value, and therefore, an interim remeasurement did not occur during the nine months ended September 30, 2020 as a result of changes to plan asset fair value.


	Three Months Ended March 31, 2021
			CenterPoint Energy		Houston Electric		CERC
		(in millions)
Pension plans			$	8	$	0	$	0
Postretirement benefit plans			3		0		1

(6) Regulatory Matters

Equity Return ~~(CenterPoint Energy and Houston Electric)~~

The Registrants are at times allowed by a regulator to defer an equity return as part of the recoverable carrying costs of a regulatory asset. A deferred equity return is capitalized for rate-making purposes, but it is not included in the Registrant’s regulatory assets on its Condensed Consolidated Balance Sheets. The allowed equity return is recognized in the Condensed Statements of Consolidated Income as it is recovered in rates. The recoverable allowed equity return not yet recognized by the Registrants is as follows:


	March 31, 2021						December 31, 2020
	CenterPoint Energy (1)		Houston Electric (2)		CERC (3)		CenterPoint Energy (1)		Houston Electric (2)		CERC (3)
	(in millions)
Allowed equity return not recognized	$	224	$	130	$	13	$	229	$	137	$	13

(1)~~As of September 30, 2020,~~In addition to the amounts described in (2) and (3) below, CenterPoint ~~Energy and Houston Electric have not recognized an~~Energy’s allowed equity return ~~of $144 million~~ on post in-service carrying cost generally associated with federally mandated investments in Indiana.

(2)Houston Electric’s allowed equity return on its true-up balance of stranded costs, other changes and related interest resulting from the formerly integrated electric utilities prior to Texas deregulation and certain storm restoration balances ~~because such return will~~expected to be ~~recognized as it is~~ recovered in ~~future rates. The timing of CenterPoint Energy’s and Houston Electric’s recognition of the equity return will vary each period based on amounts actually collected during that period.~~rates through 2024. The unrecognized equity return will be recognized as it is recovered in rates through 2024. The actual amounts recognized are adjusted at least annually to correct any over-collections or under-collections during the preceding 12 months.

CenterPoint Energy and Houston Electric
Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
(in millions)
Allowed equity return recognized $ 10 $ 14 $ 24 $ 38

(3)

~~Houston Electric Base Rate Case (CenterPoint Energy and Houston Electric)~~

~~On April 5, 2019, and subsequently adjusted~~CERC’s allowed equity return on post in-service carrying cost associated with certain distribution facilities replacements expenditures in errata filings in May and June 2019, Houston Electric filed its base rate application with the PUCT and the cities in its service area to change its rates, seeking approval for revenue increases of approximately $194 million, among other requests. On January 23, 2020, Houston Electric filed a Stipulation and Settlement Agreement with the PUCT that provided for the following, among other things:

•~~an overall revenue requirement increase of approximately $13 million;~~Texas.

•~~an ROE~~The table below reflects the amount of ~~9.4%;~~allowed equity return recognized by each Registrant in its Condensed Statements of Consolidated Income:

•~~a capital structure of 57.5% debt/42.5% equity;~~

•~~a refund of unprotected EDIT of $105 million plus carrying costs over approximately 30-36 months; and~~

•~~recovery of all retail transmission related costs through the TCRF.~~

Also, Houston Electric is not required to make a one-time refund of capital recovery from its TCOS and DCRF mechanisms. Future TCOS filings will take into account both ADFIT and EDIT until the final order from Houston Electric’s next base rate proceeding. No rate base items are required to be written off; however, approximately $12 million in rate case expenses were written off in 2019. A base rate application must be filed for Houston Electric no later than four years from the date of the PUCT’s final order in the proceeding. Additionally, Houston Electric will not file a DCRF in 2020, nor will a subsequent separate proceeding with the PUCT be instituted regarding EDIT on Houston Electric’s securitized assets. Furthermore, under the terms of the Stipulation and Settlement Agreement, Houston Electric agreed to adopt certain ring-fencing measures to increase its financial separateness from CenterPoint Energy. The PUCT approved the Stipulation and Settlement Agreement at its February 14, 2020 open meeting and issued a final order on March 9, 2020. The PUCT declined to impose a dividend restriction in the final order. The rates were implemented on April 23, 2020.

CenterPoint Energy and Houston Electric record pre-tax expense for (i) probable disallowances of capital investments and (ii) customer refund obligations and costs deferred in regulatory assets when recovery of such amounts is no longer considered probable.


	Three Months Ended March 31,
	2021						2020
	CenterPoint Energy		Houston Electric		CERC		CenterPoint Energy		Houston Electric		CERC
	(in millions)
Allowed equity return recognized	$	8	$	7	$	0	$	7	$	6	$	0

3226

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February 2021 Winter Storm Event

In February 2021, certain of our jurisdictions experienced an extreme and unprecedented winter weather event that resulted in prolonged freezing temperatures, which impacted our businesses. In Texas, the February 2021 Winter Storm Event caused an electricity generation shortage that was severely disruptive to Houston Electric’s service territory and the wholesale generation market. While demand for electricity reached extraordinary levels due to the extreme cold, the supply of electricity significantly decreased in part because of the inability of certain power generation facilities to supply electric power to the grid. Houston Electric does not own or operate any electric generation facilities. It transmits and distributes to customers of REPs electric power that the REPs obtain from power generation facilities owned by third parties. ERCOT serves as the independent system operator and regional reliability coordinator for member electric power systems in most of Texas. To comply with ERCOT’s orders, Houston Electric implemented controlled outages across its service territory, resulting in a substantial number of businesses and residents being without power, many for extended periods of time, in compliance with ERCOT’s directives as an emergency procedure to avoid prolonged large-scale state-wide blackouts and long-term damage to the electric system in Texas. In anticipation of this weather event, Houston Electric implemented its emergency operations plan’s processes and procedures necessary to respond to such events, including establishing an incident command center and calling for mutual assistance from other utilities where needed, among other measures. Throughout the February 2021 Winter Storm Event, Houston Electric remained in contact with its regulators and stakeholders, including federal, state and local officials, as well as the PUCT and ERCOT.

The February 2021 Winter Storm Event also impacted wholesale prices of CenterPoint Energy and CERC’s natural gas and their ability to service customers in their Natural Gas service territories, including due to the reduction in available natural gas capacity and impacts to CenterPoint Energy’s and CERC’s natural gas supply portfolio activities, and the effects of weather on their systems and their ability to transport natural gas, among other things. The overall natural gas market, including the markets from which CenterPoint Energy and CERC sourced a significant portion of their natural gas for their operations, experienced significant impacts caused by the February 2021 Winter Storm Event, resulting in extraordinary increases in the price of natural gas purchased by CenterPoint Energy and CERC. On February 13, 2021, the Railroad Commission authorized each Texas natural gas distribution utility to record in a regulatory asset the extraordinary expenses associated with the February 2021 Winter Storm Event, including, but not limited to, natural gas cost and other costs related to the procurement and transportation of natural gas supply, subject to recovery in future regulatory proceedings. In addition, CenterPoint Energy’s and CERC’s Natural Gas utilities in jurisdictions outside of Texas deferred natural gas cost under existing recovery mechanisms and have either sought or intend to seek recovery of the increased cost of natural gas, which will be subject to customary regulatory prudency reviews that may impact the amounts recovered. Amounts for the under recovery of natural gas costs are reflected in regulatory assets and are probable of recovery; however, the timing of recovery for each jurisdiction for the estimated incremental gas cost attributable to the February 2021 Winter Storm Event within each regulatory asset is uncertain. As of March 31, 2021, CenterPoint Energy and CERC have recorded current regulatory assets of $462 million and $347 million, respectively, and non-current regulatory assets of $1.7 billion and $1.7 billion, respectively, associated with the February 2021 Winter Storm Event. Due to the uncertainty of timing and method of recovery, CenterPoint Energy and CERC may not earn a return on all amounts deferred in the non-current regulatory asset associated with the February 2021 Winter Storm Event.

On February 21, 2021, in response to the 2021 February Winter Storm Event, the PUCT issued an order prohibiting REPs from sending a request to TDUs to disconnect such REPs’ customers for non-payment, effective February 21, 2021. As a result of this order, in the event a request for disconnect is received from a REP, Houston Electric will not execute any such disconnect request until the PUCT issues orders for disconnects to resume. As of March 31, 2021, as authorized by the PUCT, CenterPoint Energy and Houston Electric established a regulatory asset of $14 million for bad debt expenses resulting from REPs’ default on their obligation to pay delivery charges to Houston Electric net of collateral. Additionally, CenterPoint Energy and Houston Electric recorded a regulatory asset of $14 million to defer operations and maintenance costs associated with the February 2021 Winter Storm Event.

See Notes 12 and 14(d) for further information regarding debt financing transactions and litigation related to the February 2021 Winter Storm Event, respectively.

COVID-19 Regulatory Matters

Governors, public utility commissions and other authorities in the states in which the Registrants operate ~~have~~ issued a number of different orders related to the COVID-19 pandemic, including orders addressing customer non-payment and disconnection. Although the disconnect moratoriums have ~~either~~ expired ~~or will expire during the fourth quarter of 2020~~ in certain of the Registrants’ service territories, CenterPoint Energy continues to support those customers who may need payment assistance, arrangements or extensions.

~~On March 26, 2020, the PUCT issued two orders related to COVID-19 issues that affect Houston Electric. First, the PUCT issued an order related to accrual~~

Table of regulatory assets granting authority for utilities to record as a regulatory asset expenses resulting from the effects of COVID-19. In the order, the PUCT noted that it will consider whether a utility’s request for recovery of the regulatory asset is reasonable and necessary in a future proceeding. Second, the PUCT issued an order related to the COVID-19 ERP, as modified, which, in light of the disaster declarations issued by the governor of Texas, authorized a customer assistance program for certain residential customers of electric service in areas of Texas open to customer choice, which includes Houston Electric’s service territory. Contents

The PUCT issued an order on August 27, 2020 to conclude the COVID-19 ERP. The PUCT determined that enrollment in the COVID-19 ERP would end on August 31, 2020 and benefits under the program ended on September 30, 2020. Final claims for reimbursement must be submitted to the transmission and distribution utilities by November 30, 2020. The transmission and distribution utilities must file a tariff rider cancellation seven days before the date on which it is estimated that revenues from the COVID-19 ERP are approximately equal to its program expenses. Final program reports must be submitted to the PUCT by January 15, 2021. The COVID-19 ERP allows ~~for any over/under collection of~~ program expenses to be ~~recorded as a regulatory asset or liability. Houston Electric may seek recovery of such regulatory asset or liability~~recovered in ~~its next DCRF, TCRF or base rate case proceeding.~~rates. CenterPoint Energy’s and Houston Electric’s COVID-19 ERP regulatory assets were ~~$10~~$-0- as of March 31, 2021 and $6 million as of ~~September 30,~~December 31, 2020.

Commissions in all of Indiana Electric’s and CenterPoint Energy’s and CERC’s ~~NGD~~Natural Gas service territories have either (1) issued orders to record a regulatory asset for incremental bad debt expenses related to COVID-19, including costs associated with the suspension of disconnections and payment plans or (2) provided authority to recover bad debt expense through an existing tracking mechanism. CenterPoint Energy and CERC have recorded estimated incremental uncollectible receivables to the associated regulatory asset of ~~$16~~$29 million and ~~$14~~$27 million, respectively, as of ~~September 30,~~March 31, 2021 and $22 million and $19 million, respectively, as of December 31, 2020.

In some of the states in which the Registrants operate, public utility commissions have authorized utilities to employ deferred accounting authority for certain COVID-19 related costs which ensure the safety and health of customers, employees, and contractors, that would not have been incurred in the normal course of business. CERC’s ~~NGD~~Natural Gas service territories in Minnesota and Arkansas will include any offsetting savings in the deferral. Other jurisdictions where the Registrants operate may require them to offset the deferral with savings as well.

~~ERCOT Loan Agreement (CenterPoint Energy and Houston Electric)~~

On The Arkansas FRP, filed on April ~~13, 2020, in connection with~~5, 2021, included a request for (1) the PUCT’s COVID-19 ERP, Houston Electric entered into a no-interest loan agreement with ERCOT pursuant to which ERCOT loaned Houston Electric approximately $5 million to provide for an initial fund balance for reimbursement. Asregulatory asset as of September 30, 2020 ~~$5 million~~in working capital for the 2021 historical year using a thirteen-month average of the ~~loan was still outstanding. The ERCOT loan repayment date is on or before December 15, 2020.~~asset balance; (2) the regulatory asset as of September 30, 2020 in working capital for the 2021 projected year using a thirteen-month average of the asset balance; and (3) the amortization of the balance over the 2021 projected year twelve-month period beginning October 1, 2021.

(7) Derivative Instruments

The Registrants are exposed to various market risks. These risks arise from transactions entered into in the normal course of business. The Registrants utilize derivative instruments such as swaps and options to mitigate the impact of changes in commodity prices, weather and interest rates on operating results and cash flows.

On February 24, 2020, CenterPoint Energy, through its subsidiary CERC Corp., entered into the Equity Purchase Agreement to sell the Energy Services Disposal Group. The transaction closed on June 1, 2020. As a result, the following disclosures do not include the Energy Services Disposal Group. See Note 3 for further information.

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(a)Non-Trading Activities

Commodity Derivative Instruments (CenterPoint Energy). CenterPoint Energy, through ~~its~~the Indiana Utilities, enters into certain derivative instruments to mitigate the effects of commodity price movements. Outstanding derivative instruments designated as economic hedges at the Indiana Utilities hedge long-term variable rate natural gas purchases. The Indiana Utilities have authority to refund and recover mark-to-market gains and losses associated with hedging natural gas purchases, and thus the gains and losses on derivatives are deferred in a regulatory liability or asset.

Interest Rate Risk Derivative Instruments. From time to time, the Registrants may enter into interest rate derivatives that are designated as cash flow hedges or accounted for as economic hedges. The objective of these hedges is to offset risk associated with interest rates borne by the Registrants in connection with an anticipated future fixed rate debt offering or other exposure to variable rate debt. The Indiana Utilities have authority to refund and recover mark-to-market gains and losses associated with hedging financing activity, and thus the gains and losses on derivatives are deferred in a regulatory liability or asset.

The table below summarizes the Registrants’ outstanding interest rate hedging activity:

September 30, 2020

December 31, 2019

March 31, 2021

December 31, 2020

Hedging Classification

Notional Principal

Hedging Classification

Notional Principal

(in millions)

Economic hedge (1)

(1)Relates to interest rate derivative instruments at SIGECO.

Weather Hedges (CenterPoint Energy and CERC). CenterPoint Energy and CERC have weather normalization or other rate mechanisms that largely mitigate the impact of weather on ~~NGD~~Natural Gas in Arkansas, Indiana, Louisiana, Mississippi, Minnesota, Ohio and Oklahoma, as applicable. CenterPoint Energy’s and CERC’s ~~NGD~~Natural Gas in Texas and CenterPoint Energy’s electric operations in Texas and Indiana do not have such mechanisms, although fixed customer charges are historically higher in Texas for ~~NGD~~Natural Gas compared to its other jurisdictions. As a result, fluctuations from normal weather may have a positive or negative effect on CenterPoint Energy’s and CERC’s ~~NGD’s~~Natural Gas’ results in Texas and on CenterPoint Energy’s electric operations’ results in its Texas and Indiana service territories.

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CenterPoint Energy and CERC, as applicable, enter into winter season weather hedges from time to time for certain ~~NGD~~Natural Gas jurisdictions and electric operations’ service territory to mitigate the effect of fluctuations from normal weather on results of operations and cash flows. These weather hedges are based on heating degree days at 10-year normal weather. Houston Electric and Indiana Electric do not enter into weather hedges.

(b)Derivative Fair Values and Income Statement Impacts

The following tables present information about derivative instruments and hedging activities. The first table provides a balance sheet overview of Derivative ~~Assets and~~ Liabilities, while the last table provides a breakdown of the related income statement impacts.

Fair Value of Derivative Instruments and Hedged Items (CenterPoint Energy)

September 30, 2020 December 31, 2019
Balance Sheet Location Derivative
Assets
Fair Value Derivative
Liabilities
Fair Value Derivative
Assets
Fair Value Derivative
Liabilities
Fair Value
(in millions)
Derivatives not designated as hedging instruments:
Natural gas derivatives (1) Current Liabilities: Non-trading derivative liabilities $ 0 $ 1 $ 0 $ 7
Natural gas derivatives (1) Other Liabilities: Non-trading derivative liabilities 0 6 0 15
Interest rate derivatives Other Liabilities 0 24 0 10
Indexed debt securities derivative (2) Current Liabilities 0 918 0 893
Total $ 0 $ 949 $ 0 $ 925


		Derivative Liabilities Fair Value
	Balance Sheet Location	March 31, 2021		December 31, 2020




Derivatives not designated as hedging instruments:		(in millions)
Natural gas derivatives (1)	Current Liabilities: Non-trading derivative liabilities	$	2	$	3
Natural gas derivatives (1)	Other Liabilities: Non-trading derivative liabilities	5		7
Interest rate derivatives	Other Liabilities: Non-trading derivative liabilities	9		20
Indexed debt securities derivative (2)	Current Liabilities	927		953

Total		$	943	$	983

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(1)Natural gas contracts are subject to master netting arrangements. This netting applies to all undisputed amounts due or past due. However, the mark-to-market fair value of each natural gas contract is in a liability position with no offsetting amounts.

(2)Derivative component of the ZENS obligation that represents the ZENS holder’s option to receive the appreciated value of the reference shares at maturity. See Note 11 for further information.

Income Statement Impact of Hedge Accounting Activity (CenterPoint Energy)

Three Months Ended September 30, Nine Months Ended September 30,
Income Statement Location 2020 2019 2020 2019
(in millions)
Effects of derivatives not designated as hedging instruments on the income statement:
Indexed debt securities derivative Gain (loss) on indexed debt securities $ (84) $ (62) $ (25) $ (216)
Total $ (84) $ (62) $ (25) $ (216)


		Three Months Ended March 31,
	Income Statement Location		2021		2020
Derivatives not designated as hedging instruments:			(in millions)
Indexed debt securities derivative (1)	Gain (loss) on indexed debt securities		$	26	$	135

Total			$	26	$	135

(1)The indexed debt securities derivative is recorded at fair value and changes in the fair value are recorded in CenterPoint Energy’s Statements of Consolidated Income.

Certain of CenterPoint Energy’s derivative instruments contain provisions that require CenterPoint Energy’s debt to maintain an investment grade credit rating on its long-term unsecured unsubordinated debt from S&P and Moody’s. If CenterPoint Energy’s debt were to fall below investment grade, it would be in violation of these provisions, and the counterparties to the derivative instruments could request immediate payment.


	March 31, 2021		December 31, 2020
	(in millions)
Aggregate fair value of derivatives with credit-risk-related contingent features in a liability position	$	9	$	20
Fair value of collateral already posted	7		7
Additional collateral required to be posted if credit risk contingent features triggered (1)	2		3

(1)The maximum collateral required if further escalating collateral is triggered would equal the net liability position.

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(8) Fair Value Measurements

Assets and liabilities that are recorded at fair value in the Registrants’ Condensed Consolidated Balance Sheets are categorized based upon the level of judgment associated with the inputs used to measure their value. Hierarchical levels, as defined below and directly related to the amount of subjectivity associated with the inputs to fair valuations of these assets and liabilities, are as follows:

Level 1: Inputs are unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date. The types of assets carried at Level 1 fair value generally are exchange-traded derivatives and equity securities.

Level 2: Inputs, other than quoted prices included in Level 1, are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar instruments in active markets, quoted prices for identical or similar assets or liabilities in inactive markets, inputs other than quoted prices that are observable for the asset or liability and inputs that are derived principally from or corroborated by observable market data by correlation or other means. Fair value assets and liabilities that are generally included in this category are derivatives with fair values based on inputs from actively quoted markets. A market approach is utilized to value the Registrants’ Level 2 natural gas derivative assets or liabilities. CenterPoint Energy’s Level 2 indexed debt securities derivative is valued using an option model and a discounted cash flow model, which uses projected dividends on the ZENS-Related Securities and a discount rate as observable inputs.

Level 3: Inputs are unobservable for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. Unobservable inputs reflect the Registrants’ judgments about the assumptions market participants would use in pricing the asset or liability since limited market data exists. The Registrants develop these inputs based on the best information available, including the Registrants’ own data.

The Registrants determine the appropriate level for each financial asset and liability on a quarterly basis.

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The following tables present information about the Registrants’ assets and liabilities ~~(including derivatives that are presented net)~~ measured at fair value on a recurring basis as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 and indicate the fair value hierarchy of the valuation techniques utilized by the Registrants to determine such fair value.

CenterPoint Energy


		September 30, 2020						December 31, 2019									March 31, 2021										December 31, 2020
		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3				Total			Level 1		Level 2		Level 3			Total		Level 1		Level 2		Level 3		Total
Assets	Assets	(in millions)														Assets	(in millions)
Corporate equities	Corporate equities	$	838	$	0	$	0	$	838	$	825	$	0	$	0			$	825	Corporate equities	$	850	$	0	$	0		$	850	$	873	$	0	$	0	$	873
Investments, including money market funds (1)	Investments, including money market funds (1)	44		0		0		44		49		0		0				49		Investments, including money market funds (1)	43		0		0			43		43		0		0		43

Total assets	Total assets	$	882	$	0	$	0	$	882	$	874	$	0	$	0			$	874	Total assets	$	893	$	0	$	0		$	893	$	916	$	0	$	0	$	916
Liabilities	Liabilities																			Liabilities
Indexed debt securities derivative	Indexed debt securities derivative	$	0	$	918	$	0	$	918	$	0	$	893	$	0			$	893	Indexed debt securities derivative	$	0	$	927	$	0		$	927	$	0	$	953	$	0	$	953
Interest rate derivatives	Interest rate derivatives	0		24		0		24		0		10		0				10		Interest rate derivatives	0		9		0			9		0		20		0		20
Natural gas derivatives	Natural gas derivatives	0		7		0		7		0		22		0				22		Natural gas derivatives	0		7		0			7		0		10		0		10

Total liabilities	Total liabilities	$	0	$	949	$	0	$	949	$	0	$	925	$	0			$	925	Total liabilities	$	0	$	943	$	0		$	943	$	0	$	983	$	0	$	983

Houston Electric


		September 30, 2020						December 31, 2019									March 31, 2021								December 31, 2020
		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3				Total			Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets	Assets	(in millions)														Assets	(in millions)
Investments, including money market funds (1)	Investments, including money market funds (1)	$	27	$	0	$	0	$	27	$	32	$	0	$	0			$	32	Investments, including money market funds (1)	$	27	$	0	$	0	$	27	$	26	$	0	$	0	$	26

Total assets	Total assets	$	27	$	0	$	0	$	27	$	32	$	0	$	0			$	32	Total assets	$	27	$	0	$	0	$	27	$	26	$	0	$	0	$	26

Table of Contents

CERC


		September 30, 2020						December 31, 2019									March 31, 2021										December 31, 2020
		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3				Total			Level 1		Level 2		Level 3			Total		Level 1		Level 2		Level 3		Total
Assets	Assets	(in millions)														Assets	(in millions)
Corporate equities	Corporate equities	$	2	$	0	$	0	$	2	$	2	$	0	$	0			$	2	Corporate equities	$	2	$	0	$	0		$	2	$	2	$	0	$	0	$	2
Investments, including money market funds (1)	Investments, including money market funds (1)	11		0		0		11		11		0		0				11		Investments, including money market funds (1)	11		0		0			11		11		0		0		11
Total assets	Total assets	$	13	$	0	$	0	$	13	$	13	$	0	$	0			$	13	Total assets	$	13	$	0	$	0		$	13	$	13	$	0	$	0	$	13

(1)Amounts are included in Prepaid expenses and other current assets in the Condensed Consolidated Balance Sheets.

~~Items Measured at Fair Value on a Nonrecurring Basis~~

Based on the severity of the decline in Enable’s common unit price during the three months ended March 31, 2020 primarily due to the macroeconomic conditions related in part to the COVID-19 pandemic, combined with Enable’s announcement on April 1, 2020 to reduce its quarterly distributions per common unit by 50%, and the market outlook indicating excess supply and continued depressed crude oil and natural gas prices impacting the midstream oil and gas industry, CenterPoint Energy determined, in connection with its preparation of the financial statements, that an other than temporary decrease in the value of its investment in Enable had occurred. The impairment analysis compared the estimated fair value of CenterPoint Energy’s investment in Enable to its carrying value. The fair value of the investment was determined using multiple valuation methodologies under both the market and income approaches. Both of these approaches incorporate significant estimates and assumptions, including:

~~Market Approach~~

~~• quoted price of Enable’s common units;~~

~~• recent market transactions of comparable companies; and~~

~~• EBITDA to total enterprise multiples for comparable companies.~~

~~Table of Contents~~

~~Income Approach~~

~~• Enable’s forecasted cash distributions;~~

~~• projected cash flows of incentive distribution rights;~~

~~• forecasted growth rate of Enable’s cash distributions; and~~

~~• determination of the cost of equity, including market risk premiums.~~

~~Weighting of the Different Approaches~~

Significant unobservable inputs used include the growth rate applied to the projected cash distributions beyond 2020 and the discount rate used to determine the present value of the estimated future cash flows. Based on the significant unobservable estimates and assumptions required, CenterPoint Energy concluded that the fair value estimate should be classified as a Level 3 measurement within the fair value hierarchy. As a result of this analysis, CenterPoint Energy recorded an other than temporary impairment on its investment in Enable of $1,541 million during the nine months ended September 30, 2020, reducing the fair value of the investment to $848 million as of March 31, 2020. See Note 9 for further discussion of the impairment.

In the nine months ended September 30, 2020, CenterPoint Energy recorded a goodwill impairment charge of $185 million in the Indiana Electric Integrated reporting unit, reducing the carrying value of the reporting unit to its fair value as of March 31, 2020. CenterPoint Energy and CERC performed their annual goodwill impairment tests in the third quarter of 2020 and determined that no goodwill impairment charge was required for any reporting unit as a result of those tests.~~See Note 10 for further information.~~

As a result of classifying the Infrastructure Services and Energy Services Disposal Groups as held for sale, CenterPoint Energy and CERC recognized a goodwill impairment and loss on held for sale during the nine months ended September 30, 2020. CenterPoint Energy and CERC, as applicable, used the contractual sales price adjusted for estimated working capital and other contractual purchase price adjustments to determine fair value, which are Level 2 inputs. Using this market approach, the fair value of the Infrastructure Services Disposal Group as of March 31, 2020 was determined to be approximately $864 million and the fair value of the Energy Services Disposal Group as of March 31, 2020 was determined to be approximately $402 million. The same methodology was applied to estimate the fair value of the Infrastructure Services Disposal Group and Energy Services Disposal Group on the closing date and as of September 30, 2020. See Note 3 for further information.

Estimated Fair Value of Financial Instruments

The fair values of cash and cash equivalents, investments in debt and equity securities ~~classified as “trading”~~measured at fair value and short-term borrowings are estimated to be approximately equivalent to carrying amounts and have been excluded from the table below. The carrying amounts of non-trading derivative assets and liabilities and CenterPoint Energy’s ZENS indexed debt securities derivative are stated at fair value and are excluded from the table below. The fair value of each debt instrument is determined by multiplying the principal amount of each debt instrument by a combination of historical trading prices and comparable issue data. These liabilities, which are not measured at fair value in the Registrants’ Condensed Consolidated Balance Sheets, but for which the fair value is disclosed, would be classified as Level 2 in the fair value hierarchy.

September 30, 2020 December 31, 2019
Carrying
Amount Fair
Value Carrying
Amount Fair
Value

(in millions)
CenterPoint Energy
Long-term debt, including current maturities (1)
$ 13,268 $ 14,982 $ 15,093 $ 16,067
Houston Electric
Long-term debt, including current maturities (1)
$ 5,089 $ 5,968 $ 4,950 $ 5,457
CERC
Long-term debt, including current maturities $ 2,582 $ 2,973 $ 2,546 $ 2,803


	March 31, 2021						December 31, 2020
	CenterPoint Energy (1)		Houston Electric (1)		CERC		CenterPoint Energy (1)		Houston Electric (1)		CERC
Long-term debt, including current maturities	(in millions)


Carrying amount	$	15,823	$	5,968	$	4,349	$	13,401	$	5,019	$	2,428
Fair value	16,848		6,485		4,580		15,226		5,957		2,855

(1)Includes Securitization Bonds debt.

~~Table of Contents~~

(9) Unconsolidated Affiliates (CenterPoint Energy and CERC)

CenterPoint Energy has the ability to significantly influence the operating and financial policies of Enable, a publicly traded MLP, and, accordingly, accounts for its investment in Enable’s common units using the equity method of accounting. Enable is considered to be a VIE because the power to direct the activities that most significantly impact Enable’s economic performance does not reside with the holders of equity investment at risk. However, CenterPoint Energy is not considered the primary beneficiary of Enable since it does not have the power to direct the activities of Enable that are considered most significant to the economic performance of Enable. As of ~~September 30, 2020,~~March 31, 2021, CenterPoint Energy’s maximum exposure to loss related to Enable is limited to its investment in unconsolidated affiliate, its investment in Enable Series A Preferred Units ~~which are accounted for as securities without a readily determinable fair value,~~ and outstanding current accounts receivable from Enable.

On February 16, 2021, Enable entered into the Enable Merger Agreement. At the closing of the transactions contemplated by the Enable Merger Agreement, if and when it occurs, Energy Transfer will acquire all of Enable’s outstanding equity interests, resulting in the exchange of Enable common units owned by CenterPoint Energy at the transaction exchange ratio of 0.8595x Energy Transfer common units for each Enable common unit. CenterPoint Energy will also receive $5 million in cash in exchange for its interest in Enable GP and Energy Transfer Series G Preferred Units with an aggregate liquidation preference of approximately $385 million in exchange for all of its Enable Series A Preferred Units. Pursuant to previously disclosed support agreements, CenterPoint Energy and OGE, who collectively own approximately 79.2% of Enable’s common units, delivered written consents approving the Enable Merger Agreement and, on a non-binding, advisory basis, the compensation that will or may become payable to Enable’s named executive officers in connection with the transactions contemplated by the Enable Merger Agreement. The transactions contemplated under the Enable Merger Agreement are expected to be completed in the second half of 2021, subject to customary closing conditions, including Hart-Scott-Rodino antitrust clearance. Upon the consummation of the transaction, the partnership agreements between CenterPoint Energy and OGE will terminate, and CenterPoint Energy will pay $30 million in cash to OGE (or other mutually agreed upon consideration). Because CenterPoint Energy will retain an investment in the midstream industry at the completion of this transaction, the transaction does not represent a strategic shift that will have a major effect on CenterPoint Energy’s operations or financial results, and as such, Enable is not classified and presented as discontinued operations. Equity method investments that do not qualify for discontinued operations are not presented as assets held for sale.

Table of Contents

Investment in Unconsolidated Affiliates (CenterPoint Energy):


		September 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
		(in millions)					(in millions)
Enable	Enable	$	748	$	2,406	Enable	$	852	$	782
Other	Other	1		2		Other	1		1
Total	Total	$	749	$	2,408	Total	$	853	$	783

~~CenterPoint Energy evaluates its equity method investments for impairment when factors indicate that a decrease in the value~~As of its investment has occurred and the carrying amount of its investment may not be recoverable. An impairment loss, based on the excess of the carrying value over the estimated fair value of the investment, is recognized in earnings when an impairment is deemed to be other than temporary. Considerable judgment is used in determining if an impairment loss is other than temporary and the amount of any impairment. Based on the severity of the decline inMarch 31, 2021, Enable’s common unit price during the three months ended March 31, 2020 due to the macroeconomic conditions related in part to the COVID-19 pandemic, combined with Enable’s announcement on April 1, 2020 to reduce its quarterly distributionsclosed at $6.48 per common unit by 50%, and the market outlook indicating excess supply of crude oil and natural gas and continued depressed crude oil and natural gas prices impacting the midstream oil and gas industry, CenterPoint Energy determined, in connection with its preparation of the financial statements, that an other than temporary decrease in the value of its investment in Enable had occurred. CenterPoint Energy reduced the carrying value of its investment in Enable to its estimated fair value of $848 million as of March 31, 2020 and recognized an impairment charge of $1,541 million during the nine months ended September 30, 2020. Both the income approach and market approach were utilized to estimate the fair value of CenterPoint Energy’s equity investment in Enable, which includes common units, general partner interest and incentive distribution rights held by CenterPoint Energy through CNP Midstream. The determination of fair value considered a number of relevant factors including Enable’s common unit price and forecasted distributions, recent comparable transactions and the limited float of Enable’s publicly traded common units. See Note 8 for further discussion of the determination of fair value of CenterPoint Energy’s investment in Enable as of March 31, 2020. CenterPoint Energy did not identify a further decrease in value as of September 30, 2020, and no impairment in its investment in Enable was recorded during the three months ended September 30, 2020.unit.

Equity in Earnings (Losses) of Unconsolidated Affiliates, net (CenterPoint Energy):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2020		2019		2020		2019				2021		2020 (1)
		(in millions)										(in millions)
Enable	Enable	$	(67)	$	77	$	(1,499)	$	213	Enable		$	108	$	(1,475)
Other		0		0		0		0

Total	Total	$	(67)	$	77	$	(1,499)	$	213	Total		$	108	$	(1,475)

~~CenterPoint Energy recognized a loss of $1,499 million from its investment in Enable for the nine months ended September 30, 2020. This loss included~~(1)Included an impairment charge on CenterPoint Energy’s investment in Enable of $1,541 ~~million discussed above, and CenterPoint Energy’s interest in Enable’s $225 million impairment on an equity method investment.~~million.

~~Table of Contents~~

Limited Partner Interest and Units Held in Enable (CenterPoint Energy):

September 30, 2020
Limited Partner Interest (1)
Common Units (2)
Enable Series A Preferred Units (3)
CenterPoint Energy 53.7 % 233,856,623 14,520,000
OGE 25.5 % 110,982,805 0
Public unitholders 20.8 % 90,629,240 0
Total units outstanding 100.0 % 435,468,668 14,520,000


	March 31, 2021
	Limited Partner Interest (1)		Common Units	Enable Series A Preferred Units (2)
CenterPoint Energy (3)	53.7	%	233,856,623	14,520,000
OGE	25.5	%	110,982,805	0
Public unitholders	20.8	%	91,007,338	0

Total units outstanding	100.0	%	435,846,766	14,520,000

(1)Excludes the Enable Series A Preferred Units owned by CenterPoint Energy.

(2)~~Held indirectly through CNP Midstream by CenterPoint Energy.~~

~~(3)~~The carrying amount of the Enable Series A Preferred Units, reflected as Preferred units - unconsolidated affiliate on CenterPoint Energy’s Condensed Consolidated Balance Sheets, was $363 million as of both ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019. No~~2020. There were no settled transactions in the three months ended March 31, 2021 that would indicate a stand-alone, observable, and readily determinable fair value for securities identical or similar to Enable Series A Preferred Units. NaN impairment charges or adjustment due to observable price changes were required or recorded during the current or prior reporting periods.

(3)Held indirectly through CNP Midstream.

Generally, sales to any person or entity (including a series of sales to the same person or entity) of more than 5% of the aggregate of the common units CenterPoint Energy owns in Enable or sales to any person or entity (including a series of sales to the same person or entity) by OGE of more than 5% of the aggregate of the common units it owns in Enable are subject to mutual rights of first offer and first refusal set forth in Enable’s Agreement of Limited Partnership.

Interests Held in Enable GP (CenterPoint Energy):

September 30, 2020
Management
Rights (1)
Incentive Distribution Rights (2)
CenterPoint Energy (3)
50 % 40 %
OGE 50 % 60 %

CenterPoint Energy and OGE held the following interests in Enable GP as of both March 31, 2021 and December 31, 2020:


	March 31, 2021
	Management Rights (1)		Incentive Distribution Rights (2)
CenterPoint Energy (3)	50	%	40	%
OGE	50	%	60	%

Table of Contents

(1)Enable is controlled jointly by CenterPoint Energy and OGE. Sale of CenterPoint Energy’s or OGE’s ownership interests in Enable GP to a third party is subject to mutual rights of first offer and first refusal, and CenterPoint Energy is not permitted to dispose of less than all of its interest in Enable GP.

(2)If cash distributions to Enable’s unitholders exceed $0.330625 per common unit in any quarter, Enable GP will receive increasing percentages or incentive distributions rights, up to 50%, of the cash Enable distributes in excess of that amount. In certain circumstances Enable GP will have the right to reset the minimum quarterly distribution and the target distribution levels at which the incentive distributions receive increasing percentages to higher levels based on Enable’s cash distributions at the time of the exercise of this reset election. To date, no0 incentive distributions have been made.

(3)Held indirectly through CNP Midstream.

Distributions Received from Enable (CenterPoint Energy):

~~CenterPoint Energy~~

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Per Unit Cash Distribution Per Unit Cash Distribution Per Unit Cash Distribution Per Unit Cash Distribution
(in millions, except per unit amounts)
Enable common units (1) $ 0.16525 $ 39 $ 0.3305 $ 77 $ 0.6610 $ 155 $ 0.9665 $ 226
Enable Series A Preferred Units 0.62500 9 0.6250 9 1.8750 27 1.8750 27
Total CenterPoint Energy $ 48 $ 86 $ 182 $ 253

~~Table of Contents~~

~~(1)On April 1, 2020, Enable announced a 50% reduction in its quarterly distribution per common unit from $0.3305 to $0.16525.~~


	Three Months Ended March 31,
		2021		2020
				Per Unit		Cash Distribution		Per Unit		Cash Distribution
			(in millions, except per unit amounts)
Enable common units				$	0.16525	$	39	$	0.3305	$	77
Enable Series A Preferred Units				0.62500		9		0.6250		9
Total CenterPoint Energy						$	48			$	86

Transactions with Enable (CenterPoint Energy and CERC):

The transactions with Enable in the following tables exclude transactions with the Energy Services Disposal Group. ~~See Note 3~~


		CenterPoint Energy and CERC
	Three Months Ended March 31,
			2021		2020
		(in millions)
Natural gas expenses, includes transportation and storage costs			$	32	$	27


	CenterPoint Energy and CERC
	March 31, 2021		December 31, 2020
	(in millions)
Accounts payable for natural gas purchases from Enable	$	9	$	9
Accounts receivable for amounts billed for services provided to Enable	1		1

Summarized Financial Information for ~~further information.~~

CenterPoint Energy and CERC
Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
(in millions)
Natural gas expenses, includes transportation and storage costs $ 17 $ 17 $ 61 $ 62

CenterPoint Energy and CERC
September 30, 2020 December 31, 2019
(in millions)
Accounts payable for natural gas purchases from Enable $ 6 $ 9
Accounts receivable for amounts billed for services provided to Enable 1 2
Enable (CenterPoint Energy)

Summarized unaudited consolidated income information for Enable is as follows:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2020		2019		2020		2019					2021		2020
		(in millions)										(in millions)
Operating revenues	Operating revenues	$	596	$	699	$	1,759	$	2,229	Operating revenues			$	970	$	648
Cost of sales, excluding depreciation and amortization	Cost of sales, excluding depreciation and amortization	250		263		653		958		Cost of sales, excluding depreciation and amortization			519		226
Depreciation and amortization	Depreciation and amortization	105		108		314		323		Depreciation and amortization			106		104
Goodwill and long-lived assets impairments	Goodwill and long-lived assets impairments	0		0		28		0		Goodwill and long-lived assets impairments			0		28
Operating income	Operating income	100		175		326		507		Operating income			206		146
Net income (loss) attributable to Enable common units		(173)		123		(35)		351
Net income attributable to Enable common units										Net income attributable to Enable common units			155		103

Reconciliation of Equity in Earnings (Losses), net:	Reconciliation of Equity in Earnings (Losses), net:									Reconciliation of Equity in Earnings (Losses), net:
CenterPoint Energy’s interest	CenterPoint Energy’s interest	$	(93)	$	66	$	(19)	$	189	CenterPoint Energy’s interest			$	83	$	55
Basis difference amortization (1)	Basis difference amortization (1)	26		11		62		35		Basis difference amortization (1)			25		12
Loss on dilution, net of proportional basis difference recognition	Loss on dilution, net of proportional basis difference recognition	0		0		(1)		(11)		Loss on dilution, net of proportional basis difference recognition			0		(1)
Impairment of CenterPoint Energy’s equity method investment in Enable	Impairment of CenterPoint Energy’s equity method investment in Enable	0		0		(1,541)		0		Impairment of CenterPoint Energy’s equity method investment in Enable			0		(1,541)
CenterPoint Energy’s equity in earnings (losses), net	CenterPoint Energy’s equity in earnings (losses), net	$	(67)	$	77	$	(1,499)	$	213	CenterPoint Energy’s equity in earnings (losses), net			$	108	$	(1,475)

Table of Contents

(1)Equity in earnings of unconsolidated affiliate includes CenterPoint Energy’s share of Enable earnings adjusted for the amortization of the basis difference of CenterPoint Energy’s original investment in Enable and its underlying equity in net assets of Enable. The basis difference is being amortized through the year ~~2048.~~2048 or will cease upon the sale of CenterPoint Energy’s investment in Enable.

~~Table of Contents~~

Summarized unaudited consolidated balance sheet information for Enable is as follows:


		September 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
		(in millions)					(in millions)
Current assets	Current assets	$	373	$	389	Current assets	$	449	$	381
Non-current assets	Non-current assets	11,402		11,877		Non-current assets	11,315		11,348
Current liabilities	Current liabilities	644		780		Current liabilities	1,334		582
Non-current liabilities	Non-current liabilities	4,055		4,077		Non-current liabilities	3,249		4,052
Non-controlling interest	Non-controlling interest	26		37		Non-controlling interest	26		26
Preferred equity	Preferred equity	362		362		Preferred equity	362		362
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(7)		(3)		Accumulated other comprehensive loss	(5)		(6)
Enable partners’ equity	Enable partners’ equity	6,695		7,013		Enable partners’ equity	6,798		6,713

Reconciliation of Investment in Enable:	Reconciliation of Investment in Enable:					Reconciliation of Investment in Enable:
CenterPoint Energy’s ownership interest in Enable partners’ equity	CenterPoint Energy’s ownership interest in Enable partners’ equity	$	3,592	$	3,767	CenterPoint Energy’s ownership interest in Enable partners’ equity	$	3,645	$	3,601
CenterPoint Energy’s basis difference (1)	CenterPoint Energy’s basis difference (1)	(2,844)		(1,361)		CenterPoint Energy’s basis difference (1)	(2,793)		(2,819)

CenterPoint Energy’s equity method investment in Enable	CenterPoint Energy’s equity method investment in Enable	$	748	$	2,406	CenterPoint Energy’s equity method investment in Enable	$	852	$	782

(1)~~Includes the impairment of CenterPoint Energy’s equity method investment in Enable of $1,541 million recorded during the nine months ended September 30, 2020.~~ The basis difference is being amortized through the year ~~2048.~~2048 or will cease upon sale of CenterPoint Energy’s investment in Enable.

(10) Goodwill and Other Intangibles (CenterPoint ~~Energy and CERC)~~Energy)

Goodwill and intangible assets related to the Infrastructure Services and Energy Services Disposal Groups are classified as held for sale on CenterPoint Energy’s and CERC’s respective recast Condensed Consolidated Balance Sheets as of December 31, 2019, as applicable, and are excluded from the tabular disclosures below. See Note 3 for further information.

CenterPoint Energy’s goodwill by reportable segment as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019 is as follows:~~

December 31, 2019 Impairment September 30, 2020
(in millions)
Indiana Electric Integrated (1)
$ 1,121 $ 185 $ 936
Natural Gas Distribution 3,312 0 3,312
Corporate and Other 449 0 449
Total $ 4,882 $ 185 $ 4,697

~~(1) CenterPoint Energy recognized a non-cash goodwill impairment charge as a result of the March 31,~~ 2020 ~~goodwill impairment test.~~

~~CERC’s goodwill by reportable segment as of September 30, 2020 and December 31, 2019~~ is as follows:



	(in millions)
~~Natural Gas Distribution~~Electric (1)	$	~~746~~936
Natural Gas	3,323
Corporate and Other	11438

Total	$	~~757~~4,697

(1)

CenterPoint Energy and CERC perform goodwill impairment tests at least annually and evaluate goodwill when events or changes in circumstances indicate that its carrying value may not be recoverable. The impairment evaluation for goodwillAmount presented is ~~performed by comparing the fair value of each reporting unit with the carrying amount~~net of the reporting unit, including goodwill. The reporting units approximate the reportable segments, with the exception of ESG, which is a separate reporting unit but included in Corporate and Other at CenterPoint Energy. The estimated fair value of the reporting unit is primarily determined based on an income approach or a weighted combination of income and market approaches. If the carrying amount is in excess of the estimated fair value of the reporting unit, then the excess amount is recorded as an impairment charge, not to exceed the carrying amount of goodwill.

In connection with their preparation of the financial statements for the three months ended March 31, 2020, CenterPoint Energy and CERC identified triggering events to perform interim goodwill impairment tests for each of their reporting units

~~Table of Contents~~

due to the macroeconomic conditions related in part to the COVID-19 pandemic and the resulting decrease in CenterPoint Energy’s enterprise market capitalization below book value from the decline in CenterPoint Energy’s Common Stock price.

~~CenterPoint Energy’s interim impairment test in the three months ended March 31, 2020 resulted in a non-cash~~accumulated goodwill impairment charge ~~in the amount~~ of $185 million for the Indiana Electric Integrated reportable segment. The Indiana Electric Integrated reporting unit fair value analysis resulted in an implied fair value of goodwill of $936 million for this reporting unit as of March 31, 2020, and as a result, the non-cash impairment charge was recorded in ~~the nine months ended September 30,~~ 2020.

CenterPoint Energy estimated the value of the Indiana Electric Integrated reporting unit using primarily an income approach. Under the income approach, the fair value of the reporting unit is determined by using the present value of future expected cash flows, which include management’s projections of the amount and timing of future capital expenditures and the cash inflows from the related regulatory recovery. These estimated future cash flows are then discounted using a rate that approximates the weighted average cost of capital of a market participant. The selection of the discount rate requires significant judgment.

With the exception of Indiana Electric Integrated discussed above, the fair value of each of CenterPoint Energy’s and CERC’s reporting units exceeded their carrying value, resulting in no goodwill impairment from the March 31, 2020 interim impairment test. See Note 3 for goodwill impairments included within discontinued operations.

CenterPoint Energy and CERC performed their annual goodwill impairment tests in the third quarter of 2020 and determined that no goodwill impairment charge was required for any reporting unit as a result of those tests.

The tables below present information on CenterPoint Energy’s ~~other~~ intangible assets, excluding goodwill, recorded in Other non-current assets on CenterPoint Energy’s Condensed Consolidated Balance Sheets and the related amortization expense included in Depreciation and amortization on CenterPoint Energy’s Condensed Statements of Consolidated Income, unless otherwise indicated.


		September 30, 2020						December 31, 2019							March 31, 2021						December 31, 2020
		Gross Carrying Amount		Accumulated Amortization		Net Balance		Gross Carrying Amount		Accumulated Amortization		Net Balance			Gross Carrying Amount		Accumulated Amortization		Net Balance		Gross Carrying Amount		Accumulated Amortization		Net Balance
		(in millions)													(in millions)
Customer relationships	Customer relationships	$	33	$	(7)	$	26	$	33	$	(4)	$	29	Customer relationships	$	33	$	(9)	$	24	$	33	$	(8)	$	25

Trade names	Trade names	16		(3)		13		16		(1)		15		Trade names	16		(3)		13		16		(3)		13
Construction backlog (1)	Construction backlog (1)	5		(4)		1		5		(4)		1		Construction backlog (1)	5		(5)		0		5		(5)		0
Operation and maintenance agreements (1)	Operation and maintenance agreements (1)	12		(1)		11		12		0		12		Operation and maintenance agreements (1)	12		(1)		11		12		(1)		11
Other	Other	2		(1)		1		2		(1)		1		Other	2		(1)		1		2		(1)		1
Total	Total	$	68	$	(16)	$	52	$	68	$	(10)	$	58	Total	$	68	$	(19)	$	49	$	68	$	(18)	$	50

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(1)Amortization expense related to the operation and maintenance agreements and construction backlog is included in Non-utility cost of revenues, including natural gas on CenterPoint Energy’s Condensed Statements of Consolidated Income.

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
(in millions)
Amortization expense of intangible assets recorded in Depreciation and amortization (1)
$ 2 $ 1 $ 5 $ 2
Amortization expense of intangible assets recorded in Non-utility cost of revenues, including natural gas (1)
0 1 1 4

~~(1)Assets held for sale are not amortized. The table reflects amortization on continuing operations. For further information on discontinued operations, see Note 3.~~

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	Three Months Ended March 31,
			2021		2020
		(in millions)
Amortization expense of intangible assets recorded in Depreciation and amortization			$	1	$	1
Amortization expense of intangible assets recorded in Non-utility cost of revenues, including natural gas			0		1

CenterPoint Energy estimates that amortization expense of intangible assets with finite lives for the next five years will be as follows:


		Amortization Expense (1)			Amortization Expense (1)
		CenterPoint Energy			CenterPoint Energy
		(in millions)			(in millions)
Remaining three months of 2020		$	2
2021		6
Remaining nine months of 2021				Remaining nine months of 2021	$	5
2022	2022	6		2022	6
2023	2023	6		2023	6
2024	2024	5		2024	5
2025	2025	5		2025	5
2026				2026	5

~~(1)Assets held for sale are not amortized. The table reflects amortization on continuing operations. For further information on discontinued operations, see Note 3.~~

(11) Indexed Debt Securities (ZENS) and Securities Related to ZENS (CenterPoint Energy)

(a) Investment in Securities Related to ZENS

A subsidiary of CenterPoint Energy holds shares of certain securities detailed in the table below, which are securities with a readily determinable fair value and are expected to be held to facilitate CenterPoint Energy’s ability to meet its obligation under the ZENS. Unrealized gains and losses resulting from changes in the market value of the ZENS-Related Securities are recorded in CenterPoint Energy’s Condensed Statements of Consolidated Income.


		Shares Held			Shares Held
		September 30, 2020	December 31, 2019		March 31, 2021	December 31, 2020
AT&T Common	AT&T Common	10,212,945	10,212,945	AT&T Common	10,212,945	10,212,945
Charter Common	Charter Common	872,503	872,503	Charter Common	872,503	872,503

(b) ZENS

In September 1999, CenterPoint Energy issued ZENS having an original principal amount of $1.0 billion of which $828 million remained outstanding as of ~~September 30, 2020.~~March 31, 2021. Each ZENS is exchangeable at the holder’s option at any time for an amount of cash equal to 95% of the market value of the reference shares attributable to such note. The number and identity of the reference shares attributable to each ZENS are adjusted for certain corporate events.

CenterPoint Energy’s reference shares for each ZENS consisted of the following:


		September 30, 2020	December 31, 2019		March 31, 2021	December 31, 2020
		(in shares)			(in shares)
AT&T Common	AT&T Common	0.7185	0.7185	AT&T Common	0.7185	0.7185
Charter Common	Charter Common	0.061382	0.061382	Charter Common	0.061382	0.061382

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CenterPoint Energy pays interest on the ZENS at an annual rate of 2% plus the amount of any quarterly cash dividends paid in respect of the reference shares attributable to the ZENS. The principal amount of the ZENS is subject to increases or decreases to the extent that the annual yield from interest and cash dividends on the reference shares attributable to the ZENS is less than or more than 2.309%. The adjusted principal amount is defined in the ZENS instrument as “contingent principal.” As of ~~September 30, 2020,~~March 31, 2021, the ZENS, having an original principal amount of $828 million and a contingent principal amount of ~~$61~~$52 million, were outstanding and were exchangeable, at the option of the holders, for cash equal to 95% of the market value of the reference shares attributable to the ZENS.

(12) Short-term Borrowings and Long-term Debt

Inventory Financing. CenterPoint Energy’s and CERC’s Natural Gas had AMAs associated with their utility distribution service in Arkansas, Louisiana and Oklahoma with the Energy Services Disposal Group that expired in March 2021. The expired AMAs were replaced with new third-party AMAs beginning in April 2021. CenterPoint Energy’s and CERC’s Natural Gas have AMAs with third parties associated with their utility distribution service in Arkansas, Indiana, Louisiana, Minnesota, Mississippi, Oklahoma and Texas. The AMAs have varying terms, the longest of which expires in 2027. Pursuant to the provisions of the agreements, CenterPoint Energy’s and CERC’s Natural Gas either sells natural gas to the asset manager and agrees to repurchase an equivalent amount of natural gas throughout the year at the same cost, or simply purchases its full natural gas requirements at each delivery point from the asset manager. These transactions are accounted for as an inventory financing. CenterPoint Energy and CERC had $-0- and $24 million outstanding obligations related to the AMAs as of March 31, 2021 and December 31, 2020, respectively.

Debt Transactions. In ~~June 2020, Houston Electric~~February 2021, CERC Corp. received financing commitments totaling $1.7 billion on a 364-day term loan facility to bridge any working capital needs related to the February 2021 Winter Storm Event. In March 2021, CERC Corp. issued ~~$300~~$700 million aggregate principal amount of ~~2.90% general mortgage bonds maturing in 2050.~~0.70% senior notes and $1.0 billion aggregate principal amount of floating rate senior notes (three-month LIBOR plus 0.5%) due 2023. Total proceeds, net of issuance expenses and fees, of approximately ~~$296~~$1.69 billion were used for general corporate purposes, including to fund working capital. Upon the consummation of the senior notes offerings, in March 2021, CERC Corp. terminated all of the commitments for the 364-day term loan facility.

In March 2021, Houston Electric issued $400 million aggregate principal amount of 2.35% general mortgage bonds due 2031 and $700 million aggregate principal amount of 3.35% general mortgage bonds due 2051. Total proceeds, net of issuance expenses and fees, of approximately $1.08 billion were or will be used

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for general limited liability company purposes, including capital expenditures and the repayment of (i) all of Houston Electric’s outstanding $102 million 9.15% first mortgage bonds due 2021, which matured on March 15, 2021, (ii) all of Houston Electric’s outstanding $300 million of 1.85% general mortgage bonds due 2021, which were called for redemption in full on May 1, 2021, as discussed further below, and (iii) all or a portion of Houston Electric’s borrowings under the CenterPoint Energy money pool.

In September 2020, SIGECO completed the remarketing of two series of tax-exempt debt of approximately $38 million, comprised of: (i) $23 million aggregate principal amount of Environmental Improvement Revenue Bonds, Series 2015, issued by the City of Mount Vernon, Indiana, and (ii) $15 million aggregate principal amount of Environmental Improvement Revenue Bonds, Series 2015, issued by Warrick County, Indiana, that, in each case, were originally issued on September 9, 2015. Both series of revenue bonds originally had an initial term interest rate of 2.375%. After the remarketing, each series of revenue bonds have a new term interest rate of 0.875% that is fixed through August 31, 2023. Each series of revenue bonds have a final maturity date of September 1, 2055, subject to prior redemption.

In October 2020, CERC Corp. issued $500 million aggregate principal amount of 1.75% senior notes due 2030. Total proceeds, net of issuance expenses and fees, of approximately $495 million were used for general corporate purposes, including the payment of a portion of the redemption amount of CERC Corp.’s 4.50% senior notes due 2021 redeemed in full on October 15, 2020.

~~Debt Repayments.~~ In April 2020, VCC repaid the aggregate principal amount of its $200 million variable term loan, and VUHI refinanced a $100 million 6.28% guaranteed senior note that matured in April 2020. In June 2020, VUHI repaid the aggregate principal amount of its $300 million variable term loan. In addition, in June 2020, CenterPoint Energy repaid $300 million of principal on its outstanding $1.0 billion variable rate term loan.

Debt Redemption. In ~~September 2020, CERC Corp.~~April 2021, Houston Electric provided notice of redemption relating to ~~$593~~$300 million aggregate principal amount of ~~CERC Corp.’s~~its outstanding ~~4.50% Senior Notes~~1.85% general mortgage bonds due ~~2021, Series A and B.~~2021. All of the outstanding ~~senior notes~~bonds were ~~redeemed~~called for redemption in full ~~in October 2020~~on May 1, 2021 at a redemption price equal to 100% of the principal amount, ~~thereof,~~ plus accrued and unpaid ~~interest~~interest.

CenterPoint Energy Term Loan. In April 2021, CenterPoint Energy amended its existing term loan agreement, of which $700 million is still outstanding, by extending its maturity from May 15, 2021 to ~~but excluding, the redemption date.~~June 14, 2021.

Credit Facilities. In February 2021, each of CenterPoint Energy, Houston Electric, CERC Corp. and VUHI replaced their existing revolving credit facilities with new amended and restated credit facilities. The size of the CenterPoint Energy facility decreased from $3.3 billion to $2.4 billion, while the sizes of the Houston Electric, CERC Corp. and VUHI facilities remained unchanged.

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The Registrants had the following revolving credit facilities as of ~~September 30, 2020:~~March 31, 2021:

Execution
Date Registrant Size of
Facility
Draw Rate of LIBOR plus (1)
Financial Covenant Limit on Debt for Borrowed Money to Capital Ratio
Debt for Borrowed Money to Capital
Ratio as of
September 30, 2020 (2)
Termination Date
(in millions)
March 3, 2016 CenterPoint Energy $ 3,300 1.500% 65% (3) 53.4% March 3, 2022
July 14, 2017
CenterPoint Energy (4)
400 1.125% 65% 52.5% July 14, 2022
March 3, 2016 Houston Electric 300 1.250% 65% (3) 53.2% March 3, 2022
March 3, 2016 CERC 900 1.125% 65% 52.7% March 3, 2022
Total $ 4,900


Execution Date	Registrant	Size of Facility		Draw Rate of LIBOR plus (1)	Financial Covenant Limit on Debt for Borrowed Money to Capital Ratio		Debt for Borrowed Money to Capital Ratio as of March 31, 2021 (2)	Termination Date
		(in millions)
February 4, 2021	CenterPoint Energy	$	2,400	1.625%	65.0%	(3)	57.4%	February 4, 2024
February 4, 2021	CenterPoint Energy (4)	400		1.250%	65.0%		49.9%	February 4, 2024

February 4, 2021	Houston Electric	300		1.375%	67.5%	(3)	57.9%	February 4, 2024
February 4, 2021	CERC	900		1.250%	65.0%		61.5%	February 4, 2024
	Total	$	4,000

(1)Based on current credit ratings.

(2)As defined in the revolving credit facility agreements, excluding Securitization Bonds.

(3)For CenterPoint Energy and Houston Electric, the financial covenant limit will temporarily increase ~~from 65%~~ to 70% if Houston Electric experiences damage from a natural disaster in its service territory and CenterPoint Energy certifies to the administrative agent that Houston Electric has incurred system restoration costs reasonably likely to exceed $100 million in a consecutive 12-month period, all or part of which Houston Electric intends to seek to recover through securitization financing. Such temporary increase in the financial covenant would be in effect from the date CenterPoint Energy delivers its certification until the earliest to occur of (i) the completion of the securitization financing, (ii) the first anniversary of CenterPoint Energy’s certification or (iii) the revocation of such certification.

(4)This credit facility was issued by VUHI, is guaranteed by SIGECO, Indiana Gas and VEDO and includes a ~~$10 million swing line sublimit and a~~ $20 million letter of credit sublimit. This credit facility backstops VUHI’s commercial paper program.

On September 30, 2020, VCC terminated its $200 million credit agreement dated as of July 14, 2017 after determining that it was no longer necessary for financing purposes. VCC did not incur any penalties in connection with the early termination.

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The Registrants, including the subsidiaries of CenterPoint Energy discussed above, were in compliance with all financial debt covenants as of ~~September 30, 2020.~~March 31, 2021.

The table below reflects the utilization of the Registrants’ respective revolving credit facilities:


		September 30, 2020								December 31, 2019										March 31, 2021								December 31, 2020
Registrant	Registrant	Loans		Letters of Credit		Commercial Paper		Weighted Average Interest Rate		Loans		Letters of Credit		Commercial Paper		Weighted Average Interest Rate		Registrant		Loans		Letters of Credit		Commercial Paper		Weighted Average Interest Rate		Loans		Letters of Credit		Commercial Paper		Weighted Average Interest Rate
		(in millions, except weighted average interest rate)																	(in millions, except weighted average interest rate)
CenterPoint Energy (1)	CenterPoint Energy (1)	$	0	$	8	$	638	0.19	%	$	0	$	6	$	1,633	1.95	%	CenterPoint Energy (1)		$	0	$	11	$	772	0.21	%	$	0	$	11	$	1,078	0.23	%
CenterPoint Energy (2)	CenterPoint Energy (2)	0		0		176		0.19	%	0		0		268		2.08	%	CenterPoint Energy (2)		0		0		210		0.18	%	0		0		92		0.22	%

Houston Electric	Houston Electric	0		0		0		0	%	0		0		0		0	%	Houston Electric		0		0		0		0	%	0		0		0		0	%
CERC	CERC	0		0		407		0.17	%	0		1		377		1.94	%	CERC		0		0		573		0.21	%	0		0		347		0.23	%
Total	Total	$	0	$	8	$	1,221			$	0	$	7	$	2,278			Total		$	0	$	11	$	1,555			$	0	$	11	$	1,517

(1)CenterPoint Energy’s outstanding commercial paper generally has maturities of 60 days or less.

(2)This credit facility was issued by VUHI and is guaranteed by SIGECO, Indiana Gas and VEDO.

Liens. As of March 31, 2021, Houston Electric’s assets were subject to liens securing approximately $5.4 billion of general mortgage bonds, including approximately $68 million held in trust to secure pollution control bonds that mature in 2028 for which CenterPoint Energy is obligated. These general mortgage bonds are not reflected in Houston Electric’s consolidated financial statements because of the contingent nature of the obligations. Houston Electric may issue additional general mortgage bonds on the basis of retired bonds, 70% of property additions or cash deposited with the trustee. As of March 15, 2021, 0 Houston Electric first mortgage bonds remained outstanding. Houston Electric could issue approximately $3.4 billion of additional first mortgage bonds and general mortgage bonds on the basis of retired bonds and 70% of property additions as of March 31, 2021. Houston Electric has contractually agreed that it will not issue additional first mortgage bonds, subject to certain exceptions.

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Other. As of ~~September 30, 2020,~~March 31, 2021, certain financial institutions agreed to issue, from time to time, up to ~~$50~~$20 million of letters of credit on behalf of Vectren and certain of its subsidiaries in exchange for customary fees. These agreements to issue letters of credit expire on December 31, ~~2020.~~2021. As of ~~September 30, 2020,~~March 31, 2021, such financial institutions had issued $7$1 million of letters of credit on behalf of Vectren and certain of its subsidiaries.

Houston Electric had $68 million of general mortgage bonds outstanding as of September 30, 2020 and December 31, 2019 as collateral for long-term debt of CenterPoint Energy that matures in 2028. These general mortgage bonds are not reflected in Houston Electric’s consolidated financial statements because of the contingent nature of the obligations.

(13) Income Taxes

The Registrants reported the following effective tax rates:

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
CenterPoint Energy - Continuing operations (1) (2)
(9) % 15 % 29 % 12 %
CenterPoint Energy - Discontinued operations (3) (4)
0 % 46 % (13) % 30 %
Houston Electric (5)
14 % 18 % 15 % 18 %
CERC - Continuing operations (6) (7)
60 % 23 % 13 % 9 %
CERC - Discontinued operations (8) (9)
33 % 40 % 3 % 21 %


	Three Months Ended March 31,
		2021		2020
CenterPoint Energy - Continuing operations (1)		17	%	25	%
CenterPoint Energy - Discontinued operations (2)		0	%	10	%
Houston Electric		13	%	13	%
CERC - Continuing operations (3)		22	%	21	%
CERC - Discontinued operations (4)		0	%	15	%

(1)CenterPoint Energy’s lower effective tax rate on income from continuing operations for the three months ended ~~September 30, 2020~~March 31, 2021 compared to the higher effective tax rate on a loss from continuing operations for the three months ended ~~September 30, 2019~~March 31, 2020 was primarily driven by an increase in the ~~recognition~~amount of ~~additional tax benefit for increased NOL carryback claims under the CARES Act and the effects~~amortization of the ~~lower book earnings on other rate drivers in the three months ended September 30, 2020.~~

~~(2)CenterPoint Energy’s~~net regulatory EDIT liability. The higher effective tax rate on the loss from continuing operations for the ~~nine~~three months ended ~~September 30,~~March 31, 2020 ~~compared to the income from continuing operations for the nine months ended September 30, 2019~~ was primarily due to lower earnings from the impairment of CenterPoint Energy’s investment in Enable. Other effective tax rate drivers include the ~~tax benefit for the NOL carryback claims under the CARES Act, which was partially offset by the~~ non-deductible goodwill impairment at the Indiana Electric ~~Integrated~~ reporting ~~unit.~~unit, the impact of NOL carryback claims allowed under the CARES Act, and an increase in the amount of remeasurement of state deferred tax liabilities for changes in apportionment, the effects of which were compounded by the book loss in the three months ended March 31, 2020.

~~(3)~~(2)CenterPoint Energy’s lower ~~effective~~than statutory tax rate on the loss from discontinued operations for the three months ended ~~September 30,~~March 31, 2020 ~~compared~~was primarily due to the non-deductible portions of goodwill impairments on the Energy Services and Infrastructure Services Disposal Groups.

(3)CERC’s higher effective tax rate on income from ~~discontinued~~continuing operations for the three months ended ~~September 30, 2019 was primarily due~~March 31, 2021 compared to ~~lower book earnings in~~ the three months ended ~~September 30, 2020.~~

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~~(4)CenterPoint Energy’s lower effective tax rate on the loss from discontinued operations for the nine months ended September 30,~~March 31, 2020 ~~compared to the income from discontinued operations for the nine months ended September 30, 2019~~ was primarily due to the tax impacts from the sale of the Infrastructure Services Disposal Group on April 9, 2020 and the sale of the Energy Services Disposal Group on June 1, 2020, the effect of which was compoundeddriven by ~~lower book earnings in the nine months ended September 30, 2020. See Note 3 for further information.~~

~~(5)Houston Electric’s lower effective tax rate for the three and nine months ended September 30, 2020 compared to the same periods for 2019 was primarily due to an increase~~a decrease in the amount of amortization of the net regulatory EDIT liability.

~~(6)~~CERC’s higher effective tax rate on the loss from continuing operations for the three months ended September 30, 2020 compared to the three months ended September 30, 2019 was driven by an increase in the amount of amortization of the net regulatory EDIT liability and a larger return-to-accrual tax benefit recognized in the three months ended September 30, 2020. These were partially offset by the absence of state deferred tax benefits as a result of certain state tax law changes and the release of a valuation allowance on certain state NOLs that were reported in the three months ended September 30, 2019.

~~(7)~~CERC’s higher effective tax rate on income from continuing operations for the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019 was driven by the absence of state deferred tax benefits as a result of certain state tax law changes and the release of a valuation allowance on certain state NOLs that were reported in the nine months ended September 30, 2019. These were partially offset by an increase in the amount of amortization of the net regulatory EDIT liability and a larger return-to-accrual tax benefit recognized in the nine months ended September 30, 2020.

~~(8)~~(4)CERC’s lower effective tax rate on income from discontinued operations for the three months ended September 30, 2020 compared to the income from discontinued operations for the three months ended September 30, 2019 was primarily due to lower book earnings in the three months ended September 30, 2020.

~~(9)CERC’s lower effective~~than statutory tax rate on the loss from discontinued operations for the ~~nine~~three months ended ~~September 30,~~March 31, 2020 ~~compared to the income from discontinued operations for the nine months ended September 30, 2019~~ was primarily due to the ~~tax impacts~~non-deductible portion of the ~~sale of~~goodwill impairment on the Energy Services Disposal ~~Group on June 1, 2020, the effect of which was compounded by lower book earnings in the nine months ended September 30, 2020. See Note 3 for further information.~~Group.

On March 11, 2021, the ARPA was enacted in response to continued economic and health impacts of the COVID-19 pandemic. The ARPA expands the definition of “covered employee” under section 162(m) beginning in 2027, and extends the employee retention tax credit through December 31, 2021, among other provisions. CenterPoint Energy does not currently anticipate any material impacts from this legislation. On March 27, 2020, the CARES Act was enacted in response to the COVID-19 pandemic. The CARES Act provides relief to corporate taxpayers by permitting a five-year carryback of 2018-2020 NOLs, deferring the payment of the employer share of payroll taxes for the remaining months of 2020 until 2021 and 2022, increasing the 30% limitation on interest expense deductibility to 50% of adjusted taxable income for 2019 and 2020, and accelerating refunds for minimum tax credit carryforwards, among other provisions. ~~As such,~~Based on the CARES Act NOL carryback provision, during the ~~nine~~three months ended ~~September 30,~~March 31, 2020, CenterPoint Energy recorded a ~~$37~~$19 million benefit resulting from carryback claims to be filed to refund taxes paid.

CenterPoint Energy reported a net uncertain tax liability, inclusive of interest and penalties, of $9$10 million as of ~~September 30, 2020. The reserve has net zero change~~March 31, 2021. Interest and penalties of $1 million were recorded on the uncertain tax liability for the ~~nine~~three month period ending ~~September 30, 2020.~~March 31, 2021. The Registrants believe that it is reasonably possible that a decrease of up to $5$6 million in unrecognized tax benefits may occur in the next 12 months as a result of a lapse of statutes on older exposures and/or the ~~filing~~acceptance of ~~applications~~an application for an accounting method ~~changes.~~change. For CenterPoint Energy, tax years through 2018 have been audited and settled with the IRS. For the 2019 ~~and 2020~~through 2021 tax years CenterPoint Energy is a participant in the IRS’s Compliance Assurance Process. ~~Legacy Vectren is not currently under audit with the IRS, and the 2017-2019~~Vectren’s pre-Merger 2017 through 2019 tax years are still open for examination.

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(14) Commitments and Contingencies

(a)Purchase Obligations (CenterPoint Energy and CERC)

Commitments include minimum purchase obligations related to CenterPoint Energy’s and CERC’s Natural Gas ~~Distribution~~ reportable segment and CenterPoint Energy’s ~~Indiana~~ Electric ~~Integrated~~ reportable segment. A purchase obligation is defined as an agreement to purchase goods or services that is enforceable and legally binding on the registrant and that specifies all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Contracts with minimum payment provisions have various quantity requirements and durations and are not classified as non-trading derivative assets and liabilities in CenterPoint Energy’s and CERC’s Condensed Consolidated Balance Sheets as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019.~~2020. These contracts meet an exception as “normal purchases contracts” or do not meet the definition of a derivative. Natural gas and coal supply commitments also include transportation contracts that do not meet the definition of a derivative.

~~Table~~On February 9, 2021, Indiana Electric entered into a BTA with a subsidiary of ~~Contents~~

Capital Dynamics. Pursuant to the BTA, Capital Dynamics, with its partner Tenaska, will build a 300 MW solar array in Posey County, Indiana through a special purpose entity Posey Solar. Upon completion of construction, currently projected to be at the end of 2023, and subject to IURC approval, Indiana Electric will acquire Posey Solar and its solar array assets for a fixed purchase price.

As of ~~September 30, 2020,~~March 31, 2021, undiscounted minimum purchase obligations are approximately:


		CenterPoint Energy		CERC			CenterPoint Energy				CERC
		(in millions)					Natural Gas and Coal Supply		Other (1)		Natural Gas Supply
Remaining three months of 2020		$	224	$	163
2021		662		486
							(in millions)
Remaining nine months of 2021						Remaining nine months of 2021	$	429	$	2	$	271
2022	2022	496		325		2022	547		12		332
2023	2023	418		271		2023	470		404		279
2024	2024	340		246		2024	392		198		259
2025	2025	290		220		2025	337		7		231
2026 and beyond		1,817		1,496
2026						2026	304		7		226
2027 and beyond						2027 and beyond	1,634		137		1,331

(1)CenterPoint Energy’s undiscounted minimum payment obligations related to its 25-year agreement for its solar PPA in Warrick County, Indiana and its purchase commitment under its BTA in Posey County, Indiana are included above. The remaining undiscounted payment obligations relate primarily to technology hardware and software agreements.

Excluded from the table above are estimates for cash outlays from other PPAs through Indiana Electric ~~Integrated also has other purchased power agreements~~ that do not have minimum thresholds but do require payment when energy is generated by the provider. Costs arising from certain of these commitments are pass-through costs, generally collected dollar-for-dollar from retail customers through regulator-approved cost recovery mechanisms.

CenterPoint Energy’s and CERC’s NGD have AMAs associated with their utility distribution service in Arkansas, Louisiana and Oklahoma with the Energy Services Disposal Group and in Arkansas, Indiana, Louisiana, Mississippi and Texas with other third parties. The AMAs have varying terms, the longest of which expires in 2023. For further information regarding the AMAs with the Energy Services Disposal Group, see Note 3.

(b)Guarantees and Product Warranties (CenterPoint Energy)

In the normal course of business, ESG enters into contracts requiring it to timely install infrastructure, operate facilities, pay vendors and subcontractors and support warranty obligations and, at times, issue payment and performance bonds and other forms of assurance in connection with these contracts.

Specific to ESG’s role as a general contractor in the performance contracting industry, as of ~~September 30, 2020,~~March 31, 2021, there were 6051 open surety bonds supporting future performance with an aggregate face amount of approximately ~~$568~~$527 million. ESG’s exposure is less than the face amount of the surety bonds and is limited to the level of uncompleted work under the contracts. As of ~~September 30, 2020,~~March 31, 2021, approximately ~~21%~~47% of the work was yet to be completed on projects with open surety bonds. Further, various subcontractors issue surety bonds to ESG. In addition to these performance obligations, ESG also warrants the functionality of certain installed infrastructure generally for one year and the associated energy savings over a specified number of years. As of March 31, 2021, there were 32 warranties totaling $554 million and an additional $1.2 billion in energy savings commitments not guaranteed by Vectren. Since ESG’s inception in 1994, CenterPoint Energy believes ESG has had a history of generally meeting its performance obligations and energy savings guarantees and its installed products operating effectively.

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CenterPoint Energy assessed the fair value of its obligation for such guarantees as of ~~September 30, 2020~~March 31, 2021 and no0 amounts were recorded on CenterPoint Energy’s Condensed Consolidated Balance Sheets.

CenterPoint Energy issues parent company level guarantees to certain vendors, customers and other commercial counterparties of ESG. These guarantees do not represent incremental consolidated obligations, but rather, represent guarantees of subsidiary obligations to allow those subsidiaries to conduct business without posting other forms of assurance. As of ~~September 30, 2020,~~March 31, 2021, CenterPoint Energy, primarily through Vectren, has issued parent company level guarantees supporting ESG’s obligations. For those obligations where potential exposure can be estimated, management estimates the maximum exposure under these guarantees to be approximately ~~$519~~$517 million as of ~~September 30, 2020.~~March 31, 2021. This exposure primarily relates to energy savings guarantees on federal energy savings performance contracts. Other parent company level guarantees, certain of which do not contain a cap on potential liability, have been issued in support of federal operations and maintenance projects for which a maximum exposure cannot be estimated based on the nature of the projects. While there can be no assurance that performance under any of these parent company guarantees will not be required in the future, CenterPoint Energy considers the likelihood of a material amount being incurred as remote.

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(c)Guarantees and Product Warranties (CenterPoint Energy and CERC)

On February 24, 2020, CenterPoint Energy, through its subsidiary CERC Corp., entered into the Equity Purchase Agreement to sell the Energy Services Disposal Group. The transaction closed on June 1, 2020. In the normal course of business prior to June 1, 2020, the Energy Services Disposal Group through CES, traded natural gas under supply contracts and entered into natural gas related transactions under transportation, storage and other contracts. In connection with the Energy Services Disposal Group’s business activities prior to the closing of the sale of the Energy Services Disposal Group on June 1, 2020, CERC Corp. issued guarantees to CES’s counterparties to guarantee the payment of CES’s obligations. When CES remained wholly owned by CERC Corp., these guarantees did not represent incremental consolidated obligations, but rather, these guarantees represented guarantees of CES’s obligations to allow it to conduct business without posting other forms of assurance.

A CERC Corp. guarantee primarily ~~has~~had a one- or two-year term, although CERC Corp. would generally not be released from obligations incurred by CES prior to the termination of such guarantee unless the beneficiary of the guarantee affirmatively released CERC Corp. from its obligations under the guarantee. Throughout CERC Corp.’s ownership of CES and subsequent to the sale of the Energy Services Disposal Group through ~~September 30, 2020,~~March 31, 2021, CERC Corp. did not pay any amounts under guarantees of CES’s obligations.

Under the terms of the Equity Purchase Agreement, Symmetry Energy Solutions Acquisition must generally use reasonable best efforts to replace existing CERC Corp. guarantees with credit support provided by a party other than CERC Corp. as of and after the closing of the transaction. Additionally, to the extent that CERC Corp. retains any exposure relating to certain guarantees of CES’s obligations 90 days after closing of the transaction, Symmetry Energy Solutions Acquisition will pay a 3% annualized fee on such exposure, increasing by 1% on an annualized basis every three months. As of ~~September 30, 2020,~~March 31, 2021, management estimates approximately $51 million of exposure remained outstanding under CERC Corp. guarantees issued prior to the closing of the transaction on June 1, 2020. On May 3, 2021, the estimated remaining exposure under these obligations decreased to $41 million. CES ~~had~~has provided replacement credit support to counterparties to whom CERC Corp. had issued guarantees prior to ~~June 1, 2020,~~closing representing ~~$68 million~~the full amount of ~~the $73 million~~CERC’s remaining exposure under the ~~previously issued~~ guarantees. CERC believes that counterparties to whom replacement credit support has been provided would seek payment if needed under such replacement credit support instead of a CERC Corp. guarantee. NoNaN additional guarantees were provided by CERC Corp. to CES subsequent to the closing of the transaction on June 1, 2020.

If CERC Corp. is required to pay a counterparty under a guarantee in respect of obligations of CES, Symmetry Energy Solutions Acquisition is required to promptly reimburse CERC Corp. for all amounts paid. If Symmetry Energy Solutions Acquisition fails to reimburse CERC Corp., CERC Corp. has the contractual right to seek payment from Shell Energy North America (US), L.P. in an amount up to $40 million in the aggregate. While there can be no assurance that payment under any of these guarantees will not be required in the future, CenterPoint Energy and CERC consider the likelihood of a material amount being incurred as remote.

CenterPoint Energy and CERC recorded no0 amounts on their respective Condensed Consolidated Balance Sheets as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 related to the performance of these guarantees.

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(d)Legal, Environmental and Other Matters

Legal Matters

Minnehaha Academy (CenterPoint Energy and CERC). On August 2, 2017, a natural gas explosion occurred at the Minnehaha Academy in Minneapolis, Minnesota, resulting in the deaths of two school employees, serious injuries to others and significant property damage to the school. CenterPoint Energy, certain of its subsidiaries, including CERC, and the contractor company working in the school have been named in litigation arising out of this incident. CenterPoint Energy and CERC have reached confidential settlement agreements on all wrongful death and property damage claims and with some personal injury claimants. Additionally, CenterPoint Energy and CERC cooperated with the investigation conducted by the National Transportation Safety Board, which concluded its investigation in December 2019 and issued a report without making any recommendations. Further, CenterPoint Energy and CERC contested and reached a settlement regarding approximately $200,000 in fines imposed by the Minnesota Office of Pipeline Safety. In early 2018, the Minnesota Occupational Safety and Health Administration concluded its investigation without any adverse findings against CenterPoint Energy or CERC. CenterPoint Energy, certain of its subsidiaries, including CERC, and the contractor company working in the school were named in wrongful death, property damage and personal injury litigation arising out of the incident and have now reached confidential settlement agreements in all litigation. CenterPoint Energy’s and CERC’s general and excess liability insurance policies provide coverage for third party bodily injury and property damage claims.

Litigation Related to the Merger (CenterPoint Energy). With respect to the Merger, in July 2018, ~~seven~~7 separate lawsuits were filed against Vectren and the individual directors of Vectren’s Board of Directors in the U.S. District Court for the Southern District of Indiana. These lawsuits alleged violations of Sections 14(a) of the Exchange Act and SEC Rule 14a-9 on the grounds that the Vectren Proxy Statement filed on June 18, 2018 was materially incomplete because it omitted material information concerning the Merger. In August 2018, the ~~seven~~7 lawsuits were consolidated, and the Court denied the plaintiffs’ request for a preliminary injunction. In October 2018, the plaintiffs filed their Consolidated Amended Class Action Complaint. In December 2018, ~~two~~2 plaintiffs voluntarily dismissed their lawsuits. In September 2019, the court granted the defendants’ motion to dismiss and dismissed the remaining plaintiffs’ claims with prejudice, which the plaintiffs appealed in October 2019.

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The U.S. Court of Appeals for the Seventh Circuit heard oral arguments in September 2020, and a ruling is expected in ~~late 2020 or early~~ 2021. The defendants believe that the allegations asserted are without merit and intend to vigorously defend themselves against the claims raised. CenterPoint Energy does not expect the ultimate outcome of this matter to have a material adverse effect on its financial condition, results of operations or cash flows.

Litigation Related to the February 2021 Winter Storm Event.With respect to the February 2021 Winter Storm Event, CenterPoint Energy, CERC and Houston Electric, along with ERCOT, have received claims and lawsuits filed by plaintiffs alleging personal injury, property damage and other injuries and damages. Additionally, various regulatory and governmental entities have announced that they intend to conduct or are conducting inquiries, investigations and other reviews of the February 2021 Winter Storm Event and the efforts made by various entities to prepare for, and respond to, this event, including the electric generation shortfall issues.Entities that have announced that they plan to conduct or are conducting such inquiries, investigations and other reviews include the United States Congress, FERC, NERC, Texas RE, ERCOT, Texas government entities and officials such as the Texas Governor’s office, the Texas Legislature, the Texas Attorney General, the PUCT, the City of Houston and other municipal and county entities in Houston Electric’s service territory, among other entities.

Like other Texas TDUs, Houston Electric may become involved in certain of the above-referenced investigations, litigation or other regulatory and legal proceedings regarding their efforts to restore power and their compliance with NERC, ERCOT and PUCT rules and directives. CenterPoint Energy and Houston Electric are responding to inquiries from the Texas Attorney General and the Galveston County District Attorney’s Office, and CenterPoint Energy and CERC are responding to inquiries from the Arkansas, Minnesota and Oklahoma Attorneys General. CenterPoint Energy, Houston Electric and CERC are subject to, and may be further subject to, litigation and claims. Such claims include, or in the future could include, wrongful death, personal injury and property damage claims, lawsuits for impacts on businesses and other organizations and entities and shareholder claims, among other claims or litigation matters. As of April 29, 2021, CenterPoint Energy and Houston Electric have been named as a defendant in approximately 60 lawsuits related to the February 2021 Winter Storm Event. CenterPoint Energy and Houston Electric intend to vigorously defend themselves against the claims raised. CenterPoint Energy, Houston Electric and CERC are unable to predict the consequences of any such matters or to estimate a range of potential losses.

Litigation Related to the Enable Merger. In March 2021, several lawsuits were filed by persons claiming to be Enable unitholders against various defendants, including Enable, the members of Enable GP’s Board of Directors, Energy Transfer, and other parties to the Enable Merger Agreement, challenging the Enable Merger and the disclosures made in connection therewith. CenterPoint Energy has been named in one such lawsuit pending in the United States District Court for the Southern District of New York. The lawsuits allege violations of Section 14(a) of the Exchange Act and SEC Rule 14a-9 on the grounds that the Registration Statement on Form S-4 filed by Energy Transfer on March 19, 2021, was materially incomplete because it omitted material information about, among other things, Enable's and Energy Transfer's financial projections and the analyses conducted by Enable's financial advisors. The lawsuits further allege that the individual defendants, including, among others,

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Energy Transfer and CenterPoint Energy, violated Section 20(a) of the Exchange Act as controlling persons of Enable. Plaintiffs seek to have the court enjoin the Enable Merger, require defendants to disseminate a new registration statement disclosing the allegedly omitted information, declare that defendants violated the Exchange Act, rescind the Enable Merger or award rescissory damages in the event the Enable Merger is consummated, along with attorneys’ fees, costs, and other relief. CenterPoint Energy’s dates to respond to the lawsuit in which it was sued have not yet been set. CenterPoint Energy cannot predict the outcome of litigation related to the Enable Merger Agreement, but believes the litigation is without merit, intends to defend vigorously against such litigation, and does not expect the ultimate outcome of such litigation to have a material adverse effect on its financial condition, results of operations or cash flows.

Environmental Matters

MGP Sites. CenterPoint Energy, CERC and their predecessors operated MGPs in the past. In addition, certain of CenterPoint Energy’s subsidiaries acquired through the Merger operated MGPs in the past. The costs CenterPoint Energy or CERC, as applicable, expect to incur to fulfill their respective obligations are estimated by management using assumptions based on actual costs incurred, the timing of expected future payments and inflation factors, among others. While CenterPoint Energy and CERC have recorded all costs which they presently are obligated to incur in connection with activities at these sites, it is possible that future events may require remedial activities which are not presently foreseen, and those costs may not be subject to PRP or insurance recovery.

(i)Minnesota MGPs (CenterPoint Energy and CERC). With respect to certain Minnesota MGP sites, CenterPoint Energy and CERC have completed state-ordered remediation and continue state-ordered monitoring and water treatment. CenterPoint Energy and CERC recorded a liability as reflected in the table below for continued monitoring and any future remediation required by regulators in Minnesota.

(ii)Indiana MGPs (CenterPoint Energy). In the Indiana Gas service territory, the existence, location and certain general characteristics of 26 gas manufacturing and storage sites have been identified for which CenterPoint Energy may have some remedial responsibility. A remedial investigation/feasibility study was completed at one of the sites under an agreed upon order between Indiana Gas and the IDEM, and a Record of Decision was issued by the IDEM in January 2000. The remaining sites have been submitted to the IDEM’s VRP. CenterPoint Energy has also identified its involvement in 5 manufactured gas plant sites in SIGECO’s service territory, all of which are currently enrolled in the IDEM’s VRP. CenterPoint Energy is currently conducting some level of remedial activities, including groundwater monitoring at certain sites.

(iii)Other MGPs (CenterPoint Energy and CERC). In addition to the Minnesota and Indiana sites, the EPA and other regulators have investigated MGP sites that were owned or operated by CenterPoint Energy or CERC or may have been owned by one of their former affiliates.

Total costs that may be incurred in connection with addressing these sites cannot be determined at this time. The estimated accrued costs are limited to CenterPoint Energy’s and CERC’s share of the remediation efforts and are therefore net of exposures of other PRPs. The estimated range of possible remediation costs for the sites for which CenterPoint Energy and CERC believe they may have responsibility was based on remediation continuing for the minimum time frame given in the table below.


		September 30, 2020					March 31, 2021
		CenterPoint Energy		CERC			CenterPoint Energy		CERC
		(in millions, except years)					(in millions, except years)
Amount accrued for remediation	Amount accrued for remediation	$	12	$	7	Amount accrued for remediation	$	12	$	7
Minimum estimated remediation costs	Minimum estimated remediation costs	7		4		Minimum estimated remediation costs	8		5
Maximum estimated remediation costs	Maximum estimated remediation costs	54		32		Maximum estimated remediation costs	55		32
Minimum years of remediation	Minimum years of remediation	5		30		Minimum years of remediation	5		30
Maximum years of remediation	Maximum years of remediation	50		50		Maximum years of remediation	50		50

The cost estimates are based on studies of a site or industry average costs for remediation of sites of similar size. The actual remediation costs will depend on the number of sites to be remediated, the participation of other PRPs, if any, and the remediation methods used.

CenterPoint Energy and CERC do not expect the ultimate outcome of these matters to have a material adverse effect on the financial condition, results of operations or cash flows of either CenterPoint Energy or CERC.

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Asbestos. Some facilities owned by the Registrants or their predecessors contain or have contained asbestos insulation and other asbestos-containing materials. The Registrants are from time to time named, along with numerous others, as defendants in lawsuits filed by a number of individuals who claim injury due to exposure to asbestos, and the Registrants anticipate that

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additional claims may be asserted in the future. Although their ultimate outcome cannot be predicted at this time, the Registrants do not expect these matters, either individually or in the aggregate, to have a material adverse effect on their financial condition, results of operations or cash flows.

CCR Rule (CenterPoint Energy). In April 2015, the EPA finalized its CCR Rule, which regulates ash as non-hazardous material under the RCRA. The final rule allows beneficial reuse of ash, and the majority of the ash generated by Indiana Electric’s generating plants will continue to be reused. In July 2018, the EPA released its final CCR Rule Phase I Reconsideration which extended the deadline to October 31, 2020 for ceasing placement of ash in ponds that exceed groundwater protections standards or that fail to meet location restrictions. ~~While the EPA Phase I Reconsideration moves forward, the existing CCR compliance obligations remain in effect.~~ In August 2019, the EPA proposed additional “Part A” amendments to its CCR Rule with respect to beneficial reuse of ash and other materials. Further “Part B” amendments, which related to alternate liners for CCR surface impoundments and the surface impoundment closure process, were published in March 2020. The Part A amendments were finalized in August ~~2020.~~2020 and extended the deadline to cease placement of ash in ponds to April 11, 2021. The EPA ~~released a pre-publication version of~~published the final Part B amendments ~~on October 16,~~in November 2020. The Part A amendments do not restrict Indiana Electric’s current beneficial reuse of its fly ash. CenterPoint Energy continues to evaluate the Part B amendments to determine potential impacts.

Indiana Electric has ~~three~~3 ash ponds, ~~two~~2 at the F.B. Culley facility (Culley East and Culley West) and ~~one~~1 at the A.B. Brown facility. Under the existing CCR Rule, Indiana Electric is required to perform integrity assessments, including ground water monitoring, at its F.B. Culley and A.B. Brown generating stations. The ground water studies are necessary to determine the remaining service life of the ponds and whether a pond must be retrofitted with liners or closed in ~~place, with bottom ash handling conversions completed.~~place. Indiana Electric’s Warrick generating unit is not included in the scope of the CCR Rule as this unit has historically been part of a larger generating station that predominantly serves an adjacent industrial facility. ~~In March 2018, Indiana Electric began posting ground water data~~Preliminary groundwater monitoring ~~reports annually to its public website in accordance with the requirements of the CCR Rule. This data preliminarily~~ indicates potential groundwater impacts very close to Indiana Electric’s ash impoundments, and further analysis is ongoing. The CCR Rule required companies to complete location restriction determinations by October 18, 2018. Indiana Electric completed its evaluation and determined that one F.B. Culley pond (Culley East) and the A.B. Brown pond fail the aquifer placement location restriction. As a result of this failure, Indiana Electric is required to cease disposal of new ash in the ponds and commence closure of the ponds by April 11, 2021. CenterPoint Energy ~~plans to seek~~has applied for the extensions available under the CCR Rule that would allow Indiana Electric to continue to use the ponds through October 15, 2023. The inability to take these extensions may result in increased and potentially significant operational costs in connection with the accelerated implementation of an alternative ash disposal system or adversely impact Indiana Electric’s future operations. Failure to comply with these requirements could also result in an enforcement proceeding including the imposition of fines and penalties. On April 24, 2019, Indiana Electric received an order from the IURC approving recovery in rates of costs associated with the closure of the Culley West pond, which has already ~~commenced~~completed closure activities. ~~CenterPoint Energy believes the language in the IURC order is favorable for future recovery of closure costs for Indiana Electric’s remaining ponds.~~

Indiana Electric continues to refine site specific estimates of closure costs. In July 2018, Indiana Electric filed a Complaint for Damages and Declaratory Relief against its insurers seeking reimbursement of defense, investigation and pond closure costs incurred to comply with the CCR Rule, and has since reached confidential settlement agreements with its insurers. The proceeds of these settlements will offset costs that have been and will be incurred to close the ponds. In March 2019, Indiana Electric entered into agreements with third parties for the excavation and beneficial reuse of the ash at the A.B. Brown ash pond. On December 2, 2019, the EPA published proposed revisions to the CCR Rule. The revisions were finalized on August 28, 2020.

On August 14, 2019, Indiana Electric filed its petition with the IURC for recovery of costs associated with the closure of the A.B. Brown ash pond, which would include costs associated with the excavation and recycling of ponded ash. This petition was subsequently approved by the IURC on May 13, 2020. On October 28, 2020, the IURC approved Indiana Electric’s ECA proceeding, which included the initiation of recovery of the federally mandated project costs.

Indiana Electric continues to refine site specific estimates of closure costs for its ten-acre Culley East pond. In July 2018, Indiana Electric filed a Complaint for Damages and Declaratory Relief against its insurers seeking reimbursement of defense, investigation and pond closure costs incurred to comply with the CCR Rule, and has since reached confidential settlement agreements with its insurers. The proceeds of these settlements will offset costs that have been and will be incurred to close the ponds.

As of ~~September 30, 2020,~~March 31, 2021, CenterPoint Energy has recorded an approximate ~~$73~~$88 million ARO, which represents the discounted value of future cash flow estimates to close the ponds at A.B. Brown and F.B. Culley. This estimate is subject to change due to the contractual arrangements; continued assessments of the ash, closure methods, and the timing of closure; implications of Indiana Electric’s generation transition plan; changing environmental regulations; and proceeds received from the settlements in the aforementioned insurance proceeding. In addition to these removal costs, Indiana Electric also anticipates equipment purchases of between $60 million and $80 million to complete the A.B. Brown closure project.

Other Environmental. From time to time, the Registrants identify the presence of environmental contaminants during operations or on property where their predecessors have conducted operations. Other such sites involving contaminants may be identified in the future. The Registrants have and expect to continue to remediate any identified sites consistent with state and

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federal legal obligations. From time to time, the Registrants have received notices, and may receive notices in the future, from regulatory authorities or others regarding status as a PRP in connection with sites found to require remediation due to the

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presence of environmental contaminants. In addition, the Registrants have been, or may be, named from time to time as defendants in litigation related to such sites. Although the ultimate outcome of such matters cannot be predicted at this time, the Registrants do not expect these matters, either individually or in the aggregate, to have a material adverse effect on their financial condition, results of operations or cash flows.

Other Proceedings

The Registrants are involved in other legal, environmental, tax and regulatory proceedings before various courts, regulatory commissions and governmental agencies regarding matters arising in the ordinary course of business. From time to time, the Registrants are also defendants in legal proceedings with respect to claims brought by various plaintiffs against broad groups of participants in the energy industry. Some of these proceedings involve substantial amounts. The Registrants regularly analyze current information and, as necessary, provide accruals for probable and reasonably estimable liabilities on the eventual disposition of these matters. The Registrants do not expect the disposition of these matters to have a material adverse effect on the Registrants’ financial condition, results of operations or cash flows.

(15) Earnings Per Share (CenterPoint Energy)

The Series C Preferred Stock issued in May 2020 are considered participating securities since these shares participate in dividends on Common Stock on a pari passu, pro rata, as-converted basis. ~~See Note 19 for further information on the issuance of Series C Preferred Stock.~~ As a result, beginning June 30, 2020, earnings per share on Common Stock is computed using the two-class method required for participating securities.

The two-class method uses an earnings allocation formula that treats participating securities as having rights to earnings that otherwise would have been available only to common shareholders. Under the two-class method, income (loss) available to common shareholders from continuing operations is derived by subtracting the following from income (loss) from continuing operations:

•preferred share dividend requirement;

•deemed dividends for the amortization of the beneficial conversion feature recognized at issuance of the Series C Preferred Stock; and

•an allocation of undistributed earnings to preferred shareholders of participating securities (Series C Preferred Stock) based on the securities’ right to receive dividends.

Undistributed earnings are calculated by subtracting dividends declared on Common Stock, the preferred share dividend requirement and deemed dividends for the amortization of the beneficial conversion feature from net income. Net losses are not allocated to the Series C Preferred Stock as it does not have a contractual obligation to share in the losses of CenterPoint Energy.

The Series C Preferred Stock includes conversion features at a price that is below the fair value of the Common Stock on the commitment date. This beneficial conversion feature, which was approximately $32 million, represents the difference between the fair value per share of the Common Stock as of the commitment date and the conversion price, multiplied by the number of common shares issuable upon conversion. The beneficial conversion feature is recognized as a discount to Series C Preferred Stock and ~~will be~~was amortized as a deemed dividend over the period from the issue date to the first allowable conversion date, which iswas November 6, 2020. ~~The amount amortized during the three and nine months ended September 30, 2020 was approximately $16 million and $25 million, respectively.~~

Basic earnings per common share is computed by dividing income available to common shareholders from continuing operations by the basic weighted average number of common shares outstanding during the period. Participating securities are excluded from basic weighted average number of common shares outstanding. Diluted earnings per common share is computed by dividing income available to common shareholders from continuing operations by the weighted average number of common shares outstanding, including all potentially dilutive common shares, if the effect of such common shares is dilutive.

Diluted earnings per share reflects the dilutive effect of potential common shares from share-based awards and convertible preferred shares. The dilutive effect of the restricted stock, Series B Preferred Stock and Series C Preferred Stock is computed using the if-converted method, which assumes conversion of the restricted stock, Series B Preferred Stock and Series C

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Preferred Stock at the beginning of the period, giving income recognition for the add-back of the preferred share dividends, amortization of beneficial conversion feature, and undistributed earnings allocated to preferred shareholders.

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The following table reconciles numerators and denominators of CenterPoint Energy’s basic and diluted earnings per common share.


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2020		2019		2020		2019					2021		2020
		(in millions, except per share and share amounts)										(in millions, except per share and share amounts)
Numerator:	Numerator:									Numerator:
Income (loss) from continuing operations	Income (loss) from continuing operations	$	127	$	251	$	(791)	$	545	Income (loss) from continuing operations			$	363	$	(1,053)
Less: Preferred stock dividend requirement (Note 19)	Less: Preferred stock dividend requirement (Note 19)	36		29		102		88		Less: Preferred stock dividend requirement (Note 19)			29		29
Less: Amortization of beneficial conversion feature (Note 19)		16		0		25		0

Less: Undistributed earnings allocated to preferred shareholders ~~(1)~~	Less: Undistributed earnings allocated to preferred shareholders ~~(1)~~	0		0		0		0		Less: Undistributed earnings allocated to preferred shareholders ~~(1)~~			23		0
Income (loss) available to common shareholders from continuing operations - basic and diluted		75		222		(918)		457
Income (loss) available to common shareholders from continuing operations - basic										Income (loss) available to common shareholders from continuing operations - basic			311		(1,082)
Income (loss) available to common shareholders from discontinued operations - basic and diluted	Income (loss) available to common shareholders from discontinued operations - basic and diluted	(6)		19		(182)		89		Income (loss) available to common shareholders from discontinued operations - basic and diluted			0		(146)
Income (loss) available to common shareholders - basic and diluted		$	69	$	241	$	(1,100)	$	546
Add back: Series B Preferred Stock dividend										Add back: Series B Preferred Stock dividend			17		0
Add back: Undistributed earnings allocated to preferred shareholders										Add back: Undistributed earnings allocated to preferred shareholders			23		0
Income (loss) available to common shareholders - diluted										Income (loss) available to common shareholders - diluted			$	351	$	(1,228)
Denominator:	Denominator:									Denominator:
Weighted average common shares outstanding - basic	Weighted average common shares outstanding - basic	544,811,000		502,228,000		525,160,000		501,986,000		Weighted average common shares outstanding - basic			551,546,000		502,388,000
Plus: Incremental shares from assumed conversions:	Plus: Incremental shares from assumed conversions:									Plus: Incremental shares from assumed conversions:
Restricted stock (4)		3,377,000		2,852,000		0		2,852,000
Restricted stock (1)										Restricted stock (1)			3,114,000		0
Series B Preferred Stock (2)	Series B Preferred Stock (2)	0		0		0		0		Series B Preferred Stock (2)			35,937,000		0
Series C Preferred Stock (3)		0		0		0		0
Series C Preferred Stock										Series C Preferred Stock			40,823,000		0
Weighted average common shares outstanding - diluted	Weighted average common shares outstanding - diluted	548,188,000		505,080,000		525,160,000		504,838,000		Weighted average common shares outstanding - diluted			631,420,000		502,388,000

Earnings (loss) per common share:
Earnings (Loss) Per Common Share:										Earnings (Loss) Per Common Share:
Basic earnings (loss) per common share - continuing operations	Basic earnings (loss) per common share - continuing operations	$	0.14	$	0.44	$	(1.75)	$	0.91	Basic earnings (loss) per common share - continuing operations			$	0.56	$	(2.15)
Basic earnings (loss) per common share - discontinued operations	Basic earnings (loss) per common share - discontinued operations	(0.01)		0.04		(0.35)		0.18		Basic earnings (loss) per common share - discontinued operations			0		(0.29)
Basic Earnings (Loss) Per Common Share	Basic Earnings (Loss) Per Common Share	$	0.13	$	0.48	$	(2.10)	$	1.09	Basic Earnings (Loss) Per Common Share			$	0.56	$	(2.44)
Diluted earnings (loss) per common share - continuing operations	Diluted earnings (loss) per common share - continuing operations	$	0.14	$	0.44	$	(1.75)	$	0.91	Diluted earnings (loss) per common share - continuing operations			$	0.56	$	(2.15)
Diluted earnings (loss) per common share - discontinued operations	Diluted earnings (loss) per common share - discontinued operations	(0.01)		0.03		(0.35)		0.17		Diluted earnings (loss) per common share - discontinued operations			0		(0.29)
Diluted Earnings (Loss) Per Common Share	Diluted Earnings (Loss) Per Common Share	$	0.13	$	0.47	$	(2.10)	$	1.08	Diluted Earnings (Loss) Per Common Share			$	0.56	$	(2.44)

(1)~~There were no undistributed earnings to be allocated to participating securities for the three and nine months ended September 30, 2020.~~

~~(2)~~The computation of diluted earnings per common share outstanding for the three and nine months ended September 30, 2020 excludes 35,940,000 and 35,923,000 potentially dilutive shares from the denominator, respectively, because the shares would be anti-dilutive. The computation of diluted earnings per common share outstanding for the three and nine months ended September 30, 2019 excludes 33,537,000 and 33,537,000 potentially dilutive shares from the denominator, respectively, because the shares would be anti-dilutive.

~~(3)~~The computation of diluted earnings per common share outstanding for the three and nine months ended September 30, 2020 excludes 47,355,000 and 25,578,000 potentially dilutive shares, respectively, of Series C Preferred Stock from the denominator because the shares would be anti-dilutive.

~~(4)3,377,000~~2,567,000 incremental common shares from assumed conversions of restricted stock have not been included in the computation of diluted earnings (loss) per share for the ~~nine~~three months ended ~~September 30,~~March 31, 2020, ~~respectively,~~ as their inclusion would be anti-dilutive.

(2)The computation of diluted earnings per common share outstanding for the three months ended March 31, 2020 excludes 35,923,000 potentially dilutive shares from the denominator, because the shares would be anti-dilutive.

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(16) Reportable Segments

The Registrants’ determination of reportable segments considers the strategic operating units under which ~~the Registrants’~~its CODM manages sales, allocates resources and assesses performance of various products and services to wholesale or retail customers in differing regulatory environments. ~~As of January 1, 2020, each~~Each Registrant’s CODM views net income as the measure of profit or loss for the reportable ~~segments rather than the previous measure of operating income.~~segments. Certain prior year amounts have been reclassified to conform to the current year ~~presentation.~~reportable segment presentation described in the Registrants’ combined 2020 Form 10-K.

As of ~~September 30, 2020,~~March 31, 2021, reportable segments by Registrant were as follows:

~~Registrant~~

~~Houston Electric T&D~~

~~Indiana Electric Integrated~~

~~Natural Gas Distribution~~

~~Midstream Investments~~

CenterPoint Energy

~~Houston Electric~~

~~CERC~~

•CenterPoint Energy’s ~~and Houston Electric’s Houston~~ Electric ~~T&D~~ reportable segment consists of electric transmission services to transmission service customers in the ERCOT region and distribution services into REPs serving the Texas Gulf Coast ~~area.~~

•~~CenterPoint Energy’s Indiana Electric Integrated reportable segment consists of~~area and electric transmission and distribution services primarily to southwestern Indiana and includes power generation and wholesale power operations.

•CenterPoint Energy’s Natural Gas ~~Distribution~~ reportable segment consists of (i) intrastate natural gas sales to, and natural gas transportation and distribution for residential, commercial, industrial and institutional customers in Arkansas, Indiana, Louisiana, Minnesota, Mississippi, Ohio, Oklahoma and Texas; (ii) permanent pipeline connections through

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interconnects with various interstate and intrastate pipeline companies through ~~CEIP, formerly included in the Energy Services reportable segment;~~CEIP; and (iii) temporary delivery of LNG and CNG throughout the contiguous 48 states through ~~MES, formerly included~~MES.

•CenterPoint Energy’s Midstream Investments reportable segment consists of the equity investment in Enable (excluding the Enable Series A Preferred Units). See Note 9 regarding the impact of the Enable Merger.

Houston Electric

•Houston Electric’s single reportable segment consists of electric transmission services to transmission service customers in the ~~Energy Services reportable segment.~~ERCOT region and distribution services to REPs serving the Texas Gulf Coast area.

CERC

•CERC’s ~~Natural Gas Distribution~~single reportable segment consists of (i) intrastate natural gas sales to, and natural gas transportation and distribution for residential, commercial, industrial and institutional customers in Arkansas, Louisiana, Minnesota, Mississippi, Oklahoma and Texas; (ii) permanent pipeline connections through interconnects with various interstate and intrastate pipeline companies through ~~CEIP, formerly included in the Energy Services reportable segment;~~CEIP; and (iii) temporary delivery of LNG and CNG throughout the contiguous 48 states through ~~MES, formerly included in the Energy Services reportable segment.~~MES.

•~~CenterPoint Energy’s Midstream Investments reportable segment consists of the equity investment in Enable (excluding the Enable Series A Preferred Units).~~

CenterPoint Energy’s Corporate and Other consists of energy performance contracting and sustainable infrastructure services through ESG and other corporate operations which support all of the business operations of CenterPoint Energy. CERC’s Corporate and Other consists primarily of corporate operations which support all of the business operations of CERC.

~~Discontinued Operations (CenterPoint Energy and CERC)~~

On February 3, 2020, CenterPoint Energy, through its subsidiary VUSI, entered into the Securities Purchase Agreement to sell the Infrastructure Services Disposal Group, which consists of underground pipeline construction and repair services. Accordingly, the previously reported Infrastructure Services reportable segment has been eliminated. The transaction closed on April 9, 2020. See Note 3 for further information.

Additionally, on February 24, 2020, CenterPoint Energy, through its subsidiary CERC Corp., entered into the Equity Purchase Agreement to sell the Energy Services Disposal Group, which consists of non-rate regulated natural gas sales and service operations. Accordingly, the previously reported Energy Services reportable segment has been eliminated. The transaction closed on June 1, 2020. See Note 3 for further information.

~~Table of Contents~~

Financial data for reportable segments is as follows, including Corporate and Other, ~~Eliminations~~ and Discontinued Operations for reconciliation purposes:

CenterPoint Energy


		Three Months Ended September 30,
		2020							2019
		Revenues from External Customers			Equity in Earnings of Unconsolidated Affiliates		Net Income (Loss)		Revenues from External Customers			Equity in Earnings of Unconsolidated Affiliates		Net Income (Loss)
		(in millions)
Houston Electric T&D		$	828	(1)	$	0	$	157	$	859	(1)	$	0	$	185
Indiana Electric Integrated		157			0		31		165			0		34
Natural Gas Distribution		560			0		5		541			0		6

																	Three Months Ended March 31,
																	2021							2020
																	Revenues from External Customers			Equity in Earnings of Unconsolidated Affiliates		Net Income (Loss)		Revenues from External Customers			Equity in Earnings of Unconsolidated Affiliates		Net Income (Loss)
																	(in millions)
Electric																Electric	$	830	(1)	$	0	$	75	$	767	(1)	$	0	$	(134)
Natural Gas																Natural Gas	1,663			0		229		1,321			0		201
Midstream Investments (2)	Midstream Investments (2)	0			(67)		(62)		0			77		50		Midstream Investments (2)	0			108		71		0			(1,475)		(1,127)
Corporate and Other	Corporate and Other	77			0		(4)		93			0		(24)		Corporate and Other	54			0		(12)		79			0		7

Continuing Operations	Continuing Operations	$	1,622		$	(67)	127		$	1,658		$	77	251		Continuing Operations	$	2,547		$	108	363		$	2,167		$	(1,475)	(1,053)
Discontinued Operations, net	Discontinued Operations, net						(6)							19		Discontinued Operations, net						0							(146)
Consolidated	Consolidated						$	121						$	270	Consolidated						$	363						$	(1,199)

		Nine Months Ended September 30,
		2020							2019
		Revenues from External Customers			Equity in Earnings of Unconsolidated Affiliates		Net Income (Loss)		Revenues from External Customers			Equity in Earnings of Unconsolidated Affiliates		Net Income (Loss)
		(in millions)
Houston Electric T&D		$	2,186	(1)	$	0	$	281	$	2,313	(1)	$	0	$	315
Indiana Electric Integrated		414			0		(121)		388			0		41
Natural Gas Distribution		2,519			0		242		2,629			0		149
Midstream Investments (2)		0			(1,499)		(1,165)		0			213		124
Corporate and Other		245			0		(28)		215			0		(84)

Continuing Operations		$	5,364		$	(1,499)	(791)		$	5,545		$	213	545
Discontinued Operations, net							(182)							89
Consolidated							$	(973)						$	634

(1)Houston Electric ~~T&D’s~~ revenues from major external customers are as follows (CenterPoint Energy and Houston Electric):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2020		2019		2020		2019					2021		2020
		(in millions)										(in millions)
Affiliates of NRG	Affiliates of NRG	$	243	$	231	$	573	$	547	Affiliates of NRG			$	195	$	156
Affiliates of Vistra Energy Corp.	Affiliates of Vistra Energy Corp.	128		83		301		196		Affiliates of Vistra Energy Corp.			88		81

(2)Includes the impairment of CenterPoint Energy’s equity method investment in Enable of $1,541 million recorded during the ~~nine~~three months ended ~~September 30, 2020 and CenterPoint Energy’s interest in Enable’s $225 million impairment on an equity method investment during the three and nine months ended September 30,~~March 31, 2020.

Table of Contents


	Total Assets
	March 31, 2021		December 31, 2020
	(in millions)
Electric	$	15,410	$	14,493
Natural Gas	17,208		14,976
Midstream Investments	994		913
Corporate and Other, net of eliminations (1)	2,294		3,089



Consolidated	$	35,906	$	33,471

(1)Total assets included pension and other postemployment-related regulatory assets of $533 million and $540 million as of March 31, 2021 and December 31, 2020, respectively.

Houston Electric

Houston Electric consists of a single reportable segment; therefore, a tabular reportable segment presentation has not been ~~included herein.~~included.

54CERC

~~Table of Contents~~

CERC

Three Months Ended September 30,
2020 2019
Revenues from
External
Customers Net Income (Loss) Revenues from
External
Customers Net Income (Loss)
(in millions)
Natural Gas Distribution $ 422 $ 1 $ 415 $ 5
Corporate and Other 4 (7) 5 (15)
Continuing Operations $ 426 (6) $ 420 (10)
Discontinued Operations, net 2 3
Consolidated $ (4) $ (7)
Nine Months Ended September 30,
2020 2019
Revenues from
External
Customers Net Income (Loss) Revenues from
External
Customers Net Income (Loss)
(in millions)
Natural Gas Distribution $ 1,910 $ 155 $ 2,152 $ 134
Corporate and Other 10 (13) 6 (32)
Continuing Operations $ 1,920 142 $ 2,158 102
Discontinued Operations, net (66) 57
Consolidated $ 76 $ 159

~~CenterPoint Energy and CERC~~

Total Assets
September 30, 2020 December 31, 2019
CenterPoint
Energy CERC CenterPoint
Energy CERC
(in millions)
Houston Electric T&D $ 11,296 $ 0 $ 11,264 $ 0
Indiana Electric Integrated 3,142 0 3,168 0
Natural Gas Distribution 14,297 7,809 14,105 7,698
Midstream Investments 805 0 2,473 0
Corporate and Other, net of eliminations 3,165 (30) 2,555 (90)
Continuing Operations 32,705 7,779 33,565 7,608
Assets Held for Sale 0 0 1,964 904
Consolidated $ 32,705 $ 7,779 $ 35,529 $ 8,512
consists of a single reportable segment; therefore, a tabular reportable segment presentation has not been included.

(17) Supplemental Disclosure of Cash Flow Information

CenterPoint Energy and CERC elected not to separately disclose discontinued operations on their respective Condensed Statements of Consolidated Cash Flows. ~~See Note 3 for certain supplemental cash flow disclosures related to the Infrastructure Services and Energy Services Disposal Groups.~~ The table below provides supplemental disclosure of cash flow information and has not been recast to exclude the Infrastructure Services and Energy Services Disposal Groups prior to the closing of the respective transactions.

Nine Months Ended September 30,
2020 2019
CenterPoint Energy Houston Electric CERC CenterPoint Energy Houston Electric CERC
(in millions)
Cash Payments/Receipts:
Interest, net of capitalized interest $ 324 $ 176 $ 88 $ 364 $ 203 $ 88
Income tax payments, net 117 33 4 174 93 3

~~Table of Contents~~

Nine Months Ended September 30,
2020 2019
Non-cash transactions:
Accounts payable related to capital expenditures 220 121 72 178 91 75
ROU assets obtained in exchange for lease liabilities (1)
14 0 5 43 1 28
Beneficial conversion feature 32 0 0 0 0 0
Amortization of beneficial conversion feature (25) 0 0 0 0 0


	Three Months Ended March 31,
	2021						2020
	CenterPoint Energy		Houston Electric		CERC		CenterPoint Energy		Houston Electric		CERC
	(in millions)
Cash Payments/Receipts:
Interest, net of capitalized interest	$	159	$	70	$	21	$	148	$	68	$	35
Income tax payments, net	(4)		0		0		0		0		0
Non-cash transactions:
Accounts payable related to capital expenditures	166		140		56		200		110		66
ROU assets obtained in exchange for lease liabilities	1		0		0		14		0		5

~~(1)2019 includes the transition impact of adoption of ASU 2016-02 Leases.~~

The table below provides a reconciliation of cash, cash equivalents and restricted cash reported in the Condensed Consolidated Balance Sheets to the amount reported in the Condensed Statements of Consolidated Cash ~~Flows and has not been recast to exclude the Infrastructure Services and Energy Services Disposal Groups as of December 31, 2019.~~Flows.


		September 30, 2020						December 31, 2019							March 31, 2021						December 31, 2020
		CenterPoint Energy		Houston Electric		CERC		CenterPoint Energy		Houston Electric		CERC			CenterPoint Energy		Houston Electric		CERC		CenterPoint Energy		Houston Electric		CERC
		(in millions)													(in millions)
Cash and cash equivalents(1)	Cash and cash equivalents(1)	$	185	$	172	$	2	$	241	$	216	$	2	Cash and cash equivalents(1)	$	146	$	143	$	1	$	147	$	139	$	1
Restricted cash included in Prepaid expenses and other current assets	Restricted cash included in Prepaid expenses and other current assets	23		16		0		30		19		0		Restricted cash included in Prepaid expenses and other current assets	21		16		0		20		15		0

Total cash, cash equivalents and restricted cash shown in Condensed Statements of Consolidated Cash Flows	Total cash, cash equivalents and restricted cash shown in Condensed Statements of Consolidated Cash Flows	$	208	$	188	$	2	$	271	$	235	$	2	Total cash, cash equivalents and restricted cash shown in Condensed Statements of Consolidated Cash Flows	$	167	$	159	$	1	$	167	$	154	$	1

(1)Houston Electric’s Cash and cash equivalents as of March 31, 2021 and December 31, 2020 included $142 million and $139 million, respectively, of cash related to the Bond Companies.

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(18) Related Party Transactions (Houston Electric and CERC)

Houston Electric and CERC participate in CenterPoint Energy’s money pool through which they can borrow or invest on a short-term basis. Funding needs are aggregated and external borrowing or investing is based on the net cash position. The net funding requirements of the CenterPoint Energy money pool are expected to be met with borrowings under CenterPoint Energy’s revolving credit facility or the sale of CenterPoint Energy’s commercial paper.

The table below summarizes CenterPoint Energy money pool activity:


		September 30, 2020						December 31, 2019							March 31, 2021						December 31, 2020
		Houston Electric			CERC			Houston Electric			CERC				Houston Electric			CERC			Houston Electric			CERC
		(in millions, except interest rates)													(in millions, except interest rates)
Money pool investments (borrowings) (1)	Money pool investments (borrowings) (1)	$	25		$	0		$	481		$	0		Money pool investments (borrowings) (1)	$	665		$	0		$	(8)		$	0
Weighted average interest rate	Weighted average interest rate	0.19		%	0.19		%	1.98		%	1.98		%	Weighted average interest rate	0.21		%	0.21		%	0.24		%	0.24		%

(1)Included in Accounts and notes receivable (payable)–affiliated companies on Houston Electric’s and CERC’s respective Condensed Consolidated Balance Sheets.

~~Houston Electric and CERC affiliate related net interest income (expense) were as follows:~~

~~(1)~~Interest income is included in Other income (expense), net and interest expense is included in Interest and other finance charges on Houston Electric’s and CERC’s respective Condensed Statements of Consolidated Income.

CenterPoint Energy provides some corporate services to Houston Electric and CERC. The costs of services have been charged directly to Houston Electric and CERC using methods that management believes are reasonable. These methods include usage rates, dedicated asset assignment and proportionate corporate formulas based on operating expenses, assets, gross

~~Table of Contents~~

margin, employees and a composite of assets, gross margin and employees. Houston Electric provides certain services to CERC. These services are billed at actual cost, either directly or as an allocation and include fleet services, shop services, geographic services, surveying and right-of-way services, radio communications, data circuit management and field operations. Additionally, CERC provides certain services to Houston Electric. These services are billed at actual cost, either directly or as an allocation and include line locating and other miscellaneous services. These charges are not necessarily indicative of what would have been incurred had Houston Electric and CERC not been affiliates.

Amounts charged for these services were as follows and are included primarily in operation and maintenance expenses:


		Three Months Ended September 30,								Nine Months Ended September 30,									Three Months Ended March 31,
		2020				2019				2020				2019						2021	2020
		Houston Electric		CERC		Houston Electric		CERC		Houston Electric		CERC		Houston Electric		CERC					Houston Electric		CERC		Houston Electric		CERC
		(in millions)																			(in millions)
Corporate service charges	Corporate service charges	$	48	$	52	$	38	$	31	$	142	$	156	$	132	$	106	Corporate service charges			$	43	$	50	$	49	$	55
Net affiliate service charges (billings)	Net affiliate service charges (billings)	(4)		4		(3)		3		(14)		14		(7)		7		Net affiliate service charges (billings)			(1)		1		(6)		6

The table below presents transactions among Houston Electric, CERC and their parent, CenterPoint Energy.

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Houston Electric CERC Houston Electric CERC Houston Electric CERC Houston Electric CERC
(in millions)
Cash dividends paid to parent $ 52 $ 8 $ 60 $ 16 $ 457 $ 80 $ 100 $ 119
Cash contribution from parent 0 0 0 0 0 0 590 0
Capital distribution to parent associated with the sale of CES 0 0 0 0 0 286 0 0
Property, plant and equipment from parent (1)
35 23 0 0 35 23 0 0


	Three Months Ended March 31,
		2021		2020
				Houston Electric		CERC		Houston Electric		CERC
			(in millions)
Cash dividends paid to parent				$	0	$	0	$	385	$	32

~~(1)Property, plant and equipment purchased from CenterPoint Energy at its net carrying value on the date~~Table of ~~purchase.~~Contents

(19) Equity

Dividends Declared and Paid (CenterPoint Energy)

~~CenterPoint Energy paid dividends on its Common Stock during the nine months ended September 30, 2020 and 2019 as presented in the table below:~~

Declaration Date Record Date Payment Date
Per Share (1)
Total
(in millions)
February 3, 2020 February 20, 2020 March 12, 2020 $ 0.2900 $ 145
April 24, 2020 May 21, 2020 June 11, 2020 0.1500 82
July 29, 2020 August 20, 2020 September 10, 2020 0.1500 82
Total 2020 $ 0.5900 $ 309
December 12, 2018 February 21, 2019 March 14, 2019 $ 0.2875 $ 144
April 25, 2019 May 16, 2019 June 13, 2019 0.2875 144
July 31, 2019 August 15, 2019 September 12, 2019 0.2875 145
Total 2019 $ 0.8625 $ 433


		Dividends Declared Per Share					Dividends Paid Per Share
	Three Months Ended March 31,					Three Months Ended March 31,
		2021		2020			2021		2020
Common Stock		$	0	$	0.2900		$	0.1600	$	0.2900
Series A Preferred Stock		0		30.6250			30.6250		30.6250
Series B Preferred Stock		0		17.5000			17.5000		17.5000
Series C Preferred Stock (1)		0		0			0.1600		0

(1)On April 1, 2020, in response to the reduction in cash flow related to the reduction in Enable quarterly common unit distributions announced by Enable on April 1, 2020, CenterPoint Energy announced a reduction of its quarterly Common Stock dividend per share from $0.2900 to $0.1500.

~~Table of Contents~~

~~CenterPoint Energy paid dividends on its Series A Preferred Stock during the nine months ended September 30, 2020 and 2019 as presented in the table below:~~

Declaration Date Record Date Payment Date Per Share Total
(in millions)
February 3, 2020 February 14, 2020 March 2, 2020 $ 30.6250 $ 25
July 29, 2020 August 14, 2020 September 1, 2020 30.6250 24
Total 2020 $ 61.2500 $ 49
December 12, 2018 February 15, 2019 March 1, 2019 $ 32.1563 $ 26
July 31, 2019 August 15, 2019 September 3, 2019 30.6250 24
Total 2019 $ 62.7813 $ 50

~~CenterPoint Energy paid dividends on its Series B Preferred Stock during the nine months ended September 30, 2020 and 2019 as presented in the table below:~~

Declaration Date Record Date Payment Date Per Share Total
(in millions)
February 3, 2020 February 14, 2020 March 2, 2020 $ 17.5000 $ 17
April 24, 2020 May 15, 2020 June 1, 2020 17.5000 17
July 29, 2020 August 14, 2020 September 1, 2020 17.5000 17
Total 2020 $ 52.5000 $ 51
December 12, 2018 February 15, 2019 March 1, 2019 $ 17.5000 $ 17
April 25, 2019 May 15, 2019 June 3, 2019 17.5000 17
July 31, 2019 August 15, 2019 September 3, 2019 17.5000 17
Total 2019 $ 52.5000 $ 51

~~CenterPoint Energy paid dividends on its Series C Preferred Stock during the nine months ended September 30, 2020 as presented in the table below:~~

Declaration Date Record Date Payment Date Per Share Total
(in millions)
April 24, 2020 (1) May 21, 2020 June 11, 2020 $ 0.1500 $ 7
July 29, 2020 August 20, 2020 September 10, 2020 0.1500 7
Total 2020 $ 0.3000 $ 14

~~(1)Declaration date for dividends on Common Stock.~~ The Series C Preferred Stock is entitled to participate in any dividend or distribution (excluding those payable in Common Stock) with the Common Stock on a pari passu, pro rata, as-converted basis. The per share amount reflects the dividend per share of Common Stock as if the Series C Preferred Stock were converted into Common Stock.

Preferred Stock (CenterPoint Energy)


	Liquidation Preference Per Share		Shares Outstanding as of		Outstanding Value as of
			March 31, 2021	December 31, 2020	March 31, 2021		December 31, 2020
	(in millions, except shares and per share amounts)
Series A Preferred Stock	$	1,000	800,000	800,000	$	790	$	790
Series B Preferred Stock	1,000		977,400	977,400	950		950
Series C Preferred Stock	1,000		625,000	625,000	623		623
			2,402,400	2,402,400	$	2,363	$	2,363

Income Allocated to Preferred Shareholders (CenterPoint Energy)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2020		2019		2020		2019					2021		2020
		(in millions)										(in millions)
Series A Preferred Stock	Series A Preferred Stock	$	12	$	12	$	37	$	37	Series A Preferred Stock			$	12	$	12
Series B Preferred Stock	Series B Preferred Stock	17		17		51		51		Series B Preferred Stock			17		17
Series C Preferred Stock		7		0		14		0
Preferred dividend requirement		36		29		102		88
Amortization of beneficial conversion feature		16		0		25		0

Total income allocated to preferred shareholders	Total income allocated to preferred shareholders	$	52	$	29	$	127	$	88	Total income allocated to preferred shareholders			$	29	$	29

~~Table of Contents~~

Accumulated Other Comprehensive Income (Loss)

Changes in accumulated comprehensive income (loss) are as follows:


		Three Months Ended September 30,													Three Months Ended March 31,
		2020						2019							2021						2020
		CenterPoint Energy		Houston Electric		CERC		CenterPoint Energy		Houston Electric		CERC			CenterPoint Energy		Houston Electric		CERC		CenterPoint Energy		Houston Electric		CERC
		(in millions)													(in millions)
Beginning Balance	Beginning Balance	$	(84)	$	0	$	10	$	(105)	$	(15)	$	5	Beginning Balance	$	(90)	$	0	$	10	$	(98)	$	(15)	$	10
Other comprehensive loss before reclassifications:	Other comprehensive loss before reclassifications:													Other comprehensive loss before reclassifications:

Deferred loss from interest rate derivatives (1)		0		0		0		(2)		0		0

Other comprehensive income (loss) from unconsolidated affiliates	Other comprehensive income (loss) from unconsolidated affiliates	1		0		0		(2)		0		0		Other comprehensive income (loss) from unconsolidated affiliates	1		0		0		(3)		0		0
Amounts reclassified from accumulated other comprehensive loss:	Amounts reclassified from accumulated other comprehensive loss:													Amounts reclassified from accumulated other comprehensive loss:

Actuarial losses (2)		2		0		0		2		0		0
Actuarial losses ~~(2)~~(1)														Actuarial losses ~~(2)~~(1)	2		0		0		2		0		0

Tax expense	Tax expense	(1)		0		0		0		0		0		Tax expense	0		0		0		(1)		0		0
Net current period other comprehensive income (loss)	Net current period other comprehensive income (loss)	2		0		0		(2)		0		0		Net current period other comprehensive income (loss)	3		0		0		(2)		0		0
Ending Balance	Ending Balance	$	(82)	$	0	$	10	$	(107)	$	(15)	$	5	Ending Balance	$	(87)	$	0	$	10	$	(100)	$	(15)	$	10

		Nine Months Ended September 30,
		2020						2019
		CenterPoint Energy		Houston Electric		CERC		CenterPoint Energy		Houston Electric		CERC
		(in millions)
Beginning Balance		$	(98)	$	(15)	$	10	$	(108)	$	(14)	$	5
Other comprehensive loss before reclassifications:

Deferred loss from interest rate derivatives (1)		0		0		0		(3)		(1)		0
Other comprehensive loss from unconsolidated affiliates		(2)		0		0		(2)		0		0
Amounts reclassified from accumulated other comprehensive loss:
Prior service cost (2)		1		0		0		1		0		0
Actuarial losses ~~(2)~~(1)		5		0		0		6		0		0
Reclassification of deferred loss from cash flow hedges realized in net income		0		0		0		1		0		0
Reclassification of deferred loss from cash flow hedges (3)		19		19		0		0		0		0
Tax expense		(7)		(4)		0		(2)		0		0
Net current period other comprehensive income (loss)		16		15		0		1		(1)		0
Ending Balance		$	(82)	$	0	$	10	$	(107)	$	(15)	$	5

(1)Gains and losses are reclassified from Accumulated other comprehensive income into income when the hedged transactions affect earnings. The reclassification amounts are included in Interest and other finance charges in each of the Registrants’ respective Statements of Consolidated Income. Over the next twelve months estimated amortization from Accumulated Comprehensive Income into income is expected to be immaterial.

~~(2)~~Amounts are included in the computation of net periodic cost and are reflected in Other income (expense), net in each of the Registrants’ respective Statements of Consolidated Income.

~~(3)~~The cost of debt approved by the PUCT as part of Houston Electric’s Stipulation and Settlement Agreement included unrealized gains and losses on interest rate hedges. Accordingly, deferred gains and losses on interest rate hedges were reclassified to regulatory assets or liabilities, as appropriate.

~~Series C Preferred Stock Private Placement (CenterPoint Energy)~~

On May 6, 2020, CenterPoint Energy entered into agreements for the private placement of 725,000 shares of its Series C Preferred Stock, at a price of $1,000 share, resulting in net proceeds of $724 million after issuance costs.

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The Series C Preferred Stock is entitled to participate in any dividend or distribution (excluding those payable in Common Stock) with the Common Stock on a pari passu, pro rata, as-converted basis. At liquidation, the Series C Preferred Stock will rank pari passu to the existing Series A Preferred Stock and Series B Preferred Stock and senior to the Common Stock, but will participate in a liquidation only on an as-converted to Common Stock basis.

Conversion of the Series C Preferred Stock is mandatory upon the occurrence of any of the following triggers: (i) the 12-month anniversary date of the preferred stock purchase agreements, (ii) a bankruptcy event, and (iii) a fundamental change in CenterPoint Energy, including, among other things certain change of control events. Upon a mandatory conversion, each share of Series C Preferred Stock will convert into the number of Common Stock equal to the quotient of $1,000 divided by the prevailing conversion price, which is initially $15.31. In a conversion at the 12-month anniversary date, in lieu of issuing Common Stock, CenterPoint Energy may, at its election, make a cash payment equal to the product of (i) the then current market price of the Common Stock multiplied by (ii) the number of shares of Common Stock that such holder would have been entitled to receive in a conversion. Following the six-month anniversary date of the issuance of the Series C Preferred Stock, holders of Series C Preferred Stock also have an optional right to convert their holdings to Common Stock at any time, subject to a limit on conversion of no more than 4.9% of the outstanding Common Stock. The conversion price is subject to adjustment for subdivisions and combinations, dividends or distributions payable in common stock. If all of the 725,000 shares of Series C Preferred Stock converted at the initial conversion price, CenterPoint Energy would issue an incremental 47,354,670 shares of Common Stock.

CenterPoint Energy may not issue more than a specified amount of outstanding Common Stock upon conversion of Preferred Stock. Once such specified amount has been reached, each Series C Preferred Stock holder electing to convert or subject to mandatory conversion will receive a cash payment equal to the product of (i) the market price of the Common Stock multiplied by (ii) the number of shares of Common Stock that such holder would have been entitled to receive in a conversion. On June 1, 2020, CenterPoint Energy filed a shelf registration statement with the SEC registering 58,051,121 shares of Common Stock, equal to the maximum number of shares of Common Stock issuable in the aggregate upon conversion of the Series C Preferred Stock pursuant to the preferred stock purchase agreements.

Series C Preferred Stock holders have no voting rights, except that the affirmative vote of a majority of outstanding Series C Preferred Stock is required for the company to (i) create any class or series of securities that is senior to the Series C Preferred Stock; (ii) reclassify or amend any authorized securities of CenterPoint Energy if reclassification would render the relevant security senior to the Series C Preferred Stock; or (iii) increase the authorized amount or issue any additional shares of Series C Preferred Stock.

The vote of at least 66 2/3% of the outstanding shares of Series C Preferred Stock is needed to amend the terms of the Series C Preferred Stock in any manner that would adversely alter or change the rights of the Series C Preferred Stock, subject to certain exceptions.

~~Common Stock Private Placement (CenterPoint Energy)~~

On May 6, 2020, CenterPoint Energy entered into agreements for the private placement of 41,977,612 shares of its Common Stock, at a price of $16.08 share, resulting in net proceeds of $673 million after issuance costs. On June 1, 2020, CenterPoint Energy filed a shelf registration statement with the SEC registering these 41,977,612 shares of Common Stock.

(20) Subsequent Events (CenterPoint Energy)

CenterPoint Energy Dividend Declarations

Equity Instrument

Declaration Date

Record Date

Payment Date

Per Share

Common Stock

~~October 29, 2020~~April 23, 2021

~~November 19, 2020~~May 20, 2021

~~December~~June 10, ~~2020~~2021

~~0.1500~~0.1600

Series B Preferred Stock

~~October 29, 2020~~April 23, 2021

~~November 13, 2020~~May 15, 2021

~~December~~June 1, ~~2020~~2021

17.5000

~~Series C Preferred Stock~~ ~~(1)~~

~~October 29, 2020~~

~~November 19, 2020~~

~~December 10, 2020~~

~~0.1500~~

~~(1)~~The Series C Preferred Stock is entitled to participate in any dividend or distribution (excluding those payable in Common Stock) with the Common Stock on a pari passu, pro rata, as-converted basis. The per share amount reflects the dividend per share of Common Stock as if the Series C Preferred Stock were converted into Common Stock.

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Enable Distributions Declarations (CenterPoint Energy)

Equity Instrument

Declaration Date

Record Date

Payment Date

Per Unit Distribution

Expected Cash Distribution
(in millions)

Equity Instrument

Declaration Date

Record Date

Payment Date

Per Unit Distribution

Expected Cash Distribution
(in millions)

Enable common units

November 3, 2020

November 17, 2020

November 24, 2020

0.16525

Enable common units

April 26, 2021

May 13, 2021

May 25, 2021

0.16525

Enable Series A Preferred Units(1)

November 3, 2020

November 13, 2020

0.62500

Enable Series A Preferred Units(1)

April 26, 2021

May 14, 2021

0.58730

(1)On February 18, 2021, the Enable Series A Preferred Units converted to the floating rate period where the distribution rate is equal to the sum of three-month LIBOR, as calculated on each applicable date of determination, and 8.50%.

Series C Preferred Stock

~~On November 2, 2020,~~In April 2021, CenterPoint Energy received ~~notification~~two notifications of ~~the~~ intent ~~for a shareholder~~by shareholders to convert ~~100,000 shares of~~their Series C Preferred Stock to Common Stock. The ~~expected conversion date is November 6, 2020. As a result~~table below details the two notifications.

Date of Notice

Conversion Date

Shares of Series C Preferred Stock Converted

Shares of Common Stock
to be Issued

April 5, 2021

400,000

26,126,714

April 16, 2021

April 16. 2021

37,500

2,449,379

Conversion of the ~~conversion, 6,531,677 shares~~remaining Series C Preferred Stock is mandatory on May 7, 2021, the 12-month anniversary date of ~~Common Stock will be issued, and~~ the ~~outstanding number of~~preferred stock purchase agreements. The remaining 187,500 shares of Series C Preferred Stock ~~will decrease~~are expected to ~~625,000.~~convert into 12,246,897 shares of Common Stock.

Sale of Arkansas and Oklahoma Natural Gas Businesses

On April 29, 2021, CenterPoint Energy, through its subsidiary CERC Corp., entered into an Asset Purchase Agreement to sell its Arkansas and Oklahoma Natural Gas businesses for $2.15 billion in cash, including recovery of approximately $425 million of storm-related incremental natural gas costs incurred in the February 2021 Winter Storm Event, subject to certain adjustments set forth in the Asset Purchase Agreement. The assets include approximately 17,000 miles of main pipeline in Arkansas, Oklahoma and certain portions of Bowie County, Texas serving more than half a million customers. The transaction is anticipated to close by the end of 2021, subject to customary closing conditions, including Hart-Scott-Rodino antitrust clearance and state regulatory approvals.

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Item 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF CENTERPOINT ENERGY, INC. AND SUBSIDIARIES

The following combined discussion and analysis should be read in combination with the Interim Condensed Financial Statements contained in this combined Form 10-Q and the Registrants’ combined ~~2019~~2020 Form 10-K. When discussing CenterPoint Energy’s consolidated financial information, it includes the results of Houston Electric and CERC, which, along with CenterPoint Energy, are collectively referred to as the Registrants. Where appropriate, information relating to a specific Registrant has been segregated and labeled as such. In this combined Form 10-Q, the terms “our,” “we” and “us” are used as abbreviated references to CenterPoint Energy, Inc. together with its consolidated subsidiaries. No Registrant makes any representations as to the information related solely to CenterPoint Energy or the subsidiaries of CenterPoint Energy other than itself.

RECENT EVENTS

~~COVID-19 Impacts.~~ February 2021 Winter Storm Event.~~On March 11, 2020, the World Health Organization declared the current COVID-19 outbreak to be a global pandemic, and on March 13, 2020,~~ In February 2021, portions of the United States ~~declared a national emergency. In response to these declarations~~experienced an extreme and ~~the rapid spread~~unprecedented winter weather event resulting in corresponding electricity generation shortages, including in Texas, and natural gas shortages and increased wholesale prices of COVID-19, federal, state and local governments have imposed varying degrees of restrictions on business and social activities to contain COVID-19, including business shutdowns and closures, travel restrictions, quarantines, curfews, shelter in place and “stay-at-home” orders in our service territories. State and local authorities have also implemented multi-step policies with the goal of re-opening various sectors of the economy such as retail establishments, health and personal care businesses, and restaurants, among others. Governing authorities continue to reassess re-opening approaches and decisions for their respective jurisdictions given the number of COVID-19 cases and hospitalizations. The COVID-19 outbreak may significantly worsennatural gas in the United ~~States~~States. Many customers of Houston Electric’s REPs and, to a lesser extent, of CERC were severely impacted by outages in electricity and natural gas delivery during the ~~upcoming winter months, which may cause federal, state~~February 2021 Winter Storm Event. As a result of this weather event, the governors of Texas, Oklahoma and ~~local governments to reconsider restrictions on business~~Louisiana declared states of either disaster or emergencies in their respective states. Subsequently, President Biden also approved major disaster declarations for all or parts of Texas, Oklahoma and ~~social activities. In the event governments increase restrictions, the re-opening of the economy may be further curtailed.~~Louisiana.

We have experienced some resulting disruptions to our business operations, as these restrictions significantly impacted, and may continue to impact, many sectors of the economy with various businesses curtailing or ceasing normal operations. For example, since mid-March, we have had to restrict access to certain office locations around the United States. However, as of the date of this Form 10-Q, we have increased the permitted occupancy of certain of our offices and facilities. The rest of our office-based personnel continue to be productive through alternate work arrangements, leveraging a strong technology platform to support our employees working remotely to perform their duties or directly from their vehicles to serve our customers. Where we must maintain a presence in the field, we have adjusted our operational protocols to minimize exposure and risk to our field personnel, customers and the communities we serve, including, among other things, modifying our work schedules and reporting locations, delaying certain work types, such as maintenance and capital projects, and adjusting project scope and scale to adhere to safety protocols, while continuing to maintain the work activities necessary for safe and reliable service to our customers with increased safety precautions. While certain of our personnel have been, and may continue to be, quarantined, our operations and corporate functions have not been adversely affected to date.

Certain of our NGD service territories were impacted by Hurricane Laura in August 2020 and Hurricanes Delta and Zeta in October 2020. While our NGD field personnel assessed and stabilized our impacted NGD facilities, our electric operations mutual assistance crews from Texas and Indiana worked safely to support the storm restoration efforts of other impacted utilities. Despite COVID-19 conditions, neither our personnel nor our facilities experienced significant performance or operational impacts from Hurricanes Laura, Delta and Zeta.

~~Our first priority in our response to this crisis~~CenterPoint Energy has been the health and safety of our employees, our customers and other business counterparties. Because we provide a critical service to our customers, it is paramount that we keep our employees who operate our business safe and informed, and we have taken and are updating precautions for that purpose. We have implemented preventative measures and developed corporate and regional response plans to minimize unnecessary risk of exposure and prevent infection, while supporting our customers’ operations under the circumstances. When an employee tests positive for COVID-19, we investigate appropriately and take action to identify and notify potentially exposed individuals, coordinate testing and clean work locations, among other precautionary measures. If our employees feel sick or are awaiting COVID-19 test results, they do not report to their respective work locations to protect the health and safety of other employees. In addition, we have assessed and updated our existing business continuity plans for each of our business units in the context of this pandemic. We have a corporate response planning team ~~who~~comprised of employees across the organization, including members of senior management, that assesses risks to ~~the~~its business, including for health, safety and environmental matters and personnel issues, and ~~addresses~~has addressed various impacts of the ~~situation, as they~~February 2021 Winter Storm Event. The corporate response planning team coordinated additional support for operations and other personnel that responded directly to the February 2021 Winter Storm Event.

The February 2021 Winter Storm Event has had, and may continue to have, ~~been developing. We also have modified certain business practices (including those~~financial impacts on CenterPoint Energy, Houston Electric and CERC, including substantial increases in prices for natural gas, decreased revenues at Houston Electric due to ERCOT-mandated outages, additional interest expense related to ~~employee travel, employee work locations and participation in meetings, events and conferences)~~external financing to ~~conform to government restrictions and best practices encouraged by the Centers~~pay for Disease Control and Prevention, the World Health Organization and other governmental and regulatory authorities. We are continuing to address concerns to protect the health and safety of our employees and those of our customers and other business counterparties, and this includes changes to comply with health-related guidelines as they are modified and

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~~supplemented. We are continuing to work with our suppliers to understand the~~natural gas working capital, potential impacts to ~~our supply chain, including identifying any negative~~credit metrics, significant impacts to ~~material supplies, working~~the REPs, including the REPs’ ability to ~~mitigate them and pre-planning for longer-term emergency response protocols. Since March 2020, we have not experienced significant disruptions or challenges with respect to our supply chain~~pay invoices from the COVID-19 pandemic as a result of the aforementioned efforts with our core vendors and suppliers. This is a continuously evolving situation and could lead to further disruption of economic activity in our markets; we will continue to monitor developments affecting our workforce, our customers and our suppliers and take additional precautions as we believe are warranted.

An extended slowdown of economic growth, decreased demand for commodities and/or material changes in governmental or regulatory policy in the United States has resulted in, and could continue to result in, lower growth, including customer growth, and reduced demand for and usage of electricity and natural gas in our service territories as customer facilities continue to close or remain closed. While residential electric usage has increased as individuals continue to stay at home or work remotely, our business has experienced reduced demand and usage among our electric and natural gas commercial and industrial customers as well as a decrease in revenues from disconnections and reconnections due to the disconnect moratoriums across our service territories due to COVID-19, which have now expired or will expire in the fourth quarter of 2020 in certain of the Registrants’ service territories. Certain aspects of Houston Electric’s rate design could mitigate the negative impact of reduced demand among commercial and industrial users. The ability of our customers, contractors and suppliers to meet their obligations to us, including payment obligations, has also been negatively impacted under the current economic conditions. For Houston Electric, we are following PUCT orders regarding disconnection practices related to those customers impacted by COVID-19. Benefits under the COVID-19 ERP ended on September 30, 2020. Houston Electric has not experienced significant impacts with respect to its customers meeting their payment obligations since March 2020. In our NGD service territories and for Indiana Electric, we informed customers that disconnections for non-payment had been temporarily suspended andincreases in certain service territories continue to be temporarily suspended. However, the disconnect moratoriums have now either expired or will expire during the fourth quarter of 2020 in certain of the Registrants’ service territories. As a result of the disconnect moratoriums across our NGD service territories and other payment deferrals or arrangements, days outstanding on receivables and uncollectible accounts have increased, resulting in an increase to allowance for doubtful accounts. To the extent these conditions in our service territories persist, our bad debt expense, issues with counterparties and customers, litigation and investigations or inquiries from ~~uncollectible accounts could continue~~government or regulatory agencies and entities, and other financial impacts. CenterPoint Energy does not anticipate meaningful long-term changes to increase, negatively impacting our financial condition, results of operations and cash flows. Our NGD service territories and Indiana Electric have either (1) received authority from their public utility commissionsits credit profile or credit ratings given its access to defer bad debt expense associated with COVID-19 as a regulatory asset or (2) exercised existing authority to recover bad debt expense through an existing tracking mechanism. Additionally, while we have not experienced delays to date due to COVID-19 with respect to our regulatory proceedings, we could experience significant delays in scheduling proceedings or hearings and in obtaining orders from regulatory agencies. Any such delays could adversely affect our future results of operations.

~~Due to macroeconomic conditions~~external financing sources and the ~~decline~~regulatory mechanisms that are in ~~our Common Stock price, we identified a triggering event~~place to ~~perform an interim goodwill impairment test as~~seek recovery of ~~March 31, 2020~~these excess costs. For more information regarding regulatory impacts, debt transactions and recognized a non-cash goodwill impairment charge of $185 million in our Indiana Electric Integrated reporting unit for the three months ended March 31, 2020. For further discussion of this impairment,litigation, see ~~Note 10~~Notes 6, 12 and 14 to the Interim Condensed Financial ~~Statements. CenterPoint Energy~~Statements and ~~CERC did not identify triggering events in the three months ended June 30, 2020,~~“—Liquidity and goodwill impairment tests were not required or performed as of June 30, 2020. CenterPoint Energy and CERC performed their annual goodwill impairment tests in the third quarter of 2020 and determined that no goodwill impairment charge was required for any reporting unit as a result of those tests.Capital Resources” below.

AsSale of Arkansas and Oklahoma Natural Gas Businesses. On April 29, 2021, CenterPoint Energy, through its subsidiary CERC Corp., entered into an Asset Purchase Agreement to sell its Arkansas and Oklahoma Natural Gas businesses for $2.15 billion in cash, including recovery of approximately $425 million of storm-related incremental natural gas costs incurred in the ~~date of this Form 10-Q, our efforts~~February 2021 Winter Storm Event, subject to ~~respond~~certain adjustments set forth in the Asset Purchase Agreement. The transaction is anticipated to ~~the challenges presented~~close by the conditions described above and minimize the impacts to our business have been successful. Our electric facilities and natural gas distribution systems have remained operational and our customers have continued to receive service. Although we continue to assess the COVID-19 situation, we cannot estimate with any degreeend of certainty the full financial impact of the COVID-19 pandemic on our business. Nor can we predict the effect that the significant disruption and volatility currently being experienced in the markets will have on our business, cash flows, liquidity, financial condition and results of operations at this time. However, we expect the COVID-19 pandemic to adversely impact us in future quarters due to the considerable uncertainty regarding the extent to which COVID-19 will continue to spread and the extent and duration of governmental and other measures implemented to try to slow the spread of COVID-19, such as large-scale travel bans and restrictions, border closures, quarantines, shelter-in-place orders and business and government shutdowns. Restrictions of this nature have caused, and may continue to cause, us, our suppliers and other business counterparties to experience operational delays, closures or disruptions, among other things. The ultimate impacts to our business, financial condition, results of operations, liquidity and cash flows will depend on future developments and evolving factors, including, among others, the ultimate duration, scope and spread of COVID-19, the consequences of governmental and other measures designed to prevent the spread of COVID-19, the development of effective treatments, actions taken by governmental authorities, customers, suppliers and other third parties, workforce availability and the timing and extent to which normal economic and operating conditions resume. For additional discussion regarding risks associated with the COVID-19 pandemic, see ~~“Risk Factors” in Item 1A of Part II of this Form 10-Q~~.

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~~Enable Quarterly Distributions.~~ The price of, and global demand for, natural gas, NGLs and crude oil have declined significantly in part as a result of the ongoing spread and economic effects of the COVID-19 pandemic and the significant governmental measures being implemented to control the spread of COVID-19 and have remained depressed relative to pre-pandemic levels. Further, financial market declines and volatility, together with deteriorating credit, liquidity concerns, decreasing production, and increasing inventories, are conditions that are associated with a general economic downturn. Producers have announced and begun to implement plans to reduce production and decrease the drilling and completion of wells in response to these conditions, which include reductions in the exploration, development and production activity across Enable’s areas of operation. As a result, the effects of the COVID-19 pandemic and the decline in demand and price for natural gas, NGLs and crude oil have and may continue to negatively impact the demand for midstream services. In response to the impacts of these developments on its business, on April 1, 2020, Enable announced a reduction in its quarterly distributions per common unit from $0.3305 distributed for the fourth quarter 2019 to $0.16525, representing a 50% reduction. To the extent such economic conditions persist or further deteriorate, quarterly distributions on Enable’s common units may be2021, subject to ~~further reductions.~~satisfaction of customary closing conditions. For further information, see ~~“—Liquidity and Capital Resources—Future Sources and Uses of Cash” below.~~

~~CenterPoint Energy Financial Measures.~~ ~~On April 1, 2020,~~ in response to the current business environment and to strengthen its financial position and adjust for the reduction in cash flow related to the reduction in Enable quarterly common unit distributions, CenterPoint Energy announced targeted reductions in (i) its quarterly common stock dividend to $0.1500 per share; (ii) 2020 operation and maintenance expenses, excluding certain merger costs, utility costs to achieve savings, severance and amounts with revenue offsets; and (iii) 2020 capital spending. For further information, see “—Liquidity and Capital Resources—Future Sources and Uses of Cash” below.

~~Enable Investment Impairment.~~ CenterPoint Energy recognized a loss of $1,499 million on its investment in Enable for the nine months ended September 30, 2020. This loss included an impairment charge on its investment in Enable of $1,541 million and CenterPoint Energy’s interest in Enable’s $225 million impairment on an equity method investment. For further discussion, see Note 920 to the Interim Condensed Financial Statements.

~~CenterPoint EnergyLeadership Transition.~~ On June 30, 2020, the Board of Directors appointed David J. Lesar to the position of President and Chief Executive Officer, effective July 1, 2020. On September 15, 2020, Jason P. Wells was appointed to the position of Executive Vice President and Chief Financial Officer, effective September 28, 2020.

~~Business Review and Evaluation Committee~~Enable Merger Agreement. On ~~May 6, 2020,~~February 16, 2021, Enable entered into the ~~Board~~Enable Merger Agreement. At the closing of ~~Directors established a Business Review~~the transactions contemplated by the Enable Merger Agreement, if and ~~Evaluation Committee, which was designed to assist the Board~~when it occurs, Energy Transfer will acquire all of ~~Directors in evaluating~~Enable’s outstanding equity interests, including all Enable common units and ~~optimizing the various businesses, assets and ownership interests currently~~Enable Series A Preferred Units held by CenterPoint ~~Energy. In October 2020, the Business Review~~Energy, and ~~Evaluation Committee completed its review and has made final recommendations to the full Board of Directors for its consideration.~~

~~Business Divestitures.~~ ~~On February 3, 2020,~~in return CenterPoint Energy through its subsidiary VUSI, entered into the Securities Purchase Agreement to sell the Infrastructure Services Disposal Group. The transaction closed on April 9, 2020. On February 24, 2020, CenterPointwill receive Energy ~~through its subsidiary CERC Corp., entered into the Equity Purchase Agreement to sell the~~Transfer common units and Energy ~~Services Disposal Group. The transaction closed on June 1, 2020.~~Transfer Series G Preferred Units. For ~~further~~more information, see ~~Note 3~~Notes 1 and 9 to the Interim Condensed Financial Statements.

Regulatory Proceedings. On April 5, 2019, and subsequently adjusted in errata filings in May and June 2019, Houston Electric filed its base rate application with the PUCT and the cities in its service area to change its rates.~~A settlement was reached and a final order from the PUCT was received on March 9, 2020. New rates were implemented on April 23, 2020.~~ For details related to our pending and completed regulatory proceedings ~~and orders related to the TCJA~~ to date in ~~2020,~~2021, see “—Liquidity and Capital Resources —Regulatory Matters” below.

~~Equity Transactions.~~ On May 6, 2020, CenterPoint Energy entered into agreements for the private placements of its Series C Preferred Stock and its Common Stock. For more information about the private placements, see Note 19 to the Interim Condensed Financial Statements.

Debt Transactions. In ~~June 2020,~~February 2021, each of CenterPoint Energy, Houston Electric, CERC Corp. and VUHI replaced their existing revolving credit facilities with new amended and restated credit facilities. Also, in February 2021, CERC Corp. received financing commitments totaling $1.7 billion on a 364-day term loan facility to bridge any working capital needs related to the February 2021 Winter Storm Event.In March 2021, CERC Corp. issued $1.7 billion aggregate principal amount of senior notes and Houston Electric issued ~~$300 million~~$1.1 billion aggregate principal amount of general mortgage bonds. ~~In September 2020, SIGECO~~ Upon the

~~completed the remarketing~~Table of Contents~~two~~ ~~series~~

consummation of ~~tax-exempt debt of~~ ~~approximately $38 million aggregate principal amount. In September 2020, VCC terminated~~ its ~~$200 million credit agreement. In September 2020,~~senior notes offerings, in March 2021, CERC Corp. terminated all of the commitments for the 364-day term loan facility. Additionally, in March 2021, Houston Electric repaid all of its remaining outstanding $102 million first mortgage bonds at maturity. In April 2021, Houston Electric provided notice of redemption relating to ~~$593~~$300 million aggregate principal amount of its ~~senior notes, which~~outstanding general mortgage bonds (which were redeemed ~~in full in October 2020. In October 2020, CERC Corp. issued $500 million aggregate principal amount~~on May 1, 2021) and CenterPoint Energy amended its existing term loan agreement to provide for a 30-day extension of ~~senior notes.~~its maturity date. For more information, see Note 12 to the Interim Condensed Financial Statements.

Series C Preferred Stock Conversions. In April 2021, CenterPoint Energy received two notifications of intent by shareholders to convert their Series C Preferred Stock to Common Stock. For further information, see Note 20 to the Interim Condensed Financial Statements.

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CENTERPOINT ENERGY CONSOLIDATED RESULTS OF OPERATIONS

For information regarding factors that may affect the future results of our consolidated operations, please read “Risk Factors” in Item 1A of Part I of the Registrants’ combined ~~2019~~2020 Form ~~10-K and in Item 1A of Part II of this Form 10-Q.~~10-K.

Income (loss) available to common shareholders for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ was as follows:

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 Increase (Decrease) 2020 2019 Increase (Decrease)
(in millions)
Houston Electric T&D $ 157 $ 185 $ (28) $ 281 $ 315 $ (34)
Indiana Electric Integrated 31 34 (3) (121) 41 (1) (162)
Natural Gas Distribution 5 6 (1) 242 149 (2) 93
Total Utility Operations 193 225 (32) 402 505 (103)
Midstream Investments (3)
(62) 50 (112) (1,165) 124 (1,289)
Corporate & Other (4)
(56) (53) (3) (155) (172) 17
Discontinued Operations (6) 19 (25) (182) 89 (271)
Total CenterPoint Energy $ 69 $ 241 (172) $ (1,100) $ 546 (1,646)


	Three Months Ended March 31,
			2021		2020		Favorable (Unfavorable)
		(in millions)
Electric			75		(134)		$	209
Natural Gas			229		201		28
Total Utility Operations			304		67		237
Midstream Investments (1)			71		(1,127)		1,198
Corporate & Other (2)			(41)		(22)		(19)
Discontinued Operations			—		(146)		146
Total CenterPoint Energy			$	334	$	(1,228)	1,562

(1)~~Represents February 1, 2019 through September 30, 2019 results only due to the Merger.~~

~~(2)Includes only February 1, 2019 through September 30, 2019 results of acquired natural gas businesses only due to the Merger.~~

~~(3)~~For a discussion of the components of equity in earnings from CenterPoint Energy’s equity investment in Enable, see Note 9 to the Interim Condensed Financial Statements.

~~(4)~~(2)Includes energy performance contracting and sustainable infrastructure services through ESG, unallocated corporate costs, interest income and interest expense, intercompany eliminations and the reduction of income allocated to preferred shareholders.

Three months ended ~~September 30, 2020~~March 31, 2021 compared to three months ended ~~September 30, 2019~~March 31, 2020

Income available to common shareholders ~~decreased $172~~increased $1,562 million primarily due ~~to:~~

•~~our share of Enable’s impairment of an equity method investment and decreased earnings at Enable further discussed in Note 9~~ to the ~~Interim Condensed Financial Statements; and~~

•~~impacts related to COVID-19; and~~

•~~increased preferred stock dividend requirements.~~

~~These impacts were offset by~~following items in the ~~following:~~

•~~rate relief; and~~

•~~continued customer growth.~~

~~Nine months ended September 30,~~first quarter of 2020 ~~compared to nine months ended September 30, 2019~~

~~Income available to common shareholders decreased $1,646 million primarily due to:~~which did not repeat in the first quarter of 2021:

•the impairment of our investment in ~~Enable, our share of Enable’s impairment of an equity method investment and decreased earnings at~~ Enable further discussed in Note 9 to the Interim Condensed Financial Statements;

•impairment of Indiana Electric;

•losses from discontinued operations;

•partially offset by the favorable income tax impact of the CARES Act.

Excluding those items, income available to common shareholders increased $73 million primarily due to the following key factors:

•rate relief, net of increases in depreciation and amortization and taxes other than income taxes;

•favorable weather and usage, net of the impacts of COVID-19;

•continued customer growth;

•operation and maintenance expense discipline;

•reduced interest expense; and

•increased earnings at Enable.

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•~~the impairment of Indiana Electric Integrated further discussed in Note 10 to the Interim Condensed Financial Statements;~~

•~~loss and impairments on held for sale of the Infrastructure Services and Energy Services Disposal Groups;~~

•~~impacts related to COVID-19; and~~

•~~increased preferred stock dividend requirements.~~

~~These impacts were offset by the following:~~

•~~rate relief;~~

•~~continued customer growth;~~

•~~operation and maintenance expense discipline; and~~

•~~the impact of nine months in 2020 versus eight months in 2019 for acquired businesses.~~

~~Discontinued Operations.~~ On February 3, 2020, CenterPoint Energy, through its subsidiary VUSI, entered into the Securities Purchase Agreement to sell the Infrastructure Services Disposal Group. Accordingly, the previously reported Infrastructure Services reportable segment has been eliminated. The transaction closed on April 9, 2020. For further information, see Note 3 to the Interim Condensed Financial Statements.

Additionally, on February 24, 2020, CenterPoint Energy, through its subsidiary CERC Corp., entered into the Equity Purchase Agreement to sell the Energy Services Disposal Group. Accordingly, the previously reported Energy Services reportable segment has been eliminated. The transaction closed on June 1, 2020. For further information, see Note 3 to the Interim Condensed Financial Statements.

Income Tax Expense. For a discussion of effective tax rate per period, see Note 13 to the Interim Condensed Financial Statements.

CENTERPOINT ENERGY’S RESULTS OF OPERATIONS BY REPORTABLE SEGMENT

~~As of January 1, 2020, each Registrant’s~~CenterPoint Energy’s CODM views net income as the measure of profit or loss for the reportable ~~segments rather than the previous measure of operating income.~~segments. Segment results include ~~inter segment~~inter-segment interest income and expense, which may result in ~~inter segment~~inter-segment profit and loss. Certain prior year amounts have been reclassified to conform to the current year ~~presentation.~~presentation described in the Registrants’ combined 2020 Form 10-K.

Following the divestiture of the Infrastructure Services and Energy Services Disposal Groups, which accounted for a substantial portion of CenterPoint Energy’s non-utility activities, CenterPoint Energy is now focused on its utility operations conducted through three reportable segments, Houston Electric T&D, Indiana Electric Integrated and Natural Gas Distribution, which are collectively referred to herein as Utility Operations. The following discussion of results of operations by reportable segment concentrates on CenterPoint Energy’s Utility ~~Operations.~~Operations, conducted through two reportable segments, Electric and Natural Gas. A discussion of CenterPoint Energy’s Midstream Investments reportable segment results is included in the discussion of CenterPoint Energy’s consolidated results above.

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~~Houston~~ Electric ~~T&D~~ (CenterPoint Energy)

For information regarding factors that may affect the future results of operations of the ~~Houston~~ Electric ~~T&D~~ reportable segment, please read “Risk Factors — Risk Factors Associated with Our Consolidated Financial Condition,” “— Risk Factors Affecting Electric Generation, Transmission and Distribution Businesses,” “— Risk Factors Affecting Our Businesses” and “— ~~Other~~General Risk Factors Affecting Our Businesses and/or CenterPoint Energy’s Interests in Enable Midstream Partners, LP” in Item 1A of Part I of the Registrants’ combined ~~2019~~2020 Form ~~10-K and in Item 1A of Part II of this Form 10-Q.~~10-K.

The following table provides summary data of the ~~Houston~~ Electric ~~T&D~~ reportable segment:


		Three Months Ended September 30,									Nine Months Ended September 30,										Three Months Ended March 31,
		2020			2019			Increase (Decrease)			2020			2019			Increase (Decrease)						2021			2020			Favorable (Unfavorable)
		(in millions, except operating statistics)																				(in millions, except operating statistics)
Revenues	Revenues	$	828		$	859		$	(31)		$	2,186		$	2,313		$	(127)		Revenues			$	830		$	767		$	63
Cost of revenues (1)																				Cost of revenues (1)			45			35			(10)
Revenues less Cost of revenues																				Revenues less Cost of revenues			785			732			53
Expenses:	Expenses:																			Expenses:
Operation and maintenance	Operation and maintenance	381			359			22			1,104			1,086			18			Operation and maintenance			416			403			(13)
Depreciation and amortization	Depreciation and amortization	151			168			(17)			420			519			(99)			Depreciation and amortization			169			154			(15)
Taxes other than income taxes	Taxes other than income taxes	64			63			1			192			186			6			Taxes other than income taxes			67			68			1
Goodwill impairment																				Goodwill impairment			—			185			185
Total expenses	Total expenses	596			590			6			1,716			1,791			(75)			Total expenses			652			810			158
Operating Income	Operating Income	232			269			(37)			470			522			(52)			Operating Income			133			(78)			211
Other Income (Expense)	Other Income (Expense)																			Other Income (Expense)
Interest expense and other finance charges	Interest expense and other finance charges	(50)			(50)			—			(149)			(154)			(5)			Interest expense and other finance charges			(56)			(55)			(1)
Interest income		1			9			(8)			3			22			(19)
Other income (expense), net		—			(2)			2			4			(5)			9
Income from Continuing Operations Before Income Taxes		183			226			(43)			328			385			(57)

Other income, net																				Other income, net			7			7			—
Income (Loss) from Continuing Operations Before Income Taxes																				Income (Loss) from Continuing Operations Before Income Taxes			84			(126)			210
Income tax expense	Income tax expense	26			41			(15)			47			70			(23)			Income tax expense			9			8			(1)
Net Income (1)		$	157		$	185		(28)			$	281		$	315		(34)

Net Income (Loss)																				Net Income (Loss)			$	75		$	(134)		209
Throughput (in GWh):	Throughput (in GWh):																			Throughput (in GWh):
Residential	Residential	11,237			11,224			—		%	25,028			24,392			3		%	Residential			6,070			5,679			7		%
Total	Total	28,031			28,379			(1)		%	71,293			71,417			—		%	Total			21,241			21,243			—		%
Weather (percentage of 10-year average for service area):	Weather (percentage of 10-year average for service area):																			Weather (percentage of 10-year average for service area):
Cooling degree days	Cooling degree days	106		%	110		%	(4)		%	109		%	106		%	3		%	Cooling degree days			109		%	187		%	(78)		%
Heating degree days	Heating degree days	—		%	—		%	—		%	68		%	93		%	(25)		%	Heating degree days			95		%	80		%	15		%
Number of metered customers at end of period:	Number of metered customers at end of period:																			Number of metered customers at end of period:
Residential	Residential	2,291,038			2,232,740			3		%	2,291,038			2,232,740			3		%	Residential			2,448,439			2,389,585			2		%
Total	Total	2,586,093			2,523,450			2		%	2,586,093			2,523,450			2		%	Total			2,765,496			2,701,004			2		%

(1)Net income for CenterPoint Energy’s Houston Electric T&D reportable segment differs from net income for Houston Electric due to weather hedge gains (losses) recorded at CenterPoint Energy that are not recorded at Houston Electric.Includes Utility ~~revenues in CenterPoint Energy’s Condensed Statements of Consolidated Income included weather hedge gains (losses) of $-0-~~natural gas, fuel and $4 million for the three and nine months ended September 30, 2020, respectively, and $-0- and $3 million for the three and nine months ended September 30, 2019, respectively, for CenterPoint Energy’s Houston Electric T&D reportable segment. See Note 7(a) to the Interim Condensed Financial Statements for more information on weather hedges.

purchased power.

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The following table provides variance explanations for the three months ended March 31, 2021 compared to three months ended March 31, 2020 by major income statement caption for the ~~Houston~~ Electric ~~T&D~~ reportable segment:

Increase (Decrease)
Three Months Ended September 30, 2020 vs 2019 Nine Months Ended September 30, 2020 vs 2019
(in millions)
Revenues
Customer rates and impact of the change in rate design $ (119) $ (205)
Impacts of COVID-19 (15) (32)
Weather impacts and other usage 2 3
Impacts from increased peak demand in 2019, collected in rates in 2020 4 11
Transmission Revenues, including TCOS and TCRF and impact of the change in rate design, inclusive of costs billed by transmission providers 126 230
Refund of protected and unprotected EDIT, offset in income tax expense (14) (22)
Equity return, related to the annual true-up of transition charges for amounts over or under collected in prior periods (4) (14)
Customer growth 11 27
Miscellaneous revenues, primarily related to service connections 3 4
AMS, offset in depreciation and amortization below — (2)
Bond Companies (25) (126)
Energy efficiency, offset in operation and maintenance — (1)
Total $ (31) $ (127)
Operation and maintenance
Transmission costs billed by transmission providers, offset in revenues $ 15 $ 41
Labor and benefits, primarily due to timing of short-term incentive compensation 6 (2)
Contract services (4) (10)
Support services 6 1
All other operation and maintenance expense, including materials and supplies and insurance (4) (6)
Merger severance costs 3 (3)
Bond Companies — (2)
Energy efficiency, offset in revenues — (1)
Total $ 22 $ 18
Depreciation and amortization
Ongoing additions to plant-in-service $ 7 $ 21
AMS, offset by revenues — (2)
Bond Companies (24) (118)
Total $ (17) $ (99)
Taxes other than income taxes
Incremental capital projects placed in service $ 1 $ 4
Franchise fees and other taxes — 2
Total $ 1 $ 6
Interest expense and other finance charges
Debt to fund incremental capital projects $ 2 $ 5
Bond Companies (2) (10)
Total $ — $ (5)
Interest income
Investments in CenterPoint Energy Money Pool $ (7) $ (16)
Bond Companies (1) (3)
Total $ (8) $ (19)
Other income (expense), net
Reduction to non-service benefit cost $ 2 $ 9
Total $ 2 $ 9

~~Income Tax Expense.~~ ~~For a discussion of effective tax rate per period by Registrant, see Note 13 to the Interim Condensed Financial Statements.~~

~~Table of Contents~~

~~Indiana Electric Integrated (CenterPoint Energy)~~

For information regarding factors that may affect the future results of operations of the Indiana Electric Integrated reportable segment, please read “Risk Factors — Risk Factors Associated with Our Consolidated Financial Condition,” “— Risk Factors Affecting Electric Generation, Transmission and Distribution Businesses” and “— Other Risk Factors Affecting Our Businesses or CenterPoint Energy’s Interests in Enable Midstream Partners, LP” in Item 1A of Part I of the Registrants’ combined 2019 Form 10-K and in Item 1A of Part II of this Form 10-Q.

~~The following table provides summary data of CenterPoint Energy’s Indiana Electric Integrated reportable segment:~~

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 Increase (Decrease) 2020
2019 (1)
Increase (Decrease)
(in millions, except operating statistics)
Revenues $ 157 $ 165 $ (8) $ 414 $ 388 $ 26
Utility natural gas, fuel and purchased power 41 46 (5) 108 112 (4)
Revenues less Utility natural gas, fuel and purchased power 116 119 (3) 306 276 30
Expenses:
Operation and maintenance 46 42 4 128 136 (8)
Depreciation and amortization 26 25 1 77 66 11
Taxes other than income taxes 4 4 — 12 10 2
Goodwill impairment — — — 185 — 185
Total expenses 76 71 5 402 212 190
Operating Income 40 48 (8) (96) 64 (160)
Other Income (Expense)
Interest expense and other finance charges (5) (6) (1) (16) (16) —
Other income, net 3 1 2 6 3 3
Income (Loss) from Continuing Operations Before Income Taxes 38 43 (5) (106) 51 (157)
Income tax expense 7 9 (2) 15 10 5
Net Income (Loss) $ 31 $ 34 (3) $ (121) $ 41 (162)
Throughput (in GWh):
Residential 438 457 (4) % 1,085 978 11 %
Total 1,421 1,555 (9) % 3,630 3,568 2 %
Weather (percentage of 10-year average for service area):
Cooling degree days 104 % 113 % (9) % 104 % 114 % (10) %
Heating degree days 99 % 99 % — % 93 % 95 % (2) %
Number of metered customers at end of period:
Residential 129,817 128,381 1 % 129,817 128,381 1 %
Total 148,925 147,337 1 % 148,925 147,337 1 %

~~(1)Represents February 1, 2019 through September 30, 2019 results only due to the Merger.~~

~~Table of Contents~~

~~The following table provides variance explanations by major income statement caption for the Indiana Electric Integrated reportable segment:~~

Increase (Decrease)
Three Months Ended September 30, 2020 vs 2019 Nine Months Ended September 30, 2020 vs 2019
(in millions)
Revenues less Utility natural gas, fuel and purchased power
Impacts of COVID-19 $ (4) $ (10)
Weather impacts and other usage (2) (3)
Electric infrastructure revenue, primarily from TDSIC 3 9
Nine months in 2020 versus eight months in 2019 — 34
Total $ (3) $ 30
Operation and maintenance
Generation plant, primarily from increased plant outages in 2019 $ 2 $ (8)
Transmission and distribution electric operations and infrastructure 2 1
Support services 1 1
Merger-related severance and incentive compensation costs in 2019 (1) (19)
Nine months in 2020 versus eight months in 2019 — 17
Total $ 4 $ (8)
Depreciation and amortization
Ongoing additions to plant-in-service $ 1 $ 3
Nine months in 2020 versus eight months in 2019 — 8
Total $ 1 $ 11
Taxes other than income taxes
Incremental capital projects placed in service $ — $ 1
Nine months in 2020 versus eight months in 2019 — 1
Total $ — $ 2
Goodwill impairment
See Note 10 for further information $ — $ 185
Total $ — $ 185
Interest expense and other finance charges
Debt refinancing at lower rates $ (1) $ —
Total $ (1) $ —
Other income (expense), net
AFUDC equity on capital projects $ 2 $ 3
Total $ 2 $ 3


	Favorable (Unfavorable)

	(in millions)
Revenues less Cost of revenues
Transmission Revenues, including TCOS and TCRF and impact of the change in rate design, inclusive of costs billed by transmission providers, partially offset in operation and maintenance		$	136
Customer growth		8
Bond Companies, offset in other line items		6
Weather impacts and other usage		3
Impacts from increased peak demand in 2020, collected in rates in 2021		2
Bond Companies equity return, related to the annual true-up of transition charges for amounts over or under collected in prior periods		1
Energy efficiency, offset in operation and maintenance		1
Miscellaneous revenues, primarily related right-of-way revenue		(3)
Refund of protected and unprotected EDIT, offset in income tax expense		(10)
Impacts on usage of COVID-19		(12)
Customer rates and impact of the change in rate design		(79)
Total		$	53
Operation and maintenance
Support services		$	7
Contract services		5
Labor and benefits		1
Energy efficiency, offset in revenues		(1)
Bond Companies, offset in other line items		(1)
All other operation and maintenance expense, including materials and supplies and insurance		(3)

Transmission costs billed by transmission providers, offset in revenues less cost of revenues		(21)
Total		$	(13)
Depreciation and amortization
Bond Companies, offset in other line items		$	(6)
Ongoing additions to plant-in-service		(9)
Total		$	(15)
Taxes other than income taxes
Franchise fees and other taxes		$	2
Incremental capital projects placed in service		(1)
Total		$	1
Goodwill Impairment
Indiana Electric goodwill impairment charge in 2020		$	185
		$	185
Interest expense and other finance charges
Bond Companies, offset in other line items		$	2
Debt to fund incremental capital projects		(3)
Total		$	(1)




Other income (expense), net
Reduction to non-service benefit cost		$	2

Investments in CenterPoint Energy Money Pool interest income		(1)
Bond Companies interest income, offset in other line items		(1)
Total		$	—

Income Tax Expense. For a discussion of effective tax rate per period by Registrant, see Note 13 to the Interim Condensed Financial Statements.

Table of Contents

Natural Gas ~~Distribution~~ (CenterPoint Energy)

For information regarding factors that may affect the future results of operations of CenterPoint Energy’s Natural Gas ~~Distribution~~ reportable segment, please read “Risk Factors — Risk Factors Associated with Our Consolidated Financial Condition,” “— Risk Factors Affecting Natural ~~Gas Distribution and Competitive Energy Services~~Gas' Business,” “— Risk Factors Affecting Our Businesses” and “— ~~Other~~General Risk Factors Affecting Our Businesses and/or CenterPoint Energy’s Interests in Enable Midstream Partners, LP” in Item 1A of Part I of the Registrants’ combined ~~2019~~2020 Form ~~10-K and in Item 1A of Part II of this Form 10-Q.~~10-K.

The following table provides summary data of CenterPoint Energy’s Natural Gas ~~Distribution~~ reportable segment:


		Three Months Ended September 30,									Nine Months Ended September 30,										Three Months Ended March 31,
		2020			2019			Increase (Decrease)			2020			2019 (1)			Increase (Decrease)					2021			2020			Favorable (Unfavorable)
		(in millions, except operating statistics)																				(in millions, except operating statistics)
Revenues	Revenues	$	560		$	541		$	19		$	2,519		$	2,629		$	(110)		Revenues		$	1,663		$	1,321		$	342
Cost of revenues ~~(2)~~(1)	Cost of revenues ~~(2)~~(1)	131			136			(5)			888			1,145			(257)			Cost of revenues ~~(2)~~(1)		893			580			(313)
Revenues less Cost of revenues	Revenues less Cost of revenues	429			405			24			1,631			1,484			147			Revenues less Cost of revenues		770			741			29
Expenses:	Expenses:																			Expenses:
Operation and maintenance	Operation and maintenance	239			226			13			738			780			(42)			Operation and maintenance		256			272			16
Depreciation and amortization	Depreciation and amortization	115			108			7			339			310			29			Depreciation and amortization		122			111			(11)
Taxes other than income taxes	Taxes other than income taxes	52			43			9			175			149			26			Taxes other than income taxes		74			67			(7)
Total expenses	Total expenses	406			377			29			1,252			1,239			13			Total expenses		452			450			(2)
Operating Income	Operating Income	23			28			(5)			379			245			134			Operating Income		318			291			27
Other Income (Expense)	Other Income (Expense)																			Other Income (Expense)
Interest expense and other finance charges	Interest expense and other finance charges	(29)			(24)			5			(90)			(71)			19			Interest expense and other finance charges		(33)			(41)			8
Interest income		2			5			(3)			5			6			(1)

Other expense, net	Other expense, net	—			(5)			5			(2)			(6)			4			Other expense, net		—			(2)			2
Income (Loss) from Continuing Operations Before Income Taxes		(4)			4			(8)			292			174			118
Income tax expense (benefit)		(9)			(2)			(7)			50			25			25
Income from Continuing Operations Before Income Taxes																				Income from Continuing Operations Before Income Taxes		285			248			37
Income tax expense																				Income tax expense		56			47			(9)
Net Income	Net Income	$	5		$	6		(1)			$	242		$	149		93			Net Income		$	229		$	201		28

Throughput (in BCF):
Throughput (in Bcf):																				Throughput (in Bcf):
Residential	Residential	18			16			13		%	157			160			(2)		%	Residential		128			107			20		%
Commercial and Industrial	Commercial and Industrial	84			88			(5)		%	317			326			(3)		%	Commercial and Industrial		145			146			(1)		%
Total	Total	102			104			(2)		%	474			486			(2)		%	Total		273			253			8		%
Weather (percentage of 10-year average for service area):	Weather (percentage of 10-year average for service area):																			Weather (percentage of 10-year average for service area):
Heating degree days	Heating degree days	100		%	18		%	82		%	90		%	100		%	(10)		%	Heating degree days		103		%	85		%	18		%
Number of metered customers at end of period:	Number of metered customers at end of period:																			Number of metered customers at end of period:
Residential	Residential	4,295,169			4,194,232			2		%	4,295,169			4,194,232			2		%	Residential		4,343,863			4,266,685			2		%
Commercial and Industrial	Commercial and Industrial	346,641			344,858			1		%	346,641			344,858			1		%	Commercial and Industrial		351,363			350,009			—		%
Total	Total	4,641,810			4,539,090			2		%	4,641,810			4,539,090			2		%	Total		4,695,226			4,616,694			2		%

(1)~~Includes only February 1, 2019 through September 30, 2019 results of acquired natural gas businesses only due to the Merger.~~

~~(2)~~Includes Utility natural gas, fuel and purchased power and Non-utility cost of revenues, including natural gas.

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Increase (Decrease)
Three Months Ended September 30, 2020 vs 2019 Nine Months Ended September 30, 2020 vs 2019
(in millions)
Revenues less Cost of revenues
Rate increases exclusive of the TCJA impact below $ 24 $ 92
Impacts of COVID-19 (4) (19)
Weather and usage, excluding impacts from COVID-19 (3) (1)
Customer growth 5 14
Refund of protected and unprotected EDIT, offset in income tax expense (2) (1)
Nine months in 2020 versus eight months in 2019 in Indiana and Ohio jurisdictions — 65
Non-volumetric and miscellaneous revenue, excluding impacts from COVID-19 2 4
Energy efficiency, offset in operation and maintenance below 1 —
Gross receipts tax, offset in taxes other than income taxes below 1 (7)
Total $ 24 $ 147
Operation and maintenance
Labor and benefits, primarily from lower headcount in 2019 $ 13 $ 4
Contracted services (8) (16)
Support services 8 7
Other operating and maintenance expense, including material and supplies and insurance (2) (6)
Nine months in 2020 versus eight months in 2019 in Indiana and Ohio jurisdictions — 14
Energy efficiency, offset in revenues less cost of revenues above 1 —
Merger severance costs 1 (45)
Total $ 13 $ (42)
Depreciation and amortization
Incremental capital projects placed in service $ 7 $ 18
Nine months in 2020 versus eight months in 2019 in Indiana and Ohio jurisdictions — 11
Total $ 7 $ 29
Taxes other than income taxes
Gross receipts tax, offset in revenues less cost of revenues above $ 1 $ (7)
Nine months in 2020 versus eight months in 2019 in Indiana and Ohio jurisdictions — 6
Incremental capital projects placed in service 8 27
Total $ 9 $ 26
Interest expense and other finance charges
Debt to fund incremental capital projects $ 5 $ 16
Nine months in 2020 versus eight months in 2019 in Indiana and Ohio jurisdictions — 3
Total $ 5 $ 19
Interest income
Money pool investments with CenterPoint Energy $ (3) $ (1)
Total $ (3) $ (1)
Other income (expense), net
Reduction to non-service benefit cost $ 5 $ 4
Total $ 5 $ 4


	Favorable (Unfavorable)

	(in millions)
Revenues less Cost of revenues
Weather and usage, excluding impacts from COVID-19		$	21

Customer growth		7
Gross receipts tax, offset in taxes other than income taxes		5
Energy efficiency, offset in operation and maintenance		3
Customer rates and impact of the change in rate design, exclusive of the TCJA impact		1
Refund of protected and unprotected EDIT, offset in income tax expense		(2)
Impacts of COVID-19, including usage and other miscellaneous charges		(3)
Non-volumetric and miscellaneous revenue, excluding impacts from COVID-19		(3)
Total		$	29
Operation and maintenance

Other operating and maintenance expenses		$	7

Support Services		4
Merger related expenses, primarily severance and technology		2
Contracted services		2
Materials and supplies		2
Bad Debt		1
Insurance		1
Energy efficiency, offset in revenues less cost of revenues		(3)
Total		$	16
Depreciation and amortization
Incremental capital projects placed in service		(11)
Total		$	(11)
Taxes other than income taxes
Incremental capital projects placed in service		$	(2)
Gross receipts tax, offset in revenues less cost of revenues		(5)
Total		$	(7)
Interest expense and other finance charges
Reduced interest rates on outstanding borrowings, partially offset by incremental borrowings for capital expenditures		$	8

Total		$	8



Other expense, net
Reduction to non-service benefit cost		$	1
Money pool investments with CenterPoint Energy interest income		1
Total		$	2

Income Tax Expense. For a discussion of effective tax rate per period by Registrant, see Note 13 to the Interim Condensed Financial Statements.

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HOUSTON ELECTRIC’S MANAGEMENT’S NARRATIVE ANALYSIS

OF CONSOLIDATED RESULTS OF OPERATIONS

Houston Electric’s CODM views net income as the measure of profit or loss for its reportable segment. Houston Electric consists of a single reportable segment. Houston Electric’s results of operations are affected by seasonal fluctuations in the demand for electricity. Houston Electric’s results of operations are also affected by, among other things, the actions of various governmental authorities having jurisdiction over rates Houston Electric charges, debt service costs, income tax expense, Houston Electric’s ability to collect receivables from REPs and Houston Electric’s ability to recover its regulatory assets. For more information regarding factors that may affect the future results of operations of Houston Electric’s business, please read “Risk Factors — Risk Factors Associated with Our Consolidated Financial Condition,” “— Risk Factors Affecting Electric Generation, Transmission and Distribution Businesses,” “— Risk Factors Affecting Our Businesses” and “— ~~Other~~General Risk Factors Affecting Our Businesses and/or CenterPoint Energy’s Interests in Enable Midstream Partners, LP” in Item 1A of Part I of the Registrants’ combined ~~2019~~2020 Form ~~10-K and in Item 1A of Part II of this Form 10-Q.~~10-K.

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 Increase (Decrease) 2020 2019 Increase (Decrease)
(in millions)
Net income (1)
$ 157 $ 185 $ (28) $ 277 $ 312 $ (35)


	Three Months Ended March 31,
			2021			2020			Favorable (Unfavorable)
		(in millions, except operating statistics)
Revenues:
TDU			$	640		$	596		44
Bond Companies			44			38			6
Total revenues			684			634			50
Expenses:
Operation and maintenance, excluding Bond Companies			371			358			(13)
Depreciation and amortization, excluding Bond Companies			105			99			(6)
Taxes other than income taxes			63			64			1
Bond Companies			38			31			(7)
Total expenses			577			552			(25)
Operating Income			107			82			25
Other Income (Expense)
Interest expense and other finance charges			(45)			(41)			(4)
Interest expense on Securitization Bonds			(6)			(8)			2


Other income, net			5			5			—
Income from Continuing Operations Before Income Taxes			61			38			23
Income tax expense			8			5			(3)
Net Income			$	53		$	33		20
Throughput (in GWh):
Residential			5,701			5,351			7	%
Total			19,739			20,102			(2)	%
Weather (percentage of 10-year average for service area):
Cooling degree days			112		%	185		%	(73)	%
Heating degree days			104		%	68		%	36	%
Number of metered customers at end of period:
Residential			2,318,030			2,260,352			3	%
Total			2,615,917			2,552,739			2	%

~~(1)~~
~~Excludes weather hedge gains of $-0- and $4 million~~

The following table provides variance explanations for the three ~~and nine~~ months ended September 30, 2020, respectively, and weather hedge gains of $-0- and $3 million for the three and nine months ended September 30, 2019, respectively, recorded in Utility revenues on CenterPoint Energy’s Condensed Statements of Consolidated Income. See Note 7(a) to the Interim Condensed Financial Statements for more information on the weather hedge.

~~Three months ended September 30, 2020~~March 31, 2021 compared to three months ended ~~September 30, 2019~~March 31, 2020 by major income statement caption for Houston Electric:

~~Net income decreased $28 million primarily due to:~~


	Favorable (Unfavorable)

	(in millions)
Revenues
Transmission Revenues, including TCOS and TCRF and impact of the change in rate design, inclusive of costs billed by transmission providers		$	136
Customer growth		8
Weather impacts and other usage		6
Bond Companies, offset in other line items		6
Impacts from increased peak demand in 2020, collected in rates in 2021		2
Equity return, related to the annual true-up of transition charges for amounts over or under collected in prior periods		1
Energy efficiency, offset in operation and maintenance		1
Miscellaneous revenues, primarily related to right-of-way revenues		(5)
Refund of protected and unprotected EDIT, offset in income tax expense		(10)
Impacts on usage of COVID-19		(12)
Customer rates and impact of the change in rate design		(83)
Total		$	50
Operation and maintenance, excluding Bond Companies
Support services		$	6
Contract services		2
Labor and benefits		1
Energy efficiency, offset in revenues		(1)


Transmission costs billed by transmission providers, offset in revenues		(21)
Total		$	(13)
Depreciation and amortization, excluding Bond Companies
Ongoing additions to plant-in-service		$	(6)
Total		$	(6)
Taxes other than income taxes
Franchise fees and other taxes		$	2
Incremental capital projects placed in service		(1)
Total		$	1
Bond Companies expense
Operations and maintenance and depreciation expense, offset in other line items		$	(7)
		$	(7)
Interest expense and other finance charges
Debt to fund incremental capital projects		$	(4)
Total		$	(4)




Interest expense on Securitization Bonds
Lower outstanding principal balance, offset in other line items		$	2
Total		$	2
Other income (expense), net
Reduction to non-service benefit cost		$	2
Investments in CenterPoint Energy Money Pool interest income		(1)
Bond Companies interest income, offset in other line items		(1)

Total		$	—

•~~changes in rates and rate design;~~

•~~impacts related to COVID-19;~~

•~~depreciation and property taxes related to ongoing additions to plant-in service; and~~

•~~reduced interest income from investments in the CenterPoint Energy money pool.~~

~~These impacts were offset by continued customer growth.~~

~~Nine months ended September 30, 2020 compared to nine months ended September 30, 2019~~

~~Net income decreased $35 million primarily due to:~~

•~~changes in rates and rate design;~~

•~~lower equity return;~~

•~~impacts related to COVID-19;~~

•~~depreciation and property taxes related to ongoing additions to plant-in service; and~~

•~~reduced interest income from investments in the CenterPoint Energy money pool.~~

~~These impacts were offset by the following:~~

•~~continued customer growth; and~~

•~~operation and maintenance expense discipline.~~

Income Tax Expense. For a discussion of effective tax rate per period, see Note 13 to the Interim Condensed Financial Statements.

Table of Contents

CERC’S MANAGEMENT’S NARRATIVE ANALYSIS OF CONSOLIDATED RESULTS OF OPERATIONS

CERC’s CODM views net income as the measure of profit or loss for its reportable segment. CERC’s results of operations are affected by seasonal fluctuations in the demand for natural gas. CERC’s results of operations are also affected by, among other things, the actions of various federal, state and local governmental authorities having jurisdiction over rates CERC charges, debt service costs and income tax expense, CERC’s ability to collect receivables from customers and CERC’s ability to recover its regulatory assets. For more information regarding factors that may affect the future results of operations for CERC’s business, please read “Risk Factors — Risk Factors Associated with Our Consolidated Financial Condition,” “— Risk Factors Affecting Natural ~~Gas Distribution and Competitive Energy Services~~Gas’ Business,” “— Risk Factors Affecting Our Businesses” and “— ~~Other~~General Risk Factors Affecting Our Businesses and/or CenterPoint Energy’s Interests in Enable Midstream Partners, LP” in Item 1A of Part I of the Registrants’ combined ~~2019~~2020 Form ~~10-K and in Item 1A of Part II of this Form 10-Q.~~10-K.

~~Net income (loss) for the three and nine months ended September 30, 2020 and 2019 was as follows:~~

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 Increase (Decrease) 2020 2019 Increase (Decrease)
(in millions, except per share amounts)
Natural Gas Distribution $ 1 $ 5 $ (4) $ 155 $ 134 $ 21
Corporate & Other (1)
(7) (15) 8 (13) (32) 19
Discontinued Operations 2 3 (1) (66) 57 (123)
Total CERC $ (4) $ (7) $ 3 $ 76 $ 159 $ (83)

~~(1)Includes unallocated corporate costs, interest income, interest expense and intercompany eliminations.~~

~~Three months ended September 30, 2020 compared to three months ended September 30, 2019~~

~~Net income increased $3 million primarily due to:~~

•~~rate relief; and~~

•~~continued customer growth.~~

~~These impacts were offset by the following:~~

•~~impacts related to COVID-19;~~

•~~labor and benefit costs associated with higher headcount; and~~

•~~costs associated with incremental capital projects placed in service.~~

~~Nine months ended September 30, 2020 compared to nine months ended September 30, 2019~~

~~Net income decreased $83 million primarily due to:~~

•~~impacts related to COVID-19;~~

•~~costs associated with incremental capital projects placed in service; and~~

•~~impairment of the Energy Services Disposal Group.~~

~~These impacts were offset by the following:~~

•~~rate relief;~~

•~~continued customer growth; and~~

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•~~operation and maintenance expense discipline.~~

~~Discontinued Operations.~~ On February 24, 2020, CenterPoint Energy, through its subsidiary CERC Corp., entered into the Equity Purchase Agreement to sell the Energy Services Disposal Group. Accordingly, the previously reported Energy Services reportable segment has been eliminated. The transaction closed on June 1, 2020. For further information, see Note 3 to the Interim Condensed Financial Statements.

~~Income Tax Expense.~~ ~~For a discussion of effective tax rate per period, see Note 13 to the Interim Condensed Financial Statements.~~

~~CERC’S RESULTS OF OPERATIONS BY REPORTABLE SEGMENT~~

~~Natural Gas Distribution (CERC)~~

For information regarding factors that may affect the future results of operations of CERC’s Natural Gas Distribution reportable segment, please read “Risk Factors — Risk Factors Associated with Our Consolidated Financial Condition,” “— Risk Factors Affecting Natural Gas Distribution and Competitive Energy Services Businesses” and “— Other Risk Factors Affecting Our Businesses or CenterPoint Energy’s Interests in Enable Midstream Partners, LP” in Item 1A of Part I of the Registrants’ combined 2019 Form 10-K and in Item 1A of Part II of this Form 10-Q.

~~The following table provides summary data of CERC’s Natural Gas Distribution reportable segment:~~


		Three Months Ended September 30,									Nine Months Ended September 30,										Three Months Ended March 31,
		2020			2019			Increase (Decrease)			2020			2019			Increase (Decrease)					2021			2020			Favorable (Unfavorable)
		(in millions, except operating statistics)																				(in millions, except operating statistics)
Revenues	Revenues	$	422		$	415		$	7		$	1,910		$	2,152		$	(242)		Revenues		$	1,177		$	1,011		$	166
Cost of revenues (1)	Cost of revenues (1)	108			116			(8)			730			1,007			(277)			Cost of revenues (1)		625			478			(147)
Revenues less Cost of revenues	Revenues less Cost of revenues	314			299			15			1,180			1,145			35			Revenues less Cost of revenues		552			533			19
Expenses:	Expenses:																			Expenses:
Operation and maintenance	Operation and maintenance	185			173			12			568			592			(24)			Operation and maintenance		198			209			11
Depreciation and amortization	Depreciation and amortization	78			72			6			226			218			8			Depreciation and amortization		80			74			(6)
Taxes other than income taxes	Taxes other than income taxes	39			34			5			133			120			13			Taxes other than income taxes		56			50			(6)
Total expenses	Total expenses	302			279			23			927			930			(3)			Total expenses		334			333			(1)
Operating Income	Operating Income	12			20			(8)			253			215			38			Operating Income		218			200			18
Other Income (Expense)	Other Income (Expense)																			Other Income (Expense)
Interest expense and other finance charges	Interest expense and other finance charges	(21)			(16)			5			(62)			(54)			8			Interest expense and other finance charges		(24)			(30)			6
Interest income		1			2			(1)			4			5			(1)
Other income (expense), net		(1)			(3)			2			(5)			(8)			3

Other expense, net																				Other expense, net		(1)			(4)			3
Income from Continuing Operations Before Income Taxes	Income from Continuing Operations Before Income Taxes	(9)			3			(12)			190			158			32			Income from Continuing Operations Before Income Taxes		193			166			27
Income tax expense	Income tax expense	(10)			(2)			(8)			35			24			11			Income tax expense		42			35			(7)
Income From Continuing Operations																				Income From Continuing Operations		151			131			20
Loss from Discontinued Operations (net of tax benefit of $-0- and $11, respectively)																				Loss from Discontinued Operations (net of tax benefit of $-0- and $11, respectively)		—			(64)			64
Net Income	Net Income	$	1		$	5		(4)			$	155		$	134		21			Net Income		$	151		$	67		84

Throughput (in BCF):
Throughput (in Bcf):																				Throughput (in Bcf):
Residential	Residential	14			12			17		%	110			125			(12)		%	Residential		93			74			26		%
Commercial and Industrial	Commercial and Industrial	48			53			(9)		%	189			214			(12)		%	Commercial and Industrial		87			90			(3)		%
Total	Total	62			65			(5)		%	299			339			(12)		%	Total		180			164			10		%
Weather (percentage of 10-year average for service area):	Weather (percentage of 10-year average for service area):																			Weather (percentage of 10-year average for service area):
Heating degree days	Heating degree days	100		%	18		%	82		%	90		%	100		%	(10)		%	Heating degree days		102		%	86		%	16		%
Number of metered customers at end of period:	Number of metered customers at end of period:																			Number of metered customers at end of period:
Residential	Residential	3,329,032			3,250,810			2		%	3,329,032			3,250,810			2		%	Residential		3,362,902			3,299,011			2		%
Commercial and Industrial	Commercial and Industrial	258,660			257,655			—		%	258,660			257,655			—		%	Commercial and Industrial		261,944			261,120			—		%
Total	Total	3,587,692			3,508,465			2		%	3,587,692			3,508,465			2		%	Total		3,624,846			3,560,131			2		%

(1)Includes Utility natural gas and Non-utility cost of revenues, including natural gas.

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The following table provides variance explanations for the three months ended March 31, 2021 compared to three months ended March 31, 2020 by major income statement caption for ~~CERC’s Natural Gas Distribution reportable segment:~~CERC:

Increase (Decrease)
Three Months Ended September 30, 2020 vs 2019 Nine Months Ended September 30, 2020 vs 2019
(in millions)
Revenues less Cost of revenues
Rate increases exclusive of the TCJA impact below $ 14 $ 52
Impacts of COVID-19 (3) (15)
Weather and usage, excluding impacts from COVID-19 (3) (2)
Refund of protected and unprotected EDIT, offset in income tax expense (2) —
Customer growth 4 9
Non-volumetric and miscellaneous revenue, excluding impacts from COVID-19 3 3
Energy efficiency, offset in operation and maintenance below 1 (8)
Gross receipts tax, offset in taxes other than income taxes below 1 (4)
Total $ 15 $ 35
Operation and maintenance
Labor and benefits, primarily from lower headcount in 2019 $ 13 $ 7
Contracted services (7) (17)
Support services 5 1
Other operating and maintenance expense, including material and supplies and insurance — (4)
Energy efficiency, offset in revenues less cost of revenues above 1 (8)
Merger severance costs — (3)
Total $ 12 $ (24)
Depreciation and amortization
Incremental capital projects placed in service $ 6 $ 8
Total $ 6 $ 8
Taxes other than income taxes
Gross receipts tax, offset in revenues less cost of revenues above $ 1 $ (4)
Incremental capital projects placed in service 4 17
Total $ 5 $ 13
Interest expense and other finance charges
Debt to fund incremental capital projects $ 5 $ 8
Total $ 5 $ 8
Interest income
Money pool investments with CenterPoint Energy $ (1) $ (1)
Total $ (1) $ (1)
Other income (expense), net
Reduction to non-service benefit cost $ 2 $ 3
Total $ 2 $ 3
Income tax savings (expense)
Incremental taxable income 8 (11)
Total increase (decrease) 8 (11)
Total increase (decrease) #REF! #REF!
Income tax expense:
Taxable income
Total decrease


	Favorable (Unfavorable)

	(in millions)
Revenues less Cost of revenues
Weather and usage, excluding impacts from COVID-19		$	17

Customer growth		5
Gross receipts tax, offset in taxes other than income taxes		5
Energy efficiency, offset in operation and maintenance		4
Non-volumetric and miscellaneous revenue, excluding impacts from COVID-19		(1)
Refund of protected and unprotected EDIT, offset in income tax expense		(2)
Impacts of COVID-19, including usage and other miscellaneous charges		(3)
Customer rates and impact of the change in rate design, exclusive of the TCJA impact		(6)
Total		$	19
Operation and maintenance
Other operating and maintenance expense and support services		$	6
Merger related expenses, primarily severance and technology		2
Materials and supplies		2
Contracted services		2
Labor and benefits		1
Bad Debt		1
Insurance		1
Energy efficiency, offset in revenues less cost of revenues		(4)

Total		$	11
Depreciation and amortization
Incremental capital projects placed in service		$	(6)
Total		$	(6)
Taxes other than income taxes
Incremental capital projects placed in service		$	(1)
Gross receipts tax, offset in revenues less cost of revenues		(5)
Total		$	(6)
Interest expense and other finance charges
Reduced interest rates on outstanding borrowings, partially offset by incremental borrowings for capital expenditures		$	6
Total		$	6



Other expense, net
Reduction to non-service benefit cost		$	2
Money pool investments with CenterPoint Energy interest income		1
Total		$	3

Income Tax Expense. For a discussion of effective tax rate per period, see Note 13 to the Interim Condensed Financial Statements.

CERTAIN FACTORS AFFECTING FUTURE EARNINGS

For information on other developments, factors and trends that may have an impact on the Registrants’ future earnings, please read “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Certain Factors

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Affecting Future Earnings” in Item 7 of Part II and “Risk Factors” in Item 1A of Part I of the Registrants’ combined ~~2019~~2020 Form 10-K ~~in Item 1A of Part II of this Form 10-Q~~ and “Cautionary Statement Regarding Forward-Looking Information” in this combined Form 10-Q.

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LIQUIDITY AND CAPITAL RESOURCES

Historical Cash Flows

The following table summarizes the net cash provided by (used in) operating, investing and financing ~~activities:~~activities during the three months ended March 31, 2021 and 2020:


		Nine Months Ended September 30,													Three Months Ended March 31,
		2020						2019							2021						2020
		CenterPoint Energy		Houston Electric		CERC		CenterPoint Energy		Houston Electric		CERC			CenterPoint Energy		Houston Electric		CERC		CenterPoint Energy		Houston Electric		CERC
		(in millions)													(in millions)
Cash provided by (used in):	Cash provided by (used in):													Cash provided by (used in):
Operating activities	Operating activities	$	1,439	$	552	$	646	$	1,086	$	595	$	513	Operating activities	$	(1,681)	$	47	$	(1,787)	$	662	$	103	$	381
Investing activities	Investing activities	(683)		(283)		(339)		(7,775)		(1,504)		(515)		Investing activities	(604)		(982)		(131)		(654)		192		(177)
Financing activities	Financing activities	(819)		(316)		(307)		2,708		786		(21)		Financing activities	2,285		940		1,918		(32)		(315)		(205)

Operating Activities. The following items contributed to increased (decreased) net cash provided by operating activities for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 compared to the ~~same period of 2019:~~three months ended March 31, 2020:


		CenterPoint Energy		Houston Electric		CERC			CenterPoint Energy		Houston Electric		CERC
		(in millions)							(in millions)
Changes in net income after adjusting for non-cash items	Changes in net income after adjusting for non-cash items	$	(1,804)	$	(131)	$	(2)	Changes in net income after adjusting for non-cash items	$	1,616	$	28	$	(29)
Changes in working capital	Changes in working capital	569		84		126		Changes in working capital	(57)		(25)		(51)
Increase in regulatory assets (1)								Increase in regulatory assets (1)	(2,270)		(52)		(2,075)
Change in equity in earnings of unconsolidated affiliates	Change in equity in earnings of unconsolidated affiliates	1,712		—		—		Change in equity in earnings of unconsolidated affiliates	(1,583)		—		—
Change in distributions from unconsolidated affiliates (1)		(117)		—		—
Change in distributions from unconsolidated affiliates (2)								Change in distributions from unconsolidated affiliates (2)	(31)		—		—

Lower pension contribution		10		—		—
Higher pension contribution								Higher pension contribution	(6)		—		—
Other	Other	(17)		4		9		Other	(12)		(7)		(13)
		$	353	$	(43)	$	133		$	(2,343)	$	(56)	$	(2,168)

(1)The increase in regulatory assets is primarily due to the incurred natural gas costs associated with the February 2021 Winter Storm Event. See Note 6 to the Interim Condensed Financial Statements for more information on the February 2021 Winter Storm Event.

(2)This change is partially offset by the change in distributions from Enable in excess of cumulative earnings in investing activities noted in the table below.

Investing Activities. The following items contributed to (increased) decreased net cash used in investing activities for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 compared to the ~~same period of 2019:~~three months ended March 31, 2020:


	CenterPoint Energy		Houston Electric		CERC
	(in millions)

Mergers and acquisitions, net of cash acquired	$	5,991	$	—	$	—
Capital expenditures	(67)		(6)		(78)
Net change in notes receivable from affiliated companies	—		1,228		(36)
Change in distributions from Enable in excess of cumulative earnings	46		—		—

Proceeds from divestitures	1,136		—		286

Other	(14)		(1)		4
	$	7,092	$	1,221	$	176
								CenterPoint Energy		Houston Electric		CERC
								(in millions)

Capital expenditures							Capital expenditures	$	70	$	(28)	$	43
Net change in notes receivable from affiliated companies							Net change in notes receivable from affiliated companies	—		(1,146)		—
Change in distributions from Enable in excess of cumulative earnings							Change in distributions from Enable in excess of cumulative earnings	(7)		—		—

Other							Other	(13)		—		3
								$	50	$	(1,174)	$	46

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Financing Activities. The following items contributed to (increased) decreased net cash used in financing activities for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 compared to the ~~same period of 2019:~~three months ended March 31, 2020:


		CenterPoint Energy		Houston Electric		CERC			CenterPoint Energy		Houston Electric		CERC
		(in millions)							(in millions)
Net changes in commercial paper outstanding	Net changes in commercial paper outstanding	$	(2,641)	$	—	$	(70)	Net changes in commercial paper outstanding	$	866	$	—	$	398
Increased proceeds from issuances of preferred stock		723		—		—
Increased proceeds from issuances of common stock		672		—		—

Net changes in long-term debt outstanding, excluding commercial paper	Net changes in long-term debt outstanding, excluding commercial paper	(2,452)		(167)		—		Net changes in long-term debt outstanding, excluding commercial paper	2,470		1,021		1,699
Net changes in long-term revolving credit facilities								Net changes in long-term revolving credit facilities	(1,050)		—		—
Net changes in debt issuance costs								Net changes in debt issuance costs	(20)		(10)		(6)

Net changes in debt issuance costs		15		5		—
Net changes in short-term borrowings		37		5		31

Decreased payment of Common Stock dividends	Decreased payment of Common Stock dividends	124		—		—		Decreased payment of Common Stock dividends	57		—		—
Increased payment of preferred stock dividends	Increased payment of preferred stock dividends	(13)		—		—		Increased payment of preferred stock dividends	(6)		—		—
Net change in notes payable from affiliated companies	Net change in notes payable from affiliated companies	—		1		—		Net change in notes payable from affiliated companies	—		(141)		—
Contribution from parent		—		(590)		—

Dividend to parent	Dividend to parent	—		(357)		39		Dividend to parent	—		385		32
Capital contribution to parent associated with the sale of CES		—		—		(286)

Other		8		1		—
		$	(3,527)	$	(1,102)	$	(286)

									$	2,317	$	1,255	$	2,123

Future Sources and Uses of Cash

The liquidity and capital requirements of the Registrants are affected primarily by results of operations, capital expenditures, debt service requirements, tax payments, working capital needs and various regulatory actions. Capital expenditures are expected to be used for investment in infrastructure. These capital expenditures are anticipated to maintain reliability and safety, increase resiliency and expand our systems through value-added projects. In addition to dividend payments on CenterPoint Energy’s Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Common Stock, and in addition to interest payments on debt, the Registrants’ principal anticipated cash requirements for the remaining ~~three~~nine months of ~~2020~~2021 include the following:


		CenterPoint Energy		Houston Electric		CERC			CenterPoint Energy		Houston Electric		CERC
		(in millions)							(in millions)
Estimated capital expenditures	Estimated capital expenditures	$	515	$	225	$	53	Estimated capital expenditures	$	2,778	$	1,365	$	866
Scheduled principal payments on Securitization Bonds	Scheduled principal payments on Securitization Bonds	71		71		—		Scheduled principal payments on Securitization Bonds	174		174		—
Redemption of CERC Corp.’s 4.50% Senior Notes due 2021		593		—		593
ERCOT loan		5		5		—
Minimum contributions to pension plans and other post-retirement plans								Minimum contributions to pension plans and other post-retirement plans	70		1		3
Maturing CenterPoint Energy term loans								Maturing CenterPoint Energy term loans	700		—		—
Maturing CenterPoint Energy and VUHI senior notes								Maturing CenterPoint Energy and VUHI senior notes	555		—		—
Maturing Houston Electric general mortgage bonds								Maturing Houston Electric general mortgage bonds	300		300		—

February 2021 Winter Storm Event. In February 2021, portions of the United States experienced an extreme and unprecedented winter weather event resulting in corresponding electricity generation shortages, including in Texas, and natural gas shortages and increased wholesale prices of natural gas in the United States. As a result of this weather event, the governors of Texas, Oklahoma and Louisiana declared states of either disaster or emergencies in their respective states. Subsequently, President Biden also approved major disaster declarations for all or parts of Texas, Oklahoma and Louisiana.

As a result of the February 2021 Winter Storm Event, from February 12, 2021 to February 22, 2021, management estimates CenterPoint Energy spent approximately an incremental $2.2 billion more on natural gas supplies (inclusive of an incremental $2.1 billion more spent by CERC on natural gas supplies). These amounts are preliminary estimates as of April 29, 2021 and remain subject to final settlement. While CenterPoint Energy and CERC will seek to recover the increased costs from its customers (although timing of recovery is uncertain), in the interim, CERC has issued additional external debt financing to pay for such natural gas working capital. For further details, see Note 12 to the Interim Condensed Financial Statements. The proceeds from the debt financing, along with existing sources of liquidity, provide CERC with sufficient capital to address the settlement of natural gas purchases, including the associated upstream supply charges, at the end of March 2021. Any additional external debt financing and/or partial or delayed recovery may negatively impact CenterPoint Energy’s or CERC’s credit metrics, and may lead to a downgrade of CenterPoint Energy’s or CERC’s credit rating.

Although CenterPoint Energy’s and CERC’s excess costs from the increase in natural gas prices are subject to available natural gas recovery mechanisms in their jurisdictions (although timing of recovery is uncertain), until such amounts are

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ultimately recovered from customers, CenterPoint Energy and CERC will continue to incur increased finance-related costs, resulting in a significant use of cash. See “— Regulatory Matters — February 2021 Winter Storm Event” below.

The Registrants expect that anticipated cash needs for the remaining ~~three~~nine months of ~~2020~~2021 will be met with borrowings under their credit facilities, ~~bank loans,~~ proceeds from the issuance of long-term debt, term loans or common stock, anticipated cash flows from operations, with respect to CenterPoint Energy and CERC, proceeds from commercial paper, ~~and,~~ with respect to CenterPoint Energy, distributions from ~~Enable.~~Enable until the closing of the Enable Merger expected in the second half of 2021, including any proceeds therefrom, distributions from Energy Transfer or proceeds from dispositions of Energy Transfer common units or Energy Transfer Series G Preferred Units after the expected closing of the Enable Merger, and, with respect to CERC, proceeds from any potential asset sales, including the announced sale of our Natural Gas businesses in Arkansas and Oklahoma, which is expected to close by the end of 2021, subject to satisfaction of customary closing conditions. Discretionary financing or refinancing may result in the issuance of equity securities of CenterPoint Energy or debt securities of the Registrants in the capital markets or the arrangement of additional credit facilities or term bank loans. Issuances of equity or debt in the capital markets, funds raised in the commercial paper markets and additional credit facilities may not, however, be available on acceptable terms. For further information about the Enable Merger and the announced sale of our Arkansas and Oklahoma Natural Gas businesses, see Notes 9 and 20, respectively, to the Interim Condensed Financial Statements.

On April 1, 2020, Enable announced a reduction in its quarterly distributions per common unit from $0.3305 distributed for the fourth quarter 2019 to $0.16525, representing a 50% reduction. This reduction has resulted in, and is expected to result in, additional quarterly distributions to CenterPoint Energy that fall below CenterPoint Energy’s previously disclosed expected minimum quarterly distribution from Enable of $0.2875 per common unit. This reduction in Enable’s quarterly distributions per common unit is expected to reduce Enable common unit distributions to CenterPoint Energy by approximately $155 million per year assuming no further reductions. To the extent current economic conditions persist or further deteriorate with respect to declines in the price of, and global demand for, natural gas, NGLs and crude oil, quarterly distributions on Enable’s common units may be subject to further reductions.

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Additionally, on April 1, 2020, CenterPoint Energy provided a business update related to certain measures it expects to take in response to the current business environment to strengthen its financial position and to adjust for the reduction in cash flow related to the reduction in Enable quarterly common unit distributions discussed above. These measures have included, or are expected to include, reducing CenterPoint Energy’s (i) quarterly common stock dividend per share from $0.2900 to $0.1500; (ii) anticipated 2020 capital spending by approximately $300 million, with CenterPoint Energy continuing to target five-year total capital investment of approximately $13 billion as previously disclosed; and (iii) anticipated operation and maintenance expenses for 2020 by a target of approximately $40 million, excluding certain merger costs, utility costs to achieve savings, severance and amounts with revenue offsets.

The net proceeds of CenterPoint Energy’s sale of the Infrastructure Services Disposal Group were used to repay a portion of outstanding CenterPoint Energy debt, including $200 million of maturing Vectren term loans. The net proceeds of CenterPoint Energy’s sale of the Energy Services Disposal Group were used to repay a portion of outstanding CenterPoint Energy debt.

To the extent that access to the capital and other financial markets is adversely affected by the effects of COVID-19, the Registrants may need to consider alternative sources of funding for some of their operations and for working capital but expect any impacts on their liquidity to be temporary. Any alternative sources of funding may increase the cost of capital and result in higher interest expense. Although CenterPoint Energy customarily satisfies its near-term financing needs with proceeds from commercial paper, CenterPoint Energy utilized its revolving credit facilities in March and April 2020 as a source of funding because market disruptions caused by COVID-19 temporarily limited its access to the commercial paper markets. CenterPoint Energy repaid all outstanding revolving credit facility loans in April 2020 and has resumed normal utilization of commercial paper as such markets have since rebounded as of September 30, 2020. Since CenterPoint Energy’s repayment of its outstanding revolving credit facility loans, CenterPoint Energy has not utilized its revolving credit facilities as a source of liquidity. However, to the extent the capital and other financial markets are again disrupted, CenterPoint Energy may again rely on its revolving credit facilities. Furthermore, the uncertain economic conditions may also result in the inability of the Registrants’ customers and other counterparties to make payments to the Registrants, on a timely basis or at all. Although the Registrants have experienced an increase in days outstanding on receivables and uncollectible accounts during the three and nine months ended September 30, 2020, the Registrants do not expect the increase in days outstanding on receivables and uncollectible accounts to materially impact their liquidity at this time. In the event economic conditions further deteriorate and result in a greater number of customers and counterparties failing to make payments to the Registrants, their businesses, cash flows, liquidity, financial condition and results of operations would be adversely impacted. Under such circumstances, the Registrants would intend to rely on borrowings from the short-term capital markets or under their revolving credit facilities, if needed, to mitigate such effects until cash flows revert to their pre-COVID-19 levels.

Off-Balance Sheet Arrangements

Other than Houston Electric’s general mortgage bonds issued as collateral for tax-exempt long-term debt of CenterPoint Energy as discussed in Note 12, guarantees as discussed in Note 14(b) ~~and (c)~~ to the Interim Condensed Financial Statements, we have no off-balance sheet arrangements.

Regulatory Matters

COVID-19 Regulatory Matters

~~Governors, public~~For information about COVID-19 regulatory matters, see Note 6 to the Interim Condensed Financial Statements.

February 2021 Winter Storm Event

The Texas Legislature conducted in late February and March initial hearings on the February 2021 Winter Storm Event. Immediately after the February 2021 Winter Storm Event, five unaffiliated directors of the ERCOT Board resigned. Three ERCOT market segment directors have also resigned and their replacements were appointed. Presently, the Texas legislature is considering legislation that would require unaffiliated directors of ERCOT to be Texas residents. On March 3, 2021, the ERCOT Board terminated the employment agreement with the ERCOT President and CEO with 60 days’ notice. On April 27, 2021, the ERCOT Board announced a new interim President and CEO. Following the February 2021 Winter Storm Event, all three PUCT commissioners have also either resigned or announced their resignation. To date, Governor Abbott has announced two new PUCT commissioners and both have been confirmed by the Texas Senate. Under consideration at the Texas Legislature is legislation requiring the number of appointed PUCT commissioners to be increased from three to five. For the two additional PUCT commissioner appointees, one will be appointed by the Texas Lieutenant Governor and one will be appointed by the Texas Speaker of the House.

On February 13, 2021, the Railroad Commission authorized each Texas natural gas distribution utility ~~commissions~~to record in a regulatory asset the extraordinary expenses associated with the February 2021 Winter Storm Event, including, but not limited to, natural gas cost and other ~~authorities in the states in which we operate have issued a number of different orders~~costs related to the ~~COVID-19 pandemic, including orders addressing customer non-payment~~procurement and ~~disconnection. While certain jurisdictions are~~transportation of natural gas supply, subject to ~~mandatory stay-at-home and similar orders, essential businesses and activities are exempted from these orders, including utility operations and maintenance. Accordingly,~~recovery in future proceedings. In addition, CenterPoint Energy’s ~~crews continue to provide essential service by responding to calls, completing work orders~~ and ~~undertaking other critical work. To protect our customers~~CERC’s Natural Gas utilities in jurisdictions outside of Texas deferred natural gas cost under existing recovery mechanisms and ~~employees, we are implementing COVID-19 safety precautions. Although the disconnect moratoriums~~ have either ~~expired~~sought or ~~will expire during the fourth quarter of 2020 in certain of the Registrants’ service territories, CenterPoint Energy continues~~intend to support those customers who may need payment assistance, arrangements or extensions. We will continue to monitor developments in this area and adjust our response as guidelines and circumstances may require. Additionally, while we have not experienced delays to date due to COVID-19 with respect to our regulatory proceedings, we could experience significant delays in scheduling proceedings or hearings and in obtaining orders from regulatory agencies.

On March 26, 2020, the PUCT issued two orders related to COVID-19 issues that affect Houston Electric. First, the PUCT issued an order related to Accrual of Regulatory Assets granting authority for utilities to record as a regulatory asset costs resulting from the effects of COVID-19. In the order, the PUCT noted that it will consider whether a utility’s request forseek recovery of the increased cost of natural gas, which will be subject to customary regulatory prudency reviews that may impact the amounts recovered. Amounts for the under recovery of natural gas costs are reflected in regulatory assets and are probable of recovery; however, the timing of recovery for each jurisdiction for the estimated incremental gas cost attributable to the February 2021 Winter Storm Event within each regulatory asset is ~~reasonable and necessary in a future proceeding. Second, the PUCT issued an order related to~~uncertain.

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~~COVID-19 ERP,~~The table below presents the estimated incremental natural gas costs included in regulatory assets as ~~modified, which, in light~~of March 31, 2021 by state as a result of the disaster declarations issued by the Governor of Texas, authorized a customer assistance program for certain residential customers of electric service in areas of Texas open to customer choice, which includes Houston Electric’s service territory. The order includes several requirements for transmission and distribution utilities (including Houston Electric):

▪Transmission and distribution utilities must file a tariff rider to collect funds to reimburse costs related to unpaid bills from eligible residential customers unemployed due to the impacts of COVID-19. The rider is based on $0.33 per MW hour ($0.00033 per KW hour) to be applied to all customer classes. Houston Electric filed its updated tariff implementing the rider on March 31, 2020, which was approved by the PUCT on April 2, 2020.

▪Transmission and distribution utilities entered into no-interest loan agreements with ERCOT to provide for an initial fund balance for reimbursement. On April 13, 2020, in connection with the PUCT’s COVID-19 ERP, Houston Electric entered into a no-interest loan agreement with ERCOT pursuant to which ERCOT loaned Houston Electric approximately $5 million.

▪The fund administered by each transmission and distribution utility for the COVID-19 ERP can also receive donations and grants from governmental entities, corporations, and other entities. Any funds received from other sources shall be administered and treated in the same manner by the transmission and distribution utilities as the funds in the program from the rider.

▪Transmission and distribution utilities may petition the PUCT for changes to the COVID-19 ERP, including the level of the rider in the event that the funds collected are not sufficient to cover reimbursements.

▪REPs will identify eligible customers to the relevant transmission and distribution utilities, and the transmission and distribution utilities will cease charging REPs for associated delivery charges, except securitization related charges. REPs will cease submitting disconnection for non-payment orders to transmission and distribution utilities for eligible customers.

▪The funds collected through the rider will be used to reimburse the following entities and costs: REPs’ energy charges related to eligible residential customers with an unpaid, past due electric bill subject to a disconnection for non-payment notice (reimbursement amounts are based on an average energy cost of $0.04 per KW hour); transmission and distribution utilities’ delivery charges related to eligible residential customers with an unpaid, past due electric bill subject to a disconnection for non-payment notice; the third-party administrator to cover its reasonable costs of administering the COVID-19 ERP eligibility process; and ERCOT for the loan to the transmission and distribution utilities.

▪~~REPs will submit one spreadsheet with reimbursement claims to transmission and distribution utilities beginning on April 30, 2020 and all subsequent requests that may be made on the 15~~th ~~of each month, and transmission and distribution utilities will process reimbursement payments within 14 days.~~

▪Transmission and distribution utilities will prepare reports and file them at the PUCT every 30 days showing aggregate amounts of reimbursements to the transmission and distribution utilities and REPs.

~~Commissions in all of Indiana Electric’s~~February 2021 Winter Storm Event and CenterPoint Energy’s and CERC’s ~~NGD service territories have either (1) issued orders~~requested recovery status as of April 29, 2021:

State

Recovery Status

Legislative Activity

Estimated Incremental Gas Cost
(in millions)

Arkansas

Filed application on April 16, 2021 to recover over a five-year period beginning May 1, 2021. On April 28, 2021, APSC approved CERC to begin recovery effective May 2021 at a customer deposit interest rate of 0.8% over a five year period, subject to a true-up after APSC determines appropriate allocation, length of recovery, and carrying charge. A hearing is scheduled in August 2021.

A securitization bill has been passed and recovery via the securitization is beyond 2021.

343

Louisiana

Filed application on April 16, 2021 for North Louisiana to recover over a three-year period beginning May 1, 2021. LPSC approved on April 22, 2021.

None.

Minnesota

Filed application on March 15, 2021 requesting to recover over a two-year period beginning May 1, 2021.

None.

470

Mississippi

Recovery expected to begin September 2021 through normal gas cost recovery.

None.

Oklahoma

Filed application on February 25, 2021 to defer incremental gas costs is pending at the OCC.

A securitization bill has passed in the Oklahoma legislature.

Texas

Cost currently deferred to a regulatory asset pending recovery method.

A securitization bill is progressing through the Texas legislature. Approval of the bill could occur as early as the second quarter of 2021 which could allow recovery by the first quarter of 2022.

1,105

Total CERC

2,075

Indiana North

Recovery expected to begin September 2021 through normal gas recovery.

None.

Indiana South

Recovery expected to begin August 2021 through normal gas recovery.

None.

Total CenterPoint Energy

2,189

For additional information about February 2021 Winter Storm Event regulatory matters, see Note 6 to ~~record~~the Interim Condensed Financial Statements.

Indiana Electric CPCN (CenterPoint Energy)

On February 9, 2021, Indiana Electric entered into a ~~regulatory asset~~BTA with a subsidiary of Capital Dynamics. Under the agreement, Capital Dynamics, with its partner Tenaska, will build a 300 MW solar array in Posey County, Indiana through a special purpose entity Posey Solar. Upon completion of construction, which is projected to be at the end of 2023, and subject to approval by the IURC, Indiana Electric will acquire Posey Solar and its solar array assets for ~~incremental bad~~a fixed purchase price. On February 23, 2021, Indiana Electric filed a CPCN with the IURC seeking approval to purchase the project. Indiana Electric is also seeking approval for a 100 MW solar PPA in Warrick County, Indiana. The request accounts for increased cost of debt ~~expenses~~ related to ~~COVID-19, including~~this PPA, which provides equivalent equity return to offset imputed debt during the 25 year life of the PPA. A hearing is scheduled to begin in June 2021 and a decision on the CPCN is expected by the fourth quarter of 2021.

Indiana Electric Securitization of Planned Generation Retirements (CenterPoint Energy)

The State of Indiana has enacted legislation, Senate Bill 386, that would enable CenterPoint Energy to request approval from the IURC to securitize the remaining book value and removal costs associated with ~~the suspension of disconnections and payment plans or (2) provided authority~~generating facilities to ~~recover bad debt expense through an existing tracking mechanism.~~

In some of the states in which the Registrants operate, public utility commissions have authorized utilities to employ deferred accounting authority for certain COVID-19 related costs which ensure the safety and health of customers, employees, and contractors, that would not have been incurredbe retired in the normal course of business. CERC’s NGD service territories in Minnesota and Arkansas will include any offsetting savings in the deferral. Other jurisdictions where the Registrants operate may require them to offset the deferral with savings as well.

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next twenty-four months. The Governor of Indiana signed the legislation on April 19, 2021. CenterPoint Energy intends to seek securitization in the future associated with planned coal generation retirements.

~~Houston Electric Base Rate Case~~Space City Solar Transmission Interconnection Project (CenterPoint Energy and Houston Electric)

On April 5, 2019, and subsequently adjusted in errata filings in May and June 2019, Houston Electric filed its base rate application with the PUCT and the cities in its service area to change its rates, seeking approval for revenue increases of approximately $194 million, among other requests. On January 23,December 17, 2020, Houston Electric filed a ~~Stipulation and Settlement Agreement with the PUCT that provides for the following, among other things:~~

•~~an overall revenue requirement increase of approximately $13 million;~~

•~~an ROE of 9.4%;~~

•~~a capital structure of 57.5% debt/42.5% equity;~~

•~~a refund of unprotected EDIT of $105 million plus carrying costs over approximately 30-36 months; and~~

•~~recovery of all retail transmission related costs through the TCRF.~~

Also, Houston Electric is not required to make a one-time refund of capital recovery from its TCOS and DCRF mechanisms. Future TCOS filings will take into account both ADFIT and EDIT until the final order from Houston Electric’s next base rate proceeding. No rate base items are required to be written off; however, approximately $12 million in rate case expenses were written off in 2019. A base rate application must be filed for Houston Electric no later than four years from the date of the PUCT’s final order in the proceeding. Additionally, Houston Electric will not file a DCRF in 2020, nor will a subsequent separate proceeding with the PUCT be instituted regarding EDIT on Houston Electric’s securitized assets. Furthermore, under the terms of the Stipulation and Settlement Agreement, Houston Electric agreed to adopt certain ring-fencing measures to increase its financial separateness from CenterPoint Energy but left the determination of whether to impose a dividend restriction up to the PUCT. The PUCT approved the Stipulation and Settlement Agreement at its February 14, 2020 open meeting and issued a final order on March 9, 2020. The PUCT declined to impose a dividend restriction in the final order. The rates were implemented on April 23, 2020.

~~Bailey to Jones Creek Project (CenterPoint Energy and Houston Electric)~~

In April 2017, Houston Electric submitted a proposal to ERCOT requesting its endorsement of the Freeport Area Master Plan, which included the Bailey to Jones Creek Project. On November 21, 2019, the PUCT issued its final approval of Houston Electric’s certificate of convenience and necessity application ~~based~~with the PUCT for approval to build a 345 kV transmission line in Wharton County, Texas connecting the Hillje substation on ~~an unopposed settlement agreement under which~~ Houston ~~Electric would construct~~Electric’s transmission system to the ~~project at an~~planned 610 MW Space City Solar Generation facility being developed by third-party developer EDF Renewables. Depending on the route ultimately approved by the PUCT, the estimated capital cost of the transmission line project ranges from approximately ~~$483~~$23 million to $71 million. The actual capital costs of the project will depend on actual land acquisition costs, construction costs, ~~minor changes~~and other factors in addition to route selection. In January 2021, Houston Electric executed a Standard Generation Interconnection Agreement for the ~~routing~~Space City Solar Generation facility with EDF Renewables, which also provided security for the transmission line project in the form of a $23 million letter of credit, the amount of which is subject to change depending on the route approved. A hearing at the PUCT is scheduled for June 2021. The PUCT is required to issue its final decision on the transmission line project no later than December 2021. Subject to PUCT approval, Houston Electric expects to complete construction and energization of the transmission line to mitigate environmental and other land use impacts, structure design to address soil and coastal wind conditions, and other factors. In April 2020, a federal court vacated the Army Corps of Engineers Nationwide Permit 12, which Houston Electric intended to use for the project. As a result, Houston Electric filed its individual permit application with the Army Corps of Engineers in accordance with the federal court decision. However, subsequent to filing the individual permit application, the federal court stayed the effectiveness of its order as it applied to the construction of transmission lines such as the Bailey to Jones Creek Project. In July 2020, the stay was extended by the U.S. Supreme Court to apply to a broader range of infrastructure projects and is expected to last through the full appellate process. As a result, the Army Corps of Engineers is proceeding with project review under the general Nationwide Permit 12 permit. Houston Electric has commenced pre-construction activities on the project, and anticipates beginning construction in early 2021 and completing construction and energizing the line before the end of 2021.June 2022.

81Minnesota Base Rate Case (CenterPoint Energy and CERC)

~~Table~~

On October 28, 2019, CERC filed a general rate case with the MPUC seeking approval for a revenue increase of ~~Contents~~approximately $62 million with a projected test year ended December 31, 2020. The revenue increase is based upon a requested ROE of 10.15% and an overall after-tax rate of return of 7.41% on a total rate base of approximately $1,307 million. CERC implemented interim rates reflecting $53 million for gas used on and after January 1, 2020. In September 2020, a settlement that addressed all issues except the Inclusive Financing/Tariffed On Bill Financing (TOB) proposal by the City of Minneapolis was signed by a majority of all parties and was filed with the Office of Administrative Hearings. A stipulation between the City of Minneapolis and CERC addressing the TOB proposal was filed on September 2, 2020. The settlement reflects a $38.5 million increase and was based on an overall after-tax rate of return of 6.86% and does not specify individual cost of capital components. On March 1, 2021, the MPUC issued a written final order approving the $38.5 million increase and rejected the TOB stipulation. The order also required CERC and the City of Minneapolis to submit a future filing to allow for further development of a potential TOB pilot program and additional or expanded low-income conservation improvement programs. A compliance filing was submitted on March 12, 2021 proposing a final rate implementation on June 1st and the interim refund occurring in June 2021, contingent on final MPUC approval.

Indiana South Base Rate Case (CenterPoint Energy)

On October 30, 2020, and as subsequently amended, Indiana South filed its base rate case with the IURC seeking approval for a revenue increase of approximately ~~$30~~$29 million. This rate case filing is required under Indiana TDSIC statutory requirements before the completion of Indiana South’s capital expenditure program, approved in 2014 for investments starting in 2014 through 2020. The revenue increase is based upon a requested ROE of 10.15% and an overall after-tax rate of return of ~~6.18%~~5.99% on total rate base of approximately $469 million. Indiana South has utilized a projected test year, reflecting its 2021 budget as the basis for the revenue increase requested, and proposes to implement rates in two phases. The first phase of rate implementation will occur as of the date of an order in this proceeding, expected in September 2021, and the second phase of rate implementation will occur at the completion of the test year, as of December 31, 2021. On April 16, 2021, Indiana South announced that an agreement in principle has been reached with certain parties. On April 23, 2021, a Stipulation and Settlement Agreement was filed resolving all issues in the case. The settlement recommended a revenue increase of $20.5 million based on a 9.7% ROE and an overall after-tax rate of return of 5.78% on total rate base of approximately $469 million. A settlement hearing is scheduled for June 24, 2021. A final order is expected in the second half of 2021. Under Indiana statutory requirements, the IURC has 300 days from the date of the filing of Indiana South’s case-in-chief to issue an order.

Indiana ~~Electric Generation Project (CenterPoint Energy)~~

Indiana Electric must either (i) make substantial investments in its existing generation resources to comply with environmental regulations or (ii) replace its existing generation with new resources. 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 February 20, 2018, 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 the baseload capacity of its existing generation fleet at an approximate cost of $900 million, which included the cost of a new natural gas pipeline to serve the plant.

As a part of this same proceeding, Indiana Electric also sought recovery under Indiana Senate Bill 251 of costs to be incurred for environmental investments to be made at its F.B. Culley generating plant to comply with ELG and CCR rules. The F.B. Culley investments, estimated to be approximately $95 million, began in 2019 and will allow the F.B. Culley Unit 3 generating facility to comply with environmental requirements and continue to provide generating capacity to Indiana Electric’s customers. Under Indiana Senate Bill 251, Indiana Electric sought authority to recover 80% of the approved costs, including a return, using a tracking mechanism, with the remaining 20% of the costs deferred for recovery in Indiana Electric’s next base rate proceeding.

On April 24, 2019, the IURC issued an order approving the environmental investments proposed for the F.B. Culley generating facility, along with recovery of prior pollution control investments made in 2014. The order denied the proposed gas combined cycle generating facility. Indiana Electric has conducted a new IRP, which was submitted to the IURC in June 2020, to identify an appropriate generation resource portfolio to satisfy the needs of its customers and comply with environmental regulations. The proposed preferred portfolio indicates the replacement of 730 MW of coal with a significant buildout of renewables supported by dispatchable natural gas generation.

~~Indiana Electric A.B. Brown Ash Pond Remediation~~North Base Rate Case (CenterPoint Energy)

On ~~August 14, 2019,~~December 18, 2020, Indiana ~~Electric~~North filed ~~a petition~~its base rate case with the IURC seeking approval for a revenue increase of approximately $21 million. This rate case filing is required under Indiana TDSIC statutory requirements before the completion of Indiana North’s capital expenditure program, approved in 2014 for investments starting in 2014 through 2020. The revenue increase is based upon a requested ROE of 10.15% and an overall after-tax rate of return of 6.32% on total rate base of approximately $1,611 million. Indiana North has utilized a projected test year, reflecting its 2021 budget as ~~a federally mandated project,~~the basis for the ~~recovery~~revenue increase requested, and proposes to implement rates in two phases. The first phase of ~~costs associated with the clean closure~~rate implementation will occur as of the ~~A.B. Brown ash pond pursuant to Indiana Senate Bill 251. This project,~~date of an order in this proceeding, expected ~~to last approximately 14 years, would result~~ in October 2021, and the ~~full excavation and recycling~~second phase of rate implementation will occur at the completion of the ~~ponded ash through agreements with a beneficial reuse entity, totaling approximately $160 million.~~test year, as of December 31, 2021. Hearings at the IURC are currently scheduled to occur in May and

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June 2021. Under Indiana ~~Senate Bill 251, Indiana Electric seeks authority to recover via~~statutory requirements, the IURC has a ~~tracking mechanism 80%~~minimum of 300 days and maximum of 360 days from the date of the ~~approved costs, with a return on eligible capital investments needed~~filing of Indiana North’s case-in-chief to allow for the extraction of the ponded ash, with the remaining 20% of the costs deferred for recovery in Indiana Electric’s next base rate proceeding. On December 19, 2019 and subsequently on January 10, 2020, Indiana Electric filed a settlement agreement with the intervening parties whereby the costs would be recovered as requested, withissue an additional commitment by Indiana Electric to offset the federally mandated costs by at least $25 million, representing a combination of total cash proceeds received from the ash reuser and total insurance proceeds to be received from Indiana Electric’s insurers under confidential settlement agreements of litigation filed against the insurers. On May 13, 2020, the IURC approved the settlement agreement in full. On October 28, 2020, the IURC approved Indiana Electric’s ECA proceeding, which included the initiation of recovery of the federally mandated project costs.order.

Rate Change Applications

The Registrants are routinely involved in rate change applications before state regulatory authorities. Those applications include general rate cases, where the entire cost of service of the utility is assessed and reset. In addition, Houston Electric is periodically involved in proceedings to adjust its capital tracking mechanisms (TCOS and DCRF) and annually files to adjust its EECRF. CERC is periodically involved in proceedings to adjust its capital tracking mechanisms in Texas (GRIP), its cost of service adjustments in Arkansas, Louisiana, Mississippi and Oklahoma (FRP, RSP, RRA and PBRC, respectively), its

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decoupling mechanism in Minnesota, and its energy efficiency cost trackers in Arkansas, Minnesota, Mississippi and Oklahoma (EECR, CIP, EECR and EECR, respectively). CenterPoint Energy is periodically involved in proceedings to adjust its capital tracking mechanisms in Indiana (CSIA for gas and TDSIC for electric) and Ohio (DRR), its decoupling mechanism in Indiana (SRC for gas), and its energy efficiency cost trackers in Indiana (EEFC for gas and DSMA for electric) and Ohio (EEFR).

The table below reflects significant applications pending or completed since the Registrants’ combined ~~2019~~2020 Form 10-K was filed with the SEC.

Mechanism

Annual Increase (Decrease) (1)

(in millions)

Filing
Date

Effective Date

Approval Date

Additional Information

CenterPoint Energy and Houston Electric (PUCT)

~~EECRF~~TCOS

~~$11~~

June
20209

March 2021

April
2021

~~October 2020~~

~~The requested amount is comprised primarily of the following:~~April 2021 Program and Evaluation, Measurement and Verification costs of $39 million, 2019 over recovery of ($1) million and 2019 earned bonus of $12 million. A settlement was approved in October 2020 consisting of 2021 Program and Evaluation, Measurement and Verification costs of $39 million, 2019 over recovery of ($1) million, 2019 earned bonus of $11 million and a black box reduction to revenue requirement of ($1) million.

~~Rate Case~~

April
2019

April
2020

~~March 2020~~

~~See discussion above under~~ ~~Houston Electric Base Rate Case~~.

~~TCOS~~

~~March 2020~~

May
2020

Based on net change in invested capital of ~~$204 million.~~

~~TCOS~~

July
2020

~~September 2020~~

~~Based on net change in invested capital of $140 million.~~

~~CenterPoint Energy and CERC - Beaumont/East Texas (Railroad Commission)~~

~~Rate Case~~

November
2019

~~November 2020~~

June
2020

Unanimous settlement agreement approved by the Railroad Commission in June 2020 provides for a $4 million annual increase in current revenues, a refund for an Unprotected EDIT Rider amortized over three years of which $2 million is refunded in the first year and establishes a 9.65% ROE and a 56.95% equity ratio for future GRIP filings for the Beaumont/East Texas jurisdiction. New rates will be effective with October 2020 usage and will be reflected on customers’ bills in November 2020.

~~CenterPoint Energy and CERC - South Texas, Houston and Texas Coast (Railroad Commission)~~

~~GRIP~~

March
2020

June
2020

~~Based on net change in invested capital of $143~~$80 million.

CenterPoint Energy and CERC - Arkansas (APSC)

FRP (1)

~~(12)~~13

April
~~2020~~2021

~~October 2020~~TBD

~~September 2020~~TBD

Based on ROE of ~~9.5%~~9.50% with 50 basis point (+/-) earnings band. Revenue ~~reduction~~increase of ~~$12~~$13 million based on prior test year true-up earned return on equity of ~~11.79%~~11.43% combined with projected test year earned return on equity of ~~9.43%~~3.59%. The initial term of Rider FRP will terminate on September 10, 2021; a request to extend the Rider FRP term for an additional five years was filed on May 5, 2021.

CenterPoint Energy and CERC - ~~Louisiana (LPSC)~~Beaumont/East Texas, South Texas, Houston and Texas Coast (Railroad Commission)

~~RSP~~GRIP (1)

228

~~September 2020~~March 2021

~~December 2020~~TBD

TBD

Based on ~~ROE~~net change in invested capital of 9.95% with 50 basis point (+/-) earnings band. The North Louisiana increase, net of TCJA effects considered outside the earnings band, is $3 million based on a test year ended June 2020 and adjusted earned ROE of 5.97%. South Louisiana adjusted ROE of 10.42% for the test year ended June 2020 is inside the band; a decrease of $1 million results from TCJA effects considered outside the earnings band.$197 million.

CenterPoint Energy and CERC - Minnesota (MPUC)

Decoupling ~~(1)~~

N/A

September 2020

~~TBD~~March 2021

Represents under-recovery of approximately $2 million recorded for and during the period July 1, 2019 through June 30, 2020, including approximately $1 million related to the period July 1, 2018 through June 30, 2019.

~~CIP Financial Incentive~~

May
2020

~~October 2020~~

~~August 2020~~

~~CIP Financial Incentive based on 2019 activity.~~

Rate Case(1)

6239

October 2019

June
2021

TBD

See discussion above under Minnesota Base Rate Case.

CIP Financial Incentive (1)

May
2021

TBD

~~Reflects a proposed 10.15%~~CIP Financial Incentive based on 2020 activity.

CenterPoint Energy and CERC - Mississippi (MPSC)

RRA (1)

April
2021

TBD

Based on ROE ~~on a 51.39% equity ratio. Interim rates reflecting an annual~~of 9.81% with 100 basis point (+/-) earnings band. Revenue increase of ~~$53~~approximately $4 million ~~were implemented~~based on ~~January 1, 2020. In September~~ 2020 ~~a settlement that addressed all issues except the Inclusive Financing/Tariffed On Bill Financing (TOB) proposal by the City~~test year adjusted earned ROE of Minneapolis was signed by a majority of all parties and was filed with the Office of Administrative Hearings. A stipulation between the City of Minneapolis and CenterPoint Energy addressing the TOB proposal was filed on September 2, 2020. The settlement reflects a $38.5 million increase and is still subject to approval by the MPUC.6.97%.

CenterPoint Energy and CERC - Oklahoma (OCC)

PBRC (1)

~~(2)~~(1)

March
~~2020~~ 2021

July
2020TBD

Based on ROE of 10% with 50 basis point (+/-) earnings band. Revenue credit of approximately $2$1 million based on ~~2019~~2020 test year adjusted earned ROE of ~~15.37%~~12.42%. ~~The OCC approved~~

CenterPoint Energy - Indiana South - Gas (IURC)

Rate Case (1)

October 2020

September 2021

TBD

See discussion above under Indiana South Base Rate Case.

CSIA (1)

(1)

April
2021

July
2021

TBD

Requested an increase of $11 million to rate base, which reflects a ~~unanimous settlement agreement that provides for a~~$(1 million) annual decrease in current revenues. 80% of revenue ~~credit to customers of $2 million, paid out monthly for~~requirement is included in requested rate increase and 20% is deferred until the next ~~twelve months.~~rate case. The mechanism also includes refunds associated with the TCJA, resulting in no change to the previous credit provided, and a change in the total (over)/under-recovery variance of less than $1 million annually.

CenterPoint Energy - Indiana North - Gas (IURC)

Rate Case (1)

December 2020

October 2021

TBD

See discussion above under Indiana North Base Rate Case.

CSIA (1)

April
2021

July
2021

TBD

Requested an increase of $37 million to rate base, which reflects a $5 million annual increase in current revenues. 80% of revenue requirement is included in requested rate increase and 20% is deferred until the next rate case. The mechanism also includes refunds associated with the TCJA, resulting in no change to the previous credit provided, and a change in the total (over)/under-recovery variance of $6 million annually.

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Mechanism

Annual Increase (Decrease) (1)

(in millions)

Filing
Date

Effective Date

Approval Date

Additional Information

~~CenterPoint Energy and CERC - Mississippi (MPSC)~~

~~RRA~~

May
2020

~~September 2020~~

~~Based on ROE of 9.292% with 100 basis point (+/-) earnings band. Revenue increase of $2 million based on 2019 test year adjusted earned ROE of 7.90%.~~

CenterPoint Energy - ~~Indiana South - Gas (IURC)~~

~~CSIA~~

April
2020

July
2020

Requested an increase of $13 million to rate base, which reflects a $1 million annual increase in current revenues. 80% of revenue requirement is included in requested rate increase and 20% is deferred until the next rate case. The mechanism also includes refunds associated with the TCJA, resulting in no change to the previous credit provided, and a change in the total (over)/under-recovery variance of $1 million annually.Ohio (PUCO)

~~CSIA~~DRR (1)

~~October 2020~~

~~January~~ April
2021

~~TBD~~

Requested an increase of $13 million to rate base, which reflects a $2 million annual increase in current revenues. 80% of revenue requirement is included in requested rate increase and 20% is deferred until the next rate case. The mechanism also includes refunds associated with the TCJA, resulting in no change to the previous credit provided, and a change in the total (over)/under-recovery variance of $(1) million annually.

~~Rate Case~~ ~~(1)~~

~~October 2020~~

September 2021

TBD

Requested an increase of approximately $30 million to operating revenues based on an ROE of 10.15% and an overall rate of return of 6.18% on rate base of $469 million. Projected test year of 2021, with phase one rates in place in September 2021 and phase two rates in place at completion of projected test year.

~~CenterPoint Energy - Indiana North - Gas (IURC)~~

~~CSIA~~

April
2020

July
2020

Requested an increase of $35 million to rate base, which reflects a $4 million annual increase in current revenues. 80% of revenue requirement is included in requested rate increase and 20% is deferred until the next rate case. The mechanism also includes refunds associated with the TCJA, resulting in no change to the previous credit provided, and a change in the total (over)/under-recovery variance of $14 million annually.

~~CSIA~~ ~~(1)~~

~~October 2020~~

~~January 2021~~

~~TBD~~

Requested an increase of $32 million to rate base, which reflects a $2 million annual increase in current revenues. 80% of revenue requirement is included in requested rate increase and 20% is deferred until the next rate case. The mechanism also includes refunds associated with the TCJA, resulting in an increase of $(1) million to the previous credit provided, and a change in the total (over)/under-recovery variance of $(6) million annually.

~~CenterPoint Energy - Ohio (PUCO)~~

~~TSCR~~

~~N/A~~

January
2019

July
2020

Application to flow back to customers certain benefits from the TCJA. Initial impact reflects credits for 2018 of $(10) million and 2019 of $(9) million, and 2020 of $(7) million, with mechanism that began upon approval from the PUCO effective July 1, 2020.

~~TSCR~~ ~~(1)~~

~~N/A~~

~~September 2020~~

~~January 2021~~

~~TBD~~

~~Application to flow back to customers certain benefits from the TCJA. Impact reflects credits for 2021 of $(7) million and includes a reconciliation through August 31, 2020 of $(14) million.~~

~~DRR~~ ~~(1)~~

May
2020

September
2020

~~TBD~~

~~Requested an increase of $67~~$71 million to rate base for investments made in ~~2019,~~2020, which reflects a ~~$10~~$9 million annual increase in current revenues. A change in (over)/under-recovery variance of $2$5 million annually is also included in rates.

CenterPoint Energy - Indiana Electric (IURC)

TDSIC

February
2020

May
2020

Requested an increase of $34 million to rate base, which reflects a $4 million annual increase in current revenues. 80% of revenue requirement is included in requested rate increase and 20% is deferred until next rate case. The mechanism also includes a change in (over)/under-recovery variance of $2 million annually.

~~ECA~~

May
2020

~~August 2020~~

~~October 2020~~

Requested an increase of $49 million to rate base, which reflects a $10 million annual increase in current revenues. 80% of the revenue requirement is included in requested rate increase and 20% is deferred until next rate case. The mechanism also included a change in (over)/under-recovery variance of $4 million annually.

~~TDSIC~~ (1)

~~August 2020~~February 2021

~~November 2020~~May
2021

TBD

Requested an increase of ~~$36~~$28 million to rate base, which reflects a $3 million annual increase in current revenues. 80% of the revenue requirement is included in requested rate increase and 20% is deferred until next rate case. The mechanism also includes a change in (over)/under-recovery variance of ~~$(1)~~less than $1 million.

CECA (1)

February 2021

June
2021

TBD

Reflects an $8 million annual increase in current revenues through a non-traditional rate making approach related to a 50 MW universal solar array placed in service in January 2021.

ECA(1)

May 2021

August 2021

TBD

Requested an increase of $39 million to rate base, which reflects a $2 million annual increase in current revenues. 80% of the revenue requirement is included in requested rate increase and 20% is deferred until next rate case. The mechanism also included a change in (over)/under-recovery variance of less than $1 million annually.

(1)Represents proposed increases (decreases) when effective date and/or approval date is not yet determined. Approved rates could differ materially from proposed rates.

~~Tax Reform~~

TCJA-related 2018 tax expense refunds are currently included in the Registrants’ existing rates and are therefore reducing the Registrants’ current annual revenue. The TCJA-related 2018 tax expense refunds for Houston Electric were completed in September 2019. However, in Houston Electric’s rate case filed in April 2019, and subsequently adjusted in errata filings in

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May and June 2019, pursuant to the Stipulation and Settlement Agreement, Houston Electric will return unprotected EDIT net regulatory liability balance to customers, through a separate rider and its wholesale transmission tariff over approximately three years and the TCJA-related protected EDIT balance over ARAM. As of September 30, 2020, the balances of the net unprotected EDIT regulatory liability and protected EDIT regulatory liability were $65 million and $698 million, respectively.

CenterPoint Energy’s electric and natural gas utilities in Indiana and Ohio currently recover corporate income tax expense in approved rates charged to customers. The IURC and the PUCO both issued orders which initiated proceedings to investigate the impact of the TCJA on utility companies and customers within Indiana and Ohio, respectively. In addition, the IURC and PUCO have ordered each utility to establish regulatory liabilities to record all estimated impacts of tax reform starting January 1, 2018 until the date when rates are adjusted to capture these impacts. In Indiana, in response to Vectren’s pre-Merger filing for proposed changes to its rates and charges to consider the impact of the lower federal income tax rates, the IURC approved an initial reduction to current rates and charges, effective June 1, 2018, to capture the immediate impact of the lower corporate federal income tax rate. The refund of EDIT and regulatory liabilities commenced in November 2018 for Indiana electric customers and in January 2019 for Indiana natural gas customers. In Ohio, the initial rate reduction to current rates and charges became effective upon conclusion of its pending base rate case on August 28, 2019. In January 2019, an application was filed with the PUCO in compliance with its October 2018 order requiring utilities to file for a request to adjust rates to reflect the impact of the TCJA, requesting authority to implement a rider to flow back to customers the tax benefits realized under the TCJA, including the refund of EDIT and regulatory liabilities. On July 1, 2020, the PUCO approved the initial rate reduction to credit customers for the impact of the TCJA. This credit mechanism results in an amortization of the unprotected balance of EDIT over a period of six years, starting in 2018, with the protected balance amortized in accordance with ARAM. The credit mechanism will be adjusted via an annual filing made each October to reflect projected refunds for each calendar year.

~~ELG (CenterPoint Energy)~~

Under the Clean Water Act, the EPA sets technology-based guidelines for water discharges from new and existing electric generation facilities. In September 2015, the EPA finalized revisions to the existing steam electric ELG setting stringent technology-based water discharge limits for the electric power industry. The EPA focused this rulemaking on wastewater generated primarily by pollution control equipment necessitated by the comprehensive air regulations, specifically setting strict water discharge limits for arsenic, mercury and selenium for scrubber waste waters. The ELG will be implemented when existing water discharge permits for the plants are renewed. In the case of Indiana Electric’s water discharge permits, in 2017 the IDEM issued final renewals for the F.B. Culley and A.B. Brown power plants. IDEM agreed that units identified for retirement by December 2023 would not be required to install new treatment technology to meet ELG, and approved a 2020 compliance date for dry bottom ash and a 2023 compliance date for flue gas desulfurization wastewater treatment standards for the remaining coal-fired unit at F.B. Culley.

On April 13, 2017, as part of the U.S. President’s Administration’s regulatory reform initiative, which is focused on the number and nature of regulations, the EPA granted petitions to reconsider the ELG rule, and indicated it would stay the current implementation deadlines in the rule during the pendency of the reconsideration. On September 13, 2017, the EPA finalized a rule postponing certain interim compliance dates by two years, but did not postpone the final compliance deadline of December 31, 2023. In April 2018, the EPA published an effluent guidelines program plan that anticipated a December 2019 rule revising the effluent limitations and pre-treatment standards for existing sources in the 2015 rule. On April 12, 2019, the U.S. Court of Appeals for the Fifth Circuit vacated and remanded portions of the ELG rule that selected impoundment as the best available technology for legacy wastewater and leachate. On October 13, 2020, the EPA finalized revisions to the ELG rule, which established a two-year extension of the compliance deadline for the prohibition of wet sluicing of bottom ash. However, the ELG rule did not establish alternative deadlines for the prohibition of wet sluicing of fly ash, and the most recent revision to the CCR rule confirmed that ash ponds must commence closure no later than October 2023. As a result, CenterPoint Energy does not anticipate any changes to its current compliance plans based upon this most recent ELG update.

CPP and ACE Rule (CenterPoint Energy)

On August 3, 2015, the EPA released its CPP Rule, which required a 32% reduction in carbon emissions from 2005 levels. The final rule was published in the Federal Register on October 23, 2015, and that action was immediately followed by litigation ultimately resulting in the U.S. Supreme Court staying implementation of the rule. On August 31, 2018, the EPA published its proposed CPP replacement rule, the ACE Rule, which was finalized on July 8, 2019 and requires states to implement a program of energy efficiency improvement targets for individual coal-fired electric generating units. ~~States have three years to develop state plans to implement~~On January 19, 2021, the ACE ~~rule, and CenterPoint Energy does not expect a state ACE rule to be finalized and approved~~Rule was struck down by the ~~EPA until 2024.~~U.S. District Court of Appeals for the D.C. Circuit. CenterPoint Energy is currently unable to predict whether the ~~effect~~Biden Administration will continue its defense of the CPP or ACE Rule, or what a ~~state plan~~new replacement rule would look like. The Biden administration recommitted the United States to ~~implement~~the Paris Agreement, which can be expected to drive a renewed regulatory push to require further GHG emission reductions from the energy sector. Shortly after taking office in January 2021, President Biden issued a series of executive orders designed to address climate change. President Biden has also signed an executive order requiring agencies to review environmental actions taken by the Trump administration, which would have included the ACE ~~rule but does not anticipate that such~~Rule, and the Biden administration has issued a ~~plan would have~~memorandum to departments and agencies to refrain from proposing or issuing rules until a ~~material effect.~~

~~Table~~departmental or agency head appointed or designated by the Biden administration has reviewed and approved the rule. Reentry into the Paris Agreement and President Biden’s executive orders may result in the development of ~~Contents~~

~~Impact~~additional regulations or changes to existing regulations, and on April 22, 2021, President Biden announced a new goal of ~~Legislative Actions & Other Initiatives (CenterPoint Energy)~~

~~At this time, compliance costs and other effects associated with reductions in~~50% reduction of economy-wide GHG emissions ~~or obtaining renewable energy sources remain uncertain. While the requirements of~~by 2035. On March 1, 2020, CenterPoint Energy announced corporate carbon emission goals, which are expected to be used to guide Indiana Electric’s transition to a ~~state ACE rule remain uncertain,~~low carbon fleet and position Indiana Electric ~~will continue~~ to ~~monitor~~comply with anticipated future regulatory ~~activity regarding~~requirements from the Biden administration to further reduce GHG ~~emission standards that may affect~~emissions from its electric ~~generating units.~~

~~MRT Rate Case (CenterPoint Energy)~~

In June 2018, MRT filed a general Natural Gas Act rate case, and in October 2019, MRT filed a second rate case. MRT began collecting the rates proposed in the 2018 rate case, subject to refund, on January 1, 2019. On November 5, 2019, as supplemented on December 13, 2019, MRT filed uncontested proposed settlements for the 2018 and 2019 rate cases. The FERC approved both settlements on March 26, 2020, and that order became final on April 25, 2020.fleet.

Other Matters

Credit Facilities

The Registrants may draw on their respective revolving credit facilities from time to time to provide funds used for general corporate and limited liability company purposes, including to backstop CenterPoint Energy’s and CERC’s commercial paper programs. The facilities may also be utilized to obtain letters of credit. For further details related to the Registrants’ revolving credit facilities, please see Note 12 to the Interim Condensed Financial Statements.

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Based on the consolidated debt to capitalization covenant in the Registrants’ revolving credit facilities, the Registrants would have been permitted to utilize the full capacity of such revolving credit facilities, which aggregated approximately ~~$4.9~~$4 billion as of ~~September 30, 2020.~~March 31, 2021. As of ~~October 23, 2020,~~April 29, 2021, the Registrants had the following revolving credit facilities and utilization of such facilities:


				Amount Utilized as of October 23, 2020											Amount Utilized as of April 29, 2021
Registrant	Registrant	Size of Facility		Loans		Letters of Credit		Commercial Paper		Weighted Average Interest Rate	Termination Date	Registrant	Size of Facility		Loans		Letters of Credit		Commercial Paper		Weighted Average Interest Rate	Termination Date
		(in millions)											(in millions)
CenterPoint Energy	CenterPoint Energy	$	3,300	$	—	$	8	$	601	0.17%	March 3, 2022	CenterPoint Energy	$	2,400	$	—	$	11	$	846	0.21%	February 4, 2024
CenterPoint Energy (1)	CenterPoint Energy (1)	400		—		—		174		0.16%	July 14, 2022	CenterPoint Energy (1)	400		—		—		192		0.18%	February 4, 2024

Houston Electric	Houston Electric	300		—		—		—		—%	March 3, 2022	Houston Electric	300		—		—		—		—%	February 4, 2024
CERC	CERC	900		—		—		423		0.16%	March 3, 2022	CERC	900		—		—		545		0.19%	February 4, 2024
Total	Total	$	4,900	$	—	$	8	$	1,198			Total	$	4,000	$	—	$	11	$	1,583

(1)The credit facility was issued by VUHI and is guaranteed by SIGECO, Indiana Gas and VEDO.

Borrowings under each of the revolving credit facilities are subject to customary terms and conditions. However, there is no requirement that the borrower makes representations prior to borrowing as to the absence of material adverse changes or litigation that could be expected to have a material adverse effect. Borrowings under each of the revolving credit facilities are subject to acceleration upon the occurrence of events of default that we consider customary. The revolving credit facilities also provide for customary fees, including commitment fees, administrative agent fees, fees in respect of letters of credit and other fees. In each of the revolving credit facilities, the spread to LIBOR and the commitment fees fluctuate based on the borrower’s credit rating. Each of the Registrant’s credit facilities provide for a mechanism to replace LIBOR with possible alternative benchmarks upon certain benchmark replacement events. The borrowers are currently in compliance with the various business and financial covenants in the four revolving credit facilities.

Long-term Debt

For detailed information about the Registrants’ debt transactions in ~~2020,~~2021, see ~~Notes~~Note 12 ~~and 20~~ to the Interim Condensed Financial Statements.

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Securities Registered with the SEC

On May 29, 2020, the Registrants filed a joint shelf registration statement with the SEC registering indeterminate principal amounts of Houston Electric’s general mortgage bonds, CERC Corp.’s senior debt securities and CenterPoint Energy’s senior debt securities and junior subordinated debt securities and an indeterminate number of shares of Common Stock, shares of preferred stock, depositary shares, as well as stock purchase contracts and equity units. The joint shelf registration statement will expire on May 29, 2023. For information related to the Registrants’ debt ~~and equity security~~ issuances in ~~2020,~~2021, see ~~Notes~~Note 12 ~~and 19~~ to the Interim Condensed Financial Statements.

Temporary Investments

As of ~~October 23, 2020,~~April 29, 2021, the Registrants had no temporary investments.

Money Pool

The Registrants participate in a money pool through which they and certain of their subsidiaries can borrow or invest on a short-term basis. Funding needs are aggregated and external borrowing or investing is based on the net cash position. The net funding requirements of the CenterPoint Energy money pool are expected to be met with borrowings under CenterPoint Energy’s revolving credit facility or the sale of CenterPoint Energy’s commercial paper. The net funding requirements of the CERC money pool are expected to be met with borrowings under CERC’s revolving credit facility or the sale of CERC’s commercial paper. The money pool may not provide sufficient funds to meet the Registrants’ cash needs.

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The table below summarizes CenterPoint Energy money pool activity by Registrant as of ~~October 23, 2020:~~April 29, 2021:

Weighted Average Interest Rate Houston Electric CERC
(in millions)
Money pool investments (borrowings) 0.18% $ 41 $ —


	Weighted Average Interest Rate	Houston Electric		CERC
		(in millions)
Money pool investments (borrowings)	0.20%	$	569	$	—

Impact on Liquidity of a Downgrade in Credit Ratings

The interest on borrowings under the credit facilities is based on each respective borrower’s credit ratings. As of ~~October 23, 2020,~~April 29, 2021, Moody’s, S&P and Fitch had assigned the following credit ratings to the borrowers:

Moody’s

S&P

Fitch

Registrant

Borrower/Instrument

Rating

Outlook (1)

Rating

Outlook (2)

Rating

Outlook (3)

CenterPoint Energy

CenterPoint Energy Senior Unsecured Debt

Baa2

~~Negative~~Stable

BBB

~~Negative~~Stable

BBB

~~Negative~~Stable

CenterPoint Energy

Vectren Corp. Issuer Rating

n/a

BBB+

~~Negative~~Stable

n/a

CenterPoint Energy

VUHI Senior Unsecured Debt

Stable

BBB+

~~Negative~~Stable

n/a

CenterPoint Energy

Indiana Gas Senior Unsecured Debt

n/a

BBB+

~~Negative~~Stable

n/a

CenterPoint Energy

SIGECO Senior Secured Debt

Stable

~~Negative~~Stable

n/a

Houston Electric

Houston Electric Senior Secured Debt

Stable

~~Negative~~Stable

CERC

CERC Corp. Senior Unsecured Debt

~~Stable~~

~~BBB+~~

Negative

BBB+

Stable

A-

Stable

(1)A Moody’s rating outlook is an opinion regarding the likely direction of an issuer’s rating over the medium term.

(2)An S&P outlook assesses the potential direction of a long-term credit rating over the intermediate to longer term.

(3)A Fitch rating outlook indicates the direction a rating is likely to move over a one- to two-year period.

The Registrants cannot assure that the ratings set forth above will remain in effect for any given period of time or that one or more of these ratings will not be lowered or withdrawn entirely by a rating agency. The Registrants note that these credit ratings are included for informational purposes and are not recommendations to buy, sell or hold the Registrants’ securities and may be revised or withdrawn at any time by the rating agency. Each rating should be evaluated independently of any other rating. Any future reduction or withdrawal of one or more of the Registrants’ credit ratings could have a material adverse

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impact on the Registrants’ ability to obtain short- and long-term financing, the cost of such financings and the execution of the Registrants’ commercial strategies.

A decline in credit ratings could increase borrowing costs under the Registrants’ revolving credit facilities. If the Registrants’ credit ratings had been downgraded one notch by S&P and Moody’s from the ratings that existed as of ~~September 30, 2020,~~March 31, 2021, the impact on the borrowing costs under the four revolving credit facilities would have been ~~immaterial.~~insignificant. A decline in credit ratings would also increase the interest rate on long-term debt to be issued in the capital markets and could negatively impact the Registrants’ ability to complete capital market transactions and to access the commercial paper market. Additionally, a decline in credit ratings could increase cash collateral requirements and reduce earnings of CenterPoint Energy’s and CERC’s Natural Gas ~~Distribution~~ reportable segments.

Pipeline tariffs and contracts typically provide that if the credit ratings of a shipper or the shipper’s guarantor drop below a threshold level, which is generally investment grade ratings from both Moody’s and S&P, cash or other collateral may be demanded from the shipper in an amount equal to the sum of three months’ charges for pipeline services plus the unrecouped cost of any lateral built for such shipper. If the credit ratings of CERC Corp. decline below the applicable threshold levels, CERC might need to provide cash or other collateral of as much as ~~$207~~$162 million as of ~~September 30, 2020.~~March 31, 2021. The amount of collateral will depend on seasonal variations in transportation levels.

ZENS and Securities Related to ZENS (CenterPoint Energy)

If CenterPoint Energy’s creditworthiness were to drop such that ZENS holders thought its liquidity was adversely affected or the market for the ZENS were to become illiquid, some ZENS holders might decide to exchange their ZENS for cash. Funds for the payment of cash upon exchange could be obtained from the sale of the shares of ZENS-Related Securities that CenterPoint Energy owns or from other sources. CenterPoint Energy owns shares of ZENS-Related Securities equal to

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approximately 100% of the reference shares used to calculate its obligation to the holders of the ZENS. ZENS exchanges result in a cash outflow because tax deferrals related to the ZENS and shares of ZENS-Related Securities would typically cease when ZENS are exchanged or otherwise retired and shares of ZENS-Related Securities are sold. The ultimate tax liability related to the ZENS and ZENS-Related Securities continues to increase by the amount of the tax benefit realized each year, and there could be a significant cash outflow when the taxes are paid as a result of the retirement or exchange of the ZENS. If all ZENS had been exchanged for cash on ~~September 30, 2020,~~March 31, 2021, deferred taxes of approximately ~~$465~~$490 million would have been payable in ~~2020.~~2021. If all the ZENS-Related Securities had been sold on ~~September 30, 2020,~~March 31, 2021, capital gains taxes of approximately $152 million would have been payable in ~~2020~~2021 based on ~~2020~~2021 tax rates in effect. For additional information about ZENS, see Note 11 to the Interim Condensed Financial Statements.

Cross Defaults

Under each of CenterPoint Energy’s ~~(other than~~(including VUHI’s), Houston Electric’s and CERC’s respective revolving credit facilities, as well as under CenterPoint Energy’s term loan agreement, a payment default on, or a non-payment default that permits acceleration of, any indebtedness for borrowed money and certain other specified types of obligations (including guarantees) exceeding $125 million by the borrower or any of their respective significant subsidiaries will cause a default under such borrower’s respective credit facility or term loan agreement. A default by CenterPoint Energy would not trigger a default under its subsidiaries’ debt instruments or revolving credit facilities.

Under VUHI’s revolving credit facility, a payment default on, or a non-payment default that permits acceleration of, any indebtedness for borrowed money and certain other specified types of obligations (including guarantees) exceeding $50 million by the borrower, any of their respective subsidiaries or any of the respective guarantors of a credit facility will cause a default under such borrower’s credit facility.

Possible Acquisitions, Divestitures and Joint Ventures

From time to time, the Registrants consider the acquisition or the disposition of assets or businesses or possible joint ventures, strategic initiatives or other joint ownership arrangements with respect to assets or businesses. Any determination to take action in this regard will be based on market conditions and opportunities existing at the time, and accordingly, the timing, size or success of any efforts and the associated potential capital commitments are unpredictable. The Registrants may seek to fund all or part of any such efforts with proceeds from debt and/or equity issuances. Debt or equity financing may not, however, be available to the Registrants at that time due to a variety of events, including, among others, maintenance of our credit ratings, industry conditions, general economic conditions, market conditions and market perceptions.

As announced in December 2020, CenterPoint ~~Energy previously disclosed that it may reduce~~Energy’s business strategy incorporated the Business Review and Evaluation Committee’s recommendations to increase its ~~ownership~~planned capital expenditures in ~~Enable over time through sales~~its electric and natural gas businesses to support rate base growth and sell certain of its Natural Gas businesses located in ~~the public equity markets, or otherwise, of the Enable common units it holds, subject~~Arkansas and Oklahoma as a means to ~~market conditions. CenterPoint Energy has no~~

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~~intention to reduce its ownership of Enable common units and currently plans to hold such Enable common units and to utilize any cash distributions received on such Enable common units to~~efficiently finance a portion of such increased capital expenditures, among other recommendations. On April 29, 2021, CenterPoint Energy, through its subsidiary CERC Corp., entered into an Asset Purchase Agreement to sell its Arkansas and Oklahoma Natural Gas businesses for $2.15 billion in cash, including recovery of approximately $425 million of storm-related incremental natural gas costs incurred in the February 2021 Winter Storm Event, subject to certain adjustments set forth in the Asset Purchase Agreement. For further information regarding the announced sale of our Arkansas and Oklahoma Natural Gas businesses, see Note 20 to the Interim Condensed Financial Statements.

Additionally, CenterPoint Energy’s ~~capital expenditure program.~~process of evaluating and optimizing the various businesses, assets and ownership interests currently held by it considered, among other things, various plans, proposals and other strategic alternatives with respect to Enable and CenterPoint Energy’s investment in Enable, which may result in the disposition of a portion or all of its ownership interest in Enable. In February 2021, CenterPoint Energy announced its support of the Enable Merger, which is expected to close in the second half of 2021, subject to customary closing conditions, including Hart-Scott-Rodino antitrust clearance. CenterPoint Energy may ~~consider~~not realize any or ~~alter~~all of the anticipated strategic, financial, operational or other benefits from the Enable Merger, if completed, or from any disposition or reduction of its ~~plans~~anticipated resulting investment in Energy Transfer. There can be no assurances that any disposal of Energy Transfer common units or ~~proposals~~Energy Transfer Series G Preferred Units will be completed. Any disposal of such securities may involve significant costs and expenses, including in ~~respect of~~connection with any ~~such plans in~~public offering, a significant underwriting discount. For information regarding the ~~future. For further information,~~Enable Merger, see ~~“—Recent Events—Business Review and Evaluation Committee” above.~~Note 9 to the Interim Condensed Financial Statements.

Enable Midstream Partners (CenterPoint Energy)

CenterPoint Energy receives quarterly cash distributions from Enable on its common units and Enable Series A Preferred Units. A reduction in the cash distributions CenterPoint Energy receives from Enable could significantly impact CenterPoint Energy’s liquidity. For additional information about cash distributions from Enable, see Notes 9 and 20 to the Interim Condensed Financial Statements.

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Hedging of Interest Expense for Future Debt Issuances

From time to time, the Registrants may enter into interest rate agreements to hedge, in part, volatility in the U.S. treasury rates by reducing variability in cash flows related to interest payments. For further information, see Note 7(a) to the Interim Condensed Financial Statements.

Weather Hedge (CenterPoint Energy and CERC)

CenterPoint Energy and CERC have historically entered into partial weather hedges for certain ~~NGD~~Natural Gas jurisdictions and electric operations’ Texas service territory to mitigate the impact of fluctuations from normal weather. CenterPoint Energy and CERC remain exposed to some weather risk as a result of the partial hedges. For more information about weather hedges, see Note 7(a) to the Interim Condensed Financial Statements.

Collection of Receivables from REPs (CenterPoint Energy and Houston Electric)

Houston Electric’s receivables from the distribution of electricity are collected from REPs that supply the electricity Houston Electric distributes to their customers. Before conducting business, a REP must register with the PUCT and must meet certain financial qualifications. Nevertheless, adverse economic conditions, the February 2021 Winter Storm Event, 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 Houston Electric’s services or could cause them to delay such payments. Houston Electric depends on these REPs to remit payments on a timely basis, and any delay or default in payment by REPs could adversely affect Houston Electric’s cash flows. In the event of a REP default, Houston Electric’s tariff provides a number of remedies, including the option for Houston Electric to request that the PUCT suspend or revoke the certification of the REP. Applicable regulatory provisions require that customers be shifted to another REP or a provider of last resort if a REP cannot make timely payments. However, Houston Electric remains at risk for payments related to services provided prior to the shift to the replacement REP or the provider of last resort. 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 against Houston Electric involving payments it had received from such REP. If a REP were to file for bankruptcy, Houston Electric may not be successful in recovering accrued receivables owed by such REP that are unpaid as of the date the REP filed for bankruptcy. However, PUCT regulations authorize utilities, such as Houston Electric, to defer bad debts resulting from defaults by REPs for recovery in future rate cases, subject to a review of reasonableness and necessity.

Other Factors that Could Affect Cash Requirements

In addition to the above factors, the Registrants’ liquidity and capital resources could also be negatively affected by:

•further reductions in the cash distributions we receive from Enable;

•cash collateral requirements that could exist in connection with certain contracts, including weather hedging arrangements, and natural gas purchases, natural gas price and natural gas storage activities of CenterPoint Energy’s and CERC’s Natural Gas ~~Distribution~~ reportable segment;

•acceleration of payment dates on certain gas supply contracts, under certain circumstances, as a result of increased natural gas prices, including as a result of the February 2021 Winter Storm Event, and concentration of natural gas suppliers (CenterPoint Energy and CERC);

•increased costs related to the acquisition of natural gas, including as a result of the February 2021 Winter Storm Event (CenterPoint Energy and CERC);

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•increases in interest expense in connection with debt refinancings and borrowings under credit facilities or term loans or the use of alternative sources of financings due to the effects of COVID-19 and the February 2021 Winter Storm Event on capital and other financial markets;

•~~various legislative or regulatory actions;~~

•~~incremental collateral, if any, that may be required due~~the outcome of litigation, including litigation related to ~~regulation of derivatives (CenterPoint Energy);~~

the February 2021 Winter Storm Event;

•various legislative or regulatory actions;

•incremental collateral, if any, that may be required due to regulation of derivatives (CenterPoint Energy);

•slower customer payments and increased write-offs of receivables due to higher natural gas prices, changing economic conditions, COVID-19 or ~~COVID-19~~the February 2021 Winter Storm Event (CenterPoint Energy and CERC);

•the satisfaction of any obligations pursuant to guarantees;

•~~the outcome of litigation;~~

•contributions to pension and postretirement benefit plans;

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•restoration costs and revenue losses resulting from future natural disasters such as hurricanes and the timing of recovery of such restoration costs; and

•various other risks identified in “Risk Factors” in Item 1A of Part I of the Registrants’ combined ~~2019~~20 20 Form 10-K ~~and in~~ ~~Item 1A of Part II of this Form 10-Q~~.

Certain Contractual Limits on Our Ability to Issue Securities and Borrow Money

Houston Electric has contractually agreed that it will not issue additional first mortgage bonds, subject to certain exceptions. Additionally, certain provisions in note purchase agreements relating to debt issued by VUHI have the effect of restricting the amount of additional first mortgage bonds issued by SIGECO.

For information about the total debt to capitalization financial covenants in the Registrants’ and certain of CenterPoint Energy’s subsidiaries’ revolving credit facilities, see Note 12 to the Interim Condensed Financial Statements.

~~CRITICAL ACCOUNTING POLICIES~~

~~Impairment of Long-Lived Assets, Including Identifiable Intangibles, Goodwill, Equity Method Investments, and Investments without a Readily Determinable Fair Value~~

The Registrants review the carrying value of long-lived assets, including identifiable intangibles, goodwill, equity method investments, and investments without a readily determinable fair value whenever events or changes in circumstances indicate that such carrying values may not be recoverable, and at least annually, goodwill is tested for impairment as required by accounting guidance for goodwill and other intangible assets. Unforeseen events, changes in market conditions, and probable regulatory disallowances, where applicable, could have a material effect on the value of long-lived assets, including intangibles, goodwill, equity method investments, and investments without a readily determinable fair value due to changes in observable or estimated market value, future cash flows, interest rate, and regulatory matters could result in an impairment charge.

In connection with its preparation of the financial statements for the three months ended March 31, 2020, CenterPoint Energy and CERC identified triggering events to perform interim goodwill impairment tests for each of their reporting units due to the macroeconomic conditions resulting from the COVID-19 pandemic and the related decline in CenterPoint Energy’s Common Stock price. CenterPoint Energy recognized goodwill impairment losses, discussed below, during the nine months ended September 30, 2020, and CERC recorded no impairments to goodwill within continuing operations during the nine months ended September 30, 2020. CenterPoint Energy and CERC performed their annual goodwill impairment tests in the third quarter of 2020 and determined that no goodwill impairment charge was required for any reporting unit as a result of those tests.

Fair value is the amount at which an asset, liability or business could be bought or sold in a current transaction between willing parties and may be estimated using a number of techniques, including quoted market prices or valuations by third parties, present value techniques based on estimates of cash flows, or multiples of earnings or revenue performance measures. The fair value could be different using different estimates and assumptions in these valuation techniques.

Fair value measurements require significant judgment and unobservable inputs, including (i) projected timing and amount of future cash flows, which factor in planned growth initiatives, (ii) the regulatory environment, as applicable, and (iii) discount

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rates reflecting risk inherent in the current and future market prices. Determining the discount rates requires the estimation of the appropriate company specific risk premiums for those businesses based on evaluation of industry and entity-specific risks, which includes expectations about future market or economic conditions and reflects the risk demonstrated by market participants through the value of CenterPoint Energy’s Common Stock price as of the impairment test date. Changes in these assumptions could have a significant impact on results of the impairment tests. CenterPoint Energy and CERC utilized a third-party valuation specialist to determine the key assumptions used in the estimate of fair value for each of their respective reporting units on the date of their goodwill impairment tests and for CenterPoint Energy the fair value of each of its reporting units is reconciled to its market capitalization based on the price of CenterPoint Energy’s Common Stock.

~~Interim goodwill impairment test, excluding assets held for sale~~

CenterPoint Energy and CERC performed an interim goodwill impairment test as of March 31, 2020. The fair value of each reporting unit was derived using an income approach or a weighted combination of income and market approaches. Based on the results of the test, CenterPoint Energy recorded a goodwill impairment loss of $185 million at its Indiana Electric Integrated reporting unit in the nine months ended September 30, 2020. CERC recorded no goodwill impairment charge in its continuing operations for the nine months ended September 30, 2020.

The fair values of each reporting unit exceeded the carrying value of the reporting unit, with the exception of CenterPoint Energy’s Indiana Electric Integrated reporting unit. As of March 31, 2020, subsequent to the impairment loss recorded by CenterPoint Energy in the three months ended March 31, 2020, Indiana Electric Integrated reporting unit’s fair value approximated its carrying value, and the reporting unit had total goodwill of $936 million. The reporting unit is comprised entirely of businesses acquired in the Merger on February 1, 2019, when the carrying value of the acquired assets and liabilities were adjusted to fair value and as a result presented the greatest risk for impairment. The primary driver for the decline in fair value as of the March 31, 2020 interim goodwill impairment test date is an increase in discounts rates, or the weighted average cost of capital of market participants, on the rate regulated reporting units due in part to the decline in current macroeconomic conditions from July 1, 2019, the previous annual testing date at that time, to March 31, 2020.

An interim goodwill impairment test could be triggered and goodwill impairments recorded in future periods by CenterPoint Energy or CERC’s reporting units due to any of the following: CenterPoint Energy’s market capitalization falling below book value, adverse macroeconomic environment, turnover in key personnel, events affecting a reporting unit such as a contemplated disposal of all or part of a reporting unit, actual earnings results that are materially lower than expected, significant adverse changes in the operating or regulatory environment, or changes in discount rates or other key assumptions that require judgment and are forward looking in nature. CenterPoint Energy and CERC performed their annual goodwill impairment tests in the third quarter of 2020 and determined that no goodwill impairment charge was required for any reporting unit as a result of those tests.

~~For further information, see Note 10 to the Interim Condensed Financial Statements.~~

~~Assets held for sale and discontinued operations~~

Generally, a long-lived asset to be sold is classified as held for sale in the period in which management, with approval from the Board of Directors, as applicable, commits to a plan to sell, and a sale is expected to be completed within one year. The Registrants record assets and liabilities held for sale, or the disposal group, at the lower of their carrying value or their estimated fair value less cost to sell. If a disposal group reflects a component of a reporting unit and meets the definition of a business, the goodwill within that reporting unit is allocated to the disposal group based on the relative fair value of the components representing a business that will be retained and disposed. Goodwill is not allocated to a portion of a reporting unit that does not meet the definition of a business. A disposal group that meets the held for sale criteria and also represents a strategic shift to the Registrant is also reflected as discontinued operations on the Statements of Consolidated Income, and prior periods are recast to reflect the earnings or losses from such businesses as income from discontinued operations, net of tax.

On February 3, 2020, CenterPoint Energy, through its subsidiary VUSI, entered into the Securities Purchase Agreement to sell the Infrastructure Services Disposal Group. In February 2020, certain assets and liabilities representing the Infrastructure Services Disposal Group met the held for sale criteria and represented all of the businesses within the reporting unit. In accordance with the Securities Purchase Agreement, VISCO was converted from a wholly-owned corporation to a limited liability company that was disregarded for federal income tax purposes immediately prior to the closing of the transaction resulting in the sale of membership units. The sale was considered an asset sale for tax purposes and closed on April 9, 2020. As of September 30, 2020, CenterPoint Energy had a receivable from PowerTeam Services for working capital and other adjustments set forth in the Securities Purchase Agreement, and a gain or loss on sale in future periods may be incurred by CenterPoint Energy for differences between the estimated receivable as of September 30, 2020 and the actual amount of the payment.

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On February 24, 2020, CenterPoint Energy, through its subsidiary CERC Corp., entered into the Equity Purchase Agreement to sell the Energy Services Disposal Group. This transaction did not include CEIP and its assets or MES. In February 2020, certain assets and liabilities representing the Energy Services Disposal Group met the criteria to be classified as held for sale and represented substantially all of the businesses within the reporting unit. In accordance with the Equity Purchase Agreement, CES was converted from a wholly-owned corporation to a limited liability company that was disregarded for federal income tax purposes immediately prior to the closing of the transaction resulting in the sale of membership units. The sale was considered an asset sale for tax purposes and closed on June 1, 2020.

CenterPoint Energy and CERC disclosed in its 2019 Form 10-K that an anticipated loss on held for sale of $80 million was expected in 2020 for the Energy Services Disposal Group. The primary driver for the increase in the actual loss on held for sale, including goodwill impairment, recorded by CenterPoint Energy and CERC in the nine months ended September 30, 2020 compared to the amounts previously anticipated is a result of an increase in portions of the derivative assets, net of derivative liabilities, excluded from the working capital adjustment within the Equity Purchase Agreement during the nine months ended September 30, 2020. In October 2020, CenterPoint Energy collected the full and final settlement of the working capital adjustment under the Equity Purchase Agreement, and no gains or losses on this transaction are expected in future periods.

~~For further information, see Note 3 to the Interim Condensed Financial Statements.~~

~~Equity Method Investments~~

Equity method investments are evaluated for impairment when factors indicate that a decrease in value of an investment has occurred and the carrying amount of the investment may not be recoverable. An impairment loss, based on the excess of the carrying value over the best estimate of fair value of the investment, is recognized in earnings when an impairment is deemed to be other than temporary. Considerable judgment is used in determining if an impairment loss is other than temporary and the amount of any impairment. Based on the severity of the decline in Enable’s common unit price during the three months ended March 31, 2020 due to the macroeconomic conditions related in part to the COVID-19 pandemic, combined with Enable’s announcement on April 1, 2020 to reduce its quarterly distributions per common unit by 50%, and the market outlook indicating excess supply and continued depressed crude oil and natural gas prices impacting the midstream oil and gas industry, CenterPoint Energy determined, in connection with its preparation of its financial statements for the three months ended March 31, 2020, that an other than temporary decrease in the value of its investment in Enable had occurred. CenterPoint Energy wrote down the value of its investment in Enable to its estimated fair value of $848 million as of March 31, 2020 and recognized an impairment charge of $1,541 million during the nine months ended September 30, 2020. Both the income approach and market approach were utilized to estimate the fair value of CenterPoint Energy’s equity investment in Enable, which includes common units, general partner interest, and incentive distribution rights held by CenterPoint Energy through CNP Midstream. The determination of fair value considered a number of relevant factors including Enable’s common unit price and forecasted distributions, recent comparable transactions and the limited float of Enable’s publicly traded common units. CenterPoint Energy did not identify a decrease in value as of September 30, 2020, and no impairments in its investment in Enable were recorded during the three months ended September 30, 2020.

Key assumptions in the market approach include recent market transactions of comparable companies and EBITDA to total enterprise multiples for comparable companies. Due to volatility of the quoted price of Enable’s units, a volume weighted average price was used under the market approach to best approximate fair value at the measurement date. Key assumptions in the income approach include Enable’s forecasted cash distributions, projected cash flows of incentive distribution rights, forecasted growth rate of Enable’s cash distributions beyond 2020, and the discount rate used to determine the present value of the estimated future cash flows. A weighing of the different approaches was utilized to determine the estimated fair value of our investment in Enable. CenterPoint Energy based its assumptions on projected financial information that it believes is reasonable; however, actual results may differ materially from those projections. It is reasonably possible that the fair value of CenterPoint Energy’s investment in Enable will change in the near term due to the following: actual Enable cash distribution is materially lower than expected, significant adverse changes in Enable’s operating environment, decline in Enable’s common unit price, increase in the discount rate, and changes in other key assumptions which require judgment and/or are forward looking in nature. Further declines in the fair value of Enable could result in additional impairments.

~~For further information, see Note 9 to the Interim Condensed Financial Statements.~~

~~NEW ACCOUNTING PRONOUNCEMENTS~~

~~See Note 2 to the Interim Condensed Financial Statements, incorporated herein by reference, for a discussion of new accounting pronouncements that affect the Registrants.~~

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~~OTHER SIGNIFICANT MATTERS~~

The significant uncertainties related to the COVID-19 pandemic and actions taken to mitigate it have had and are expected to continue to have an adverse impact on the economies and financial markets of many countries. While it is unknown how long these conditions will last and what the complete financial effect will be, the plan assets and benefit obligations of our pension and postretirement plans may be negatively impacted when these plans are re-measured, generally, at year-end, resulting in a decline in the funded status. During the nine months ended September 30, 2020, the fair value of pension plan assets increased by approximately $115 million or 5.7% from December 31, 2019, excluding CenterPoint Energy’s contributions to, and benefit distributions from, the pension plans. A decline in the funded status of our pension plans as of December 31, 2020 could result in an increase in plan expenses and minimum required contributions for the subsequent years from the historical amounts. Currently, we do not expect the event to impact the disclosed 2020 plan expenses or minimum required contributions.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Houston Electric and CERC meet the conditions specified in General Instruction H(1)(a) and (b) to Form 10-Q and are therefore permitted to use the reduced disclosure format for wholly-owned subsidiaries of reporting companies. Accordingly, Houston Electric and CERC have omitted from this report the information called for by Item 3 (Quantitative and Qualitative Disclosures About Market Risk) of Part I of the Form 10-Q.

Interest Rate Risk (CenterPoint Energy)

As of ~~September 30, 2020,~~March 31, 2021, CenterPoint Energy had outstanding long-term debt, lease obligations and obligations under its ZENS that subject it to the risk of loss associated with movements in market interest rates.

CenterPoint Energy’s floating rate obligations aggregated ~~$2.1~~$3.4 billion and ~~$3.9~~$2.4 billion as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively. If the floating interest rates were to increase by 10% from ~~September 30, 2020~~March 31, 2021 rates, CenterPoint Energy’s combined interest expense would increase by approximately $1$1.7 million annually.

As of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, CenterPoint Energy had outstanding fixed-rate debt (excluding indexed debt securities) aggregating ~~$11.3~~$12.5 billion and ~~$11.2~~$11.1 billion, respectively, in principal amount and having a fair value of ~~$13.0~~$13.5 billion and ~~$12.2~~$12.9 billion, respectively. Because these instruments are fixed-rate, they do not expose CenterPoint Energy to the risk of loss in earnings due to changes in market interest rates. However, the fair value of these instruments would increase by approximately ~~$294~~$376 million if interest rates were to decline by 10% from levels at ~~September 30, 2020.~~ March 31, 2021. In general, such an increase in fair value would impact earnings and cash flows only if CenterPoint Energy were to reacquire all or a portion of these instruments in the open market prior to their maturity.

In general, such an increase in fair value would impact earnings and cash flows only if CenterPoint Energy were to reacquire all or a portion of these instruments in the open market prior to their maturity.

The ZENS obligation is bifurcated into a debt component and a derivative component. The debt component of ~~$16~~$13 million as of ~~September 30, 2020~~March 31, 2021 was a fixed-rate obligation and, therefore, did not expose CenterPoint Energy to the risk of loss in earnings due to changes in market interest rates. However, the fair value of the debt component would increase by approximately $2 million if interest rates were to decline by 10% from levels at ~~September 30, 2020.~~March 31, 2021. Changes in the fair value of the derivative component, a ~~$918~~$927 million recorded liability at ~~September 30, 2020,~~March 31, 2021, are recorded in CenterPoint Energy’s Condensed Statements of Consolidated Income and, therefore, it is exposed to changes in the fair value of the derivative component as a result of changes in the underlying risk-free interest rate. If the risk-free interest rate were to increase by 10% from ~~September 30, 2020~~March 31, 2021 levels, the fair value of the derivative component liability would decrease by ~~less than~~approximately $1 million, which would be recorded as an unrealized gain in CenterPoint Energy’s Condensed Statements of Consolidated Income.

Equity Market Value Risk (CenterPoint Energy)

CenterPoint Energy is exposed to equity market value risk through its ownership of 10.2 million shares of AT&T Common and 0.9 million shares of Charter Common, which CenterPoint Energy holds to facilitate its ability to meet its obligations under the ZENS. See Note 11 to the ~~condensed consolidated financial statements~~Interim Condensed Financial Statements for a discussion of CenterPoint Energy’s ZENS obligation. Changes in the fair value of the ZENS-Related Securities held by CenterPoint Energy are expected to substantially offset changes in the fair value of the derivative component of the ZENS. A decrease of 10% from the ~~September 30, 2020~~March 31, 2021 aggregate market value of these shares would result in a net ~~gain~~loss of $8less than $1 million, which would be recorded as ~~an unrealized gain~~a loss in CenterPoint Energy’s Condensed Statements of Consolidated Income.

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Commodity Price Risk From Non-Trading Activities (CenterPoint Energy)

CenterPoint Energy’s regulated operations in Indiana have limited exposure to commodity price risk for transactions involving purchases and sales of natural gas, coal and purchased power for the benefit of retail customers due to current state

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regulations, which, subject to compliance with those regulations, allow for recovery of the cost of such purchases through natural gas and fuel cost adjustment mechanisms. CenterPoint Energy’s utility natural gas operations in Indiana have regulatory authority to lock in pricing for up to 50% of annual natural gas purchases using arrangements with an original term of up to 10 years. This authority has been utilized to secure fixed price natural gas using both physical purchases and financial derivatives. As of ~~September 30, 2020,~~March 31, 2021, the recorded fair value of non-trading energy derivative liabilities was $7 million for CenterPoint Energy’s utility natural gas operations in Indiana, which is offset by a regulatory asset.

Although CenterPoint Energy’s regulated operations are exposed to limited commodity price risk, natural gas and coal prices have other effects on working capital requirements, interest costs, and some level of price-sensitivity in volumes sold or delivered. Constructive regulatory orders, such as those authorizing lost margin recovery, other innovative rate designs and recovery of unaccounted for natural gas and other natural gas-related expenses, also mitigate the effect natural gas costs may have on CenterPoint Energy’s financial condition. In 2008, the PUCO approved an exit of the merchant function in CenterPoint Energy’s Ohio natural gas service territory, allowing Ohio customers to purchase substantially all natural gas directly from retail marketers rather than from CenterPoint Energy.

Item 4.CONTROLS AND PROCEDURES

In accordance with Exchange Act Rules 13a-15 and 15d-15, the Registrants carried out separate evaluations, under the supervision and with the participation of each company’s management, including the principal executive officer and principal financial officer, of the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report. Based on those evaluations, the principal executive officer and principal financial officer, in each case, concluded that the disclosure controls and procedures were effective as of ~~September 30, 2020~~March 31, 2021 to provide assurance that information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and such information is accumulated and communicated to management, including the principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding disclosure.

There has been no change in the Registrants’ internal controls over financial reporting that occurred during the three months ended ~~September 30, 2020~~March 31, 2021 that has materially affected, or is reasonably likely to materially affect, the Registrants’ internal controls over financial reporting.

PART II. OTHER INFORMATION

Item 1.LEGAL PROCEEDINGS

For a description of certain legal and regulatory proceedings, please read Note 14(d) to the Interim Condensed Financial Statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Future Sources and Uses of Cash” and “— Regulatory Matters,” each of which is incorporated herein by reference. See also “Business — Regulation” and “— Environmental Matters” in Item 1 and “Legal Proceedings” in Item 3 of the Registrants’ combined ~~2019~~2020 Form 10-K.

Item 1A.RISK FACTORS

Please see below the new risk factors affecting the Registrants’ businesses and CenterPoint Energy’s investment in Enable, in addition to those discussed in “Risk Factors” in Item 1A of Part I of the combined 2019 Form 10-K, which could materially affect the Registrants’ financial condition or future results. Except for the updates below, thereThere have been no material changes from the risk factors disclosed in the Registrants’ combined ~~2019~~2020 Form 10-K.

We face risks related to COVID-19 and other health epidemics and outbreaks, including economic, regulatory, legal, workforce and cyber security risks, which could adversely impact our financial condition, results of operations, cash flows and liquidity.

The COVID-19 pandemic is a rapidly evolving situation that is adversely affecting current global economic activities and conditions. An extended slowdown of economic growth, decreased demand for commodities and/or material changes in governmental or regulatory policy in the United States has resulted in, and could continue to result in, lower growth, including customer growth, and reduced demand for and usage of electricity and natural gas in our service territories as customer facilities close, remain closed or potentially close again. We have experienced reduced demand and usage among our electric and natural gas commercial and industrial customers, as well as a decrease in revenues from disconnections and reconnections due to the disconnect moratoriums across our service territories due to COVID-19, which have now either expired or will expire during the fourth quarter of 2020 in certain of the Registrants’ service territories. The ability of our customers, contractors and

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suppliers to meet their obligations to us, including payment obligations, has also been negatively affected under the current economic conditions. Furthermore, while we have not experienced significant disruptions or challenges with respect to our supply chain from the COVID-19 pandemic, to the extent we experience such disruptions in our supply chain that limit our ability to obtain materials and equipment necessary for our businesses, whether through delayed order fulfillment, limited production or unavailability due to COVID-19, we may be unable to perform our operations timely or as anticipated, which could result in service or construction delays or increased costs.

For Houston Electric, we are following PUCT orders regarding disconnection practices related to those customers impacted by COVID-19. These PUCT orders provide for suspended disconnections for certain residential customers as well as for their REPs and utilities to be compensated through a temporary rider charged by utilities, including Houston Electric, applicable to all customers. Additionally, the PUCT orders allow for certain utility costs related to COVID-19 to be placed in a regulatory asset for utilities to seek recovery in the future. As adverse economic conditions continue, REPs could encounter financial difficulties, including bankruptcies, which could impair their ability to pay for Houston Electric’s services or could cause them to delay such payments, adversely affecting Houston Electric’s cash flows and liquidity. In our NGD service territories and for Indiana Electric, we informed customers that disconnections for non-payment had been temporarily suspended and in certain service territories continue to be temporarily suspended. However, the disconnect moratoriums have now either expired or will expire during the fourth quarter of 2020 in certain of the Registrants’ service territories. As a result of the disconnect moratoriums across our NGD service territories and other payment deferrals or arrangements, days outstanding on receivables and uncollectible accounts have increased, resulting in an increase to allowance for doubtful accounts. To the extent these conditions in our service territories persist, our bad debt expense from uncollectible accounts could continue to increase, negatively impacting our financial condition, results of operations and cash flows. Our NGD service territories and Indiana Electric have either (1) received authority from their public utility commissions to defer bad debt expense associated with COVID-19 as a regulatory asset or (2) exercised existing authority to recover bad debt expense through an existing tracking mechanism. CenterPoint Energy and CERC have recorded estimated incremental uncollectible receivables to the associated regulatory asset of $16 million and $14 million, respectively, as of September 30, 2020. Additionally, our state and local regulatory agencies, in response to a federal mandate or otherwise, could impose restrictions on the rates we charge to provide our services, including the inability to implement approved rates, or delay actions with respect to our rate cases and filings. The COVID-19 pandemic may affect our ability to timely satisfy regulatory requirements such as recordkeeping and/or timely reporting requirements.

~~Furthermore,~~ in the event key officers or a substantial portion of our workforce were to be impacted by COVID-19 for an extended period of time, we may face challenges with respect to our services or operations and we may not be able to execute our capital plan as anticipated. There is considerable uncertainty regarding the extent to which COVID-19 will continue to spread and the extent and duration of governmental and other measures implemented to try to slow the spread of COVID-19, such as large-scale travel bans and restrictions, border closures, quarantines, shelter-in-place orders and business and government shutdowns. Restrictions of this nature have caused, and may continue to cause, us, our suppliers and other business counterparties to experience operational delays, shortages of employees, facility shutdowns or business closures. We have modified certain business and workforce practices (including those related to employee travel, employee work locations and participation in meetings, events and conferences) to conform to government restrictions and best practices encouraged by governmental and regulatory authorities. However, the quarantine of personnel or the inability to access our facilities or customer sites could adversely affect our operations. While certain of our personnel have been, and may continue to be, quarantined, our operations and corporate functions have not been adversely affected to date. As of the date of this Form 10-Q, we have increased the permitted occupancy of certain of our offices and facilities, with the rest of our office-based personnel continuing to work remotely under alternate work arrangements. Where we must maintain a presence in the field, we have adjusted our operational protocols to minimize exposure and risk to our field personnel, customers and the communities we serve, including, among other things, modifying our work schedules and reporting locations, delaying certain work types, such as maintenance and capital projects, and adjusting project scope and scale to adhere to safety protocols, while continuing to maintain the work activities necessary for safe and reliable service to our customers with increased safety precautions, but we cannot assure that such adjustments and precautions will be sufficient to minimize exposure to and risk from COVID-19. Also, we have a limited number of highly skilled employees for some of our operations. If a large proportion of our employees in those critical positions were to contract COVID-19 at the same time, we would rely upon our business continuity plans in an effort to continue operations at our facilities, but there is no certainty that such measures will be sufficient to mitigate the adverse impact to our operations that could result from shortages of highly skilled employees.

In addition, the significant uncertainties related to the COVID-19 pandemic and actions taken to slow its spread have had, and are expected to continue to have, an adverse impact on the economies and financial markets of many countries. The plan assets and benefit obligations of our pension and postretirement plans may be impacted negatively when these plans are re-measured, generally, at year-end, resulting in a decline in the funded status. During the nine months ended September 30, 2020, the fair value of pension plan assets increased by approximately $115 million or 5.7% from December 31, 2019, excluding CenterPoint Energy’s contributions to, and benefit distributions from, the pension plans. A decline in the funded status of our

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~~pension plans as of December 31, 2020 could result in an increase in plan expenses and minimum required contributions for the subsequent years from the historical amounts.~~

Experts have observed an increase in the volume and the sophistication of cyberattacks since the beginning of the COVID-19 pandemic. Any technology system breaches and/or data privacy incidents could disrupt our operations or result in the loss or exposure of confidential or sensitive customer, employee or company information and adversely affect our business, financial condition and results of operations. As many of our employees and third-party service providers work remotely in accordance with government mandates or guidelines, we face heightened cyber security and privacy risks related to unauthorized system access, aggressive social engineering tactics and adversaries attacking the information technology systems, network infrastructure, technology and facilities used to conduct our business. The increase in the remote working arrangements of our employees as a result of the COVID-19 pandemic has required enhancements and modifications to our information technology infrastructure (e.g., virtual private network, or VPN, and remote collaboration systems), and any failures of these technologies, including third-party service providers, that facilitate working remotely could limit our ability to conduct our ordinary operations and expose us to increased risk or impact of a cyberattack.

Additionally, in the event that customers, contractors, employees or others were to allege that they contracted COVID-19 because of actions we took or failed to take, we could face claims, lawsuits and potential legal liability. In addition to the reasonableness of our actions and efforts to comply with applicable COVID-19 guidance, our exposure and ultimate liability would depend upon the applicability of workers’ compensation, the availability of insurance coverage and limitations on liability being considered or enacted at the state and federal level.

We will continue to monitor developments affecting our employees, customers and operations. At this time, however, we cannot predict the extent or duration of the COVID-19 pandemic or its effects on national, state and local economies, including the impact on our ability to access capital markets, our supply chain, our business strategies and plans and our workforce, nor can we estimate the potential adverse impact from COVID-19 on our financial condition, results of operations, cash flows and liquidity.

The demand for Enable’s services are impacted by the drilling and production decisions of others and by commodity price volatility, which could adversely affect its financial position, results of operations and its ability to make cash distributions to us. ~~A sustained decline in energy and commodity prices may also contribute to unfavorable economic conditions in certain of our service territories, in particular Houston, Texas.~~

The COVID-19 pandemic has adversely affected Enable’s businesses by (i) reducing the demand for natural gas, NGLs and crude oil due to reduced global and national economic activity, leading to significantly lower prices for natural gas, NGLs and crude oil; (ii) impairing the supply chain of certain of its customers for which it provides gathering and processing services, both of which could lead to further reduction of the utilization of its systems; and (iii) reducing producer activity across its footprint which is expected to result in reduced utilization of its services. In addition, concerns about global economic growth, as well as uncertainty regarding the timing, pace and extent of an economic recovery in the United States and abroad, have had a significant adverse impact on global financial markets and commodity prices. The price of, and demand for, natural gas, NGLs and crude oil declined significantly in response to the ongoing spread and economic effects of COVID-19, including significant governmental measures being implemented to control the spread of COVID-19, including quarantines, travel restrictions and business shutdowns. A coalition of 23 nations led by Saudi Arabia and Russia agreed to reduce production of crude oil by 9.7 million barrels per day in May and June; however, NGL and crude oil prices have remained depressed. These events, combined with the continuing COVID-19 pandemic and uncertainty regarding the length of time it would take for the United States and the rest of the world to slow the spread of COVID-19 to the point where applicable authorities are comfortable easing current restrictions on various commercial and economic activities, contributed to a sharp drop in prices for crude oil in the first quarter of 2020 and negative crude oil prices in the second quarter of 2020. On March 31, 2020, Enable’s common unit price closed at $2.57 per common unit. In response to these industry conditions, on April 1, 2020, Enable announced a reduction in its quarterly distributions per common unit from $0.3305 distributed for the fourth quarter 2019 to $0.16525, representing a 50% reduction. This reduction has resulted, and is expected to result in additional, quarterly distributions to us that fall below our previously disclosed expected minimum quarterly distribution from Enable of $0.2875 per common unit. This reduction in Enable’s quarterly distributions per common unit will reduce its common unit distributions to us by approximately $155 million per year assuming no further reductions. To the extent such economic conditions persist or further deteriorate, quarterly distributions on Enable’s common units may be subject to further reductions. Enable currently cannot predict the duration or magnitude of the effects of COVID-19 on the supply and demand for, and the price of, natural gas, NGLs and crude oil or the exploration, development and production activity of the producers across its areas of operation. Sustained low commodity prices and reductions in exploration or production activities could continue to adversely affect the value of our interests in Enable and Enable’s financial position, results of operations and ability to make cash distributions to us.

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Additionally, the significant decline in energy and commodity prices described above, if sustained, could cause, the rate of economic, employment and/or population growth in certain of our service territories to decline. In particular, Houston, Texas has a higher percentage of employment tied to the energy sector relative to other regions of the country. A reduction in the rate of economic, employment and/or population growth could result in lower growth and reduced demand for and usage of electricity and natural gas in such service territories. As such, sustained low energy and commodity prices could have an adverse impact on our financial condition, results of operations, cash flows and liquidity.

Item 6.EXHIBITS

Exhibits filed herewith are designated by a cross (+(†); all exhibits not so designated are incorporated by reference to a prior filing as indicated. Agreements included as exhibits are included only to provide information to investors regarding their terms. Agreements listed below may contain representations, warranties and other provisions that were made, among other things, to provide the parties thereto with specified rights and obligations and to allocate risk among them, and no such agreement should be relied upon as constituting or providing any factual disclosures about the Registrants, any other persons, any state of affairs or other matters.

Pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K, the Registrants have not filed as exhibits to this Form 10-Q certain long-term debt instruments, including indentures, under which the total amount of securities authorized does not exceed 10% of the total assets of the Registrants and its subsidiaries on a consolidated basis. The Registrants hereby agree to furnish a copy of any such instrument to the SEC upon request.

Exhibit
Number

Description

Report or Registration
Statement

SEC File or
Registration
Number

Exhibit
Reference

CenterPoint Energy

Houston Electric

CERC

Exhibit
Number

Description

Report or Registration
Statement

SEC File or
Registration
Number

Exhibit
Reference

CenterPoint Energy

Houston Electric

CERC

2.1*

Agreement and Plan of Merger, dated as of April 21, 2018, by and among Vectren Corporation, CenterPoint Energy, Inc. and Pacer Merger Sub, Inc.

CenterPoint Energy’s Form 8-K dated April 21, 2018

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2.1

2.1*

Agreement and Plan of Merger, dated as of April 21, 2018, by and among Vectren Corporation, CenterPoint Energy, Inc. and Pacer Merger Sub, Inc.

CenterPoint Energy’s Form 8-K dated April 21, 2018

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2.1

2.2*

Securities Purchase Agreement, dated as of February 3, 2020, by and among Vectren Utility Services, Inc., PowerTeam Services, LLC and, solely for purposes of Section 10.17 of the Securities Purchase Agreement, Vectren Corporation

CenterPoint Energy’s Form 8-K dated February 3, 2020

1-31447

2.2*

CenterPoint Energy’s Form 8-K dated February 3, 2020

1-31447

2.3*

Equity Purchase Agreement, dated as of February 24, 2020, by and between CERC Corp. and Athena Energy Services Buyer, LLC

CenterPoint Energy’s Form 8-K dated February 24, 2020

1-31447

2.3*

Equity Purchase Agreement, dated as of February 24, 2020, by and between CERC Corp. and Athena Energy Services Buyer, LLC

CenterPoint Energy’s Form 8-K dated February 24, 2020

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†2.4*

Asset Purchase Agreement, by and between CenterPoint Energy Resources Corp. and Southern Col Midco, LLC, dated as of April 29, 2021

3.1

Restated Articles of Incorporation of CenterPoint Energy

CenterPoint Energy’s Form 8-K dated July 24, 2008

1-31447

3.2

3.1

Restated Articles of Incorporation of CenterPoint Energy

CenterPoint Energy’s Form 8-K dated July 24, 2008

1-31447

3.2

Restated Certificate of Formation of Houston Electric

Houston Electric’s Form 10-Q for the quarter ended June 30, 2011

1-3187

3.1

3.2

Restated Certificate of Formation of Houston Electric

Houston Electric’s Form 10-Q for the quarter ended June 30, 2011

1-3187

3.1

3.3

Certificate of Incorporation of RERC Corp.

CERC Form 10-K for the year ended December 31, 1997

1-13265

3(a)(1)

3.3

Certificate of Incorporation of RERC Corp.

CERC Form 10-K for the year ended December 31, 1997

1-13265

3(a)(1)

3.4

Certificate of Merger merging former NorAm Energy Corp. with and into HI Merger, Inc. dated August 6, 1997

CERC Form 10-K for the year ended December 31, 1997

1-13265

3(a)(2)

3.4

Certificate of Merger merging former NorAm Energy Corp. with and into HI Merger, Inc. dated August 6, 1997

CERC Form 10-K for the year ended December 31, 1997

1-13265

3(a)(2)

3.5

Certificate of Amendment changing the name to Reliant Energy Resources Corp.

CERC Form 10-K for the year ended December 31, 1998

1-13265

3(a)(3)

3.5

Certificate of Amendment changing the name to Reliant Energy Resources Corp.

CERC Form 10-K for the year ended December 31, 1998

1-13265

3(a)(3)

3.6

Certificate of Amendment changing the name to CenterPoint Energy Resources Corp.

CERC Form 10-Q for the quarter ended June 30, 2003

1-13265

3(a)(4)

3.6

Certificate of Amendment changing the name to CenterPoint Energy Resources Corp.

CERC Form 10-Q for the quarter ended June 30, 2003

1-13265

3(a)(4)

3.7

Third Amended and Restated Bylaws of CenterPoint Energy

CenterPoint Energy’s Form 8-K dated February 21, 2017

1-31447

3.1

3.7

Third Amended and Restated Bylaws of CenterPoint Energy

CenterPoint Energy’s Form 8-K dated February 21, 2017

1-31447

3.1

3.8

Amended and Restated Limited Liability Company Agreement of Houston Electric

Houston Electric’s Form 10-Q for the quarter ended June 30, 2011

1-3187

3.2

3.8

Amended and Restated Limited Liability Company Agreement of Houston Electric

Houston Electric’s Form 10-Q for the quarter ended June 30, 2011

1-3187

3.2

3.9

Bylaws of RERC Corp.

CERC Form 10-K for the year ended December 31, 1997

1-13265

3(b)

3.9

Bylaws of RERC Corp.

CERC Form 10-K for the year ended December 31, 1997

1-13265

3(b)

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Exhibit Number	Exhibit Number	Description	Report or Registration Statement	SEC File or Registration Number	Exhibit Reference	CenterPoint Energy	Houston Electric	CERC	Exhibit Number	Description	Report or Registration Statement	SEC File or Registration Number	Exhibit Reference	CenterPoint Energy	Houston Electric	CERC
3.10	3.10	Statement of Resolutions Deleting Shares Designated Series A Preferred Stock of CenterPoint Energy	CenterPoint Energy’s Form 10-K for the year ended December 31, 2011	1-31447	3(c)	x			3.10	Statement of Resolutions Deleting Shares Designated Series A Preferred Stock of CenterPoint Energy	CenterPoint Energy’s Form 10-K for the year ended December 31, 2011	1-31447	3(c)	x
3.11	3.11	Statement of Resolution Establishing Series of Shares Designated Series A Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock of CenterPoint Energy	CenterPoint Energy’s Form 8-K dated August 22, 2018	1-31447	3.1	x			3.11	Statement of Resolution Establishing Series of Shares Designated Series A Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock of CenterPoint Energy	CenterPoint Energy’s Form 8-K dated August 22, 2018	1-31447	3.1	x
3.12	3.12	Statement of Resolution Establishing Series of Shares designated 7.00% Series B Mandatory Convertible Preferred Stock of CenterPoint Energy	CenterPoint Energy’s Form 8-K dated September 25, 2018	1-31447	3.1	x			3.12	Statement of Resolution Establishing Series of Shares designated 7.00% Series B Mandatory Convertible Preferred Stock of CenterPoint Energy	CenterPoint Energy’s Form 8-K dated September 25, 2018	1-31447	3.1	x
3.13	3.13	Statement of Resolution Establishing Series of Shares designated Series C Mandatory Convertible Preferred Stock of CenterPoint Energy, Inc., filed with the Secretary of State of the State of Texas and effective May 7, 2020	CenterPoint Energy’s Form 8-K dated May 6, 2020	1-31447	3.1	x			3.13	Statement of Resolution Establishing Series of Shares designated Series C Mandatory Convertible Preferred Stock of CenterPoint Energy, Inc., filed with the Secretary of State of the State of Texas and effective May 7, 2020	CenterPoint Energy’s Form 8-K dated May 6, 2020	1-31447	3.1	x
4.1	4.1	Form of CenterPoint Energy Stock Certificate	CenterPoint Energy’s Registration Statement on Form S-4	3-69502	4.1	x			4.1	Form of CenterPoint Energy Stock Certificate	CenterPoint Energy’s Registration Statement on Form S-4	3-69502	4.1	x
4.2	4.2	Form of Certificate representing the Series A Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock of CenterPoint Energy	CenterPoint Energy’s Form 8-K dated August 22, 2018	1-31447	4.1	x			4.2	Form of Certificate representing the Series A Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock of CenterPoint Energy	CenterPoint Energy’s Form 8-K dated August 22, 2018	1-31447	4.1	x
4.3	4.3	Form of Certificate representing the 7.00% Series B Mandatory Convertible Preferred Stock of CenterPoint Energy (included as Exhibit A to Exhibit 3.12)	CenterPoint Energy’s Form 8-K dated September 25, 2018	1-31447	4.1	x			4.3	Form of Certificate representing the 7.00% Series B Mandatory Convertible Preferred Stock of CenterPoint Energy (included as Exhibit A to Exhibit 3.12)	CenterPoint Energy’s Form 8-K dated September 25, 2018	1-31447	4.1	x
4.4	4.4	Deposit Agreement, dated as of October 1, 2018, among CenterPoint Energy and Broadridge Corporate Issuer Solutions, Inc., as Depositary, and the holders from time to time of the Depositary Receipts described therein	CenterPoint Energy’s Form 8-K dated September 25, 2018	1-31447	4.2	x			4.4	Deposit Agreement, dated as of October 1, 2018, among CenterPoint Energy and Broadridge Corporate Issuer Solutions, Inc., as Depositary, and the holders from time to time of the Depositary Receipts described therein	CenterPoint Energy’s Form 8-K dated September 25, 2018	1-31447	4.2	x
4.5	4.5	Form of Depositary Receipt for the Depositary Shares (included as Exhibit A to Exhibit 4.4)	CenterPoint Energy’s Form 8-K dated September 25, 2018	1-31447	4.3	x			4.5	Form of Depositary Receipt for the Depositary Shares (included as Exhibit A to Exhibit 4.4)	CenterPoint Energy’s Form 8-K dated September 25, 2018	1-31447	4.3	x
4.6	4.6	$1,600,000,000 Credit Agreement, dated as of March 3, 2016, among CenterPoint Energy, as Borrower, and the banks named therein	CenterPoint Energy’s Form 8-K dated March 3, 2016	1-31447	4.1	x			4.6	$2,400,000,000 Amended and Restated Credit Agreement dated as of February 4, 2021 among CenterPoint Energy, as Borrower, JPMorgan Chase Bank, N.A., as Administrative Agent, the financial institutions as bank parties thereto and the other parties thereto	CenterPoint Energy’s Form 8-K dated February 4, 2021	1-31447	4.1	x
4.7	4.7	$300,000,000 Credit Agreement, dated as of March 3, 2016, among Houston Electric, as Borrower, and the banks named therein	CenterPoint Energy’s Form 8-K dated March 3, 2016	1-31447	4.2	x	x		4.7	$300,000,000 Credit Agreement dated as of February 4, 2021 among Houston Electric, as Borrower, Mizuho Bank, Ltd., as Administrative Agent, the financial institutions as bank parties thereto and the other parties thereto	CenterPoint Energy’s Form 8-K dated February 4, 2021	1-31447	4.2	x	x
4.8	4.8	$600,000,000 Credit Agreement, dated as of March 3, 2016, among CERC Corp., as Borrower, and the banks named therein	CenterPoint Energy’s Form 8-K dated March 3, 2016	1-31447	4.3	x		x	4.8	$900,000,000 Credit Agreement dated as of February 4, 2021 among CERC Corp., as Borrower, Wells Fargo Bank, National Association, as Administrative Agent, the financial institutions as bank parties thereto and the other parties thereto	CenterPoint Energy’s Form 8-K dated February 4, 2021	1-31447	4.3	x		x
4.9		First Amendment to Amended and Restated Credit Agreement, dated as of June 16, 2017, by and among CenterPoint Energy, as Borrower, and the banks named therein	CenterPoint Energy’s Form 8-K dated June 16, 2017	1-31447	4.1	x
4.10		Second Amendment to Amended and Restated Credit Agreement, dated as of May 25, 2018, by and among CenterPoint Energy, as Borrower, and the banks named therein	CenterPoint Energy’s Form 8-K dated May 25, 2018	1-31447	4.1	x
4.11		First Amendment to Credit Agreement, dated as of June 16, 2017, among Houston Electric, as Borrower, and the banks named therein	CenterPoint Energy’s Form 8-K dated June 16, 2017	1-31447	4.2	x	x
4.12		First Amendment to Credit Agreement, dated as of June 16, 2017, among CERC Corp., as Borrower, and the banks named therein	CenterPoint Energy’s Form 8-K dated June 16, 2017	1-31447	4.3	x		x

9875

Table of Contents

Exhibit
Number Description Report or Registration
Statement SEC File or
Registration
Number Exhibit
Reference CenterPoint Energy Houston Electric CERC
4.13
$400,000,000 Credit Agreement, dated as of July 14, 2017, among VUHI, as Borrower, certain Subsidiaries of VUHI, as Guarantors, and the banks named therein
Vectren’s Form 8-K dated July 17, 2017 1-15467 10.1 x
4.14
Term Loan Agreement dated as of September 14, 2018, among VCC, as Borrower, Vectren as Guarantor, and the banks named therein
Vectren’s Form 8-K dated September 18, 2018 1-15467 10.1 x
4.15
First Amendment to Term Loan Agreement, dated as of June 25, 2019, among VCC, as Borrower, Vectren as Guarantor and the banks named therein
CenterPoint Energy’s Form 10-Q for the quarter ended June 30, 2019 1-31447 4.17 x
4.16
$1,000,000,000 Term Loan Agreement, dated as of May 15, 2019, among CenterPoint Energy, as Borrower, Mizuho Bank, Ltd., as Administrative Agent and Lead Arranger, and the banks named therein
CenterPoint Energy’s Form 8-K dated May 15, 2019 1-31447 4.1 x
4.17
Preferred Stock Purchase Agreement, by and among CenterPoint Energy, Inc., Elliott International, L.P., and Elliott Associates, L.P., dated May 6, 2020
CenterPoint Energy’s Form 8-K dated May 6, 2020
1-31447 4.1 x
4.18
Preferred Stock Purchase Agreement, by and among CenterPoint Energy, Inc., BEP Special Situations 2 LLC and BEP Special Situations IV LLC, dated May 6, 2020
CenterPoint Energy’s Form 8-K dated May 6, 2020
1-31447 4.2 x
4.19
Common Stock Purchase Agreement, by and among CenterPoint Energy, Inc. and each investor identified on Schedule A thereto, dated May 6, 2020
CenterPoint Energy’s Form 8-K dated May 6, 2020
1-31447 4.3 x
4.20
Common Stock Purchase Agreement, by and among CenterPoint Energy, Inc. and each investor identified on Schedule A thereto, dated May 6, 2020
CenterPoint Energy’s Form 8-K dated May 6, 2020
1-31447 4.4 x
4.21
Common Stock Purchase Agreement, by and among CenterPoint Energy, Inc. and each investor identified on Schedule A thereto, dated May 6, 2020
CenterPoint Energy’s Form 8-K dated May 6, 2020
1-31447 4.5 x
4.22
Indenture, dated as of February 1, 1998, between Reliant Energy Resources Corp. and Chase Bank of Texas, National Association, as Trustee
CERC’s Form 8-K dated February 5, 1998 1-13265 4.1 x
+4.23
Supplemental Indenture No. 18 to Exhibit 4.22, dated as of October 1, 2020, providing for the issuance of CERC Corp.’s 1.75% Senior Notes due 2020
x
10.1
Offer Letter dated July 1, 2020 between CenterPoint Energy and David J. Lesar
Form 8-K of CenterPoint Energy, Inc. dated June 30, 2020
1-31447 10.1 x
10.2
Form of Performance Award Agreement for the Chief Executive Officer

Form 8-K of CenterPoint Energy, Inc. dated June 30, 2020
1-31447 10.2 x
10.3
Form of Restricted Stock Unit Award Agreement for the Chief Executive Officer

Form 8-K of CenterPoint Energy, Inc. dated June 30, 2020
1-31447 10.3 x

Exhibit
Number

Description

Report or Registration
Statement

SEC File or
Registration
Number

Exhibit
Reference

CenterPoint Energy

Houston Electric

CERC

4.9

$400,000,000 Credit Agreement dated as of February 4, 2021 among VUHI, as Borrower, Indiana Gas, SIGECO and VEDO, as guarantors, Bank of America, N.A., as Administrative Agent, the financial institutions as bank parties thereto and the other parties thereto , Inc., as Borrower, Indiana Gas Company, Inc., Southern Indiana Gas and Electric Company and Vectren Energy Delivery of Ohio, Inc. as guarantors, Bank of America, N.A., as Administrative Agent, the financial institutions as bank parties thereto and the other parties thereto

CenterPoint Energy’s Form 8-K dated February 4, 2021

1-31447

4.4

4.10

$1,000,000,000 Term Loan Agreement, dated as of May 15, 2019, among CenterPoint Energy, as Borrower, Mizuho Bank, Ltd., as Administrative Agent and Lead Arranger, and the banks named therein

CenterPoint Energy’s Form 8-K dated May 15, 2019

1-31447

4.1

4.11

First Amendment to Term Loan Agreement, dated as of April 26, 2021, by and among CenterPoint Energy, as Borrower, Mizuho Bank, Ltd., as Administrative Agent, and the banks named therein

CenterPoint Energy’s Form 8-K dated April 26, 2021

1-31447

4.1

4.12

Preferred Stock Purchase Agreement, by and among CenterPoint Energy, Inc., Elliott International, L.P., and Elliott Associates, L.P., dated May 6, 2020

CenterPoint Energy’s Form 8-K dated May 6, 2020

1-31447

4.1

4.13

Preferred Stock Purchase Agreement, by and among CenterPoint Energy, Inc., BEP Special Situations 2 LLC and BEP Special Situations IV LLC, dated May 6, 2020

CenterPoint Energy’s Form 8-K dated May 6, 2020

1-31447

4.2

4.14

Common Stock Purchase Agreement, by and among CenterPoint Energy, Inc. and each investor identified on Schedule A thereto, dated May 6, 2020

CenterPoint Energy’s Form 8-K dated May 6, 2020

1-31447

4.3

4.15

Common Stock Purchase Agreement, by and among CenterPoint Energy, Inc. and each investor identified on Schedule A thereto, dated May 6, 2020

CenterPoint Energy’s Form 8-K dated May 6, 2020

1-31447

4.4

4.16

Common Stock Purchase Agreement, by and among CenterPoint Energy, Inc. and each investor identified on Schedule A thereto, dated May 6, 2020

CenterPoint Energy’s Form 8-K dated May 6, 2020

1-31447

4.5

4.17

Indenture, dated as of February 1, 1998, between Reliant Energy Resources Corp. and Chase Bank of Texas, National Association, as Trustee

CERC’s Form 8-K dated February 5, 1998

1-13265

4.1

†4.18

Supplemental Indenture No. 19 to Exhibit 4.16, dated as of March 2, 2021, providing for the issuance of CERC Corp.’s Floating Rate Senior Notes due 2023

†4.19

Supplemental Indenture No. 20 to Exhibit 4.16, dated as of March 2, 2021, providing for the issuance of CERC Corp.’s 0.70% Senior Notes due 2023

9976

Table of Contents

Exhibit
Number Description Report or Registration
Statement SEC File or
Registration
Number Exhibit
Reference CenterPoint Energy Houston Electric CERC
10.4
Form of Restricted Stock Unit Award Agreement (Retention, Service-Based Vesting)
Form 8-K of CenterPoint Energy, Inc. dated June 30, 2020 1-31447 10.4 x
10.5
Offer Letter between CenterPoint Energy and Jason P. Wells
Form 8-K of CenterPoint Energy, Inc. dated September 15, 2020 1-31447 10.1 x x x
10.6
Governance Arrangement Agreement, by and among CenterPoint Energy, Inc., Elliott International, L.P., and Elliott Associates, dated May 6, 2020
Form 8-K of CenterPoint Energy, Inc. dated May 6, 2020 1-31447 10.1 x
+31.1.1
Rule 13a-14(a)/15d-14(a) Certification of David J. Lesar
x
+31.1.2
Rule 13a-14(a)/15d-14(a) Certification of K enn eth M. Mercado
x
+31.1.3
Rule 13a-14(a)/15d-14(a) Certification of S cott E. Doyle
x
+31.2.1
Rule 13a-14(a)/15d-14(a) Certification of J ason P. W ells
x
+31.2.2
Rule 13a-14(a)/15d-14(a) Certification of Jason P. Wells
x
+31.2.3
R ule 13a-14(a)/15d-14(a) Certification of Jason P. Wells
x
+32.1.1
Section 1350 Certification of David J. Lesar
x
+32.1.2
Section 1350 Certification of Kenneth M. Mercado
x
+32.1.3
Section 1350 Certification of Scott E. Doyle
x
+32.2.1
Section 1350 Certification of Jason P. Wells
x
+32.2.2
Section 1350 Certification of Jason P. Wells
x
+32.2.3
Section 1350 Certification of Jason P. Wells
x
+101.INS Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document x x x
+101.SCH Inline XBRL Taxonomy Extension Schema Document x x x
+101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document x x x
+101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document x x x
+101.LAB Inline XBRL Taxonomy Extension Labels Linkbase Document x x x
+101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document x x x
+104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) x x x

Exhibit
Number

Description

Report or Registration
Statement

SEC File or
Registration
Number

Exhibit
Reference

CenterPoint Energy

Houston Electric

CERC

4.20

General Mortgage Indenture, dated as of October 10, 2002, between CenterPoint Energy Houston Electric, LLC and JPMorgan Chase Bank, as Trustee

Houston Electric’s Form 10-Q for the quarter ended September 30, 2002

1-3187

4(j)(1)

4.21

Thirtieth Supplemental Indenture to Exhibit 4.19, dated as of March 11, 2021

Houston Electric’s Form 8-K dated March 8, 2021

1-3187

4.4

†4.22

Officer’s Certificate, dated as of March 11, 2021, setting forth the form, terms and provisions of the Series AE Bonds and the Series AF Bonds

10.1

Form of Restricted Stock Unit Award Agreement (Service-Based Vesting with Performance Goals)

CenterPoint Energy’s Form 10-K for the year ended December 31, 2020

1-31447

10(q)(12)

10.2

Form of Restricted Stock Unit Award Agreement for CEO (Service-Based Vesting with Performance Goals)

CenterPoint Energy’s Form 10-K for the year ended December 31, 2020

1-31447

10(q)(13)

10.3

Governance Arrangement Agreement, by and among CenterPoint Energy, Inc., Elliott International, L.P., and Elliott Associates, dated May 6, 2020

Form 8-K of CenterPoint Energy, Inc. dated May 6, 2020

1-31447

10.1

10.4

Support Agreement, dated as of February 16, 2021, by and among Energy Transfer LP, Elk Merger Sub LLC, Elk GP Merger Sub LLC, Enable Midstream Partners, LP, Enable GP, LLC and CenterPoint Energy

CenterPoint Energy’s Form 8-K dated February 16, 2021

1-31447

10.1

10.5

Form of Registration Rights Agreement, to be dated as of the Closing Date, by and among Energy Transfer LP and certain unitholders of Enable Midstream Partners, LP as set forth on Schedule I thereto

CenterPoint Energy’s Form 8-K dated February 16, 2021

1-31447

10.2

10.6

Change in Control Plan

CenterPoint Energy’s Form 8-K dated April 27, 2017

1-31447

10.1

10.7

First Amendment to Exhibit 10.6

CenterPoint Energy’s Form 10-K for the year ended December 31, 2020

1-31447

10(t)(2)

†31.1.1

Rule 13a-14(a)/15d-14(a) Certification of David J. Lesar

†31.1.2

Rule 13a-14(a)/15d-14(a) Certification of Kenneth M. Mercado

†31.1.3

Rule 13a-14(a)/15d-14(a) Certification of Scott E. Doyle

†31.2.1

Rule 13a-14(a)/15d-14(a) Certification of Jason P. Wells

†31.2.2

Rule 13a-14(a)/15d-14(a) Certification of Jason P. Wells

†31.2.3

Rule 13a-14(a)/15d-14(a) Certification of Jason P. Wells

†32.1.1

Section 1350 Certification of David J. Lesar

†32.1.2

Section 1350 Certification of Kenneth M. Mercado

†32.1.3

Section 1350 Certification of Scott E. Doyle

†32.2.1

Section 1350 Certification of Jason P. Wells

†32.2.2

Section 1350 Certification of Jason P. Wells

†32.2.3

Section 1350 Certification of Jason P. Wells

Table of Contents

Exhibit
Number

Description

Report or Registration
Statement

SEC File or
Registration
Number

Exhibit
Reference

CenterPoint Energy

Houston Electric

CERC

†101.INS

Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

†101.SCH

Inline XBRL Taxonomy Extension Schema Document

†101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

†101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

†101.LAB

Inline XBRL Taxonomy Extension Labels Linkbase Document

†101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

†104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


*			Schedules to this agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. A copy of any omitted schedules will be furnished supplementally to the SEC upon request; provided, however, that the parties may request confidential treatment pursuant to Rule 24b-2 of the Exchange Act for any document so furnished.

~~100~~78

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			CENTERPOINT ENERGY, INC.
			CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC
			CENTERPOINT ENERGY RESOURCES CORP.


By:			/s/ Kristie L. Colvin
			Kristie L. Colvin
			Senior Vice President and Chief Accounting Officer

Date: ~~November 5, 2020~~May 6, 2021

~~101~~79


	Three Months Ended September 30, 2020
	Houston Electric T&D		Indiana Electric Integrated		Natural Gas Distribution		Corporate and Other		Total
	(in millions)
Revenue from contracts	$	828	$	157	$	550	$	75	$	1,610

Other (1)	0		0		10		2		12

Total revenues	$	828	$	157	$	560	$	77	$	1,622

	Nine Months Ended September 30, 2020
	Houston Electric T&D		Indiana Electric Integrated		Natural Gas Distribution		Corporate and Other		Total
	(in millions)
Revenue from contracts	$	2,188	$	414	$	2,475	$	240	$	5,317

Other (1)	(2)		0		44		5		47

Total revenues	$	2,186	$	414	$	2,519	$	245	$	5,364


	Three Months Ended September 30, 2019
	Houston Electric T&D		Indiana Electric Integrated		Natural Gas Distribution		Corporate and Other		Total
	(in millions)
Revenue from contracts	$	861	$	165	$	527	$	91	$	1,644

Other (1)	(2)		0		14		2		14

Total revenues	$	859	$	165	$	541	$	93	$	1,658

	Nine Months Ended September 30, 2019
	Houston Electric T&D		Indiana Electric Integrated (2)		Natural Gas Distribution (2)		Corporate and Other (2)		Total
	(in millions)
Revenue from contracts	$	2,319	$	388	$	2,603	$	210	$	5,520

Other (1)	(6)		0		26		5		25

Total revenues	$	2,313	$	388	$	2,629	$	215	$	5,545


	CenterPoint Energy and Houston Electric
	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in millions)
Allowed equity return recognized	$	10	$	14	$	24	$	38


	September 30, 2020				December 31, 2019
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(in millions)
CenterPoint Energy
Long-term debt, including current maturities (1)	$	13,268	$	14,982	$	15,093	$	16,067
Houston Electric
Long-term debt, including current maturities (1)	$	5,089	$	5,968	$	4,950	$	5,457
CERC
Long-term debt, including current maturities	$	2,582	$	2,973	$	2,546	$	2,803


	September 30, 2020
	Limited Partner Interest (1)		Common Units (2)	Enable Series A Preferred Units (3)
CenterPoint Energy	53.7	%	233,856,623	14,520,000
OGE	25.5	%	110,982,805	0
Public unitholders	20.8	%	90,629,240	0

Total units outstanding	100.0	%	435,468,668	14,520,000


	December 31, 2019		Impairment		September 30, 2020
	(in millions)
Indiana Electric Integrated (1)	$	1,121	$	185	$	936
Natural Gas Distribution	3,312		0		3,312


Corporate and Other	449		0		449

Total	$	4,882	$	185	$	4,697


	Increase (Decrease)
	Three Months Ended September 30, 2020 vs 2019		Nine Months Ended September 30, 2020 vs 2019
	(in millions)
Revenues
Customer rates and impact of the change in rate design	$	(119)	$	(205)
Impacts of COVID-19	(15)		(32)
Weather impacts and other usage	2		3
Impacts from increased peak demand in 2019, collected in rates in 2020	4		11
Transmission Revenues, including TCOS and TCRF and impact of the change in rate design, inclusive of costs billed by transmission providers	126		230
Refund of protected and unprotected EDIT, offset in income tax expense	(14)		(22)
Equity return, related to the annual true-up of transition charges for amounts over or under collected in prior periods	(4)		(14)
Customer growth	11		27
Miscellaneous revenues, primarily related to service connections	3		4
AMS, offset in depreciation and amortization below	—		(2)
Bond Companies	(25)		(126)
Energy efficiency, offset in operation and maintenance	—		(1)
Total	$	(31)	$	(127)
Operation and maintenance
Transmission costs billed by transmission providers, offset in revenues	$	15	$	41
Labor and benefits, primarily due to timing of short-term incentive compensation	6		(2)
Contract services	(4)		(10)
Support services	6		1
All other operation and maintenance expense, including materials and supplies and insurance	(4)		(6)
Merger severance costs	3		(3)
Bond Companies	—		(2)
Energy efficiency, offset in revenues	—		(1)
Total	$	22	$	18
Depreciation and amortization
Ongoing additions to plant-in-service	$	7	$	21
AMS, offset by revenues	—		(2)
Bond Companies	(24)		(118)
Total	$	(17)	$	(99)
Taxes other than income taxes
Incremental capital projects placed in service	$	1	$	4
Franchise fees and other taxes	—		2
Total	$	1	$	6
Interest expense and other finance charges
Debt to fund incremental capital projects	$	2	$	5
Bond Companies	(2)		(10)
Total	$	—	$	(5)
Interest income
Investments in CenterPoint Energy Money Pool	$	(7)	$	(16)
Bond Companies	(1)		(3)
Total	$	(8)	$	(19)
Other income (expense), net
Reduction to non-service benefit cost	$	2	$	9

Total	$	2	$	9