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Leases | 3 Months Ended
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Mar. 31, 2023
Leases [Abstract] |
Leases | Leases In 2021, Houston Electric entered into a temporary short-term lease and long-term leases for mobile generation. The short-term lease agreement allowed Houston Electric to take delivery of TEEEF assets on a short-term basis with an initial term ending on September 30, 2022 and extended until December 31, 2022. As of December 31, 2022, the short-term lease agreement has expired and all mobile generation assets are leased under the long-term lease agreement. Per Houston Electric’s short-term lease accounting policy election, a ROU asset and lease liability are not reflected on Houston Electric’s Condensed Consolidated Balance Sheets. Expenses associated with the short-term lease, including carrying costs, are deferred to a regulatory asset and totaled $105 million and $103 million as of March 31, 2023 and December 31, 2022, respectively. The long-term lease agreement includes up to 505 MW of TEEEF, all of which was delivered as of December 31, 2022, triggering lease commencement at delivery, with an initial term ending in 2029 for all TEEEF leases. These assets were previously available under the short-term lease agreement. Houston Electric derecognized the finance lease liability when the extinguishment criteria in Topic 405 - Liabilities was achieved. Per the terms of the agreement, lease payments are due and made in full by Houston Electric upon taking possession of the asset, relieving substantially all of the associated finance lease liability at that time. The remaining finance lease liability associated with the commenced long-term TEEEF agreement was not significant as of March 31, 2023 and December 31, 2022 and relates to removal costs that will be incurred at the end of the lease term. As of March 31, 2023, Houston Electric has secured a first lien on the assets leased under the prepayment agreement, except for assets with lease payments totaling $113 million. The $113 million prepayment is being held in an escrow account, not controlled by Houston Electric, and the funds will be released when a first lien can be secured for Houston Electric. Expenses associated with the long-term lease, including depreciation expense on the right of use asset and carrying costs, are deferred to a regulatory asset and totaled $90 million and $60 million as of March 31, 2023 and December 31, 2022, respectively. The long-term lease agreement contains a termination clause that can be exercised in the event of material adverse regulatory actions. If the right to terminate is elected, subject to the satisfaction of certain conditions, 75% of Houston Electric’s prepaid lease costs that is attributable to the period from the effective date of termination to the end of the lease term would be refunded. In December 2022, the long-term lease agreement was amended to include a disallowance reimbursement clause that can be exercised in the event that any regulatory proceeding or settlement agreement results in a disallowance of Houston Electric’s recovery of deferred costs under either the long-term lease agreement, short-term lease agreement or any other quantifiable adverse financial impact to Houston Electric. If the disallowance reimbursement clause is exercised, 85% of such disallowance up to $53 million would be paid to Houston Electric. Any disallowance greater than $53 million would remain subject to the 75% limit set forth in the termination clause. For further discussion of the regulatory impacts, see Note 6. Houston Electric will also incur variable costs throughout the lease term for the operation and maintenance of the generators. Lease costs, including variable and ROU asset amortization costs, are deferred to Regulatory assets as incurred as a recoverable cost under the 2021 Texas legislation. See Note 6 for further information regarding recovery of these deferred costs. The components of lease cost, included in Operation and maintenance expense on the Registrants’ respective Condensed Statements of Consolidated Income, are as follows:
| Three Months Ended March 31, 2023 |  | Three Months Ended March 31, 2022
| CenterPoint Energy |  | Houston Electric |  | CERC |  | CenterPoint Energy |  | Houston Electric |  | CERC
| (in millions)
Operating lease cost | $ | 2 |  |  | $ | 1 |  |  | $ | — |  |  | $ | 2 |  |  | $ | — |  |  | $ | 1 |
Short-term lease cost | — |  |  | (1) |  |  | — |  |  | 46 |  |  | 46 |  |  | — |
Variable lease cost | — |  |  | — |  |  | — |  |  | (1) |  |  | (1) |  |  | — |
Total lease cost (1) | $ | 2 |  |  | $ | — |  |  | $ | — |  |  | $ | 47 |  |  | $ | 45 |  |  | $ | 1 |
(1) CenterPoint Energy and Houston Electric defer finance lease costs for TEEEF to Regulatory assets for recovery rather than recognizing Depreciation and Amortization in the Condensed Statements of Consolidated Income. Lease income was as follows:
| Three Months Ended March 31, 2023 |  | Three Months Ended March 31, 2022
| CenterPoint Energy |  | Houston Electric |  | CERC |  | CenterPoint Energy |  | Houston Electric |  | CERC
| (in millions)
Operating lease income | $ | 2 |  |  | $ | — |  |  | $ | 1 |  |  | $ | 1 |  |  | $ | — |  |  | $ | 1 |
Total lease income | $ | 2 |  |  | $ | — |  |  | $ | 1 |  |  | $ | 1 |  |  | $ | — |  |  | $ | 1 |
Supplemental balance sheet information related to leases was as follows:
| March 31, 2023 |  | December 31, 2022 |  |
| CenterPoint Energy |  | Houston Electric |  | CERC |  | CenterPoint Energy |  | Houston Electric |  | CERC |  |  |  |  |  |
| (in millions, except lease term and discount rate)
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Operating ROU assets (1) | $ | 19 |  |  | $ | 8 |  |  | $ | 5 |  |  | $ | 19 |  |  | $ | 6 |  |  | $ | 5 |  |  |  |  |  |  |
Finance ROU assets (2) | 597 |  |  | 597 |  |  | — |  |  | 621 |  |  | 621 |  |  | — |  |  |  |  |  |  |
Total leased assets | $ | 616 |  |  | $ | 605 |  |  | $ | 5 |  |  | $ | 640 |  |  | $ | 627 |  |  | $ | 5 |  |  |  |  |  |  |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current operating lease liability (3) | $ | 5 |  |  | $ | 1 |  |  | $ | 1 |  |  | $ | 5 |  |  | $ | 1 |  |  | $ | 2 |  |  |  |  |  |  |
Non-current operating lease liability (4) | 13 |  |  | 6 |  |  | 4 |  |  | 14 |  |  | 5 |  |  | 4 |  |  |  |  |  |  |
Total leased liabilities (5) | $ | 18 |  |  | $ | 7 |  |  | $ | 5 |  |  | $ | 19 |  |  | $ | 6 |  |  | $ | 6 |  |  |  |  |  |  |
Weighted-average remaining lease term (in years) - operating leases | 4.2 |  | 4.6 |  | 3.7 |  | 4.3 |  | 4.8 |  | 3.9 |  |  |  |  |  |
Weighted-average discount rate - operating leases | 3.86 | % |  | 4.07 | % |  | 3.58 | % |  | 3.80 | % |  | 4.01 | % |  | 3.58 | % |  |  |  |  |  |
Weighted-average remaining lease term (in years) - finance leases | 6.3 |  | 6.3 |  | — |  |  | 6.5 |  | 6.5 |  | — |  |  |  |  |  |  |
Weighted-average discount rate - finance leases | 3.60 | % |  | 3.60 | % |  | — |  |  | 3.60 | % |  | 3.60 | % |  | — |  |  |  |  |  |  |
(1)Reported within Other assets in the Registrants’ respective Condensed Consolidated Balance Sheets. (2)Reported within Property, Plant and Equipment in the Registrants’ respective Condensed Consolidated Balance Sheets. Finance lease assets are recorded net of accumulated amortization. (3)Reported within Current other liabilities in the Registrants’ respective Condensed Consolidated Balance Sheets. (4)Reported within Other liabilities in the Registrants’ respective Condensed Consolidated Balance Sheets. (5)Finance lease liabilities were not significant as of March 31, 2023 or December 31, 2022 and are reported within Other long-term debt in the Registrants’ respective Condensed Consolidated Balance Sheets when applicable. As of March 31, 2023, finance lease liabilities were not significant to the Registrants. As of March 31, 2023, maturities of operating lease liabilities were as follows:
| CenterPoint Energy |  | Houston Electric |  | CERC
| (in millions)
Remainder of 2023 | $ | 5 |  |  | $ | 1 |  |  | $ | 2 |
2024 | 5 |  |  | 2 |  |  | 2 |
2025 | 4 |  |  | 2 |  |  | 1 |
2026 | 4 |  |  | 2 |  |  | 1 |
2027 | 2 |  |  | 1 |  |  | — |
2028 and beyond | — |  |  | — |  |  | — |
Total lease payments | 20 |  |  | 8 |  |  | 6 |
Less: Interest | 2 |  |  | 1 |  |  | 1 |
Present value of lease liabilities | $ | 18 |  |  | $ | 7 |  |  | $ | 5 |
As of March 31, 2023, future minimum finance lease payments were not significant to the Registrants. As of March 31, 2023, maturities of undiscounted operating lease payments to be received are as follows:
| CenterPoint Energy |  | Houston Electric |  | CERC
| (in millions)
Remainder of 2023 | $ | 4 |  |  | $ | — |  |  | $ | 3 |
2024 | 7 |  |  | 1 |  |  | 4 |
2025 | 7 |  |  | 1 |  |  | 4 |
2026 | 7 |  |  | — |  |  | 4 |
2027 | 7 |  |  | — |  |  | 4 |
2028 | 6 |  |  | — |  |  | 5 |
2029 and beyond | 154 |  |  | — |  |  | 151 |
Total lease payments to be received | $ | 192 |  |  | $ | 2 |  |  | $ | 175 |
Other information related to leases is as follows:
| Three Months Ended March 31, 2023 |  | Three Months Ended March 31, 2022
| CenterPoint Energy |  | Houston Electric |  | CERC |  | CenterPoint Energy |  | Houston Electric |  | CERC
| (in millions)
Operating cash flows from operating leases included in the measurement of lease liabilities | $ | 2 |  |  | $ | — |  |  | $ | — |  |  | $ | 2 |  |  | $ | — |  |  | $ | 1 |
Financing cash flows from finance leases included in the measurement of lease liabilities | — |  |  | — |  |  | — |  |  | 171 |  |  | 171 |  |  | — |
See Note 16 for information on ROU assets obtained in exchange for operating lease liabilities.

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- Definition The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI https://asc.fasb.org/subtopic&trid=77888251 + Details
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