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Derivative Instruments | 9 Months Ended
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Sep. 30, 2023
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Instruments | 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. (a)Non-Trading Activities Commodity Derivative Instruments (CenterPoint Energy and CERC). CenterPoint Energy and CERC, through the Indiana Utilities they respectively own, enter 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. All other financial instruments do not qualify or are not designated as cash flow or fair value hedges. Interest Rate Risk Derivative Instruments. From time to time, the Registrants may enter into interest rate derivatives that are designated as economic or cash flow 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 CenterPoint Energy’s outstanding interest rate hedging activity:
|  | September 30, 2023 |  |  |  | December 31, 2022
Hedging Classification |  | Notional Principal
|  | CenterPoint Energy |  |  |  | CenterPoint Energy |  |
|  | (in millions)
Economic hedge (1) |  | $ | — |  |  |  |  | $ | 84 |  |  |
(1)Relates to interest rate derivative instruments at SIGECO that terminated on May 1, 2023. In May 2023, CenterPoint Energy entered into a forward interest rate agreement having an aggregate notional amount of $75 million, which agreement was amended in June 2023. The agreement was executed to hedge, in part, volatility in the 3-year U.S treasury rate by reducing CenterPoint Energy’s exposure to variability in cash flows related to interest payments of CenterPoint Energy’s $400 million issuance of fixed rate debt in August 2023. The forward interest rate agreement was designated as a cash flow hedge. The realized gains and losses associated with the agreement were immaterial. In September 2023, SIGECO entered into two forward interest rate agreements having aggregate notional amounts of $50 million and $38 million. The agreements were executed to hedge, in part, volatility in the 5-year and 7-year U.S. treasury rates, respectively, by reducing SIGECO’s exposure to variability in cash flows related to interest payments of SIGECO’s $470 million issuance of fixed rate debt in October 2023. The forward interest rate agreements were designated as cash flow hedges. The realized gains and losses associated with the agreements were immaterial. Weather Normalization (CenterPoint Energy and CERC). CenterPoint Energy and CERC have weather normalization or other rate mechanisms that largely mitigate the impact of weather on Natural Gas in Indiana, Louisiana, Mississippi, Minnesota and Ohio, as applicable. CenterPoint Energy’s and CERC’s Natural Gas in Texas and CenterPoint Energy’s electric operations in Texas and Indiana do not have such mechanisms. As a result, fluctuations from normal weather may have a positive or negative effect on CenterPoint Energy’s and CERC’s Natural Gas’ results in Texas and on CenterPoint Energy’s electric operations’ results in its Texas and Indiana service territories. The Registrants do not currently enter into weather hedges. (b)Derivative Fair Values and Income Statement Impacts (CenterPoint Energy and CERC) 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, 2023 |  | December 31, 2022
|  | Balance Sheet Location |  | Derivative Assets Fair Value |  | Derivative Liabilities Fair Value |  | Derivative Assets Fair Value |  | Derivative Liabilities Fair Value
| Derivatives not designated as hedging instruments: |  | (in millions)
| Natural gas derivatives (1) | Current Assets: Non-trading derivative assets |  | $ | 1 |  |  | $ | — |  |  | $ | 9 |  |  | $ | — |
| Natural gas derivatives (1) | Other Assets: Non-trading derivative assets |  | — |  |  | — |  |  | 2 |  |  | — |
| Interest rate derivatives | Current Assets: Non-trading derivative assets |  | — |  |  | — |  |  | 1 |  |  | — |
| Indexed debt securities derivative (2) | Current Liabilities |  | — |  |  | 630 |  |  | — |  |  | 578 |
| Total |  | $ | 1 |  |  | $ | 630 |  |  | $ | 12 |  |  | $ | 578 |
CERC
|  |  |  | September 30, 2023 |  | December 31, 2022
|  | Balance Sheet Location |  | Derivative Assets Fair Value |  | Derivative Liabilities Fair Value |  | Derivative Assets Fair Value |  | Derivative Liabilities Fair Value
| Derivatives not designated as hedging instruments: |  | (in millions)
| Natural gas derivatives (1) | Current Assets: Non-trading derivative assets |  | $ | 1 |  |  | $ | — |  |  | $ | 7 |  |  | $ | — |
| Natural gas derivatives (1) | Other Assets: Non-trading derivative assets |  | — |  |  | — |  |  | 2 |  |  | — |
| Total |  | $ | 1 |  |  | $ | — |  |  | $ | 9 |  |  | $ | — |
(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 an asset 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 and other payments to which they may be entitled. See Note 10 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 |  | 2023 |  | 2022 |  | 2023 |  | 2022
Derivatives not designated as hedging instruments: |  |  |  | (in millions)
Indexed debt securities derivative (1) |  | Gain (loss) on indexed debt securities |  | $ | (47) |  |  | $ | 210 |  |  | $ | (52) |  |  | $ | 381 |
(1)The indexed debt securities derivative is recorded at fair value and changes in the fair value are recorded in CenterPoint Energy’s Condensed Statements of Consolidated Income. (c) Credit Risk Contingent Features (CenterPoint Energy) 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. As of September 30, 2023 and December 31, 2022, all derivatives with credit risk-related contingent features were in an asset position.

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- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 40 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480237/815-40-50-5 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 5C -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480434/815-10-50-5C Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 815 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//815/tableOfContent + Details
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