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Income Taxes | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The components of the Registrants’ income tax expense (benefit) were as follows for the periods presented:
| Year Ended December 31,
| 2024 |  | 2023 |  | 2022
| (in millions)
CenterPoint Energy |  |  |  |  |
Current income tax expense (benefit): |  |  |  |  |
Federal | $ | (17) |  |  | $ | 106 |  |  | $ | 294 |
State | (9) |  |  | 33 |  |  | 46 |
Total current expense (benefit) | (26) |  |  | 139 |  |  | 340 |
Deferred income tax expense (benefit): |  |  |  |  |
Federal | 218 |  |  | 119 |  |  | 16 |
State | 3 |  |  | (88) |  |  | 4 |
Total deferred expense | 221 |  |  | 31 |  |  | 20 |
Total income tax expense | $ | 195 |  |  | $ | 170 |  |  | $ | 360 |
Houston Electric |  |  |  |  |
Current income tax expense (benefit): |  |  |  |  |
Federal | $ | 62 |  |  | $ | (26) |  |  | $ | 23 |
State | 15 |  |  | 34 |  |  | 16 |
Total current expense | 77 |  |  | 8 |  |  | 39 |
Deferred income tax expense: |  |  |  |  |
Federal | 60 |  |  | 159 |  |  | 86 |
State | 1 |  |  | 1 |  |  | — |
Total deferred expense | 61 |  |  | 160 |  |  | 86 |
Total income tax expense | $ | 138 |  |  | $ | 168 |  |  | $ | 125 |
CERC |  |  |  |  |
Current income tax expense (benefit): |  |  |  |  |
Federal | $ | 55 |  |  | $ | 12 |  |  | $ | 30 |
State | (6) |  |  | 3 |  |  | 28 |
Total current expense | 49 |  |  | 15 |  |  | 58 |
Deferred income tax expense (benefit): |  |  |  |  |
Federal | 60 |  |  | 95 |  |  | 164 |
State | (5) |  |  | (136) |  |  | 14 |
Total deferred expense (benefit) | 55 |  |  | (41) |  |  | 178 |
Total income tax expense (benefit) | $ | 104 |  |  | $ | (26) |  |  | $ | 236 |
A reconciliation of income tax expense (benefit) using the federal statutory income tax rate to the actual income tax expense and resulting effective income tax rate were as follows:
| Year Ended December 31,
| 2024 |  | 2023 |  | 2022
| (in millions)
CenterPoint Energy (1) (2) (3) |  |  |  |  |
Income before income taxes | $ | 1,214 |  |  | $ | 1,087 |  |  | $ | 1,417 |
Federal statutory income tax rate | 21 | % |  | 21 | % |  | 21 | %
Expected federal income tax expense | 255 |  |  | 228 |  |  | 298 |
Increase (decrease) in tax expense resulting from: |  |  |  |  |
State income tax expense, net of federal income tax | 25 |  |  | 25 |  |  | 46 |
State valuation allowance, net of federal income tax | 17 |  |  | — |  |  | — |
State law change, net of federal income tax | (47) |  |  | (69) |  |  | — |
Equity AFUDC | (12) |  |  | (13) |  |  | (8) |
Excess deferred income tax amortization | (43) |  |  | (44) |  |  | (51) |
Goodwill impairment | — |  |  | — |  |  | 84 |
Sale of Energy Systems Group | — |  |  | 28 |  |  | — |
Other, net | — |  |  | 15 |  |  | (9) |
Total | (60) |  |  | (58) |  |  | 62 |
Total income tax expense | $ | 195 |  |  | $ | 170 |  |  | $ | 360 |
Effective tax rate | 16 | % |  | 16 | % |  | 25 | %
Houston Electric (4) (5) (6) |  |  |  |  |
Income before income taxes | $ | 684 |  |  | $ | 761 |  |  | $ | 635 |
Federal statutory income tax rate | 21 | % |  | 21 | % |  | 21 | %
Expected federal income tax expense | 144 |  |  | 160 |  |  | 133 |
Increase (decrease) in tax expense resulting from: |  |  |  |  |
State income tax expense, net of federal income tax | 12 |  |  | 27 |  |  | 13 |
Equity AFUDC | (5) |  |  | — |  |  | — |
Excess deferred income tax amortization | (17) |  |  | (17) |  |  | (18) |
Other, net | 4 |  |  | (2) |  |  | (3) |
Total | (6) |  |  | 8 |  |  | (8) |
Total income tax expense | $ | 138 |  |  | $ | 168 |  |  | $ | 125 |
Effective tax rate | 20 | % |  | 22 | % |  | 20 | %
CERC (7) (8) (9) |  |  |
Income before income taxes | $ | 644 |  |  | $ | 486 |  |  | $ | 961 |
Federal statutory income tax rate | 21 | % |  | 21 | % |  | 21 | %
Expected federal income tax expense | 135 |  |  | 102 |  |  | 202 |
Increase (decrease) in tax expense resulting from: |  |  |  |  |
State income tax expense, net of federal income tax | 19 |  |  | (40) |  |  | 35 |
State law change, net of federal income tax | (45) |  |  | (66) |  |  | — |
State valuation allowance, net of federal income tax | 17 |  |  | — |  |  | — |
Goodwill impairment | — |  |  | — |  |  | 30 |
Equity AFUDC | (4) |  |  | — |  |  | — |
Excess deferred income tax amortization | (15) |  |  | (23) |  |  | (28) |
Other, net | (3) |  |  | 1 |  |  | (3) |
Total | (31) |  |  | (128) |  |  | 34 |
Total income tax expense (benefit) | $ | 104 |  |  | $ | (26) |  |  | $ | 236 |
Effective tax rate | 16 | % |  | (5) | % |  | 25 | %
(1)Recognized a $47 million benefit for the impact of state apportionment changes and Louisiana statutory rate change that resulted in the remeasurement of state deferred taxes, a $43 million benefit for the amortization of the net regulatory EDIT liability as decreed by regulators in certain jurisdictions, a $17 million valuation allowance established against Louisiana and Mississippi NOL, since those NOLs will not be utilized due to the Louisiana and Mississippi natural gas LDC businesses sale and a $12 million benefit for the impact of AFUDC equity. (2)Recognized a $69 million benefit for the impact of state apportionment changes that resulted in the remeasurement of state deferred taxes of the unitary group, a $44 million benefit for the amortization of the net regulatory EDIT liability as decreed by regulators in certain jurisdictions, a $13 million benefit for the impact of AFUDC equity, and a $28 million expense for the gain on the Energy Systems Group sale. (3)Recognized a $51 million benefit for the amortization of the net regulatory EDIT liability as decreed by regulators in certain jurisdictions, an $8 million benefit for the impact of AFUDC equity, and a $84 million expense for the goodwill impairment on the Arkansas and Oklahoma Natural Gas business sale. (4)Recognized a $17 million benefit for the amortization of the net regulatory EDIT liability as decreed by regulators in Texas. (5)Recognized a $17 million benefit for the amortization of the net regulatory EDIT liability as decreed by regulators in certain jurisdictions. (6)Recognized a $18 million benefit for the amortization of the net regulatory EDIT liability as decreed by regulators in certain jurisdictions. (7)Recognized a $45 million benefit for the impact of state apportionment changes and Louisiana statutory rate change that resulted in the remeasurement of state deferred taxes, a $17 million valuation allowance established against Louisiana and Mississippi NOL, since those NOLs will not be utilized due to the Louisiana and Mississippi natural gas LDC businesses sale, and a $15 million benefit for the amortization of the net regulatory EDIT liability as decreed by regulators in certain jurisdictions. (8)Recognized a $66 million benefit for the impact of state apportionment changes that resulted in the remeasurement of state deferred taxes of the unitary group, and a $23 million benefit for the amortization of the net regulatory EDIT liability as decreed by regulators in certain jurisdictions. (9)Recognized a $28 million benefit for the amortization of the net regulatory EDIT liability as decreed by regulators in certain jurisdictions, and a $30 million expense for the goodwill impairment on the Arkansas and Oklahoma Natural Gas business sale. The tax effects of temporary differences that gave rise to significant portions of deferred tax assets and liabilities were as follows:
| December 31, 2024 |  | December 31, 2023
| (in millions)
CenterPoint Energy |  |  |
Deferred tax assets: |  |  |
Benefits and compensation | $ | 126 |  |  | $ | 131 |
Regulatory liabilities | 348 |  |  | 365 |
Loss and credit carryforwards | 942 |  |  | 76 |
Asset retirement obligations | 98 |  |  | 96 |
Other | 150 |  |  | 124 |
Valuation allowance | (35) |  |  | (10) |
Total deferred tax assets | 1,629 |  |  | 782 |
Deferred tax liabilities: |  |  |
Property, plant and equipment | 4,384 |  |  | 3,580 |
Regulatory assets | 750 |  |  | 401 |
Investment in ZENS and equity securities related to ZENS | 866 |  |  | 788 |
Other | 18 |  |  | 92 |
Total deferred tax liabilities | 6,018 |  |  | 4,861 |
Net deferred tax liabilities | $ | 4,389 |  |  | $ | 4,079 |
Houston Electric |  |  |
Deferred tax assets: |  |  |
Benefits and compensation | $ | 8 |  |  | $ | 10 |
Regulatory liabilities | 158 |  |  | 176 |
Loss and credit carryforward | 408 |  |  | — |
Asset retirement obligations | 9 |  |  | 6 |
Other | 16 |  |  | 18 |
Total deferred tax assets | 599 |  |  | 210 |
Deferred tax liabilities: |  |  |
Property, plant and equipment | 1,988 |  |  | 1,497 |
Regulatory assets | 113 |  |  | 119 |
Total deferred tax liabilities | 2,101 |  |  | 1,616 |
Net deferred tax liabilities | $ | 1,502 |  |  | $ | 1,406 |
CERC |  |  |
Deferred tax assets: |  |  |
Benefits and compensation | $ | 17 |  |  | $ | 21 |
Regulatory liabilities | 150 |  |  | 145 |
Loss and credit carryforwards | 694 |  |  | 276 |
Asset retirement obligations | 82 |  |  | 86 |
Other | 122 |  |  | 65 |
Valuation allowance | (25) |  |  | — |
Total deferred tax assets | 1,040 |  |  | 593 |
Deferred tax liabilities: |  |  |
Property, plant and equipment | 1,883 |  |  | 1,602 |
Regulatory assets | 513 |  |  | 171 |
Other | 14 |  |  | 66 |
Total deferred tax liabilities | 2,410 |  |  | 1,839 |
Net deferred tax liabilities | $ | 1,370 |  |  | $ | 1,246 |
Tax Attribute Carryforwards and Valuation Allowance. As of December 31, 2024, CenterPoint Energy has federal NOL carryforwards of $3.3 billion, which have an indefinite carryforward period. As of December 31, 2024, CenterPoint Energy has federal charitable contribution carryforwards of $51 million which expire between 2029 and 2030. As of December 31, 2024, CenterPoint Energy has federal corporate alternative minimum tax carryforwards of $124 million which have an indefinite carryforward period. As of December 31, 2024, CenterPoint Energy has $2.1 billion of gross state NOL carryforwards which expire between 2025 and 2043, and $3 million of state tax credits, net of valuation allowance, which do not expire. CenterPoint Energy reported a valuation allowance against certain state NOL and credit carryforwards because it is more likely than not that the benefit will not be realized. As of December 31, 2024, Houston Electric has $1.7 billion of federal NOL carryforwards which have an indefinite carryforward period. As of December 31, 2024, Houston Electric has federal corporate alternative minimum tax carryforwards of $48 million which have an indefinite carryforward period. As of December 31, 2024, CERC has federal NOL carryforwards of $2.3 billion which have an indefinite carryforward period. As of December 31, 2024, CERC has federal corporate alternative minimum tax carryforwards of $101 million which have an indefinite carryforward period. As of December 31, 2024, CERC has $1.2 billion of gross state NOL carryforwards which expire between 2025 and 2043, and $3 million of state tax credits, net of valuation allowance, which do not expire. A reconciliation of CenterPoint Energy’s beginning and ending balance of unrecognized tax benefits, excluding interest and penalties, are as follows for the periods presented:
| Year Ended December 31,
| 2024 |  | 2023 |  | 2022
| (in millions)
Balance, beginning of year | $ | 25 |  |  | $ | 26 |  |  | $ | 3 |
Increases related to tax positions of prior years | — |  |  | — |  |  | 26 |
Decreases related to tax positions of prior years | — |  |  | — |  |  | (3) |
Lapse of statute of limitations | — |  |  | (1) |  |  | — |
Balance, end of year | $ | 25 |  |  | $ | 25 |  |  | $ | 26 |
As of December 31, 2024, CenterPoint Energy reported net unrecognized tax benefits, including penalties and interest, of $32 million which were included in Other non-current liabilities in the Consolidated Balance Sheets. Included in the balance of uncertain tax positions as of December 31, 2024 were $25 million of tax benefits that, if recognized, would affect the effective tax rate. The Registrants recognize interest accrued related to unrecognized tax benefits and penalties as income tax expense. The above table does not include $7 million of accrued penalties and interest as of December 31, 2024. The Registrants believe that it is reasonably possible that there will be a $10 million decrease in unrecognized tax benefits, including penalties and interest, in the next 12 months as a result of a lapse of statutes on older exposures, a tax settlement, and/or a resolution of open audits. Tax Audits and Settlements. Tax years through 2022 have been audited and settled with the IRS for CenterPoint Energy. For tax years 2023 and 2024, the Registrants are participants in the IRS’s Compliance Assurance Process.

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