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Income Taxes
 12 Months Ended
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,
202420232022
(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):
Federal218 119 16 
State3 (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 
State15 34 16 
Total current expense77 8 39 
Deferred income tax expense:
Federal60 159 86 
State1 1 — 
Total deferred expense61 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 expense49 15 58 
Deferred income tax expense (benefit):
Federal60 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,
202420232022
(in millions)
CenterPoint Energy (1) (2) (3)
Income before income taxes$1,214 $1,087 $1,417 
Federal statutory income tax rate21 %21 %21 %
Expected federal income tax expense255 228 298 
Increase (decrease) in tax expense resulting from:
State income tax expense, net of federal income tax25 25 46 
State valuation allowance, net of federal income tax17 — — 
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 rate16 %16 %25 %
Houston Electric (4) (5) (6)
Income before income taxes$684 $761 $635 
Federal statutory income tax rate21 %21 %21 %
Expected federal income tax expense144 160 133 
Increase (decrease) in tax expense resulting from:
State income tax expense, net of federal income tax12 27 13 
Equity AFUDC
(5)— — 
Excess deferred income tax amortization(17)(17)(18)
Other, net4 (2)(3)
Total(6)8 (8)
Total income tax expense$138 $168 $125 
Effective tax rate20 %22 %20 %
CERC (7) (8) (9)
Income before income taxes$644 $486 $961 
Federal statutory income tax rate21 %21 %21 %
Expected federal income tax expense135 102 202 
Increase (decrease) in tax expense resulting from:
State income tax expense, net of federal income tax19 (40)35 
State law change, net of federal income tax(45)(66)— 
State valuation allowance, net of federal income tax17 — — 
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 rate16 %(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, 2024December 31, 2023
(in millions)
CenterPoint Energy
Deferred tax assets:
Benefits and compensation$126 $131 
Regulatory liabilities348 365 
Loss and credit carryforwards942 76 
Asset retirement obligations98 96 
Other150 124 
Valuation allowance(35)(10)
Total deferred tax assets1,629 782 
Deferred tax liabilities:
Property, plant and equipment4,384 3,580 
Regulatory assets750 401 
Investment in ZENS and equity securities related to ZENS866 788 
Other18 92 
Total deferred tax liabilities6,018 4,861 
Net deferred tax liabilities$4,389 $4,079 
Houston Electric
Deferred tax assets:
Benefits and compensation$8 $10 
Regulatory liabilities158 176 
Loss and credit carryforward
408 — 
Asset retirement obligations9 6 
Other16 18 
Total deferred tax assets599 210 
Deferred tax liabilities:
Property, plant and equipment1,988 1,497 
Regulatory assets113 119 
Total deferred tax liabilities2,101 1,616 
Net deferred tax liabilities$1,502 $1,406 
CERC
Deferred tax assets:
Benefits and compensation$17 $21 
Regulatory liabilities150 145 
Loss and credit carryforwards694 276 
Asset retirement obligations82 86 
Other122 65 
Valuation allowance(25)— 
Total deferred tax assets1,040 593 
Deferred tax liabilities:
Property, plant and equipment1,883 1,602 
Regulatory assets513 171 
Other14 66 
Total deferred tax liabilities2,410 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,
202420232022
(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.