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Regulatory Matters | 9 Months Ended
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Sep. 30, 2025
Regulated Operations [Abstract] |
Regulatory Matters | Regulatory Matters Equity Return 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:
| September 30, 2025 |  | December 31, 2024
| CenterPoint Energy (1) |  | Houston Electric (2) |  | CERC (3) |  | CenterPoint Energy (1) |  | Houston Electric (2) |  | CERC (3)
| (in millions)
Unrecognized equity return | $ | 313 |  |  | $ | 144 |  |  | $ | 105 |  |  | $ | 251 |  |  | $ | 94 |  |  | $ | 92 |
(1)In addition to the amounts described in (2) and (3) below, represents CenterPoint Energy’s allowed equity return on post in-service carrying cost generally associated with investments at SIGECO. (2)Represents Houston Electric’s allowed equity return on TEEEF costs and certain storm restoration costs. (3)Represents CERC’s allowed equity return on post in-service carrying cost associated with certain distribution facilities replacement expenditures in Texas and at Indiana Gas. The table below reflects the amount of allowed equity return recognized by each Registrant in its Condensed Statements of Consolidated Income:
| Three Months Ended September 30,
| 2025 |  | 2024
| CenterPoint Energy |  | Houston Electric |  | CERC |  | CenterPoint Energy |  | Houston Electric |  | CERC
| (in millions)
Allowed equity return recognized | $ | 9 |  |  | $ | 8 |  |  | $ | 1 |  |  | $ | 1 |  |  | $ | — |  |  | $ | 1 |
| Nine Months Ended September 30,
| 2025 |  | 2024
| CenterPoint Energy |  | Houston Electric |  | CERC |  | CenterPoint Energy |  | Houston Electric |  | CERC
| (in millions)
Allowed equity return recognized | $ | 18 |  |  | $ | 14 |  |  | $ | 3 |  |  | $ | 22 |  |  | $ | 19 |  |  | $ | 2 |
February 2021 Winter Storm Event In February 2021, certain of the Registrants’ jurisdictions experienced an extreme and unprecedented winter weather event that resulted in prolonged freezing temperatures, which impacted their businesses. The February 2021 Winter Storm Event impacted wholesale prices of CenterPoint Energy’s and CERC’s natural gas purchases and their ability to serve 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 cost of natural gas purchased by CenterPoint Energy and CERC of approximately $2 billion. CenterPoint Energy and CERC have completed recovery of natural gas costs in Mississippi, Indiana, Louisiana and Texas, and continue to recover the natural gas cost in Minnesota. As of September 30, 2025, each of CenterPoint Energy and CERC had recorded current regulatory assets of $67 million and non-current regulatory assets of $21 million associated with the February 2021 Winter Storm Event. As of December 31, 2024, each of CenterPoint Energy and CERC had recorded current regulatory assets of $67 million and non-current regulatory assets of $67 million associated with the February 2021 Winter Storm Event. As of September 30, 2025 and December 31, 2024, as authorized by the PUCT, each of CenterPoint Energy and Houston Electric had recorded a regulatory asset of $7 million and $8 million for bad debt expenses resulting from REPs’ default on their obligation to pay delivery charges to Houston Electric net of collateral. Additionally, each of CenterPoint Energy and Houston Electric had recorded a regulatory asset of $18 million and $19 million as of September 30, 2025 and December 31, 2024, respectively, for reimbursement of costs associated with the February 2021 Winter Storm Event. Each of the aforementioned regulatory assets are being amortized over five years beginning April 28, 2025, which was the date that rates became effective following the PUCT’s final order in the Houston Electric rate case. See Note 11(d) for further information regarding litigation related to the February 2021 Winter Storm Event. Texas Public Securitization The Texas Natural Gas Securitization Finance Corporation issued customer rate relief bonds in March 2023, and on March 23, 2023, CenterPoint Energy and CERC, collectively, received approximately $1.1 billion in cash proceeds from the issuance and sale of the state’s customer rate relief bonds. As CenterPoint Energy and CERC have no future financial obligations for the repayment of the state’s customer rate relief bonds, the customer rate relief bonds are not recorded on CenterPoint Energy’s or CERC’s balance sheets. The $1.1 billion in cash proceeds from the state’s customer rate relief bonds is considered to be a government grant. The state’s customer rate relief bonds are backed in part by customer rate relief property, including customer rate relief charges, which are non-bypassable uniform monthly volumetric charges to be paid by all existing and future sales customers as a component of each regulated utility’s gas cost, separate from their base rate. CERC only acts as a collection agent, whose duties include management, servicing and administration of a portion of the customer rate relief property which is associated with the customer rate relief charge imposed on customers of CERC under the guidance and direction from the Railroad Commission. The Texas Natural Gas Securitization Finance Corporation, and not CenterPoint Energy or CERC, is the owner of the customer rate relief property. The assets of the Texas Natural Gas Securitization Finance Corporation are not available to pay creditors of CenterPoint Energy, CERC, or their affiliates. While the customer rate relief charges will be included by CERC in their monthly billings, the billing amount is established by the Railroad Commission. CERC will remit all customer rate relief charges collected to the financing entity set up by the Railroad Commission. Therefore, the collection and servicing of customer rate relief charges have no impact on the respective Condensed Statements of Consolidated Income of CenterPoint Energy or CERC. Indiana Electric Securitization of Generation Retirements (CenterPoint Energy) On January 4, 2023, the IURC issued an order in accordance with Indiana Senate Enrolled Act 386 authorizing the issuance of up to $350 million in securitization bonds to securitize qualified costs associated with the retirements of Indiana Electric’s A.B. Brown coal-fired generation facilities. The SIGECO Securitization Subsidiary issued $341 million aggregate principal amount of the SIGECO Securitization Bonds on June 29, 2023 and used a portion of the net proceeds from the issuance of the SIGECO Securitization Bonds to purchase the securitization property from SIGECO. No gain or loss was recognized. The SIGECO Securitization Bonds are secured by the securitization property, which includes the right to recover, through non-bypassable securitization charges payable by SIGECO’s retail electric customers, the qualified costs of SIGECO authorized by the IURC order. The SIGECO Securitization Subsidiary, and not SIGECO, is the owner of the securitization property, and the assets of the SIGECO Securitization Subsidiary are not available to pay the creditors of SIGECO or its affiliates, other than the SIGECO Securitization Subsidiary. SIGECO has no payment obligations with respect to the SIGECO Securitization Bonds except to remit collections of securitization charges as set forth in a servicing agreement between SIGECO and the SIGECO Securitization Subsidiary. The non-bypassable securitization charges are subject to a true-up mechanism. Houston Electric TEEEF Pursuant to legislation passed in 2021, Houston Electric entered into two leases for TEEEF (temporary generation). Houston Electric defers costs associated with the short-term and long-term leases that are probable of recovery and would otherwise be charged to expense in a regulatory asset, including allowed debt returns, and determined that such regulatory assets remain probable of recovery as of September 30, 2025. Expenses associated with the short-term lease, including carrying costs, were deferred in a regulatory asset as a recoverable cost under the 2021 Texas legislation and totaled $81 million and $89 million as of September 30, 2025 and December 31, 2024, respectively. Expenses associated with the long-term lease, including variable costs associated with the operation and maintenance of the TEEEF, depreciation expense on the right of use asset and carrying costs, are deferred in a regulatory asset as a recoverable cost under the 2021 Texas legislation and totaled $139 million and $158 million as of September 30, 2025 and December 31, 2024, respectively. Right of use finance lease assets, such as assets acquired under the long-term leases, are evaluated for impairment under the long-lived asset impairment model by assessing if a capital disallowance from a regulator is probable through monitoring the outcome of rate cases and other proceedings. Houston Electric continues to monitor the ongoing proceedings and did not record any impairments or disallowances on its right of use assets or TEEEF regulatory assets in the three and nine months ended September 30, 2025 or September 30, 2024. Effective January 1, 2023, all temporary generation assets were leased under the long-term lease agreement. 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. The remaining finance lease liability associated with the commenced long-term TEEEF agreement was not significant as of September 30, 2025 and December 31, 2024 and relates to removal costs that will be incurred at the end of the lease term. As of September 30, 2025, Houston Electric had secured a first lien on the assets leased under the prepayment agreement, except for assets with lease payments totaling $17 million, which is being held in an escrow account, not controlled by Houston Electric, and the funds will be released either pro rata each month or when a first lien can be secured by Houston Electric on such assets. On September 11, 2024, the TCA filed a complaint with the PUCT requesting that the PUCT modify its rulings with respect to its prior decisions related to the TEEEF filings made in 2022 and 2023. Specifically, the TCA requested that the PUCT end cost recovery and return on investment on all the large up to 32 MW and 5 MW TEEEF units approved in Docket 53442. On October 2, 2024, Houston Electric filed a response to the TCA complaint and requested that the complaint be dismissed due to the principles of res judicata and collateral estoppel. On October 8, 2024, the TCA supplemented its complaint and on October 9, 2024, PUCT staff filed a statement of position stating that Houston Electric’s response provided a strong argument for dismissal of the complaint, but also stating that it would be prudent to have a thorough legal argument from the TCA. On October 10, 2024, the PUCT issued Order No. 2 finding the TCA complaint insufficient and requiring supplemental information or amendment from the TCA by October 24, 2024; the TCA filed supplemental information on October 24, 2024. On November 14, 2024, the PUCT issued Order No. 4 denying the motion to reconsider and extending a deadline. On December 16, 2024, the PUCT issued Order No. 5 granting waiver of the requirement for informal disposition and soliciting PUCT staff recommendation by January 16, 2025. On January 16, 2025, the PUCT staff filed a supplemental recommendation recommending that the TCA had not met its requirement to first present its complaint to the City of Houston prior to presenting it to the PUCT. On February 26, 2025, the TCA filed its complaint with the City of Houston. On April 1, 2025, the TCA filed the response from the City of Houston dated March 12, 2025, which stated the matter is closed and the City of Houston does not have the authority to re-visit these dockets. The City of Houston also stated that the TCA may appeal to the PUCT and then district court. On April 29, 2025, the PUCT staff filed a supplemental statement of position and motion to dismiss the TCA’s complaint due to lack of jurisdiction. On May 19, 2025, the PUCT issued Order No. 8 lifting the abatement and requiring parties to file responses indicating whether they wish to proceed with or without a hearing. In response to Order No. 8, Houston Electric and the PUCT staff filed responses on June 20, 2025, supporting the dismissal of the TCA’s complaint without a hearing. The TCA also filed a response on June 20, 2025, to request that the parties be allowed to delay responding to the request for a hearing in this docket until a final settlement is made in Docket 57980 (Houston Electric’s application to remove the 15 large 27 MW to 32 MW TEEEF units from its TEEEF fleet) or, if the request for delay is not granted, to request that the hearing in this docket be scheduled after the settlement of Docket 57980. On June 29, 2025, Order No. 9 was issued, granting the TCA’s request to abate this complaint case until a final order is issued in Docket 57980. On December 19, 2024, Houston Electric announced a proposal to release its 15 large 27 MW to 32 MW TEEEF units to the San Antonio area prior to the summer of 2025. The proposal was intended to help ERCOT address a potential energy shortfall and Load Shed risk. On April 18, 2025, a proposal was filed with the PUCT (Docket 57980), seeking approval of the aforementioned release to ERCOT, a corresponding reduction to TEEEF fleet capacity and a rate reduction to reflect the removal of the 15 large TEEEF units from Houston Electric’s TEEEF fleet. On June 4, 2025, Houston Electric entered into definitive documentation, subject to PUCT approval, to release the 15 large 27 MW to 32 MW TEEEF units to the San Antonio area for a period of up to two years, during which time Houston Electric will not receive revenue or profit from ERCOT and will not charge Houston-area customers for such TEEEF units while they remain in the San Antonio area serving ERCOT. Following the completion of service in the San Antonio area, Houston Electric anticipates that it would receive revenues from one or more future transactions involving various sizes of the TEEEF units, and therefore plans to continue to not charge customers for these units for any future periods. On June 5, 2025, certain intervenors submitted a joint request for hearing. On July 9, 2025, the PUCT referred this docket to the SOAH. The PUCT issued a preliminary order on July 10, 2025, listing the issues to be addressed. SOAH Order No. 1 required parties to confer and submit a proposed procedural schedule or request a prehearing conference by July 25, 2025. On July 25, 2025, Houston Electric requested a prehearing conference. On July 28, 2025, SOAH Order No. 2 was issued, setting a prehearing conference for August 22, 2025. On August 21, 2025, Houston Electric filed a joint proposed procedural schedule. On August 22, 2025, SOAH Order No. 3 was issued and cancelled the prehearing conference, adopted the procedural schedule, set the prehearing conference for November 12, 2025 and set the hearing on the merits for November 13 through November 14, 2025. On October 13, 2025, intervenor testimony was filed. PUCT staff testimony is due on October 23, 2025. Following the passage of legislation in 2023 that allows for wider uses for TEEEF, Houston Electric entered into a lease with Energy Rental Solutions (“ERS”) to add smaller 200 kW to one MW TEEEF units to its existing TEEEF fleet. In response to both the May 2024 Storm Events and Hurricane Beryl, Houston Electric extended its lease with ERS and secured additional small TEEEF units under the ERS lease terms; the primary purpose of the smaller TEEEF units is to provide temporary electric service to medical facilities, cooling centers, assisted living facilities and critical care customers that are impacted by extended weather-related outages. Houston Electric’s lease with ERS expired on March 31, 2025, after the PUCT adopted the TEEEF Rule, which went into effect on January 8, 2025 and refined the scope of TEEEF filings that can be made pursuant to applicable Texas regulations. Among other things, the TEEEF Rule has specific provisions relating to when and how utilities must request PUCT authorization to lease TEEEF units, and it generally requires a utility to obtain preapproval prior to renewing or entering into a new lease of TEEEF units. Houston Electric believes that it continues to need small TEEEF units, and on May 27, 2025, Houston Electric filed an application pursuant to the TEEEF Rule requesting preapproval to enter into two leases for a combined approximately 20 MW of TEEEF capacity comprised of 36 small TEEEF units, each with a capacity range of 200 kW to 1,250 kW, for respective terms of 36 months. Approval of Houston Electric’s request in this filing will have no cost impact on customers at this time because cost determination will occur in a future proceeding. On July 28, 2025, the Texas Office of Public Utility Counsel requested a hearing. On August 26, 2025, Houston Electric and an intervenor each filed a list of issues. On September 9, 2025, the PUCT issued an order of referral to SOAH and requested assignment of an ALJ. A preliminary order providing a non-exhaustive list of issues that must be addressed was issued on September 11, 2025. On September 16, 2025, SOAH Order No. 1 was issued, ordering the parties to confer and submit a proposed procedural schedule or request a prehearing conference by September 26, 2025. On September 26, 2025, SOAH Order No. 2 was issued, extending the deadline to submit a proposed procedural schedule until October 3, 2025 and stating that this deadline may be further extended without order by agreement of the parties. On October 3, 2025, Houston Electric filed a letter of notification providing that all parties were engaged in constructive settlement talks and requested an abatement until October 17, 2025. On October 13, 2025, Houston Electric filed errata and supplemental testimony to modify its application to instead request preapproval of just one lease for all 36 small TEEEF units. On October 17, 2025, Houston Electric filed a letter indicating that the parties continue to engage in productive settlement negotiations and plan to file settlement documents or another status update by October 31, 2025. May 2024 Storm Events Houston Electric’s electric delivery system suffered significant damage as a result of the May 2024 Storm Events. As is common with electric utilities serving coastal regions, the poles, towers, wires, street lights and pole-mounted equipment that comprise Houston Electric’s transmission and distribution system are not covered by property insurance. On November 8, 2024, Houston Electric filed an Application for Determination of System Restoration Costs with the PUCT to determine the reasonableness and necessity of approximately $502 million of costs (including estimated case processing expenses and carrying costs) incurred or expected to be incurred to restore service following the May 2024 Storm Events. On March 19, 2025, Houston Electric filed a settlement agreement with the PUCT, under which Houston Electric would be entitled to recover a total of $396 million in distribution-related costs relating to the May 2024 Storm Events, along with carrying costs from the date those costs were incurred until system restoration bonds are issued. The settlement agreement also provided for the recovery of $29 million in transmission-related costs related to the May 2024 Storm Events that will be eligible for recovery through existing mechanisms established to recover transmission costs. Houston Electric agreed to defer $17.5 million of its distribution-related costs to the Hurricane Beryl cost determination proceeding and further agreed to an overall $10 million reduction in costs as part of the settlement agreement. A final order approving the settlement agreement was issued by the PUCT on April 24, 2025. On January 24, 2025, Houston Electric filed a request for a Financing Order for the distribution costs included in the November 8, 2024 Application for Determination of System Restoration Costs. On April 23, 2025, Houston Electric filed a settlement agreement with the PUCT, under which Houston Electric would be entitled to securitize the approved distribution-related costs. A final order approving the settlement agreement was issued by the PUCT on June 5, 2025. The PUCT issued an irrevocable Financing Order on June 5, 2025, which became final and non-appealable on June 20, 2025. In connection with the securitization of the system restoration costs incurred in connection with the May 2024 Storm Events, on June 20, 2025, Houston Electric and Restoration Bond Company II filed a registration statement, as amended on August 13, 2025 and as further amended on August 27, 2025, on Form SF-1 under the Securities Act with the SEC registering the public offering and sale of up to approximately $401.5 million aggregate principal amount of the May 2024 Storm Events System Restoration Bonds. The registration statement became effective on September 8, 2025. See Note 9 for additional detail on the issuance of the May 2024 Storm Events System Restoration Bonds. Hurricane Beryl and Subsequent Storm Events In 2024 and early 2025, Houston Electric’s service territory was damaged as a result of Hurricane Beryl and certain other significant storms. Houston Electric is deferring the related system restoration costs as management believes it is probable that such costs will be recovered through the regulatory process. The ultimate recovery of the system restoration costs (or a portion thereof) is expected to be sought through the issuance and sale of non-recourse securitization bonds for distribution-related costs. However, neither the amount nor timing of the recovery of the system restoration costs is certain. On May 2, 2025, Houston Electric filed an Application for Determination of System Restoration Costs with the PUCT to determine the reasonableness and necessity of approximately $1.3 billion of costs (including estimated case processing expenses and carrying costs) incurred or expected to be incurred to restore service following Hurricane Beryl and certain other significant storms. Intervenor direct testimony was filed on June 30, 2025 and PUCT staff direct testimony was filed on July 3, 2025. Intervenor and PUCT staff disallowance positions totaled about $298.8 million and $4.7 million, respectively. Houston Electric’s rebuttal testimony was filed on July 18, 2025. On August 14, 2025, Houston Electric filed a settlement agreement with the PUCT, under which Houston Electric would be entitled to recover a total of $1.1 billion in distribution-related costs, along with carrying costs from the date those costs were incurred until the system restoration bonds are issued. The settlement agreement also provided for the recovery of $13 million in transmission-related costs that will be eligible for recovery through existing mechanisms established to recover transmission costs. As part of the settlement agreement, Houston Electric agreed to defer $78 million of its distribution-related costs to a regulatory asset and may request recovery and, if eligible, securitization of the deferral in a future rate case. Houston Electric further agreed as part of the settlement agreement to an overall $22 million reduction in distribution-related costs, which is comprised of shareholder equity carrying costs, and a $440,000 reduction in transmission-related costs, which is also comprised of shareholder equity carrying costs. On October 2, 2025, the PUCT voted to approve the settlement agreement with a modification to remove municipal legal fees and consulting and non-consulting fees from the securitization amount and defer such costs in a regulatory asset for recovery in a future ratemaking proceeding. On October 22, 2025, Houston Electric filed a letter to affirm the removal of $2.9 million of municipal legal fees and consulting and non-consulting fees from the securitization amount and defer these costs until a future rate making proceeding. This docket is included on a PUCT open meeting agenda on October 23, 2025. On June 20, 2025, Houston Electric filed a request for a Financing Order for the distribution costs included in the May 2, 2025 Application for Determination of System Restoration Costs. On August 19, 2025, Houston Electric filed a settlement agreement with the PUCT, under which Houston Electric would be entitled to securitize the approved distribution-related costs. The settlement agreement also reduced the requested upfront qualified costs for printing materials by $25,000 and legal expenses by $125,000. The Financing Order is included on a PUCT open meeting agenda on October 23, 2025. Neither the amount nor timing of the recovery of the system restoration costs is certain.

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