About Centerpoint Energy, Inc.
CenterPoint Energy Inc., one of the largest public utilities in the US, distributes natural gas and electricity to more than 6 million customers. Through subsidiary CenterPoint Energy Resources Corp, this holding company distributes natural gas to 3.5 million customers in six states. The company's other major subsidiary, Houston Electric, distributes electricity that reaches 2.5 million customers in the Texas Gulf Coast region, including Houston. Beyond these regulated distributions (that requires rate approval from regional authorities), CenterPoint Energy also sells gas directly to some 30,000 customers across 30 US states. These customers range from large industries and utilities to municipalities and educational institutions. In addition to its portfolio of 54,000 miles of power distribution lines and 76,000 miles of gas distribution lines, the holding company has a 54% equity investment in the master limited partnership Enable, which maintains natural gas and crude oil infrastructure assets in three US states.
CenterPoint Energy operates through five segments.
Most of the company's revenue (40%) comes from selling non-rate regulated natural gas to commercial and industrial customers including other utilities. Reported under its Energy Services segment, CenterPoint Energy markets around 1,350 billion cubic feet of natural gas, provides related energy services (like load forecasting and supply acquisition), and maintains a portfolio of physical delivery services across 30 states.
Electric Transmission & Distribution (30% of annual revenue) comprises CenterPoint Energy's subsidiary Houston Electric, which delivers electricity from power plants to substations and retail customers and serves 2.5 million customers. This segment also constructs and maintains transmission facilities and provides transmission services under regulated tariffs.
The company's Natural Gas Distribution segment (another 30%) sells regulated natural gas to 3.5 million residential, commercial, industrial, and transportation customers in six US states, serving major metropolitan areas like Houston, Texas and Minneapolis, Minnesota. The segment also maintains natural gas transportation and storage assets.
CenterPoint Energy's Midstream Investment segment consists of its equity investment in Enable, which provides natural gas gathering and processing and transportation and storage services to producers, refiners, local distributors, and industrial end-users.
The company's Other segment consists of corporate operations that support all of CenterPoint Energy's businesses. Going forward, CenterPoint will also report Vectren as a new reportable segment following its 2019 acquisition and integration into the company.
CenterPoint Energy delivers non-rate regulated gas to 30,000 customers in 30 states and rate-regulated gas to 3.5 million customers in six states (Arkansas, Louisiana, Minnesota, Mississippi, Oklahoma, and Texas). In addition, the company provides electricity to 2.5 million in the greater Houston area through its 3,800 miles of transmission lines and more than 54,300 miles of distribution lines. Enable, majority-owned by CenterPoint, has gathering and processing operations in Arkansas, Louisiana, and Texas.
Sales and Marketing
CenterPoint Energy provides electricity in a 5,000 square-mile area around the greater Houston area to roughly 2.5 million customers, while its natural gas distribution business serves some 3.5 million customers in six states. CenterPoint Energy Services (CES), its natural gas sales and service business, reaches approximately 30,000 customers across over 30 states.
The company distributes electricity via substations and delivers electricity to end users through distribution feeders and sells natural gas directly to commercial and industrial customers. Its customers include gas utilities, large industrial customers, electric generators, smaller commercial and industrial customers, municipalities, educational institutions, government facilities and hospitals.
CenterPoint Energy's revenue in the last five years, though initially affected by the commodity price downturn of 2014, has grown by 15% following the oil price recovery. Revenue grew 10% from $9.6 billion in 2017 to $10.5 billion in 2018, coming from a combination of higher transmission-related electric revenue, customer growth, and rate increases in multiple states. This result was further aided by improved natural gas margins due to a reduction in supply costs.
Net income fell from $1.7 billion in 2017 to $368.0 million in 2018. An income tax expense of $146 million posted in 2018 (compared to $729.0 million gained in 2017), a $305 million decrease in operating income (mostly due to higher expenses in buying natural gas), as well as a $232 million loss on indexed debt securities (compared to a $49 million gain in 2017) worsened the company's earnings.
The company's cash and cash equivalents shot up from $296.0 million in 2017 to $4.2 billion in 2018. Cash from operations generated $2.1 billion, while cash from investing used $1.2 billion. Financing activities provided $3.0 billion, mostly coming from long-term debt proceeds.
CenterPoint Energy has grown dramatically in the past few years by acquiring complementary businesses to expand its core electric and gas operations. The acquisitions of parts of Continuum's business and Atmos, as well as the Vectren merger, bolsters its growth potential.
Targeting an 8% annual growth through 2021, the company is prioritizing cost- saving measures of almost $100 million by eliminating overlapping operations and duplicate services. It is also zeroing in on Vectren's non-utility businesses VISCO (underground pipelines services) and VESCO (renewable energy project development & performance contracting), both of which have outperformed base growth plans. Two significant investments, the $630 million Freeport transmission project and Vectren's $900 million CCGT project, are also growing CenterPoint's utility business.
An $8 billion CAPEX budget for the next five years is mostly geared towards two projects: the Brazos Valley Connection (a 60-mile, 345-kilovolt electric transmission line), part of a larger project that imports power from North Texas; and the Bailey-Jones Creek Project (345-kV transmission line and two substations) serving the petrochemical industry in Freeport, Texas. With the electric market in Texas predicted to grow over the next decade due to population increase, these projects position the company well in the near term.
Mergers and Acquisitions
CenterPoint and Vectren Corporation merged in 2019, with Vectren becoming a consolidated subsidiary of CenterPoint. The combined company now has electric and natural gas delivery operations in eight states with assets totaling $29 billion, making it one of the top US energy delivery companies with access to 7 million customers.
Two other acquisitions, Atmos Energy's retail energy business (Atmos Energy Marketing) and Continuum's retail energy services and wholesale gas business, grew CenterPoint's customer base to over 100,000 in the last two years.
CenterPoint Energy traces its roots back to three major companies—Minneapolis Gas Light Company (founded in 1870), Houston Electric Light & Power (1882), and a Louisiana natural gas distribution business in Shreveport (1905). Decades later, these businesses merged to become NorAm Energy Corp. Soon after, NorAm Energy merged with Houston Industries, the parent of Houston Electricl, renamed Reliant Energy in 1999. The company changed names again to CenterPoint Energy in 2002 following a restructuring of the electric market in Texas that made it into a mostly regulated company.
In 2013, along with ArcLight Capital Partners and OGE Energy Corp, CenterPoint created one the largest master limited partnerships in the US, Enable Midstream Partners.
1111 LOUISIANA ST
Houston, TX 77002-5228
Phone: 1 (713) 207-1111
Employer Type: Publicly Owned
Stock Symbol: CNP
Stock Exchange: , NYSE
Chairman: Milton Carroll
President, CEO, and Director: Scott M. Prochazka
EVP and CFO: William D. Rogers
Employees (This Location): 1,100
Employees (All Locations): 7,977
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