Detailed Narrative
First Quarter Financial Performance and Outlook
CenterPoint Energy reported non-GAAP EPS of $0.53 for Q1 FY25, compared to $0.55 in Q1 FY24. The company reaffirmed its full-year 2025 non-GAAP EPS guidance of $1.74 to $1.76, representing 8% growth at the midpoint. The earnings profile for 2025 is expected to be more back-weighted due to delays in capital recovery mechanisms from prior rate case activity, with incremental revenue from these mechanisms materializing in the second half of the year.
Hurricane Resiliency Initiatives
In advance of the upcoming hurricane season, CenterPoint has significantly accelerated resiliency investments. By June 1, the company will have doubled the number of grid automation devices, replaced 26,000 poles designed for extreme winds, and trimmed or removed over 6,000 miles of high-risk vegetation since August. This represents an extra 1.5 years of work completed in 9 months, aiming to build the most resilient coastal grid in the country.
Regulatory Progress and Derisked Profile
CenterPoint has substantially derisked its regulatory profile, with final orders received in three of five rate cases initiated last year, representing nearly 90% of enterprise rate base. After the conclusion of the Ohio gas business rate case, over 80% of the enterprise rate base will not be subject to a general rate case for approximately another four years. This provides a solid foundation for the financial plan through the remainder of the decade.
Houston Electric Regulatory Filings
Recent filings at Houston Electric include a plan to remove unamortized rate base of temporary generation units, expected to reduce average residential customer charges by up to $2 monthly. The refiled system resiliency plan, informed by stakeholder feedback after Hurricane Beryl, is scheduled for mediation next week, with a PUCT final order expected by mid-September. The company also anticipates filing for recovery of $1.1 billion in Hurricane Beryl storm costs and $100 million for other storms within two weeks.
Significant Load Growth and Capital Investment Increase
The Houston Electric service territory continues to experience significant and diversified load growth. The interconnection queue has grown by another 7 GW to 47 GW since January, with data centers accounting for 20 GW. This growth has led to a $1 billion increase in the capital investment plan through 2030, bringing the total to $48.5 billion. This initial increase reflects nearly a dozen transmission projects to be submitted to ERCOT, with further updates expected over the next two quarters.
Future Capital Investment Opportunities
Beyond the current increase, CenterPoint sees at least an additional $3 billion in capital investment opportunities through 2030, including $2 billion for electric transmission and $1 billion for a high-pressure gas distribution network around Houston. Other opportunities include partnering with the city of Houston on downtown revitalization, additional resiliency investments post-2028, and potential MISO transmission projects in Indiana. A comprehensive 10-year plan update is expected in Q3 FY25.
Balance Sheet and Credit Metrics
The company's trailing 12-month adjusted FFO to debt (Moody's methodology) was 13.9% at quarter-end, making progress towards the target cushion range of 100 to 150 basis points. The sale of Louisiana and Mississippi Gas LDCs generated over $1 billion in net cash proceeds. CenterPoint also expects $400 million in securitization proceeds for the May 2024 derecho storm and anticipates receiving securitization bond proceeds for Hurricane Beryl costs around year-end. Equity forward sales of $145 million were executed through the ATM program to derisk 2026 financing.