Detailed narrative
Strong Q2 Financial Performance and Reaffirmed Guidance
CenterPoint Energy reported non-GAAP EPS of $0.40 for the second quarter of 2026, driven by $0.10 of favorability from rate recovery and $0.02 from O&M efficiencies. The company reaffirmed its full-year 2026 non-GAAP EPS guidance range of $1.89 to $1.91, representing 8% growth at the midpoint over 2025.
Management also reiterated its long-term non-GAAP EPS growth target of mid- to high end of 7% to 9% annually through 2028 and 7% to 9% thereafter through 2035, underscoring confidence in its growth trajectory.
ERCOT Batch Zero Process and Accelerated Large Load Growth in Texas
The company made significant progress through ERCOT's new Batch Zero process, submitting over 17 gigawatts of large load projects in the greater Houston area. Of these, 14 gigawatts are expected to be eligible for Batch Zero, representing a substantial 65% increase from Houston Electric's current system peak of 21 gigawatts.
Approximately 10 gigawatts of these projects have baseload designation, with the remaining 4 gigawatts positioned as study load. This growth reinforces confidence in achieving an accelerated 50% load growth by year-end 2029, with nearly all projects expected to be energized by the end of 2030.
Increased Capital Investment Plan and Affordability Benefits
CenterPoint increased its 10-year capital investment plan by $1.2 billion, raising the total to $66.7 billion through 2035. This increase is primarily driven by $800 million for targeted system upgrades to connect the 14 gigawatts of Batch Zero eligible projects and $400 million for the Downtown Houston Revitalization Project.
The company emphasized that these incremental investments will be funded without the need for additional equity financing. The increased demand from large load customers is projected to save residential and commercial electric customers over $5 billion over the next decade in Texas.
Indiana Electric Service Territory Opportunities
The company continues to advance transformational large load customer opportunities in its Indiana Electric Service Territory, with one project representing the single largest load to be served in that region. Work has already begun to serve this load, and CenterPoint is engaged with multiple counterparties for additional projects.
These related investments are incremental to the current base plan and are focused on supporting community growth and improving customer affordability. The company aims to provide a more definitive update on these opportunities before the end of the calendar year.
Regulatory Progress and Financing Strategy
CenterPoint continues to execute on timely recovery of capital investments, with approximately 85% of investments recovered through capital trackers. Recent regulatory filings include a $73 million increase in revenue requirement for Houston Electric's DCRF and an expected TCOS filing next month.
The company's financing plan is derisked, with the $1.2 billion capital increase funded by existing capacity, supported by clarification in corporate alternative minimum tax rules and the Ohio Gas LDC divestiture. The adjusted FFO to debt ratio improved to 13.4% in Q2, with further expansion anticipated from a Q3 tax refund.
Transmission Planning and Future Growth
Beyond the immediate Batch Zero upgrades, CenterPoint is evaluating broader transmission investments to support future demand growth, with an update expected later this year. The company noted an uptick in distribution-level interconnection requests for loads less than 75 megawatts, indicating continued growth outside of Batch Zero.
Management is actively engaging with communities and state leadership to enable this growth constructively, emphasizing the need for more import capacity and intra-regional transmission to support Texas's expanding economic activity.