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Released September 18, 2024 | SUGAR LAND
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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--CenterPoint Energy Incorporated (NYSE:CNP) (Houston, Texas) is in the early stages of a two-pronged strategic rebuilding program. One part of that effort involves physically rebuilding its electric transmission & distribution (T&D) infrastructure in and around Houston, which was devastated by Hurricane Beryl in early July. That Cat 1 storm plunged an estimated 2.3 million of CenterPoint's Houston-area electric customers in the dark for as long as a week, amid sweltering heat and humidity.
Most of that physical rebuilding work is complete. But repairing its T&D system might be easier than CenterPoint's other pressing rebuilding task: restoring the confidence of its customers, regulators, elected officials and other critical stakeholders. That could take years.
In an August 28 letter to Texas elected officials, CenterPoint Energy President and Chief Executive Jason P. Wells pledged to double its planned capital investment in Texas, to about $5 billion, over the 2026-2028 period to make its electric system more resilient and reliable.
The letter also offered to forego about 50% of its planned profit from the $800 million purchase of mobile power generators, which were not used to restore power after Beryl.
That olive branch may not be good enough: some Texas elected officials want CenterPoint to eat the entire outlay. In an August 2 letter to the Public Utility Commission of Texas (PUCT) (Austin, Texas), Texas Lt. Governor Dan Patrick urged regulators to claw back authorization for CenterPoint to lease $800 million in large generators designed to be mobile.
Patrick asserted CenterPoint "squandered" that money in "massive, non-mobile" generators ranging from 5 megawatts (MW) to 32 MW in generating capacity. Other utilities in Texas invested in smaller, more mobile generators, he said.
In a separate statement, Patrick alleged, "By leasing more expensive, massive generators, which they may never need and are of little to no use in 99% of emergencies, CenterPoint testified they will make at least $30 million in profits off the backs of ratepayers."
On August 12, Texas Attorney General Ken Paxton announced his office has opened an investigation into the utility's storm response, including "allegations of fraud, waste, and improper use of taxpayer-provided funds."
Separately, the PUCT has opened an investigation into the response of various Texas utilities to Hurricane Beryl. Other Texas utilities were affected by that storm, but CenterPoint Energy was the hardest-hit utility.
CenterPoint Energy officials currently are on a listening tour across its Greater Houston service area, where customers and others who were affected by the early-July outage have been invited to share their concerns about the extended outage. The company has held nearly a dozen open houses to date and plans to hold another seven or so by the end of this month.
The PUCT will hold a workshop in Houston on Saturday, October 5, for customers to provide feedback on the utility's power restoration efforts. Normally, the commission meets during the week at its Austin headquarters. But in scheduling a workshop in Houston on a Saturday, regulators are making an extra effort to gather feedback from CenterPoint Energy customers. They're likely to get an earful.
But the utility is not only listening. It is acting. It launched a Greater Houston Resiliency Initiative (GHRI) shortly after Beryl to strengthen resiliency, improve communications and strengthen partnerships "to better prepare for the next major storm or hurricane."
To immediately improve resiliency, CenterPoint's website said it has accomplished 17 of 19 tasks through the end of August, including:
The third phase of CenterPoint's resiliency plan, to be detailed in a filing with PUCT by early 2025, involves investing in "a smart grid that can better withstand the full spectrum of risks." This new plan, which will be implemented over the 2026-2028 period, will "represent the largest investment in the Greater Houston infrastructure in our company's nearly 160-year history," Wells wrote, adding that the goal is to "build the most resilient coastal grid in the country."
Industrial Info Resources is tracking six CenterPoint Energy capital projects in Texas valued at about $477 million. Most of these have been on the books for a while; the new proposed capital outlays are not reflected in our data. Subscribers to Industrial Info's Global Market Intelligence (GMI) Power Project Database can click here for a list of detailed project reports.
"As a company that has the privilege of serving the energy capital of the world. And one of the most rapidly growing cities in our nation," Wells wrote of the GHRI, "we have committed ourselves to an unprecedented level of action ... by modernizing and making our grid more resilient for the future."
In his letter to Texas senators and House members, Wells estimated the economic impact to Houstonians of not having power was over $1.4 billion per day. "It is evident that now is the time to make these critical resiliency investments across the (Greater Houston) region."
Wells said that the $5 billion in capital outlays CenterPoint Energy plans to make through 2028 will bring the company's total planned capital expenditures for its Texas electric and gas systems to $21 billion between 2025 and 2030.
"We have heard the call to action from our customers and elected officials, and we are responding with bold actions," Wells said in a statement August 28.
Shortly after Beryl, CenterPoint Energy reported second-quarter profits more than doubled from year-earlier levels, to about $228 million from $106 million in the second quarter of 2023.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
Most of that physical rebuilding work is complete. But repairing its T&D system might be easier than CenterPoint's other pressing rebuilding task: restoring the confidence of its customers, regulators, elected officials and other critical stakeholders. That could take years.
In an August 28 letter to Texas elected officials, CenterPoint Energy President and Chief Executive Jason P. Wells pledged to double its planned capital investment in Texas, to about $5 billion, over the 2026-2028 period to make its electric system more resilient and reliable.
The letter also offered to forego about 50% of its planned profit from the $800 million purchase of mobile power generators, which were not used to restore power after Beryl.
That olive branch may not be good enough: some Texas elected officials want CenterPoint to eat the entire outlay. In an August 2 letter to the Public Utility Commission of Texas (PUCT) (Austin, Texas), Texas Lt. Governor Dan Patrick urged regulators to claw back authorization for CenterPoint to lease $800 million in large generators designed to be mobile.
Patrick asserted CenterPoint "squandered" that money in "massive, non-mobile" generators ranging from 5 megawatts (MW) to 32 MW in generating capacity. Other utilities in Texas invested in smaller, more mobile generators, he said.
In a separate statement, Patrick alleged, "By leasing more expensive, massive generators, which they may never need and are of little to no use in 99% of emergencies, CenterPoint testified they will make at least $30 million in profits off the backs of ratepayers."
On August 12, Texas Attorney General Ken Paxton announced his office has opened an investigation into the utility's storm response, including "allegations of fraud, waste, and improper use of taxpayer-provided funds."
Separately, the PUCT has opened an investigation into the response of various Texas utilities to Hurricane Beryl. Other Texas utilities were affected by that storm, but CenterPoint Energy was the hardest-hit utility.
CenterPoint Energy officials currently are on a listening tour across its Greater Houston service area, where customers and others who were affected by the early-July outage have been invited to share their concerns about the extended outage. The company has held nearly a dozen open houses to date and plans to hold another seven or so by the end of this month.
The PUCT will hold a workshop in Houston on Saturday, October 5, for customers to provide feedback on the utility's power restoration efforts. Normally, the commission meets during the week at its Austin headquarters. But in scheduling a workshop in Houston on a Saturday, regulators are making an extra effort to gather feedback from CenterPoint Energy customers. They're likely to get an earful.
But the utility is not only listening. It is acting. It launched a Greater Houston Resiliency Initiative (GHRI) shortly after Beryl to strengthen resiliency, improve communications and strengthen partnerships "to better prepare for the next major storm or hurricane."
To immediately improve resiliency, CenterPoint's website said it has accomplished 17 of 19 tasks through the end of August, including:
- Nearly doubling its vegetation management workforce, to about 1,000 workers, who are working to immediately address higher risk vegetation issues
- Removing 100% of vegetation from the 2,000 distribution line miles with higher risk vegetation across the system
- Replacing about 1,000 distribution system utility poles with composite poles. Those older poles had been scheduled for removal prior to Beryl
- Deploying at least 300 automated devices to reduce sustained interruptions in major storm events and reduce restoration time
- Using new state-of-the-art predictive modeling and artificial intelligence (AI) technology to identify higher risk vegetation across the system
- Dispatching outage restoration crews more rapidly once a storm passes
- Deploying predictive modeling tools to inform resource planning to prepare for a major storm
- Designing new distribution structures and replacements to standards that address extreme wind and loading conditions
The third phase of CenterPoint's resiliency plan, to be detailed in a filing with PUCT by early 2025, involves investing in "a smart grid that can better withstand the full spectrum of risks." This new plan, which will be implemented over the 2026-2028 period, will "represent the largest investment in the Greater Houston infrastructure in our company's nearly 160-year history," Wells wrote, adding that the goal is to "build the most resilient coastal grid in the country."
Industrial Info Resources is tracking six CenterPoint Energy capital projects in Texas valued at about $477 million. Most of these have been on the books for a while; the new proposed capital outlays are not reflected in our data. Subscribers to Industrial Info's Global Market Intelligence (GMI) Power Project Database can click here for a list of detailed project reports.
"As a company that has the privilege of serving the energy capital of the world. And one of the most rapidly growing cities in our nation," Wells wrote of the GHRI, "we have committed ourselves to an unprecedented level of action ... by modernizing and making our grid more resilient for the future."
In his letter to Texas senators and House members, Wells estimated the economic impact to Houstonians of not having power was over $1.4 billion per day. "It is evident that now is the time to make these critical resiliency investments across the (Greater Houston) region."
Wells said that the $5 billion in capital outlays CenterPoint Energy plans to make through 2028 will bring the company's total planned capital expenditures for its Texas electric and gas systems to $21 billion between 2025 and 2030.
"We have heard the call to action from our customers and elected officials, and we are responding with bold actions," Wells said in a statement August 28.
Shortly after Beryl, CenterPoint Energy reported second-quarter profits more than doubled from year-earlier levels, to about $228 million from $106 million in the second quarter of 2023.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
