CenterPoint Energy's 10-Year, $43 Billion Capital Plan Well Under Way

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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--CenterPoint Energy Incorporated (NYSE:CNP) (Houston, Texas) is two years into a 10-year, $43 billion capital program--and that program could grow an additional $3 billion, company officials told investors on an earnings call February 17.

The 10-year capital plan runs from 2021 to 2030. Through 2030, CenterPoint told investors, it will invest more than $26 billion in its electricity business and more than $17 billion in its gas business. The potential $3 billion addition to the existing planned capital expenditures (capex) is expected to go toward increased and accelerated commercial and industrial customer electrification; accelerated electric-vehicle adoption; and additional grid-modernization projects.

In 2023, CenterPoint officials told investors, the firm plans to invest about $2.1 billion in its electricity businesses and about $1.5 billion in its natural gas businesses.

Industrial Info is tracking nine projects involving CenterPoint affiliates, worth about $1 billion. CenterPoint's affiliates provide electric and gas service to about 6.8 million customers in Indiana, Texas, Minnesota, Ohio, Louisiana and Mississippi. The company also owns about 1,300 megawatts (MW) of electric-generating capacity in Indiana.

In Indiana, there are plans to build the 130-MW CrossTrack solar project, another 200-MW solar project and a wind-energy project. In addition, a contractor has received a full notice to proceed with the construction of a 460-MW, gas-fired unit addition at its A.B. Brown Power Station in the Hoosier State. Subscribers to Industrial Info's Global Market Intelligence (GMI) Power Project Database can learn more from a detailed project report.

In Texas, CenterPoint plans to build a 206-MW, $235 million battery energy storage system (BESS) at its Oasis Substation in Alvin. Subscribers can learn more from Industrial Info's project report.

The company also plans outlays to decommission and demolish two coal-fired generating units in Indiana, as well as invest in environmental remediation projects in that state. Subscribers can learn more from Industrial Info's reports on the decommissioning and demolishing of the A.B. Brown and F.B. Culley.

Company officials told investors that about 80% of its planned $43 billion in capex is expected to be recoverable through interim mechanisms. Officials emphasized there were "no big bets with recovery through established regulatory mechanisms," such as fully litigated rate cases before regulatory panels. That seemed to be an effort to emphasize its low-risk profile.

In a transcript of the company's third-quarter 2022 quarterly earnings conference call last November, CenterPoint Chief Executive Dave Lesar told investors: "We committed to becoming a pure-play regulated utility that was not subject to the earnings volatility of our now-divested midstream investment. And now, more than 95% of our earnings are derived from regulated utility operations."

Lesar continued: "Our new incremental capital opportunities are based on customer-driven investments that were developed through our increased stakeholder engagement strategy." A large chunk of the company's 10-year capex program is tied to "increased system resiliency, reliability and grid modernization, as well as to facilitate eventual electric-vehicle adoption."

On that November call, Lesar said as part of its investment in increased electric resiliency, the company will be undergrounding certain parts of its system, replacing poles with more wind-resistant ones, and elevating parts of the grid, especially substations, to help protect such structures from the threat of flood damage. Additional investments will be made to upgrade the company's transmission assets to increase the Houston area's ability to import power during peak periods.

For the fourth quarter of 2022, CenterPoint earned $122 million, down sharply from the comparable year-earlier period when it earned $646 million. But 2021 results included hefty contributions from CenterPoint's midstream business, which was sold in 2022. For full-year 2022, CenterPoint earned $1 billion, down from $1.4 billion in 2021 when it had the midstream business. It sold its interest in the midstream business last March, as part of its transition to becoming a pure-play rate-regulated entity.

"I am pleased to announce yet another quarter of execution," Lesar told investors on February 17. "A few years ago, I think this level of performance would have been hard to imagine. To achieve this growth in 2022 and invest a company record $4.8 billion of capital is really a testament to our people and our strategy."

"2022 was not without its challenges given some of the extreme weather and the macroeconomic environment," he continued. "With the country facing increasing interest rates and some of the highest rates of inflation in four decades, we continue to focus on customer affordability through efficient deployment of our capital plan and O&M discipline."

Subscribers to Industrial Info's GMI Power Project Database can click here for a list of detailed reports for active CenterPoint projects, and can click here for a list of related plant profiles.

Subscribers can click here for a full list of projects mentioned in this article.

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 more than 200,000 current and future projects worth $17.8 trillion (USD).