CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

From time to time wethe Registrants make statements concerning ~~our~~their expectations, beliefs, plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements that are not historical facts. These statements are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those expressed or implied by these statements. You can generally identify ~~our~~ forward-looking statements by the words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “may,” “objective,” “plan,” “potential,” “predict,” “projection,” “should,” “target,” “will” or other similar words.

WeThe Registrants have based ~~our~~their forward-looking statements on ~~our~~ management’s beliefs and assumptions based on information reasonably available to ~~our~~ management at the time the statements are made. WeThe Registrants caution you that assumptions, beliefs, expectations, intentions and projections about future events may and often do vary materially from actual results. Therefore, wethe Registrants cannot assure you that actual results will not differ materially from those expressed or implied by ~~our~~the Registrants’ forward-looking statements. In this Form 10-Q, unless context requires otherwise, the terms “our,” “we” and “us” are used as abbreviated references to CenterPoint Energy, Inc. together with its consolidated subsidiaries, including Houston Electric, CERC and Vectren.

The following are some of the factors that could cause actual results to differ from those expressed or implied by the Registrants’ forward-looking statements and apply to all Registrants unless otherwise indicated:

•CenterPoint Energy’s business strategies and strategic initiatives, restructurings, joint ventures and acquisitions or dispositions of assets or businesses, including the completed sale of our ~~forward-looking statements:~~

~~the performance of Enable, the amount of cash distributions we receive from Enable,~~Natural Gas businesses in Arkansas and Oklahoma and the ~~value of our interest in Enable, and factors that may~~exit from midstream, which we cannot assure will have ~~a material impact on such performance, cash distributions and value, including factors such as:~~


◦	competitive conditions in the midstream industry, and actions taken by Enable’s customers and competitors, including the extent and timing of the entry of additional competition in the markets served by Enable;

◦

the timing and extent of changes in the supply of natural gas and associated commodity prices, particularly prices of natural gas and NGLs, the competitive effects of the available pipeline capacity in the regions served by Enable, and the effects of geographic and seasonal commodity price differentials, including the effects of these circumstances on re-contracting available capacity on Enable’s interstate pipelines;


◦	~~the demand for crude oil, natural gas, NGLs and transportation and storage services;~~


◦	~~environmental and other governmental regulations, including the availability of drilling permits and the regulation of hydraulic fracturing;~~


◦	~~recording of non-cash goodwill, long-lived asset or other than temporary impairment charges by or related to Enable;~~


◦	~~changes in tax status;~~


◦	~~access to debt and equity capital; and~~


◦	~~the availability and prices of raw materials and services for current and future construction projects;~~

the anticipated benefits to us;

•industrial, commercial and residential growth in our service territories and changes in market demand, including the demand for our non-utility products and services and effects of energy efficiency measures and demographic patterns;

•our ability to fund and invest planned capital and the timely recovery of our investments, including those related to Indiana Electric’s generation transition plan as part of its most recent IRP;

•our ability to successfully construct and operate electric generating facilities, natural gas facilities, mobile generation and electric transmission facilities, including complying with applicable environmental standards and the implementation of a well-balanced energy and resource mix, as appropriate;

•the recording of impairment charges;

•timely and appropriate rate actions that allow recovery of costs and a reasonable return on ~~investment;~~investment, including the timing and amount of recovered natural gas costs associated with the February 2021 Winter Storm Event and those related to Houston Electric’s mobile generation;

•future economic conditions in regional and national markets and their effect on sales, prices and costs;

•weather variations and other natural phenomena, including the impact of severe weather events on operations and ~~capital;~~capital, such as impacts from the February 2021 Winter Storm Event;

•the ability of REPs, including REP affiliates of NRG and Vistra Energy Corp., to satisfy their obligations to CenterPoint Energy and Houston Electric, including the negative impact on such ability related to COVID-19 and the February 2021 Winter Storm Event;

•the COVID-19 pandemic and its effect on our operations, business and financial condition, our industries and the communities we serve, U.S. and world financial markets and supply chains, potential regulatory actions and changes in customer and stakeholder behaviors relating thereto;

•increases in commodity prices;

•volatility in the markets for oil and natural gas as a result of, among other factors, the actions of certain crude-oil exporting countries and the Organization of Petroleum Exporting Countries, armed conflicts, including the conflict in Ukraine and the related sanctions on certain Russian entities, and climate change concerns, including the increasing adoption and use of alternative energy sources;

•state and federal legislative and regulatory actions or developments affecting various aspects of our businesses, ~~(including the businesses of Enable),~~ including, among others, energy deregulation or re-regulation, pipeline integrity and safety and changes in regulation and legislation pertaining to trade, health care, finance and actions regarding the rates charged by our regulated businesses;

~~tax reform and legislation;~~

~~our ability to mitigate weather impacts through normalization or rate mechanisms, and the effectiveness of such mechanisms;~~

~~the timing and extent of changes in commodity prices, particularly natural gas, and the effects of geographic and seasonal commodity price differentials;~~

problems with regulatory approval, construction, implementation of necessary technology or other issues with respect to major capital projects that result in delays or in cost overruns that cannot be recouped in rates;

~~local, state and federal legislative and regulatory actions or developments relating to the environment, including those related to global climate change;~~

~~the impact of unplanned facility outages;~~

~~any~~ •direct or indirect effects on our facilities, resources, operations and financial condition resulting from terrorism, ~~cyber-attacks,~~cyber attacks or intrusions, including as a result of global conflict such as the conflict in Ukraine, data security breaches or other attempts to disrupt our businesses or the businesses of third parties, or other catastrophic events such as fires, ice, earthquakes, explosions, leaks, floods, droughts, hurricanes, tornadoes and other severe weather events, pandemic health events or other occurrences;

•tax legislation, including the effects of the CARES Act and of the TCJA (which includes but is not limited to any potential changes to tax rates, tax credits and/or interest deductibility), as well as any changes in tax laws under the

current administration, and uncertainties involving state commissions’ and local municipalities’ regulatory requirements and determinations regarding the treatment of EDIT and our rates;

•our ability to ~~invest planned capital~~mitigate weather impacts through normalization or rate mechanisms, and the ~~timely recovery~~effectiveness of ~~our investment in capital;~~such mechanisms;

~~our ability to control operation and maintenance costs;~~

•actions by credit rating ~~agencies;~~agencies, including any potential downgrades to credit ratings;

•matters affecting regulatory approval, legislative actions, construction, implementation of necessary technology or other issues with respect to major capital projects that result in delays or cancellation or in cost overruns that cannot be recouped in rates;

•local, state and federal legislative and regulatory actions or developments relating to the environment, including, among others, those related to global climate change, air emissions, carbon, waste water discharges and the handling and disposal of CCR that could impact operations, cost recovery of generation plant costs and related assets, and CenterPoint Energy’s net zero and carbon emissions reduction goals;

•the impact of unplanned facility outages or other closures;

•the sufficiency of our insurance coverage, including availability, cost, coverage and ~~terms;~~terms and ability to recover claims;

•the availability and prices of raw materials and services and changes in labor for current and future construction projects and operations and maintenance costs, including our ability to control such costs;

•continued disruptions to the global supply chain, including tariffs and other legislation impacting the supply chain, that could prevent CenterPoint Energy from securing the resources needed to fully execute on its 10-year capital plan or achieve its net zero and carbon emissions reduction goals;

•the investment performance of CenterPoint ~~Energy, Inc.’s~~Energy’s pension and postretirement benefit plans;

•changes in interest rates and their impact on costs of borrowing and the valuation of CenterPoint Energy’s pension benefit obligation;

•commercial bank and financial market conditions, our access to capital, the cost of such capital, and the results of our financing and refinancing efforts, including availability of funds in the debt capital markets;

•changes in ~~interest rates or~~ rates of inflation;

•inability of various counterparties to meet their obligations to us;

•non-payment for our services due to financial distress of our customers;

•the extent and effectiveness of our risk management and hedging activities, including, but not limited to ~~our~~ financial ~~hedges~~ and weather hedges;

•timely and appropriate regulatory actions, which include actions allowing ~~recovery of costs associated with Hurricane Harvey and~~securitization, for any future hurricanes or other severe weather events, or natural ~~disasters;~~disasters or other recovery of costs;

our or Enable’s potential business strategies and strategic initiatives, including restructurings, joint ventures and acquisitions or dispositions of assets or businesses (including a reduction of our interests in Enable, whether through our election to sell the common units we own in the public equity markets or otherwise, subject to certain limitations), which we cannot assure you will be completed or will have the anticipated benefits to us or Enable;

•acquisition and merger activities involving us or our ~~competitors;~~competitors, including the ability to successfully complete merger, acquisition and divestiture plans;

•our ~~or Enable’s~~ ability to recruit, effectively transition and retain management and key employees and maintain good labor relations;

•changes in technology, particularly with respect to efficient battery storage or the ~~ability~~emergence or growth of ~~GenOn (formerly known as RRI Energy, Inc., Reliant Energy~~new, developing or alternative sources of generation, and ~~RRI), a wholly-owned subsidiary~~their adoption by consumers;

•the impact of ~~NRG, and its subsidiaries, currently~~alternate energy sources on the ~~subject of bankruptcy proceedings, to satisfy their obligations to us, including indemnity obligations;~~demand for natural gas;

~~the outcome of litigation;~~

•the timing and outcome of any audits, disputes and other proceedings related to taxes;

•the effective tax rates;

•political and economic developments, including energy and environmental policies under the current administration;

•the transition to a replacement for the LIBOR benchmark interest rate;

•CenterPoint Energy’s ability to execute on its initiatives, targets and goals, including its net zero and carbon emissions reduction goals and its operations and maintenance goals;

•the outcome of litigation, including litigation related to the February 2021 Winter Storm Event;

•the development of new opportunities and the performance of projects undertaken by Energy Systems Group, which are subject to, among other factors, the level of success in bidding contracts and cancellation and/or reductions in the scope of projects by customers, and obligations related to warranties, guarantees and other contractual and legal obligations;

•the effect of changes in and application of accounting standards and pronouncements; and

•other factors ~~we discuss~~discussed in “Risk Factors” in Item 1A of Part I of ~~our 2016~~the Registrants’ combined 2021 Form 10-K, which isare incorporated herein by reference, and other factors described in Item 1A of Part II of this combined Form 10-Q, and in other reports wethe Registrants file from time to time with the SEC.

You should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of the particular statement, and wethe Registrants undertake no obligation to update or revise any forward-looking statements.

Investors should note that the Registrants announce material financial and other information in SEC filings, press releases and public conference calls. Based on guidance from the SEC, the Registrants may use the Investors section of CenterPoint

vii

Energy’s website (www.centerpointenergy.com) to communicate with investors about the Registrants. It is possible that the financial and other information posted there could be deemed to be material information. The information on CenterPoint Energy’s website is not part of this combined Form 10-Q.

viii

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PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

CENTERPOINT ENERGY, INC. AND SUBSIDIARIES

CONDENSED STATEMENTS OF CONSOLIDATED INCOME

(Unaudited)


	Three Months Ended
	March 31,
		2022		2021
		(in millions, except per share amounts)
Revenues:
Utility revenues		$	2,709	$	2,484
Non-utility revenues		54		63
Total		2,763		2,547
Expenses:
Utility natural gas, fuel and purchased power		1,098		935
Non-utility cost of revenues, including natural gas		35		40
Operation and maintenance		688		669
Depreciation and amortization		318		307
Taxes other than income taxes		147		143

Total		2,286		2,094
Operating Income		477		453
Other Income (Expense):
Loss on equity securities		(17)		(23)
Gain on indexed debt securities		106		26
Gain on sale		303		—
Interest expense and other finance charges		(153)		(140)
Interest expense on Securitization Bonds		(4)		(6)



Other income, net		18		19
Total		253		(124)
Income from Continuing Operations Before Income Taxes		730		329
Income tax expense		199		49
Income from Continuing Operations		531		280
Income from Discontinued Operations (net of tax expense of $—, $25, respectively)		—		83
Net Income		531		363
Income allocated to preferred shareholders		13		29
Income Available to Common Shareholders		$	518	$	334

Basic earnings per common share - continuing operations		$	0.82	$	0.41
Basic earnings per common share - discontinued operations		—		0.15
Basic Earnings Per Common Share		0.82		0.56
Diluted earnings per common share - continuing operations		$	0.82	$	0.43
Diluted earnings per common share - discontinued operations		—		0.13
Diluted Earnings Per Common Share		$	0.82	$	0.56

Weighted Average Common Shares Outstanding, Basic		629		552
Weighted Average Common Shares Outstanding, Diluted		631		631

See Combined Notes to Interim Condensed Financial Statements

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CENTERPOINT ENERGY, INC. AND SUBSIDIARIES

CONDENSED STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended
	March 31,
		2022		2021
		(in millions)
Net Income		$	531	$	363
Other comprehensive income:
Adjustment to pension and other postretirement plans (net of tax of $-0- and $-0-)		1		2

Reclassification of deferred loss from cash flow hedges realized in net income (net of tax of $-0- and $-0-)		1		—

Other comprehensive income from unconsolidated affiliates (net of tax of $-0- and $-0-)		—		1
Total		2		3
Comprehensive income		533		366
Income allocated to preferred shareholders		13		29
Comprehensive income available to common shareholders		$	520	$	337

See Combined Notes to Interim Condensed Financial Statements

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CENTERPOINT ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


	March 31, 2022		December 31, 2021
	(in millions)
ASSETS
Current Assets:
Cash and cash equivalents ($104 and $92 related to VIEs, respectively)	$	125	$	230
Investment in equity securities	720		1,439

Accounts receivable ($29 and $29 related to VIEs, respectively), less allowance for credit losses of $39 and $44, respectively	943		690
Accrued unbilled revenues, less allowance for credit losses of $2 and $6, respectively	432		513

Natural gas and coal inventory	54		186
Materials and supplies	458		422
Non-trading derivative assets	33		9
Taxes receivable	—		1
Current assets held for sale	—		2,338
Regulatory assets	1,323		1,395
Prepaid expenses and other current assets ($18 and $19 related to VIEs, respectively)	100		132
Total current assets	4,188		7,355
Property, Plant and Equipment:
Property, plant and equipment	34,495		33,673
Less: accumulated depreciation and amortization	10,282		10,189
Property, plant and equipment, net	24,213		23,484
Other Assets:
Goodwill	4,294		4,294
Regulatory assets ($372 and $420 related to VIEs, respectively)	2,270		2,321

Non-trading derivative assets	6		5




Other non-current assets	231		220
Total other assets	6,801		6,840
Total Assets	$	35,202	$	37,679

See Combined Notes to Interim Condensed Financial Statements

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CENTERPOINT ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS – (continued)

(Unaudited)


	March 31, 2022		December 31, 2021
	(in millions, except par value and shares)
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Short-term borrowings	$	—	$	7
Current portion of VIE Securitization Bonds long-term debt	182		220
Indexed debt, net	9		10
Current portion of other long-term debt	1,582		308
Indexed debt securities derivative	797		903
Accounts payable	1,036		1,196

Taxes accrued	489		378
Interest accrued	116		136
Dividends accrued	—		131
Customer deposits	110		111
Non-trading derivative liabilities	1		2


Current liabilities held for sale	—		562
Other current liabilities	283		323
Total current liabilities	4,605		4,287
Other Liabilities:
Deferred income taxes, net	3,951		3,904
Non-trading derivative liabilities	5		12
Benefit obligations	499		511
Regulatory liabilities	3,250		3,153

Other non-current liabilities	834		836
Total other liabilities	8,539		8,416
Long-term Debt:
VIE Securitization Bonds, net	317		317
Other long-term debt, net	11,789		15,241
Total long-term debt, net	12,106		15,558
Commitments and Contingencies (Note 13)	0		0
Temporary Equity (Note 18)	1		3
Shareholders’ Equity:
Cumulative preferred stock, $0.01 par value, 20,000,000 shares authorized, 800,000 shares and 800,000 shares outstanding, respectively, $800 and $800 liquidation preference, respectively (Note 18)	790		790
Common stock, $0.01 par value, 1,000,000,000 shares authorized, 629,432,406 shares and 628,923,534 shares outstanding, respectively	6		6
Additional paid-in capital	8,532		8,529
Retained earnings	685		154
Accumulated other comprehensive loss	(62)		(64)
Total shareholders’ equity	9,951		9,415
Total Liabilities and Shareholders’ Equity	$	35,202	$	37,679

See Combined Notes to Interim Condensed Financial Statements

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CENTERPOINT ENERGY, INC. AND SUBSIDIARIES

CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS

(Unaudited)


	Three Months Ended March 31,
	2022		2021
	(in millions)
Cash Flows from Operating Activities:
Net income	$	531	$	363


Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	318		307

Deferred income taxes	28		66




Gain on divestitures	(303)		—
Loss on equity securities	17		23
Gain on indexed debt securities	(106)		(26)

Equity in (earnings) losses of unconsolidated affiliates	—		(108)
Distributions from unconsolidated affiliates	—		39
Pension contributions	(2)		(8)
Changes in other assets and liabilities:
Accounts receivable and unbilled revenues, net	(201)		29

Inventory	132		99
Taxes receivable	1		3
Accounts payable	(85)		(55)

Net regulatory assets and liabilities	135		(2,297)
Other current assets and liabilities	82		(121)
Other non-current assets and liabilities	(25)		3
Other operating activities, net	58		2


Net cash provided by (used in) operating activities	580		(1,681)
Cash Flows from Investing Activities:
Capital expenditures	(846)		(594)






Proceeds from sale of marketable securities	702		—
Proceeds from divestitures	2,060		—


Other investing activities, net	18		(10)


Net cash provided by (used in) investing activities	1,934		(604)
Cash Flows from Financing Activities:
Decrease in short-term borrowings, net	(43)		—
Payment of obligation for finance lease	(171)		—
Proceeds from (payments of) commercial paper, net	(1,941)		38
Proceeds from long-term debt	792		2,795
Payments of long-term debt, including make-whole premiums	(1,113)		(388)




Payment of debt issuance costs	(8)		(20)


Payment of dividends on Common Stock	(107)		(88)
Payment of dividends on Preferred Stock	(24)		(48)





Other financing activities, net	(6)		(4)


Net cash provided by (used in) financing activities	(2,621)		2,285
Net Decrease in Cash, Cash Equivalents and Restricted Cash	(107)		—
Cash, Cash Equivalents and Restricted Cash at Beginning of Period	254		167
Cash, Cash Equivalents and Restricted Cash at End of Period	$	147	$	167

See Combined Notes to Interim Condensed Financial Statements

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CENTERPOINT ENERGY, INC. AND SUBSIDIARIES

CONDENSED STATEMENTS OF CONSOLIDATED CHANGES IN EQUITY

(Unaudited)


	Three Months Ended March 31,
		2022	2021
			Shares	Amount		Shares	Amount
			(in millions of dollars and shares, except authorized shares and par value amounts)
Cumulative Preferred Stock, $0.01 par value; authorized 20,000,000 shares
Balance, beginning of period			1	$	790	3	$	2,363



Balance, end of period			1	790		3	2,363
Common Stock, $0.01 par value; authorized 1,000,000,000 shares
Balance, beginning of period			629	6		551	6

Issuances related to benefit and investment plans			—	—		1	—
Balance, end of period			629	6		552	6
Additional Paid-in-Capital
Balance, beginning of period				8,529			6,914

Issuances related to benefit and investment plans				3			2

Balance, end of period				8,532			6,916
Retained Earnings (Accumulated Deficit)
Balance, beginning of period				154			(845)
Net income				531			363







Balance, end of period				685			(482)
Accumulated Other Comprehensive Loss
Balance, beginning of period				(64)			(90)
Other comprehensive income				2			3
Balance, end of period				(62)			(87)
Total Shareholders’ Equity				$	9,951		$	8,716

See Combined Notes to Interim Condensed Financial Statements

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CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC AND SUBSIDIARIES

(AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.)

CONDENSED STATEMENTS OF CONSOLIDATED INCOME

(Unaudited)


	Three Months Ended March 31,
		2022		2021
		(in millions)
Revenues		$	746	$	684
Expenses:
Operation and maintenance		395		373
Depreciation and amortization		162		141
Taxes other than income taxes		63		63
Total		620		577
Operating Income		126		107
Other Income (Expense):
Interest expense and other finance charges		(48)		(45)
Interest expense on Securitization Bonds		(4)		(6)



Other income, net		4		5
Total		(48)		(46)
Income Before Income Taxes		78		61
Income tax expense		17		8
Net Income		$	61	$	53

See Combined Notes to Interim Condensed Financial Statements

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CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC AND SUBSIDIARIES

(AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.)

CONDENSED STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended March 31,
		2022		2021
		(in millions)
Net income		$	61	$	53




Comprehensive income		$	61	$	53

See Combined Notes to Interim Condensed Financial Statements

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CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC AND SUBSIDIARIES

(AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.)

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


	March 31, 2022		December 31, 2021
	(in millions)
ASSETS
Current Assets:
Cash and cash equivalents ($104 and $92 related to VIEs, respectively)	$	104	$	214
Accounts and notes receivable ($29 and $29 related to VIEs, respectively), less allowance for credit losses of $1 and $1, respectively	280		263
Accounts and notes receivable–affiliated companies	369		11
Accrued unbilled revenues	95		127
Materials and supplies	304		292



Prepaid expenses and other current assets ($18 and $19 related to VIEs, respectively)	32		49
Total current assets	1,184		956
Property, Plant and Equipment:
Property, plant and equipment	15,995		15,273
Less: accumulated depreciation and amortization	4,175		4,070
Property, plant and equipment, net	11,820		11,203
Other Assets:
Regulatory assets ($372 and $420 related to VIEs, respectively)	785		789

Other non-current assets	43		32
Total other assets	828		821
Total Assets	$	13,832	$	12,980

See Combined Notes to Interim Condensed Financial Statements

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CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC AND SUBSIDIARIES

(AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.)

CONDENSED CONSOLIDATED BALANCE SHEETS – (continued)

(Unaudited)


	March 31, 2022		December 31, 2021
	(in millions)
LIABILITIES AND MEMBER’S EQUITY
Current Liabilities:

Current portion of VIE Securitization Bonds long-term debt	$	182	$	220
Current portion of other long-term debt	300		300
Accounts payable	474		510
Accounts and notes payable–affiliated companies	98		568
Taxes accrued	129		193
Interest accrued	66		74

Other current liabilities	68		91
Total current liabilities	1,317		1,956
Other Liabilities:
Deferred income taxes, net	1,142		1,122
Benefit obligations	55		55
Regulatory liabilities	1,135		1,152

Other non-current liabilities	100		98
Total other liabilities	2,432		2,427
Long-term Debt:
VIE Securitization Bonds, net	317		317
Other long-term debt, net	5,444		4,658
Total long-term debt, net	5,761		4,975
Commitments and Contingencies (Note 13)	0		0
Member’s Equity:
Common stock	—		—
Additional paid-in capital	3,354		2,678
Retained earnings	968		944

Total member’s equity	4,322		3,622
Total Liabilities and Member’s Equity	$	13,832	$	12,980

See Combined Notes to Interim Condensed Financial Statements

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CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC AND SUBSIDIARIES

(AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.)

CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS

(Unaudited)


	Three Months Ended March 31,
	2022		2021
	(in millions)
Cash Flows from Operating Activities:
Net income	$	61	$	53
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	162		141
Deferred income taxes	9		(5)


Changes in other assets and liabilities:
Accounts and notes receivable, net	15		21
Accounts receivable/payable–affiliated companies	38		(49)
Inventory	(12)		(7)
Accounts payable	(62)		14

Net regulatory assets and liabilities	(75)		(63)
Other current assets and liabilities	(56)		(59)
Other non-current assets and liabilities	(5)		3
Other operating activities, net	(2)		(2)
Net cash provided by operating activities	73		47
Cash Flows from Investing Activities:
Capital expenditures	(491)		(314)
Increase in notes receivable–affiliated companies	(354)		(665)


Other investing activities, net	(3)		(3)
Net cash used in investing activities	(848)		(982)
Cash Flows from Financing Activities:


Proceeds from long-term debt	792		1,096
Payments of long-term debt	(38)		(138)
Decrease in notes payable–affiliated companies	(512)		(8)
Dividend to parent	(37)		—
Contribution from parent	637		—

Payment of debt issuance costs	(8)		(10)
Payment of obligation for finance lease	(171)		—
Other, net	1		—
Net cash provided by financing activities	664		940
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash	(111)		5
Cash, Cash Equivalents and Restricted Cash at Beginning of Period	233		154
Cash, Cash Equivalents and Restricted Cash at End of Period	$	122	$	159

See Combined Notes to Interim Condensed Financial Statements

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CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC AND SUBSIDIARIES

(AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.)

CONDENSED STATEMENTS OF CONSOLIDATED CHANGES IN EQUITY

(Unaudited)


	Three Months Ended March 31,
		2022	2021
			Shares	Amount		Shares	Amount
			(in millions, except share amounts)


Common Stock
Balance, beginning of period			1,000	$	—	1,000	$	—
Balance, end of period			1,000	—		1,000	—
Additional Paid-in-Capital
Balance, beginning of period				2,678			2,548
Contribution from parent				675			—
Other				1			—
Balance, end of period				3,354			2,548
Retained Earnings
Balance, beginning of period				944			563
Net income				61			53
Dividend to parent				(37)			—
Balance, end of period				968			616
Accumulated Other Comprehensive Loss
Balance, beginning of period				—			—

Balance, end of period				—			—
Total Member’s Equity				$	4,322		$	3,164

See Combined Notes to Interim Condensed Financial Statements

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CENTERPOINT ENERGY RESOURCES CORP. AND SUBSIDIARIES

(AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.)

CONDENSED STATEMENTS OF CONSOLIDATED INCOME

~~(Millions of Dollars)~~

(Unaudited)


	Three Months Ended
	March 31,
		2022		2021
		(in millions)
Revenues:
Utility revenues		$	1,376	$	1,168
Non-utility revenues		9		9
Total		1,385		1,177
Expenses:
Utility natural gas		857		623
Non-utility cost of revenues, including natural gas		1		2
Operation and maintenance		187		198
Depreciation and amortization		72		80
Taxes other than income taxes		56		56

Total		1,173		959
Operating Income		212		218
Other Income (Expense):
Gain on sale		557		—
Interest expense and other finance charges		(21)		(24)


Other expense, net		—		(1)
Total		536		(25)
Income Before Income Taxes		748		193
Income tax expense		194		42


Net Income		$	554	$	151

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016

Revenues:
Utility revenues $ 390
$ 370
$ 1,767
$ 1,672
Non-utility revenues 861
608
2,964
1,433
Total 1,251
978
4,731
3,105

Expenses:

Utility natural gas 106
99
706
663
Non-utility natural gas 832
584
2,843
1,368
Operation and maintenance 187
175
603
571
Depreciation and amortization 68
62
202
185
Taxes other than income taxes 32
32
104
108
Total 1,225
952
4,458
2,895
Operating Income 26
26
273
210

Other Income (Expense):

Interest and other finance charges (32 ) (29 ) (92 ) (93 )
Equity in earnings of unconsolidated affiliate, net 68
73
199
164
Other, net 1
(1 ) 3
1
Total 37
43
110
72
Income Before Income Taxes 63
69
383
282
Income tax expense 25
26
144
113
Net Income $ 38
$ 43
$ 239
$ 169

See Combined Notes to Interim Condensed ~~Consolidated~~ Financial Statements

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CENTERPOINT ENERGY RESOURCES CORP. AND SUBSIDIARIES

(AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.)

CONDENSED STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME

~~(Millions of Dollars)~~

(Unaudited)


	Three Months Ended
	March 31,
		2022		2021
		(in millions)
Net income		$	554	$	151




Comprehensive income		$	554	$	151

Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016

Net income $ 38
$ 43
$ 239
$ 169
Other comprehensive income, net of tax:

Adjustment to pension and other postretirement plans (net of tax of $2, $1, $2 and $-0-) 1
1
1
2
Net deferred loss from cash flow hedges (net of tax of $1, $-0-, $1 and $-0-) (1 ) —
(1 ) —
Other comprehensive income —
1
—
2
Comprehensive income $ 38
$ 44
$ 239
$ 171

See Combined Notes to Interim Condensed ~~Consolidated~~ Financial Statements

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CENTERPOINT ENERGY RESOURCES CORP. AND SUBSIDIARIES

(AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.)

CONDENSED CONSOLIDATED BALANCE SHEETS

~~(Millions of Dollars)~~

(Unaudited)

~~ASSETS~~


	March 31, 2022		December 31, 2021
	(in millions)
ASSETS
Current Assets:
Cash and cash equivalents	$	4	$	8
Accounts receivable, less allowance for credit losses of $33 and $39, respectively	426		240
Accrued unbilled revenues, less allowance for credit losses of $2 and $5, respectively	209		247
Accounts and notes receivable–affiliated companies	17		16
Materials and supplies	85		74
Natural gas inventory	19		127

Taxes receivable	29		28

Current assets held for sale	—		2,084
Regulatory assets	1,269		1,289
Prepaid expenses and other current assets	13		15
Total current assets	2,071		4,128
Property, Plant and Equipment:
Property, plant and equipment	8,140		7,878
Less: accumulated depreciation and amortization	2,143		2,115
Property, plant and equipment, net	5,997		5,763
Other Assets:
Goodwill	611		611
Regulatory assets	534		577




Other non-current assets	30		31
Total other assets	1,175		1,219
Total Assets	$	9,243	$	11,110

September 30,
2017 December 31, 2016
Current Assets:

Cash and cash equivalents $ 1
$ 1
Accounts receivable, less bad debt reserve of $15 and $14, respectively 448
512
Accrued unbilled revenues 84
229
Accounts and notes receivable–affiliated companies 8
5
Materials and supplies 53
47
Natural gas inventory 252
131
Non-trading derivative assets 64
51
Prepaid expenses and other current assets 102
81
Total current assets 1,012
1,057

Property, Plant and Equipment:
Property, plant and equipment 6,694
6,351
Less: accumulated depreciation and amortization 1,995
1,782
Property, plant and equipment, net 4,699
4,569

Other Assets:

Goodwill 867
862
Non-trading derivative assets 56
19
Investment in unconsolidated affiliate 2,481
2,505
Other 261
206
Total other assets 3,665
3,592

Total Assets $ 9,376
$ 9,218

See Combined Notes to Interim Condensed ~~Consolidated~~ Financial Statements

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CENTERPOINT ENERGY RESOURCES CORP. AND SUBSIDIARIES

(AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.)

CONDENSED CONSOLIDATED BALANCE SHEETS

~~(Millions of Dollars)~~ – (continued)

(Unaudited)

~~LIABILITIES AND STOCKHOLDER’S EQUITY~~


	March 31, 2022		December 31, 2021
	(in millions)
LIABILITIES AND STOCKHOLDER’S EQUITY
Current Liabilities:
Short-term borrowings	$	—	$	7
Current portion of long-term debt	1,275		—
Accounts payable	293		365
Accounts payable–affiliated companies	147		56
Notes payable–affiliated companies	—		224
Taxes accrued	82		90
Interest accrued	24		27
Customer deposits	63		63

Current liabilities held for sale	—		562
Other current liabilities	105		113
Total current liabilities	1,989		1,507
Other Liabilities:
Deferred income taxes, net	879		680


Benefit obligations	80		81
Regulatory liabilities	1,054		979

Other non–current liabilities	477		482
Total other liabilities	2,490		2,222
Long-Term Debt	1,905		4,380
Commitments and Contingencies (Note 13)	0		0
Stockholder’s Equity:
Common stock	—		—
Additional paid-in capital	1,553		2,226
Retained earnings	1,296		765
Accumulated other comprehensive income	10		10
Total stockholder’s equity	2,859		3,001
Total Liabilities and Stockholder’s Equity	$	9,243	$	11,110

September 30,
2017 December 31, 2016
Current Liabilities:

Short-term borrowings $ 48
$ 35
Current portion of long-term debt 550
250
Accounts payable 375
471
Accounts and notes payable–affiliated companies 42
40
Taxes accrued 64
�� 73
Interest accrued 33
33
Customer deposits 76
80
Non-trading derivative liabilities 17
41
Other 118
124
Total current liabilities 1,323
1,147

Other Liabilities:

Deferred income taxes, net 2,066
1,925
Non-trading derivative liabilities 10
5
Benefit obligations 105
104
Regulatory liabilities 699
769
Other 226
221
Total other liabilities 3,106
3,024

Long-Term Debt 2,086
2,125

Commitments and Contingencies (Note 12)

Stockholder’s Equity:
Common stock —
—
Paid-in capital 2,528
2,489
Retained earnings 332
430
Accumulated other comprehensive income 1
3
Total stockholder’s equity 2,861
2,922

Total Liabilities and Stockholder’s Equity $ 9,376
$ 9,218

See Combined Notes to Interim Condensed ~~Consolidated~~ Financial Statements

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CENTERPOINT ENERGY RESOURCES CORP. AND SUBSIDIARIES

(AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.)

CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS

~~(Millions of Dollars)~~(Unaudited)

~~(Unaudited)~~


	Three Months Ended March 31,
	2022		2021
	(in millions)
Cash Flows from Operating Activities:
Net income	$	554	$	151
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	72		80

Deferred income taxes	196		41

Gain on divestitures	(557)		—
Changes in other assets and liabilities:
Accounts receivable and unbilled revenues, net	(176)		(41)
Accounts receivable/payable–affiliated companies	90		(5)
Inventory	133		64
Accounts payable	(74)		(10)



Net regulatory assets and liabilities	125		(2,065)
Other current assets and liabilities	(14)		7
Other non-current assets and liabilities	(3)		(10)
Other operating activities, net	1		1
Net cash provided by (used in) operating activities	347		(1,787)
Cash Flows from Investing Activities:
Capital expenditures	(197)		(133)


Proceeds from divestiture	2,060		—
Other investing activities, net	(3)		2


Net cash provided by (used in) investing activities	1,860		(131)
Cash Flows from Financing Activities:
Decrease in short-term borrowings, net	(43)		—

Proceeds from (payments of) commercial paper, net	(776)		226
Proceeds from long-term debt	—		1,699
Payments of long-term debt	(425)		—

Dividends to parent	(743)		—
Payment of debt issuance costs	—		(6)
Decrease in notes payable–affiliated companies	(224)		—



Other financing activities, net	—		(1)


Net cash provided by (used in) financing activities	(2,211)		1,918
Net Decrease in Cash, Cash Equivalents and Restricted Cash	(4)		—
Cash, Cash Equivalents and Restricted Cash at Beginning of Period	8		1
Cash, Cash Equivalents and Restricted Cash at End of Period	$	4	$	1

Nine Months Ended September 30,
2017 2016
Cash Flows from Operating Activities:
Net income $ 239
$ 169
Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 202
185
Amortization of deferred financing costs 7
7
Deferred income taxes 140
108
Write-down of natural gas inventory —
1
Equity in earnings of unconsolidated affiliate, net of distributions (199 ) (164 )
Changes in other assets and liabilities, excluding acquisitions:

Accounts receivable and unbilled revenues, net 346
220
Accounts receivable/payable–affiliated companies (1 ) (5 )
Inventory (49 ) (1 )
Accounts payable (227 ) (85 )
Fuel cost recovery (30 ) (43 )
Interest and taxes accrued (9 ) (8 )
Non-trading derivatives, net (51 ) 23
Margin deposits, net (49 ) 65
Other current assets 23
(11 )
Other current liabilities (5 ) 15
Other assets (32 ) (5 )
Other liabilities 6
1
Other, net 1
2
Net cash provided by operating activities 312
474
Cash Flows from Investing Activities:

Capital expenditures (373 ) (378 )
Distribution from unconsolidated affiliate in excess of cumulative earnings 223
223
Decrease in notes receivable–unconsolidated affiliate —
363
Acquisitions, net of cash acquired (132 ) (102 )
Other, net 2
(1 )
Net cash provided by (used in) investing activities (280 ) 105
Cash Flows from Financing Activities:

Decrease in short-term borrowings, net 13
3
Proceeds from (payments of) commercial paper, net (40 ) 240
Proceeds from long-term debt 298
—
Payments of long-term debt —
(325 )
Dividends to parent (337 ) (567 )
Debt issuance costs (4 ) (1 )
Contribution from parent 38
73
Other, net —
(2 )
Net cash used in financing activities (32 ) (579 )
Net Increase in Cash and Cash Equivalents —
—
Cash and Cash Equivalents at Beginning of Period 1
—
Cash and Cash Equivalents at End of Period $ 1
$ —
Supplemental Disclosure of Cash Flow Information:

Cash Payments:

Interest, net of capitalized interest $ 86
$ 90
Income taxes, net 4
3
Non-cash transactions:

Accounts payable related to capital expenditures $ 53
$ 32

See Combined Notes to Interim Condensed ~~Consolidated~~ Financial Statements

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CENTERPOINT ENERGY RESOURCES CORP. AND SUBSIDIARIES

(AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.)

CONDENSED STATEMENTS OF CONSOLIDATED CHANGES IN EQUITY

(Unaudited)


	Three Months Ended March 31,
		2022	2021
			Shares	Amount		Shares	Amount
			(in millions, except share amounts)
Common Stock
Balance, beginning of period			1,000	$	—	1,000	$	—
Balance, end of period			1,000	—		1,000	—
Additional Paid-in-Capital
Balance, beginning of period				2,226			2,046

Contribution from parent				46			—
Contribution to parent for sale of Arkansas and Oklahoma Natural Gas businesses				(720)			—
Other				1			—
Balance, end of period				1,553			2,046
Retained Earnings
Balance, beginning of period				765			511
Net income				554			151
Dividend to parent				(23)			—
Balance, end of period				1,296			662
Accumulated Other Comprehensive Income
Balance, beginning of period				10			10

Balance, end of period				10			10
Total Stockholder’s Equity				$	2,859		$	2,718

See Combined Notes to Interim Condensed Financial Statements

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CENTERPOINT ENERGY, INC. AND SUBSIDIARIES

CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC AND SUBSIDIARIES

CENTERPOINT ENERGY RESOURCES CORP. AND SUBSIDIARIES

COMBINED NOTES TO ~~UNAUDITED~~INTERIM CONDENSED ~~CONSOLIDATED~~ FINANCIAL STATEMENTS

(1) Background and Basis of Presentation

General.This combined Form 10-Q is filed separately by 3 registrants: CenterPoint Energy, Inc., CenterPoint Energy Houston Electric, LLC and CenterPoint Energy Resources Corp. Information contained herein relating to any individual registrant is filed by such registrant solely on its own behalf. Each registrant makes no representation as to information relating exclusively to the other Registrants or the subsidiaries of CenterPoint Energy other than itself or its subsidiaries.

Except as discussed in the penultimate paragraph in Note 11 to the Registrants’ Interim Condensed Financial Statements, no registrant has an obligation in respect of any other Registrant’s debt securities, and holders of such debt securities should not consider the financial resources or results of operations of any Registrant other than the obligor in making a decision with respect to such securities.

Included in this combined Form 10-Q are the Interim Condensed Financial Statements of ~~CERC.~~CenterPoint Energy, Houston Electric and CERC, which are referred to collectively as the Registrants. The Interim Condensed Financial Statements are unaudited, omit certain financial statement disclosures and should be read with the ~~2016~~Registrants’ financial statements included in the Registrants’ combined 2021 Form 10-K.

~~Background.~~ The Combined Notes to Interim Condensed Financial Statements apply to all Registrants and specific references to Houston Electric and CERC ~~Corp. is an indirect, wholly-owned subsidiary of~~herein also pertain to CenterPoint Energy, unless otherwise indicated.

Background.CenterPoint Energy, Inc. is a public utility holding company. ~~CERC Corp.’s~~As of March 31, 2022, CenterPoint Energy’s operating subsidiaries ~~own~~were as follows:

•Houston Electric owns and ~~operate natural gas~~operates electric transmission and distribution facilities ~~supply natural gas to commercial and industrial customers and electric and natural gas utilities and own interests~~ in ~~Enable as described in Note 8.~~ the Texas gulf coast area that includes the city of Houston.

•CERC Corp.~~’s operating subsidiaries and divisions include:~~

~~NGD, which~~ (i) directly owns and operates natural gas distribution systems in ~~six states;~~4 states and (ii) owns and operates permanent pipeline connections through interconnects with various interstate and intrastate pipeline companies through CEIP.

~~CES, which obtains and offers competitive variable and fixed-price physical~~•Vectren holds 3 public utilities through its wholly-owned subsidiary, VUHI, a public utility holding company:

•Indiana Gas provides energy delivery services to natural gas ~~supplies~~customers located in central and southern Indiana;

•SIGECO provides energy delivery services ~~primarily~~ to ~~commercial and industrial customers and~~ electric and natural gas ~~utilities~~customers located in ~~33 states.~~and near Evansville in southwestern Indiana and owns and operates electric generation assets to serve its electric customers and optimizes those assets in the wholesale power market; and

•VEDO provides energy delivery services to natural gas customers located in and near Dayton in west-central Ohio.

•Vectren performs non-utility activities through Energy Systems Group, which provides energy performance contracting and sustainable infrastructure services, such as renewables, distributed generation and combined heat and power projects.

On January 10, 2022, CERC Corp. completed the sale of its Arkansas and Oklahoma Natural Gas businesses. For additional information regarding discontinued operations and divestitures, see Note 3.

As of ~~September 30, 2017,~~March 31, 2022, CenterPoint Energy’s reportable segments were Electric and Natural Gas. Houston Electric and CERC ~~Corp. also owned approximately 54.1%~~each consist of a single reportable segment. For a description of CenterPoint Energy’s reportable segments, see Note 15.

As of March 31, 2022, CenterPoint Energy and Houston Electric had VIEs consisting of the ~~common units representing limited partner interests in Enable,~~Bond Companies, which ~~owns, operates~~are consolidated. The consolidated VIEs are wholly-owned, bankruptcy-remote, special purpose entities that were formed solely for

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the purpose of securitizing transition and ~~develops natural gas~~system restoration-related property. Creditors of CenterPoint Energy and ~~crude oil infrastructure assets.~~Houston Electric have no recourse to any assets or revenues of the Bond Companies. The bonds issued by these VIEs are payable only from and secured by transition and system restoration property, and the bondholders have no recourse to the general credit of CenterPoint Energy or Houston Electric.

Basis of Presentation.The preparation of the Registrants’ financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

~~CERC’s~~The Interim Condensed Financial Statements reflect all normal recurring adjustments that are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows for the respective periods. Amounts reported in ~~CERC’s~~the Condensed Statements of Consolidated Income are not necessarily indicative of amounts expected for a full-year period due to the effects of, among other things, (a) seasonal fluctuations in demand for energy, ~~and energy services,~~ (b) changes in energy commodity prices, (c) timing of maintenance and other expenditures and (d) acquisitions and dispositions of businesses, assets and other interests. Certain prior year amounts have been reclassified to conform to the current year reportable segment presentation described in Note 15 and to reflect the impacts of discontinued operations.

~~For a description of CERC’s reportable business segments, see Note 14.~~

(2) New Accounting Pronouncements

~~In January 2016, the FASB issued ASU No. 2016-01,~~ ~~Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities~~ (ASU 2016-01). ASU 2016-01 requires equity investments that do not result in consolidation and are not accounted for under the equity method to be measured at fair value and to recognize any changes in fair value in net income unless the investments qualify for the new practicability exception. It does not change the guidance for classifying and measuring investments in debt securities and loans. ASU 2016-01 also changes certain disclosure requirements and other aspects related to recognition and measurement of financial assets and financial liabilities. ASU 2016-01 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. As of the first reporting period in which the guidance is adopted, a cumulative-effect adjustment to beginning retained earnings will be made, with two features that will be adopted prospectively. CERC does not believe this standard will have a material impact on its financial position, results of operations, cash flows and disclosures.

~~In 2016, the FASB issued ASU No. 2016-02,~~ ~~Leases (Topic 842)~~ ~~(ASU 2016-02) and related amendments. ASU 2016-02~~The following table provides a comprehensive new lease model that requires lessees to recognize assets and liabilities for most leases and would change certain aspects of lessor accounting. ASU 2016-02 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. A modified retrospective adoption approach is required. CERC is currently assessing the impact that this standard will have on its financial position, results of operations, cash flows and disclosures.

~~In March 2016, the FASB issued ASU No. 2016-09,~~ ~~Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting~~ (ASU 2016-09). The new guidance simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification

on the statement of cash flows. CERC adopted this standard as of January 1, 2017. The adoption did not have a material impact on CERC’s financial position or results of operations. However, CERC’s statement of cash flows reflects a decrease in financing activity and a corresponding increase in operating activity of $1 million as of both September 30, 2017 and 2016 due to the retrospective application of the requirement that cash paid to a tax authority when shares are withheld to satisfy statutory income tax withholding obligations should be presented as a financing rather than as an ~~operating activity.~~

~~In 2016, the FASB issued ASUs which amended ASU No. 2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606)~~. ASU 2014-09, as amended, provides a comprehensive new revenue recognition model that requires revenue to be recognized in a manner that depicts the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services. Early adoption is permitted, and entities have the option of using either a full retrospective or a modified retrospective adoption approach. CERC is currently evaluating its revenue streams under these ASUs and has not yet identified any significant changes as the result of these new standards. A substantial amount of CERC’s revenues are tariff and derivative based, which we do not anticipate will be significantly impacted by these ASUs. CERC expects to adopt these ASUs on January 1, 2018 using the modified retrospective adoption approach.

~~In August 2016, the FASB issued ASU No. 2016-15,~~ ~~Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments~~ ~~(ASU 2016-15). ASU 2016-15 provides clarifying guidance on the classification~~overview of certain ~~cash receipts and payments in~~recently adopted accounting pronouncements applicable to all the statement of cash flows and eliminates the variation in practice related to such classifications. ASU 2016-15 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. A retrospective adoption approach is required. CERC is currently assessing the impact that this standard will have on its statement of cash flows.Registrants.

~~In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash~~ (ASU 2016-18). ASU 2016-18 requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, restricted cash and restricted cash equivalents. As a result, the statement of cash flows will no longer present transfers between cash and cash equivalents and restricted cash and restricted cash equivalents. When cash, cash equivalents, restricted cash and restricted cash equivalents are presented in more than one line item on the balance sheet, the new guidance requires a reconciliation of the totals in the statement of cash flows to the related captions in the balance sheet. ASU 2016-18 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. A retrospective adoption approach is required. This standard will not have an impact on CERC’s financial position, results of operations, cash flows and disclosures.

Recently Adopted Accounting Standards

ASU Number and Name

Description

Date of Adoption

Financial Statement Impact
upon Adoption

ASU 2021-10: Government Assistance (Topic 832)

Disclosures by Business Entities about Government

Assistance

This standard requires additional disclosure requirements when a business receives government assistance and uses a grant or contribution accounting model by analogy to other accounting guidance such as the grant model under International Accounting Standards (IAS) 20 Accounting for Government Grants and Disclosures of Government Assistance and GAAP ASC 958-605 Not for Profit.

Transition method: Prospective or retrospective

January 1, 2022

Adoption of this standard may result in additional disclosures related to the recovery of Texas natural gas costs associated with the February 2021 Winter Storm Event through the state securitization, which is expected to be accounted for as a government grant by analogy to IAS 20. The adoption of this standard did not have a material impact on the Registrants’ financial position, results of operations or cash flows.

~~In January 2017, the FASB issued ASU No. 2017-01,~~ ~~Business Combinations (Topic 805): Clarifying the Definition of a Business~~ (ASU 2017-01). ASU 2017-01 revises the definition of a business. If substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets, then under ASU 2017-01, the asset or group of assets is not a business. The guidance also requires a business to include at least one substantive process and narrows the definition of outputs to be more closely aligned with how outputs are described in ASC 606. ASU 2017-01 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted in certain circumstances. A prospective adoption approach is required. ASU 2017-01 could have a potential impact on CERC’s accounting for future acquisitions.

~~In January 2017, the FASB issued ASU No. 2017-04,~~ ~~Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment~~ (ASU 2017-04). ASU 2017-04 eliminates Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. ASU 2017-04 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. A prospective adoption approach is required. ASU 2017-04 will have an impact on CERC’s future calculation of goodwill impairments if an impairment is identified.

~~In February 2017, the FASB issued ASU No. 2017-05,~~ Other Income-Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets ~~(ASU 2017-05). ASU 2017-05 clarifies when and how to apply ASC 610-20~~ ~~Gains and Losses from the Derecognition of Nonfinancial Assets, which was issued as part of ASU 2014-09~~ ~~Revenue from Contracts with Customers (Topic 606).~~ ASU 2017-05 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. Companies can elect a retrospective or modified retrospective approach to adoption. CERC does not believe this standard will have a material impact on its financial position, results of operations, cash flows and disclosures.

~~In March 2017, the FASB issued ASU No. 2017-07,~~ ~~Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost~~ ~~(ASU 2017-07). ASU 2017-07 requires an employer to report the service cost component of the net periodic pension cost and postretirement benefit cost in the same line item(s) as other~~

employee compensation costs arising from services rendered during the period; all other components will be presented separately from the line item(s) that includes the service cost and outside of any subtotal of operating income. In addition, only the service cost component will be eligible for capitalization in assets. ASU 2017-07 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. ASU 2017-07 should be applied retrospectively for the presentation of the service cost component and the other components and prospectively for the capitalization of the service cost component. The adoption of this guidance is expected to result in an increase to operating income and a decrease to other income. Prospectively, other components previously capitalized in assets will be recorded as regulatory assets in CERC’s rate-regulated businesses. CERC does not believe this standard will have a material impact on its financial position, results of operations, cash flows and disclosures.

~~In August 2017, the FASB issued ASU No. 2017-12,~~ ~~Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities~~ (ASU 2017-12). ASU 2017-12 expands an entity’s ability to hedge nonfinancial and financial risk components and reduce complexity in fair value hedges of interest rate risk. The guidance eliminates the requirement to separately measure and report hedge ineffectiveness, eases certain documentation and assessment requirements, and updates the presentation and disclosure requirements. ASU 2017-12 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. A cumulative-effect adjustment to eliminate the separate measurement of ineffectiveness upon adoption is required for existing cash flow and net investment hedges. Presentation and disclosure guidance should be applied prospectively. CERC is currently assessing the impact that this standard will have on its financial position, results of operations, cash flows and disclosures.

Management believes that other recently adopted standards and recently issued standards ~~which~~that are not yet effective will not have a material impact on ~~CERC’s consolidated~~the Registrants’ financial position, results of operations or cash flows upon adoption.

(3) ~~Acquisition~~Divestitures (CenterPoint Energy and CERC)

Divestiture of Arkansas and Oklahoma Natural Gas Businesses. On April 29, 2021, CenterPoint Energy, through its subsidiary CERC Corp., entered into an Asset Purchase Agreement to sell its Arkansas and Oklahoma Natural Gas businesses for $2.15 billion in cash, including recovery of approximately $425 million in natural gas costs, including storm-related incremental natural gas costs associated with the February 2021 Winter Storm Event, subject to certain adjustments set forth in the Asset Purchase Agreement. The assets include approximately 17,000 miles of main pipeline in Arkansas, Oklahoma and certain portions of Bowie County, Texas serving more than half a million customers. The transaction closed on January ~~3, 2017,CES,~~10, 2022.

The sale was considered an asset sale for tax purposes, requiring net deferred tax liabilities to be excluded from held for sale balances. The deferred taxes associated with the businesses were recognized as a ~~wholly-owned subsidiary~~deferred income tax benefit by CenterPoint Energy and CERC upon closing of the sale in 2022.

Although the Arkansas and Oklahoma Natural Gas businesses met the held for sale criteria as of December 31, 2021, their disposals did not represent a strategic shift to CenterPoint Energy and CERC, ~~completed its acquisition~~as both retained significant operations in, and continued to invest in, their natural gas businesses. Therefore, the income and expenses associated with the disposed businesses were not reflected as discontinued operations on CenterPoint Energy’s and CERC’s Condensed Statements of ~~AEM. After working capital adjustments,~~Consolidated Income, as applicable. Since the ~~final purchase price was $147 million~~depreciation on the Arkansas and ~~was allocated~~Oklahoma Natural Gas assets continued to ~~identifiable~~be reflected in revenues through customer rates until the closing of the transaction and will be reflected in the carryover basis of the rate-regulated assets, ~~acquired~~CenterPoint Energy and CERC continued to record depreciation on those assets through the closing of the

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transaction. The Registrants record assets and liabilities ~~assumed based on~~held for sale at the lower of their carrying value or their estimated fair ~~values~~value less cost to sell.

CenterPoint Energy and CERC recognized gains of $303 million and $557 million, respectively, net of transaction costs of $59 million, in connection with the closing of the disposition of the Arkansas and Oklahoma Natural Gas businesses during the three months ended March 31, 2022. As of March 31, 2022, CenterPoint Energy and CERC had a receivable for working capital and other customary adjustments set forth in the Asset Purchase Agreement, and a gain or loss on sale in future periods may be incurred by CenterPoint Energy and CERC for differences between the estimated receivable as of March 31, 2022 and the actual amount of the payment.

As a result of the sale of the Arkansas and Oklahoma Natural Gas businesses, there were no assets or liabilities classified as held for sale as of March 31, 2022. The assets and liabilities of the Arkansas and Oklahoma Natural Gas businesses classified as held for sale in CenterPoint Energy’s and CERC’s Condensed Consolidated Balance Sheets, as applicable, as of December 31, 2021 included the following:


	December 31, 2021
	CenterPoint Energy		CERC
	(in millions)
Receivables, net	$	46	$	46
Accrued unbilled revenues	48		48
Natural gas inventory	46		46
Materials and supplies	9		9
Property, plant and equipment, net	1,314		1,314
Goodwill (1)	398		144
Regulatory assets	471		471
Other	6		6
Total current assets held for sale	$	2,338	$	2,084

Short term borrowings (2)	$	36	$	36
Accounts payable	40		40
Taxes accrued	7		7

Customer deposits	12		12
Regulatory liabilities	365		365
Other	102		102
Total current liabilities held for sale	$	562	$	562

(1)See Note 9 for further information about the allocation of goodwill to the disposed businesses.

(2)Represents third-party AMAs associated with utility distribution service in Arkansas and Oklahoma. These transactions are accounted for as an inventory financing. For further information, see Note 11.

The pre-tax income for the Arkansas and Oklahoma Natural Gas businesses, excluding interest and corporate allocations, included in CenterPoint Energy’s and CERC’s Condensed Statements of Consolidated Income is as follows:


	Three Months Ended March 31,
	2022 (1)		2021
	(in millions)
Income from Continuing Operations Before Income Taxes	$	9	$	52

(1)Reflects January 1, 2022 to January 9, 2022 results only due to of the sale of the Arkansas and Oklahoma Natural Gas businesses.

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Effective on the ~~acquisition date.~~date of the closing of the disposition of the Arkansas and Oklahoma Natural Gas businesses, a subsidiary of CenterPoint Energy, Inc. entered into the Transition Services Agreement, whereby that subsidiary agreed to provide certain transition services such as accounting, customer operations, procurement, and technology functions for a term of up to twelve months. Subject to the conditions in the Transition Services Agreement, Southern Col Midco may terminate these support services with 60 days prior written notice.

~~The following table summarizes~~CenterPoint Energy’s charges to Southern Col Midco for reimbursement of transition services were $9 million during the ~~final purchase price allocation~~three months ended March 31, 2022. Actual transitional services costs incurred are recorded net of amounts charged to Southern Col Midco. CenterPoint Energy had accounts receivable from Southern Col Midco of $7 million as of March 31, 2022 for transition services.

Discontinued Operations (CenterPoint Energy)

Enable Merger. On December 2, 2021, Enable, completed the previously announced Enable Merger pursuant to the Enable Merger Agreement entered into on February 16, 2021. At the closing of the Enable Merger on December 2, 2021, Energy Transfer acquired 100% of Enable’s outstanding common and preferred units, resulting in the exchange of Enable Common Units owned by CenterPoint Energy for Energy Transfer Common Units and the ~~fair value amounts recognized~~exchange of Enable Series A Preferred Units owned by CenterPoint Energy for ~~the assets acquired and liabilities assumed related to the acquisition:~~Energy Transfer Series G Preferred Units.

(in millions)
Total purchase price consideration $ 147
Cash $ 15
Receivables 140
Natural gas inventory 78
Derivative assets 35
Prepaid expenses and other current assets 5
Property and equipment 8
Identifiable intangibles 25
Total assets acquired 306
Accounts payable 113
Derivative liabilities 43
Other current liabilities 7
Other liabilities 1
Total liabilities assumed 164
Identifiable net assets acquired 142
Goodwill 5
Net assets acquired $ 147

The goodwill of $5 million resulting from the acquisition reflects the excess of the purchase price over the fair value of the net identifiable assets acquired. The goodwill recorded as part of the acquisition primarily reflects the value of the complementary operational and geographic footprints, scale and expanded capabilities provided by the acquisition.

Identifiable intangible assets were recorded at estimated fair value as determined by management based on available information, which includes a preliminary valuation prepared by an independent third party. The significant assumptions used in arriving at the estimated identifiable intangible asset values included management’s estimates of future cash flows, the discount rate which is based on the weighted average cost of capital for comparable publicly traded guideline companies and projected customer attrition rates. The useful lives for the identifiable intangible assets were determined using methods that approximate the pattern of economic benefit provided by the utilization of the assets.

~~The estimated fair value of the identifiable intangible assets and related useful lives as included in the final purchase price allocation include:~~

Estimate Fair Value Estimate Useful Life
(in millions) (in years)
Customer relationships $ 25
15

~~Amortization expense related to the above identifiable intangible assets was $-0- and $1 million for~~During the three ~~and nine~~ months ended ~~September 30, 2017, respectively.~~March 31, 2022, CenterPoint Energy sold all of its remaining Energy Transfer Common Units and Energy Transfer Series G Preferred Units. See Note 10 for further information regarding Energy Transfer equity securities.

~~Revenues~~Additionally, CenterPoint Energy’s disposal of ~~approximately $311 million~~its interests in Enable represented a strategic shift that will have a major effect on CenterPoint Energy’s operations or financial results, and ~~$989 million, respectively,~~as such, its equity investment in Enable was classified and ~~operating income~~presented as held for sale. The equity in earnings of ~~approximately $3 million and $28 million, respectively, attributable to the AEM acquisition are reported~~unconsolidated affiliates, net of tax, associated with CenterPoint Energy’s equity investment in ~~the Energy Services business segment and included in CERC’s~~Enable was reflected as discontinued operations on CenterPoint Energy’s Condensed Statements of Consolidated Income for the three ~~and nine~~ months ended ~~September 30, 2017.~~March 31, 2021.

A summary of discontinued operations presented in CenterPoint Energy’s Condensed Statements of Consolidated Income is as follows:


	Three Months Ended March 31, 2021
	Equity Method Investment in Enable
	(in millions)
Equity in earnings of unconsolidated affiliate, net	$	108
Income from discontinued operations before income taxes	108
Income tax expense	25
Net income from discontinued operations	$	83

CenterPoint Energy has elected not to separately disclose discontinued operations on its respective Condensed Statements of Consolidated Cash Flows. The following table summarizes CenterPoint Energy’s cash flows from discontinued operations and certain supplemental cash flow disclosures, as applicable:


	Three Months Ended March 31, 2021
	CenterPoint Energy
	Equity Method Investment in Enable
	(in millions)
Equity in earnings of unconsolidated affiliate - operating	$	(108)
Distributions from unconsolidated affiliate - operating	39

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Distributions Received from Enable (CenterPoint Energy):


	Three Months Ended March 31,
	2021
		Per Unit		Cash Distribution
		(in millions, except per unit amounts)
Enable Common Units		$	0.16525	$	39
Enable Series A Preferred Units		0.62500		9
Total CenterPoint Energy				$	48

Transactions with Enable (CenterPoint Energy and CERC):


	Three Months Ended March 31, 2021
	(in millions)
Natural gas expenses, includes transportation and storage costs	$	32

Summarized Financial Information for Enable (CenterPoint Energy)

As a result of the closing of the Enable Merger in 2021, there were no assets classified as held for sale as of December 31, 2021. Summarized consolidated balance sheet information for Enable on the closing of the Enable Merger is as follows:


	December 2,
	2021
	(in millions)
Current assets	$	594
Non-current assets	11,227
Current liabilities	1,254
Non-current liabilities	3,281
Non-controlling interest	26
Preferred equity	362
Accumulated other comprehensive loss	(1)
Enable partners’ equity	6,899

Reconciliation of Investment in Enable:
CenterPoint Energy’s ownership interest in Enable partners’ equity	$	3,701
CenterPoint Energy’s basis difference	(2,732)

CenterPoint Energy��s equity method investment in Enable	$	969

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Summarized unaudited consolidated income information for Enable is as follows:


	Three Months Ended March 31, 2021
		(in millions)
Operating revenues		$	970
Cost of sales, excluding depreciation and amortization		519
Depreciation and amortization		106

Operating income		206
Net income attributable to Enable Common Units		155


Reconciliation of Equity in Earnings, net:
CenterPoint Energy’s interest		$	83
Basis difference amortization (1)		25


CenterPoint Energy’s equity in earnings, net (2)		$	108

(1)Equity in earnings of unconsolidated affiliate includes CenterPoint Energy’s share of Enable earnings adjusted for the amortization of the basis difference of CenterPoint Energy’s investment in Enable and its underlying equity in net assets of Enable. The basis difference was being amortized through the year 2048 and ceased upon closing of the Enable Merger.

(2)Reported as discontinued operations on CenterPoint Energy’s Condensed Statements of Consolidated Income.

(4) Revenue Recognition and Allowance for Credit Losses

Revenues from Contracts with Customers

In accordance with ASC 606, Revenue from Contracts with Customers, revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which the Registrants expect to be entitled to receive in exchange for these goods or services.

ARPs are contracts between the utility and its regulators, not between the utility and a customer. The Registrants recognize ARP revenue as other revenues when the regulator-specified conditions for recognition have been met. Upon recovery of ARP revenue through incorporation in rates charged for utility service to customers, ARP revenue is reversed and recorded as revenue from contracts with customers. The recognition of ARP revenues and the reversal of ARP revenues upon recovery through rates charged for utility service may not occur in the same period.

The following ~~unaudited pro forma financial information reflects~~tables disaggregate revenues by reportable segment and major source:

CenterPoint Energy











	Three Months Ended March 31, 2022
	Electric		Natural Gas		Corporate and Other		Total
	(in millions)
Revenue from contracts	$	898	$	1,845	$	45	$	2,788
Other (1)	(5)		(21)		1		(25)

Total revenues	$	893	$	1,824	$	46	$	2,763










	Three Months Ended March 31, 2021
	Electric		Natural Gas		Corporate and Other		Total
	(in millions)
Revenue from contracts	$	833	$	1,655	$	53	$	2,541
Other (1)	(3)		8		1		6

Total revenues	$	830	$	1,663	$	54	$	2,547

(1)Primarily consists of income from ARPs and leases. Total lease income was $1 million and $2 million for the ~~consolidated~~three months ended March 31, 2022 and 2021, respectively.

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Houston Electric


	Three Months Ended March 31,
		2022		2021
		(in millions)
Revenue from contracts		$	756	$	687
Other (1)		(10)		(3)
Total revenues		$	746	$	684

(1)Primarily consists of income from ARPs and leases. Lease income was not significant for the three months ended March 31, 2022 and 2021.

CERC


	Three Months Ended March 31,
		2022		2021
		(in millions)
Revenue from contracts		$	1,409	$	1,172
Other (1)		(24)		5

Total revenues		$	1,385	$	1,177

(1)Primarily consists of income from ARPs and leases. Lease income was not significant for the three months ended March 31, 2022 and 2021.

Revenues from Contracts with Customers

Electric (CenterPoint Energy and Houston Electric). Houston Electric transmits and distributes electricity to customers over time, and customers consume the electricity when delivered. Indiana Electric generates, transmits and distributes electricity to customers over time, and customers consume the electricity when delivered. Revenue, consisting of both volumetric and fixed tariff rates set by state regulators, such as the PUCT and the IURC, is recognized as electricity is delivered and represents amounts both billed and unbilled. Discretionary services requested by customers are provided at a point in time with control transferring upon the completion of the service. Revenue for discretionary services provided by Houston Electric is recognized upon completion of service based on the tariff rates set by the PUCT. Payments for electricity distribution and discretionary services are aggregated and received on a monthly basis. Houston Electric performs transmission services over time as a stand-ready obligation to provide a reliable network of transmission systems. Revenue is recognized upon time elapsed, and the monthly tariff rate set by the regulator. Payments are received on a monthly basis. Indiana Electric customers are billed monthly and payment terms, set by the regulator, require payment within a month of billing.

Natural Gas (CenterPoint Energy and CERC). CenterPoint Energy and CERC distribute and transport natural gas to customers over time, and customers consume the natural gas when delivered. Revenue, consisting of both volumetric and fixed tariff rates set by the state governing agency for that service area, is recognized as natural gas is delivered and represents amounts both billed and unbilled. Discretionary services requested by the customer are satisfied at a point in time and revenue is recognized upon completion of service and the tariff rates set by the applicable state regulator. Payments of natural gas distribution, transportation and discretionary services are aggregated and received on a monthly basis.

Contract Balances. When the timing of delivery of service is different from the timing of the payments made by customers and when the right to consideration is conditioned on something other than the passage of time, the Registrants recognize either a contract asset (performance precedes billing) or a contract liability (customer payment precedes performance). Those customers that prepay are represented by contract liabilities until the performance obligations are satisfied. The Registrants’ contract assets are included in Accrued unbilled revenues in their Condensed Consolidated Balance Sheets. As of March 31, 2022, CenterPoint Energy’s contract assets primarily relate to Energy Systems Group contracts where revenue is recognized using the input method. The Registrants’ contract liabilities are included in Accounts payable and Other current liabilitiesin their Condensed Consolidated Balance Sheets. As of March 31, 2022, CenterPoint Energy’s contract liabilities primarily relate to Energy Systems Group contracts where revenue is recognized using the input method.

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The opening and closing balances of accounts receivable related to ASC 606 revenues, other accrued unbilled revenue, contract assets and contract liabilities from contracts with customers, excluding balances related to assets held for sale, as of December 31, 2021 and March 31, 2022, respectively, are presented below.

CenterPoint Energy


	Accounts Receivable		Other Accrued Unbilled Revenues		Contract Assets		Contract Liabilities
	(in millions)
Opening balance as of December 31, 2021	$	627	$	513	$	15	$	16
Closing balance as of March 31, 2022	876		432		16		27
Increase (decrease)	$	249	$	(81)	$	1	$	11

The amount of revenue recognized during the three months ended March 31, 2022 that was included in the opening contract liability was $10 million. The difference between the opening and closing balances of the contract liabilities primarily results from the timing difference between CenterPoint Energy’s performance and the customer’s payment.

Houston Electric


	Accounts Receivable		Other Accrued Unbilled Revenues		Contract Liabilities
	(in millions)
Opening balance as of December 31, 2021	$	225	$	127	$	4
Closing balance as of March 31, 2022	247		95		8
Increase (decrease)	$	22	$	(32)	$	4

The amount of ~~operations~~revenue recognized during the three months ended March 31, 2022 that was included in the opening contract liability was $1 million. The difference between the opening and closing balances of ~~CERC, assuming~~ the AEM acquisition had taken place on January 1, 2016. Adjustments to pro forma net income include intercompany sales, amortization of intangible assets, depreciation of fixed assets, interest expense associated with debt financing to fundcontract liabilities primarily results from the ~~acquisition,~~timing difference between Houston Electric’s performance and ~~related income tax effects. The pro forma information~~the customer’s payment.

CERC


	Accounts Receivable		Other Accrued Unbilled Revenues
	(in millions)
Opening balance as of December 31, 2021	$	223	$	247
Closing balance as of March 31, 2022	408		209
Increase (decrease)	$	185	$	(38)

CERC does not have any opening or closing contract asset or contract liability balances.

Remaining Performance Obligations (CenterPoint Energy).The table below discloses (1) the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied (or partially unsatisfied) as of the end of the reporting period for contracts and (2) when CenterPoint Energy expects to recognize this revenue. Such contracts include ~~the mark-to-market impact~~energy performance and sustainable infrastructure services contracts of ~~financial instruments designated as cash flow hedges of anticipated purchases~~Energy Systems Group, which are included in Corporate and ~~sales at index prices. The effective portion of these hedges~~Other.


	Rolling 12 Months		Thereafter		Total
	(in millions)
Revenue expected to be recognized on contracts in place as of March 31, 2022:

Corporate and Other	$	224	$	535	$	759
	$	224	$	535	$	759

Practical Expedients and Exemption. Sales taxes and other similar taxes collected from customers are excluded from ~~earnings~~the transaction price. For contracts for which revenue from the satisfaction of the performance obligations is recognized in the amount invoiced, the practical expedient was elected and ~~reported~~revenue expected to be recognized on these contracts has not been disclosed.

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Allowance for Credit Losses

CenterPoint Energy and CERC segregate financial assets that fall under the scope of Topic 326, primarily trade receivables due in one year or less, into portfolio segments based on shared risk characteristics, such as ~~changes in Other Comprehensive Income.~~geographical location and regulatory environment, for evaluation of expected credit losses. Historical and current information, such as average write-offs, are applied to each portfolio segment to estimate the allowance for losses on uncollectible receivables. Additionally, the ~~pro forma information does~~allowance for losses on uncollectible receivables is adjusted for reasonable and supportable forecasts of future economic conditions, which can include changing weather, commodity prices, regulations, and macroeconomic factors, among others. Houston Electric recognizes losses on financial assets that fall under the scope of Topic 326. Losses on financial assets are primarily recoverable through regulatory mechanisms and do not ~~include~~materially impact Houston Electric's allowance for credit losses. For a discussion of regulatory deferrals related to the ~~mark-to-market impact of physical forward transactions that were previously accounted for as normal purchase and sale transactions.~~February 2021 Winter Storm Event, see Note 6.

The unaudited pro forma financial information has been presented for illustrative purposes only and is not necessarily indicative of the consolidated results of operations that would have been achieved had the acquisition taken place on the dates indicated or the future consolidated results of operations of the combined company.

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(in millions)
Operating Revenue $ 1,251
$ 1,234
$ 4,731
$ 3,819
Net Income 38
43
239
173

~~(4)~~(5) Employee Benefit Plans

~~CERC’s employees participate in CenterPoint Energy’s postretirement benefit plan. CERC’s~~The Registrants’ net periodic cost, before considering amounts subject to overhead allocations for capital expenditure projects or for amounts subject to deferral for regulatory purposes, includes the following components relating to pension and postretirement benefits:

Pension Benefits (CenterPoint Energy)


	Three Months Ended March 31,
		2022		2021
		(in millions)
Service cost (1)		$	8	$	10
Interest cost (2)		15		15
Expected return on plan assets (2)		(25)		(26)

Amortization of net loss (2)		7		9


Net periodic cost		$	5	$	8

(1)Amounts presented in the table above are included in Operation and maintenance expense in CenterPoint Energy’s Condensed Statements of Consolidated Income, net of amounts capitalized and regulatory deferrals.

(2)Amounts presented in the table above are included in Other income, net in CenterPoint Energy’s Condensed Statements of Consolidated Income, net of regulatory deferrals.

Postretirement Benefits

















	Three Months Ended March 31,
	2022						2021
	CenterPoint Energy		Houston Electric		CERC		CenterPoint Energy		Houston Electric		CERC
	(in millions)
Service cost (1)	$	1	$	—	$	—	$	1	$	—	$	—
Interest cost (2)	2		1		1		2		1		1
Expected return on plan assets (2)	(1)		(1)		—		(1)		(1)		—
Amortization of prior service cost (credit) (2)	(1)		(1)		—		(1)		(1)		—
Amortization of net loss (2)	(1)		(1)		—		—		—		—




Net periodic cost (benefit)	$	—	$	(2)	$	1	$	1	$	(1)	$	1

(1)Amounts presented in the tables above are included in Operation and maintenance expense in each of the Registrants’ respective Condensed Statements of Consolidated Income, net of amounts capitalized and regulatory deferrals.

(2)Amounts presented in the tables above are included in Other income (expense), net in each of the Registrants’ respective Condensed Statements of Consolidated Income, net of regulatory deferrals.

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Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
(in millions)
Service cost $ 1
$ 1
$ 1
$ 1
Interest cost 1
1
3
3
Expected return on plan assets (1 ) (1 ) (1 ) (1 )
Amortization of prior service cost —
—
1
—
Net periodic cost (1)
$ 1
$ 1
$ 4
$ 3
The table below reflects the expected contributions to be made to the pension and postretirement benefit plans during 2022:


	CenterPoint Energy		Houston Electric		CERC
	(in millions)
Expected minimum contribution to pension plans during 2022	$	7	$	—	$	—
Expected contribution to postretirement benefit plans in 2022	8		1		3

The table below reflects the contributions made to the pension and postretirement benefit plans during 2022:


~~(1)~~	~~Net periodic cost~~	Three Months Ended March 31, 2022
			CenterPoint Energy		Houston Electric		CERC
			(in ~~this table is before considering amounts subject to overhead allocations for capital expenditure projects or for amounts subject to deferral for regulatory purposes.~~ millions)
Pension plans			$	2	$	—	$	—
Postretirement benefit plans			2		—		—

~~CERC expects~~

(6) Regulatory Matters

Equity Return

The Registrants are at times allowed by a regulator to ~~contribute approximately~~ ~~$5 million~~defer an equity return as part of the recoverable carrying costs of a regulatory asset. A deferred equity return is capitalized for rate-making purposes, but it is not included in the Registrant’s regulatory assets on its Condensed Consolidated Balance Sheets. The allowed equity return is recognized in the Condensed Statements of Consolidated Income as it is recovered in rates. The recoverable allowed equity return not yet recognized by the Registrants is as follows:


	March 31, 2022						December 31, 2021
	CenterPoint Energy (1)		Houston Electric (2)		CERC (3)		CenterPoint Energy (1)		Houston Electric (2)		CERC (3)
	(in millions)
Allowed equity return not recognized	$	195	$	95	$	16	$	199	$	100	$	16

(1)In addition to the amounts described in (2) and (3) below, represents CenterPoint Energy’s allowed equity return on post in-service carrying cost generally associated with investments in Indiana.

(2)Represents Houston Electric’s allowed equity return on its ~~postretirement benefit plan~~true-up balance of stranded costs, other changes and related interest resulting from the formerly integrated electric utilities prior to Texas deregulation to be recovered in ~~2017, of which approximately $1 million~~rates through 2024 and ~~$4 million were contributed during the three and nine months ended September 30, 2017, respectively.~~

~~(5) Regulatory Accounting~~

~~Hurricane Harvey.~~ NGD suffered damage as a result of Hurricane Harvey, a major storm classified as a Category 4 hurricane on the Saffir-Simpson Hurricane Wind Scale, that first struck the Texas coast on Friday, August 25, 2017 and remained over the Houston area for the next several days. The unprecedented flooding from torrential amounts of rainfall accompanying the storm caused significant damage to or destruction of residences and businesses served by NGD.

Currently, NGD estimates that total costs to restore natural gas distribution facilities damaged as a result of Hurricane Harvey will range from $25 million to $30 million and estimates that the total restoration costs covered by insurance will be approximately $17 million. NGD will defer the uninsuredcertain storm restoration ~~costs as management believes it is probable that such costs will be recovered through traditional rate adjustment mechanisms for capital costs and through~~balances pending recovery in the next rate ~~proceeding~~proceeding. The actual amounts recognized are adjusted at least annually to correct any over-collections or under-collections during the preceding 12 months.

(3)CERC’s allowed equity return on post in-service carrying cost associated with certain distribution facilities replacements expenditures in Texas.

The table below reflects the amount of allowed equity return recognized by each Registrant in its Condensed Statements of Consolidated Income:


	Three Months Ended March 31,
	2022						2021
	CenterPoint Energy		Houston Electric		CERC		CenterPoint Energy		Houston Electric		CERC
	(in millions)
Allowed equity return recognized	$	10	$	9	$	—	$	8	$	7	$	—

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February 2021 Winter Storm Event

Amounts for ~~operation~~the under recovery of natural gas costs associated with the February 2021 Winter Storm Event are reflected in current and non-current regulatory assets on CenterPoint Energy’s and CERC’s Condensed Consolidated Balance Sheets. Recovery of natural gas costs within the regulatory assets are probable and are subject to customary regulatory prudence reviews in all jurisdictions that may impact the amounts ultimately recovered. CenterPoint Energy and CERC, as applicable, have begun recovery of natural gas costs in Indiana, Louisiana, Mississippi and Minnesota. CenterPoint Energy and CERC have filed for securitization of natural gas costs in Texas, received commission approval and issuance of financing order in 2022, and expect the Texas Public Financing Authority to issue customer rate relief bonds in 2022. As part of the closing of the sale of CenterPoint Energy’s and CERC’s Natural Gas businesses in Arkansas and Oklahoma, CERC received as part of the purchase price $398 million for unrecovered natural gas costs associated with the February 2021 Winter Storm Event. In testimonies filed on December 22, 2021 and February 11, 2022, in CERC’s high gas cost prudency review case, the Minnesota Attorney General’s Office, Minnesota Department of Commerce, and Citizens Utility Board have proposed significant disallowances for all natural gas utilities, resulting in potential disallowances for CenterPoint Energy and CERC. Recommended disallowances for CERC include up to $45 million proposed by the Minnesota Department of Commerce, $82 million proposed by the Citizens Utility Board, and $409 million (or in the alternative $57 million) proposed by the Attorney General’s Office. The natural gas costs in Minnesota were incurred in accordance with the plan on file with the MPUC and CenterPoint Energy believes the costs were prudently incurred and are eligible for recovery through an existing mechanism. Additionally, due to the uncertainty of timing and method of recovery in some jurisdictions, CenterPoint Energy and CERC may not earn a return on amounts deferred in the regulatory assets associated with the February 2021 Winter Storm Event.

As of March 31, 2022, CenterPoint Energy and CERC have recorded current regulatory assets of $1,207 million and $1,176 million, respectively, and non-current regulatory assets of $297 million and $297 million, respectively, associated with the February 2021 Winter Storm Event. As of December 31, 2021, CenterPoint Energy and CERC have recorded current regulatory assets of $1,410 million and $1,336 million, respectively, of which $154 million related to Arkansas and Oklahoma has been recast to held for sale at both CenterPoint Energy and CERC, and non-current regulatory assets of $583 million and $583 million, respectively, of which $244 million related to Arkansas and Oklahoma has been recast to held for sale at both CenterPoint Energy and CERC, associated with the February 2021 Winter Storm Event.

As of both March 31, 2022 and December 31, 2021, as authorized by the PUCT, CenterPoint Energy and Houston Electric recorded a regulatory asset of $8 million for bad debt expenses resulting from REPs’ default on their obligation to pay delivery charges to Houston Electric net of collateral. Additionally, as of both March 31, 2022 and December 31, 2021, CenterPoint Energy and Houston Electric recorded a regulatory asset of $15 million to defer operations and maintenance ~~expenses. As of September 30, 2017, NGD has recorded approximately $7 million in regulatory assets, net of $2 million of insurance receivables recorded,~~costs associated with the February 2021 Winter Storm Event.

See Note 13(d) for ~~restoration costs incurred. As a result, storm restoration costs should not materially affect CERC’s reported net income for 2017.~~further information regarding litigation related to the February 2021 Winter Storm Event.

~~(6)~~

(7) Derivative Instruments

~~CERC is~~The Registrants are exposed to various market risks. These risks arise from transactions entered into in the normal course of business. ~~CERC utilizes~~The Registrants utilize derivative instruments such as ~~physical forward contracts,~~ swaps and options to mitigate the impact of changes in commodity prices, weather and interest rates on ~~its~~ operating results and cash flows. Such derivatives are recognized in CERC’s Condensed Consolidated Balance Sheets at their fair value unless CERC elects the normal purchase and sales exemption for qualified physical transactions. A derivative may be designated as a normal purchase or sale if the intent is to physically receive or deliver the product for use or sale in the normal course of business.

(a)Non-Trading Activities

Commodity Derivative Instruments (CenterPoint Energy).CenterPoint Energy, has a Risk Oversight Committee composed of corporate and business segment officers that oversees commodity price, weather and credit risk activities, including CERC’s marketing, risk management services and hedging activities. The committee’s duties are to establish CERC’s commodity risk policies, allocate board-approved commercial risk limits, approvethrough the ~~use of new products and commodities, monitor positions and ensure compliance with CERC’s risk management policies, procedures and limits established by CenterPoint Energy’s board of directors.~~

CERC’s policies prohibit the use of leveraged financial instruments. A leveraged financial instrument, for this purpose, is a transaction involving a derivative whose financial impact will be based on an amount other than the notional amount or volume of the instrument.

~~(a) Non-Trading Activities~~

~~Derivative Instruments.~~ ~~CERC~~Indiana Utilities, enters into certain derivative instruments to mitigate the effects of commodity price movements. ~~Certain financial~~Outstanding derivative instruments ~~used to~~designated as economic hedges at the Indiana Utilities hedge ~~portions of the~~long-term variable rate natural gas ~~inventory of~~purchases. The Indiana Utilities have authority to refund and recover mark-to-market gains and losses associated with hedging natural gas purchases, and thus the ~~Energy Services business segment~~gains and losses on derivatives are deferred in a regulatory liability or asset.

Interest Rate Risk Derivative Instruments. From time to time, the Registrants may enter into interest rate derivatives that are designated as ~~fair value hedges for accounting purposes. All other financial instruments do not qualify~~economic or ~~are not designated as~~ cash flow hedges. The objective of these hedges is to offset risk associated with interest rates borne by the Registrants in connection with an anticipated future fixed rate debt offering or ~~fair value hedges.~~other exposure to variable rate debt. The Indiana Utilities have authority to refund and recover mark-to-market gains and losses associated with hedging financing activity, and thus the gains and losses on derivatives are deferred in a regulatory liability or asset.

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The table below summarizes the Registrants’ outstanding interest rate hedging activity:


	March 31, 2022		December 31, 2021
Hedging Classification	Notional Principal

	(in millions)
Economic hedge (1)	$	84	$	84

(1)Relates to interest rate derivative instruments at SIGECO.

Weather ~~Hedges.~~Normalization (CenterPoint Energy and CERC). CenterPoint Energy and CERC ~~has~~have weather normalization or other rate mechanisms that largely mitigate the impact of weather on ~~NGD~~Natural Gas in ~~Arkansas,~~Indiana, Louisiana, Mississippi, Minnesota and ~~Oklahoma. NGD~~Ohio, as applicable. CenterPoint Energy’s and CERC’s Natural Gas in Texas ~~does~~and CenterPoint Energy’s electric operations in Texas and Indiana do not have such mechanisms, although fixed customer charges are historically higher in Texas for ~~NGD~~Natural Gas compared to ~~CERC’s~~its other jurisdictions. As a result, fluctuations from normal weather may have a positive or negative effect on ~~NGD’s~~CenterPoint Energy’s and CERC’s Natural Gas’ results in ~~Texas.~~

~~CERC entered into heating-degree day swaps for certain NGD~~ Texas ~~jurisdictions to mitigate the effect of fluctuations from normal weather~~and on CenterPoint Energy’s electric operations’ results in its ~~results of operations~~Texas and ~~cash flows for the 2017–2018 winter heating season, which contained a bilateral dollar cap of $8 million. However, CERC did~~Indiana service territories. The Registrants do not currently enter into ~~heating-degree day swaps for NGD jurisdictions for the 2015–2016 or 2016–2017 winter heating seasons.~~weather hedges.

~~Hedging of Interest Expense for Future Debt Issuances.~~ In August 2017, CERC Corp. entered into forward interest rate agreements with several counterparties, having an aggregate notional amount of $150 million. These agreements were executed to hedge, in part, volatility in the 30-year U.S. treasury rate by reducing CERC Corp.’s exposure to variability in cash flows related to interest payments of CERC Corp.’s $300 million issuance of fixed rate debt in August 2017. These forward interest rate agreements were designated as cash flow hedges. Accordingly, the effective portion of realized losses associated with the agreements, which totaled approximately $1.5 million, is a component of accumulated other comprehensive income in 2017 and will be amortized over the life of the notes.

(b)Derivative Fair Values and Income Statement Impacts

The following tables present information about ~~CERC’s~~ derivative instruments and hedging activities. The first ~~four tables provide~~table provides a balance sheet overview of ~~CERC’s Derivative Assets~~derivative assets and ~~Liabilities as of September 30, 2017 and December 31, 2016,~~liabilities, while the last table provides a breakdown of the related income statement ~~impacts for~~impacts.

Fair Value of Derivative Instruments and Hedged Items (CenterPoint Energy)


		March 31, 2022				December 31, 2021
	Balance Sheet Location	Derivative Assets Fair Value		Derivative Liabilities Fair Value		Derivative Assets Fair Value		Derivative Liabilities Fair Value




Derivatives not designated as hedging instruments:		(in millions)
Natural gas derivatives (1)	Current Assets: Non-trading derivative assets	$	33	$	—	$	9	$	—
Natural gas derivatives (1)	Other Assets: Non-trading derivative assets	6		—		5		—

Interest rate derivatives	Current Liabilities: Non-trading derivative liabilities	—		1		—		2

Interest rate derivatives	Other Liabilities: Non-trading derivative liabilities	—		5		—		12
Indexed debt securities derivative (2)	Current Liabilities	—		797		—		903

Total		$	39	$	803	$	14	$	917

(1)Natural gas contracts are subject to master netting arrangements. This netting applies to all undisputed amounts due or past due. However, the ~~three and nine months ended September 30, 2017 and 2016.~~

Fair Value of Derivative Instruments
September 30, 2017
Derivatives designated as fair value hedges:
Balance Sheet
Location

Derivative
Assets
Fair Value

Derivative
Liabilities
Fair Value
(in millions)
Natural gas derivatives (1) (2) (3)
Current Assets: Non-trading derivative assets $ —
$ —
Natural gas derivatives (1) (2) (3)
Current Liabilities: Non-trading derivative liabilities 5
—

Derivatives not designated as hedging instruments:
Natural gas derivatives (1) (2) (3)
Current Assets: Non-trading derivative assets 65
2
Natural gas derivatives (1) (2) (3)
Other Assets: Non-trading derivative assets 58
2
Natural gas derivatives (1) (2) (3)
Current Liabilities: Non-trading derivative liabilities 27
55
Natural gas derivatives (1) (2) (3)
Other Liabilities: Non-trading derivative liabilities 9
25
Total $ 164
$ 84


~~(1)~~	The fair value shown for natural gas contracts is comprised of derivative gross volumes totaling 1,866 Bcf or a net 46 Bcf long position. Certain natural gas contracts hedge basis risk only and lack a fixed price exposure.

~~(2)~~

Natural gas contracts are presented on a net basis in the Condensed Consolidated Balance Sheets as they are subject to master netting arrangements. This netting applies to all undisputed amounts due or past due and causes derivative assets (liabilities) to be ultimately presented net in a liability (asset) account within the Condensed Consolidated Balance Sheets. The net of total non-trading natural gas derivative assets and liabilities was a $93 million asset as shown on CERC’s Condensed Consolidated Balance Sheets (and as detailed in the table below), and was comprised of the natural gas contracts derivative assets and liabilities separately shown above, impacted by collateral netting of $13 million.


~~(3)~~	~~Derivative Assets and Derivative Liabilities include no material amounts related to physical forward transactions with Enable.~~

Offsetting of Natural Gas Derivative Assets and Liabilities
September 30, 2017

Gross Amounts Recognized (1)
Gross Amounts Offset in the Consolidated Balance Sheets Net Amount Presented in the Consolidated Balance Sheets (2)
(in millions)
Current Assets: Non-trading derivative assets $ 97
$ (33 ) $ 64
Other Assets: Non-trading derivative assets 67
(11 ) 56
Current Liabilities: Non-trading derivative liabilities (57 ) 40
(17 )
Other Liabilities: Non-trading derivative liabilities (27 ) 17
(10 )
Total $ 80
$ 13
$ 93


~~(1)~~	~~Gross amounts recognized include some derivative assets and liabilities that are not subject to master netting arrangements.~~


~~(2)~~	The derivative assets and liabilities on the Condensed Consolidated Balance Sheets exclude accounts receivable or accounts payable that, should they exist, could be used as offsets to these balances in the event of a default.

Fair Value of Derivative Instruments
December 31, 2016
Derivatives not designated
as hedging instruments

Balance Sheet
Location

Derivative
Assets
Fair Value

Derivative
Liabilities
Fair Value
(in millions)
Natural gas derivatives (1) (2) (3)
Current Assets: Non-trading derivative assets $ 79
$ 14
Natural gas derivatives (1) (2) (3)
Other Assets: Non-trading derivative assets 24
5
Natural gas derivatives (1) (2) (3)
Current Liabilities: Non-trading derivative liabilities 2
43
Natural gas derivatives (1) (2) (3)
Other Liabilities: Non-trading derivative liabilities —
5
Total (4)
$ 105
$ 67


~~(1)~~	The fair value shown for natural gas contracts is comprised of derivative gross volumes totaling 1,035 Bcf or a net 59 Bcf long position. Certain natural gas contracts hedge basis risk only and lack a fixed price exposure.

~~(2)~~

Natural gas contracts are presented on a net basis in the Condensed Consolidated Balance Sheets as they are subject to master netting arrangements. This netting applies to all undisputed amounts due or past due and causes derivative assets (liabilities) to be ultimately presented net in a liability (asset) account within the Condensed Consolidated Balance Sheets. The net of total non-trading natural gas derivative assets and liabilities was a $24 million asset as shown on CERC’s Condensed Consolidated Balance Sheets (and as detailed in the table below), and was comprised of the natural gas contracts derivative assets and liabilities separately shown above, impacted by collateral netting of $14 million.


~~(3)~~	~~Derivative Assets and Derivative Liabilities include no material amounts related to physical forward transactions with Enable.~~


~~(4)~~	~~No derivatives were designated as fair value hedges as of December 31, 2016.~~

Offsetting of Natural Gas Derivative Assets and Liabilities
December 31, 2016

Gross Amounts Recognized (1)
Gross Amounts Offset in the Consolidated Balance Sheets Net Amount Presented in the Consolidated Balance Sheets (2)
(in millions)
Current Assets: Non-trading derivative assets $ 81
$ (30 ) $ 51
Other Assets: Non-trading derivative assets 24
(5 ) 19
Current Liabilities: Non-trading derivative liabilities (57 ) 16
(41 )
Other Liabilities: Non-trading derivative liabilities (10 ) 5
(5 )
Total $ 38
$ (14 ) $ 24


~~(1)~~	~~Gross amounts recognized include some derivative assets and liabilities that are not subject to master netting arrangements.~~


~~(2)~~	The derivative assets and liabilities on the Condensed Consolidated Balance Sheets exclude accounts receivable or accounts payable that, should they exist, could be used as offsets to these balances in the event of a default.

~~Realized and unrealized gains and losses on~~mark-to-market fair value of each natural gas ~~derivatives are recognized~~contract is in an asset position with no offsetting amounts.

(2)Derivative component of the ZENS obligation that represents the ZENS holder’s option to receive the appreciated value of the reference shares at maturity. See Note 10 for further information.

Income Statement Impact of Hedge Accounting Activity (CenterPoint Energy)


		Three Months Ended March 31,
	Income Statement Location	2022		2021
Derivatives not designated as hedging instruments:		(in millions)
Indexed debt securities derivative (1)	Gain on indexed debt securities	$	106	$	26

(1)The indexed debt securities derivative is recorded at fair value and changes in the ~~Condensed~~fair value are recorded in CenterPoint Energy’s Statements of Consolidated ~~Income as revenue for physical sales derivative contracts and as natural gas expense for financial natural gas derivatives and physical purchase natural gas derivatives.~~Income.

Hedge ineffectiveness is recorded as a component of natural gas expense and primarily results from differences in the location of the derivative instrument and the hedged item. Basis ineffectiveness arises from natural gas market price differences between the locations of the hedged inventory and the delivery location specified in the hedge instruments. The impact of natural gas derivatives

~~designated as fair value hedges, the related hedged item, and natural gas derivatives not designated as hedging instruments are presented in the table below.~~

Income Statement Impact of Derivative Activity
Three Months Ended September 30,
Income Statement Location 2017 2016
Derivatives designated as fair value hedges: (in millions)
Natural gas derivatives Gains (Losses) in Expenses: Natural Gas $ (4 ) $ —
Fair value adjustments for natural gas inventory designated as the hedged item Gains (Losses) in Expenses: Natural Gas 4
—
Total increase in Expenses: Natural Gas (1)
$ —
$ —

Derivatives not designated as hedging instruments:
Natural gas derivatives Gains (Losses) in Revenues $ 30
$ 31
Natural gas derivatives Gains (Losses) in Expenses: Natural Gas (9 ) (13 )
Total - derivatives not designated as hedging instruments $ 21
$ 18

Income Statement Impact of Derivative Activity
Nine Months Ended September 30,
Income Statement Location 2017 2016
Derivatives designated as fair value hedges: (in millions)
Natural gas derivatives Gains (Losses) in Expenses: Natural Gas $ 8
$ —
Fair value adjustments for natural gas inventory designated as the hedged item Gains (Losses) in Expenses: Natural Gas (10 ) —
Total increase in Expenses: Natural Gas (1)
$ (2 ) $ —

Derivatives not designated as hedging instruments:
Natural gas derivatives Gains (Losses) in Revenues $ 162
$ 1
Natural gas derivatives Gains (Losses) in Expenses: Natural Gas (91 ) 35
Total - derivatives not designated as hedging instruments $ 71
$ 36

~~(1)~~

Hedge ineffectiveness results from the basis ineffectiveness discussed above, and excludes the impact to natural gas expense from timing ineffectiveness. Timing ineffectiveness arises due to changes in the difference between the spot price and the futures price, as well as the difference between the timing of the settlement of the futures and the valuation of the underlying physical commodity. As the commodity contract nears the settlement date, spot-to-forward price differences should converge, which should reduce or eliminate the impact of this ineffectiveness on natural gas expense.

~~CERC enters into financial~~Certain of CenterPoint Energy’s derivative ~~contracts containing material adverse change provisions. These~~instruments contain provisions ~~could~~that require ~~CERC~~CenterPoint Energy’s debt to ~~post additional collateral if the~~maintain an investment grade credit rating on its long-term unsecured unsubordinated debt from S&P ~~or Moody’s credit ratings~~and Moody’s. If

Tab le of ~~CERC are downgraded. The total fair value~~Contents

CenterPoint Energy’s debt were to fall below investment grade, it would be in violation of these provisions, and the counterparties to the derivative instruments ~~that contain credit risk contingent features that are in a~~could request immediate payment.


	March 31, 2022		December 31, 2021
	(in millions)
Aggregate fair value of derivatives with credit-risk-related contingent features in a liability position	$	6	$	14
Fair value of collateral already posted	7		7
Additional collateral required to be posted if credit risk contingent features triggered (1)	—		7

(1)The maximum collateral required if further escalating collateral is triggered would equal the net liability position as of both September 30, 2017 and December 31, 2016 was $1 million. CERC posted no assets as collateral toward derivative instruments that contain credit risk contingent features as of either September 30, 2017 or December 31, 2016. If all derivative contracts (in a net liability position) containing credit risk contingent features were triggered as of September 30, 2017 and December 31, 2016, $1 million and $-0-, respectively, of additional assets would be required to be posted as collateral.position.

~~(7)~~(8) Fair Value Measurements

Assets and liabilities that are recorded at fair value in the Registrants’ Condensed Consolidated Balance Sheets are categorized based upon the level of judgment associated with the inputs used to measure their value. Hierarchical levels, as defined below and directly related to the amount of subjectivity associated with the inputs to fair valuations of these assets and liabilities, are as follows:

Level 1: Inputs are unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date. The types of assets carried at Level 1 fair value generally are exchange-traded derivatives and equity ~~securities, as well as natural gas inventory that has been designated as the hedged item in a fair value hedge.~~securities.

Level 2: Inputs, other than quoted prices included in Level 1, are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar instruments in active markets, ~~and~~quoted prices for identical or similar assets or liabilities in inactive markets, inputs other than quoted prices that are observable for the asset or ~~liability.~~liability and inputs that are derived principally from or corroborated by observable market data by correlation or other means. Fair value assets and liabilities that are generally included in this category are derivatives with fair values based on inputs from actively quoted markets. A market approach is utilized to value ~~CERC’s~~the Registrants’ Level 2 natural gas derivative assets or liabilities. CenterPoint Energy’s Level 2 indexed debt securities derivative is valued using an option model and a discounted cash flow model, which uses projected dividends on the ZENS-Related Securities and a discount rate as observable inputs.

Level 3: Inputs are unobservable for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. Unobservable inputs reflect ~~CERC’s~~the Registrants’ judgments about the assumptions market participants would use in pricing the asset or liability since limited market data exists. ~~CERC develops~~The Registrants develop these inputs based on the best information available, including ~~CERC’s~~the Registrants’ own data. A market approach is utilized to value CERC’s Level 3 assets or liabilities. As of September 30, 2017, CERC’s Level 3 assets and liabilities are comprised of physical natural gas forward contracts and options. Level 3 physical natural gas forward contracts are valued using a discounted cash flow model which includes illiquid forward price curve locations (ranging from $1.08 to $5.83 per MMBtu) as an unobservable input. Level 3 options are valued through Black-Scholes (including forward start) option models which include option volatilities (ranging from 0% to 87%) as an unobservable input. CERC’s Level 3 physical natural gas forward contracts and options derivative assets and liabilities consist of both long and short positions (forwards and options) and their fair value is sensitive to forward prices and volatilities. If forward prices decrease, CERC’s long forwards lose value whereas its short forwards gain in value. If volatility decreases, CERC’s long options lose value whereas its short options gain in value.

~~CERC determines~~The Registrants determine the appropriate level for each financial asset and liability on a quarterly basis and recognizes transfers between levels at the end of the reporting period. For the nine months ended September 30, 2017, there were no transfers between Level 1 and 2. CERC also recognizes purchases of Level 3 financial assets and liabilities at their fair market value at the end of the reporting period.basis.

The following tables present information about ~~CERC’s~~the Registrants’ assets and liabilities ~~(including derivatives that are presented net)~~ measured at fair value on a recurring basis as of ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016,~~2021 and indicate the fair value hierarchy of the valuation techniques utilized by ~~CERC~~the Registrants to determine such fair value.

CenterPoint Energy


	March 31, 2022						December 31, 2021
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets	(in millions)
Equity securities	$	720	$	—	$	—	$	720	$	1,439	$	—	$	—	$	1,439
Investments, including money market funds (1)	39		—		—		39		42		—		—		42

Natural gas derivatives	—		39		—		39		—		14		—		14



Total assets	$	759	$	39	$	—	$	798	$	1,481	$	14	$	—	$	1,495
Liabilities
Indexed debt securities derivative	$	—	$	797	$	—	$	797	$	—	$	903	$	—	$	903
Interest rate derivatives	—		6		—		6		—		14		—		14




Total liabilities	$	—	$	803	$	—	$	803	$	—	$	917	$	—	$	917

Tab le of Contents

Quoted Prices in
Active Markets
for Identical Assets
(Level 1)

Significant Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Netting
Adjustments (1)
Balance as of September 30, 2017
(in millions)
Assets
Corporate equities $ 3
$ —
$ —
$ —
$ 3
Investments, including money
market funds (2)
11
—
—
—
11
Natural gas derivatives (3)
3
128
33
(44 ) 120
Hedged portion of natural gas inventory 65
—
—
—
65
Total assets $ 82
$ 128
$ 33
$ (44 ) $ 199
Liabilities

Natural gas derivatives (3)
$ 3
$ 74
$ 7
$ (57 ) $ 27
Total liabilities $ 3
$ 74
$ 7
$ (57 ) $ 27
Houston Electric


~~(1)~~	Amounts represent the impact of legally enforceable master netting arrangements that allow CERC to settle positive and negative positions and also include cash collateral of $13 million posted with the same counterparties.


~~(2)~~	~~Amounts are included in Other Assets in the Condensed Consolidated Balance Sheets.~~


~~(3)~~	~~Natural gas derivatives include no material amounts related to physical forward transactions with Enable.~~


	March 31, 2022						December 31, 2021
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets	(in millions)
Investments, including money market funds (1)	$	24	$	—	$	—	$	24	$	27	$	—	$	—	$	27

Total assets	$	24	$	—	$	—	$	24	$	27	$	—	$	—	$	27

CERC


	March 31, 2022						December 31, 2021
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets	(in millions)

Investments, including money market funds (1)	$	14	$	—	$	—	$	14	$	14	$	—	$	—	$	14
Total assets	$	14	$	—	$	—	$	14	$	14	$	—	$	—	$	14

Quoted Prices in
Active Markets
for Identical Assets
(Level 1)

Significant Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Netting
Adjustments (1)
Balance as of December 31, 2016
(in millions)
Assets
Corporate equities $ 3
$ —
$ —
$ —
$ 3
Investments, including money
market funds (2)
10
—
—
—
10
Natural gas derivatives (3)
11
74
20
(35 ) 70
Total assets $ 24
$ 74
$ 20
$ (35 ) $ 83
Liabilities

Natural gas derivatives (3)
$ 4
$ 56
$ 7
$ (21 ) $ 46
Total liabilities $ 4
$ 56
$ 7
$ (21 ) $ 46


~~(1)~~	Amounts represent the impact of legally enforceable master netting arrangements that allow CERC to settle positive and negative positions and also include cash collateral of $14 million held by CES from the same counterparties.


~~(2)~~	~~Amounts are included in Other Assets in the Condensed Consolidated Balance Sheets.~~


~~(3)~~	~~Natural gas derivatives include no material amounts related to physical forward transactions with Enable.~~

(1)Amounts are included in Prepaid expenses and other current assets in the Condensed Consolidated Balance Sheets.

The following table presents additional information about assets or liabilities, including derivatives that are measured at fair value on a recurring basis for which CERC has utilized Level 3 inputs to determine fair value:

Fair Value Measurements Using Significant
Unobservable Inputs (Level 3)
Derivative Assets and Liabilities, Net
Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(in millions)
Beginning balance $ 28
$ 16
$ 13
$ 12
Purchases (1)
—
—
—
12
Total gains (2 ) 9
21
13
Total settlements (1 ) (8 ) (5 ) (24 )
Transfers into Level 3 7
—
9
5
Transfers out of Level 3 (6 ) —
(12 ) (1 )
Ending balance (2)
$ 26
$ 17
$ 26
$ 17
The amount of total gains for the period included
in earnings attributable to the change in unrealized gains or losses relating to assets still held at the reporting date
$ —
$ 6
$ 17
$ 14


~~(1)~~	~~Mark-to-market value of Level 3 derivative assets acquired through the purchase of AEM was less than $1 million at the acquisition date.~~


~~(2)~~	~~CERC did not have significant Level 3 sales during either of the three or nine months ended September 30, 2017 or 2016.~~

Estimated Fair Value of Financial Instruments

The fair values of cash and cash equivalents, investments in debt and equity securities measured at fair value and short-term borrowings are estimated to be approximately equivalent to carrying amounts and have been excluded from the table below. The carrying amounts of non-trading derivative assets and liabilities and CenterPoint Energy’s ZENS indexed debt securities derivative are stated at fair value and are excluded from the table below. The fair value of each debt instrument is determined by multiplying the principal amount of each debt instrument by a combination of historical trading prices and comparable issue data. These liabilities, which are not measured at fair value in the Registrants’ Condensed Consolidated Balance Sheets, but for which the fair value is disclosed, would be classified as Level 2 in the fair value hierarchy.


	March 31, 2022						December 31, 2021
	CenterPoint Energy (1)		Houston Electric (1)		CERC		CenterPoint Energy (1)		Houston Electric (1)		CERC
Long-term debt, including current maturities	(in millions)


Carrying amount	$	13,870	$	6,243	$	3,180	$	16,086	$	5,495	$	4,380
Fair value	14,056		6,378		3,277		17,385		6,230		4,682

(1)Includes Securitization Bond debt.

(9) Goodwill and Other Intangibles (CenterPoint Energy and CERC)

Goodwill (CenterPoint Energy and CERC)

CenterPoint Energy’s goodwill by reportable segment is as follows:


	December 31, 2021		March 31, 2022
	(in millions)
Electric (1)	$	936	$	936
Natural Gas (2)	2,920		2,920
Corporate and Other	438		438

Total	$	4,294	$	4,294

CERC’s goodwill is as follows:


	December 31, 2021		March 31, 2022
	(in millions)
Goodwill (2)	$	611	$	611

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September 30, 2017 December 31, 2016
Carrying
Amount Fair
Value
Carrying
Amount

Fair
Value
(in millions)
Financial liabilities:
Long-term debt $ 2,636
$ 2,854
$ 2,375
$ 2,551
(1)Amount presented is net of the accumulated goodwill impairment charge of $185 million recorded in 2020.

~~(8) Unconsolidated Affiliate~~

~~CERC Corp. has~~(2)Excludes $398 million and $144 million, respectively, of goodwill attributable to the ~~ability to significantly influence the operating~~Arkansas and ~~financial policies of Enable, a publicly traded MLP,~~Oklahoma Natural Gas businesses which was reflected on CenterPoint Energy’s and ~~accordingly, accounts for its investment in Enable’s common units using the equity method of accounting.~~

~~CERC Corp.’s maximum exposure to loss related to Enable, a VIE in which CERC Corp. is not the primary beneficiary, is limited to its equity investment as presented in the~~CERC’s respective Condensed Consolidated Balance Sheets ~~as of September 30, 2017 and outstanding current accounts receivable from Enable.~~

~~Transactions with Enable:~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(in millions)
Reimbursement of transition services (1)
$ —
$ 1
$ 3
$ 6
Natural gas expenses, including transportation and storage costs 23
22
80
79
Interest income related to notes receivable from Enable —
—
—
1


~~(1)~~	~~Represents amounts billed under the Transition Agreements for certain support services provided to Enable. Actual transition services costs are recorded net of reimbursement.~~

September 30, 2017 December 31, 2016
(in millions)
Accounts receivable for amounts billed for transition services $ 1
$ 1
Accounts payable for natural gas purchases from Enable 8
10

~~Limited Partner Interest~~ in ~~Enable:~~



	~~September 30, 2017~~
~~CERC Corp.~~	~~54.1~~	%
~~OGE~~	~~25.7~~	%

In November 2016, Enable completed a public offering of 11,500,000 common units of which 1,424,281 were sold by ArcLight Capital Partners, LLC. The common units issued and sold by Enable resulted in dilution of both CERC Corp.’s and OGE’s limited partner interest in Enable.

~~Enable Common Units Held:~~



	~~September 30, 2017~~
~~CERC Corp.~~	~~233,856,623~~
~~OGE~~	~~110,982,805~~

The 139,704,916 subordinated units previously owned by CERC Corp. converted into common units of Enable on a one-for-one basis on August 30, 2017, at the end of the subordination period, as set forth in Enable’s Fourth Amended and Restated Agreement of Limited Partnership. Upon conversion, holders of common units resulting from the conversion of subordinated units have all the rights and obligations of unitholders holding all other common units, including the right to receive distributions pro rata made with respect to common units.

Generally, sales of more than 5% of the aggregate of the common units CERC Corp. owns in Enable or sales by OGE of more than 5% of the aggregate of the common units it owns in Enable are subject to mutual rights of first offer and first refusal.

Enable is controlled jointly by CERC Corp. and OGE, and each own 50% of the management rights in the general partner of Enable. Sale of CERC Corp.’s or OGE’s ownership interests in Enable’s general partner to a third party is subject to mutual rights of first offer and first refusal, and CERC Corp. is not permitted to dispose of less than all of its interest in Enable’s general partner.

~~Summarized unaudited consolidated income information~~Current assets held for ~~Enable is as follows:~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(in millions)
Operating revenues $ 705
$ 620
$ 1,997
$ 1,658
Cost of sales, excluding depreciation and amortization 349
268
936
717
Impairment of goodwill and other long-lived assets —
8
—
8
Operating income 137
139
399
299
Net income attributable to Enable 104
110
301
231

Reconciliation of Equity in Earnings, net:
CERC Corp.’s interest $ 56
$ 61
$ 163
$ 128
Basis difference amortization (1)
12
12
36
36
CERC Corp.’s equity in earnings, net $ 68
$ 73
$ 199
$ 164


~~(1)~~	Equity in earnings of unconsolidated affiliates includes CERC Corp.’s share of Enable’s earnings adjusted for the amortization of the basis difference of CERC Corp.’s original investment in Enable and its underlying equity in Enable’s net assets. The basis difference is amortized over approximately 33 years, the average life of the assets to which the basis difference is attributed.

~~Summarized unaudited consolidated balance sheet information for Enable is as follows:~~

September 30,
2017 December 31, 2016
(in millions)
Current assets $ 446
$ 396
Non-current assets 10,816
10,816
Current liabilities 831
362
Non-current liabilities 2,740
3,056
Non-controlling interest 12
12
Preferred equity 362
362
Enable partners’ equity 7,317
7,420

Reconciliation of Equity Method Investment in Enable:
CERC Corp.’s ownership interest in Enable partners’ capital $ 4,007
$ 4,067
CERC Corp.’s basis difference (1,526 ) (1,562 )
CERC Corp.’s equity method investment in Enable $ 2,481
$ 2,505

~~Distributions Received from Unconsolidated Affiliate:~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(in millions)
Investment in Enable’s common units $ 74
$ 74
$ 223
$ 223

As of September 30, 2017, CERC Corp. and OGE also own 40% and 60%, respectively, of the incentive distribution rights held by the general partner of Enable. Enable is expected to pay a minimum quarterly distribution of $0.2875 per common unit on its outstanding common units to the extent it has sufficient cash from operations after establishment of cash reserves and payment of fees and expenses, including payments to its general partner and its affiliates, within 60 days after the end of each quarter. If cash distributions to Enable’s unitholders exceed $0.330625 per common unit in any quarter, the general partner will receive increasing percentages or incentive distributions rights, up to 50%, of the cash Enable distributes in excess of that amount. In certain circumstances the general partner of Enable will have the right to reset the minimum quarterly distribution and the target distribution levels at which the incentive distributions receive increasing percentages to higher levels based on Enable’s cash distributions at the time of the exercise of this reset election. To date, no incentive distributions have been made.

~~(9) Goodwill~~

~~Goodwill by reportable business segment~~sale as of December 31, ~~2016~~2021 and ~~changes~~disposed following the completion of the sale in January 2022. For further information, see Note 3.

When a disposal group reflects a component of a reporting unit and meets the ~~carrying amount~~definition of a business, the goodwill within that reporting unit is allocated to the disposal group based on the relative fair value of the components representing a business that will be retained and disposed. Goodwill attributable to the disposed Natural Gas businesses was classified as held for sale as of ~~September 30, 2017~~December 31, 2021 and excluded from the table above.

Other Intangibles (CenterPoint Energy)

The tables below present information on CenterPoint Energy’s intangible assets, excluding goodwill, recorded in Other non-current assets on CenterPoint Energy’s Condensed Consolidated Balance Sheets and the related amortization expense included in Depreciation and amortization on CenterPoint Energy’s Condensed Statements of Consolidated Income.


	March 31, 2022						December 31, 2021
	Gross Carrying Amount		Accumulated Amortization		Net Balance		Gross Carrying Amount		Accumulated Amortization		Net Balance
	(in millions)
Customer relationships	$	33	$	(13)	$	20	$	33	$	(12)	$	21

Trade names	16		(5)		11		16		(5)		11

Operation and maintenance agreements (1)	12		(1)		11		12		(1)		11
Other	2		(1)		1		2		(1)		1
Total	$	63	$	(20)	$	43	$	63	$	(19)	$	44

(1)Amortization expense related to the operation and maintenance agreements and construction backlog is included in Non-utility cost of revenues, including natural gas on CenterPoint Energy’s Condensed Statements of Consolidated Income.


	Three Months Ended March 31,
			2022		2021
		(in millions)
Amortization expense of intangible assets recorded in Depreciation and amortization			$	1	$	1

CenterPoint Energy estimates that amortization expense of intangible assets with finite lives for the next five years will be as follows:


	Amortization Expense

	(in millions)
Remaining nine months of 2022	$	5
2023	6
2024	5
2025	5
2026	5
2027	4

(10) Equity Securities and Indexed Debt Securities (ZENS) (CenterPoint Energy)

(a) Equity Securities

During the three months ended March 31, 2022, CenterPoint Energy executed its previously announced plan to exit the midstream sector by selling the remaining Energy Transfer Common Units and Energy Transfer Series G Preferred Units it held

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as discussed below. CenterPoint Energy used the proceeds from the these sales to redeem outstanding debt and pay incurred expenses associated with the early redemptions. See Note 11 for further information.

CenterPoint Energy’s sales of equity securities during the three months ended March 31, 2022 are as follows:

December 31, 2016 AEM Acquisition (1) September 30,
2017
(in millions)
Natural Gas Distribution $ 746
$ —
$ 746

Energy Services 105
(2) 5
110
(2)
Other Operations 11
—
11

Total $ 862
$ 5
$ 867


~~(1)~~	~~See Note 3.~~


~~(2)~~	~~Amount presented is net of the accumulated goodwill impairment charge of $252 million recorded in 2012.~~


Equity Security/Date Sold	Units Sold	Proceeds (1)
		(in millions)
Energy Transfer Common Units
February and March 2022	50,999,768	$	515
Energy Transfer Series G Preferred Units
March 2022	192,390	$	187

~~CERC performs its goodwill impairment tests at least annually~~

(1)Proceeds are net of transaction costs.

Gains and ~~evaluates goodwill when events or changes~~losses on equity securities, net of transaction costs, are recorded in ~~circumstances indicate that its carrying value may not be recoverable. The impairment evaluation for goodwill is performed using a two-step process.~~Loss on Equity Securities in CenterPoint Energy’s Statements of Consolidated Income.


	Gains (Losses) on Equity Securities
	Three Months Ended March 31,
	2022		2021
	(in millions)
AT&T Common	$	(10)	$	15
Charter Common	(93)		(38)
Energy Transfer Common Units	95		—
Energy Transfer Series G Preferred Units	(9)		—

	$	(17)	$	(23)

~~In the first step, the fair value~~CenterPoint Energy recorded net unrealized losses of each reporting unit is compared with the carrying amount of the reporting unit, including goodwill. The estimated fair value of the reporting unit is generally determined on the basis of discounted cash flows. If the estimated fair value of the reporting unit is less than the carrying amount of the reporting unit, then a second step must be completed to determine the amount of the goodwill impairment that should be recorded. In the second step, the implied fair value of the reporting unit’s goodwill is determined by allocating the reporting unit’s fair value to all of its assets$103 million and liabilities other than goodwill (including any unrecognized intangible assets) in a manner similar to a purchase price allocation. The resulting implied fair value of the goodwill that results from the application of this second step is then compared to the carrying amount of the goodwill and an impairment charge is recorded$23 million for the ~~difference.~~three months ended March 31, 2022 and 2021 respectively, for equity securities held as of March 31, 2022 and 2021.

~~CERC performed~~CenterPoint Energy and its ~~annual impairment test~~subsidiaries hold shares of certain securities detailed in the ~~third quarter~~table below, which are classified as trading securities. Shares of ~~2017~~AT&T Common and ~~determined, based on the results of the first step, that no impairment charge was required for any reportable segment.~~

~~(10)~~ ~~Related Party Transactions~~

CERC participates in a money pool through which it can borrow or invest on a short-term basis. Funding needs are aggregated and external borrowing or investing is based on the net cash position. The net funding requirements of the money poolCharter Common are expected to be ~~met with borrowings under~~held to facilitate CenterPoint Energy’s ~~revolving credit facility or~~ability to meet its obligation under the ~~sale~~ZENS.


	Shares Held		Carrying Value
	March 31, 2022	December 31, 2021	March 31, 2022		December 31, 2021
			(in millions)
AT&T Common	10,212,945	10,212,945	$	241	$	251
Charter Common	872,503	872,503	476		569
Energy Transfer Common Units	—	50,999,768	—		420
Energy Transfer Series G Preferred Units	—	192,390	—		196
Other			3		3
			$	720	$	1,439

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(b) ZENS

In September 1999, CenterPoint Energy issued ZENS having an original principal amount of $1.0 billion of which $828 million remained outstanding as of March 31, 2022. Each ZENS is exchangeable at the holder’s option at any time for an amount of cash equal to 95% of the market value of the reference shares attributable to such note. The number and identity of the reference shares attributable to each ZENS are adjusted for certain corporate events.

CenterPoint Energy’s ~~commercial paper. CERC had no investments in~~reference shares for each ZENS consisted of the money pool as of both September 30, 2017 and December 31, 2016, which would be included in accounts and notes receivable–affiliated companies in the Condensed Consolidated Balance Sheets. Affiliate related net interest income (expense) was not material for either the three or nine months ended September 30, 2017 or 2016.following:


	March 31, 2022	December 31, 2021
	(in shares)
AT&T Common	0.7185	0.7185
Charter Common	0.061382	0.061382

CenterPoint Energy ~~provides some corporate services~~pays interest on the ZENS at an annual rate of 2% plus the amount of any quarterly cash dividends paid in respect of the reference shares attributable to ~~CERC.~~the ZENS. The ~~costs~~principal amount of ~~services have been charged directly~~the ZENS is subject to ~~CERC using methods~~increases or decreases to the extent that ~~management believes are reasonable. These methods include negotiated usage rates, dedicated asset assignment~~the annual yield from interest and ~~proportionate corporate formulas based~~cash dividends on ~~operating expenses, assets, gross margin, employees~~the reference shares attributable to the ZENS is less than or more than 2.309%. The adjusted principal amount is defined in the ZENS instrument as “contingent principal.” As of March 31, 2022, the ZENS, having an original principal amount of $828 million and a ~~composite~~contingent principal amount of $33 million, were outstanding and were exchangeable, at the option of the holders, for cash equal to 95% of the market value of the reference shares attributable to the ZENS.

On May 17, 2021, AT&T announced that it had entered into a definitive agreement with Discovery, Inc. to combine their media assets ~~gross margin~~into a new publicly traded company, Warner Bros. Discovery. The transaction closed on April 8, 2022. Pursuant to the definitive agreement, AT&T shareholders received 0.241917 shares of WBD Common for each share of AT&T Common owned, representing 71% of the new company. Upon the closing of the transaction, reference shares attributable to ZENS now consist of 0.7185 shares of AT&T Common, 0.061382 shares of Charter Common and ~~employees. Houston Electric provides a number~~0.173817 shares of services to CERC. These services are billed at actual cost, either directly or as an allocation, and include fleet services, shop services, geographic services, surveying and right-of-way services, radio communications, data circuit management and field operations. Additionally, CERC provides certain services to Houston Electric. These services are billed at actual cost, either directly or as an allocation and include line locating and other miscellaneous services. These charges are not necessarily indicative of what would have been incurred had CERC not been an affiliate of CenterPoint Energy. Amounts charged to and by CERC for these services were as follows and are included primarily in operation and maintenance expenses:WBD Common.

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(in millions)
Corporate service charges $ 30
$ 31
$ 93
$ 90
Charges from Houston Electric for services provided 3
4
11
11
Billings to Houston Electric for services provided (2 ) (2 ) (5 ) (5 )

~~See Note 8 for related party transactions with Enable.~~

(11) Short-term Borrowings and Long-term Debt

~~(a)Short-term Borrowings~~

Inventory ~~Financing. NGD currently has~~Financing. CenterPoint Energy’s and CERC’s Natural Gas businesses have third-party AMAs associated with ~~its~~their utility distribution service in ~~Arkansas, north~~Indiana, Louisiana, Minnesota, Mississippi and ~~Oklahoma that extend through 2020.~~Texas. The AMAs have varying terms, the longest of which expires in 2027. Pursuant to the provisions of the agreements, ~~NGD~~CenterPoint Energy’s and CERC’s Natural Gas either sells natural gas to the asset manager and agrees to repurchase an equivalent amount of natural gas ~~during~~throughout the ~~winter heating seasons~~year at the same cost, ~~plus a financing charge.~~or simply purchases its full natural gas requirements at each delivery point from the asset manager. These transactions are accounted for as an inventory ~~financing~~financing. CenterPoint Energy and CERC had an$-0- and $7 million outstanding obligations related to the AMAs as of March 31, 2022 and December 31, 2021, respectively, recorded in Short-term borrowings on CenterPoint Energy’s and CERC’s Condensed Consolidated Balance Sheets. Outstanding obligations related to third-party AMAs associated ~~principal obligation~~with utility distribution service in Arkansas and Oklahoma of ~~$48 million and $35~~$36 million as of ~~September 30, 2017 and~~ December 31, ~~2016, respectively.~~2021 are reflected in current liabilities held for sale on CenterPoint Energy’s and CERC’s Condensed Consolidated Balance Sheets. See Note 3 for further information.


~~(b)~~	~~Long-term Debt~~

Debt ~~Issuances.~~Transactions. During the ~~nine~~three months ended ~~September 30, 2017, CERC issued~~March 31, 2022, the following ~~unsecured senior notes:~~debt instruments were issued or incurred:


Registrant	Issuance Date	Debt Instrument	Aggregate Principal Amount		Interest Rate	Maturity Date
	(in millions)



Houston Electric	February 2022	General Mortgage Bonds	$	300	3.00%	2032
Houston Electric	February 2022	General Mortgage Bonds	500		3.60%	2052
		Total Houston Electric (1)	800


		Total CenterPoint Energy	$	800

Issuance Date Aggregate Principal Amount Interest Rate Maturity Date
(in millions)
August 2017 $ 300
4.10% 2047

~~The~~(1)Total proceeds, ~~from the~~net of discounts and issuance expenses and fees, of ~~these unsecured senior notes~~approximately $784 million were used for general ~~corporate~~limited liability company purposes, including capital expenditures and ~~to repay~~the repayment of all or a portion of Houston Electric’s borrowings under the CenterPoint Energy money pool.

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Debt Repayments and Redemptions. During the three months ended March 31, 2022, the following debt instruments were repaid at maturity or redeemed prior to maturity with proceeds received from the sale of Energy Transfer units discussed further in Note 10:


Registrant	Repayment/Redemption Date	Debt Instrument	Aggregate Principal		Interest Rate	Maturity Date
			(in millions)
CERC (1)	January 2022	Floating Rate Senior Notes	$	425	Three-month LIBOR plus 0.5%	2023
		Total CERC	425


CenterPoint Energy (2)	January 2022	First Mortgage Bonds	5		0.82%	2022
CenterPoint Energy (3)	March 2022	Senior Notes	250		3.85%	2024
CenterPoint Energy (4)	March 2022	Senior Notes	350		4.25%	2028
		Total CenterPoint Energy	$	1,030

(1)In January 2022, CERC provided notice of partial redemption, and on January 31, 2022, CERC redeemed a portion of the outstanding ~~commercial paper.~~

~~Revolving Credit Facility.~~ In June 2017, CERC entered into an amendment to its revolving credit facility to extend the termination date thereof from March 3, 2021 to March 3, 2022 and to terminate the swingline loan subfacility thereunder. The amendment also increased the aggregate commitments by $300 million to $900 million under its revolving credit facility. In connection with the amendment to increase the aggregate commitments under its revolving credit facility, CERC increased the size of its commercial paper program to permit the issuance of commercial paper notes in an$1 billion aggregate principal amount ~~not~~of the series at a redemption price equal to ~~exceed $900~~100% of the principal amount, plus accrued and unpaid interest on the principal amount being redeemed.

(2)First Mortgage Bonds issued by SIGECO.

(3)In March 2022, CenterPoint Energy provided notice of redemption, and on March 31, 2022, CenterPoint Energy redeemed all of the remaining outstanding senior notes of the series at a redemption price equal to 100% of the principal amount, plus accrued and unpaid interest of approximately $2 million, the write off of issuance costs of $1 million and an applicable make-whole premium of approximately $7 million for a total redemption price of $260 million.

(4)In March 2022, CenterPoint Energy provided notice of partial redemption, and on March 31, 2022, CenterPoint Energy redeemed a portion ($350 million) of the outstanding $500 million aggregate principal amount of the series at ~~any time outstanding.~~a redemption price equal to 100% of the principal amount, plus accrued and unpaid interest of approximately $6 million, the write off of issuance costs of $3 million and an applicable make-whole premium of approximately $34 million for a total redemption price of $393 million.

~~As of September 30, 2017 and December 31, 2016, CERC~~Credit Facilities.

The Registrants had the following revolving credit facilities as of March 31, 2022:


Execution Date	Registrant	Size of Facility		Draw Rate of LIBOR plus (1)	Financial Covenant Limit on Debt for Borrowed Money to Capital Ratio		Debt for Borrowed Money to Capital Ratio as of March 31, 2022 (2)	Termination Date
		(in millions)
February 4, 2021	CenterPoint Energy	$	2,400	1.625%	65.0%	(3)	56.9%	February 4, 2024
February 4, 2021	CenterPoint Energy (4)	400		1.250%	65.0%		47.0%	February 4, 2024

February 4, 2021	Houston Electric	300		1.375%	67.5%	(3)	53.7%	February 4, 2024
February 4, 2021	CERC	900		1.250%	65.0%		52.7%	February 4, 2024
	Total	$	4,000

(1)Based on current credit ratings.

(2)As defined in the revolving credit facility agreements, excluding Securitization Bonds.

(3)For CenterPoint Energy and ~~utilization~~Houston Electric, the financial covenant limit will temporarily increase to 70% if Houston Electric experiences damage from a natural disaster in its service territory and CenterPoint Energy certifies to the administrative agent that Houston Electric has incurred system restoration costs reasonably likely to exceed $100 million in a consecutive 12-month period, all or part of which Houston Electric intends to seek to recover through securitization financing. Such temporary increase in the financial covenant would be in effect from the date CenterPoint Energy delivers its certification until the earliest to occur of (i) the completion of the securitization financing, (ii) the first anniversary of CenterPoint Energy’s certification or (iii) the revocation of such ~~facility:~~certification.

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September 30, 2017 December 31, 2016
Size of
Facility Loans Letters
of Credit Commercial
Paper Size of
Facility Loans Letters
of Credit Commercial
Paper
(in millions)
$ 900
$ —
$ —
$ 529
(1) $ 600
$ —
$ 4
$ 569
(1)
(4)This credit facility was issued by VUHI, is guaranteed by SIGECO, Indiana Gas and VEDO and includes a $20 million letter of credit sublimit. This credit facility backstops VUHI’s commercial paper program.


~~(1)~~	~~Weighted average interest rate was approximately 1.43% and 1.03% as of September 30, 2017 and December 31, 2016, respectively.~~

Execution Date
Size of
Facility

Draw Rate of LIBOR plus (2)
Financial Covenant Limit on Debt for Borrowed Money to Capital Ratio
Debt for Borrowed Money to Capital
Ratio as of September 30, 2017

Termination Date (3)
(in millions)
March 3, 2016 $ 900
(1) 1.25 % 65 % 38.6% March 3, 2022


~~(1)~~	~~Amended on June 16, 2017 to increase the aggregate commitment size as noted above.~~


~~(2)~~	~~Based on current credit ratings.~~


~~(3)~~	~~Amended on June 16, 2017 to extend the termination date as noted above.~~

~~CERC Corp. was~~The Registrants, including the subsidiaries of CenterPoint Energy discussed above, were in compliance with all financial debt covenants as of ~~September 30, 2017.~~March 31, 2022.

The table below reflects the utilization of the Registrants’ respective revolving credit facilities:


	March 31, 2022								December 31, 2021
Registrant	Loans		Letters of Credit		Commercial Paper (1)		Weighted Average Interest Rate		Loans		Letters of Credit		Commercial Paper (1)		Weighted Average Interest Rate
	(in millions, except weighted average interest rate)
CenterPoint Energy	$	—	$	11	$	325	0.54	%	$	—	$	11	$	1,400	0.34	%
CenterPoint Energy (2)	—		—		260		0.58	%	—		—		350		0.21	%

Houston Electric	—		—		—		—	%	—		—		—		—	%
CERC	—		—		123		0.54	%	—		—		899		0.26	%
Total	$	—	$	11	$	708			$	—	$	11	$	2,649

(1)Outstanding commercial paper generally has maturities of 60 days or less and each Registrants’ commercial paper program is backstopped by such Registrants’ long-term credit facilities. Houston Electric does not have a commercial paper program.

(2)This credit facility was issued by VUHI and is guaranteed by SIGECO, Indiana Gas and VEDO.

Liens. As of March 31, 2022, Houston Electric’s assets were subject to liens securing approximately $5.8 billion of general mortgage bonds, including approximately $68 million held in trust to secure pollution control bonds that mature in 2028 for which CenterPoint Energy is obligated. The general mortgage bonds that are held in trust to secure pollution control bonds are not reflected in Houston Electric’s consolidated financial statements because of the contingent nature of the obligations. As of March 31, 2022, Houston Electric could issue approximately $4.1 billion of additional general mortgage bonds on the basis of retired bonds and 70% of property additions.

Other. As of March 31, 2022, certain financial institutions agreed to issue, from time to time, up to $20 million of letters of credit on behalf of Vectren and certain of its subsidiaries in exchange for customary fees. These agreements to issue letters of credit expire on February 4, 2024. As of March 31, 2022, such financial institutions had issued $1 million of letters of credit on behalf of Vectren and certain of its subsidiaries.

(12) Income Taxes

The Registrants reported the following effective tax rates:


	Three Months Ended March 31,
		2022		2021
CenterPoint Energy - Continuing operations (1)		27	%	15	%
CenterPoint Energy - Discontinued operations		—	%	23	%
Houston Electric (2)		22	%	13	%
CERC (3)		26	%	22	%

(1)CenterPoint Energy’s higher effective tax rate on income from continuing operations for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 was primarily driven by the impact of the non-deductible goodwill associated with the sale of the Natural Gas businesses in Arkansas and Oklahoma, and a decrease in EDIT amortization of the net regulatory EDIT liability.

(2)Houston Electric’s higher effective tax rate for the three months ended March 31, 2022 compared to the same period in 2021 was primarily driven by a decrease in the amount of amortization of the net regulatory EDIT liability.

(3)CERC’s higher effective tax rate for the three months ended March 31, 2022 compared to the same period ended March 31, 2021 was primarily driven by the impact of the non-deductible goodwill associated with the sale of the Natural Gas businesses in Arkansas and Oklahoma, and an increase in EDIT amortization of the net regulatory EDIT liability.

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CenterPoint Energy reported a net uncertain tax liability, inclusive of interest and penalties, of $4 million as of March 31, 2022. The Registrants believe that it is reasonably possible that a decrease of up to $3 million in unrecognized tax benefits may occur in the next 12 months as a result of a lapse of statutes on older exposures, a tax settlement, and/or a resolution of open audits.

Tax Audits and Settlements. Tax years through 2018 have been audited and settled with the IRS for CenterPoint Energy. For the 2019-2022 tax years, the Registrants are participants in the IRS’s Compliance Assurance Process. Vectren’s pre-Merger

2014-2019 tax years are currently under audit by the IRS.

(13) Commitments and Contingencies

(a) ~~Natural Gas Supply Commitments~~Purchase Obligations (CenterPoint Energy and CERC)

~~Natural gas supply commitments~~Commitments include ~~natural gas contracts~~minimum purchase obligations related to CenterPoint Energy’s and CERC’s Natural Gas ~~Distribution~~reportable segment and ~~Energy Services business segments, which~~CenterPoint Energy’s Electric reportable segment. A purchase obligation is defined as an agreement to purchase goods or services that is enforceable and legally binding on the registrant and that specifies all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Contracts with minimum payment provisions have various quantity requirements and durations ~~that~~and are not classified as non-trading derivative assets and liabilities in CenterPoint Energy’s and CERC’s Condensed Consolidated Balance Sheets as of ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016 as these~~2021. These contracts meet an exception as “normal purchases contracts” or do not meet the definition of a derivative. Natural gas and coal supply commitments

also include ~~natural gas~~ transportation contracts that do not meet the definition of a derivative.

On February 9, 2021, Indiana Electric entered into a BTA with a subsidiary of Capital Dynamics. Pursuant to the BTA, Capital Dynamics, with its partner Tenaska, originally planned to build a 300 MW solar array in Posey County, Indiana through a special purpose entity, Posey Solar. Upon completion of construction, currently projected to be at the end of 2023, and subject to IURC approval, which was received on October 27, 2021, Indiana Electric will acquire Posey Solar and its solar array assets for a fixed purchase price. Due to rising cost for the project, caused in part by supply chain issues in the energy industry, the rising cost of commodities and community feedback, CenterPoint Energy, along with Capital Dynamics, announced plans in January 2022 to downsize the project to approximately 200 MW. Indiana Electric collaboratively agreed to the scope change and is currently working through contract negotiations, contingent on further IURC review and approval.

As of ~~September 30, 2017,~~March 31, 2022, undiscounted minimum purchase obligations are approximately:


	CenterPoint Energy				CERC
	Natural Gas and Coal Supply		Other (1)		Natural Gas Supply
	(in millions)
Remaining nine months of 2022	$	521	$	99	$	348
2023	726		503		535
2024	638		181		507
2025	451		30		339
2026	324		30		246
2027	305		72		241
2028 and beyond	1,319		544		1,079

(1)CenterPoint Energy’s undiscounted minimum payment obligations related to PPAs with commitments ranging from 15 to 25 years and its purchase commitment under its BTA in Posey County, Indiana are included above. The remaining undiscounted payment obligations relate primarily to technology hardware and software agreements.

Excluded from the table above are estimates for cash outlays from other PPAs through Indiana Electric that do not have minimum thresholds but do require payment when energy is generated by the provider. Costs arising from certain of these commitments are pass-through costs, generally collected dollar-for-dollar from retail customers through regulator-approved cost recovery mechanisms.

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(b) Guarantees and Product Warranties (CenterPoint Energy)

In the normal course of business, Energy Systems Group enters into contracts requiring it to timely install infrastructure, operate facilities, pay vendors and subcontractors and support warranty obligations and, at times, issue payment and performance bonds and other forms of assurance in connection with these contracts.

Specific to Energy Systems Group’s role as a general contractor in the performance contracting industry, as of March 31, 2022, there were 53 open surety bonds supporting future performance with an aggregate face amount of approximately $527 million. Energy Systems Group’s exposure is less than the face amount of the surety bonds and is limited to the level of uncompleted work under the contracts. As of March 31, 2022, approximately 39% of the work was yet to be completed on projects with open surety bonds. Further, various subcontractors issue surety bonds to Energy Systems Group. In addition to these performance obligations, Energy Systems Group also warrants the functionality of certain installed infrastructure generally for one year and the associated energy savings over a specified number of years. As of March 31, 2022, there were 37 warranties totaling $549 million and an additional $1.2 billion in energy savings commitments not guaranteed by Vectren. Since Energy Systems Group’s inception in 1994, CenterPoint Energy believes Energy Systems Group has had a history of generally meeting its performance obligations and energy savings guarantees and its installed products have operated effectively. CenterPoint Energy assessed the fair value of its obligation for such guarantees as of March 31, 2022 and no amounts were recorded on CenterPoint Energy’s Condensed Consolidated Balance Sheets.

CenterPoint Energy issues parent company level guarantees to certain vendors, customers and other commercial counterparties of Energy Systems Group. These guarantees do not represent incremental consolidated obligations, but rather, represent guarantees of subsidiary obligations to allow those subsidiaries to conduct business without posting other forms of assurance. As of March 31, 2022, CenterPoint Energy, primarily through Vectren, has issued parent company level guarantees supporting Energy Systems Group’s obligations. For those obligations where potential exposure can be estimated, management estimates the maximum exposure under these guarantees to be approximately $511 million as of March 31, 2022. This exposure primarily relates to energy savings guarantees on federal energy savings performance contracts. Other parent company level guarantees, certain of which do not contain a cap on potential liability, have been issued in support of federal operations and maintenance projects for which a maximum exposure cannot be estimated based on the nature of the projects. While there can be no assurance that performance under any of these parent company guarantees will not be required in the future, CenterPoint Energy considers the likelihood of a material amount being incurred as remote.

(c)Guarantees and Product Warranties (CenterPoint Energy and CERC)

On February 24, 2020, CenterPoint Energy, through its subsidiary CERC Corp., entered into the Equity Purchase Agreement to sell the Energy Services Disposal Group. The transaction closed on June 1, 2020. In the normal course of business prior to June 1, 2020, the Energy Services Disposal Group through CES, traded natural gas under supply ~~commitments are approximately:~~contracts and entered into natural gas related transactions under transportation, storage and other contracts. In connection with the Energy Services Disposal Group’s business activities prior to the closing of the sale of the Energy Services Disposal Group on June 1, 2020, CERC Corp. issued guarantees to certain of CES’s counterparties to guarantee the payment of CES’s obligations. When CES remained wholly owned by CERC Corp., these guarantees did not represent incremental consolidated obligations, but rather, these guarantees represented guarantees of CES’s obligations to allow it to conduct business without posting other forms of assurance.

A CERC Corp. guarantee primarily had a one- or two-year term, although CERC Corp. would generally not be released from obligations incurred by CES prior to the termination of such guarantee unless the beneficiary of the guarantee affirmatively released CERC Corp. from its obligations under the guarantee. Throughout CERC Corp.’s ownership of CES and subsequent to the sale of the Energy Services Disposal Group through March 31, 2022, CERC Corp. did not pay any amounts under guarantees of CES’s obligations.

Under the terms of the Equity Purchase Agreement, Symmetry Energy Solutions Acquisition must generally use reasonable best efforts to replace existing CERC Corp. guarantees with credit support provided by a party other than CERC Corp. as of and after the closing of the transaction. Additionally, to the extent that CERC Corp. retains any exposure relating to certain guarantees of CES’s obligations 90 days after closing of the transaction, Symmetry Energy Solutions Acquisition will pay a 3% annualized fee on such exposure, increasing by 1% on an annualized basis every three months. As of March 31, 2022, management estimates approximately $6 million of exposure remained outstanding under CERC Corp. guarantees issued prior to the closing of the transaction on June 1, 2020. If CERC Corp. is required to pay a counterparty under a guarantee in respect of obligations of CES, Symmetry Energy Solutions Acquisition is required to promptly reimburse CERC Corp. for all amounts paid. While there can be no assurance that payment under any of these guarantees will not be required in the future, CenterPoint Energy and CERC consider the likelihood of a material amount being incurred as remote.

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(in millions)
Remaining three months of 2017 $ 169
2018 507
2019 348
2020 166
2021 76
2022 and beyond 113
CenterPoint Energy and CERC recorded no amounts on their respective Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021 related to the performance of these guarantees.

~~(b)~~(d) Legal, Environmental and Other Matters

Legal Matters

~~Gas Market Manipulation Cases~~.Litigation Related to the February 2021 Winter Storm Event.Various legal matters are still proceeding with respect to the February 2021 Winter Storm Event. As of March, 31, 2022, CenterPoint Energy and Houston Electric ~~or their predecessor, Reliant~~have been named as a defendant in over 100 lawsuits related to the February 2021 Winter Storm Event. Like other Texas energy companies and TDUs, CenterPoint Energy and Houston Electric have become involved in certain ofinvestigations, litigation and other regulatory and legal proceedings regarding their ~~former subsidiaries~~efforts to restore power and their compliance with NERC, ERCOT and PUCT rules and directives. CenterPoint Energy and Houston Electric, along with ERCOT, power generation companies, other TDUs, retail electric providers, and other entities, have received, and may continue to receive, claims and lawsuits filed by plaintiffs alleging wrongful death, personal injury, property damage and other injuries and damages. CenterPoint Energy and Houston Electric, along with numerous other entities, have been named as defendants in ~~certain lawsuits described below. Under~~such litigation, all of which is now pending in Texas state court in Harris County, Texas, as part of a ~~master separation agreement between~~multi-district litigation proceeding. The judge overseeing the multi-district litigation has issued an initial case management order, stayed discovery, and will first entertain dispositive motions in 5 representative or “bellwether” cases, which will likely be decided later this year and then likely appealed. CenterPoint Energy and ~~a former subsidiary, RRI,~~ Houston Electric intend to vigorously defend themselves against the claims raised.

CenterPoint Energy and ~~its subsidiaries~~Houston Electric have also responded to inquiries from the Texas Attorney General and the Galveston County District Attorney’s Office, and various other regulatory and governmental entities have conducted or are ~~entitled to be indemnified by RRI and its successors for any losses, including certain attorneys’ fees~~conducting inquiries, investigations and other costs, arising out of these lawsuits. In May 2009, RRI sold its Texas retail business to a subsidiary of NRG and RRI changed its name to RRI Energy, Inc. In December 2010, Mirant Corporation merged with and became a wholly-owned subsidiary of RRI, and RRI changed its name to GenOn. In December 2012, NRG acquired GenOn through a merger in which GenOn became a wholly-owned subsidiary of NRG. Nonereviews of the ~~sale~~February 2021 Winter Storm Event and the efforts made by various entities to prepare for, and respond to, the event, including the electric generation shortfall issues.Such other entities include the United States Congress, FERC, NERC, Texas RE, ERCOT, Texas government entities and officials such as the Texas Governor’s office, the Texas Legislature, the PUCT, the City of ~~the retail business, the merger with Mirant Corporation, or the acquisition of GenOn by NRG alters RRI’s (now GenOn’s) contractual obligations to indemnify~~Houston and other municipal and county entities in Houston Electric’s service territory.

Additionally, CenterPoint Energy and ~~its subsidiaries, including~~CERC have responded to inquiries from the Arkansas, Minnesota and Oklahoma Attorneys General. CenterPoint Energy, Houston Electric ~~for certain liabilities, including their indemnification obligations regarding~~and CERC are unable to predict the ~~gas market manipulation litigation.~~

~~A large number~~outcome or consequences of ~~lawsuits were filed against numerous gas market participants in a number of federal and western state courts in connection with the operation~~any of the ~~natural gas markets in 2000–2002. CenterPoint Energy and its affiliates have since been released~~foregoing matters or ~~dismissed from all such cases. CES,~~to estimate a ~~subsidiary~~range of CERC Corp., was a defendant in a case now pending in federal court in Nevada alleging a conspiracy to inflate Wisconsin natural gas prices in 2000–2002. On May 24, 2016, the district court granted CES’s motion for summary judgment, dismissing CES from the case. The plaintiffs have appealed that ruling. CenterPoint Energy and CES intend to continue vigorously defending against the plaintiffs’ claims. In June 2017, GenOn and various affiliates filed for protection under Chapter 11 of the U.S. Bankruptcy Code. CenterPoint Energy, CERC, and CES submitted proofs of claim in the bankruptcy proceedings to protect their indemnity rights. If GenOn were unable to meet its indemnity obligations or satisfy a liability that has been assumed in the gas market manipulation litigation, then CERC, CenterPoint Energy or Houston Electric could incur liability and be responsible for satisfying the liability. CERC does not expect the ultimate outcome of the case against CES to have a material adverse effect on its financial condition, results of operations or cash flows.potential losses.

~~Minnehaha Academy.~~ On August 2, 2017, a natural gas explosion occurred at the Minnehaha Academy in Minneapolis, Minnesota, resulting in the deaths of two school employees, serious injuries to others and significant property damage to the school. CenterPoint Energy, certain of its subsidiaries, including CERC Corp., and the contractor company working in the school have been named in litigation arising out of this incident. Additionally, CenterPoint Energy is cooperating with ongoing investigations conducted by the National Transportation Safety Board, the Minnesota Occupational Safety and Health Administration and the Minnesota Office of Pipeline Safety. CenterPoint Energy’s general and excess liability insurance policies provide coverage for third party bodily injury and property damage claims.

Environmental Matters

MGP Sites. CenterPoint Energy, CERC and ~~its~~their predecessors, including predecessors of Vectren, operated MGPs in the past. The costs CenterPoint Energy or CERC, as applicable, expect to incur to fulfill their respective obligations are estimated by management using assumptions based on actual costs incurred, the timing of expected future payments and inflation factors, among others. While CenterPoint Energy and CERC have recorded obligations for all costs which are probable and estimable, including amounts they are presently obligated to incur in connection with activities at these sites, it is possible that future events may require remedial activities which are not presently foreseen, and those costs may not be subject to PRP or insurance recovery.

(i)Minnesota MGPs (CenterPoint Energy and CERC). With respect to certain Minnesota MGP sites, CenterPoint Energy and CERC ~~has~~have completed state-ordered remediation and ~~continues~~continue state-ordered monitoring and water treatment. ~~As of September 30, 2017,~~CenterPoint Energy and CERC ~~had~~recorded a ~~recorded~~ liability ~~of $7 million~~as reflected in the table below for continued monitoring and any future remediation required by regulators in Minnesota.

(ii)Indiana MGPs (CenterPoint Energy). In the Indiana Gas service territory, the existence, location and certain general characteristics of 26 gas manufacturing and storage sites have been identified for which CenterPoint Energy may have some remedial responsibility. A remedial investigation/feasibility study was completed at one of the sites under an agreed upon order between Indiana Gas and the IDEM, and a Record of Decision was issued by the IDEM in January 2000. The remaining sites have been submitted to the IDEM’s VRP. CenterPoint Energy has also identified its involvement in 5 manufactured gas plant sites in SIGECO’s service territory, all of which are currently enrolled in the IDEM’s VRP. CenterPoint Energy is currently conducting some level of remedial activities, including groundwater monitoring at certain sites.

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(iii)Other MGPs(CenterPoint Energy and CERC). In addition to the Minnesota and Indiana sites, the EPA and other regulators have investigated MGP sites that were owned or operated by CenterPoint Energy or CERC or may have been owned by one of their former affiliates.

Total costs that may be incurred in connection with addressing these sites cannot be determined at this time. The estimated accrued costs are limited to CenterPoint Energy’s and CERC’s share of the remediation efforts and are therefore net of exposures of other PRPs. The estimated range of possible remediation costs for the sites for which CenterPoint Energy and CERC ~~believes it~~believe they may have responsibility was ~~$4 million to $30 million~~ based on remediation continuing for ~~30 to 50 years.~~ the minimum time frame given in the table below.


	March 31, 2022
	CenterPoint Energy		CERC
	(in millions, except years)
Amount accrued for remediation	$	17	$	12
Minimum estimated remediation costs	12		9
Maximum estimated remediation costs	51		29
Minimum years of remediation	5		30
Maximum years of remediation	50		50

The cost estimates are based on studies of a site or industry average costs for remediation of sites of similar size. The actual remediation costs will depend on the number of sites to be remediated, the participation of other PRPs, if any, and the remediation methods used.

~~In addition to the Minnesota sites, the Environmental Protection Agency~~CenterPoint Energy and ~~other regulators have investigated MGP sites that were owned or operated by~~ CERC ~~or may have been owned by one of its former affiliates. CERC does~~do not expect the ultimate outcome of these matters to have a material adverse effect on ~~its~~the financial condition, results of operations or cash ~~flows.~~flows of either CenterPoint Energy or CERC.

Asbestos.Some facilities owned by ~~CERC~~the Registrants or ~~its~~their predecessors contain or have contained asbestos insulation and other asbestos-containing materials. ~~CERC and its predecessor companies~~The Registrants are from time to time named, along with numerous others, as defendants in lawsuits filed by a number of individuals who claim injury due to exposure to asbestos, and ~~CERC anticipates~~the Registrants anticipate that additional claims may be asserted in the future. Although their ultimate outcome cannot be predicted at this time, ~~CERC does~~the Registrants do not expect these matters, either individually or in the aggregate, to have a material adverse effect on ~~its~~their financial condition, results of operations or cash flows.

CCR Rule (CenterPoint Energy). In April 2015, the EPA finalized its CCR Rule, which regulates ash as non-hazardous material under the RCRA. The final rule allows beneficial reuse of ash, and the majority of the ash generated by Indiana Electric’s generating plants will continue to be reused. In July 2018, the EPA released its final CCR Rule Phase I Reconsideration which extended the deadline to October 31, 2020 for ceasing placement of ash in ponds that exceed groundwater protections standards or that fail to meet location restrictions. In August 2019, the EPA proposed additional “Part A” amendments to its CCR Rule with respect to beneficial reuse of ash and other materials. Further “Part B” amendments, which related to alternate liners for CCR surface impoundments and the surface impoundment closure process, were published in March 2020. The Part A amendments were finalized in August 2020 and extended the deadline to cease placement of ash in ponds to April 11, 2021, discussed further below. The EPA published the final Part B amendments in November 2020. The Part A amendments do not restrict Indiana Electric’s current beneficial reuse of its fly ash. CenterPoint Energy evaluated the Part B amendments to determine potential impacts and determined that the Part B amendments did not have an impact on its current plans. Shortly after taking office in January 2021, President Biden signed an executive order requiring agencies to review environmental actions taken by the Trump administration, including the CCR Rule Phase I Reconsideration, the Part A amendments, and the Part B amendments; the EPA has completed its review of the Phase I Reconsideration, Part A amendments, and Part B amendments and determined that the most environmentally protective course is to implement the rules.

Indiana Electric has 3 ash ponds, 2 at the F.B. Culley facility (Culley East and Culley West) and 1 at the A.B. Brown facility. Under the existing CCR Rule, Indiana Electric is required to perform integrity assessments, including ground water monitoring, at its F.B. Culley and A.B. Brown generating stations. The ground water studies are necessary to determine the remaining service life of the ponds and whether a pond must be retrofitted with liners or closed in place. Indiana Electric’s Warrick generating unit is not included in the scope of the CCR Rule as this unit has historically been part of a larger generating station that predominantly serves an adjacent industrial facility. Preliminary groundwater monitoring indicates potential groundwater impacts very close to Indiana Electric’s ash impoundments, and further analysis is ongoing. The CCR Rule required companies to complete location restriction determinations by October 18, 2018. Indiana Electric completed its evaluation and determined that 1 F.B. Culley pond (Culley East) and the A.B. Brown pond fail the aquifer placement location

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restriction. As a result of this failure, Indiana Electric was required to cease disposal of new ash in the ponds and commence closure of the ponds by April 11, 2021, unless approved for an extension. CenterPoint Energy has applied for the extensions available under the CCR Rule that would allow Indiana Electric to continue to use the ponds through October 15, 2023. The EPA is still reviewing industry extension requests, including CenterPoint Energy’s extension request. Companies can continue to operate ponds pending completion of the EPA’s evaluation of the requests for extension. If the EPA denies a full extension request, that denial may result in increased and potentially significant operational costs in connection with the accelerated implementation of an alternative ash disposal system or may adversely impact Indiana Electric’s future operations. Failure to comply with a cease waste receipt could also result in an enforcement proceeding, resulting in the imposition of fines and penalties. On April 24, 2019, Indiana Electric received an order from the IURC approving recovery in rates of costs associated with the closure of the Culley West pond, which has already completed closure activities. On August 14, 2019, Indiana Electric filed its petition with the IURC for recovery of costs associated with the closure of the A.B. Brown ash pond, which would include costs associated with the excavation and recycling of ponded ash. This petition was subsequently approved by the IURC on May 13, 2020. On October 28, 2020, the IURC approved Indiana Electric’s ECA proceeding, which included the initiation of recovery of the federally mandated project costs.

Indiana Electric continues to refine site specific estimates of closure costs for its 10-acre Culley East pond. In July 2018, Indiana Electric filed a Complaint for Damages and Declaratory Relief against its insurers seeking reimbursement of defense, investigation and pond closure costs incurred to comply with the CCR Rule, and has since reached confidential settlement agreements with its insurers. The proceeds of these settlements will offset costs that have been and will be incurred to close the ponds.

As of March 31, 2022, CenterPoint Energy has recorded an approximate $90 million ARO, which represents the discounted value of future cash flow estimates to close the ponds at A.B. Brown and F.B. Culley. This estimate is subject to change due to the contractual arrangements; continued assessments of the ash, closure methods, and the timing of closure; implications of Indiana Electric’s generation transition plan; changing environmental regulations; and proceeds received from the settlements in the aforementioned insurance proceeding. In addition to these AROs, Indiana Electric also anticipates equipment purchases of between $60 million and $80 million to complete the A.B. Brown closure project.

Clean Water Act Permitting of Groundwater Discharges. In April 2021, the U.S. Supreme Court issued an opinion providing that indirect discharges via groundwater or other non-point sources are subject to permitting and liability under the Clean Water Act when they are the functional equivalent of a direct discharge. The Registrants are evaluating the extent to which this decision will affect Clean Water Act permitting requirements and/or liability for their operations.

Other Environmental.From time to time, ~~CERC identifies~~the Registrants identify the presence of environmental contaminants during ~~its~~ operations or on property where ~~its predecessor companies~~their predecessors have conducted operations. Other such sites involving contaminants may be identified in the future. ~~CERC has~~The Registrants have and ~~expects~~expect to continue to remediate any identified sites consistent with ~~its~~state and federal legal obligations. From time to time, ~~CERC has~~the Registrants have received notices, and may receive notices in the future, from regulatory authorities or others regarding ~~its~~ status as a PRP in connection with sites found to require remediation due to the presence of environmental contaminants. In addition, ~~CERC has~~the Registrants have been, or may be, named from time to time as ~~a defendant~~defendants in litigation related to such sites. Although the ultimate outcome of such matters cannot be predicted at this time, ~~CERC does~~the Registrants do not expect these matters, either individually or in the aggregate, to have a material adverse effect on ~~its~~their financial condition, results of operations or cash flows.

Other Proceedings

~~CERC is~~The Registrants are involved in other legal, environmental, tax and regulatory proceedings before various courts, regulatory commissions and governmental agencies regarding matters arising in the ordinary course of business. From time to time, ~~CERC is~~the Registrants are also ~~a defendant~~defendants in legal proceedings with respect to claims brought by various plaintiffs against broad groups of participants in the energy industry. Some of these proceedings involve substantial amounts. ~~CERC~~The Registrants regularly ~~analyzes~~analyze current information and, as necessary, ~~provides~~provide accruals for probable and reasonably estimable liabilities on the eventual disposition of these matters. ~~CERC does~~The Registrants do not expect the disposition of these matters to have a material adverse effect on ~~its~~the Registrants’ financial condition, results of operations or cash flows.

~~(13) Income Taxes~~(14) Earnings Per Share (CenterPoint Energy)

The ~~effective tax rate reported~~Series C Preferred Stock issued in May 2020 were considered participating securities since these shares participated in dividends on Common Stock on a pari passu, pro rata, as-converted basis. As a result, beginning June 30, 2020, earnings per share on Common Stock was computed using the two-class method required for participating securities during the periods the Series C Preferred Stock was outstanding. As of May 7, 2021, all of the remaining outstanding Series C Preferred Stock were

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converted into shares of Common Stock and earnings per share on Common Stock and, as such, the two-class method was no longer applicable beginning June 30, 2021.

The two-class method uses an earnings allocation formula that treats participating securities as having rights to earnings that otherwise would have been available only to common shareholders. Under the two-class method, income (loss) available to common shareholders from continuing operations is derived by subtracting the following from income (loss) from continuing operations:

•preferred share dividend requirement;

•deemed dividends for the amortization of the beneficial conversion feature recognized at issuance of the Series C Preferred Stock; and

•an allocation of undistributed earnings to preferred shareholders of participating securities (Series C Preferred Stock) based on the securities’ right to receive dividends.

Undistributed earnings are calculated by subtracting dividends declared on Common Stock, the preferred share dividend requirement and deemed dividends for the amortization of the beneficial conversion feature from net income. Net losses are not allocated to the Series C Preferred Stock as it does not have a contractual obligation to share in the losses of CenterPoint Energy.

Basic earnings per common share is computed by dividing income available to common shareholders from continuing operations by the basic weighted average number of common shares outstanding during the period. Participating securities are excluded from basic weighted average number of common shares outstanding. Diluted earnings per common share is computed by dividing income available to common shareholders from continuing operations by the weighted average number of common shares outstanding, including all potentially dilutive common shares, if the effect of such common shares is dilutive.

Diluted earnings per share reflects the dilutive effect of potential common shares from share-based awards and convertible preferred shares. The dilutive effect of Series B Preferred Stock and Series C Preferred Stock is computed using the if-converted method, as applicable, which assumes conversion of Series B Preferred Stock and Series C Preferred Stock at the beginning of the period, giving income recognition for the add-back of the preferred share dividends, amortization of beneficial conversion feature, and undistributed earnings allocated to preferred shareholders. The dilutive effect of restricted stock is computed using the treasury stock method, as applicable, which includes the incremental shares that would be hypothetically vested in excess of the number of shares assumed to be hypothetically repurchased with the assumed proceeds.

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The following table reconciles numerators and denominators of CenterPoint Energy’s basic and diluted earnings per common share.


	Three Months Ended March 31,
	2022		2021
	(in millions, except per share and share amounts)
Numerator:
Income from continuing operations	$	531	$	280
Less: Preferred stock dividend requirement (Note 18)	13		29

Less: Undistributed earnings allocated to preferred shareholders (1)	—		23
Income available to common shareholders from continuing operations - basic	518		228
Add back: Series B Preferred Stock dividend	—		17
Add back: Undistributed earnings allocated to preferred shareholders (1)	—		23
Income available to common shareholders from continuing operations - diluted	518		268
Income available to common shareholders from discontinued operations - basic and diluted	—		83
Income available to common shareholders - basic and diluted	$	518	$	351
Denominator:
Weighted average common shares outstanding - basic	629,134,000		551,546,000
Plus: Incremental shares from assumed conversions:
Restricted stock	2,170,000		3,114,000
Series B Preferred Stock	—		35,937,000
Series C Preferred Stock	—		40,823,000
Weighted average common shares outstanding - diluted	631,304,000		631,420,000







Earnings Per Common Share:
Basic earnings per common share - continuing operations	$	0.82	$	0.41
Basic earnings per common share - discontinued operations	—		0.15
Basic Earnings Per Common Share	$	0.82	$	0.56
Diluted earnings per common share - continuing operations	$	0.82	$	0.43
Diluted earnings per common share - discontinued operations	—		0.13
Diluted Earnings Per Common Share	$	0.82	$	0.56

(1)There were no undistributed earnings to be allocated to participating securities for the three months ended ~~September 30, 2017 was 40% compared to 38% for the same period in 2016.~~ March 31, 2022.

(15) Reportable Segments

The effective tax rate reported for the nine months ended September 30, 2017 was 38% compared to 40% for the same period in 2016. The higher effective tax rate for the nine months ended September 30, 2016 was due to a Louisiana state tax law change resulting in an increase to CERC’s deferred tax liability.

CERC reported no uncertain tax liability as of September 30, 2017 and expects no significant change to the uncertain tax liability over the next twelve months. CenterPoint Energy’s consolidated federal income tax returns have been audited and settled through 2015. For the 2016 and 2017 tax years, CenterPoint Energy is a participant in the IRS’s Compliance Assurance Process.

~~(14) Reportable Business Segments~~

~~CERC’s~~Registrants’ determination of reportable ~~business~~ segments considers the strategic operating units under which itits CODM manages sales, allocates resources and assesses performance of various products and services to wholesale or retail customers in differing regulatory environments. ~~CERC uses operating~~Each Registrant’s CODM views net income as the measure of profit or loss for ~~its business segments other than Midstream Investments, where it uses equity in earnings of unconsolidated affiliates.~~

~~CERC’s~~the reportable ~~business segments include~~segments. Certain prior year amounts have been reclassified for discontinued operations as described below. Additionally, during the ~~following:~~three months ended March 31, 2022, CenterPoint Energy sold certain assets previously owned by entities within Corporate and Other to businesses within the Electric and Natural Gas ~~Distribution,~~reportable segments. Prior year amounts were reclassified as a result of this transaction in the three months ended March 31, 2022 and as described in the combined 2021 Form 10-K.

In 2021, CenterPoint Energy’s equity investment in Enable was classified and presented as held for sale and discontinued operations. On December 2, 2021, Enable completed the previously announced Enable Merger pursuant to the Enable Merger Agreement entered into on February 16, 2021. See Note 3 for further information.

As of March 31, 2022, reportable segments by Registrant were as follows:

CenterPoint Energy ~~Services, Midstream Investments~~

•CenterPoint Energy’s Electric reportable segment consisted of electric transmission and ~~Other Operations.~~distribution services in the Texas gulf coast area in the ERCOT region and electric transmission and distribution services primarily to southwestern Indiana and includes power generation and wholesale power operations in the MISO region.

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•CenterPoint Energy’s Natural Gas ~~Distribution~~reportable segment consists of (i) intrastate natural gas sales to, and natural gas transportation and distribution for residential, commercial, industrial and institutional ~~customers.~~ customers in Indiana, Louisiana, Minnesota, Mississippi, Ohio and Texas; and (ii) permanent pipeline connections through interconnects with various interstate and intrastate pipeline companies through CEIP.

CenterPoint Energy’s Corporate and Other category consists of energy performance contracting and sustainable infrastructure services through Energy ~~Services represents~~ Systems Group and other corporate operations which support all of the business operations of CenterPoint Energy.

Houston Electric

•Houston Electric’s single reportable segment consisted of electric transmission services to transmission service customers in the ERCOT region and distribution services to REPs serving the Texas gulf coast area.

CERC

•CERC’s ~~non-rate regulated~~single reportable segment consisted of (i) intrastate natural gas sales to, and ~~services operations. Midstream Investments consists of CERC’s equity investment~~natural gas transportation and distribution for residential, commercial, industrial and institutional customers in ~~Enable. The Other Operations business segment includes unallocated corporate costs~~Louisiana, Minnesota, Mississippi and ~~inter-segment eliminations.~~Texas; and (ii) permanent pipeline connections through interconnects with various interstate and intrastate pipeline companies through CEIP.

Financial data for ~~business~~reportable segments is as ~~follows:~~follows, including Corporate and Other and Discontinued Operations for reconciliation purposes:

CenterPoint Energy














	Three Months Ended March 31,
	2022			2021
	Revenues from External Customers			Net Income		Revenues from External Customers			Net Income (Loss)
	(in millions)
Electric	$	893	(1)	$	82	$	830	(1)	$	75
Natural Gas	1,824			398		1,663			229

Corporate and Other	46			51		54			(24)

Continuing Operations	$	2,763		531		$	2,547		280
Discontinued Operations, net				—					83
Consolidated				$	531				$	363

(1)Houston Electric revenues from major external customers are as follows (CenterPoint Energy and Houston Electric):


	Three Months Ended March 31,
			2022		2021
		(in millions)
Affiliates of NRG			$	225	$	195
Affiliates of Vistra Energy Corp.			105		88

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For the Three Months Ended September 30, 2017
Revenues from
External
Customers Inter-segment
Revenues Operating
Income
(in millions)
Natural Gas Distribution $ 390
$ 8
$ 19
Energy Services 861
10
7
Midstream Investments (1)
—
—
—
Other Operations —
—
—
Reconciling Eliminations —
(18 ) —
Consolidated $ 1,251
$ —
$ 26


	Total Assets
	March 31, 2022		December 31, 2021
	(in millions)
Electric	$	17,258	$	16,547
Natural Gas	16,306		16,267

Corporate and Other, net of eliminations (1)	1,638		2,527

Continuing Operations	35,202		35,341
Assets Held for Sale	—		2,338
Consolidated	$	35,202	$	37,679

(1)Total assets included pension and other postemployment-related regulatory assets of $423 million and $427 million as of March 31, 2022 and December 31, 2021, respectively.

Houston Electric

Houston Electric consists of a single reportable segment; therefore, a tabular reportable segment presentation has not been included.

CERC

CERC consists of a single reportable segment; therefore, a tabular reportable segment presentation has not been included.

(16) Supplemental Disclosure of Cash Flow Information

For the Three Months Ended September 30, 2016
Revenues from
External
Customers Inter-segment
Revenues Operating
Income (Loss)
(in millions)
Natural Gas Distribution $ 370
$ 7
$ 22
Energy Services 608
6
5
Midstream Investments (1)
—
—
—
Other Operations —
—
(1 )
Reconciling Eliminations —
(13 ) —
Consolidated $ 978
$ —
$ 26

The table below provides supplemental disclosure of cash flow information:

For the Nine Months Ended September 30, 2017
Revenues from
External
Customers Inter-segment
Revenues Operating
Income (Loss) Total Assets as of September 30, 2017
(in millions)
Natural Gas Distribution $ 1,767
$ 24
$ 220
$ 6,067
Energy Services 2,964
34
58
1,337
Midstream Investments (1)
—
—
—
2,481
Other Operations —
—
(5 ) 73
Reconciling Eliminations —
(58 ) —
(582 )
Consolidated $ 4,731
$ —
$ 273
$ 9,376


	Three Months Ended March 31,
	2022						2021
	CenterPoint Energy		Houston Electric		CERC		CenterPoint Energy		Houston Electric		CERC
	(in millions)
Cash Payments/Receipts:
Interest, net of capitalized interest	$	134	$	63	$	24	$	159	$	70	$	21
Income tax refunds, net	(15)		—		—		(4)		—		—
Non-cash transactions:
Accounts payable related to capital expenditures	307		232		79		166		140		56
ROU assets obtained in exchange for lease liabilities (1)	—		—		—		1		—		—

(1) Excludes ROU assets obtained through prepayment of the lease liabilities. See Note 19.

For the Nine Months Ended September 30, 2016
Revenues from
External
Customers Inter-segment
Revenues Operating
Income (Loss) Total Assets as of December 31, 2016
(in millions)
Natural Gas Distribution $ 1,672
$ 21
$ 202
$ 6,099
Energy Services 1,433
17
11
1,102
Midstream Investments (1)
—
—
—
2,505
Other Operations —
—
(3 ) 75
Reconciling Eliminations —
(38 ) —
(563 )
Consolidated $ 3,105
$ —
$ 210
$ 9,218


~~(1)~~	~~Midstream Investments’ equity earnings are as follows:~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(in millions)
Enable $ 68
$ 73
$ 199
$ 164

~~(15) Other Current Assets~~The table below provides a reconciliation of cash, cash equivalents and ~~Liabilities~~

~~Included~~restricted cash reported in ~~other current assets on~~ the Condensed Consolidated Balance Sheets to the amount reported in the Condensed Statements of Consolidated Cash Flows:


	March 31, 2022						December 31, 2021
	CenterPoint Energy		Houston Electric		CERC		CenterPoint Energy		Houston Electric		CERC
	(in millions)
Cash and cash equivalents (1)	$	125	$	104	$	4	$	230	$	214	$	8
Restricted cash included in Prepaid expenses and other current assets	22		18		—		24		19		—

Total cash, cash equivalents and restricted cash shown in Condensed Statements of Consolidated Cash Flows	$	147	$	122	$	4	$	254	$	233	$	8

(1)Houston Electric’s Cash and cash equivalents as of ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016 were $22~~2021 included $104 million and ~~less than $1~~$92 million, respectively, of ~~margin deposits~~cash related to the Bond Companies.

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(17) Related Party Transactions(Houston Electric and ~~$55 million~~CERC)

Houston Electric and ~~$40 million, respectively,~~CERC participate in CenterPoint Energy’s money pool through which they can borrow or invest on a short-term basis. Funding needs are aggregated and external borrowing or investing is based on the net cash position. The net funding requirements of ~~under-recovered gas cost.~~ the CenterPoint Energy money pool are expected to be met with borrowings under CenterPoint Energy’s revolving credit facility or the sale of CenterPoint Energy’s commercial paper.

The table below summarizes CenterPoint Energy money pool activity:


	March 31, 2022						December 31, 2021
	Houston Electric			CERC			Houston Electric			CERC
	(in millions, except interest rates)
Money pool investments (borrowings) (1)	$	354		$	—		$	(512)		$	(224)
Weighted average interest rate	0.55		%	0.55		%	0.34		%	0.34		%

(1)Included in ~~other current liabilities~~Accounts and notes receivable (payable)–affiliated companies on ~~the~~Houston Electric’s and CERC’s respective Condensed Consolidated Balance ~~Sheets~~Sheets.

CenterPoint Energy provides some corporate services to Houston Electric and CERC. The costs of services have been charged directly to Houston Electric and CERC using methods that management believes are reasonable. These methods include usage rates, dedicated asset assignment and proportionate corporate formulas based on operating expenses, assets, gross margin, employees and a composite of assets, gross margin and employees. Houston Electric provides certain services to CERC. These services are billed at ~~September 30, 2017~~actual cost, either directly or as an allocation and include fleet services, shop services, geographic services, surveying and right-of-way services, radio communications, data circuit management and field operations. Additionally, CERC provides certain services to Houston Electric. These services are billed at actual cost, either directly or as an allocation and include line locating and other miscellaneous services. These charges are not necessarily indicative of what would have been incurred had Houston Electric and CERC not been affiliates.

Amounts charged for these services were as follows and are included primarily in operation and maintenance expenses:


	Three Months Ended March 31,
		2022	2021
			Houston Electric		CERC		Houston Electric		CERC
			(in millions)
Corporate service charges			$	39	$	45	$	43	$	50
Net affiliate service charges (billings)			(6)		6		(1)		1

The table below presents transactions among Houston Electric, CERC and their parent, CenterPoint Energy.


	Three Months Ended March 31,
		2022	2021
			Houston Electric		CERC		Houston Electric		CERC
			(in millions)
Cash dividends paid to parent			$	37	$	23	$	—	$	—
Cash dividend paid to parent related to the sale of the Arkansas and Oklahoma Natural Gas businesses			—		720		—		—
Cash contribution from parent			637		—		—		—
Non-cash capital contribution from parent in payment for property, plant and equipment below			38		46		—		—
Payable to parent for property, plant and equipment below			52		41		—		—
Property, plant and equipment from parent (1)			90		87		—		—

(1) Property, plant and equipment purchased from CenterPoint Energy at its net carrying value on the date of purchase.

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(18) Equity

Dividends Declared and Paid (CenterPoint Energy)

CenterPoint Energy did not declare dividends on its Common Stock or Series A Preferred Stock during either of the three months ended March 31, 2022 or 2021. The table below provides information about dividends paid during each of these periods:


	Dividends Paid Per Share
		Three Months Ended March 31,
			2022		2021
Common Stock			$	0.170	$	0.160
Series A Preferred Stock			30.625		30.625
Series B Preferred Stock			—		17.500
Series C Preferred Stock (1)			—		0.160

(1)The Series C Preferred Stock was entitled to participate in any dividend or distribution (excluding those payable in Common Stock) with the Common Stock on a pari passu, pro rata, as-converted basis. The per share amount reflects the dividend per share of Common Stock as if the Series C Preferred Stock were converted into Common Stock. All of the outstanding Series C Preferred Stock was converted to Common Stock during April and May 2021.

Preferred Stock (CenterPoint Energy)


	Liquidation Preference Per Share		Shares Outstanding as of		Outstanding Value as of
			March 31, 2022	December 31, 2021	March 31, 2022		December 31, 2021
	(in millions, except shares and per share amounts)
Series A Preferred Stock	$	1,000	800,000	800,000	$	790	$	790


			800,000	800,000	$	790	$	790

Income Allocated to Preferred Shareholders (CenterPoint Energy)


	Three Months Ended March 31,
			2022		2021
		(in millions)
Series A Preferred Stock			$	13	$	12
Series B Preferred Stock			—		17



Total income allocated to preferred shareholders			$	13	$	29

Temporary Equity (CenterPoint Energy)

On the approval and recommendation of the Compensation Committee and approval of the Board (acting solely through its independent directors), CenterPoint Energy entered into a retention incentive agreement with David J. Lesar, President and Chief Executive Officer of CenterPoint Energy, dated July 20, 2021. Under the terms of the retention incentive agreement, Mr. Lesar will receive equity-based awards under CenterPoint Energy’s LTIP covering a total of 1 million shares of Common Stock (Total Stock Award) to be granted in multiple annual awards. Mr. Lesar received 400 thousand restricted stock units in July 2021 that will vest in December ~~31, 2016~~2022 and 400 thousand restricted stock units in February 2022 that will vest in December 2023. In February 2023, restricted stock units covering the remaining 200 thousand shares, or such lesser number of restricted stock units as may be required pursuant to the annual individual award limitations under CenterPoint Energy’s LTIP, will be awarded to Mr. Lesar and will vest in December 2023. In the event any shares under the Total Stock Award remain unawarded, in February 2024, a fully vested stock bonus award of the remaining shares will be granted.For accounting purposes, the 1 million shares under the Total Stock Award, consisting of both the awarded and unawarded equity-based awards described above, were ~~$2 million and $10 million, respectively,~~considered granted in July 2021. In the event of ~~over-recovered gas cost.~~

~~(16) Subsequent Events~~

~~On October 31, 2017, Enable declared a quarterly cash distribution of $0.318 per unit on all of its outstanding common units~~death, disability, termination without cause or resignation for ~~the quarter ended September 30, 2017. Accordingly, CERC Corp. expects to receive a cash distribution of approximately $74 million from Enable~~good reason, as defined in the ~~fourth quarter~~retention incentive agreement, that occurs prior to the full Total Stock Award being awarded, CenterPoint Energy will pay a lump sum cash payment equal to the value of ~~2017~~the unawarded equity-based awards, based on the closing trading price

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of Common Stock on the date of the event’s occurrence. Because the unawarded equity-based awards are redeemable for cash upon events that are not probable at the grant date, the equity associated with the unawarded equity-based awards will be classified as Temporary Equity on CenterPoint Energy’s Condensed Consolidated Balance Sheets.

Accumulated Other Comprehensive Income (Loss)

Changes in accumulated comprehensive income (loss) are as follows:




















	Three Months Ended March 31,
	2022						2021
	CenterPoint Energy		Houston Electric		CERC		CenterPoint Energy		Houston Electric		CERC
	(in millions)
Beginning Balance	$	(64)	$	—	$	10	$	(90)	$	—	$	10
Other comprehensive loss before reclassifications:


Other comprehensive income (loss) from unconsolidated affiliates	—		—		—		1		—		—
Amounts reclassified from accumulated other comprehensive income (loss):

Actuarial losses (1)	1		—		—		2		—		—

Reclassification of deferred loss from cash flow hedges realized in net income	1		—		—		—		—		—


Net current period other comprehensive income	2		—		—		3		—		—
Ending Balance	$	(62)	$	—	$	10	$	(87)	$	—	$	10

(1)Amounts are included in the computation of net periodic cost and are reflected in Other income, net in each of the Registrants’ respective Condensed Statements of Consolidated Income.

(19) Leases

In 2021 Houston Electric entered into a temporary short-term lease and a long-term lease, each for mobile generation. The short-term lease agreement allows Houston Electric to ~~be made~~take delivery of mobile generation assets on a short-term basis with ~~respect to CERC Corp.’s investment~~a term ending in ~~common units of Enable for~~ the third quarter of ~~2017.~~2022. Per Houston Electric’s short term lease accounting policy election, a ROU asset and lease liability are not reflected on Houston Electric’s Condensed Consolidated Balance Sheets. Expenses associated with the short-term lease, including carrying costs, are deferred to a regulatory asset and totaled $51 million and $20 million as of March 31, 2022 and December 31, 2021, respectively.

Houston Electric took delivery of an additional 128 MW of mobile generation under the long-term lease in the first quarter of 2022 and remitted a cash payment under the lease of $171 million. These assets were previously available under the short-term lease agreement. Houston Electric derecognized the finance lease liability when the extinguishment criteria in Topic 405 - Liabilities was achieved. Per the terms of the agreement, lease payments are due and made in full by Houston Electric upon taking possession of the asset, relieving substantially all of the associated finance lease liability as of March 31, 2022. The remaining finance lease liability associated with the commenced long-term mobile generation agreement was not significant as of March 31, 2022 and December 31, 2021 and relates to removal costs that will be incurred at the end of the lease term. The long-term lease agreement includes up to 505 MW of mobile generation of which 253 MW and 125 MW was delivered as of March 31, 2022 and December 31, 2021, respectively, triggering lease commencement at delivery, and has an initial term ending in 2029 for all mobile generation leases. As of March 31, 2022, Houston Electric has secured a first lien on all the generation equipment leases and no amount of the payments made by Houston Electric were held in escrow.

The components of lease cost, included in Operation and maintenance expense on the Registrants’ respective Statements of Consolidated Income, are as follows:


	Three Months Ended March 31, 2022						Three Months Ended March 31, 2021
	CenterPoint Energy		Houston Electric		CERC		CenterPoint Energy		Houston Electric		CERC
	(in millions)
Operating lease cost	$	2	$	—	$	1	$	2	$	—	$	1
Short-term lease cost	46		46		—		10		10		—
Variable lease cost	(1)		(1)		—		—		—		—
Total lease cost (1)	$	47	$	45	$	1	$	12	$	10	$	1

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(1) CenterPoint Energy and Houston Electric defer finance lease costs for mobile generation to Regulatory assets for recovery rather than to Depreciation and Amortization in the Statements of Consolidated Income.

The components of lease income were as follows:


	Three Months Ended March 31, 2022						Three Months Ended March 31, 2021
	CenterPoint Energy		Houston Electric		CERC		CenterPoint Energy		Houston Electric		CERC
	(in millions)
Operating lease income	$	1	$	—	$	1	$	2	$	—	$	1
Variable lease income	—		—		—		—		—		—
Total lease income	$	1	$	—	$	1	$	2	$	—	$	1

Supplemental balance sheet information related to leases was as follows:


	March 31, 2022									December 31, 2021
	CenterPoint Energy			Houston Electric			CERC			CenterPoint Energy			Houston Electric			CERC
	(in millions, except lease term and discount rate)
Assets:
Operating ROU assets (1)	$	16		$	1		$	7		$	22		$	1		$	12
Finance ROU assets (2)	344			343			—			179			179			—
Total leased assets	$	360		$	344		$	7		$	201		$	180		$	12

Liabilities:
Current operating lease liability (3)	$	4		$	—		$	2		$	6		$	1		$	2
Non-current operating lease liability (4)	12			1			5			17			—			11
Total leased liabilities (5)	$	16		$	1		$	7		$	23		$	1		$	13

Weighted-average remaining lease term (in years) - operating leases	5.2			4.3			4.5			6.2			4.1			6.5
Weighted-average discount rate - operating leases	3.20		%	3.00		%	3.52		%	3.10		%	2.86		%	3.20		%
Weighted-average remaining lease term (in years) - finance leases	7.3			7.3			—			7.5			7.5			—
Weighted-average discount rate - finance leases	2.21		%	2.21		%	—			2.21		%	2.21		%	—

(1)Reported within Other assets in the Registrants’ respective Consolidated Balance Sheets.

(2)Reported within Property, Plant and Equipment in the Registrants’ respective Consolidated Balance Sheets. Finance lease assets are recorded net of accumulated amortization.

(3)Reported within Current other liabilities in the Registrants’ respective Consolidated Balance Sheets.

(4)Reported within Other liabilities in the Registrants’ respective Consolidated Balance Sheets.

(5)Finance lease liabilities were not material as of December 31, 2021 or 2020 and are reported within Other long-term debt in the Registrants’ respective Consolidated Balance Sheets when applicable.

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As of March 31, 2022, finance lease liabilities were not significant to the Registrants. As of March 31, 2022, maturities of operating lease liabilities were as follows:


	CenterPoint Energy		Houston Electric		CERC
	(in millions)
Remainder of 2022	$	4	$	1	$	1
2023	4		—		2
2024	3		—		2
2025	2		—		1
2026	2		—		1
2027 and beyond	3		—		1
Total lease payments	18		1		8
Less: Interest	2		—		1
Present value of lease liabilities	$	16	$	1	$	7

As of March 31, 2022, future minimum finance lease payments were not significant to the Registrants, exclusive of approximately $347 million of legally-binding undiscounted minimum lease payments for finance leases for approximately 252 MW of mobile generation leases signed but not yet commenced. As of March 31, 2022, maturities of undiscounted operating lease payments to be received are as follows:


	CenterPoint Energy		Houston Electric		CERC
	(in millions)
Remainder of 2022	$	5	$	1	$	3
2023	5		—		3
2024	5		—		3
2025	5		—		3
2026	6		—		4
2027	6		—		4
2028 and beyond	136		—		132
Total lease payments to be received	$	168	$	1	$	152

Other information related to leases is as follows:


	Three Months Ended March 31, 2022						Three Months Ended March 31, 2021
	CenterPoint Energy		Houston Electric		CERC		CenterPoint Energy		Houston Electric		CERC
	(in millions)
Operating cash flows from operating leases included in the measurement of lease liabilities	$	2	$	—	$	1	$	2	$	—	$	1
Financing cash flows from finance leases included in the measurement of lease liabilities	171		171		—		—		—		—

See Note 16 for information on ROU assets obtained in exchange for operating lease liabilities.

(20) Subsequent Events (CenterPoint Energy)

CenterPoint Energy Dividend Declarations

Equity Instrument

Declaration Date

Record Date

Payment Date

Per Share

Common Stock

April 22, 2022

May 19, 2022

June 9, 2022

0.1700

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Item 2. ~~MANAGEMENT~~’~~S NARRATIVE~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF CENTERPOINT ENERGY, INC. AND SUBSIDIARIES

The following ~~narrative~~combined discussion and analysis should be read in combination with ~~our~~the Interim Condensed Financial Statements contained in this combined Form 10-Q and ~~our 2016~~the Registrants’ combined 2021 Form 10-K.

~~We meet~~ When discussing CenterPoint Energy’s consolidated financial information, it includes the ~~conditions specified in General Instruction H(1)(a)~~results of Houston Electric and ~~(b)~~CERC, which, along with CenterPoint Energy, are collectively referred to as the Registrants. Where appropriate, information relating to a specific Registrant has been segregated and labeled as such. In this combined Form 10-Q, the terms “our,” “we” and “us” are ~~therefore permitted~~used as abbreviated references to ~~use~~CenterPoint Energy, Inc. together with its consolidated subsidiaries. No Registrant makes any representations as to the ~~reduced disclosure format for wholly-owned~~information related solely to CenterPoint Energy or the subsidiaries of reporting companies. Accordingly, we have omitted from this report the information called for by Item 2 (Management’s Discussion and Analysis of Financial Condition and Results of Operations) and Item 3 (Quantitative and Qualitative Disclosures About Market Risk) of Part I and the following Part II items of Form 10-Q: Item 2 (Unregistered Sales of Equity Securities and Use of Proceeds), Item 3 (Defaults Upon Senior Securities) and Item 4 (Submission of Matters to a Vote of Security Holders). The following discussion explains material changes in our revenue and expense items between the three and nine months ended September 30, 2017 and the three and nine months ended September 30, 2016. Reference is made to “Management’s Narrative Analysis of Results of Operations” in Item 7 of our 2016 Form 10-K.CenterPoint Energy other than itself.

RECENT EVENTS

~~Hurricane Harvey.~~ ~~NGD suffered damage as a result~~Sale of ~~Hurricane Harvey, which struck~~Natural Gas Businesses. On January 10, 2022, CERC Corp. completed the ~~Texas coast on Friday, August 25, 2017.~~sale of its Arkansas and Oklahoma Natural Gas businesses. For ~~further~~additional information regarding ~~the impact of Hurricane Harvey,~~discontinued operations and divestitures, see Note 53 to ~~our~~the Interim Condensed Financial Statements.

Sale of Energy Transfer Equity Securities. During the three months ended March 31, 2022, CenterPoint Energy sold its remaining Energy Transfer Common Units and Energy Transfer Series G Preferred Units for net proceeds of $702 million. For more information, see Note 10 to the Interim Condensed Financial Statements.

Debt Transactions. During the three months ended March 31, 2022, Houston Electric issued $800 million in new debt and CenterPoint Energy and CERC repaid or redeemed a combined $1,030 million of debt, excluding scheduled principal payments on Securitization Bonds. For information about debt transactions to date in 2022, see Note 11 to the Interim Condensed Financial Statements.

Regulatory ~~Proceedings~~. Proceedings. For ~~details~~information related to our pending and completed regulatory proceedings to date in ~~2017,~~2022, see “—Liquidity and Capital Resources —Regulatory Matters” below.

~~Debt Issuances.~~ In August 2017, we issued $300 million aggregate principal amount of unsecured senior notes. For further information about our 2017 debt issuances, see Note 11 to our Interim Condensed Financial Statements.

CENTERPOINT ENERGY CONSOLIDATED RESULTS OF OPERATIONS

For information regarding factors that may affect the future results of our consolidated operations, please read “Risk Factors” in Item 1A of Part I of the Registrants’ combined 2021 Form 10-K and in Item 1A of Part II of this combined Form 10-Q.

Income available to common shareholders for the three months ended March 31, 2022 and 2021 was as follows:


	Three Months Ended March 31,
		2022		2021		Favorable (Unfavorable)
		(in millions)
Electric		$	82	$	75	$	7
Natural Gas		398		229		169
Total Utility Operations		480		304		176

Corporate & Other (1)		38		(53)		91
Discontinued Operations		—		83		(83)
Total CenterPoint Energy		$	518	$	334	$	184

(1)Includes energy performance contracting and sustainable infrastructure services through Energy Systems Group, unallocated corporate costs, interest income and interest expense, intercompany eliminations and the reduction of income allocated to preferred shareholders.

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Three months ended March 31, 2022 compared to three months ended March 31, 2021

Income available to common shareholders increased $184 million primarily due to the following items:

•the gain, net of transaction costs, associated with the sale of the Arkansas and Oklahoma Natural Gas businesses in January 2022; and

•the dividend requirement associated with the Series B Preferred Stock in 2021.

These increases were partially offset by:

•a decrease in earnings associated with midstream common and preferred units; and

•increased costs associated with the early redemption of long-term debt.

Excluding those items, income available to common shareholders increased $9 million primarily due to the following key factors:

•rate relief, net of increases in depreciation and amortization and taxes other than income taxes; and

•continued customer growth.

These increases were partially offset by:

•increased operation and maintenance expense; and

•increased interest expense.

Income Tax Expense. For a discussion of effective tax rate per period, see Note 12 to the Interim Condensed Financial Statements.

CENTERPOINT ENERGY’S RESULTS OF OPERATIONS BY REPORTABLE SEGMENT

CenterPoint Energy’s CODM views net income as the measure of profit or loss for the reportable segments. Segment results include inter-segment interest income and expense, which may result in inter-segment profit and loss. During the three months ended March 31, 2022, CenterPoint Energy sold certain assets previously owned by entities within Corporate and Other to businesses within the Electric and Natural Gas reportable segments. Prior year amounts were reclassified as a result of the transaction in the three months ended March 31, 2022.

The following discussion of results of operations by reportable segment concentrates on CenterPoint Energy’s Utility Operations, conducted through two reportable segments, Electric and Natural Gas.

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Electric (CenterPoint Energy)

For information regarding factors that may affect the future results of operations of the Electric reportable segment, please read “Risk Factors — Risk Factors Associated with Our Consolidated Financial Condition,” “— Risk Factors Affecting Electric Generation, Transmission and Distribution Businesses,” “— Risk Factors Affecting Our Businesses” and “— General Risk Factors Affecting Our Businesses” in Item 1A of Part I of the Registrants’ combined 2021 Form 10-K and in Item 1A of Part II of this combined Form 10-Q.

The following table provides summary data of the Electric reportable segment:


	Three Months Ended March 31,
		2022			2021			Favorable (Unfavorable)
		(in millions, except operating statistics)
Revenues		$	893		$	830		$	63
Cost of revenues (1)		41			45			4
Revenues less Cost of revenues		852			785			67
Expenses:
Operation and maintenance		437			411			(26)
Depreciation and amortization		192			174			(18)
Taxes other than income taxes		68			67			(1)

Total expenses		697			652			(45)
Operating Income		155			133			22
Other Income (Expense):
Interest expense and other finance charges		(57)			(56)			(1)

Other income, net		5			7			(2)
Income Before Income Taxes		103			84			19
Income tax expense		21			9			(12)
Net Income		$	82		$	75		$	7
Throughput (in GWh):
Residential		6,346			6,070			5		%
Total		23,155			21,241			9		%
Weather (percentage of 10-year average for service area):
Cooling degree days		62		%	109		%	(47)		%
Heating degree days		129		%	95		%	34		%
Number of metered customers at end of period:
Residential		2,502,253			2,448,439			2		%
Total		2,824,100			2,765,496			2		%

(1)Includes Utility natural gas, fuel and purchased power.

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The following table provides variance explanations for the three months ended March 31, 2022 compared to three months ended March 31, 2021 by major income statement caption for the Electric reportable segment:


	Favorable (Unfavorable)

	(in millions)
Revenues less Cost of revenues
Transmission Revenues, including TCOS and TCRF, inclusive of costs billed by transmission providers, partially offset in operation and maintenance	$	29
Bond Companies, offset in other line items	9
Refund of protected and unprotected EDIT, offset in income tax expense	8
Weather, efficiency improvements and other usage impacts	8
Customer growth	6
Customer rates	4
Bond Companies equity return, related to the annual true-up of transition charges for amounts over or under collected in prior periods	2
Miscellaneous revenues	2
Impacts from increased peak demand in 2021, collected in rates in 2022	1
Energy efficiency and pass-through offset in operation and maintenance	(2)
Total	$	67
Operation and maintenance
Transmission costs billed by transmission providers, offset in revenues less cost of revenues	$	(22)

Contract services	(7)
All other operation and maintenance expense, including materials and supplies and insurance	(5)
Bond Companies, offset in other line items	1
Energy efficiency and pass-through offset in revenues	3

Support services	4
Total	$	(26)
Depreciation and amortization
Bond Companies, offset in other line items	$	(12)
Ongoing additions to plant-in-service	(6)
Total	$	(18)
Taxes other than income taxes
Franchise fees and other taxes	$	2
Incremental capital projects placed in service	(3)
Total	$	(1)



Interest expense and other finance charges
Bond Companies, offset in other line items	$	2
Incremental borrowings to fund capital expenditures	(3)
Total	$	(1)




Other income, net
Other non-operating income	$	(2)


Total	$	(2)

Income Tax Expense. For a discussion of effective tax rate per period by Registrant, see Note 12 to the Interim Condensed Financial Statements.

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Natural Gas (CenterPoint Energy)

For information regarding factors that may affect the future results of operations of CenterPoint Energy’s Natural Gas reportable segment, please read “Risk Factors — Risk Factors Associated with Our Consolidated Financial Condition,” “— Risk Factors Affecting Natural Gas' Business,” “— Risk Factors Affecting Our Businesses” and “— General Risk Factors Affecting Our Businesses” in Item 1A of Part I of the Registrants’ combined 2021 Form 10-K and in Item 1A of Part II of this combined Form 10-Q.

The following table provides summary data of CenterPoint Energy’s Natural Gas reportable segment:


	Three Months Ended March 31,
		2022			2021			Favorable (Unfavorable)
		(in millions, except operating statistics)
Revenues		$	1,824		$	1,663		$	161
Cost of revenues (1)		1,058			893			(165)
Revenues less Cost of revenues		766			770			(4)
Expenses:
Operation and maintenance		246			250			4
Depreciation and amortization		112			128			16
Taxes other than income taxes		77			74			(3)
Total expenses		435			452			17
Operating Income		331			318			13
Other Income (Expense):
Gain on sale		303			—			303
Interest expense and other finance charges		(30)			(33)			3


Income Before Income Taxes		604			285			319
Income tax expense		206			56			(150)
Net Income		$	398		$	229		$	169



Throughput (in Bcf):
Residential		123			128			(4)		%
Commercial and Industrial		137			145			(6)		%
Total		260			273			(5)		%
Weather (percentage of 10-year average for service area):
Heating degree days		109		%	103		%	6		%
Number of metered customers at end of period:
Residential		3,926,192			4,343,863			(10)		%
Commercial and Industrial		297,270			351,363			(15)		%
Total		4,223,462			4,695,226			(10)		%

(1)Includes Utility natural gas, fuel and purchased power and Non-utility cost of revenues, including natural gas.

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	Favorable (Unfavorable)

	(in millions)
Revenues less Cost of revenues
Nine days in 2022 versus three months in 2021 for Arkansas and Oklahoma Natural Gas businesses due to sale	$	(86)
Energy efficiency, offset in operation and maintenance	(2)
Customer growth	4
Refund of protected and unprotected EDIT, offset in income tax expense	4
Gross receipts tax, offset in taxes other than income taxes	9

Weather and usage	9
Non-volumetric and miscellaneous revenue	14
Customer rates and impact of the change in rate design, exclusive of the TCJA impact	44
Total	$	(4)
Operation and maintenance

Other operating and maintenance expense, including materials and supplies and insurance	$	(21)
Labor and benefits	(6)
Contract services	(1)
Energy efficiency, offset in revenues less cost of revenues	2
Nine days in 2022 versus three months in 2021 for Arkansas and Oklahoma Natural Gas businesses due to sale	30
Total	$	4
Depreciation and amortization
Nine days in 2022 versus three months in 2021 for Arkansas and Oklahoma Natural Gas businesses due to sale	$	15
Indiana lower depreciation rates from recent rate order	5
Incremental capital projects placed in service	(4)

Total	$	16
Taxes other than income taxes
Gross receipts tax, offset in revenues less cost of revenues	$	(9)
Incremental capital projects placed in service	(1)
Nine days in 2022 versus three months in 2021 for Arkansas and Oklahoma Natural Gas businesses due to sale	7
Total	$	(3)
Gain on Sale
Net gain on sale of Arkansas and Oklahoma Natural Gas businesses	$	303
Total	$	303
Interest expense and other finance charges
Nine days in 2022 versus three months in 2021 for Arkansas and Oklahoma Natural Gas businesses due to sale	$	3

Total	$	3

Income Tax Expense. For a discussion of effective tax rate per period by Registrant, see Note 12 to the Interim Condensed Financial Statements.

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HOUSTON ELECTRIC’S MANAGEMENT’S NARRATIVE ANALYSIS

OF CONSOLIDATED RESULTS OF OPERATIONS

Houston Electric’s CODM views net income as the measure of profit or loss for its reportable segment. Houston Electric consists of a single reportable segment. Houston Electric’s results of operations are affected by seasonal fluctuations in the demand for electricity. Houston Electric’s results of operations are also affected by, among other things, the actions of various governmental authorities having jurisdiction over rates Houston Electric charges, debt service costs, income tax expense, Houston Electric’s ability to collect receivables from REPs and Houston Electric’s ability to recover its regulatory assets. For more information regarding factors that may affect the future results of operations of Houston Electric’s business, please read “Risk Factors — Risk Factors Associated with Our Consolidated Financial Condition,” “— Risk Factors Affecting Electric Generation, Transmission and Distribution Businesses,” “— Risk Factors Affecting Our Businesses” and “— General Risk Factors Affecting Our Businesses” in Item 1A of Part I of the Registrants’ combined 2021 Form 10-K and in Item 1A of Part II of this combined Form 10-Q.


	Three Months Ended March 31,
		2022			2021			Favorable (Unfavorable)
		(in millions, except operating statistics)
Revenues:
TDU		$	693		$	640		$	53
Bond Companies		53			44			9
Total revenues		746			684			62
Expenses:
Operation and maintenance, excluding Bond Companies		394			371			(23)
Depreciation and amortization, excluding Bond Companies		114			105			(9)
Taxes other than income taxes		63			63			—
Bond Companies		49			38			(11)
Total expenses		620			577			(43)
Operating Income		126			107			19
Other Income (Expense)
Interest expense and other finance charges		(48)			(45)			(3)
Interest expense on Securitization Bonds		(4)			(6)			2


Other income, net		4			5			(1)
Income Before Income Taxes		78			61			17
Income tax expense		17			8			(9)
Net Income		$	61		$	53		$	8
Throughput (in GWh):
Residential		5,988			5,701			5		%
Total		21,934			19,739			11		%
Weather (percentage of 10-year average for service area):
Cooling degree days		62		%	112		%	(50)		%
Heating degree days		129		%	104		%	25		%
Number of metered customers at end of period:
Residential		2,370,818			2,318,030			2		%
Total		2,673,393			2,615,917			2		%

The following table provides variance explanations for the three months ended March 31, 2022 compared to three months ended March 31, 2021 by major income statement caption for Houston Electric:


	Favorable (Unfavorable)

	(in millions)
Revenues
Transmission Revenues, including TCOS and TCRF, inclusive of costs billed by transmission providers	$	29
Bond Companies, offset in other line items	9
Refund of protected and unprotected EDIT, offset in income tax expense	8

Weather impacts and other usage	8
Customer growth	6
Equity return, related to the annual true-up of transition charges for amounts over or under collected in prior periods	2
Impacts from increased peak demand in 2021, collected in rates in 2022	1
Miscellaneous revenues, primarily related to right-of-way revenues, and service connections	1
Energy efficiency, offset in operation and maintenance	(2)

Total	$	62
Operation and maintenance, excluding Bond Companies
Transmission costs billed by transmission providers, offset in revenues	$	(22)
Contract services	(5)
Other operation and maintenance expense	(3)
Labor and benefits	1


Energy efficiency, offset in revenues	2
Support services	4
Total	$	(23)
Depreciation and amortization, excluding Bond Companies
Ongoing additions to plant-in-service	$	(9)
Total	$	(9)
Taxes other than income taxes
Franchise fees and other taxes	$	3
Incremental capital projects placed in service	(3)
Total	$	—
Bond Companies expense
Operations and maintenance and depreciation expense, offset in other line items	$	(11)
	$	(11)
Interest expense and other finance charges
Incremental borrowings to fund capital expenditures	$	(3)
Total	$	(3)




Interest expense on Securitization Bonds
Lower outstanding principal balance, offset in other line items	$	2
Total	$	2
Other income, net
Other non-operating income	$	(1)


Total	$	(1)

Income Tax Expense. For a discussion of effective tax rate per period, see Note 12 to the Interim Condensed Financial Statements.

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CERC’S MANAGEMENT’S NARRATIVE ANALYSIS OF CONSOLIDATED RESULTS OF OPERATIONS

CERC’s CODM views net income as the measure of profit or loss for its reportable segment. CERC’s results of operations are affected by seasonal fluctuations in the demand for natural ~~gas and price movements of energy commodities as well as natural gas basis differentials. Our~~gas. CERC’s results of operations are also affected by, among other things, the actions of various federal, state and local governmental authorities having jurisdiction over rates ~~we charge, competition in our various business operations, the effectiveness of our risk management activities,~~CERC charges, debt service costs and income tax ~~expense.~~expense, CERC’s ability to collect receivables from customers and CERC’s ability to recover its regulatory assets. For more information regarding factors that may affect the future results of operations ~~of our~~for CERC’s business, ~~please read “Risk Factors” in Item 1A of Part I of our 2016 Form 10-K.~~

The following table sets forth our consolidated results of operations for the three and nine months ended September 30, 2017 and 2016, followed by a discussion of our consolidated results of operations.

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(in millions)
Revenues $ 1,251
$ 978
$ 4,731
$ 3,105
Expenses:

Natural gas 938
683
3,549
2,031
Operation and maintenance 187
175
603
571
Depreciation and amortization 68
62
202
185
Taxes other than income taxes 32
32
104
108
Total 1,225
952
4,458
2,895
Operating Income 26
26
273
210
Interest and other finance charges (32 ) (29 ) (92 ) (93 )
Equity in earnings of unconsolidated affiliate, net 68
73
199
164
Other income, net 1
(1 ) 3
1
Income Before Income Taxes 63
69
383
282
Income tax expense 25
26
144
113
Net Income $ 38
$ 43
$ 239
$ 169

~~Three months ended September 30, 2017 compared to three months ended September 30, 2016~~

~~We reported net income of $38 million for the three months ended September 30, 2017 compared to net income of $43 million for the three months ended September 30, 2016.~~

~~The decrease in net income of $5 million was primarily due to the following key factors:~~

~~a $5 million decrease in equity earnings from our investment in Enable, discussed further in Note 8 to our Interim Condensed Financial Statements; and~~

a $3 million increase in interest expense due to the issuance of $300 million of unsecured senior notes and higher weighted average commercial paper interest rates discussed further in Note 11 to our Interim Condensed Financial Statements.

These decreases in net income were partially offset by a $2 million increase in miscellaneous other non-operating income included in Other income, net shown above, and a $1 million decrease in income tax expense due to lower net income.

~~Nine months ended September 30, 2017 compared to nine months ended September 30, 2016~~

~~We reported net income of $239 million for the nine months ended September 30, 2017 compared to net income of $169 million for the nine months ended September 30, 2016.~~

~~The increase in net income of $70 million was primarily due to the following key factors:~~

~~a $63 million increase in operating income, discussed below by segment; and~~

~~a $35 million increase in equity earnings from our investment in Enable, discussed further in Note 8 to our Interim Condensed Financial Statements.~~

~~These increases in net income were partially offset by a $31 million increase in income tax expense due to higher net income.~~

~~Income Tax Expense~~

Our effective tax rates reported for the three months ended September 30, 2017 was 40% compared to 38% for the same period in 2016. The effective tax rate reported for the nine months ended September 30, 2017 was 38% compared to 40% for the same

~~period in 2016. The higher effective tax rate for the nine months ended September 30, 2016 was due to a Louisiana state tax law change resulting in an increase to CERC’s deferred tax liability.~~

~~RESULTS OF OPERATIONS BY BUSINESS SEGMENT~~

The following table presents operating income (loss) for each of our business segments for the three and nine months ended September 30, 2017 and 2016, followed by a discussion of the results of operations by business segment based on operating income. Included in revenues are intersegment sales. We account for intersegment sales as if the sales were to third parties at current market prices.

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(in millions)
Natural Gas Distribution $ 19
$ 22
$ 220
$ 202
Energy Services 7
5
58
11
Other Operations —
(1 ) (5 ) (3 )
Total Consolidated Operating Income $ 26
$ 26
$ 273
$ 210

~~Natural Gas Distribution~~

~~For information regarding factors that may affect the future results of operations of our Natural Gas Distribution business segment,~~ please read “Risk Factors — Risk Factors Associated with Our Consolidated Financial Condition,” “— Risk Factors Affecting ~~Our~~ Natural ~~Gas Distribution and Energy Services Businesses” and~~Gas’ Business,” “— ~~Other~~ Risk Factors Affecting Our ~~Businesses or~~Businesses” and “— General Risk Factors Affecting Our ~~Interests in Enable Midstream Partners, LP”~~Businesses” in Item 1A of Part I of ~~our 2016~~the Registrants’ combined 2021 Form ~~10-K.~~10-K and in Item 1A of Part II of this combined Form 10-Q.


	Three Months Ended March 31,
		2022			2021			Favorable (Unfavorable)
		(in millions, except operating statistics)
Revenues		$	1,385		$	1,177		$	208
Cost of revenues (1)		858			625			(233)
Revenues less Cost of revenues		527			552			(25)
Expenses:
Operation and maintenance		187			198			11
Depreciation and amortization		72			80			8
Taxes other than income taxes		56			56			—
Total expenses		315			334			19
Operating Income		212			218			(6)
Other Income (Expense):
Gain on sale		557			—			557
Interest expense and other finance charges		(21)			(24)			3

Other expense, net		—			(1)			1
Income Before Income Taxes		748			193			555
Income tax expense		194			42			(152)


Net Income		$	554		$	151		$	403
Throughput (in Bcf):
Residential		86			93			(8)		%
Commercial and Industrial		78			87			(10)		%
Total		164			180			(9)		%
Weather (percentage of 10-year average for service area):
Heating degree days		117		%	102		%	15		%
Number of metered customers at end of period:
Residential		2,934,085			3,362,902			(13)		%
Commercial and Industrial		207,348			261,944			(21)		%
Total		3,141,433			3,624,846			(13)		%

(1)Includes Utility natural gas and Non-utility cost of revenues, including natural gas.

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The following table provides ~~summary data of our Natural Gas Distribution business segment~~variance explanations for the three ~~and nine~~ months ended ~~September 30, 2017 and 2016:~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(in millions, except throughput and customer data)
Revenues $ 398
$ 377
$ 1,791
$ 1,693
Expenses:
Natural gas 117
104
742
679
Operation and maintenance 163
159
531
526
Depreciation and amortization 66
61
194
180
Taxes other than income taxes 33
31
104
106
Total expenses 379
355
1,571
1,491
Operating Income $ 19
$ 22
$ 220
$ 202
Throughput (in Bcf):

Residential 13
12
94
105
Commercial and industrial 50
51
189
193
Total Throughput 63
63
283
298
Number of customers at end of period:

Residential 3,179,284
3,143,357
3,179,284
3,143,357
Commercial and industrial 253,041
251,043
253,041
251,043
Total 3,432,325
3,394,400
3,432,325
3,394,400

~~Three months ended September 30, 2017~~March 31, 2022 compared to three months ended ~~September 30, 2016~~March 31, 2021 by major income statement caption for CERC:

Our Natural Gas Distribution business segment reported operating income of $19 million for the three months ended September 30, 2017 compared to $22 million for the three months ended September 30, 2016.

~~Operating income decreased $3 million as a result of the following key factors:~~

~~increased depreciation and amortization expense, primarily due to ongoing additions to plant-in-service, and other taxes of $6 million;~~

~~lower usage of $4 million, primarily due to the timing of a decoupling normalization adjustment; and~~

~~higher operation and maintenance expenses of $3 million.~~

~~These decreases were partially offset by the following:~~

~~rate relief increased $5 million, primarily from Texas jurisdictions of $2 million, Arkansas rate case filing of $1 million and Mississippi RRA of $1 million; and~~

~~customer growth of $2 million associated with the addition of approximately 38,000 new customers.~~

~~Increased operation and maintenance expenses related to energy efficiency programs of $1 million were offset by corresponding increases in the related revenues.~~

~~Nine months ended September 30, 2017 compared to nine months ended September 30, 2016~~

Our Natural Gas Distribution business segment reported operating income of $220 million for the nine months ended September 30, 2017 compared to $202 million for the nine months ended September 30, 2016.

~~Operating income increased $18 million as a result of the following key factors:~~

~~rate increases of $25 million, primarily from Texas jurisdictions of $12 million, Arkansas rate case filing of $10 million and Mississippi RRA of $3 million;~~

labor and benefits were favorable by $11 million resulting primarily from the recording of a regulatory asset (and a corresponding reduction in expense) to recover $16 million of prior postretirement expenses in future rates established in the Texas Gulf rate order; and

~~customer growth of $3 million associated with the addition of approximately 38,000 new customers.~~

~~These increases were partially offset by the following:~~

~~increased depreciation and amortization expense, primarily due to ongoing additions to plant-in-service, and other taxes of $10 million;~~

~~higher operation and maintenance expenses of $9 million partially resulting from an adjustment associated with the Texas Gulf rate order of $4 million, which is timing related; and~~

~~lower usage of $7 million primarily due to milder weather effects, partially mitigated by decoupling and weather normalization adjustments.~~

Increased operation and maintenance expenses related to energy efficiency programs of $7 million and increased gross receipts taxes of $2 million were offset by corresponding increases in the related revenues.

~~Energy Services~~

For information regarding factors that may affect the future results of operations of our Energy Services business segment, please read “Risk Factors — Risk Factors Associated with Our Consolidated Financial Condition,” “— Risk Factors Affecting Our Natural Gas Distribution and Energy Services Businesses” and “— Other Risk Factors Affecting Our Businesses or Our Interests in Enable Midstream Partners, LP” in Item 1A of Part I of our 2016 Form 10-K.

~~The following table provides summary data of our Energy Services business segment for the three and nine months ended September 30, 2017 and 2016:~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(in millions, except throughput and customer data)
Revenues $ 871
$ 614
$ 2,998
$ 1,450
Expenses:
Natural gas 839
591
2,865
1,389
Operation and maintenance 22
16
65
43
Depreciation and amortization 3
1
9
5
Taxes other than income taxes —
1
1
2
Total expenses 864
609
2,940
1,439
Operating Income $ 7
$ 5
$ 58
$ 11

Timing impacts related to mark-to-market gain (loss) (1)
$ 2
$ (2 ) $ 23
$ (18 )

Throughput (in Bcf) 272
200
864
570

Number of customers at end of period (2)
30,817
31,669
30,817
31,669

~~(1)~~

~~Includes~~

Favorable (Unfavorable)

(in millions)

Revenues less Cost of revenues

Nine days in 2022 versus three months in 2021 for Arkansas and Oklahoma Natural Gas businesses due to sale

(86)

Customer growth

Refund of protected and unprotected EDIT, offset in income tax expense

Energy efficiency, offset in operation and maintenance

Gross receipts tax, offset in taxes other than income taxes

Weather and usage

Non-volumetric and miscellaneous revenue

Customer rates and impact of the change in ~~unrealized mark-to-market value and~~rate design, exclusive of the TCJA impact ~~from derivative assets and liabilities acquired through the purchase of Continuum and AEM.~~

	23
~~(2)~~Total	~~Does not include approximately 66,100 natural gas customers as~~	$	(25)
Operation and maintenance
Nine days in 2022 versus three months in 2021 for Arkansas and Oklahoma Natural Gas businesses due to sale		$	30

Labor and benefits		(1)
Energy efficiency, offset in revenues less cost of ~~September 30, 2017 that are under residential~~revenues		(5)
Other operating and ~~small commercial choice programs invoiced by their host utility.~~maintenance expense, including materials and supplies and insurance		(13)



Total		$	11
Depreciation and amortization
Nine days in 2022 versus three months in 2021 for Arkansas and Oklahoma Natural Gas businesses due to sale		$	15
Incremental capital projects placed in service		(7)

Total		$	8
Taxes other than income taxes
Nine days in 2022 versus three months in 2021 for Arkansas and Oklahoma Natural Gas businesses due to sale		$	7
Incremental capital projects placed in service		(1)
Gross receipts tax, offset in revenues less cost of revenues		(6)
Total		$	—
Gain on Sale
Net gain on sale of Arkansas and Oklahoma Natural Gas businesses		$	557
Total		$	557
Interest expense and other finance charges
Nine days in 2022 versus three months in 2021 for Arkansas and Oklahoma Natural Gas businesses due to sale		$	3
Total		$	3

~~Three months ended September 30, 2017 compared to three months ended September 30, 2016~~

~~Our Energy Services business segment reported operating income~~Income Tax Expense. For a discussion of $7 million for the three months ended September 30, 2017 compared to $5 million for the three months ended September 30, 2016. The increase in operating income of $2 million was primarily due to a $4 million increase from mark-to-market accounting for derivatives associated with certain natural gas purchases and sales used to lock in economic margins. Operating income for the three months ended September 30, 2017 also included $2 million of expenses relatedeffective tax rate per period, see Note 12 to the ~~acquisition and integration of AEM.~~Interim Condensed Financial Statements.

~~Nine months ended September 30, 2017 compared to nine months ended September 30, 2016~~

Our Energy Services business segment reported operating income of $58 million for the nine months ended September 30, 2017 compared to $11 million for the nine months ended September 30, 2016. The increase in operating income of $47 million was primarily due to a $41 million increase from mark-to-market accounting for derivatives associated with certain natural gas purchases and sales used to lock in economic margins. Operating income in the first nine months of 2017 also included $3 million of expenses related to the acquisition and integration of AEM. The remaining increase in operating income was primarily due to the increased throughput related to the acquisition of AEM in 2017.

~~Midstream Investments~~

For information regarding factors that may affect the future results of operations of our Midstream Investments business segment, please read “Risk Factors — Risk Factors Affecting Our Interests in Enable Midstream Partners, LP” and “— Other Risk Factors Affecting Our Businesses or Our Interests in Enable Midstream Partners, LP” in Item 1A of Part I of our 2016 Form 10-K.

~~The following table provides pre-tax equity income of our Midstream Investments business segment for the three and nine months ended September 30, 2017 and 2016:~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(in millions)
Enable $ 68
$ 73
$ 199
$ 164

CERTAIN FACTORS AFFECTING FUTURE EARNINGS

For information on other developments, factors and trends that may have an impact on ~~our~~the Registrants’ future earnings, please read ~~“Risk Factors” in Item 1A~~“Management’s Discussion and Analysis of ~~Part I of our 2016 Form 10-K~~Financial Condition and ~~“Management’s Narrative Analysis of~~ Results of Operations — Certain Factors Affecting Future Earnings” in Item 7 of Part II and “Risk Factors” in Item 1A of ~~our 2016~~Part I of the Registrants’ combined 2021 Form 10-K, in Item 1A of Part II of this combined Form 10-Q and “Cautionary Statement Regarding Forward-Looking Information” in this combined Form 10-Q.

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LIQUIDITY AND CAPITAL RESOURCES

~~Our~~Historical Cash Flows

The following table summarizes the net cash provided by (used in) operating, investing and financing activities during the three months ended March 31, 2022 and 2021:


	Three Months Ended March 31,
	2022						2021
	CenterPoint Energy		Houston Electric		CERC		CenterPoint Energy		Houston Electric		CERC
	(in millions)
Cash provided by (used in):
Operating activities	$	580	$	73	$	347	$	(1,681)	$	47	$	(1,787)
Investing activities	1,934		(848)		1,860		(604)		(982)		(131)
Financing activities	(2,621)		664		(2,211)		2,285		940		1,918

Operating Activities. The following items contributed to increased (decreased) net cash provided by operating activities for the three months ended March 31, 2022 compared to the three months ended March 31, 2021:


	CenterPoint Energy		Houston Electric		CERC
	(in millions)
Changes in net income after adjusting for non-cash items	$	(248)	$	43	$	(7)
Changes in working capital	(26)		3		(56)
Change in net regulatory assets and liabilities (1)	2,432		(12)		2,190
Change in equity in earnings of unconsolidated affiliates (2)	108		—		—
Change in distributions from unconsolidated affiliates (2)	(39)		—		—

Lower pension contribution	6		—		—
Other	28		(8)		7
	$	2,261	$	26	$	2,134

(1)The change in net regulatory assets and liabilities at CenterPoint Energy and CERC is primarily due to the extraordinary natural gas costs associated with the February 2021 Winter Storm Event. See Note 6 to the Interim Condensed Financial Statements for more information on the February 2021 Winter Storm Event.

(2)In September 2021, CenterPoint Energy’s equity investment in Enable met the held for sale criteria and is reflected as discontinued operations on CenterPoint Energy’s Condensed Statements of Consolidated Income. For further information, see Note 3 to the Interim Condensed Financial Statements.

Investing Activities.The following items contributed to (increased) decreased net cash used in investing activities for the three months ended March 31, 2022 compared to the three months ended March 31, 2021:


	CenterPoint Energy		Houston Electric		CERC
	(in millions)
Proceeds from the sale of equity securities	$	702	$	—	$	—

Capital expenditures	(252)		(177)		(64)
Net change in notes receivable from affiliated companies	—		311		—


Proceeds from divestitures	2,060		—		2,060


Other	28		—		(5)
	$	2,538	$	134	$	1,991

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FinancingActivities. The following items contributed to (increased) decreased net cash used in financing activities for the three months ended March 31, 2022 compared to the three months ended March 31, 2021:


	CenterPoint Energy		Houston Electric		CERC
	(in millions)
Net changes in commercial paper outstanding	$	(1,979)	$	—	$	(1,002)


Net changes in long-term debt outstanding, excluding commercial paper	(2,728)		(204)		(2,124)


Net changes in debt issuance costs	12		2		6
Net changes in short-term borrowings	(43)		—		(43)

Payment of obligation for finance lease	(171)		(171)		—
Increased payment of common stock dividends	(19)		—		—
Decreased payment of preferred stock dividends	24		—		—
Net change in notes payable from affiliated companies	—		(504)		(224)
Contribution from parent	—		637		—
Dividend to parent	—		(37)		(743)


Other	(2)		1		1
	$	(4,906)	$	(276)	$	(4,129)

Future Sources and Uses of Cash

The liquidity and capital requirements of the Registrants are affected primarily by ~~our~~ results of operations, capital expenditures, debt service requirements, tax payments, working capital needs and various regulatory actions. ~~Our capital~~Capital expenditures are expected to be used for investment in ~~infrastructure for our natural gas distribution operations.~~infrastructure. These capital expenditures are anticipated to maintain reliability and safety, ~~as well as~~increase resiliency and expand our systems through value-added projects. ~~Our~~In addition to dividend payments on CenterPoint Energy’s Series A Preferred Stock and Common Stock, interest payments on debt, the Registrants’ principal anticipated cash requirements for the remaining ~~three~~nine months of ~~2017~~2022 include ~~approximately $153 million of capital expenditures, $250 million of maturing senior notes and restoration costs related to Hurricane Harvey.~~the following:


	CenterPoint Energy		Houston Electric		CERC
	(in millions)
Estimated capital expenditures	$	2,986	$	1,475	$	1,182
Scheduled principal payments on Securitization Bonds	182		182		—
Minimum contributions to pension plans and other post-retirement plans	11		1		3
Finance lease for mobile generation	347		347		—

The Registrants expect that borrowings under our credit facility, proceeds from commercial paper, anticipated cash flows from operations, intercompany borrowings and distributions on our investment in common units from Enable will be sufficient to meet our anticipated cash needs for the remaining ~~three~~nine months of ~~2017.~~2022 will be met with borrowings under their credit facilities, proceeds from the issuance of long-term debt, term loans, anticipated cash flows from operations, and, with respect to CenterPoint Energy and CERC, proceeds from commercial paper. Discretionary financing or refinancing may result in the issuance of debt securities of the Registrants in the capital markets or the arrangement of additional credit ~~facilities.~~facilities or term bank loans. Issuances of debt in the capital markets, funds raised in the commercial paper markets and additional credit facilities may not, however, be available ~~to us~~ on acceptable terms.

Off-Balance Sheet Arrangements

Other than ~~operating leases,~~Houston Electric’s general mortgage bonds issued as collateral for tax-exempt long-term debt of CenterPoint Energy as discussed in Note 11 and guarantees as discussed in Note 13(b) to the Interim Condensed Financial Statements, we have no off-balance sheet arrangements.

Regulatory Matters

~~PHMSA Matters~~February 2021 Winter Storm Event

For further information about the February 2021 Winter Storm Event, see Note 6 to the Interim Condensed Financial Statements.

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Indiana Electric CPCN (CenterPoint Energy)

On February 9, 2021, Indiana Electric entered into a BTA with a subsidiary of Capital Dynamics. Under the agreement, Capital Dynamics, with its partner Tenaska, contracted to build a 300 MW solar array in Posey County, Indiana through a special purpose entity, Posey Solar. Upon completion of construction, Indiana Electric will acquire Posey Solar and its solar array assets for a fixed purchase price. On February 23, 2021, Indiana Electric filed a CPCN with the IURC seeking approval to purchase the project. Indiana Electric also sought approval for a 100 MW solar PPA with Clenera LLC in Warrick County, Indiana. The request accounted for increased cost of debt related to this PPA, which provides equivalent equity return to offset imputed debt during the 25 year life of the PPA. A hearing was conducted on June 21, 2021. On October 27, 2021, the IURC issued an order approving the CPCN, authorizing Indiana Electric to purchase the Posey solar project through a BTA and approved recovery of costs via a levelized rate over the anticipated 35-year life. The IURC also approved the Warrick County solar PPA but denied the request to preemptively offset imputed debt in the PPA cost. Due to rising cost for the project, caused in part by supply chain issues in the energy industry, the rising costs of commodities and community feedback, we, along with Capital Dynamics, announced plans in January, 2022 to downsize the Posey solar project to approximately 200 MW. The Posey solar project is expected to be in service by 2023. Indiana Electric collaboratively agreed to the scope change and is currently working through contract negotiations, contingent on further IURC review and approval.

On June 17, 2021, Indiana Electric filed a CPCN with the IURC seeking approval to construct two natural gas combustion turbines to replace portions of its existing coal-fired generation fleet. Indiana Electric has also requested depreciation expense and post in-service carrying costs to be deferred in a regulatory asset until the date Indiana South’s base rates include a return on and recovery of depreciation expense on the facility. A hearing was conducted on January 26 through 28, 2022. The estimated $334 million turbine facility would be constructed at the current site of the A.B. Brown power plant in Posey County, Indiana and would provide a combined output of 460 MW. A new approximately 23.5 mile pipeline requiring FERC approval would also be constructed and operated by Texas Gas Transmission, LLC to supply natural gas to the turbine facility. Construction of the turbines will begin following receipt of necessary regulatory approvals by the IURC and FERC, which are anticipated in the second half of 2022 and first quarter of 2023, respectively. The turbines are targeted to be operational in first quarter of 2025. Subject to IURC approval, recovery of the proposed natural gas combustion turbines and regulatory asset will be requested in the next Indiana Electric rate case expected in 2023.

On August 25, 2021, Indiana Electric filed with the IURC seeking approval to purchase 185 MW of solar power, under a 15-year PPA, from Oriden LLC, which is developing a solar project in Vermillion County, Indiana, and 150 MW of solar power, under a 20-year PPA, from Origis Energy USA Inc., which is developing a solar project in Knox County, Indiana. Subject to necessary approvals, both solar arrays are expected to be in service by 2023. For more information regarding uncertainties related to our solar projects, see Item 1A of Part II of this combined Form 10-Q and “ —Solar Panel Issues” below.

Indiana Electric Securitization of Planned Generation Retirements (CenterPoint Energy)

The State of Indiana has enacted legislation, Senate Bill 386, that would enable CenterPoint Energy to request approval from the IURC to securitize the remaining book value and removal costs associated with generating facilities to be retired in the next twenty-four months. The Governor of Indiana signed the legislation on April 19, 2021. CenterPoint Energy intends in the second quarter of 2022 to make a filing with the IURC to securitize qualified costs associated with its planned retirements of coal generation facilities.

Subsidiary Restructuring

In July 2021, Indiana North and SIGECO filed petitions with the IURC for the approval of a new financial services agreement and the confirmation of Indiana North’s financing authority, and final orders were issued by the IURC on December ~~14, 2016, PHMSA announced~~28, 2021. VEDO filed a similar application with the PUCO in September 2021 and the PUCO issued an order on January 26, 2022 adopting recommendations by PUCO staff. CenterPoint Energy is evaluating the transfer of Indiana North and VEDO from VUHI to CERC in order to better align its organizational structure with management and financial reporting. Both the IURC and PUCO have approved the transaction. In order to effect the restructuring, VUHI has approached certain of its debt holders with an offer to exchange existing VUHI debt for CERC debt. The orders allow the reissuance of existing debt of Indiana North and VEDO to CERC, to continue to amortize existing issuance expenses and discounts, and to treat any potential exchange fees as discounts to be amortized over the life of the debt.

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Texas Legislation (CenterPoint Energy and Houston Electric)

Houston Electric continues to review the effects of the legislation and is working with the PUCT regarding proposed rulemakings and pursuing implementation of these items where applicable. For example, in 2021 Houston Electric entered into two leases for temporary emergency electric energy (mobile generation): (1) a temporary short-term lease of 220 MW as of December 31, 2021 and reduced to 92 MW as of March 31, 2022 as assets were delivered under the long-term lease agreement and (2) a 7.5 year lease for up to 505 MW of mobile generation of which 253 MW and 125 MW was delivered as of March 31, 2022 and December 31, 2021. On April 5, 2022, CenterPoint Energy and Houston Electric filed its DCRF with the PUCT seeking recovery of deferred costs and the applicable return as of December 31, 2021 under these lease agreements, approximating $200 million. The annual revenue increase requested for these lease agreements is approximately $60 million. These mobile generation leases will support resiliency in major weather events and were deployed during the restoration process for Hurricane Nicholas. For additional information, see Note 19 to the Interim Condensed Financial Statements.

In addition to these measures taken by Houston Electric to support system preparedness and reliability, in February 2022, the City of Houston launched the first-of-its-kind long-term strategic power resilience initiative called “Resilient Now.” In a joint effort, Houston Electric is working with the City of Houston to develop the Master Energy Plan for the city to help the community thrive through economic changes, digital transformation, and advancing environmental goals for the benefit of its communities. The Master Energy Plan could develop into capital opportunities for Houston Electric, including relating to infrastructure modernization, residential weatherization, and investments around electric vehicles infrastructure.

Minnesota Base Rate Cases (CenterPoint Energy and CERC)

On November 1, 2021, CERC filed a general rate case with the MPUC seeking approval for a revenue increase of approximately $67 million with a projected test year ended December 31, 2022. The revenue increase is based upon a requested ROE of 10.2% and an overall rate of return of 7.06% on a total rate base of approximately $1.8 billion. CERC requested that an interim rate increase of approximately $52 million be implemented January 1, 2022 while the rate case is litigated. An alternative request was also filed on November 1, 2021. The alternative request proposed a final ~~rule~~rate increase of $40 million that would be implemented in the rate case on January 1, 2022, and offered: an increase in rates for plant investment only using the overall rate of return approved in the prior rate case, an asymmetrical capital true-up, extension of the recovery of gas costs incurred to ~~impose industry-developed recommendations as enforceable safety standards~~serve customers in February 2021 from the then current 27 month mechanism to 63 months, an income tax rider, continuation of the existing property tax rider and continued deferral of COVID-19 incremental costs along with additional adjustments. On December 30, 2021, the MPUC issued a written order denying the alternative request but extended the amortization period for ~~downhole (underground) equipment, including wells, wellbore tubing,~~extraordinary gas costs to 63-months beginning on January 1, 2022. The MPUC also issued written orders on the general rate case filing which (1) accepted CERC’s rate-increase application with a time for final determination of September 1, 2022, (2) authorized the implementation of interim rates on January 1, 2022, of $42 million based on an overall rate of return of 6.46%, and ~~casing, at both interstate~~(3) referred the case to the Office of Administrative Hearings for a contested case proceeding. On March 14, 2022, an Offer of Settlement was filed with the Office of Administrative Hearings which would resolve all issues in the rate case. The Settlement provides for a general revenue increase of $48.5 million and ~~intrastate underground~~overall rate of return of 6.65% and is currently subject to review and approval by the MPUC. Final rate implementation is expected before the end of 2022.

Minnesota Legislation (CenterPoint Energy and CERC)

The Natural Gas Innovation Act was passed by the Minnesota legislature in June 2021 with bipartisan support. This law establishes a regulatory framework to enable the state’s investor-owned natural gas ~~storage facilities. Both~~ utilities to provide customers with access to renewable energy resources and innovative technologies, with the goal of reducing greenhouse gas emissions and advancing the state’s clean energy future. Specifically, the Natural Gas Innovation Act allows a natural gas utility to submit an innovation plan for approval by the MPUC which could propose the use of renewable energy resources and innovative technologies such as:

•renewable natural gas (produces energy from organic materials such as wastewater, agricultural manure, food waste, agricultural or forest waste);

•renewable hydrogen gas (produces energy from water through electrolysis with renewable electricity such as solar);

•energy efficiency measures (avoids energy consumption in excess of the utility’s existing conservation programs); and

•innovative technologies (reduces or avoids greenhouse gas emissions using technologies such as carbon capture).

CERC expects to submit its first innovation plan to the MPUC in 2022. The maximum allowable cost for an innovation plan will start at 1.75% of the utility's revenue in the state and ~~Enable own and operate underground storage facilities that are~~could increase to 4% by 2033, subject to ~~this rule’s provisions, which include procedures~~review and ~~practices for operations, maintenance, threat identification, monitoring, assessment, site security, emergency response~~approval by the MPUC.

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Solar Panel Issues (CenterPoint Energy)

The DOC recently announced the commencement of an investigation into circumvention of anti-dumping and ~~preparedness, training~~countervailing duties by manufacturers of solar cells and ~~recordkeeping. This rule went into effect on January 18, 2017,~~panels located in Cambodia, Malaysia, Thailand, and Vietnam. If an affirmative determination is made by the DOC, it could impose duties with ~~an announced compliance deadline of January 18, 2018. PHMSA determined, however, that it will not issue enforcement citations~~both forward-looking and retroactive application. The DOC is expected to ~~any operators for violations of provisions~~present its preliminary findings of the ~~interim final rule that had previously been non-mandatory provisions~~investigation in August or September of ~~American Petroleum Institute Recommended Practices 1170 and 1171 until one year after PHMSA issues~~2022, but a final ~~rule, which it expects~~determination is not expected to ~~publish~~be issued until January 2023 (which deadline can be extended by the DOC to April 1, 2023). CenterPoint Energy’s current and future solar projects may be significantly impacted by this investigation through project delays, cancellations and increased costs to the projects. For more information regarding potential delays, cancellations and supply chain disruptions, see “Item 1A. Risk Factors” in ~~January~~the Registrants’ 2021 Form 10-K and Item 1A of 2018. On October 19, 2017, PHMSA formally reopened the comment period on the interim final rule in response to a petition for reconsideration. This matter remains ongoing and subject to future PHMSA determinations. CERC and Enable will continue to monitor developments and assess the potential impactPart II of ~~any modifications to~~ this ~~rule.~~combined Form 10-Q.

Rate Change Applications

WeThe Registrants are routinely involved in rate change applications before state regulatory authorities. Those applications include general rate cases, where the entire cost of service of the utility is assessed and reset. ~~We are~~In addition, Houston Electric is periodically involved in proceedings to adjust ~~our~~its capital tracking mechanisms (TCOS and DCRF) and annually files to adjust its EECRF. CERC is periodically involved in proceedings to adjust its capital tracking mechanisms in Texas (GRIP), ~~our~~its cost of service adjustments in ~~Arkansas,~~ Louisiana and Mississippi (RSP and ~~Oklahoma (FRP, RSP,~~ RRA, ~~and PBRC)~~respectively), ~~our~~its decoupling mechanism in Minnesota, and ~~our~~its energy efficiency cost trackers in ~~Arkansas,~~ Minnesota and Mississippi (CIP and ~~Oklahoma (EECR, CIP,~~ EECR, respectively). CenterPoint Energy is periodically involved in proceedings to adjust its capital tracking mechanisms in Indiana (CSIA for gas and ~~EECR)~~TDSIC for electric) and Ohio (DRR), its decoupling mechanism in Indiana (SRC for gas), and its energy efficiency cost trackers in Indiana (EEFC for gas and DSMA for electric) and Ohio (EEFR). The table below reflects significant applications pending or completed since ~~our 2016~~the Registrants’ combined 2021 Form 10-K was filed with the ~~SEC.~~

SEC through April 29, 2022.

Mechanism

Annual Increase (Decrease) (1)

(in millions)

Filing
Date

Effective Date

Approval Date

Additional Information

~~Mechanism~~

~~Annual Increase~~ ~~(1)~~

~~(in millions)~~

~~Filing~~

~~Date~~

~~Effective Date~~

~~Approval Date~~

~~Additional Information~~

~~South Texas~~

CenterPoint Energy and Houston Electric (PUCT)

DCRF (1)

146

April 2022

TBD

Based on net change in distribution invested capital since its last base rate proceeding of over $1 billion for the period January 1, 2019 through December 31, 2021. In addition, request includes approximately $200 million in mobile generation facilities during the calendar year ending December 31, 2021. The requested overall revenue increase is $146 million with a proposed effective date of September 1, 2022.

TCOS

February 2022

April 2022

Based on net change of invested capital of $574 million.

CenterPoint Energy and CERC - Beaumont/East Texas, South Texas, Houston and Texas Coast (Railroad Commission)

GRIP

~~$7.6~~

~~March 2017~~

~~July~~

~~2017~~ (1)

~~June~~

~~2017~~

March 2022

TBD

Based on net change in invested capital for calendar year 2021 of ~~$46.5~~$213 million.

~~Houston~~CenterPoint Energy and ~~Texas Coast (Railroad Commission)~~CERC - Minnesota (MPUC)

Rate Case(1)

~~16.5~~67

November ~~2016~~2021

TBD

~~May~~See discussion above under Minnesota Base Rate Case.

~~2017~~

~~May~~

~~2017~~

~~The Railroad Commission approved a unanimous settlement agreement establishing parameters for future GRIP filings, including a 9.6% ROE on a 55.15% equity ratio.~~

~~Texarkana, Texas Service Area (Multiple City Jurisdictions)~~Decoupling

N/A

September 2021

April 2022

Represents under-recovery of approximately $19 million recorded for and during the period July 1, 2020 through June 30, 2021, including an approximately $5 million adjustment related to the implementation of final rates from the general rate case filed in 2019.

~~Rate Case~~

~~1.1~~

~~July~~

~~2017~~

~~September~~

~~2017~~

~~August 2017~~

~~Approved rates are consistent with Arkansas rates approved in 2016.~~

~~Arkansas (APSC)~~

~~EECR (2)~~

~~0.5~~

~~May~~

~~2017~~

~~January 2018~~

~~September 2017~~

~~Recovers $11.0 million, including an incentive of $0.5 million based on 2016 program performance.~~

~~FRP~~

~~7.6~~

~~April~~
~~2017~~

~~October~~
~~2017~~

~~September 2017~~

CenterPoint Energy and CERC - Mississippi (MPSC)

RRA (1)

April
2022

TBD

Based on ROE of ~~9.5% as approved in the last rate case. Unanimous Settlement Agreement was filed in July 2017 for $7.6 million and was subsequently approved.~~

~~BDA~~

~~3.9~~

~~March~~

~~2017~~

~~June~~

~~2017~~

~~June~~

~~2017~~

~~For the evaluation period between January 2016 and August 2016. Amounts are recorded during the evaluation period.~~

~~Minnesota (MPUC)~~

~~Rate Case~~

~~56.5~~

~~August 2017~~

~~TBD~~

~~Reflects a proposed 10.0% ROE on a 52.18% equity ratio. Includes a proposal to extend decoupling beyond current expiration date of June 2018. Interim rates reflecting an annual~~9.568% with 100 basis point (+/-) earnings band. Revenue increase of ~~$47.8 million were effective October 1, 2017.~~

~~CIP (2)~~

~~13.8~~

~~May~~

~~2017~~

~~August 2017~~

~~Annual reconciliation filing for program year 2016 and includes performance bonus of $13.8 million.~~

~~Decoupling~~

~~20.4~~

~~September 2017~~

~~TBD~~

Reflects revenue under recovery for the period July 1, 2016 through June 30, 2017 and $3.0 million related to the under recovery of prior period adjustment factor. $9.2 million was recognized in 2016 and $11.2 million has been recognized in 2017.

~~Mississippi (MPSC)~~

~~RRA~~

~~2.3~~

~~May~~

~~2017~~

~~July~~

~~2017~~

~~July~~

~~2017~~

~~Authorized ROE of 9.59% and a capital structure of 50% debt and 50% equity.~~

~~Louisiana (LPSC)~~

~~RSP~~

~~1.0~~

~~September 2016~~

~~December 2016~~

~~April~~

~~2017~~

~~Authorized ROE of 9.95% and a capital structure of 48% debt and 52% equity.~~

~~RSP~~

~~3.4~~

~~September 2017~~

~~December 2017~~

~~TBD~~

~~Authorized ROE of 9.95% and a capital structure of 48% debt and 52% equity.~~

~~Oklahoma (OCC)~~

~~EECR (2)~~

~~0.4~~

~~March 2017~~

~~November 2017~~

~~October 2017~~

~~Recovers $2.6 million, including an incentive of $0.4~~approximately $3 million based on ~~2016 program performance.~~2021 test year adjusted earned ROE of 7.74%. Interim increase of approximately $1 million to be implemented May 31, 2022.

~~PBRC~~CenterPoint Energy - Ohio (PUCO)

~~2.2~~

~~March~~

~~2017~~DRR (1)

~~November 2017~~9

~~October 2017~~April
2022

~~Based on ROE~~TBD

TBD

Requested an increase of ~~10%.~~$63 million to rate base for investments made in 2021, which reflects a $9 million annual increase in current revenues. A change in (over)/under-recovery variance of $(4 million) annually is also included in rates.

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~~(1)~~Mechanism

~~Represents proposed increases when effective date and/or approval date~~

Annual Increase (Decrease) (1)

(in millions)

Filing
Date

Effective Date

Approval Date

Additional Information

CenterPoint Energy - Indiana Electric (IURC)

TDSIC (1)

February 2022

TBD

Requested an increase of $42 million to rate base, which reflects a $3 million annual increase in current revenues. 80% of the revenue requirement is ~~not yet determined. Approved rates could differ materially from proposed rates.~~included in requested rate increase and 20% is deferred until next rate case. The mechanism also includes a change in (over)/under-recovery variance of less than $1 million.

CECA (1)

(2)

February 2022

TBD

Requested a decrease of less than $1 million to rate base, which reflects a $3 million annual decrease in current revenues. The mechanism also includes a change in (over)/under-recovery variance of less than $1 million. This mechanism includes a non-traditional rate making approach related to a 50 MW universal solar array placed in service in January 2021.

~~(2)~~

~~Amounts are recorded when approved.~~

(1)Represents proposed increases (decreases) when effective date and/or approval date is not yet determined. Approved rates could differ materially from proposed rates.

Greenhouse Gas Regulation and Compliance (CenterPoint Energy)

On August 3, 2015, the EPA released its CPP rule, which required a 32% reduction in carbon emissions from 2005 levels. The final rule was published in the Federal Register on October 23, 2015, and that action was immediately followed by litigation ultimately resulting in the U.S. Supreme Court staying implementation of the rule. On July 8, 2019, the EPA published the ACE rule, which (i) repealed the CPP rule; (ii) replaced the CPP rule with a program that requires states to implement a program of energy efficiency improvement targets for individual coal-fired electric generating units; and (iii) amended the implementing regulations for Section 111(d) of the Clean Air Act. On January 19, 2021, the majority of the ACE rule — including the CPP repeal, CPP replacement, and the timing-related portions of the Section 111(d) implementing rule — was struck down by the U.S. Court of Appeals for the D.C. Circuit and on October 29, 2021, the U.S. Supreme Court agreed to consider four petitions filed by various coal interests and a coalition of 19 states that seek review of the lower court’s decision vacating the ACE rule. CenterPoint Energy is currently unable to predict what a replacement rule for either the ACE rule or CPP would require.

The Biden administration recommitted the United States to the Paris Agreement, which can be expected to drive a renewed regulatory push to require further GHG emission reductions from the energy sector and proceeded to lead negotiations at the global climate conference in Glasgow, Scotland. On April 22, 2021, President Biden announced new goals of 50% reduction of economy-wide GHG emissions, and 100% carbon-free electricity by 2035, which formed the basis of the U.S. commitments announced in Glasgow. In September 2021, CenterPoint Energy announced its new net zero emissions goals for both Scope 1 and Scope 2 emissions by 2035 as well as a goal to reduce Scope 3 emissions by 20% to 30% by 2035. Because Texas is an unregulated market, CenterPoint Energy’s Scope 2 estimates do not take into account Texas electric transmission and distribution assets in the line loss calculation and exclude emissions related to purchased power in Indiana between 2024 and 2026 as estimated. CenterPoint Energy’s Scope 3 estimates do not take into account the emissions of transport customers and emissions related to upstream extraction. These emission goals are expected to be used to position CenterPoint Energy to comply with anticipated future regulatory requirements from the current and future administrations to further reduce GHG emissions. CenterPoint Energy’s and CERC’s revenues, operating costs and capital requirements could be adversely affected as a result of any regulatory action that would require installation of new control technologies or a modification of their operations or would have the effect of reducing the consumption of natural gas. In addition, the EPA has indicated that it intends to implement new regulations targeting reductions in methane emissions, which are likely to increase costs related to production, transmission and storage of natural gas. Houston Electric, in contrast to some electric utilities including Indiana Electric, does not generate electricity, other than leasing facilities that provide temporary emergency electric energy to aid in restoring power to distribution customers during certain widespread power outages as allowed by a new law enacted after the February 2021 Winter Storm Event, and thus is not directly exposed to the risk of high capital costs and regulatory uncertainties that face electric utilities that burn fossil fuels to generate electricity. CenterPoint Energy’s new net zero emissions goals are aligned with Indiana Electric’s generation transition plan and are expected to position Indiana Electric to comply with anticipated future regulatory requirements related to GHG emissions reductions. Nevertheless, Houston Electric’s and Indiana Electric’s revenues could be adversely affected to the extent any resulting regulatory action has the effect of reducing consumption of electricity by ultimate consumers within their respective service territories. Likewise, incentives to conserve energy or to use energy sources other than natural gas could result in a decrease in demand for the Registrants’ services. For example, Minnesota has enacted the Natural Gas Innovation Act that seeks to provide customers with access to renewable energy resources and innovative technologies, with the goal of reducing GHG emissions.Further, certain local government bodies have introduced or are considering requirements and/or incentives to reduce energy consumption by certain specified dates. For example, Minneapolis has adopted carbon emission reduction goals in an effort to decrease reliance on fossil gas. Additionally, cities in Minnesota

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within CenterPoint Energy’s Natural Gas operational footprint are considering initiatives to eliminate natural gas use in buildings and focus on electrification. Also, Minnesota cities may consider seeking legislative authority for the ability to enact voluntary enhanced energy standards for all development projects. These initiatives could have a significant impact on CenterPoint Energy and its operations, and this impact could increase if other cities and jurisdictions in its service area enact similar initiatives. Further, our third party suppliers, vendors and partners may also be impacted by climate change laws and regulations, which could impact CenterPoint Energy’s business by, among other things, causing permitting and construction delays, project cancellations or increased project costs passed on to CenterPoint Energy. Conversely, regulatory actions that effectively promote the consumption of natural gas because of its lower emissions characteristics would be expected to benefit CenterPoint Energy and CERC and their natural gas-related businesses. At this time, however, we cannot quantify the magnitude of the impacts from possible new regulatory actions related to GHG emissions, either positive or negative, on the Registrants’ businesses.

Compliance costs and other effects associated with climate change, reductions in GHG emissions and obtaining renewable energy sources remain uncertain. Although the amount of compliance costs remains uncertain, any new regulation or legislation relating to climate change will likely result in an increase in compliance costs. While the requirements of a federal or state rule remain uncertain, CenterPoint Energy will continue to monitor regulatory activity regarding GHG emission standards that may affect its business. Currently, CenterPoint Energy does not purchase carbon credits. In connection with its net zero emissions goals, CenterPoint Energy is expected to purchase carbon credits in the future; however, CenterPoint Energy does not currently expect the number of credits, or cost for those credits, to be material.

Climate Change Trends and Uncertainties

As a result of increased awareness regarding climate change, coupled with adverse economic conditions, availability of alternative energy sources, including private solar, microturbines, fuel cells, energy-efficient buildings and energy storage devices, and new regulations restricting emissions, including potential regulations of methane emissions, some consumers and companies may use less energy, meet their own energy needs through alternative energy sources or avoid expansions of their facilities, including natural gas facilities, resulting in less demand for the Registrants’ services. As these technologies become a more cost-competitive option over time, whether through cost effectiveness or government incentives and subsidies, certain customers may choose to meet their own energy needs and subsequently decrease usage of the Registrants’ systems and services, which may result in, among other things, Indiana Electric’s generating facilities becoming less competitive and economical. Further, evolving investor sentiment related to the use of fossil fuels and initiatives to restrict continued production of fossil fuels have had significant impacts on CenterPoint Energy’s electric generation and natural gas businesses. For example, because Indiana Electric’s current generating facilities substantially rely on coal for their operations, certain financial institutions choose not to participate in CenterPoint Energy’s financing arrangements. Conversely, demand for the Registrants’ services may increase as a result of customer changes in response to climate change. For example, as the utilization of electric vehicles increases, demand for electricity may increase, resulting in increased usage of CenterPoint Energy’s systems and services. Any negative opinions with respect to CenterPoint Energy’s environmental practices or its ability to meet the challenges posed by climate change formed by regulators, customers, investors or legislators could harm its reputation.

To address these developments, CenterPoint Energy announced its new net zero emissions goals for both Scope 1 and Scope 2 emissions by 2035. In June of 2020, Indiana Electric identified a preferred generation resource in its most recent IRP submitted to the IURC that aligns with its new net zero emissions goals and includes the replacement of 730 MWs of coal-fired generation facilities with a significant portion comprised of renewables, including solar and wind, supported by dispatchable natural gas combustion turbines, including a pipeline to serve such natural gas generation, as well as storage. Additionally, as reflected in its 10-year capital plan announced in September 2021, CenterPoint Energy anticipates spending over $3 billion in clean energy investments and enablement, which may be used to support, among other things, renewable generation and electric vehicle expansion. CenterPoint Energy believes its planned investments in renewable energy generation and corresponding planned reduction in its GHG emissions as part of its newly adopted net zero emissions goals support global efforts to reduce the impacts of climate change.

To the extent climate changes result in warmer temperatures in the Registrants’ service territories, financial results from the Registrants’ businesses could be adversely impacted. For example, CenterPoint Energy’s and CERC’s Natural Gas could be adversely affected through lower natural gas sales. On the other hand, warmer temperatures in CenterPoint Energy’s and Houston Electric’s electric service territory may increase revenues from transmission and distribution and generation through increased demand for electricity used for cooling. Another possible result of climate change is more frequent and more severe weather events, such as hurricanes, tornadoes and flooding, including such storms as the February 2021 Winter Storm Event. Since many of the Registrants’ facilities are located along or near the Texas Gulf Coast, increased or more severe hurricanes or tornadoes could increase costs to repair damaged facilities and restore service to customers. CenterPoint Energy’s recently announced 10-year capital plan includes capital expenditures to maintain reliability and safety and increase resiliency of its systems as climate change may result in more frequent significant weather events. Houston Electric does not own or operate

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any electric generation facilities other than, since September 2021, leasing facilities that provide temporary emergency electric energy to aid in restoring power to distribution customers during certain widespread power outages as allowed by a new law enacted after the February 2021 Winter Storm Event. Houston Electric transmits and distributes to customers of REPs electric power that the REPs obtain from power generation facilities owned by third parties. To the extent adverse weather conditions affect the Registrants’ suppliers, results from their energy delivery businesses may suffer. For example, in Texas, the February 2021 Winter Storm Event caused an electricity generation shortage that was severely disruptive to Houston Electric’s service territory and the wholesale generation market and also caused a reduction in available natural gas capacity. When the Registrants cannot deliver electricity or natural gas to customers, or customers cannot receive services, the Registrants’ financial results can be impacted by lost revenues, and they generally must seek approval from regulators to recover restoration costs. To the extent the Registrants are unable to recover those costs, or if higher rates resulting from recovery of such costs result in reduced demand for services, the Registrants’ future financial results may be adversely impacted. Further, as the intensity and frequency of significant weather events continues, it may impact our ability to secure cost-efficient insurance.

Other Matters

Credit ~~Facility~~Facilities

~~Our~~The Registrants may draw on their respective revolving credit ~~facility may be drawn on~~facilities from time to time to provide funds used for general corporate and limited liability company purposes, including to backstop ~~our~~CenterPoint Energy’s and CERC’s commercial paper ~~program.~~programs. The facilities may also be utilized to obtain letters of credit. For further details related to ~~our~~the Registrants’ revolving credit ~~facility and the 2017 amendment, please~~facilities, see Note 11 to ~~our~~the Interim Condensed Financial Statements.

Based on the consolidated debt to capitalization covenant in the Registrants’ revolving credit facilities, the Registrants would have been permitted to utilize the full capacity of such revolving credit facilities, which aggregated approximately $4 billion as of March 31, 2022. As of ~~October 26, 2017, we~~April 20, 2022, the Registrants had the following revolving credit ~~facility~~facilities and utilization of such ~~facility:~~facilities:


			Amount Utilized as of April 20, 2022
Registrant	Size of Facility		Loans		Letters of Credit		Commercial Paper		Weighted Average Interest Rate	Termination Date
	(in millions)
CenterPoint Energy	$	2,400	$	—	$	11	$	443	0.70%	February 4, 2024
CenterPoint Energy (1)	400		—		—		245		0.62%	February 4, 2024


Houston Electric	300		—		—		—		—%	February 4, 2024
CERC	900		—		—		96		0.60%	February 4, 2024
Total	$	4,000	$	—	$	11	$	784

Execution Date
Size of
Facility

Amount
Utilized at
October 26, 2017
Termination Date
(in millions)
March 3, 2016 $ 900
$ 561
(1) March 3, 2022

(1) ~~Represents outstanding commercial paper.~~The credit facility was issued by VUHI and is guaranteed by SIGECO, Indiana Gas and VEDO.

Borrowings under ~~our~~each of the revolving credit ~~facility~~facilities are subject to customary terms and conditions. However, there is no requirement that ~~we make~~the borrower makes representations prior to ~~borrowings~~borrowing as to the absence of material adverse changes or litigation that could be expected to have a material adverse effect. Borrowings under ~~our~~each of the revolving credit ~~facility~~facilities are subject to acceleration upon the occurrence of events of default that we consider customary. The revolving credit ~~facility~~facilities also ~~provides~~provide for customary fees, including commitment fees, administrative agent fees, fees in respect of letters of credit and other fees. In ~~our~~each of the revolving credit ~~facility,~~facilities, the spread to LIBOR and the commitment fees fluctuate based on ~~our~~the borrower’s credit rating. WeEach of the Registrant’s credit facilities provide for a mechanism to replace LIBOR with possible alternative benchmarks upon certain benchmark replacement events. The borrowers are currently in compliance with the various business and financial covenants in ~~our~~the four revolving credit ~~facility.~~facilities.

Long-term Debt ~~Financing Transactions~~

~~In August 2017, we issued $300 million aggregate principal amount of unsecured senior notes.~~ For ~~further~~detailed information about ~~our 2017~~the Registrants’ debt transactions in 2022, see Note 11 to ~~our~~the Interim Condensed Financial Statements.

Securities Registered with the SEC

On ~~January 31, 2017, we~~May 29, 2020, the Registrants filed a joint shelf registration statement with the SEC registering indeterminate principal amounts of Houston Electric’s general mortgage bonds, CERC Corp.’s senior debt securities and CenterPoint Energy’s senior

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debt securities and junior subordinated debt securities and an indeterminate ~~principal amount~~number of ~~our senior debt securities.~~shares of Common Stock, shares of preferred stock, depositary shares, as well as stock purchase contracts and equity units. The joint shelf registration statement will expire on ~~January 31, 2020.~~May 29, 2023. For information related to the Registrants’ debt issuances in 2022, see Note 11 to the Interim Condensed Financial Statements.

Temporary Investments

As of ~~October 26, 2017, we~~April 20, 2022, the Registrants had no temporary ~~external~~ investments.

Money Pool

WeThe Registrants participate in a money pool through which wethey and certain of ~~our affiliates~~their subsidiaries can borrow or invest on a short-term basis. Funding needs are aggregated and external borrowing or investing is based on the net cash position. The net funding requirements of the CenterPoint Energy money pool are expected to be met with borrowings byunder CenterPoint ~~Energy under its~~Energy’s revolving credit facility or the sale byof CenterPoint ~~Energy of its~~Energy’s commercial paper. AsThe net funding requirements of ~~October 26, 2017, we had no~~the CERC money pool are expected to be met with borrowings ~~from~~under CERC’s revolving credit facility or ~~investments in~~ the ~~money pool.~~sale of CERC’s commercial paper. The money pool may not provide sufficient funds to meet ~~our~~the Registrants’ cash needs.

The table below summarizes CenterPoint Energy money pool activity by Registrant as of April 20, 2022:


	Weighted Average Interest Rate	Houston Electric		CERC
		(in millions)
Money pool investments (borrowings)	0.67%	$	145	$	—

Impact on Liquidity of a Downgrade in Credit Ratings

The interest rate on borrowings under ~~our~~the credit ~~facility~~facilities is based on ~~our~~each respective borrower’s credit rating. On August 4, 2017, S&P revised its rating outlook on our senior debt to positive from developing and affirmed its rating. On September 24, 2017, Fitch revised its rating outlook on our senior debt to positive from stable and affirmed its rating.

ratings. As of ~~October 26, 2017,~~April 20, 2022, Moody’s, S&P and Fitch had assigned the following credit ratings to ~~our senior unsecured debt:~~

the borrowers:

~~Moody’s~~

Moody’s

S&P

Fitch

~~Rating~~Registrant

Borrower/Instrument

Rating

Outlook (1)

Rating

Outlook (2)

Rating

Outlook (3)

~~Baa2~~CenterPoint Energy

~~Stable~~CenterPoint Energy Senior Unsecured Debt

A-Baa2

~~Positive~~Stable

BBB

~~Positive~~Stable

BBB

Stable

CenterPoint Energy

Vectren Corp. Issuer Rating

n/a

BBB+

Stable

n/a

CenterPoint Energy

VUHI Senior Unsecured Debt

Stable

BBB+

Stable

n/a

CenterPoint Energy

Indiana Gas Senior Unsecured Debt

n/a

BBB+

Stable

n/a

CenterPoint Energy

SIGECO Senior Secured Debt

Stable

n/a

Houston Electric

Houston Electric Senior Secured Debt

Stable

CERC

CERC Corp. Senior Unsecured Debt

Stable

BBB+

Stable

A-

Stable


~~(1)~~	~~A Moody’s rating outlook is an opinion regarding the likely direction of an issuer’s rating over the medium term.~~


~~(2)~~	~~An S&P rating outlook assesses the potential direction of a long-term credit rating over the intermediate to longer term.~~


~~(3)~~	~~A Fitch rating outlook indicates the direction a rating is likely to move over a one- to two-year period.~~

We(1)A Moody’s rating outlook is an opinion regarding the likely direction of an issuer’s rating over the medium term.

(2)An S&P outlook assesses the potential direction of a long-term credit rating over the intermediate to longer term.

(3)A Fitch rating outlook indicates the direction a rating is likely to move over a one- to two-year period.

The Registrants cannot assure that the ratings set forth above will remain in effect for any given period of time or that one or more of these ratings will not be lowered or withdrawn entirely by a rating agency. WeThe Registrants note that these credit ratings are included for informational purposes and are not recommendations to buy, sell or hold ~~our~~the Registrants’ securities and may be revised or withdrawn at any time by the rating agency. Each rating should be evaluated independently of any other rating. Any future reduction or withdrawal of one or more of ~~our~~the Registrants’ credit ratings could have a material adverse impact on ~~our~~the Registrants’ ability to obtain short- and long-term financing, the cost of such financings and the execution of ~~our~~the Registrants’ commercial strategies.

A decline in credit ratings could increase borrowing costs under ~~our~~the Registrants’ revolving credit ~~facility.~~facilities. If ~~our~~the Registrants’ credit ratings had been downgraded one notch by ~~each of the three principal credit rating agencies~~S&P and Moody’s from the ratings that existed as of ~~September 30, 2017,~~March 31, 2022, the impact on the borrowing costs under ~~our~~the four revolving credit ~~facility~~facilities would have been ~~immaterial.~~insignificant. A decline in

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credit ratings would also increase the interest rate on long-term debt to be issued in the capital markets and could negatively impact ~~our~~the Registrants’ ability to complete capital market transactions and to access the commercial paper market. Additionally, a decline in credit ratings could increase cash collateral requirements and reduce earnings of ~~our~~CenterPoint Energy’s and CERC’s Natural Gas ~~Distribution and Energy Services business~~reportable segments.

CES, our wholly-owned subsidiary operating in our Energy Services business segment, provides natural gas sales and services primarily to commercial and industrial customers and electric and natural gas utilities throughout the United States. To economically hedge its exposure to natural gas prices, CES uses derivatives with provisions standard for the industry, including those pertaining to credit thresholds. Typically, the credit threshold negotiated with each counterparty defines the amount of unsecured credit that such counterparty will extend to CES. To the extent that the credit exposure that a counterparty has to CES at a particular time does not exceed that credit threshold, CES is not obligated to provide collateral. Mark-to-market exposure in excess of the credit threshold is routinely collateralized or settled-to-market by CES. As of September 30, 2017, the amounts posted as collateral and settled-to-market aggregated approximately $35 million. Should the credit ratings of CERC Corp. (as the credit support provider for CES) fall below certain levels, CES would be required to provide additional collateral up to the amount of its previously unsecured credit limit. We estimate that as of September 30, 2017, unsecured credit limits extended to CES by counterparties aggregated $358 million, and $1 million of such amount was utilized.

Pipeline tariffs and contracts typically provide that if the credit ratings of a shipper or the shipper’s guarantor drop below a threshold level, which is generally investment grade ratings from both Moody’s and S&P, cash or other collateral may be demanded from the shipper in an amount equal to the sum of three months’ charges for pipeline services plus the unrecouped cost of any lateral built for such shipper. If the credit ratings of CERC Corp. decline below the applicable threshold levels, CERC ~~Corp.~~ might need to provide cash or other collateral of as much as ~~$197~~$203 million as of ~~September 30, 2017.~~March 31, 2022. The amount of collateral will depend on seasonal variations in transportation levels.

ZENS and Securities Related to ZENS (CenterPoint Energy)

If CenterPoint Energy’s creditworthiness were to drop such that ZENS holders thought its liquidity was adversely affected or the market for the ZENS were to become illiquid, some ZENS holders might decide to exchange their ZENS for cash. Funds for the payment of cash upon exchange could be obtained from the sale of the shares of ZENS-Related Securities that CenterPoint Energy owns or from other sources. CenterPoint Energy owns shares of ZENS-Related Securities equal to approximately 100% of the reference shares used to calculate its obligation to the holders of the ZENS. ZENS exchanges result in a cash outflow because tax deferrals related to the ZENS and shares of ZENS-Related Securities would typically cease when ZENS are exchanged or otherwise retired and shares of ZENS-Related Securities are sold. The ultimate tax liability related to the ZENS and ZENS-Related Securities continues to increase by the amount of the tax benefit realized each year, and there could be a significant cash outflow when the taxes are paid as a result of the retirement or exchange of the ZENS. If all ZENS had been exchanged for cash on March 31, 2022, deferred taxes of approximately $575 million would have been payable in 2022. If all the ZENS-Related Securities had been sold on March 31, 2022, capital gains taxes of approximately $124 million would have been payable in 2022 based on 2022 tax rates in effect. For additional information about ZENS, see Note 10 to the Interim Condensed Financial Statements.

Cross Defaults

Under each of CenterPoint Energy’s (including VUHI’s), Houston Electric’s and CERC’s respective revolving credit ~~facility,~~facilities, a payment default on, or a non-payment default that permits acceleration of, any indebtedness for borrowed money and certain other specified types of obligations (including guarantees) exceeding $125 million by usthe borrower or any of their respective significant subsidiaries will cause a ~~default.~~default under such borrower’s respective credit facility or term loan agreement. A default by CenterPoint Energy would not trigger a default under ~~our~~its subsidiaries’ debt instruments or revolving credit ~~facility.~~facilities.

Possible Acquisitions, Divestitures and Joint Ventures

From time to time, wethe Registrants consider the acquisition or the disposition of assets or businesses or possible joint ventures, strategic initiatives or other joint ownership arrangements with respect to assets or businesses. Any determination to take action in this regard will be based on market conditions and opportunities existing at the time, and accordingly, the timing, size or success of any efforts

and the associated potential capital commitments are unpredictable. WeThe Registrants may seek to fund all or part of any such efforts with proceeds from debt and/or equity issuances. Debt or equity financing may not, however, be available to usthe Registrants at that time due to a variety of events, including, among others, maintenance of our credit ratings, industry conditions, general economic conditions, market conditions and market perceptions.

~~In February 2016,~~ As announced in September 2021, CenterPoint Energy ~~announced that it was evaluating strategic alternatives for our investment~~plans to increase its planned capital expenditures in ~~Enable, including a sale or spin-off qualifying under Section 355 of~~its Electric and Natural Gas businesses to support rate base growth and may explore asset sales, in addition to the U.S. Internal Revenue Code. CenterPoint Energy has determined that it will no longer pursue the spin option. Should the sale option not be viable, we intend to reduce our ownership in Enable over time through arecently completed sale of ~~the common units we hold~~its Natural Gas businesses located in ~~the public equity markets, subject~~Arkansas and Oklahoma, as a means to ~~market conditions. There can be no assurances that these evaluations will result in any specific action, and we do not intend~~efficiently finance a portion of such increased capital expenditures. For further information, see Note 3 to ~~disclose further developments on these initiatives unless and until CenterPoint Energy’s board of directors approves a specific action or as otherwise required.~~

~~Enable Midstream Partners~~

~~We receive quarterly cash distributions from Enable on its common units we own. A reduction in~~ the ~~cash distributions we receive from Enable could significantly impact our liquidity. For additional information about cash distributions from Enable, see Notes 8 and 16 to our~~ Interim Condensed Financial Statements.

~~Weather Hedge~~

We have entered into partial weather hedges for certain NGD jurisdictions to mitigate the impact of fluctuations from normal weather. We remain exposed to some weather risk as a result of the partial hedges. For more information about our weather hedges, see Note 6(a) to our Interim Condensed Financial Statements.

Hedging of Interest Expense for Future Debt Issuances

~~During August 2017, we entered~~From time to time, the Registrants may enter into ~~forward~~ interest rate agreements to hedge, in part, volatility in the U.S. treasury rates by reducing variability in cash flows related to interest payments. For further information, see Note ~~6(a)~~7(a) to ~~our~~the Interim Condensed Financial Statements.

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Collection of Receivables from REPs (CenterPoint Energy and Houston Electric)

Houston Electric’s receivables from the distribution of electricity are collected from REPs that supply the electricity Houston Electric distributes to their customers. Before conducting business, a REP must register with the PUCT and must meet certain financial qualifications. Nevertheless, adverse economic conditions, the February 2021 Winter Storm Event, structural problems in the market served by ERCOT or financial difficulties of one or more REPs could impair the ability of these REPs to pay for Houston Electric’s services or could cause them to delay such payments. Houston Electric depends on these REPs to remit payments on a timely basis, and any delay or default in payment by REPs could adversely affect Houston Electric’s cash flows. In the event of a REP default, Houston Electric’s tariff provides a number of remedies, including the option for Houston Electric to request that the PUCT suspend or revoke the certification of the REP. Applicable regulatory provisions require that customers be shifted to another REP or a provider of last resort if a REP cannot make timely payments. However, Houston Electric remains at risk for payments related to services provided prior to the shift to the replacement REP or the provider of last resort. If a REP were unable to meet its obligations, it could consider, among various options, restructuring under the bankruptcy laws, in which event such REP might seek to avoid honoring its obligations and claims might be made against Houston Electric involving payments it had received from such REP. If a REP were to file for bankruptcy, Houston Electric may not be successful in recovering accrued receivables owed by such REP that are unpaid as of the date the REP filed for bankruptcy. However, PUCT regulations authorize utilities, such as Houston Electric, to defer bad debts resulting from defaults by REPs for recovery in future rate cases, subject to a review of reasonableness and necessity.

Other Factors that Could Affect Cash Requirements

In addition to the above factors, ~~our~~the Registrants’ liquidity and capital resources could also be negatively affected by:

•cash collateral requirements that could exist in connection with certain contracts, including ~~our~~ weather hedging arrangements, and natural gas purchases, natural gas price and natural gas storage activities of ~~our~~CenterPoint Energy’s and CERC’s Natural Gas ~~Distribution and Energy Services business segments;~~reportable segment;

•acceleration of payment dates on certain gas supply contracts, under certain circumstances, as a result of increased natural gas prices and concentration of natural gas ~~suppliers;~~suppliers (CenterPoint Energy and CERC);

•increased costs related to the acquisition of natural ~~gas;~~gas (CenterPoint Energy and CERC);

•increases in interest expense in connection with debt refinancings and borrowings under ~~our~~ credit ~~facility;~~facilities or term loans or the use of alternative sources of financings;

•increases in commodity prices;

•various legislative or regulatory ~~actions;~~actions, including recovery of costs such as those associated with the mobile generation leases;

•incremental collateral, if any, that may be required due to regulation of ~~derivatives;~~derivatives (CenterPoint Energy);

•the ability of ~~GenOn~~REPs, including REP affiliates of NRG and ~~its subsidiaries, currently the subject of bankruptcy proceedings,~~Vistra Energy Corp., to satisfy their ~~obligations in respect of GenOn’s indemnity~~ obligations to CenterPoint Energy and ~~its subsidiaries;~~Houston Electric, including the negative impact on such ability related to the February 2021 Winter Storm Event;

•slower customer payments and increased write-offs of receivables due to higher natural gas prices, or changing economic ~~conditions;~~conditions or the February 2021 Winter Storm Event (CenterPoint Energy and CERC);

•the satisfaction of any obligations pursuant to guarantees;

~~the outcome of litigation brought by or against us;~~•contributions to pension and postretirement benefit plans;

•restoration costs and revenue losses resulting from future natural disasters such as hurricanes and the timing of recovery of such restoration costs; and

•various other risks identified in “Risk Factors” in Item 1A of Part I of ~~our 2016~~the Registrants’ combined 202 1 Form ~~10-K.~~10-K and in Item 1A of Part II of this combined Form 10-Q.

Certain Contractual Limits on Our Ability to Issue Securities and Borrow Money

Certain provisions in note purchase agreements relating to debt issued by VUHI have the effect of restricting the amount of additional first mortgage bonds issued by SIGECO. For information about the total debt to capitalization financial covenants in ~~our~~the Registrants’ and certain of CenterPoint Energy’s subsidiaries’ revolving credit ~~facility,~~facilities, see Note 11 to ~~our~~the Interim Condensed Financial Statements.

~~Relationship~~

CRITICAL ACCOUNTING POLICIES

A critical accounting policy is one that is both important to the presentation of the Registrants’ financial condition and results of operations and requires management to make difficult, subjective or complex accounting estimates. An accounting estimate is an approximation made by management of a financial statement element, item or account in the financial statements.

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Accounting estimates in the Registrants’ historical consolidated financial statements measure the effects of past business transactions or events, or the present status of an asset or liability. Additionally, different estimates that the Registrants could have used or changes in an accounting estimate that are reasonably likely to occur could have a material impact on the presentation of their financial condition, results of operations or cash flows. The circumstances that make these judgments difficult, subjective and/or complex have to do with the need to make estimates about the effect of matters that are inherently uncertain. Estimates and assumptions about future events and their effects cannot be predicted with certainty. The Registrants base their estimates on historical experience and on various other assumptions that they believe to be reasonable under the circumstances, the results of which form the basis for making judgments. These estimates may change as new events occur, as more experience is acquired, as additional information is obtained and as the Registrants’ operating environment changes.

There have been no significant changes in our critical accounting policies during the three months ended March 31, 2022, as compared to the critical accounting policies disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Registrants’ combined 2021 Form 10-K.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Houston Electric and CERC meet the conditions specified in General Instruction H(1)(a) and (b) to Form 10-Q and are therefore permitted to use the reduced disclosure format for wholly-owned subsidiaries of reporting companies. Accordingly, Houston Electric and CERC have omitted from this report the information called for by Item 3 (Quantitative and Qualitative Disclosures About Market Risk) of Part I of the Form 10-Q.

Interest Rate Risk (CenterPoint Energy)

As of March 31, 2022, CenterPoint Energy had outstanding long-term debt, lease obligations and obligations under its ZENS that subject it to the risk of loss associated with movements in market interest rates.

WeCenterPoint Energy’s floating rate obligations aggregated $2.1 billion and $4.5 billion as of March 31, 2022 and December 31, 2021, respectively. If the floating interest rates were to increase by 10% from March 31, 2022 rates, CenterPoint Energy’s combined interest expense would increase by approximately $2 million annually.

As of March 31, 2022 and December 31, 2021, CenterPoint Energy had outstanding fixed-rate debt (excluding indexed debt securities) aggregating $11.8 billion and $11.7 billion, respectively, in principal amount and having a fair value of $12.0 billion and $13.0 billion, respectively. Because these instruments are fixed-rate, they do not expose CenterPoint Energy to the risk of loss in earnings due to changes in market interest rates. However, the fair value of these instruments would increase by approximately $443 million if interest rates were to decline by 10% from levels at March 31, 2022. In general, such an ~~indirect, wholly-owned subsidiary~~increase in fair value would impact earnings and cash flows only if CenterPoint Energy were to reacquire all or a portion of these instruments in the open market prior to their maturity.

In general, such an increase in fair value would impact earnings and cash flows only if CenterPoint ~~Energy. As~~Energy were to reacquire all or a portion of these instruments in the open market prior to their maturity.

The ZENS obligation is bifurcated into a debt component and a derivative component. The debt component of $9 million as of March 31, 2022 was a fixed-rate obligation and, therefore, did not expose CenterPoint Energy to the risk of loss in earnings due to changes in market interest rates. However, the fair value of the debt component would increase by approximately $1 million if interest rates were to decline by 10% from levels at March 31, 2022. Changes in the fair value of the derivative component, a $797 million recorded liability at March 31, 2022, are recorded in CenterPoint Energy’s Condensed Statements of Consolidated Income and, therefore, it is exposed to changes in the fair value of the derivative component as a result of ~~this relationship,~~changes in the ~~financial condition~~underlying risk-free interest rate. If the risk-free interest rate were to increase by 10% from March 31, 2022 levels, the fair value of the derivative component liability would decrease by approximately $1 million, which would be recorded as an unrealized gain in CenterPoint Energy’s Condensed Statements of Consolidated Income.

Equity Market Value Risk (CenterPoint Energy)

CenterPoint Energy is exposed to equity market value risk through its ownership of 10.2 million shares of AT&T Common, 0.9 million shares of Charter Common and ~~liquidity~~2.5 million shares of ~~our parent company could affect our access~~WBD Common, which CenterPoint Energy holds to ~~capital, our credit standing and our financial condition.~~

~~NEW ACCOUNTING PRONOUNCEMENTS~~

facilitate its ability to meet its obligations under the ZENS. See Note 210 to ~~our~~the Interim Condensed Financial Statements ~~incorporated herein by reference,~~ for a discussion of ~~new accounting pronouncements that affect us.~~CenterPoint Energy’s ZENS obligation. Changes in the fair value of the ZENS-Related Securities held by CenterPoint Energy are expected to substantially offset changes in the fair value of the derivative component of the ZENS. A

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decrease of 10% from the March 31, 2022 aggregate market value of these shares would result in a net loss of less than $1 million, which would be recorded as a loss in CenterPoint Energy’s Condensed Statements of Consolidated Income.

Commodity Price Risk From Non-Trading Activities (CenterPoint Energy)

CenterPoint Energy’s regulated operations in Indiana have limited exposure to commodity price risk for transactions involving purchases and sales of natural gas, coal and purchased power for the benefit of retail customers due to current state regulations, which, subject to compliance with those regulations, allow for recovery of the cost of such purchases through natural gas and fuel cost adjustment mechanisms. CenterPoint Energy’s utility natural gas operations in Indiana have regulatory authority to lock in pricing for up to 50% of annual natural gas purchases using arrangements with an original term of up to 10 years. This authority has been utilized to secure fixed price natural gas using both physical purchases and financial derivatives. As of March 31, 2022, the recorded fair value of non-trading energy derivative assets was $39 million for CenterPoint Energy’s utility natural gas operations in Indiana.

Although CenterPoint Energy’s regulated operations are exposed to limited commodity price risk, natural gas and coal prices have other effects on working capital requirements, interest costs, and some level of price-sensitivity in volumes sold or delivered. Constructive regulatory orders, such as those authorizing lost margin recovery, other innovative rate designs and recovery of unaccounted for natural gas and other natural gas-related expenses, also mitigate the effect natural gas costs may have on CenterPoint Energy’s financial condition. In 2008, the PUCO approved an exit of the merchant function in CenterPoint Energy’s Ohio natural gas service territory, allowing Ohio customers to purchase substantially all natural gas directly from retail marketers rather than from CenterPoint Energy.

Item 4.CONTROLS AND PROCEDURES

In accordance with Exchange Act Rules 13a-15 and 15d-15, wethe Registrants carried out ~~an evaluation,~~separate evaluations, under the supervision and with the participation of each company’s management, including ~~our~~the principal executive officer and principal financial officer, of the effectiveness of ~~our~~the disclosure controls and procedures as of the end of the period covered by this report. Based on ~~that evaluation, our~~those evaluations, the principal executive officer and principal financial officer, in each case, concluded that ~~our~~the disclosure controls and procedures were effective as of ~~September 30, 2017~~March 31, 2022 to provide assurance that information required to be disclosed in ~~our~~the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and such information is accumulated and communicated to ~~our~~ management, including ~~our~~the principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding disclosure.

There has been no change in ~~our~~the Registrants’ internal controls over financial reporting that occurred during the three months ended ~~September 30, 2017~~March 31, 2022 that has materially affected, or is reasonably likely to materially affect, ~~our~~the Registrants’ internal controls over financial reporting.

PART II. OTHER INFORMATION

Item 1.LEGAL PROCEEDINGS

For a description of certain legal and regulatory proceedings, ~~affecting us,~~ please read Note ~~12(b)~~13(d) to ~~our~~the Interim Condensed Financial Statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Future Sources and Uses of Cash” and “— Regulatory Matters,” each of which is incorporated herein by reference. See also ~~“Business~~“Business — Regulation” and “— Environmental ~~Matters”~~Matters” in Item 1 and ~~“Legal Proceedings”~~“Legal Proceedings” in Item 3 of ~~our 2016~~the Registrants’ combined 2021 Form 10-K.

Item 1A.RISK FACTORS

~~There~~See below the new risk factor affecting CenterPoint Energy’s and Houston Electric’s businesses, in addition to those risk factors discussed in “Risk Factors” in Item 1A of Part I of the combined 2021 Form 10-K, which could materially affect the Registrants’ financial condition or future results. Except for the updates below, there have been no material changes from the risk factors disclosed in ~~our 2016~~the Registrants’ combined 2021 Form 10-K.

Increases in the cost or reduction in supply of solar energy system components due to tariffs or trade restrictions imposed by the U.S. government may have an adverse effect on our business, financial condition and results of operations.

~~Item 5.OTHER INFORMATION~~

China is a major producer of solar cells and other solar products. Certain solar cells, modules, laminates and panels from China are subject to various antidumping and countervailing duty rates, depending on the exporter supplying the product,

~~Ratio~~

Tab le of ~~Earnings to Fixed Charges.~~ ~~The ratio~~Contents

imposed by the U.S. government as a result of ~~earnings to fixed charges for the nine months ended September 30, 2017 and 2016 was 5.27 and 4.51, respectively. We do not believe~~determinations that the ~~ratios~~U.S. was materially injured as a result of such imports being sold at less than fair value and subsidized by the Chinese government. In March 2022, the DOC announced that it would initiate an investigation into whether imports of solar cells and panels produced in Cambodia, Malaysia, Thailand and Vietnam are circumventing rules, such as anti-dumping and countervailing duties, intended to impose a tariff on imports of solar cells and panels manufactured in China. If an affirmative finding is made by the DOC, it could impose duties on imports of solar cells and panels from Cambodia, Malaysia, Thailand and Vietnam with both forward-looking and retroactive application. If enacted, these or similar duties could put upward pressure on prices of these solar energy products, which may reduce our ability to acquire these items in a timely and cost-efficient manner. If we are unable to secure such solar energy products in a timely and cost-efficient manner, we may be forced to delay, downsize and/or cancel solar projects and we may not be able to procure the resources needed to fully execute on our ten-year capital plan or achieve our net zero emissions goals. Additionally, delays or cancellations by developers of third-party solar power facilities expected to interconnect with CenterPoint Energy’s and Houston Electric’s system may have adverse impacts, such as delayed or reduced potential future revenues.We cannot predict what additional actions the U.S. government may adopt with respect to tariffs or other trade regulations in the future or what actions may be taken by other countries in retaliation for ~~these nine-month periods~~such measures. If an affirmative finding is made by the DOC or other additional measures are ~~necessarily indicative~~imposed, our business, financial condition and results of ~~the ratios for the 12-month periods due to the seasonal nature of our business. The ratios were calculated pursuant to applicable rules of the SEC.~~operations may be adversely affected.

Item 5.OTHER INFORMATION

None.

Item 6.EXHIBITS

~~The following exhibits are filed herewith:~~

Exhibits ~~not incorporated by reference to a prior filing~~filed herewith are designated by a cross (+(†); all exhibits not so designated are incorporated by reference to a prior filing as indicated.

Agreements included as exhibits are included only to provide information to investors regarding their terms. Agreements listed below may contain representations, warranties and other provisions that were made, among other things, to provide the parties thereto with specified rights and obligations and to allocate risk among them, and no such agreement should be relied upon as constituting or providing any factual disclosures about ~~CERC Corp.,~~the Registrants, any other persons, any state of affairs or other matters.

Pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K, the Registrants have not filed as exhibits to this combined Form 10-Q certain long-term debt instruments, including indentures, under which the total amount of securities authorized does not exceed 10% of the total assets of the Registrants and its subsidiaries on a consolidated basis. The Registrants hereby agree to furnish a copy of any such instrument to the SEC upon request.

Exhibit
Number

Description

Report or Registration
Statement

SEC File or
Registration
Number

Exhibit
Reference

CenterPoint Energy

Houston Electric

CERC

2.1*

Agreement and Plan of Merger, dated as of April 21, 2018, by and among Vectren Corporation, CenterPoint Energy, Inc. and Pacer Merger Sub, Inc.

CenterPoint Energy’s Form 8-K dated April 21, 2018

1-31447

2.1

2.2*

Securities Purchase Agreement, dated as of February 3, 2020, by and among Vectren Utility Services, Inc., PowerTeam Services, LLC and, solely for purposes of Section 10.17 of the Securities Purchase Agreement, Vectren Corporation

CenterPoint Energy’s Form 8-K dated February 3, 2020

1-31447

2.1

2.3*

Equity Purchase Agreement, dated as of February 24, 2020, by and between CERC Corp. and Athena Energy Services Buyer, LLC

CenterPoint Energy’s Form 8-K dated February 24, 2020

1-31447

2.1

2.4*

Asset Purchase Agreement, by and between CenterPoint Energy Resources Corp. and Southern Col Midco, LLC, dated as of April 29, 2021

CenterPoint Energy’s Form 10-Q for the quarter ended March 31, 2021

1-31447

2.4

3.1

Restated Articles of Incorporation of CenterPoint Energy

CenterPoint Energy’s Form 8-K dated July 24, 2008

1-31447

3.2

Restated Certificate of Formation of Houston Electric

Houston Electric’s Form 10-Q for the quarter ended June 30, 2011

1-3187

3.1

3.3

Certificate of Incorporation of RERC Corp.

CERC Form 10-K for the year ended December 31, 1997

1-13265

3(a)(1)

Tab le of Contents

Exhibit
Number
Description
Report or Registration
Statement

SEC File or
Registration
Number

Exhibit
Reference
3.1.1
Certificate of Incorporation of RERC Corp.

Form 10-K for the year ended December 31, 1997 1-13265 3(a)(1)
3.1.2
Certificate of Merger merging former NorAm Energy Corp. with and into HI Merger, Inc. dated August 6, 1997

Form 10-K for the year ended December 31, 1997 1-13265 3(a)(2)
3.1.3
Certificate of Amendment changing the name to Reliant Energy Resources Corp.

Form 10-K for the year ended December 31, 1998 1-13265 3(a)(3)
3.1.4
Certificate of Amendment changing the name to CenterPoint Energy Resources Corp.
Form 10-Q for the quarter ended June 30, 2003 1-13265 3(a)(4)
3.2 Bylaws of RERC Corp. Form 10-K for the year ended December 31, 1997 1-13265 3(b)
4.1
$600,000,000 Credit Agreement, dated as of March 3, 2016, among CERC Corp., as Borrower, and the banks named therein
Form 8-K dated March 3, 2016 1-13265 4.3
4.2
First Amendment to Credit Agreement, dated as of June 16, 2017, among CERC Corp., as Borrower, and the banks named therein
Form 8-K dated June 16, 2017 1-13265 4.3
4.3 Indenture, dated as of February 1, 1998, between Reliant Energy Resources Corp. and Chase Bank of Texas, National Association, as Trustee Form 8-K dated February 5, 1998 1-13265 4.1
+4.4
Supplemental Indenture No. 16 to Exhibit 4.3, dated as of August 23, 2017, providing for the issuance of CERC Corp.’s 4.10% Senior Notes due 2047

+12
Computation of Ratios of Earnings to Fixed Charges

+31.1
Rule 13a-14(a)/15d-14(a) Certification of Scott M. Prochazka

+31.2
Rule 13a-14(a)/15d-14(a) Certification of William D. Rogers

+32.1
Section 1350 Certification of Scott M. Prochazka

+32.2
Section 1350 Certification of William D. Rogers

+101.INS XBRL Instance Document
+101.SCH XBRL Taxonomy Extension Schema Document
+101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
+101.DEF XBRL Taxonomy Extension Definition Linkbase Document
+101.LAB XBRL Taxonomy Extension Labels Linkbase Document
+101.PRE XBRL Taxonomy Extension Presentation Linkbase Document


Exhibit Number	Description	Report or Registration Statement	SEC File or Registration Number	Exhibit Reference	CenterPoint Energy	Houston Electric	CERC
3.4	Certificate of Merger merging former NorAm Energy Corp. with and into HI Merger, Inc. dated August 6, 1997	CERC Form 10-K for the year ended December 31, 1997	1-13265	3(a)(2)			x
3.5	Certificate of Amendment changing the name to Reliant Energy Resources Corp.	CERC Form 10-K for the year ended December 31, 1998	1-13265	3(a)(3)			x
3.6	Certificate of Amendment changing the name to CenterPoint Energy Resources Corp.	CERC Form 10-Q for the quarter ended June 30, 2003	1-13265	3(a)(4)			x
3.7	Third Amended and Restated Bylaws of CenterPoint Energy	CenterPoint Energy’s Form 8-K dated February 21, 2017	1-31447	3.1	x
3.8	Amended and Restated Limited Liability Company Agreement of Houston Electric	Houston Electric’s Form 10-Q for the quarter ended June 30, 2011	1-3187	3.2		x
3.9	Bylaws of RERC Corp.	CERC Form 10-K for the year ended December 31, 1997	1-13265	3(b)			x
3.10	Statement of Resolutions Deleting Shares Designated Series A Preferred Stock of CenterPoint Energy	CenterPoint Energy’s Form 10-K for the year ended December 31, 2011	1-31447	3(c)	x
3.11	Statement of Resolution Establishing Series of Shares Designated Series A Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock of CenterPoint Energy	CenterPoint Energy’s Form 8-K dated August 22, 2018	1-31447	3.1	x
3.12	Statement of Resolution Establishing Series of Shares designated 7.00% Series B Mandatory Convertible Preferred Stock of CenterPoint Energy	CenterPoint Energy’s Form 8-K dated September 25, 2018	1-31447	3.1	x
3.13	Statement of Resolution Establishing Series of Shares designated Series C Mandatory Convertible Preferred Stock of CenterPoint Energy, Inc., filed with the Secretary of State of the State of Texas and effective May 7, 2020	CenterPoint Energy’s Form 8-K dated May 6, 2020	1-31447	3.1	x
4.1	Form of CenterPoint Energy Stock Certificate	CenterPoint Energy’s Registration Statement on Form S-4	3-69502	4.1	x
4.2	Form of Certificate representing the Series A Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock of CenterPoint Energy	CenterPoint Energy’s Form 8-K dated August 22, 2018	1-31447	4.1	x
4.3	$2,400,000,000 Amended and Restated Credit Agreement dated as of February 4, 2021 among CenterPoint Energy, as Borrower, JPMorgan Chase Bank, N.A., as Administrative Agent, the financial institutions as bank parties thereto and the other parties thereto	CenterPoint Energy’s Form 8-K dated February 4, 2021	1-31447	4.1	x
4.4	$300,000,000 Credit Agreement dated as of February 4, 2021 among Houston Electric, as Borrower, Mizuho Bank, Ltd., as Administrative Agent, the financial institutions as bank parties thereto and the other parties thereto	CenterPoint Energy’s Form 8-K dated February 4, 2021	1-31447	4.2	x	x
4.5	$900,000,000 Credit Agreement dated as of February 4, 2021 among CERC Corp., as Borrower, Wells Fargo Bank, National Association, as Administrative Agent, the financial institutions as bank parties thereto and the other parties thereto	CenterPoint Energy’s Form 8-K dated February 4, 2021	1-31447	4.3	x		x

Tab le of Contents


Exhibit Number	Description	Report or Registration Statement	SEC File or Registration Number	Exhibit Reference	CenterPoint Energy	Houston Electric	CERC
4.6	$400,000,000 Credit Agreement dated as of February 4, 2021 among VUHI, as Borrower, Indiana Gas, SIGECO and VEDO, as guarantors, Bank of America, N.A., as Administrative Agent, the financial institutions as bank parties thereto and the other parties thereto , Inc., as Borrower, Indiana Gas Company, Inc., Southern Indiana Gas and Electric Company and Vectren Energy Delivery of Ohio, Inc. as guarantors, Bank of America, N.A., as Administrative Agent, the financial institutions as bank parties thereto and the other parties thereto	CenterPoint Energy’s Form 8-K dated February 4, 2021	1-31447	4.4	x
4.7	General Mortgage Indenture, dated as of October 10, 2002, between CenterPoint Energy Houston Electric, LLC and JPMorgan Chase Bank, as Trustee	Houston Electric’s Form 10-Q for the quarter ended September 30, 2002	1-3187	4(j)(1)		x
4.8	Ninth Supplemental Indenture to Exhibit 4.7 dated as of November 12, 2002	CenterPoint Energy’s Form 10-K for the year ended December 31, 2002	1-3187	4(k)(10)		x
4.9	Twentieth Supplemental Indenture to Exhibit 4.7 dated as of December 9, 2008	CenterPoint Energy’s Form 8-K dated January 9, 2009	1-3187	4.2		x
4.10	Thirty-First Supplemental Indenture to Exhibit 4 .7 , dated as of February 28, 2022	Houston Electric’s Form 8-K dated February 23, 2022	1-3187	4.4		x
†4.11	Officer’s Certificate, dated as of February 28, 2022, setting forth the form, terms and provisions of the Thirty-Third and Thirty-Fourth Series of General Mortgage Bonds					x
10.1	CenterPoint Energy, Inc. 2022 Long Term Incentive Plan	CenterPoint Energy’s Definitive Proxy Statement filed on March 11, 2022	1-31447	Appendix A	x
10.2	Form of Performance Award Agreement for 20XX-20XX Performance Cycle for the CEO under Exhibit 10.1	CenterPoint Energy’s Form 8-K dated April 22, 2022	1-31447	10.2	x
10.3	Form of Performance Award Agreement for 20XX-20XX Performance Cycle for officers and director employees under Exhibit 10.1	CenterPoint Energy’s Form 8-K dated April 22, 2022	1-31447	10.3	x
10.4	Form of Restricted Stock Unit Award Agreement under Exhibit 10.1	CenterPoint Energy’s Form 8-K dated April 22, 2022	1-31447	10.4	x
10.5	Form of Restricted Stock Unit Award Agreement for the CEO (with Performance Goals) under Exhibit 10.1	CenterPoint Energy’s Form 8-K dated April 22, 2022	1-31447	10.5	x
10.6	Form of Restricted Stock Unit Award Agreement (with Performance Goals) under Exhibit 10.1	CenterPoint Energy’s Form 8-K dated April 22, 2022	1-31447	10.6	x
10.7	Form of Restricted Stock Unit Award Agreement for Officers and Director Employees (with Performance Goals) under Exhibit 10.1	CenterPoint Energy’s Form 8-K dated April 22, 2022	1-31447	10.7	x
10.8	Form of Restricted Stock Unit Award Agreement for the CEO under Exhibit 10.1	CenterPoint Energy’s Form 8-K dated April 22, 2022	1-31447	10.8	x
10.9	Amended and Restated CenterPoint Energy 2005 Deferred Compensation Plan, effective January 1, 2009	CenterPoint Energy’s Form 10-Q for the quarter ended September 30, 2008	1-31447	10.1	x

Tab le of Contents

Exhibit
Number

Description

Report or Registration
Statement

SEC File or
Registration
Number

Exhibit
Reference

CenterPoint Energy

Houston Electric

CERC

10.10

First Amendment to Exhibit 10.9 effective March 1, 2022

CenterPoint Energy’s Form 8-K dated April 22, 2022

1-31447

10.10

†10.11

Second Amendment to Exhibit 10.9 effective May 1, 2022

10.12

CenterPoint Energy Benefit Restoration Plan, effective January 1, 2008

CenterPoint Energy’s Form 8-K dated December 22, 2008

1-31447

10.1

10.13

First Amendment to Exhibit 10.12, effective as of February 25, 2011

CenterPoint Energy’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2011

1-31447

10.4

†10.14

Partial Termination Amendment to Exhibit 10.12, effective as of March 1, 2022

10.15

CenterPoint Energy Savings Restoration Plan, effective as of January 1, 2008

CenterPoint Energy’s Form 8-K dated December 22, 2008

1-31447

10.3

10.16

First Amendment to Exhibit 10.15, effective as of February 25, 2011

CenterPoint Energy’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2011

1-31447

10.6

10.17

Second Amendment to Exhibit 10.15, effective as of January 1, 2020

CenterPoint Energy’s Form 8-K dated December 9, 2019

1-31447

10.1

†10.18

Partial Termination Amendment to Exhibit 10.15, effective as of March 1, 2022

†31.1.1

Rule 13a-14(a)/15d-14(a) Certification of David J. Lesar

†31.1.2

Rule 13a-14(a)/15d-14(a) Certification of Scott E. Doyle

†31.1.3

Rule 13a-14(a)/15d-14(a) Certification of Scott E. Doyle

†31.2.1

Rule 13a-14(a)/15d-14(a) Certification of Jason P. Wells

†31.2.2

Rule 13a-14(a)/15d-14(a) Certification of Jason P. Wells

†31.2.3

Rule 13a-14(a)/15d-14(a) Certification of Jason P. Wells

†32.1.1

Section 1350 Certification of David J. Lesar

†32.1.2

Section 1350 Certification of Scott E . Doyle

†32.1.3

Section 1350 Certification of Scott E. Doyle

†32.2.1

Section 1350 Certification of Jason P. Wells

†32.2.2

Section 1350 Certification of Jason P. Wells

†32.2.3

Section 1350 Certification of Jason P. Wells

†101.INS

Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

†101.SCH

Inline XBRL Taxonomy Extension Schema Document

†101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

†101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

†101.LAB

Inline XBRL Taxonomy Extension Labels Linkbase Document

Tab le of Contents

Exhibit
Number

Description

Report or Registration
Statement

SEC File or
Registration
Number

Exhibit
Reference

CenterPoint Energy

Houston Electric

CERC

†101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

†104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


*			Schedules to this agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. A copy of any omitted schedules will be furnished supplementally to the SEC upon request; provided, however, that the parties may request confidential treatment pursuant to Rule 24b-2 of the Exchange Act for any document so furnished.

Tab le of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, ~~the~~each registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		CENTERPOINT ENERGY, INC.
		CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC
		CENTERPOINT ENERGY RESOURCES CORP.


By:		~~CENTERPOINT ENERGY RESOURCES CORP.~~/s/ Stacey L. Peterson
		Stacey L. Peterson

~~By:~~	~~/s/ Kristie L. Colvin~~
	~~Kristie L. Colvin~~
	Senior Vice President and Chief Accounting Officer

Date: May 3, 2022

~~Date: November 3, 2017~~


☐		~~FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2017~~
OR
¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	FOR THE TRANSITION PERIOD FROM __________________ TO __________________


Texas			74-0694415
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

1111 Louisiana	Houston	Texas	77002
(Address of Principal Executive Offices)			(Zip Code)


Texas			22-3865106
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

1111 Louisiana	Houston	Texas	77002
(Address of Principal Executive Offices)			(Zip Code)


Delaware			76-0511406
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

1111 Louisiana
Houston ~~Texas 77002~~	~~(713) 207-1111~~Texas	77002
(Address ~~and zip code~~ of ~~principal executive offices)~~Principal Executive Offices)			(~~Registrant’s telephone number, including area code)~~Zip Code)


Securities registered pursuant to Section 12(b) of the Act:
Registrant	Title of each class	Trading Symbol(s)	Name of each exchange on which registered
CenterPoint Energy, Inc.	Common Stock, $0.01 par value	CNP	The New York Stock Exchange
			Chicago Stock Exchange, Inc.
CenterPoint Energy Houston Electric, LLC	6.95% General Mortgage Bonds due 2033	n/a	The New York Stock Exchange
CenterPoint Energy Resources Corp.	6.625% Senior Notes due 2037	n/a	The New York Stock Exchange



(Mark One)
þ☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


CenterPoint Energy, Inc.	629,448,787	shares of common stock outstanding, excluding 166 shares held as treasury stock
CenterPoint Energy Houston Electric, LLC	1,000	common shares outstanding, all held by Utility Holding, LLC, a wholly-owned subsidiary of CenterPoint Energy, Inc.
CenterPoint Energy Resources Corp.	1,000	shares of common stock outstanding, all held by Utility Holding, LLC, a wholly-owned subsidiary of CenterPoint Energy, Inc.


PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	CenterPoint Energy, Inc. Financial Statements (unaudited)	1




	CenterPoint Energy Houston Electric, LLC Financial Statements (unaudited)	7




	CenterPoint Energy Resources Corp. Financial Statements (unaudited)	13





	Combined Notes to Interim Condensed Financial Statements (unaudited)	19
	(1) Background and Basis of Presentation	19
	(2) New Accounting Pronouncements	20
	(3) Divestitures	20
	(4) Revenue Recognition and Allowance for Credit Losses	24
	(5) Employee Benefit Plans	27
	(6) Regulatory Matters	28
	(7) Derivative Instruments	29
	(8) Fair Value Measurements	31
	(9 ) Goodwill and Other Intangibles	32
	(1 0 ) Equity Securities and Indexed Debt Securities (ZENS)	33
	(1 1 ) Short-term Borrowings and Long-term Debt	35
	(1 2 ) Income Taxes	37
	(1 3 ) Commitments and Contingencies	38
	(1 4 ) Earnings Per Share	42
	(1 5 ) Reportable Segments	44
	(1 6 ) Supplemental Disclosure of Cash Flow Information	46
	(1 7 ) Related Party Transactions	47
	(1 8 ) Equity	48
	(19) Leases	49
	(20 ) Subsequent Events	51
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	53
	Recent Events	53
	Consolidated Results of Operations	53
	Results of Operations by Reportable Segment	54
	Certain Factors Affecting Future Earnings	62
	Liquidity and Capital Resources	63
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	74
Item 4.	Controls and Procedures	75

PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	75
Item 1A.	Risk Factors	75

Item 6.	Exhibits	76
	Signatures	81


GLOSSARY
ACE				Affordable Clean Energy


~~PART I.~~			~~FINANCIAL INFORMATION~~
AMA				~~Page~~Asset Management Agreement
~~Item 1.~~			~~Financial Statements~~	1

	~~Condensed Statements of Consolidated Income~~
	~~Three and Nine Months Ended September 30, 2017 and 2016 (unaudited)~~	1

	~~Condensed Statements of Consolidated Comprehensive Income~~
	~~Three and Nine Months Ended September 30, 2017 and 2016 (unaudited)~~	2

	~~Condensed Consolidated Balance Sheets~~
	~~September 30, 2017 and December 31, 2016 (unaudited)~~	3

	~~Condensed Statements of Consolidated Cash Flows~~
	~~Nine Months Ended September 30, 2017 and 2016 (unaudited)~~	5

	~~Notes to Unaudited Condensed Consolidated Financial Statements~~	6

~~Item 2.~~	~~Management’s Narrative Analysis of Results of Operations~~	24

~~Item 4.~~	~~Controls and Procedures~~	34

~~PART II.~~	~~OTHER INFORMATION~~

~~Item 1.~~	~~Legal Proceedings~~	34

~~Item 1A.~~	~~Risk Factors~~	34

~~Item 5.~~	~~Other Information~~	34

~~Item 6.~~	~~Exhibits~~	35



~~GLOSSARY~~
~~AEM~~ARO			~~Atmos~~Asset retirement obligation

ARP			Alternative revenue program
ARPA			American Rescue Plan Act of 2021
ASC			Accounting Standards Codification
Asset Purchase Agreement			Asset Purchase Agreement, dated as of April 29, 2021, by and between CERC Corp. and Southern Col Midco

AT&T			AT&T Inc.
AT&T Common			AT&T common stock

Bcf			Billion cubic feet
Board			Board of Directors of CenterPoint Energy, ~~Marketing,~~Inc.
Bond Companies			Bond Company IV and Restoration Bond Company, each a wholly-owned, bankruptcy remote entity formed solely for the purpose of purchasing and owning transition or system restoration property through the issuance of Securitization Bonds
Bond Company IV			CenterPoint Energy Transition Bond Company IV, LLC, ~~previously~~ a wholly-owned subsidiary of ~~Atmos~~Houston Electric
BTA			Build Transfer Agreement

Capital Dynamics			Capital Dynamics, Inc.
CARES Act			Coronavirus Aid, Relief, and Economic Security Act

CCR			Coal Combustion Residuals


CEIP			CenterPoint Energy ~~Holdings, Inc.,~~Intrastate Pipelines, LLC, a wholly-owned subsidiary of ~~Atmos Energy Corporation~~CERC Corp.
~~AMAs~~		~~Asset Management Agreements~~
~~APSC~~	~~Arkansas Public Service Commission~~
~~ASU~~	~~Accounting Standards Update~~
~~Bcf~~	~~Billion cubic feet~~
~~BDA~~	~~Billing Determinant Adjustment, which is a revenue stabilization mechanism used to adjust revenues impacted by declines in natural gas consumption which occurred after the most recent rate case~~
CenterPoint Energy		CenterPoint Energy, Inc., and its subsidiaries
CERC ~~Corp.~~			~~CenterPoint Energy Resources Corp.~~
~~CERC~~	CERC Corp., together with its subsidiaries
~~CES~~CERC Corp.			CenterPoint Energy Resources Corp.
CES			CenterPoint Energy Services, Inc. (now known as Symmetry Energy Solutions, LLC), previously a wholly-owned subsidiary of CERC Corp.
~~CIP~~Charter Common			Charter Communications, Inc. common stock
CIP			Conservation Improvement Program
~~Continuum~~			The retail energy services business of Continuum Retail Energy Services, LLC, including its wholly-owned subsidiary Lakeshore Energy Services, LLC and the natural gas wholesale assets previously owned by Continuum Energy Services, LLC
~~EECR~~


CODM			Chief Operating Decision Maker, who is each Registrant’s Chief Operating Executive
Common Stock			CenterPoint Energy, Inc. common stock, par value $0.01 per share
Compensation Committee			Compensation Committee of the Board
COVID-19			Novel coronavirus disease 2019, and any mutations or variants thereof, and related global outbreak that was subsequently declared a pandemic by the World Health Organization
COVID-19 ERP			COVID-19 Electricity Relief Program
CPCN			Certificate of Public Convenience and Necessity
CPP			Clean Power Plan
CSIA			Compliance and System Improvement Adjustment
DCRF			Distribution Cost Recovery Factor
DOC			U.S. Department of Commerce
DRR			Distribution Replacement Rider
DSMA			Demand Side Management Adjustment


ECA			Environmental Cost Adjustment
EDIT			Excess deferred income taxes
EECR			Energy Efficiency Cost Recovery
~~Enable~~EECRF			Energy Efficiency Cost Recovery Factor
EEFC			Energy Efficiency Funding Component
EEFR			Energy Efficiency Funding Rider


GLOSSARY
Elk GP Merger Sub		Elk GP Merger Sub LLC, a Delaware limited liability company and a direct wholly-owned subsidiary of Energy Transfer
Elk Merger Sub		Elk Merger Sub LLC, a Delaware limited liability company and a direct wholly-owned subsidiary of Energy Transfer
Enable		Enable Midstream Partners, LP
~~FASB~~Enable Common Units		~~Financial Accounting Standards Board~~Enable common units, representing limited partner interests in Enable
~~Fitch~~Enable GP		~~Fitch, Inc.~~Enable GP, LLC, Enable’s general partner
Enable Merger		The merger of Elk Merger Sub with and into Enable and the merger of Elk GP Merger Sub with and into Enable GP, in each case on the terms and subject to the conditions set forth in the Enable Merger Agreement, with Enable and Enable GP surviving as wholly-owned subsidiaries of Energy Transfer, which closed on December 2, 2021
Enable Merger Agreement		Agreement and Plan of Merger by and among Energy Transfer, Elk Merger Sub LLC, Elk GP Merger Sub, Enable, Enable GP and, solely for the purposes of Section 2.1(a)(i) therein, Energy Transfer GP, and solely for the purposes of Section 1.1(b)(i) therein, CenterPoint Energy
Enable Series A Preferred Units		Enable’s 10% Series A Fixed-to-Floating Non-Cumulative Redeemable Perpetual Preferred Units, representing limited partner interests in Enable
Energy Services		Offered competitive variable and fixed-priced physical natural gas supplies primarily to commercial and industrial customers and electric and natural gas utilities through CES and CEIP
Energy Services Disposal Group		Substantially all of the businesses within CenterPoint Energy’s and CERC’s Energy Services reporting unit that were sold under the Equity Purchase Agreement
Energy Systems Group		Energy Systems Group, LLC, a wholly-owned subsidiary of Vectren
Energy Transfer		Energy Transfer LP, a Delaware limited partnership
Energy Transfer Common Units		Energy Transfer common units, representing limited partner interests in Energy Transfer
Energy Transfer GP		LE GP, LLC, a Delaware limited liability company and sole general partner of Energy Transfer
Energy Transfer Series G Preferred Units		Energy Transfer Series G Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Units, representing limited partner interests in Energy Transfer
EPA		Environmental Protection Agency
Equity Purchase Agreement		Equity Purchase Agreement, dated as of February 24, 2020, by and between CERC Corp. and Symmetry Energy Solutions Acquisition, LLC (f/k/a Athena Energy Services Buyer, LLC)
ERCOT		Electric Reliability Council of Texas
February 2021 Winter Storm Event		The extreme and unprecedented winter weather event in February 2021 (Winter Storm Uri) that resulted in electricity generation supply shortages, including in Texas, and natural gas supply shortages and increased wholesale prices of natural gas in the United States, primarily due to prolonged freezing temperatures
FERC		Federal Energy Regulatory Commission
Fitch		Fitch Ratings, Inc.
Form 10-Q		Quarterly Report on Form 10-Q
~~FRP~~		~~Formula Rate Plan~~
~~GenOn~~		~~GenOn Energy, Inc.~~
~~GRIP~~
GHG		Greenhouse gases

GRIP		Gas Reliability Infrastructure Program

GWh		Gigawatt-hours
Houston Electric		CenterPoint Energy Houston Electric, LLC and its subsidiaries
~~Interim Condensed Financial Statements~~IDEM		~~Condensed consolidated interim financial statements and notes~~Indiana Department of Environmental Management
~~IRS~~Indiana Electric		~~Internal Revenue Service~~Operations of SIGECO’s electric transmission and distribution services, and includes its power generating and wholesale power operations
~~LIBOR~~Indiana Gas		~~London Interbank Offered Rate~~Indiana Gas Company, Inc., a wholly-owned subsidiary of Vectren
~~LPSC~~Indiana North		~~Louisiana Public Service Commission~~Gas operations of Indiana Gas
~~MGPs~~Indiana South		~~Manufactured gas plants~~
~~MLP~~	~~Master Limited Partnership~~
~~MMBtu~~	~~One million British thermal units~~
~~Moody’s~~	~~Moody’s Investors Service, Inc.~~
~~MPSC~~	~~Mississippi Public Service Commission~~
~~MPUC~~	~~Minnesota Public Utilities Commission~~
~~NGD~~	~~Natural gas distribution business~~
~~NGLs~~	~~Natural gas liquids~~
~~NRG~~	~~NRG Energy, Inc.~~
~~OCC~~	~~Oklahoma Corporation Commission~~
~~OGE~~	~~OGE Energy Corp.~~
~~PBRC~~	~~Performance Based Rate Change~~
~~PHMSA~~	~~U.S. Department~~Gas operations of ~~Transportation’s Pipeline and Hazardous Materials Safety Administration~~
~~PRPs~~	~~Potentially responsible parties~~
~~Railroad Commission~~	~~Railroad Commission of Texas~~
~~Reliant Energy~~	~~Reliant Energy, Incorporated~~
~~ROE~~	~~Return on equity~~SIGECO


GLOSSARY
Indiana Utilities		The combination of Indiana Electric, Indiana North and Indiana South


~~GLOSSARY (cont.)~~Interim Condensed Financial Statements		Unaudited condensed consolidated interim financial statements and combined notes
~~RRA~~
IRP		Integrated Resource Plan
IRS		Internal Revenue Service
IURC		Indiana Utility Regulatory Commission



LIBOR		London Interbank Offered Rate

LPSC		Louisiana Public Service Commission
LTIP		Long-term Incentive Plan

Merger		The merger of Merger Sub with and into Vectren on the terms and subject to the conditions set forth in the Merger Agreement, with Vectren continuing as the surviving corporation and as a wholly-owned subsidiary of CenterPoint Energy, Inc.
Merger Agreement		Agreement and Plan of Merger, dated as of April 21, 2018, among CenterPoint Energy, Vectren and Merger Sub

Merger Sub		Pacer Merger Sub, Inc., an Indiana corporation and wholly-owned subsidiary of CenterPoint Energy
MES		CenterPoint Energy Mobile Energy Solutions, Inc. (now known as Mobile Energy Solutions, Inc.), previously a wholly-owned subsidiary of CERC Corp.
MGP		Manufactured gas plant
MISO		Midcontinent Independent System Operator
MLP		Master Limited Partnership

Moody’s		Moody’s Investors Service, Inc.
MPSC		Mississippi Public Service Commission
MPUC		Minnesota Public Utilities Commission

MW		Megawatt
NERC		North American Electric Reliability Corporation


NOLs		Net operating losses
NRG		NRG Energy, Inc.





Posey Solar		Posey Solar, LLC, a special purpose entity
PowerTeam Services		PowerTeam Services, LLC, a Delaware limited liability company, now known as Artera Services, LLC


PPA		Power Purchase Agreement
PRPs		Potentially responsible parties
PUCO		Public Utilities Commission of Ohio
PUCT		Public Utility Commission of Texas
Railroad Commission		Railroad Commission of Texas
RCRA		Resource Conservation and Recovery Act of 1976
Registrants		CenterPoint Energy, Houston Electric and CERC, collectively

REP		Retail electric provider
Restoration Bond Company		CenterPoint Energy Restoration Bond Company, LLC, a wholly-owned subsidiary of Houston Electric

ROE		Return on equity
ROU		Right of use
RRA		Rate Regulation Adjustment
~~RRI~~RSP		~~Reliant Resources, Inc.~~
~~RSP~~	Rate Stabilization Plan
~~SEC~~S&P		S&P Global Ratings
Scope 1 emissions		Direct source of emissions from a company’s operations
Scope 2 emissions		Indirect source of emissions from a company’s energy usage
Scope 3 emissions		Indirect source of emissions from a company’s end-users


GLOSSARY
SEC						Securities and Exchange Commission
~~S&P~~Securities Purchase Agreement						~~Standard & Poor’s Ratings~~Securities Purchase Agreement, dated as of February 3, 2020, by and among Vectren Utility Services, ~~a division~~Inc., PowerTeam Services and, solely for purposes of ~~The McGraw-Hill Companies~~Section 10.17 of the Securities Purchase Agreement, Vectren
~~TBD~~Securitization Bonds						Transition and system restoration bonds
Series A Preferred Stock						CenterPoint Energy’s Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Stock, par value $0.01 per share, with a liquidation preference of $1,000 per share
Series B Preferred Stock						CenterPoint Energy’s 7.00% Series B Mandatory Convertible Preferred Stock, par value $0.01 per share, with a liquidation preference of $1,000 per share

Series C Preferred Stock						CenterPoint Energy’s Series C Mandatory Convertible Preferred Stock, par value $0.01 per share, with a liquidation preference of $1,000 per share
SIGECO						Southern Indiana Gas and Electric Company, a wholly-owned subsidiary of Vectren

Southern Col Midco						Southern Col Midco, LLC, a Delaware limited liability company and an affiliate of Summit Utilities, Inc.
SRC						Sales Reconciliation Component

Symmetry Energy Solutions Acquisition						Symmetry Energy Solutions Acquisition, LLC, a Delaware limited liability company (f/k/a Athena Energy Services Buyer, LLC) and subsidiary of Energy Capital Partners, LLC
TBD						To be determined

TCJA						Tax reform legislation informally called the Tax Cuts and Jobs Act of 2017
TCOS						Transmission Cost of Service
TCRF						Transmission Cost Recovery Factor
TDSIC						Transmission, Distribution and Storage System Improvement Charge
TDU						Transmission and distribution utility


Tenaska						Tenaska Wind Holdings, LLC
Texas RE						Texas Reliability Entity



Transition ~~Agreements~~Services Agreement						Transition Services Agreement ~~Employee Transition Agreement, Transitional Seconding Agreement~~by and ~~other agreements entered into in connection with the formation of Enable~~between CenterPoint Energy Service Company, LLC and Southern Col Midco
~~VIE~~Vectren						Vectren Corporation, a wholly-owned subsidiary of CenterPoint Energy as of February 1, 2019
VEDO						Vectren Energy Delivery of Ohio, Inc., a wholly-owned subsidiary of Vectren
VIE						Variable interest entity
~~2016~~
Vistra Energy Corp.						Texas-based energy company focused on the competitive energy and power generation markets, whose major subsidiaries include Luminant and TXU Energy
VRP						Voluntary Remediation Program
VUHI						Vectren Utility Holdings, Inc., a wholly-owned subsidiary of Vectren
WBD Common						Warner Bros. Discovery, Inc. Series A common stock
ZENS						2.0% Zero-Premium Exchangeable Subordinated Notes due 2029
ZENS-Related Securities						As of both March 31, 2022 and December 31, 2021, consisted of AT&T Common and Charter Common. As of April 8, 2022, consisted of AT&T Common, Charter Common and WBD Common
2021 Form 10-K						Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016~~2021 as filed with the SEC on February 22, 2022



	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016

Revenues:
Utility revenues	$	390		$	370		$	1,767		$	1,672
Non-utility revenues	861			608			2,964			1,433
Total	1,251			978			4,731			3,105

Expenses:
Utility natural gas	106			99			706			663
Non-utility natural gas	832			584			2,843			1,368
Operation and maintenance	187			175			603			571
Depreciation and amortization	68			62			202			185
Taxes other than income taxes	32			32			104			108
Total	1,225			952			4,458			2,895
Operating Income	26			26			273			210

Other Income (Expense):
Interest and other finance charges	(32		)	(29		)	(92		)	(93		)
Equity in earnings of unconsolidated affiliate, net	68			73			199			164
Other, net	1			(1		)	3			1
Total	37			43			110			72
Income Before Income Taxes	63			69			383			282
Income tax expense	25			26			144			113
Net Income	$	38		$	43		$	239		$	169



	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2017			2016		2017			2016

Net income	$	38		$	43	$	239		$	169
Other comprehensive income, net of tax:
Adjustment to pension and other postretirement plans (net of tax of $2, $1, $2 and $-0-)	1			1		1			2
Net deferred loss from cash flow hedges (net of tax of $1, $-0-, $1 and $-0-)	(1		)	—		(1		)	—
Other comprehensive income	—			1		—			2
Comprehensive income	$	38		$	44	$	239		$	171



	September 30, 2017		December 31, 2016
Current Assets:
Cash and cash equivalents	$	1	$	1
Accounts receivable, less bad debt reserve of $15 and $14, respectively	448		512
Accrued unbilled revenues	84		229
Accounts and notes receivable–affiliated companies	8		5
Materials and supplies	53		47
Natural gas inventory	252		131
Non-trading derivative assets	64		51
Prepaid expenses and other current assets	102		81
Total current assets	1,012		1,057

Property, Plant and Equipment:
Property, plant and equipment	6,694		6,351
Less: accumulated depreciation and amortization	1,995		1,782
Property, plant and equipment, net	4,699		4,569

Other Assets:
Goodwill	867		862
Non-trading derivative assets	56		19
Investment in unconsolidated affiliate	2,481		2,505
Other	261		206
Total other assets	3,665		3,592

Total Assets	$	9,376	$	9,218



	(in millions)
Total purchase price consideration	$	147
Cash	$	15
Receivables	140
Natural gas inventory	78
Derivative assets	35
Prepaid expenses and other current assets	5
Property and equipment	8
Identifiable intangibles	25
Total assets acquired	306
Accounts payable	113
Derivative liabilities	43
Other current liabilities	7
Other liabilities	1
Total liabilities assumed	164
Identifiable net assets acquired	142
Goodwill	5
Net assets acquired	$	147



Fair Value of Derivative Instruments
	September 30, 2017
Derivatives designated as fair value hedges:	Balance Sheet Location	Derivative Assets Fair Value		Derivative Liabilities Fair Value
		(in millions)
Natural gas derivatives (1) (2) (3)	Current Assets: Non-trading derivative assets	$	—	$	—
Natural gas derivatives (1) (2) (3)	Current Liabilities: Non-trading derivative liabilities	5		—

Derivatives not designated as hedging instruments:
Natural gas derivatives (1) (2) (3)	Current Assets: Non-trading derivative assets	65		2
Natural gas derivatives (1) (2) (3)	Other Assets: Non-trading derivative assets	58		2
Natural gas derivatives (1) (2) (3)	Current Liabilities: Non-trading derivative liabilities	27		55
Natural gas derivatives (1) (2) (3)	Other Liabilities: Non-trading derivative liabilities	9		25
Total		$	164	$	84



Offsetting of Natural Gas Derivative Assets and Liabilities
	September 30, 2017
	Gross Amounts Recognized (1)			Gross Amounts Offset in the Consolidated Balance Sheets			Net Amount Presented in the Consolidated Balance Sheets (2)
	(in millions)
Current Assets: Non-trading derivative assets	$	97		$	(33	)	$	64
Other Assets: Non-trading derivative assets	67			(11		)	56
Current Liabilities: Non-trading derivative liabilities	(57		)	40			(17		)
Other Liabilities: Non-trading derivative liabilities	(27		)	17			(10		)
Total	$	80		$	13		$	93



Fair Value of Derivative Instruments
	December 31, 2016
Derivatives not designated as hedging instruments	Balance Sheet Location	Derivative Assets Fair Value		Derivative Liabilities Fair Value
		(in millions)
Natural gas derivatives (1) (2) (3)	Current Assets: Non-trading derivative assets	$	79	$	14
Natural gas derivatives (1) (2) (3)	Other Assets: Non-trading derivative assets	24		5
Natural gas derivatives (1) (2) (3)	Current Liabilities: Non-trading derivative liabilities	2		43
Natural gas derivatives (1) (2) (3)	Other Liabilities: Non-trading derivative liabilities	—		5
Total (4)		$	105	$	67



	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Netting Adjustments (1)			Balance as of September 30, 2017
	(in millions)
Assets
Corporate equities	$	3	$	—	$	—	$	—		$	3
Investments, including money market funds (2)	11		—		—		—			11
Natural gas derivatives (3)	3		128		33		(44		)	120
Hedged portion of natural gas inventory	65		—		—		—			65
Total assets	$	82	$	128	$	33	$	(44	)	$	199
Liabilities
Natural gas derivatives (3)	$	3	$	74	$	7	$	(57	)	$	27
Total liabilities	$	3	$	74	$	7	$	(57	)	$	27



	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Derivative Assets and Liabilities, Net
	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
	(in millions)
Beginning balance	$	28		$	16		$	13		$	12
Purchases (1)	—			—			—			12
Total gains	(2		)	9			21			13
Total settlements	(1		)	(8		)	(5		)	(24		)
Transfers into Level 3	7			—			9			5
Transfers out of Level 3	(6		)	—			(12		)	(1		)
Ending balance (2)	$	26		$	17		$	26		$	17
The amount of total gains for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held at the reporting date	$	—		$	6		$	17		$	14



	September 30, 2017				December 31, 2016
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(in millions)
Financial liabilities:
Long-term debt	$	2,636	$	2,854	$	2,375	$	2,551



	December 31, 2016			AEM Acquisition (1)		September 30, 2017
	(in millions)
Natural Gas Distribution	$	746		$	—	$	746
Energy Services	105		(2)	5		110		(2)
Other Operations	11			—		11
Total	$	862		$	5	$	867



Execution Date	Size of Facility			Draw Rate of LIBOR plus (2)		Financial Covenant Limit on Debt for Borrowed Money to Capital Ratio		Debt for Borrowed Money to Capital Ratio as of September 30, 2017	Termination Date (3)
	(in millions)
March 3, 2016	$	900	(1)	1.25	%	65	%	38.6%	March 3, 2022



	(in millions)
Remaining three months of 2017	$	169
2018	507
2019	348
2020	166
2021	76
2022 and beyond	113



	For the Three Months Ended September 30, 2017
	Revenues from External Customers		Inter-segment Revenues			Operating Income
	(in millions)
Natural Gas Distribution	$	390	$	8		$	19
Energy Services	861		10			7
Midstream Investments (1)	—		—			—
Other Operations	—		—			—
Reconciling Eliminations	—		(18		)	—
Consolidated	$	1,251	$	—		$	26



Execution Date	Size of Facility		Amount Utilized at October 26, 2017			Termination Date
(in millions)
March 3, 2016	$	900	$	561	(1)	March 3, 2022

Estimate Fair Value

Estimate Useful Life

(in millions)

(in years)

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