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 or Enable’s business strategies and strategic initiatives, restructurings, joint ventures and acquisitions or dispositions of assets or businesses, including the pending sale of our ~~forward-looking statements:~~Natural Gas businesses in Arkansas and Oklahoma, which we cannot assure will be completed or will have the anticipated benefits to us, the pending Enable Merger, which we cannot assure will be completed or will have the anticipated benefits to us or Enable, and our planned exit from our Midstream Investment reportable segment, which we cannot assure will be completed or will have 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, including complying with applicable environmental standards and the implementation of a well-balanced energy and resource mix, as appropriate;

•the performance of Enable, the amount of cash distributions ~~we receive~~CenterPoint Energy receives from Enable, Enable’s ability to redeem the Enable Series A Preferred Units in certain circumstances and the value of ~~our~~CenterPoint Energy’s interest in Enable, and factors that may 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 drilling, production and capital spending decisions of third parties and the extent and timing of the entry of additional competition in the markets served by Enable;


◦	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;~~

~~industrial, commercial and residential growth in our service territories and changes in market demand,~~ including the effects of ~~energy efficiency measures~~these circumstances on re-contracting available capacity on Enable’s interstate pipelines and ~~demographic patterns;~~its commodity risk management activities;

◦economic effects of the actions of certain crude oil-exporting countries and the Organization of Petroleum Exporting Countries, which have in the past resulted in volatility in oil and natural gas prices, and the combined impact of these events and COVID-19 on commodity prices;

◦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 goodwill, long-lived asset or other than temporary impairment charges by or related to Enable;

◦the timing of payments from Enable’s customers under existing contracts, including minimum volume commitment payments;

◦changes in tax status; and

◦access to debt and equity capital;

•the integration of the businesses acquired in the Merger, including the integration of technology systems; the outcome of shareholder litigation filed against Vectren that could reduce the benefits of the Merger; and the ability to realize additional benefits and commercial opportunities from the Merger, including the development of new opportunities and the performance of projects undertaken by ESG, which are subject to, among other factors, the level of success in

vii

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 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 natural gas purchase costs associated with the February 2021 Winter Storm Event recovered;

•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 outcome of litigation, including litigation related to 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 and Enable’s 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;

•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, reduced worldwide consumption due to the COVID-19 pandemic 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 or Enable’s facilities, resources, operations and financial condition resulting from terrorism, ~~cyber-attacks,~~cyber attacks or intrusions, 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 Biden 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 emission 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;

•the investment performance of ~~our~~CenterPoint 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 and Enable’s 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 securitization, for any future hurricanes or other severe weather events, or natural disasters or other recovery of ~~costs associated with Hurricane Harvey and any future hurricanes or natural disasters;~~costs;

viii

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;

the ability of GenOn (formerly known as RRI Energy, Inc., Reliant Energy and RRI), a wholly-owned subsidiary of NRG, and its subsidiaries, currently the subject of bankruptcy proceedings, to satisfy their obligations to us, including indemnity obligations;

~~the outcome of litigation;~~

~~the ability of REPs, including REP affiliates of NRG and Vistra Energy Corp., formerly known as TCEH Corp., to satisfy their obligations to us and our subsidiaries;~~

•changes in technology, particularly with respect to efficient battery storage or the emergence or growth of new, developing or alternative sources of ~~generation;~~generation, and their adoption by consumers;

•the impact of alternate energy sources on the demand for natural gas;

•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 Biden 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 emission goals and its operations and maintenance goals;

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

•other factors ~~we discuss~~discussed in ~~“Risk~~“Risk Factors” in Item 1A of Part I of ~~our 2016~~the Registrants’ combined 2020 Form 10-K, which isare incorporated herein by reference, and other factors discussed 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 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 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.

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

CENTERPOINT ENERGY, INC. AND SUBSIDIARIES

CONDENSED STATEMENTS OF CONSOLIDATED INCOME

~~(In Millions, Except Per Share Amounts)~~

(Unaudited)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
	(in millions, except per share amounts)
Revenues:
Utility revenues	$	1,661	$	1,538	$	5,797	$	5,087
Non-utility revenues	88		84		241		277
Total	1,749		1,622		6,038		5,364
Expenses:
Utility natural gas, fuel and purchased power	223		170		1,416		981
Non-utility cost of revenues, including natural gas	61		63		159		196
Operation and maintenance	709		659		2,055		1,976
Depreciation and amortization	353		306		987		885
Taxes other than income taxes	125		122		394		387
Goodwill impairment	—		—		—		185
Total	1,471		1,320		5,011		4,610
Operating Income	278		302		1,027		754
Other Income (Expense):
Gain (loss) on marketable securities	(12)		83		40		14
Gain (loss) on indexed debt securities	11		(84)		(40)		(25)
Gain on sale	8		—		8		—
Interest expense and other finance charges	(114)		(121)		(346)		(388)
Interest expense on Securitization Bonds	(5)		(7)		(16)		(22)



Other income, net	17		11		20		47
Total	(95)		(118)		(334)		(374)
Income from Continuing Operations Before Income Taxes	183		184		693		380
Income tax expense (benefit)	33		(15)		63		33
Income from Continuing Operations	150		199		630		347
Income (Loss) from Discontinued Operations (net of tax expense (benefit) of $15, $5, $56 and $(340), respectively)	68		(78)		202		(1,320)
Net Income (Loss)	218		121		832		(973)
Income allocated to preferred shareholders	23		52		82		127
Income (Loss) Available to Common Shareholders	$	195	$	69	$	750	$	(1,100)

Basic earnings per common share - continuing operations	$	0.21	$	0.27	$	0.94	$	0.42
Basic earnings (loss) per common share - discontinued operations	0.11		(0.14)		0.35		(2.52)
Basic Earnings (Loss) Per Common Share	0.32		0.13		1.29		(2.10)
Diluted earnings per common share - continuing operations	$	0.21	$	0.27	$	0.91	$	0.42
Diluted earnings (loss) per common share - discontinued operations	0.11		(0.14)		0.34		(2.52)
Diluted Earnings (Loss) Per Common Share	$	0.32	$	0.13	$	1.25	$	(2.10)

Weighted Average Common Shares Outstanding, Basic	605		545		581		525
Weighted Average Common Shares Outstanding, Diluted	609		548		601		525

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

Revenues:
Utility revenues $ 1,233
$ 1,278
$ 4,001
$ 4,003
Non-utility revenues 865
611
2,975
1,444
Total 2,098
1,889
6,976
5,447

Expenses:
Utility natural gas 106
99
706
663
Non-utility natural gas 832
584
2,843
1,368
Operation and maintenance 519
505
1,614
1,539
Depreciation and amortization 269
324
749
873
Taxes other than income taxes 93
93
288
288
Total 1,819
1,605
6,200
4,731
Operating Income 279
284
776
716

Other Income (Expense):
Gain on marketable securities 37
77
104
187
Loss on indexed debt securities (36 ) (72 ) (59 ) (258 )
Interest and other finance charges (80 ) (83 ) (235 ) (256 )
Interest on securitization bonds (18 ) (23 ) (58 ) (70 )
Equity in earnings of unconsolidated affiliate, net 68
73
199
164
Other, net 17
20
50
41
Total (12 ) (8 ) 1
(192 )

Income Before Income Taxes 267
276
777
524
Income tax expense 98
97
281
193
Net Income $ 169
$ 179
$ 496
$ 331

Basic Earnings Per Share $ 0.39
$ 0.42
$ 1.15
$ 0.77

Diluted Earnings Per Share $ 0.39
$ 0.41
$ 1.14
$ 0.76

Dividends Declared Per Share $ 0.2675
$ 0.2575
$ 0.8025
$ 0.7725

Weighted Average Shares Outstanding, Basic 431
431
431
431

Weighted Average Shares Outstanding, Diluted 434
433
434
433

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

Table of Contents

CENTERPOINT ENERGY, INC. AND SUBSIDIARIES

CONDENSED STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME

~~(In Millions)~~

(Unaudited)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
	(in millions)
Net Income (Loss)	$	218	$	121	$	832	$	(973)
Other comprehensive income (loss):
Adjustment to pension and other postretirement plans (net of tax of $1, $1, $2 and $3)	4		1		7		3

Reclassification of deferred loss from cash flow hedges realized in net income (net of tax of $-0-, $-0-, $-0- and $-0-)	1		—		1		—
Reclassification of net deferred losses from cash flow hedges (net of tax of $-0-, $-0-, $-0- and $4)	—		—		—		15
Other comprehensive income (loss) from unconsolidated affiliates (net of tax of $-0-, $-0-, $-0- and $-0-)	—		1		2		(2)
Total	5		2		10		16
Comprehensive income (loss)	223		123		842		(957)
Income allocated to preferred shareholders	23		52		82		127
Comprehensive income (loss) available to common shareholders	$	200	$	71	$	760	$	(1,084)

Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
Net income $ 169
$ 179
$ 496
$ 331
Other comprehensive income:
Adjustment related to pension and other postretirement plans (net of tax of $2, $2, $4 and $1) —
1
2
1
Net deferred gain (loss) from cash flow hedges (net of tax of $2, $1, $2 and $-0-) (2 ) 2
(3 ) 1
Total (2 ) 3
(1 ) 2
Comprehensive income $ 167
$ 182
$ 495
$ 333

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

Table of Contents

CENTERPOINT ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

~~(In Millions)~~

(Unaudited)

ASSETS


	September 30, 2021		December 31, 2020
	(in millions)
Current Assets:
Cash and cash equivalents ($105 and $139 related to VIEs, respectively)	$	133	$	147
Investment in marketable securities	911		871
Preferred units – unconsolidated affiliate	363		—
Accounts receivable ($43 and $23 related to VIEs, respectively), less allowance for credit losses of $50 and $52, respectively	650		676
Accrued unbilled revenues, less allowance for credit losses of $2 and $5, respectively	293		505

Natural gas and coal inventory	217		203
Materials and supplies	376		297
Non-trading derivative assets	23		—
Taxes receivable	14		82
Current assets held for sale	3,150		—
Prepaid expenses and other current assets ($18 and $15 related to VIEs, respectively)	1,578		139
Total current assets	7,708		2,920
Property, Plant and Equipment:
Property, plant and equipment	32,692		32,514
Less: accumulated depreciation and amortization	10,078		10,152
Property, plant and equipment, net	22,614		22,362
Other Assets:
Goodwill	4,294		4,697
Regulatory assets ($469 and $633 related to VIEs, respectively)	2,307		2,094

Non-trading derivative assets	9		—

Preferred units – unconsolidated affiliate	—		363

Non-current assets held for sale	—		782
Other non-current assets	228		253
Total other assets	6,838		8,189
Total Assets	$	37,160	$	33,471

September 30,
2017 December 31,
2016
Current Assets:
Cash and cash equivalents ($200 and $340 related to VIEs, respectively) $ 201
$ 341
Investment in marketable securities 1,057
953
Accounts receivable ($65 and $52 related to VIEs, respectively), less bad debt reserve of $16 and $15, respectively 783
740
Accrued unbilled revenues 213
335
Natural gas inventory 252
131
Materials and supplies 190
181
Non-trading derivative assets 64
51
Taxes receivable —
30
Prepaid expenses and other current assets ($31 and $40 related to VIEs, respectively) 175
161
Total current assets 2,935
2,923

Property, Plant and Equipment:
Property, plant and equipment 18,581
17,831
Less: accumulated depreciation and amortization 5,881
5,524
Property, plant and equipment, net 12,700
12,307

Other Assets:
Goodwill 867
862
Regulatory assets ($1,690 and $1,919 related to VIEs, respectively) 2,539
2,677
Non-trading derivative assets 56
19
Investment in unconsolidated affiliate 2,481
2,505
Preferred units – unconsolidated affiliate 363
363
Other 194
173
Total other assets 6,500
6,599

Total Assets $ 22,135
$ 21,829

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

Table of Contents

CENTERPOINT ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS – (continued)

~~(In Millions, except share amounts)~~

(Unaudited)

LIABILITIES AND SHAREHOLDERS’ EQUITY


	September 30, 2021		December 31, 2020
	(in millions, except share amounts)
Current Liabilities:
Short-term borrowings	$	7	$	24
Current portion of VIE Securitization Bonds long-term debt	217		211
Indexed debt, net	11		15
Current portion of other long-term debt	863		1,669
Indexed debt securities derivative	993		953
Accounts payable	905		853

Taxes accrued	265		265
Interest accrued	126		145
Dividends accrued	107		136
Customer deposits	111		119
Non-trading derivative liabilities	—		3


Current liabilities held for sale	512		—
Other current liabilities	390		432
Total current liabilities	4,507		4,825
Other Liabilities:
Deferred income taxes, net	3,750		3,603
Non-trading derivative liabilities	13		27
Benefit obligations	560		680
Regulatory liabilities	3,144		3,448

Other non-current liabilities	926		1,019
Total other liabilities	8,393		8,777
Long-term Debt:
VIE Securitization Bonds, net	393		536
Other long-term debt, net	15,001		10,985
Total long-term debt, net	15,394		11,521
Commitments and Contingencies (Note 14)	0		0
Temporary Equity (Note 19)	1		—
Shareholders’ Equity:
Cumulative preferred stock, $0.01 par value, 20,000,000 shares authorized, 800,000 shares and 2,402,400 shares outstanding, respectively, $800 and $2,402 liquidation preference, respectively (Note 19)	790		2,363
Common stock, $0.01 par value, 1,000,000,000 shares authorized, 628,849,375 shares and 551,355,861 shares outstanding, respectively	6		6
Additional paid-in capital	8,517		6,914
Accumulated deficit	(368)		(845)
Accumulated other comprehensive loss	(80)		(90)
Total shareholders’ equity	8,865		8,348
Total Liabilities and Shareholders’ Equity	$	37,160	$	33,471

September 30,
2017 December 31,
2016
Current Liabilities:
Short-term borrowings $ 48
$ 35
Current portion of VIE securitization bonds long-term debt 432
411
Indexed debt, net 120
114
Current portion of other long-term debt 550
500
Indexed debt securities derivative 776
717
Accounts payable 657
657
Taxes accrued 199
172
Interest accrued 83
108
Non-trading derivative liabilities 17
41
Other 339
325
Total current liabilities 3,221
3,080

Other Liabilities:

Deferred income taxes, net 5,458
5,263
Non-trading derivative liabilities 10
5
Benefit obligations 886
913
Regulatory liabilities 1,127
1,298
Other 284
278
Total other liabilities 7,765
7,757

Long-term Debt:

VIE securitization bonds, net 1,500
1,867
Other long-term debt, net 6,031
5,665
Total long-term debt, net 7,531
7,532

Commitments and Contingencies (Note 13)

Shareholders’ Equity:

Cumulative preferred stock, $0.01 par value, 20,000,000 shares authorized, none issued or outstanding —
—
Common stock, $0.01 par value, 1,000,000,000 shares authorized, 431,030,884 shares and 430,682,504 shares outstanding, respectively 4
4
Additional paid-in capital 4,204
4,195
Accumulated deficit (518 ) (668 )
Accumulated other comprehensive loss (72 ) (71 )
Total shareholders’ equity 3,618
3,460

Total Liabilities and Shareholders’ Equity $ 22,135
$ 21,829

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

Table of Contents

CENTERPOINT ENERGY, INC. AND SUBSIDIARIES

CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS

~~(In Millions)~~(Unaudited)

~~(Unaudited)~~


	Nine Months Ended September 30,
	2021		2020
	(in millions)
Cash Flows from Operating Activities:
Net income (loss)	$	832	$	(973)


Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	987		885

Amortization of deferred financing costs	27		23
Amortization of intangible assets in non-utility cost of revenues	1		1
Deferred income taxes	86		(429)

Goodwill impairment and loss from reclassification to held for sale	—		175
Goodwill impairment	—		185

Unrealized gain on marketable securities	(40)		(14)
Gain on sale	(8)		—
Loss on indexed debt securities	40		25

Write-down of natural gas inventory	—		3
Equity in (earnings) losses of unconsolidated affiliates	(258)		1,499
Distributions from unconsolidated affiliates	116		109
Pension contributions	(59)		(84)
Changes in other assets and liabilities:
Accounts receivable and unbilled revenues, net	231		326

Inventory	(104)		(50)
Taxes receivable	68		4
Accounts payable	(53)		(251)

Non-trading derivatives, net	(51)		(14)
Margin deposits, net	—		65
Interest and taxes accrued	(12)		(53)
Net regulatory assets and liabilities	(2,309)		(81)
Other current assets	11		6
Other current liabilities	(24)		30
Other non-current assets	2		5
Other non-current liabilities	(46)		46
Other operating activities, net	12		1


Net cash provided by (used in) operating activities	(551)		1,439
Cash Flows from Investing Activities:
Capital expenditures	(2,148)		(1,889)



Distributions from unconsolidated affiliate in excess of cumulative earnings	—		46




Proceeds from divestitures	22		1,136


Other investing activities, net	22		24


Net cash used in investing activities	(2,104)		(683)
Cash Flows from Financing Activities:
Increase (decrease) in short-term borrowings, net	(27)		37
Proceeds from (payments of) commercial paper, net	596		(1,057)
Proceeds from long-term debt	4,493		299
Payments of long-term debt	(1,990)		(1,060)
Borrowings from revolving credit facilities	—		1,050
Payments of revolving credit facilities	—		(1,050)


Payment of debt issuance costs	(38)		(4)


Payment of dividends on Common Stock	(278)		(309)
Payment of dividends on Preferred Stock	(106)		(114)
Proceeds from issuance of Common Stock, net	—		672
Proceeds from issuance of Series C Preferred Stock, net	—		723



Other financing activities, net	(6)		(6)


Net cash provided by (used in) financing activities	2,644		(819)
Net Decrease in Cash, Cash Equivalents and Restricted Cash	(11)		(63)
Cash, Cash Equivalents and Restricted Cash at Beginning of Period	167		271
Cash, Cash Equivalents and Restricted Cash at End of Period	$	156	$	208

Nine Months Ended September 30,
2017 2016
Cash Flows from Operating Activities:
Net income $ 496
$ 331
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 749
873
Amortization of deferred financing costs 18
19
Deferred income taxes 185
150
Unrealized gain on marketable securities (104 ) (187 )
Loss on indexed debt securities 59
258
Write-down of natural gas inventory —
1
Equity in earnings of unconsolidated affiliate, net of distributions (199 ) (164 )
Pension contributions (46 ) (7 )
Changes in other assets and liabilities, excluding acquisitions:
Accounts receivable and unbilled revenues, net 216
86
Inventory (52 ) (5 )
Taxes receivable 30
149
Accounts payable (137 ) (90 )
Fuel cost recovery (30 ) (43 )
Non-trading derivatives, net (53 ) 23
Margin deposits, net (49 ) 65
Interest and taxes accrued 2
(48 )
Net regulatory assets and liabilities (135 ) (26 )
Other current assets 21
(9 )
Other current liabilities 19
31
Other assets (3 ) —
Other liabilities 28
29
Other, net 16
19
Net cash provided by operating activities 1,031
1,455
Cash Flows from Investing Activities:
Capital expenditures (994 ) (1,047 )
Acquisitions, net of cash acquired (132 ) (102 )
Decrease in notes receivable – unconsolidated affiliate —
363
Investment in preferred units – unconsolidated affiliate —
(363 )
Distributions from unconsolidated affiliate in excess of cumulative earnings 223
223
Decrease (increase) in restricted cash of Bond Companies 8
(2 )
Proceeds from sale of marketable securities —
178
Other, net 3
11
Net cash used in investing activities (892 ) (739 )
Cash Flows from Financing Activities:
Increase in short-term borrowings, net 13
3
Proceeds from (payments of) commercial paper, net (428 ) 63
Proceeds from long-term debt, net 1,096
600
Payments of long-term debt (597 ) (855 )
Debt issuance costs (13 ) (9 )
Payment of dividends on common stock (346 ) (332 )
Distribution to ZENS note holders —
(178 )
Other, net (4 ) (2 )
Net cash used in financing activities (279 ) (710 )
Net Increase (Decrease) in Cash and Cash Equivalents (140 ) 6
Cash and Cash Equivalents at Beginning of Period 341
264
Cash and Cash Equivalents at End of Period $ 201
$ 270
Supplemental Disclosure of Cash Flow Information:
Cash Payments/Receipts:
Interest, net of capitalized interest $ 306
$ 324
Income taxes (refunds), net 14
(105 )
Non-cash transactions:
Accounts payable related to capital expenditures 111
75

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

Table of Contents

CENTERPOINT ENERGY, INC. AND SUBSIDIARIES

CONDENSED STATEMENTS OF CONSOLIDATED CHANGES IN EQUITY

(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount
	(in millions of dollars and shares)
Cumulative Preferred Stock, $0.01 par value; authorized 20,000,000 shares
Balance, beginning of period	3	$	1,739	3	$	2,441	3	$	2,363	2	$	1,740

Issuances of Series C Preferred Stock, net of issuance costs and beneficial conversion feature	—	—		—	15		—	—		1	716
Conversion of Series B Preferred Stock and Series C Preferred Stock	(2)	(949)		—	—		(2)	(1,573)		—	—
Balance, end of period	1	790		3	2,456		1	790		3	2,456
Common Stock, $0.01 par value; authorized 1,000,000,000 shares
Balance, beginning of period	593	6		545	5		551	6		502	5
Issuances of Common Stock	36	—		—	—		77	—		42	—
Issuances related to benefit and investment plans	—	—		—	—		1	—		1	—
Balance, end of period	629	6		545	5		629	6		545	5
Additional Paid-in-Capital
Balance, beginning of period		7,553			6,801			6,914			6,080
Issuances of Common Stock, net of issuance costs		949			(1)			1,573			672
Issuances related to benefit and investment plans		15			5			30			21
Recognition of beneficial conversion feature		—			—			—			32
Balance, end of period		8,517			6,805			8,517			6,805
Retained Earnings (Accumulated Deficit)
Balance, beginning of period		(343)			(771)			(845)			632
Net income (loss)		218			121			832			(973)
Common Stock dividends declared (see Note 19)		(202)			(82)			(297)			(309)
Preferred Stock dividends declared (see Note 19)		(41)			(48)			(58)			(114)



Amortization of beneficial conversion feature		—			(16)			—			(25)
Adoption of ASU 2016-13		—			—			—			(7)
Balance, end of period		(368)			(796)			(368)			(796)
Accumulated Other Comprehensive Loss
Balance, beginning of period		(85)			(84)			(90)			(98)
Other comprehensive income		5			2			10			16
Balance, end of period		(80)			(82)			(80)			(82)
Total Shareholders’ Equity		$	8,865		$	8,388		$	8,865		$	8,388

See Combined Notes to Interim Condensed Financial Statements

Table of Contents

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 September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(in millions)
Revenues	$	874	$	828	$	2,344	$	2,182
Expenses:
Operation and maintenance	396		381		1,159		1,104
Depreciation and amortization	182		151		484		420
Taxes other than income taxes	64		64		192		192
Total	642		596		1,835		1,716
Operating Income	232		232		509		466
Other Income (Expense):
Interest expense and other finance charges	(46)		(43)		(138)		(127)
Interest expense on Securitization Bonds	(5)		(7)		(16)		(22)



Other income, net	4		1		12		7
Total	(47)		(49)		(142)		(142)
Income Before Income Taxes	185		183		367		324
Income tax expense	34		26		60		47
Net Income	$	151	$	157	$	307	$	277

See Combined Notes to Interim Condensed Financial Statements

Table of Contents

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 September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(in millions)
Net income	$	151	$	157	$	307	$	277
Other comprehensive income:

Reclassification of net deferred losses from cash flow hedges (net of tax of $-0-, $-0-, $-0- and $4)	—		—		—		15
Total	—		—		—		15
Comprehensive income	$	151	$	157	$	307	$	292

See Combined Notes to Interim Condensed Financial Statements

Table of Contents

CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC AND SUBSIDIARIES

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

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

ASSETS


	September 30, 2021		December 31, 2020
	(in millions)
Current Assets:
Cash and cash equivalents ($105 and $139 related to VIEs, respectively)	$	105	$	139
Accounts receivable ($43 and $23 related to VIEs, respectively), less allowance for credit losses of $1 and $1, respectively	381		268
Accounts and notes receivable–affiliated companies	20		7
Accrued unbilled revenues	132		113
Materials and supplies	244		195



Prepaid expenses and other current assets ($18 and $15 related to VIEs, respectively)	26		47
Total current assets	908		769
Property, Plant and Equipment:
Property, plant and equipment	14,643		13,593
Less: accumulated depreciation and amortization	4,079		3,930
Property, plant and equipment, net	10,564		9,663
Other Assets:
Regulatory assets ($469 and $633 related to VIEs, respectively)	811		848

Other non-current assets	26		36
Total other assets	837		884
Total Assets	$	12,309	$	11,316

See Combined Notes to Interim Condensed Financial Statements

Table of Contents

CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC AND SUBSIDIARIES

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

CONDENSED CONSOLIDATED BALANCE SHEETS – (continued)

(Unaudited)

LIABILITIES AND MEMBER’S EQUITY


	September 30, 2021		December 31, 2020
	(in millions)
Current Liabilities:

Current portion of VIE Securitization Bonds long-term debt	217		211
Current portion of other long-term debt	300		402
Accounts payable	451		281
Accounts and notes payable–affiliated companies	110		96
Taxes accrued	179		158
Interest accrued	58		71

Other current liabilities	122		117
Total current liabilities	1,437		1,336
Other Liabilities:
Deferred income taxes, net	1,088		1,041
Benefit obligations	75		75
Regulatory liabilities	1,140		1,252

Other non-current liabilities	101		95
Total other liabilities	2,404		2,463
Long-term Debt:
VIE Securitization Bonds, net	393		536
Other long-term debt, net	4,657		3,870
Total long-term debt, net	5,050		4,406
Commitments and Contingencies (Note 14)	0		0
Member’s Equity:
Common stock	—		—
Additional paid-in capital	2,548		2,548
Retained earnings	870		563

Total member’s equity	3,418		3,111
Total Liabilities and Member’s Equity	$	12,309	$	11,316

See Combined Notes to Interim Condensed Financial Statements

Table of Contents

CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC AND SUBSIDIARIES

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

CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS

(Unaudited)


	Nine Months Ended September 30,
	2021		2020
	(in millions)
Cash Flows from Operating Activities:
Net income	$	307	$	277
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	484		420
Amortization of deferred financing costs	8		8
Deferred income taxes	8		(36)


Changes in other assets and liabilities:
Accounts and notes receivable, net	(140)		(145)
Accounts receivable/payable–affiliated companies	(31)		10
Inventory	(49)		(35)
Accounts payable	60		(7)

Interest and taxes accrued	8		16
Non-trading derivatives, net	—		15
Net regulatory assets and liabilities	(190)		5
Other current assets	24		13
Other current liabilities	9		21
Other assets	8		(5)
Other liabilities	5		6
Other operating activities, net	(14)		(11)
Net cash provided by operating activities	497		552
Cash Flows from Investing Activities:
Capital expenditures	(1,108)		(750)
Decrease (increase) in notes receivable–affiliated companies	—		456


Other investing activities, net	4		11
Net cash used in investing activities	(1,104)		(283)
Cash Flows from Financing Activities:

Increase in short-term borrowings, net	—		5
Proceeds from long-term debt	1,096		299
Payments of long-term debt	(540)		(160)
Decrease in notes payable–affiliated companies	32		—
Dividend to parent	—		(457)


Payment of debt issuance costs	(12)		(3)

Net cash provided by (used in) financing activities	576		(316)
Net Decrease in Cash, Cash Equivalents and Restricted Cash	(31)		(47)
Cash, Cash Equivalents and Restricted Cash at Beginning of Period	154		235
Cash, Cash Equivalents and Restricted Cash at End of Period	$	123	$	188

See Combined Notes to Interim Condensed Financial Statements

Table of Contents

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 September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount
	(in millions, except share amounts)


Common Stock
Balance, beginning of period	1,000	$	—	1,000	$	—	1,000	$	—	1,000	$	—
Balance, end of period	1,000	—		1,000	—		1,000	—		1,000	—
Additional Paid-in-Capital
Balance, beginning of period		2,548			2,486			2,548			2,486


Balance, end of period		2,548			2,486			2,548			2,486
Retained Earnings
Balance, beginning of period		719			495			563			780
Net income		151			157			307			277
Dividend to parent		—			(52)			—			(457)
Balance, end of period		870			600			870			600
Accumulated Other Comprehensive Loss
Balance, beginning of period		—			—			—			(15)
Other comprehensive income		—			—			—			15
Balance, end of period		—			—			—			—
Total Member’s Equity		$	3,418		$	3,086		$	3,418		$	3,086

See Combined Notes to Interim Condensed Financial Statements

Table of Contents

CENTERPOINT ENERGY RESOURCES CORP. AND SUBSIDIARIES

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

CONDENSED STATEMENTS OF CONSOLIDATED INCOME

(Unaudited)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
	(in millions)
Revenues:
Utility revenues	$	472	$	415	$	2,189	$	1,878
Non-utility revenues	15		11		49		42
Total	487		426		2,238		1,920
Expenses:
Utility natural gas	157		106		962		715
Non-utility cost of revenues, including natural gas	4		2		16		15
Operation and maintenance	187		186		579		574
Depreciation and amortization	82		78		242		226
Taxes other than income taxes	41		40		141		134

Total	471		412		1,940		1,664
Operating Income	16		14		298		256
Other Expense:
Gain on sale	11		—		11		—
Interest expense and other finance charges	(24)		(28)		(73)		(87)


Other income (expense), net	(3)		(1)		(3)		(5)
Total	(16)		(29)		(65)		(92)
Income (Loss) From Continuing Operations Before Income Taxes	—		(15)		233		164
Income tax expense (benefit)	1		(9)		25		22
Income (Loss) From Continuing Operations	(1)		(6)		208		142
Income (Loss) from Discontinued Operations (net of tax expense (benefit) of $-0-, $1, $-0- and $(2), respectively)	—		2		—		(66)
Net Income (Loss)	$	(1)	$	(4)	$	208	$	76

See Combined Notes to Interim Condensed Financial Statements

Table of Contents

CENTERPOINT ENERGY RESOURCES CORP. AND SUBSIDIARIES

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

CONDENSED STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
	(in millions)
Net income (loss)	$	(1)	$	(4)	$	208	$	76




Comprehensive income (loss)	$	(1)	$	(4)	$	208	$	76

See Combined Notes to Interim Condensed Financial Statements

Table of Contents

CENTERPOINT ENERGY RESOURCES CORP. AND SUBSIDIARIES

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

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

ASSETS


	September 30, 2021		December 31, 2020
	(in millions)
Current Assets:
Cash and cash equivalents	$	—	$	1
Accounts receivable, less allowance for credit losses of $45 and $45, respectively	146		233
Accrued unbilled revenues, less allowance for credit losses of $2 and $4, respectively	92		260
Accounts and notes receivable–affiliated companies	15		8
Materials and supplies	78		58
Natural gas inventory	162		121

Taxes receivable	4		—

Current assets held for sale	1,970		—
Prepaid expenses and other current assets	1,335		26
Total current assets	3,802		707
Property, Plant and Equipment:
Property, plant and equipment	7,726		8,972
Less: accumulated depreciation and amortization	2,049		2,414
Property, plant and equipment, net	5,677		6,558
Other Assets:
Goodwill	611		757
Regulatory assets	571		220




Other non-current assets	41		66
Total other assets	1,223		1,043
Total Assets	$	10,702	$	8,308

See Combined Notes to Interim Condensed Financial Statements

Table of Contents

CENTERPOINT ENERGY RESOURCES CORP. AND SUBSIDIARIES

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

CONDENSED CONSOLIDATED BALANCE SHEETS – (continued)

(Unaudited)

LIABILITIES AND STOCKHOLDER’S EQUITY


	September 30, 2021		December 31, 2020
	(in millions)
Current Liabilities:
Short-term borrowings	$	7	$	24

Accounts payable	281		296
Accounts and notes payable–affiliated companies	55		50
Taxes accrued	74		74
Interest accrued	30		28
Customer deposits	65		76

Current liabilities held for sale	512		—
Other current liabilities	146		178
Total current liabilities	1,170		726
Other Liabilities:
Deferred income taxes, net	625		584


Benefit obligations	83		83
Regulatory liabilities	1,020		1,226

Other non-current liabilities	564		694
Total other liabilities	2,292		2,587
Long-Term Debt	4,465		2,428
Commitments and Contingencies (Note 14)	0		0
Stockholder’s Equity:
Common stock	—		—
Additional paid-in capital	2,046		2,046
Retained earnings	719		511
Accumulated other comprehensive income	10		10
Total stockholder’s equity	2,775		2,567
Total Liabilities and Stockholder’s Equity	$	10,702	$	8,308

See Combined Notes to Interim Condensed Financial Statements

Table of Contents

CENTERPOINT ENERGY RESOURCES CORP. AND SUBSIDIARIES

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

CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS

(Unaudited)


	Nine Months Ended September 30,
	2021		2020
	(in millions)
Cash Flows from Operating Activities:
Net income	$	208	$	76
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	242		226

Amortization of deferred financing costs	10		7
Deferred income taxes	27		19
Goodwill impairment and loss from reclassification to held for sale	—		93
Gain on sale	(11)		—
Write-down of natural gas inventory	—		3

Changes in other assets and liabilities:
Accounts receivable and unbilled revenues, net	259		402
Accounts receivable/payable–affiliated companies	(4)		(8)
Inventory	(73)		(3)
Taxes receivable	(4)		—
Accounts payable	(37)		(180)

Interest and taxes accrued	9		(18)
Non-trading derivatives, net	—		(13)
Margin deposits, net	—		65
Net regulatory assets and liabilities	(2,027)		(28)
Other current assets	5		4
Other current liabilities	(20)		(7)
Other assets	—		7
Other liabilities	(49)		8
Other operating activities, net	(1)		(7)
Net cash provided by (used in) operating activities	(1,466)		646
Cash Flows from Investing Activities:
Capital expenditures	(571)		(624)

Increase in notes receivable–affiliated companies	—		(9)





Proceeds from divestiture	22		286
Other investing activities, net	15		8


Net cash used in investing activities	(534)		(339)
Cash Flows from Financing Activities:
Increase in short-term borrowings, net	(27)		31

Proceeds from (payments of) commercial paper, net	338		30
Proceeds from long-term debt	1,699		—


Dividends to parent	—		(80)
Payment of debt issuance costs	(10)		—



Capital distribution to parent associated with the sale of CES	—		(286)
Other financing activities, net	(1)		(2)


Net cash provided by (used in) financing activities	1,999		(307)
Net Decrease in Cash, Cash Equivalents and Restricted Cash	(1)		—
Cash, Cash Equivalents and Restricted Cash at Beginning of Period	1		2
Cash, Cash Equivalents and Restricted Cash at End of Period	$	—	$	2

See Combined Notes to Interim Condensed Financial Statements

Table of Contents

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 September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount
	(in millions, except share amounts)
Common Stock
Balance, beginning of period	1,000	$	—	1,000	$	—	1,000	$	—	1,000	$	—
Balance, end of period	1,000	—		1,000	—		1,000	—		1,000	—
Additional Paid-in-Capital
Balance, beginning of period		2,046			1,829			2,046			2,116

Capital distribution to parent associated with the sale of CES		—			—			—			(286)
Other		—			—			—			(1)
Balance, end of period		2,046			1,829			2,046			1,829
Retained Earnings
Balance, beginning of period		720			518			511			515
Net income (loss)		(1)			(4)			208			76
Dividend to parent		—			(8)			—			(80)
Adoption of ASU 2016-13		—			—			—			(5)
Balance, end of period		719			506			719			506
Accumulated Other Comprehensive Income
Balance, beginning of period		10			10			10			10

Balance, end of period		10			10			10			10
Total Stockholder’s Equity		$	2,775		$	2,345		$	2,775		$	2,345

See Combined Notes to Interim Condensed Financial Statements

Table of Contents

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 12 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 CenterPoint ~~Energy.~~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 2020 Form 10-K. The Combined Notes to Interim Condensed Financial Statements apply to all Registrants and specific references to Houston Electric and CERC herein also pertain to CenterPoint Energy, unless otherwise indicated.

Background.CenterPoint Energy, Inc. is a public utility holding ~~company.~~company and owns interests in Enable, a publicly traded MLP, as described below. As of September 30, 2021, CenterPoint Energy’s operating subsidiaries ~~own and operate~~reported as continuing operations were as follows:

•Houston Electric provides electric transmission service to transmission service customers in the ERCOT region and distribution ~~and natural gas distribution facilities, supply natural gas~~service to ~~commercial and industrial customers and electric and natural gas utilities and own interests in Enable as described below. CenterPoint Energy’s indirect, wholly-owned subsidiaries include:~~

~~Houston Electric, which engages in the electric transmission and distribution business in~~REPs serving the Texas Gulf Coast area that includes the city of ~~Houston;~~Houston.

•CERC ~~Corp., which~~(i) owns and operates natural gas distribution systems in ~~six states;~~6 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 ESG, which provides energy performance contracting and sustainable infrastructure services, such as renewables, distributed generation and combined heat and power projects.

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. On August 31, 2021, CenterPoint Energy, through its subsidiary CERC Corp., completed the sale of MES to Last Mile Energy. See Note 3 for further information.

As of September 30, ~~2017,~~2021, CenterPoint ~~Energy also~~Energy’s reportable segments were Electric and Natural Gas. Houston Electric and CERC each consist of a single reportable segment. For a description of CenterPoint Energy’s reportable segments, see Note 16.

As of September 30, 2021, CNP Midstream owned ~~an aggregate~~approximately 53.7% of ~~14,520,000 Series A Preferred Units~~the common units representing limited partner interests in Enable, which owns, operates and develops natural gas and crude oil infrastructure ~~assets, and CERC Corp.~~ assets; CNP Midstream also

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owned ~~approximately 54.1%~~50% of the management rights and 40% of the incentive distribution rights in Enable GP. On February 16, 2021, Enable entered into the Enable Merger Agreement. At the closing of the transactions contemplated by the Enable Merger Agreement, if and when it occurs, Energy Transfer will acquire all of Enable’s outstanding equity interests, including all Enable common units ~~representing limited partner interests~~and Enable Series A Preferred Units held by CenterPoint Energy, and in ~~Enable.~~return CenterPoint Energy will receive Energy Transfer common units and Energy Transfer Series G Preferred Units. For additional information regarding CenterPoint Energy’s interest in Enable, including the 14,520,000 Enable Series A Preferred Units directly owned by CenterPoint Energy, the Enable Merger and CenterPoint Energy’s plan to exit the Midstream Investment reportable segment, see Notes 3 and 9.

As of September 30, ~~2017,~~2021, CenterPoint Energy and Houston Electric had VIEs consisting of the Bond Companies, which ~~it consolidates.~~are consolidated. The consolidated VIEs are wholly-owned, bankruptcy-remote, special purpose entities that were formed ~~specifically~~solely for the purpose of securitizing transition and system restoration-related property. Creditors of CenterPoint Energy and 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.~~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.

~~CenterPoint Energy’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 ~~CenterPoint Energy’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 the 2020 Form 10-K and to reflect the impacts of discontinued operations.

~~For a description of CenterPoint Energy’s reportable business segments, see Note 15.~~

(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. CenterPoint Energy 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 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. CenterPoint Energy 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. CenterPoint Energy adopted this standard as of January 1, 2017. The adoption did not have a material impact on CenterPoint Energy’s financial position or results of operations. However, CenterPoint Energy’s statement of cash flows reflects a decrease in financing activity and a corresponding increase in operating activity of $4 million and $3 million as of September 30, 2017 and 2016, respectively, 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. CenterPoint Energy 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 CenterPoint Energy’s revenues are tariff and derivative based, which we do not anticipate will be significantly impacted by these ASUs. CenterPoint Energy 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 of certain cash receipts and payments in 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. CenterPoint Energy is currently assessing the impact that this standard will have on its statement of cash flows.

~~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 CenterPoint Energy’s financial position, results of operations, and disclosures, but it will have an impact on the presentation of the statement of 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 CenterPoint Energy’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 CenterPoint Energy’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. CenterPoint Energy 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 CenterPoint Energy’s rate-regulated businesses. CenterPoint Energy does not believe this standard will have a material impact on its financial position, results of operations, cash flows and disclosures.

~~In May 2017, the FASB issued ASU No. 2017-09,~~ ~~Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting~~ (ASU 2017-09). ASU 2017-09 clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as a modification. Entities will apply the modification accounting guidance if the value, vesting conditions or classification of the award changes. ASU 2017-09 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. ASU 2017-09 should be applied prospectively for awards modified on or after the adoption date. This standard will have an impact on CenterPoint Energy’s future treatment of changes to share-based payment awards.

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

(3) ~~Acquisition~~Held for Sale and Divestitures (CenterPoint Energy and CERC)

Held for Sale. On ~~January 3, 2017,CES, an indirect, wholly-owned subsidiary of~~April 29, 2021, CenterPoint Energy, ~~completed~~through its ~~acquisition~~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 ~~AEM. After working capital~~approximately $425 million of storm-related incremental natural gas costs incurred in the February 2021 Winter Storm Event, subject to certain adjustments set forth in the ~~final purchase price~~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 Arkansas and Oklahoma Natural Gas businesses are reflected in CenterPoint Energy’s Natural Gas reportable segment and CERC’s single reportable segment, as applicable. Filings were made on June 11, 2021 to the APSC and June 24, 2021 to the OCC requesting approval of the transaction. On August 18, 2021, the Hart-Scott-Rodino antitrust waiting period expired. On October 14, 2021, a unanimous settlement agreement was ~~$147 million and was allocated to identifiable assets acquired and liabilities assumed based on their estimated fair values on~~filed with the ~~acquisition date.~~

~~The following table summarizes~~APSC that, if approved, upon the ~~final purchase price allocation~~closing of the transaction, would resolve all matters associated with the sale and the ~~fair value amounts recognized for the assets acquired and liabilities assumed related to the acquisition:~~

(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~~FRP. As part of the ~~purchase price over~~settlement agreement, CERC committed to provide $22 million in cash at the ~~fair value~~closing of the ~~net identifiable assets acquired. The goodwill recorded~~transaction, which will be passed through to Arkansas customers. CERC also committed to return any insurance proceeds it may receive for claims submitted with respect to Arkansas, if any, for costs incurred as part of the ~~acquisition primarily reflects~~February 2021 Winter Storm Event to reduce the ~~value~~balance of the ~~complementary operational~~incurred costs. The settlement agreement also provides for the extinguishment of CERC’s obligation to refund through the FRP approximately $10 million as of September 30, 2021. The settling parties requested that the October 22, 2021 hearing be waived and ~~geographic footprints, scale and expanded capabilities provided~~that the APSC enter an order by December 13, 2021 to allow for the closing of the transaction to take place by the ~~acquisition.~~end of the year, or shortly thereafter. The Oklahoma filing is still pending state regulatory approval. The transaction is anticipated to close by the end of 2021, subject to customary closing conditions, including final orders from the APSC and OCC approving the transaction. As announced in December 2020, CenterPoint Energy’s business strategy incorporated the Business Review and Evaluation Committee’s recommendations to increase its planned capital expenditures in its electric and natural gas businesses to support rate base growth and sell certain of its Natural Gas businesses located in Arkansas and Oklahoma as a means to efficiently finance a portion of such increased capital expenditures, among other recommendations.

~~Identifiable intangible~~In April 2021, certain assets and liabilities representing the Arkansas and Oklahoma Natural Gas businesses met the held for sale criteria. The sale will be considered an asset sale for tax purposes, requiring net deferred tax liabilities to be excluded

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from held for sale balances. The deferred taxes associated with the businesses will be recognized as a deferred income tax benefit by CenterPoint Energy and CERC upon closing.

Although the Arkansas and Oklahoma Natural Gas businesses met the held for sale criteria, their expected disposals do not represent a strategic shift to CenterPoint Energy and CERC, as both will retain significant operations in, and will continue to invest in, their natural gas businesses. Therefore, the assets and liabilities associated with the transaction are not reflected as discontinued operations on CenterPoint Energy’s and CERC’s Condensed Statements of Consolidated Income, as applicable, and the December 31, 2020 Condensed Consolidated Balance Sheets were ~~recorded~~not required to be recast for assets held for sale. Since the depreciation on the Arkansas and Oklahoma Natural Gas assets will continue to be reflected in revenues through customer rates until the expected closing of the transaction and will be reflected in the carryover basis of the rate-regulated assets once sold, CenterPoint Energy and CERC will continue to record depreciation on those assets through the expected closing of the transaction.

In September 2021, CenterPoint Energy’s equity investment in Enable met the held for sale criteria. CenterPoint Energy’s plan to exit its Midstream Investment reportable segment in 2022 represents a strategic shift to CenterPoint Energy. Therefore, the assets and liabilities associated with the equity investment in Enable are reflected as discontinued operations on CenterPoint Energy’s Condensed Statements of Consolidated Income, and the December 31, 2020 Condensed Consolidated Balance Sheet was required to be recast for assets held for sale. For further information about CenterPoint Energy’s equity investment in Enable, see Note 9.

The Registrants record assets and liabilities held for sale at the lower of their carrying value or their estimated fair value less cost to sell. Neither CenterPoint Energy nor CERC recognized any gains or losses on assets held for sale during the three and nine months ended September 30, 2021. See Note 10 for further information about the allocation of goodwill to the businesses to be disposed.

The assets and liabilities of the Arkansas and Oklahoma Natural Gas businesses and equity method investment in Enable classified as ~~determined by management based~~held for sale in CenterPoint Energy’s and CERC’s Condensed Consolidated Balance Sheets, as applicable, included the following:


	September 30, 2021
	CenterPoint Energy		CERC
	(in millions)
Receivables, net	$	15	$	15
Accrued unbilled revenues	12		12
Natural gas inventory	48		48
Materials and supplies	8		8
Property, plant and equipment, net	1,254		1,254
Goodwill	398		144
Investment in unconsolidated affiliate (1)	926		—
Regulatory assets	403		403
Other	86		86
Total current assets held for sale	$	3,150	$	1,970

Short term borrowings (2)	$	34	$	34
Accounts payable	21		21
Taxes accrued	7		7

Customer deposits	11		11
Regulatory liabilities	317		317
Other	122		122
Total current liabilities held for sale	$	512	$	512

(1)Balance of $782 million as of December 31, 2020 is reported as Non-current assets held for sale on ~~available~~CenterPoint Energy’s Condensed Consolidated Balance Sheets.

(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, ~~which includes a preliminary valuation prepared by an independent third party.~~ see Note 12.

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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 livespre-tax income for the ~~identifiable intangible assets were determined using methods that approximate~~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 September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(in millions)
Income (Loss) from Continuing Operations Before Income Taxes	$	(14)	$	(12)	$	48	$	48

Divestitures of Infrastructure Services and Energy Services (CenterPoint Energy and CERC). CenterPoint Energy completed the ~~pattern of economic benefit provided by the utilization~~sale of the ~~assets.~~

~~The estimated fair value~~Infrastructure Services Disposal Group on April 9, 2020 for $850 million and collected a receivable of $4 million from PowerTeam Services in January 2021 for full and final settlement of the ~~identifiable intangible assets and related useful lives as included~~working capital adjustment in the Securities Purchase Agreement. See “—Other Sale Related Matters of Infrastructure Services and Energy Services” below for a discussion of an additional mechanism within the Securities Purchase Agreement. CenterPoint Energy, through its subsidiary CERC Corp., completed the sale of the Energy Services Disposal Group on June 1, 2020 for $286 million in cash and collected a receivable for $79 million in October 2020 for full and final ~~purchase price allocation include:~~

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

~~Amortization expense related to~~settlement of the ~~above identifiable intangible assets was $-0-~~working capital adjustment. The earnings and ~~$1 million~~expenses directly associated with these dispositions for the three and nine months ended September 30, ~~2017, respectively.~~2020 are reflected as discontinued operations on CenterPoint Energy’s and CERC’s Condensed Statements of Consolidated Income through the closing of the transactions, as applicable.

~~Revenues~~A summary of approximately $311 million and $989 million, respectively, and operating income of approximately $3 million and $28 million, respectively, attributable to the AEM acquisition are reported in the Energy Services business segment and includeddiscontinued operations presented in CenterPoint Energy’s Condensed Statements of Consolidated Income is as follows:


	Three Months Ended September 30,
	2021		2020
	Equity Method Investment in Enable		Equity Method Investment in Enable		Infrastructure Services Disposal Group		Energy Services Disposal Group		Total
	(in millions)










Equity in earnings (losses) of unconsolidated affiliate, net	$	83	$	(67)	$	—	$	—	$	(67)
Income (loss) from discontinued operations before income taxes	83		(67)		—		—		(67)
Gain (loss) on classification to held for sale, net (1)	—		—		(9)		3		(6)
Income tax expense (benefit)	15		5		(1)		1		5
Net income (loss) from discontinued operations	$	68	$	(72)	$	(8)	$	2	$	(78)


	Nine Months Ended September 30,
	2021		2020
	Equity Method Investment in Enable		Equity Method Investment in Enable		Infrastructure Services Disposal Group		Energy Services Disposal Group		Total
	(in millions)
Revenues	$	—	$	—	$	250	$	1,167	$	1,417
Expenses:
Non-utility cost of revenues	—		—		50		1,108		1,158
Operation and maintenance	—		—		184		34		218

Taxes other than income taxes	—		—		1		3		4
Total	—		—		235		1,145		1,380
Operating income (loss)	—		—		15		22		37
Equity in earnings (losses) of unconsolidated affiliate, net	258		(1,499)		—		—		(1,499)
Income (loss) from discontinued operations before income taxes	258		(1,499)		15		22		(1,462)
Loss on classification to held for sale, net (1)	—		—		(102)		(96)		(198)
Income tax expense (benefit)	56		(361)		24		(3)		(340)
Net loss from discontinued operations	$	202	$	(1,138)	$	(111)	$	(71)	$	(1,320)

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(1)Loss on classification to held for sale, net is inclusive of goodwill impairment, gains and losses recognized upon sale, and costs to sell.

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


	Three Months Ended September 30, 2020		Nine Months Ended September 30, 2020
	Energy Services Disposal Group
	(in millions)
Revenues	$	—	$	1,167
Expenses:
Non-utility cost of revenues	—		1,108
Operation and maintenance	—		34

Taxes other than income taxes	—		3
Total	—		1,145


Income from discontinued operations before income taxes	—		22
Gain (loss) on classification to held for sale, net (1)	3		(90)
Income tax expense (benefit)	1		(2)
Net income (loss) from discontinued operations	$	2	$	(66)

(1)Gain (loss) on classification to held for sale, net is inclusive of goodwill impairment, gains and losses recognized upon sale.

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


	Nine Months Ended September 30, 2021
	CenterPoint Energy
	Equity Method Investment in Enable
	(in millions)


Equity in earnings of unconsolidated affiliate - operating	$	(258)
Distributions from unconsolidated affiliate - operating	116


	Nine Months Ended September 30, 2020
	CenterPoint Energy						CERC
	Equity Method Investment in Enable		Infrastructure Services Disposal Group		Energy Services Disposal Group		Energy Services Disposal Group
			(in millions)


Write-down of natural gas inventory - operating	$	—	$	—	$	3	$	3
Equity in losses of unconsolidated affiliate - operating	1,499		—		—		—
Distributions from unconsolidated affiliate - operating	109		—		—		—
Capital expenditures - investing	—		16		1		1
Distributions from unconsolidated affiliate in excess of cumulative earnings - investing	46		—		—		—
Non-cash transactions:
Accounts payable related to capital expenditures	—		2		4		4

Other Sale Related Matters of Infrastructure Services and Energy Services (CenterPoint Energy and CERC). CES provided natural gas supply to CenterPoint Energy’s and CERC’s Natural Gas under contracts executed in a competitive bidding process, with the duration of some contracts extending into 2021. In addition, CERC is the natural gas transportation provider for a portion of CES’s customer base and will continue to be the transportation provider for these customers as long as these customers retain a relationship with the divested CES business.

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Transactions between CES and CenterPoint Energy’s and CERC’s Natural Gas businesses that were previously eliminated in consolidation have been reflected in continuing operations until June 1, 2020, which was the date of closing of the sale of the Energy Services Disposal Group. Revenues and expenses included in continuing operations were as follows:








	Nine Months Ended September 30, 2020
	CenterPoint Energy		CERC
	(in millions)
Transportation revenue	$	34	$	34
Natural gas expense	48		47

In the normal course of business prior to June 1, 2020, the Energy Services Disposal Group through CES traded natural gas under supply 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. For further information, see Note 14.

CenterPoint Energy’s and CERC’s Natural Gas businesses had AMAs associated with their utility distribution service in Arkansas, Louisiana and Oklahoma with the Energy Services Disposal Group that expired in March 2021. See Note 12 for further information.

The Infrastructure Services Disposal Group provided pipeline construction and repair services to CenterPoint Energy’s and CERC’s Natural Gas. In accordance with consolidation guidance in ASC 980—Regulated Operations, costs incurred by Natural Gas utilities for these pipeline construction and repair services are not eliminated in consolidation when capitalized and included in rate base by the Natural Gas utility. Amounts charged for these services that are not capitalized are included primarily in Operation and maintenance expenses.

Fees incurred by CenterPoint Energy’s and CERC’s Natural Gas reportable segment for pipeline construction and repair services are as follows:








	Nine Months Ended September 30, 2020
	CenterPoint Energy		CERC
	(in millions)
Pipeline construction and repair services capitalized	$	34	$	—
Pipeline construction and repair service charges in operations and maintenance expense	1		1

(1)Represents charges for the period from January 1, 2020 until the closing of the sale of the Infrastructure Services Disposal Group.

In the Securities Purchase Agreement, CenterPoint Energy agreed to a mechanism to reimburse PowerTeam Services subsequent to closing of the sale for certain amounts of specifically identified change orders that may be ultimately rejected by one of VISCO’s customers as part of on-going audits. CenterPoint Energy’s maximum contractual exposure under the Securities Purchase Agreement, in addition to the amount reflected in the working capital adjustment, for these change orders is $21 million. CenterPoint Energy does not expect the ultimate outcome of this matter to have a material adverse effect on its financial condition, results of operations or cash flows. CenterPoint Energy anticipates this matter will be resolved in 2021.

Divestiture of MES (CenterPoint Energy and CERC). CenterPoint Energy, through its subsidiary CERC Corp., completed the sale of MES on August 31, 2021 to Last Mile Energy. Prior to the transaction, MES provided temporary delivery of LNG and CNG throughout the contiguous 48 states and MES was reflected in CenterPoint Energy’s Natural Gas reportable segment and CERC’s single reportable segment, as applicable.

The MES disposal does not represent a strategic shift to CenterPoint Energy and CERC, as both will retain significant operations in, and will continue to invest in, their natural gas businesses. Therefore, the assets and liabilities associated with MES are not reflected as discontinued operations on CenterPoint Energy’s and CERC’s Condensed Statements of Consolidated Income, as applicable, and the December 31, 2020 Condensed Consolidated Balance Sheets were not required to be recast for assets held for sale. CenterPoint Energy and CERC recognized a pre-tax gain on the sale of $8 million and $11 million, respectively, during the three and nine months ended September 30, 2021. See Note 10 for further information about the allocation of goodwill to the MES disposal.

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(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. The revenues and related balances in the following tables exclude operating revenues and balances from the Energy Services Disposal Group and the Infrastructure Services Disposal Group, which are reflected as discontinued operations prior to the date of closing of each transaction. See Note 3 for further information. Certain prior year amounts have been reclassified to conform to the current year reportable segment presentation described in the Registrants’ combined 2020 Form 10-K.

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 tables disaggregate revenues by reportable segment and major source:

CenterPoint Energy


	Three Months Ended September 30, 2021
	Electric		Natural Gas		Corporate and Other		Total
	(in millions)
Revenue from contracts	$	1,056	$	611	$	73	$	1,740

Other (1)	—		8		1		9

Total revenues	$	1,056	$	619	$	74	$	1,749

	Nine Months Ended September 30, 2021
	Electric		Natural Gas		Corporate and Other		Total
	(in millions)
Revenue from contracts	$	2,822	$	2,984	$	190	$	5,996
Other (1)	1		38		3		42

Total revenues	$	2,823	$	3,022	$	193	$	6,038


	Three Months Ended September 30, 2020
	Electric		Natural Gas		Corporate and Other		Total
	(in millions)
Revenue from contracts	$	985	$	553	$	72	$	1,610
Other (1)	—		11		1		12

Total revenues	$	985	$	564	$	73	$	1,622

	Nine Months Ended September 30, 2020
	Electric		Natural Gas		Corporate and Other		Total
	(in millions)
Revenue from contracts	$	2,602	$	2,483	$	232	$	5,317
Other (1)	(2)		46		3		47

Total revenues	$	2,600	$	2,529	$	235	$	5,364

(1)Primarily consists of income from ARPs, weather hedge gains (losses) and leases. Total lease income was $2 million and $2 million for the three months ended September 30, 2021 and 2020, respectively, and $6 million and $4 million for the nine months ended September 30, 2021 and 2020, respectively.

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Houston Electric


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(in millions)
Revenue from contracts	$	880	$	828	$	2,358	$	2,188
Other (1)	(6)		—		(14)		(6)
Total revenues	$	874	$	828	$	2,344	$	2,182

(1)Primarily consists of income from ARPs and leases. Lease income was not significant for the three and nine months ended September 30, ~~2017.~~2021 and 2020.

CERC


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(in millions)
Revenue from contracts	$	484	$	417	$	2,214	$	1,873
Other (1)	3		9		24		47

Total revenues	$	487	$	426	$	2,238	$	1,920

(1)Primarily consists of income from ARPs, weather hedge gains (losses) and leases. Lease income was not significant for the three and nine months ended September 30, 2021 and 2020.

Revenues from Contracts with Customers

Electric (CenterPoint Energy and Houston Electric). Houston Electric distributes electricity to customers over time and customers consume the electricity when delivered. Indiana Electric generates, distributes and transmits 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 September 30, 2021, CenterPoint Energy’s contract assets primarily relate to ESG 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 September 30, 2021, CenterPoint Energy’s contract liabilities primarily relate to ESG contracts where revenue is recognized using the input method.

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The ~~following unaudited pro forma financial information reflects~~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, 2020 and September 30, 2021, respectively, are presented below.

CenterPoint Energy


	Accounts Receivable		Other Accrued Unbilled Revenues		Contract Assets		Contract Liabilities
	(in millions)
Opening balance as of December 31, 2020	$	604	$	505	$	27	$	18
Closing balance as of September 30, 2021	568		293		24		22
Increase (decrease)	$	(36)	$	(212)	$	(3)	$	4

The amount of revenue recognized during the ~~consolidated~~nine months ended September 30, 2021 that was included in the opening contract liability was $16 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, 2020	$	225	$	113	$	3
Closing balance as of September 30, 2021	339		132		4
Increase	$	114	$	19	$	1

The amount of ~~operations~~revenue recognized during the nine months ended September 30, 2021 that was included in the opening contract liability was $3 million. The difference between the opening and closing balances of the contract liabilities primarily results from the timing difference between Houston Electric’s performance and the customer’s payment.

CERC


	Accounts Receivable		Other Accrued Unbilled Revenues
	(in millions)
Opening balance as of December 31, 2020	$	214	$	261
Closing balance as of September 30, 2021	108		92
Decrease	$	(106)	$	(169)

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 ~~assuming the AEM acquisition had taken place on January 1, 2016. Adjustments~~expects to ~~pro forma net income~~recognize this revenue. Such contracts include ~~intercompany sales, amortization~~energy performance and sustainable infrastructure services contracts of ~~intangible assets, depreciation of fixed assets, interest expense associated with debt financing to fund the acquisition,~~ESG, which are included in Corporate and ~~related income tax effects. The pro forma information does not include the mark-to-market impact of financial instruments designated as cash flow hedges of anticipated purchases~~Other.


	Rolling 12 Months		Thereafter		Total
	(in millions)
Revenue expected to be recognized on contracts in place as of September 30, 2021:

Corporate and Other	$	245	$	564	$	809
	$	245	$	564	$	809

Practical Expedients and ~~sales at index prices. The effective portion of these hedges~~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 COVID-19 and 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 $ 2,098
$ 2,145
$ 6,976
$ 6,161
Net Income 169
179
496
335

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

~~CenterPoint Energy’s~~The Registrants’ net periodic cost (benefit), 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:

Three Months Ended September 30,
2017 2016
Pension
Benefits Postretirement
Benefits Pension
Benefits Postretirement
Benefits
(in millions)
Service cost $ 9
$ —
$ 10
$ 1
Interest cost 22
4
23
4
Expected return on plan assets (24 ) (1 ) (26 ) (2 )
Amortization of prior service cost (credit) 2
(1 ) 3
(1 )
Amortization of net loss 14
—
15
—
Net periodic cost (2)
$ 23
$ 2
$ 25
$ 2

Nine Months Ended September 30,
2017 2016
Pension
Benefits Postretirement
Benefits Pension
Benefits Postretirement
Benefits
(in millions)
Service cost $ 27
$ 1
$ 28
$ 2
Interest cost 66
12
70
13
Expected return on plan assets (72 ) (4 ) (76 ) (5 )
Amortization of prior service cost (credit) 7
(3 ) 7
(2 )
Amortization of net loss 43
—
47
—
Curtailment gain (1)
—
—
—
(3 )
Net periodic cost (2)
$ 71
$ 6
$ 76
$ 5
Pension Benefits (CenterPoint Energy)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(in millions)
Service cost (1)	$	9	$	10	$	29	$	32
Interest cost (2)	15		18		44		56
Expected return on plan assets (2)	(26)		(28)		(78)		(85)

Amortization of net loss (2)	9		10		28		31
Settlement cost (benefit) (2) (3)	27		1		26		2

Net periodic cost	$	34	$	11	$	49	$	36

~~(1)~~

A curtailment gain or loss is required when the expected future services of a significant number of current employees are reduced or eliminated for the accrual of benefits. In May 2016, Houston Electric entered into a renegotiated collective bargaining agreement with the IBEW Local Union 66 that provides that for Houston Electric union employees covered under the agreement who retire on or after January 1, 2017, retiree medical and prescription drug coverage will be provided exclusively through the NECA/IBEW Family Medical Care Plan

(1)Amounts presented in the table above are included in Operation and maintenance expense in exchange for the payment of monthly premiums as determined under the agreement. As a result, the accrued postretirement benefits related to such future Houston Electric union retirees were eliminated. In 2016, Houston Electric recognized a curtailment gain of $3 million as an accelerated recognition of the prior service credit that would otherwise be recognized in future periods.


~~(2)~~	~~Net periodic cost in this table is before considering amounts subject to overhead allocations for capital expenditure projects or for amounts subject to deferral for regulatory purposes.~~

CenterPoint Energy’s ~~changes~~Condensed Statements of Consolidated Income, net of amounts capitalized and regulatory deferrals.

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

(3)Amounts presented represent a one-time, non-cash settlement cost (benefit), prior to ~~defined~~regulatory deferrals, which are required when the total lump sum distributions or other settlements of plan benefit obligations during a plan year exceed the service cost and interest cost components of the net periodic cost for that year.

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Postretirement Benefits


	Three Months Ended September 30,
	2021						2020
	CenterPoint Energy		Houston Electric		CERC		CenterPoint Energy		Houston Electric		CERC
	(in millions)
Service cost (1)	$	1	$	—	$	—	$	1	$	—	$	1
Interest cost (2)	2		1		1		2		1		—
Expected return on plan assets (2)	(1)		(1)		—		(1)		(1)		(1)
Amortization of prior service cost (credit) (2)	(1)		(1)		—		(1)		(1)		1





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

	Nine Months Ended September 30,
	2021						2020
	CenterPoint Energy		Houston Electric		CERC		CenterPoint Energy		Houston Electric		CERC
	(in millions)
Service cost (1)	$	2	$	—	$	1	$	2	$	—	$	1
Interest cost (2)	6		3		2		8		4		2
Expected return on plan assets (2)	(3)		(3)		—		(4)		(3)		(1)
Amortization of prior service cost (credit) (2)	(3)		(3)		—		(3)		(4)		1





Net periodic cost (benefit)	$	2	$	(3)	$	3	$	3	$	(3)	$	3

(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.

The table below reflects the expected contributions to be made to the pension and postretirement benefit plans ~~are as follows:~~during 2021:


	CenterPoint Energy		Houston Electric		CERC
	(in millions)
Expected minimum contribution to pension plans during 2021	$	61	$	—	$	—
Expected contribution to postretirement benefit plans in 2021	9		1		3

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(in millions)
Beginning Balance $ (70 ) $ (65 ) $ (72 ) $ (65 )
Other comprehensive income (loss) before reclassifications (1)
—
—
—
(4 )
Amounts reclassified from accumulated other comprehensive loss:
Prior service cost (2)
—
1
1
1
Actuarial losses (2)
2
2
5
5
Tax expense (2 ) (2 ) (4 ) (1 )
Net current period other comprehensive income —
1
2
1
Ending Balance $ (70 ) $ (64 ) $ (70 ) $ (64 )


~~(1)~~	~~Total other comprehensive income (loss) is related to the remeasurement of the postretirement plan.~~


~~(2)~~	~~These accumulated other comprehensive components are included in the computation of net periodic cost.~~

On March 11, 2021, the ARPA was signed into law which includes pension plan funding relief for the sponsoring employers. As a result, the required minimum contribution to pension plans for 2021 has been significantly reduced. However, CenterPoint Energy ~~expects~~elects to ~~contribute~~maintain the same level of funding previously planned for 2021, and therefore, the expected minimum contribution amount does not reflect this funding relief available for 2021.

The table below reflects the contributions made to the pension and postretirement benefit plans during 2021:


	Three Months Ended September 30, 2021						Nine Months Ended September 30, 2021
	CenterPoint Energy		Houston Electric		CERC		CenterPoint Energy		Houston Electric		CERC
	(in millions)
Pension plans	$	51	$	—	$	—	$	59	$	—	$	—
Postretirement benefit plans	$	2	$	1	$	—	$	6	$	1	$	2

Board of Directors Actions. On July 22, 2021, CenterPoint Energy announced the decision of the independent directors of the Board to implement a ~~minimum~~new independent Board leadership and governance structure and appointed a new independent chair of ~~approximately $46 million to~~the Board. To implement this new governance structure, the independent directors of the Board eliminated the Executive Chairman position that was formerly held by Milton Carroll.

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On the approval and recommendation of the Compensation Committee and approval of the Board (acting solely through its ~~pension plans in 2017,~~independent directors), CenterPoint Energy entered into a separation agreement between CenterPoint Energy and Mr. Carroll, dated July 21, 2021. Under the terms of ~~which approximately~~the separation agreement, Mr. Carroll exited the positions of Executive Chairman on July 21, 2021 and Board member on September 30, 2021. Under the terms of the separation agreement, Mr. Carroll received a lump sum cash payment of $28 million and ~~$46 million were contributed during~~his separation was treated as an “enhanced retirement” for purposes of his outstanding 2019, 2020 and 2021 equity award agreements.

On the ~~three~~approval and ~~nine months ended September 30, 2017, respectively.~~

recommendation of the Compensation Committee and approval of the Board (acting solely through its independent directors), CenterPoint Energy ~~expects~~has entered into a retention incentive agreement with David J. Lesar, President and Chief Executive Officer of CenterPoint Energy, dated July 20, 2021. For information about the classification of this award, see Note 19.

(6) Regulatory Matters

Equity Return

The Registrants are at times allowed by a regulator to ~~contribute~~defer an equity return as part of the recoverable carrying costs of a ~~total of approximately $16 million to~~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 ~~postretirement benefit plan in 2017, of which approximately $4 million and $12 million were contributed during the three and nine months ended September 30, 2017, respectively.~~

~~(5) Regulatory Accounting~~

~~Equity Return.~~ ~~As of September 30, 2017, Houston Electric has not recognized an~~Condensed Consolidated Balance Sheets. The allowed equity return is recognized in the Condensed Statements of ~~$299 million because such return will be recognized~~Consolidated Income as it is recovered in rates. ~~During the three months ended September 30, 2017 and 2016, Houston Electric recognized approximately $13 million and $22 million, respectively, of the~~The recoverable allowed equity return not ~~previously recognized. During~~yet recognized by the ~~nine months ended September 30, 2017~~Registrants is as follows:


	September 30, 2021						December 31, 2020
	CenterPoint Energy (1)		Houston Electric (2)		CERC (3)		CenterPoint Energy (1)		Houston Electric (2)		CERC (3)
	(in millions)
Allowed equity return not recognized	$	206	$	108	$	15	$	229	$	137	$	13

(1)In addition to the amounts described in (2) and ~~2016, Houston Electric recognized approximately $30 million and $52 million, respectively, of the~~(3) below, represents CenterPoint Energy’s allowed equity return ~~not previously recognized.~~on post in-service carrying cost generally associated with investments in Indiana.

~~Hurricane Harvey.~~ (2)Represents Houston Electric’s allowed equity return on its true-up balance of stranded costs, other changes and related interest resulting from the formerly integrated electric ~~delivery~~utilities prior to Texas deregulation to be recovered in rates through 2024 and certain storm restoration balances pending recovery in the next rate 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 September 30,
	2021						2020
	CenterPoint Energy		Houston Electric		CERC		CenterPoint Energy		Houston Electric		CERC
	(in millions)
Allowed equity return recognized	$	12	$	11	$	1	$	10	$	10	$	—

	Nine Months Ended September 30,
	2021						2020
	CenterPoint Energy		Houston Electric		CERC		CenterPoint Energy		Houston Electric		CERC
Allowed equity return recognized	$	31	$	29	$	1	$	24	$	24	$	—

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February 2021 Winter Storm Event

In February 2021, certain of the Registrants’ jurisdictions experienced an extreme and unprecedented winter weather event that resulted in prolonged freezing temperatures, which impacted their businesses. 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. While demand for electricity reached extraordinary levels due to the extreme cold, the supply of electricity significantly decreased in part because of the inability of certain power generation facilities to supply electric power to the grid. Houston Electric does not own or operate any electric generation facilities 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. Houston Electric transmits and distributes to customers of REPs electric power that the REPs obtain from power generation facilities owned by third parties. ERCOT serves as the independent system operator and regional reliability coordinator for member electric power systems in most of Texas. To comply with ERCOT’s orders, Houston Electric implemented controlled outages across its service territory, resulting in a substantial number of businesses and residents being without power, many for extended periods of time, in compliance with ERCOT’s directives as an emergency procedure to avoid prolonged large-scale state-wide blackouts and long-term damage to the electric system in Texas. In anticipation of this weather event, Houston Electric implemented its emergency operations plan’s processes and procedures necessary to respond to such events, including establishing an incident command center and calling for mutual assistance from other utilities where needed, among other measures. Throughout the February 2021 Winter Storm Event, Houston Electric remained in contact with its regulators and stakeholders, including federal, state and local officials, as well as the PUCT and ERCOT.

The February 2021 Winter Storm Event also impacted wholesale prices of CenterPoint Energy’s and CERC’s natural gas purchases and their ability to serve customers in their Natural Gas service territories, including due to the reduction in available natural gas capacity and impacts to CenterPoint Energy’s and CERC’s natural gas supply portfolio activities, and the effects of weather on their systems and their ability to transport natural gas, among other things. The overall natural gas market, including the markets from which CenterPoint Energy and CERC ~~Corp.’s NGD suffered damage~~sourced a significant portion of their natural gas for their operations, experienced significant impacts caused by the February 2021 Winter Storm Event, resulting in extraordinary increases in the price of natural gas purchased by CenterPoint Energy and CERC.

On February 13, 2021, the Railroad Commission authorized each Texas natural gas distribution utility to record in a regulatory asset the extraordinary expenses associated with the February 2021 Winter Storm Event, including, but not limited to, natural gas cost and other costs related to the procurement and transportation of natural gas supply, subject to recovery in future regulatory proceedings. The Texas governor signed legislation in June 2021 that authorizes the Railroad Commission to use securitization financing and the issuance of customer rate relief bonds for recovery of extraordinary natural gas costs incurred by natural gas utilities as a result of ~~Hurricane Harvey, a major storm classified~~the February 2021 Winter Storm Event. In addition, CenterPoint Energy’s and CERC’s Natural Gas utilities in jurisdictions outside of Texas deferred under-recovered natural gas cost as ~~a Category 4 hurricane on~~regulatory assets under existing recovery mechanisms and are seeking recovery of 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 amountsincreased cost of ~~rainfall accompanying the storm caused significant damage to or destruction of residences and businesses served by Houston Electric and NGD.~~

Currently, Houston Electric estimates that total costs to restore the electric delivery facilities damaged as a result of Hurricane Harvey will range from $110 million to $120 million and estimates that the total restoration costs covered by insurance will be approximately $35 million. Houston Electric will defer the uninsured 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 the next rate proceeding for operation and maintenance expenses.natural gas. As of September 30, ~~2017, Houston Electric~~2021, CenterPoint Energy and CERC have recorded ~~an increase~~current regulatory assets of $4$1,423 million and $1,316 million included in ~~property, plant~~Prepaid expenses and ~~equipment~~other current assets, respectively, and ~~$73~~non-current regulatory assets of $654 million and $654 million, respectively, associated with the February 2021 Winter Storm Event.

Amounts for the under recovery of natural gas costs are reflected in regulatory assets ~~net~~included in Prepaid expenses and other current assets and Regulatory assets on CenterPoint Energy’s and CERC’s Condensed Consolidated Balance Sheets. Recovery of ~~$23~~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 Arkansas, Indiana, Louisiana, Mississippi and Minnesota. CenterPoint Energy and CERC have filed for securitization of natural gas costs in Oklahoma and Texas, and expect to receive commission approval and issuance of financing orders from both in 2022, and issuance of the securitization bonds from Texas in 2022 and Oklahoma in 2023. The Minnesota Attorney General’s Office and Department of Commerce have proposed significant disallowances for all natural gas utilities, resulting in a potential disallowance of up to approximately $290 million for CenterPoint Energy and CERC. The natural gas costs in ~~insurance receivables recorded,~~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 ~~restoration costs incurred.~~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.

On February 21, 2021, in response to the 2021 February Winter Storm Event, the PUCT issued an order prohibiting REPs from sending a request to TDUs to disconnect such REPs’ customers for non-payment, effective February 21, 2021. As a result ~~storm restoration costs should~~of this order, Houston Electric did not ~~materially affect Houston Electric’s reported net income~~execute any requests for ~~2017.~~

~~Currently, NGD estimates that total costs~~disconnection from any REPs until the PUCT issued orders for disconnects to ~~restore natural gas~~resume. In June 2021, the PUCT issued an updated order relating to disconnections and REPs resumed the 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 uninsured 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 the next rate proceeding for operation and maintenance expenses.disconnection notices thereafter. As of September 30, ~~2017, NGD has~~2021, as authorized by the PUCT, CenterPoint Energy and

Table of Contents

Houston Electric recorded ~~approximately $7~~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 September 30, 2021, CenterPoint Energy and Houston Electric recorded a regulatory asset of $15 million to defer operations and maintenance costs associated with the February 2021 Winter Storm Event.

See Notes 12 and 14(d) for further information regarding debt financing transactions and litigation related to the February 2021 Winter Storm Event, respectively.

COVID-19 Regulatory Matters

Governors, public utility commissions and other authorities in the states in which the Registrants operate issued a number of different orders related to the COVID-19 pandemic, including orders addressing customer non-payment and disconnection. Although the disconnect moratoriums have expired in the Registrants’ service territories, CenterPoint Energy continues to support those customers who may need payment assistance, arrangements or extensions.

The COVID-19 ERP allows program expenses to be recovered in rates. CenterPoint Energy’s and Houston Electric’s COVID-19 ERP regulatory assets ~~net~~were $-0- as of $2September 30, 2021 and $6 million as of December 31, 2020.

~~million~~Commissions in all of ~~insurance receivables recorded,~~Indiana Electric’s and CenterPoint Energy’s and CERC’s Natural Gas service territories either (1) issued orders to record a regulatory asset for ~~restoration~~incremental bad debt expenses related to COVID-19, including costs ~~incurred. As a result, storm restoration costs should not materially affect CERC’s reported net income for 2017.~~

~~(6) Derivative Instruments~~

associated with the suspension of disconnections and payment plans or (2) provided authority to recover bad debt expense through an existing tracking mechanism. CenterPoint Energy isand CERC have recorded estimated incremental uncollectible receivables to the associated regulatory asset of $28 million and $26 million, respectively, as of September 30, 2021 and $22 million and $19 million, respectively, as of December 31, 2020.

In some of the states in which the Registrants operate, public utility commissions have authorized utilities to employ deferred accounting authority for certain COVID-19 related costs which ensure the safety and health of customers, employees, and contractors, that would not have been incurred in the normal course of business. CERC’s Natural Gas service territories in Minnesota and Arkansas will include any offsetting savings in the deferral. Other jurisdictions where the Registrants operate may require them to offset the deferral with savings as well. The Arkansas FRP, filed on April 5, 2021, included a request for (1) the regulatory asset as of September 30, 2020 in working capital for the 2021 historical year using a thirteen-month average of the asset balance; (2) the regulatory asset as of September 30, 2020 in working capital for the 2021 projected year using a thirteen-month average of the asset balance; and (3) the amortization of the balance over the 2021 projected year twelve-month period beginning October 1, 2021. The APSC ordered that the regulatory asset be reviewed in a future proceeding. The Mississippi RRA, filed on April 30, 2021, included the unamortized balance of the regulatory asset as of December 31, 2020 in rate base per Docket No. 2018-AD-141 Order Authorizing Utility Response and Accounting for COVID-19.

(7) Derivative Instruments

The Registrants are exposed to various market risks. These risks arise from transactions entered into in the normal course of business. ~~CenterPoint Energy 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 CenterPoint Energy’s Condensed Consolidated Balance Sheets at their fair value unless~~

(a)Non-Trading Activities

Commodity Derivative Instruments (CenterPoint Energy). CenterPoint Energy, ~~elects~~through 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.

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

CenterPoint Energy’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.~~ ~~CenterPoint Energy~~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 ~~designated as fair value hedges for accounting purposes. All other financial instruments do not qualify~~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 ~~not~~ designated as cash flow hedges or ~~fair value~~accounted for as economic 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 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:


	September 30, 2021		December 31, 2020
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 ~~has~~and CERC have weather normalization or other rate mechanisms that largely mitigate the impact of weather on ~~NGD~~Natural Gas in Arkansas, Indiana, Louisiana, Mississippi, Minnesota, Ohio and ~~Oklahoma. NGD~~Oklahoma, as applicable. CenterPoint Energy’s and CERC’s Natural Gas in Texas 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 ~~CenterPoint Energy’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 and on ~~Houston Electric’s~~CenterPoint Energy’s electric operations’ results in its Texas and Indiana service ~~territory.~~

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

(b)Derivative Fair Values and cash flows, which contained bilateral dollar caps of $7 million, $9 million and $9 million for the 2015–2016, 2016–2017 and 2017–2018 winter seasons, respectively. The swaps are based on heating degree days at 10-year normal weather. During both the three months ended September 30, 2017 and 2016, CenterPoint Energy recognized no gains or losses related to these swaps. During the nine months ended September 30, 2017 and 2016, CenterPoint Energy recognized gains of $1 million and $3 million, respectively, related to these swaps. Weather hedge gains and losses are included in revenues in the Condensed Statements of Consolidated Income.Income Statement Impacts

~~Hedging of Interest Expense for Future Debt Issuances.~~ In January 2017, Houston Electric 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 10-year U.S. treasury rate by reducing Houston Electric’s exposure to variability in cash flows related to interest payments of Houston Electric’s $300 million issuance of fixed rate debt in January 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 $0.5 million, is a component of accumulated other comprehensive income in 2017 and will be amortized over the life of the bonds.

In 2017, CenterPoint Energy entered into forward interest rate agreements with several counterparties, having an aggregate notional amount of $350 million. These agreements were executed to hedge, in part, volatility in the 5-year U.S. treasury rate by reducing CenterPoint Energy’s exposure to variability in cash flows relating to interest payments of CenterPoint Energy’s $500 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 $2.9 million, is a component of accumulated other comprehensive income in 2017 and will be amortized over the life of the notes.

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 ~~CenterPoint Energy’s~~ derivative instruments and hedging activities. The first ~~four tables provide~~table provides a balance sheet overview of ~~CenterPoint Energy’s~~ Derivative ~~Assets and~~ Liabilities, ~~as of September 30, 2017 and December 31, 2016,~~ 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)


		September 30, 2021				December 31, 2020
	Balance Sheet Location	Derivative Assets Fair Value		Derivative Liabilities Fair Value		Derivative Liabilities Fair Value




Derivatives not designated as hedging instruments:		(in millions)
Natural gas derivatives (1)	Current Assets: Non-trading derivative assets	$	23	$	—	$	—
Natural gas derivatives (1)	Other Assets: Non-trading derivative assets	9		—		—
Natural gas derivatives (2)	Current Liabilities: Non-trading derivative liabilities	—		—		3
Natural gas derivatives (2)	Other Liabilities: Non-trading derivative liabilities	—		—		7
Interest rate derivatives	Other Liabilities: Non-trading derivative liabilities	—		13		20
Indexed debt securities derivative (3)	Current Liabilities	—		993		953

Total		$	32	$	1,006	$	983

(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
Indexed debt securities derivative Current Liabilities —
776
Total $ 164
$ 860


~~(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 CenterPoint Energy’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
Indexed debt securities derivative Current Liabilities —
717
Total (4)
$ 105
$ 784


~~(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 CenterPoint Energy’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~~contract is in an asset position with no offsetting amounts.

(2)Natural gas contracts are ~~recognized~~subject to master netting arrangements. This netting applies to all undisputed amounts due or past due. However, the mark-to-market fair value of each natural gas contract is in a liability position with no offsetting amounts.

(3)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 11 for further information.

Income Statement Impact of Hedge Accounting Activity (CenterPoint Energy)


		Three Months Ended September 30,				Nine Months Ended September 30,
	Income Statement Location	2021		2020		2021		2020
Derivatives not designated as hedging instruments:		(in millions)
Indexed debt securities derivative (1)	Gain (loss) on indexed debt securities	$	11	$	(84)	$	(40)	$	(25)

(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~~Income.

Table of Contents

Certain of CenterPoint Energy’s derivative ~~contracts~~instruments contain provisions that require CenterPoint Energy’s debt to maintain an investment grade credit rating on its long-term unsecured unsubordinated debt from S&P and ~~as natural gas expense for financial natural gas derivatives and physical purchase natural gas derivatives. Realized and unrealized gains and losses on indexed~~Moody’s. If CenterPoint Energy’s debt ~~securities are recorded as Other Income (Expense)~~were to fall below investment grade, it would be in ~~the Condensed Statements~~violation of ~~Consolidated Income.~~

~~Hedge ineffectiveness is recorded as a component of natural gas expense and primarily results from differences in the location of the derivative instrument~~these provisions, 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 )
Indexed debt securities derivative Gains (Losses) in Other Income (Expense) (36 ) (72 )
Total - derivatives not designated as hedging instruments $ (15 ) $ (54 )

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
Indexed debt securities derivative Gains (Losses) in Other Income (Expense) (59 ) (258 )
Total - derivatives not designated as hedging instruments $ 12
$ (222 )

~~(1)~~

~~Hedge ineffectiveness results from the basis ineffectiveness discussed above, and excludes the impact~~counterparties 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.


~~(c)~~	~~Credit Risk Contingent Features~~

CenterPoint Energy enters into financial derivative contracts containing material adverse change provisions. These provisions could require CenterPoint Energy to post additional collateral if the S&P or Moody’s credit ratings of CenterPoint Energy, Inc. or its subsidiaries are downgraded. The total fair value of the derivative instruments ~~that contain credit risk contingent features that are in a~~could request immediate payment.


	September 30, 2021		December 31, 2020
	(in millions)
Aggregate fair value of derivatives with credit-risk-related contingent features in a liability position	$	13	$	20
Fair value of collateral already posted	7		7
Additional collateral required to be posted if credit risk contingent features triggered (1)	6		3

(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. CenterPoint Energy 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 the Registrants’ Level 2 natural gas derivative assets or liabilities. CenterPoint Energy’s Level 2 ~~assets or liabilities.~~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 ~~CenterPoint Energy’s~~the Registrants’ judgments about the assumptions market participants would use in pricing the asset or liability since limited market data exists. ~~CenterPoint Energy develops~~The Registrants develop these inputs based on the best information available, including ~~CenterPoint Energy’s~~the Registrants’ own data. A market approach is utilized to value CenterPoint Energy’s Level 3 assets or liabilities. As of September 30, 2017, CenterPoint Energy’s Level 3 assets and liabilities are comprised of physical natural gas forward contracts and options and its indexed debt securities. 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. CenterPoint Energy’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, CenterPoint Energy’s long forwards lose value whereas its short forwards gain in value. If volatility decreases, CenterPoint Energy’s long options lose value whereas its short options gain in value. CenterPoint Energy’s Level 3 indexed debt securities are valued using a Black-Scholes option model and a discounted cash flow model, which use option volatility (11.4%) and a projected dividend growth rate (7%) as unobservable inputs. An increase in either volatilities or projected dividends will increase the value of the indexed debt securities, and a decrease in either the volatilities or projected dividends will decrease the value of the indexed debt securities.

~~CenterPoint Energy 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~~basis.

Table of the reporting period. For the nine months ended September 30, 2017, there were no transfers between Level 1 and 2. CenterPoint Energy also recognizes purchases of Level 3 financial assets and liabilities at their fair market value at the end of the reporting period.Contents

The following tables present information about ~~CenterPoint Energy’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~~2021 and December 31, ~~2016,~~2020 and indicate the fair value hierarchy of the valuation techniques utilized by ~~CenterPoint Energy~~the Registrants to determine such fair value.

September 30, 2017

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

(in millions)
Assets
Corporate equities $ 1,060
$ —
$ —
$ —
$ 1,060
Investments, including money
market funds (2)
67
—
—
—
67
Natural gas derivatives (3)
3
128
33
(44 ) 120
Hedged portion of natural gas inventory 65
—
—
—
65
Total assets $ 1,195
$ 128
$ 33
$ (44 ) $ 1,312
Liabilities

Indexed debt securities derivative $ —
$ —
$ 776
$ —
$ 776
Natural gas derivatives (3)
3
74
7
(57 ) 27
Total liabilities $ 3
$ 74
$ 783
$ (57 ) $ 803
CenterPoint Energy


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


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


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


	September 30, 2021						December 31, 2020
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets	(in millions)
Corporate equities	$	913	$	—	$	—	$	913	$	873	$	—	$	—	$	873
Investments, including money market funds (1)	42		—		—		42		43		—		—		43

Natural gas derivatives	—		32		—		32		—		—		—		—



Total assets	$	955	$	32	$	—	$	987	$	916	$	—	$	—	$	916
Liabilities
Indexed debt securities derivative	$	—	$	993	$	—	$	993	$	—	$	953	$	—	$	953
Interest rate derivatives	—		13		—		13		—		20		—		20
Natural gas derivatives	—		—		—		—		—		10		—		10



Total liabilities	$	—	$	1,006	$	—	$	1,006	$	—	$	983	$	—	$	983

December 31, 2016

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

(in millions)
Assets
Corporate equities $ 956
$ —
$ —
$ —
$ 956
Investments, including money
market funds (2)
77
—
—
—
77
Natural gas derivatives (3)
11
74
20
(35 ) 70
Total assets $ 1,044
$ 74
$ 20
$ (35 ) $ 1,103
Liabilities

Indexed debt securities derivative $ —
$ —
$ 717
$ —
$ 717
Natural gas derivatives (3)
4
56
7
(21 ) 46
Total liabilities $ 4
$ 56
$ 724
$ (21 ) $ 763


~~(1)~~	Amounts represent the impact of legally enforceable master netting arrangements that allow CenterPoint Energy 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 Prepaid Expenses and Other Current Assets in the Condensed Consolidated Balance Sheets.~~


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

Houston Electric


	September 30, 2021						December 31, 2020
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets	(in millions)
Investments, including money market funds (1)	$	27	$	—	$	—	$	27	$	26	$	—	$	—	$	26

Total assets	$	27	$	—	$	—	$	27	$	26	$	—	$	—	$	26

~~The following table presents additional information about~~

CERC


	September 30, 2021						December 31, 2020
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets	(in millions)
Corporate equities	$	3	$	—	$	—	$	3	$	2	$	—	$	—	$	2
Investments, including money market funds (1)	11		—		—		11		11		—		—		11
Total assets	$	14	$	—	$	—	$	14	$	13	$	—	$	—	$	13

(1)Amounts are included in Prepaid expenses and other current assets ~~or liabilities, including derivatives that are measured~~in the Condensed Consolidated Balance Sheets.

Items Measured at ~~fair value~~Fair Value on a ~~recurring basis~~Nonrecurring Basis

As a result of classifying the Arkansas and Oklahoma Natural Gas businesses as held for ~~which~~sale, including the allocation of goodwill, CenterPoint Energy ~~has utilized Level 3 inputs~~and CERC used a market approach consisting of the contractual sales price adjusted for estimated working capital and other contractual purchase price adjustments to determine fair ~~value:~~value of the businesses classified as held for sale, which are Level 2 inputs. Neither CenterPoint Energy nor CERC recognized any gains or losses upon classification of held for sale during the three and nine months ended September 30, 2021. See Note 3 for further information.

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 $ (712 ) $ 16
$ (704 ) $ 12
Purchases (1)
—
—
—
12
Total gains (losses) (38 ) 9
(38 ) 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)
$ (750 ) $ 17
$ (750 ) $ 17
The amount of total gains (losses) for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held at the reporting date (3)
$ (36 ) $ 6
$ (42 ) $ 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)~~	~~CenterPoint Energy did not have significant Level 3 sales during either of the three or nine months ended September 30, 2017 or 2016.~~

~~(3)~~

During 2016, CenterPoint Energy transferred its indexed debt securities from Level 2 to Level 3 to reflect changes in the significance of the unobservable inputs used in the valuation. As of September 30, 2017, the indexed debt securities liability was $776 million. During the three and nine months ended September 30, 2017, there was a loss of $36 million and $59 million, respectively, on the indexed debt securities.

Estimated Fair Value of Financial Instruments

The fair values of cash and cash equivalents, investments in debt and equity securities ~~classified as “trading”~~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.

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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 $ 8,513
$ 9,005
$ 8,443
$ 8,846


	September 30, 2021						December 31, 2020
	CenterPoint Energy (1)		Houston Electric (1)		CERC		CenterPoint Energy (1)		Houston Electric (1)		CERC
Long-term debt, including current maturities	(in millions)


Carrying amount	$	16,474	$	5,567	$	4,465	$	13,401	$	5,019	$	2,428
Fair value	17,890		6,315		4,811		15,226		5,957		2,855

(1)Includes Securitization Bonds debt.

~~(8)~~

(9) Unconsolidated ~~Affiliate~~Affiliates (CenterPoint Energy and CERC)

CenterPoint Energy has the ability to significantly influence the operating and financial policies of Enable, a publicly traded MLP, and, accordingly, accounts for its investment in Enable’s common units using the equity method of accounting.

Enable is considered to be a VIE because the power to direct the activities that most significantly impact Enable’s economic performance does not reside with the holders of equity investment at risk. However, CenterPoint Energy is not considered the primary beneficiary of Enable since it does not have the power to direct the activities of Enable that are considered most significant to the economic performance of Enable. As of September 30, 2021, CenterPoint Energy’s maximum exposure to loss related to Enable ~~a VIE in which CenterPoint Energy is not the primary beneficiary,~~ is limited to its ~~equity~~ investment ~~and~~in unconsolidated affiliates, its investment in Enable Series A Preferred ~~Unit investment as presented in the Condensed Consolidated Balance Sheets as of September 30, 2017~~Units 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~~On February 16, 2021, Enable entered into the Enable Merger Agreement. At the closing of the transactions contemplated by the Enable Merger Agreement, if and when it occurs, Energy Transfer will acquire all of Enable’s outstanding equity interests, resulting in the exchange of Enable common units owned by CenterPoint Energy at the transaction exchange ratio of 0.8595x Energy Transfer common units for each Enable common unit. CenterPoint Energy will also receive $5 million in cash in exchange for its interest in Enable ~~(1)~~:GP and Energy Transfer Series G Preferred Units with an aggregate liquidation preference of approximately $385 million in exchange for all of its Enable Series A Preferred Units. Pursuant to previously disclosed support agreements, CenterPoint Energy and OGE, who collectively own approximately 79.2% of Enable’s common units, delivered written consents approving the Enable Merger Agreement and, on a non-binding, advisory basis, the compensation that will or may become payable to Enable’s named executive officers in connection with the transactions contemplated by the Enable Merger Agreement. The transactions contemplated under the Enable Merger Agreement are expected to be completed in 2021, subject to customary closing conditions, including Hart-Scott-Rodino antitrust clearance. Upon the consummation of the transaction, the agreements relating to Enable between CenterPoint Energy, OGE and Enable and certain of their affiliates will terminate, and CenterPoint Energy will pay $30 million to OGE (or other mutually agreed upon consideration).



	~~September 30, 2017~~
~~CenterPoint Energy~~	~~54.1~~	%
~~OGE~~	~~25.7~~	%


~~(1)~~	~~Excluding~~On September 21, 2021, CNP Midstream entered into a Forward Sale Agreement with an investment banking financial institution to deliver, subject to and immediately following the closing of the ~~Series A Preferred Units owned by CenterPoint Energy.~~

~~In November 2016,~~ Enable ~~completed a public offering of 11,500,000~~Merger, 50 million common units of ~~which 1,424,281 were sold~~Energy Transfer expected to be received by ~~ArcLight Capital Partners, LLC.~~CNP Midstream as consideration in the pending Enable Merger in exchange for the proceeds of the forward sale transaction. The Forward Sale Agreement provides for an initial forward sale price equal to a percentage of the closing price on September 21, 2021 of Energy Transfer common units, ~~issued and sold by~~which is subject to certain adjustments pursuant to the terms of the Forward Sale Agreement. The Forward Sale Agreement is subject to early termination under certain circumstances, including in connection with termination of the Enable ~~resulted~~Merger. CenterPoint Energy has guaranteed CNP Midstream’s obligations under the Forward Sale Agreement. Additionally, CenterPoint Energy plans for a complete exit from its Midstream Investment reportable segment in ~~dilution of both~~ 2022.

CenterPoint Energy’s planned exit from its Midstream Investment reportable segment represents a strategic shift that will have a major effect on CenterPoint Energy’s operations or financial results, and ~~OGE’s limited partner interest~~as such, its equity investment in ~~Enable.~~

Enable ~~Common Units~~is classified and presented as discontinued operations. Equity method investments that qualify for discontinued operations are also presented as assets held for sale. Therefore, the assets and liabilities associated with the equity investment in Enable are reflected as discontinued operations on CenterPoint Energy’s Condensed Statements of Consolidated Income and the December 31, 2020 Condensed Consolidated Balance Sheet was required to be recast for assets held for sale. The Enable Series A Preferred Units ~~Held:~~are not reflected in the Midstream Investments reportable segment as equity investments without a readily determinable fair value are not included in the scope of discontinued operations.

September 30, 2017
Common Series A Preferred
CenterPoint Energy 233,856,623
14,520,000
OGE 110,982,805
—

The ~~139,704,916 subordinated units previously~~carrying value of CenterPoint Energy’s equity method investment in Enable is reflected as held for sale on CenterPoint Energy’s Condensed Consolidated Balance Sheets and equity in earnings (losses) from Enable are reflected as discontinued operations on CenterPoint Energy’s Condensed Statements of Consolidated Income. For further information, see Note 3.

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Limited Partner Interest and Units Held in Enable (CenterPoint Energy):


	September 30, 2021
	Limited Partner Interest (1)		Common Units	Enable Series A Preferred Units (2)
CenterPoint Energy (3)	53.7	%	233,856,623	14,520,000
OGE	25.5	%	110,982,805	—
Public unitholders	20.8	%	91,038,118	—

Total units outstanding	100.0	%	435,877,546	14,520,000

(1)Excludes the Enable Series A Preferred Units owned by ~~CERC Corp. converted into common units of Enable on a one-for-one basis, on August 30, 2017, at the end~~CenterPoint Energy.

(2)The carrying amount of the ~~subordination period,~~Enable Series A Preferred Units, reflected as ~~set forth~~Preferred units - unconsolidated affiliate on CenterPoint Energy’s Condensed Consolidated Balance Sheets, was $363 million as of both September 30, 2021 and December 31, 2020. There were no settled transactions in ~~Enable’s Fourth Amended~~the nine months ended September 30, 2021 and ~~Restated Agreement of Limited Partnership. Upon conversion, holders of common units resulting from~~2020 that would indicate a stand-alone, observable, and readily determinable fair value for securities identical or similar to Enable Series A Preferred Units. No impairment charges or adjustment due to observable price changes were required or recorded during 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.current or prior reporting periods.

(3)Held indirectly through CNP Midstream.

Generally, sales to any person or entity (including a series of sales to the same person or entity) of more than 5% of the aggregate of the common units CenterPoint Energy owns in Enable or sales to any person or entity (including a series of sales to the same person or entity) 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.~~refusal set forth in Enable’s Agreement of Limited Partnership.

Interests Held in Enable GP (CenterPoint Energy):

CenterPoint Energy and OGE held the following interests in Enable GP as of both September 30, 2021 and December 31, 2020:


	September 30, 2021
	Management Rights (1)		Incentive Distribution Rights (2)
CenterPoint Energy (3)	50	%	40	%
OGE	50	%	60	%

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

~~Summarized unaudited consolidated income information 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:
CenterPoint Energy’s interest $ 56
$ 61
$ 163
$ 128
Basis difference amortization (1)
12
12
36
36
CenterPoint Energy’s equity in earnings, net $ 68
$ 73
$ 199
$ 164

~~(1)~~

Equity in earnings of unconsolidated affiliates includes CenterPoint Energy’s share of Enable’s earnings adjusted for the amortization of the basis difference of CenterPoint Energy’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:
CenterPoint Energy’s ownership interest in Enable partners’ capital $ 4,007
$ 4,067
CenterPoint Energy’s basis difference (1,526 ) (1,562 )
CenterPoint Energy’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
Investment in Enable’s Series A Preferred Units 9
9
27
13

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. (2)If cash distributions to Enable’s unitholders exceed $0.330625 per common unit in any quarter, ~~the general partner~~Enable GP 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 GP 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.

(3)Held indirectly through CNP Midstream.

~~(9) Goodwill~~

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Distributions Received from Enable (CenterPoint Energy):

~~Goodwill by reportable business segment as of December 31, 2016~~


	Three Months Ended September 30,								Nine Months Ended September 30,
	2021				2020				2021				2020
	Per Unit		Cash Distribution		Per Unit		Cash Distribution		Per Unit		Cash Distribution		Per Unit		Cash Distribution
	(in millions, except per unit amounts)
Enable common units	$	0.16525	$	39	$	0.16525	$	39	$	0.49575	$	116	$	0.66100	$	155
Enable Series A Preferred Units	0.54390		8		0.62500		9		1.75620		26		1.87500		27
Total CenterPoint Energy			$	47			$	48			$	142			$	182

Transactions with Enable (CenterPoint Energy and ~~changes~~CERC):

The transactions with Enable in the ~~carrying amount of goodwill as of September 30, 2017 are~~following tables exclude transactions with the Energy Services Disposal Group.


	CenterPoint Energy and CERC
	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(in millions)
Natural gas expenses, includes transportation and storage costs	$	14	$	17	$	62	$	61


	CenterPoint Energy and CERC
	September 30, 2021		December 31, 2020
	(in millions)
Accounts payable for natural gas purchases from Enable	$	5	$	9
Accounts receivable for amounts billed for services provided to Enable	1		1

Summarized Financial Information for Enable (CenterPoint Energy)

Summarized unaudited consolidated income information for Enable is as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(in millions)
Operating revenues	$	956	$	596	$	2,713	$	1,759
Cost of sales, excluding depreciation and amortization	565		250		1,510		653
Depreciation and amortization	104		105		313		314
Goodwill and long-lived assets impairments	—		—		—		28
Operating income	152		100		482		326
Net income (loss) attributable to Enable common units	107		(173)		341		(35)


Reconciliation of Equity in Earnings (Losses), net:
CenterPoint Energy’s interest	$	58	$	(93)	$	183	$	(19)
Basis difference amortization (1)	25		26		75		62
Loss on dilution, net of proportional basis difference recognition	—		—		—		(1)
Impairment of CenterPoint Energy’s equity method investment in Enable	—		—		—		(1,541)
CenterPoint Energy’s equity in earnings (losses), net (2)	$	83	$	(67)	$	258	$	(1,499)

(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 is being amortized through the year 2048 or will cease upon the sale of CenterPoint Energy’s investment in Enable.

(2)Reported as discontinued operations on CenterPoint Energy’s Condensed Statements of Consolidated Income. For further information, see Note 3.

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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

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


	September 30, 2021		December 31, 2020
	(in millions)
Current assets	$	536	$	381
Non-current assets	11,244		11,348
Current liabilities	1,299		582
Non-current liabilities	3,248		4,052
Non-controlling interest	25		26
Preferred equity	362		362
Accumulated other comprehensive loss	(2)		(6)
Enable partners’ equity	6,848		6,713


Reconciliation of Investment in Enable:
CenterPoint Energy’s ownership interest in Enable partners’ equity	$	3,673	$	3,601
CenterPoint Energy’s basis difference (1)	(2,747)		(2,819)

CenterPoint Energy’s equity method investment in Enable (2)	$	926	$	782

(1) ~~See~~The basis difference is being amortized through the year 2048 or will cease upon sale of CenterPoint Energy’s investment in Enable.

(2)Reflected in assets held for sale in CenterPoint Energy’s Condensed Consolidated Balance Sheets. For further information, see Note 3.

~~(2)~~

(10) 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, 2020		Held For Sale			Disposals			September 30, 2021
	(in millions)
Electric (1)	$	936	$	—		$	—		$	936
Natural Gas	3,323		398		(2)	5		(3)	2,920
Corporate and Other	438		—			—			438

Total	$	4,697	$	398		$	5		$	4,294

CERC’s goodwill is as follows:


	December 31, 2020		Held For Sale			Disposals			September 30, 2021
	(in millions)
Goodwill	$	757	$	144	(2)	$	2	(3)	$	611

(1)Amount presented is net of the accumulated goodwill impairment charge of ~~$252~~$185 million recorded in ~~2012.~~2020.

(2)Represents goodwill attributable to the Natural Gas businesses. For further information, see Note 3.

(3)Represents goodwill attributable to the MES disposal. For further information, see Note 3.

When a disposal group reflects a component of a reporting unit and meets the 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. As a result, goodwill attributable to the Natural Gas businesses to be disposed is classified as held for sale as of September 30, 2021, and goodwill attributable to MES was reflected in the gain on sale during the three and nine months ended September 30, 2021. Neither CenterPoint Energy nor CERC recognized any goodwill impairments within any reportable segment during the three or nine months ended September 30, 2021.

CenterPoint Energy ~~performs its~~and CERC perform goodwill impairment tests at least annually and ~~evaluates~~evaluate goodwill when events or changes in circumstances indicate that its carrying value may not be recoverable. The impairment evaluation for goodwill is performed ~~using a two-step process. In the first step,~~by comparing the fair value of each reporting unit ~~is compared~~ with the carrying amount of the reporting unit, including goodwill. The reporting units approximate the reportable segments, with the exception of ESG, which is a separate reporting unit but included in the Corporate and Other reconciling category at CenterPoint Energy. The estimated fair value of the reporting unit

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is ~~generally~~primarily determined based on an income approach or a weighted combination of income and market approaches. If the ~~basis~~carrying amount is in excess of ~~discounted cash flows. If~~ the estimated fair value of the reporting unit, then the excess amount is ~~less than~~recorded as an impairment charge, not to exceed the carrying amount of ~~the reporting unit, then a second step must be completed to determine the amount of the~~goodwill.

CenterPoint Energy and CERC performed their annual 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 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 for the difference.

~~CenterPoint Energy performed its annual impairment test~~tests in the third quarter of ~~2017~~2021 and determined ~~based on the results of the first step,~~ that no goodwill impairment charge was required for any ~~reportable segment.~~reporting unit as a result of those tests.

Other Intangibles (CenterPoint Energy)

~~(10)~~

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, unless otherwise indicated.


	September 30, 2021						December 31, 2020
	Gross Carrying Amount		Accumulated Amortization		Net Balance		Gross Carrying Amount		Accumulated Amortization		Net Balance
	(in millions)
Customer relationships	$	33	$	(11)	$	22	$	33	$	(8)	$	25

Trade names	16		(4)		12		16		(3)		13
Construction backlog (1)	5		(5)		—		5		(5)		—
Operation and maintenance agreements (1)	12		(2)		10		12		(1)		11
Other	2		(1)		1		2		(1)		1
Total	$	68	$	(23)	$	45	$	68	$	(18)	$	50

(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 September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(in millions)
Amortization expense of intangible assets recorded in Depreciation and amortization	$	1	$	2	$	4	$	5
Amortization expense of intangible assets recorded in Non-utility cost of revenues, including natural gas	1		—		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 three months of 2021	$	2
2022	6
2023	6
2024	5
2025	5
2026	5

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(11) Indexed Debt Securities (ZENS) and Securities Related to ZENS (CenterPoint Energy)

(a) Investment in Securities Related to ZENS

~~In 1995, CenterPoint Energy sold a cable television subsidiary to TW and received TW securities as partial consideration.~~ A subsidiary of CenterPoint Energy ~~now~~ holds ~~7.1 million~~ shares of ~~TW Common, 0.9 million shares of Time Common and 0.9 million shares of Charter Common,~~certain securities detailed in the table below, which are ~~classified as trading~~ securities with a readily determinable fair value and are expected to be held to facilitate CenterPoint Energy’s ability to meet its obligation under the ZENS. Unrealized gains and losses resulting from changes in the market value of the TWZENS-Related Securities are recorded in CenterPoint Energy’s Condensed Statements of Consolidated Income.


	Shares Held
	September 30, 2021	December 31, 2020
AT&T Common	10,212,945	10,212,945
Charter Common	872,503	872,503

(b) ZENS

In September 1999, CenterPoint Energy issued ZENS having an original principal amount of $1$1.0 billion of which $828 million ~~remain~~remained outstanding as of September 30, ~~2017.~~2021. Each ZENS ~~was originally~~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 ~~of TW Common~~ attributable to such note. The number and identity of the reference shares attributable to each ZENS are adjusted for certain corporate events. ~~As of September 30, 2017, the~~

CenterPoint Energy’s reference shares for each ZENS consisted of ~~0.5 share~~the following:


	September 30, 2021	December 31, 2020
	(in shares)
AT&T Common	0.7185	0.7185
Charter Common	0.061382	0.061382

CenterPoint Energy pays interest on the ZENS at an annual rate of ~~TW Common, 0.0625 share~~2% plus the amount of ~~Time Common~~any quarterly cash dividends paid in respect of the reference shares attributable to the ZENS. The principal amount of the ZENS is subject to increases or decreases to the extent that the annual yield from interest and ~~0.061382 share~~cash dividends on 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 ~~Charter Common,~~September 30, 2021, the ZENS, having an original principal amount of $828 million and ~~the~~a contingent principal ~~balance was $507 million.~~amount of $42 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 ~~October 22, 2016,~~May 17, 2021, AT&T announced that it had entered into a definitive agreement with Discovery, Inc. to ~~acquire TW in~~combine their media assets into a ~~stock and cash transaction. On February 15, 2017, TW shareholders approved the announced transaction with AT&T.~~new publicly traded company to be called Warner Bros. Discovery. Pursuant to the ~~merger~~definitive agreement, ~~upon~~AT&T shareholders are expected to receive stock representing 71% of the new company. Upon the closing of the ~~merger, TW shareholders~~transaction, reference shares attributable to ZENS would receive for each of their shares of TW Common an estimated implied value of $107.50, comprised of $53.75 per share in cash and $53.75 per share in AT&T Common. The stock portion will be subject to a collar such that TW shareholders will receive 1.437 sharesconsist of AT&T Common, ~~if AT&T Common’s average stock price is below $37.411 at closing and 1.3 shares of AT&T Common if AT&T Common’s average stock price is above $41.349 at~~

closing. Cash received for the TW Common reference shares would subsequently be distributed to ZENS holders, which is expected to reduce the contingent principal balance, and reference shares would consist of Charter Common ~~Time Common~~ and common stock of Warner Bros. Discovery. AT&T ~~Common. AT&T has publicly~~ announced that the ~~merger~~transaction is expected to close byin the ~~end~~middle of ~~2017.~~2022.

~~(11)~~(12) Short-term Borrowings and Long-term Debt


~~(a)~~	~~Short-term Borrowings~~

Inventory ~~Financing. NGD currently has~~Financing. Upon expiration of the AMA’s with the Energy Services Disposal Group discussed in Note 3, CenterPoint Energy’s and CERC’s Natural Gas businesses entered into new third-party AMAs beginning in April 2021 associated with ~~its~~their utility distribution service in Arkansas, ~~north~~Indiana, Louisiana, Minnesota, Mississippi, Oklahoma 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 associated principal obligation of $48~~$7 million and ~~$35~~$24 million outstanding obligations related to the AMAs as of September 30, 2021 and December 31, 2020, 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 with utility distribution service in Arkansas and Oklahoma of $34 million as of September 30, ~~2017~~2021 are reflected in current liabilities held for sale on CenterPoint Energy’s and ~~December 31, 2016, respectively.~~CERC’s Condensed Consolidated Balance Sheets. See Note 3 for further information.


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

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Debt ~~Retirements~~. In February 2017, CenterPoint Energy retired $250 million aggregate principal amount of its 5.95% senior notes at their maturity. The retirement of senior notes was financed by the issuance of commercial paper.

~~Debt Issuances.~~ Transactions. During the nine months ended September 30, ~~2017, CenterPoint Energy, Houston Electric and CERC Corp. issued~~2021, the following debt ~~instruments:~~instruments were issued or incurred:


Registrant	Issuance Date	Debt Instrument	Aggregate Principal Amount		Interest Rate	Maturity Date
	(in millions)
CERC	March 2021	Senior Notes	$	700	0.70%	2023
CERC	March 2021	Floating Rate Senior Notes	1,000		Three-month LIBOR plus 0.50%	2023
		Total CERC(1)	1,700
Houston Electric	March 2021	General Mortgage Bonds	400		2.35%	2031
Houston Electric	March 2021	General Mortgage Bonds	700		3.35%	2051
		Total Houston Electric (2)	1,100
CenterPoint Energy	May 2021	Senior Notes	500		1.45%	2026
CenterPoint Energy	May 2021	Senior Notes	500		2.65%	2031
CenterPoint Energy	May 2021	Floating Rate Senior Notes	700		SOFR plus 0.65%	2024
		Total CenterPoint Energy (3)	$	4,500

Issuance Date Debt Instrument Aggregate Principal Amount Interest Rate Maturity Date
(in millions)
Houston Electric January 2017 General mortgage bonds $ 300
3.00% 2027
CenterPoint Energy August 2017 Unsecured senior notes 500
2.50% 2022
CERC Corp. August 2017 Unsecured senior notes 300
4.10% 2047

(1)In February 2021, CERC Corp. received financing commitments totaling $1.7 billion on a 364-day term loan facility to bridge any working capital needs related to the February 2021 Winter Storm Event. Total proceeds of the senior notes and floating rate senior note offerings, net of issuance expenses and fees, of approximately $1.69 billion were used for general corporate purposes, including to fund working capital. Upon the consummation of its senior notes offerings, in March 2021, CERC Corp. terminated all of the commitments for the 364-day term loan facility.

~~The~~(2)Total proceeds, ~~from the issuances~~net of issuance expenses and fees, of approximately $1.08 billion were used for general limited liability company purposes, including capital expenditures and the repayment of outstanding debt discussed below and Houston Electric’s borrowings under the CenterPoint Energy money pool.

(3)Total proceeds, net of issuance expenses and fees, of approximately $1.69 billion, excluding amounts issued by Houston Electric and CERC, were used for general corporate purposes, ~~as applicable,~~ including ~~to repay portions~~the repayment of outstanding debt discussed below and a portion of CenterPoint Energy’s outstanding commercial paper.

Debt Repayments and Redemptions. During the nine months ended September 30, 2021, the following debt instruments were repaid at maturity or redeemed:


Registrant	Repayment/Redemption Date	Debt Instrument	Aggregate Principal		Interest Rate	Maturity Date
			(in millions)
Houston Electric	March 2021	First Mortgage Bonds	$	102	9.15%	2021
Houston Electric (1)	May 2021	General Mortgage Bonds	300		1.85%	2021
		Total Houston Electric	402
CenterPoint Energy (2)	January 2021	Senior Notes	250		3.85%	2021
CenterPoint Energy (3)	May 2021	Term Loan	700		0.76%	2021
CenterPoint Energy (4)	June 2021	Senior Notes	500		3.60%	2021
		Total CenterPoint Energy	$	1,852

(1)In April 2021, Houston Electric provided notice of redemption and on May 1, 2021, Houston Electric redeemed all of the outstanding bonds of the series at a redemption price equal to 100% of the principal amount, plus accrued and unpaid interest.

(2)In December 2020, CenterPoint Energy provided notice of redemption of a portion of its outstanding $500 million aggregate principal amount of the series and on January 15, 2021, CenterPoint Energy redeemed $250 million aggregate principal amount of the series at a redemption price equal to 100% of the principal amount redeemed, plus accrued and unpaid interest and an applicable make-whole premium of $26 million.

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(3)In April 2021, CenterPoint Energy amended its existing term loan agreement by extending its maturity from May 15, 2021 to June 14, 2021. The outstanding LIBOR rate loan balance was prepaid in full at a price equal to 100% of the principal amount, plus accrued and unpaid interest, which was calculated based on the interest rate at maturity.

(4)In May 2021, CenterPoint Energy provided notice of redemption and on June 1, 2021, CenterPoint Energy redeemed all of the outstanding senior notes of the series at a redemption price equal to 100% of the principal amount, plus accrued and unpaid interest and an applicable make-whole premium of $7 million.

Credit ~~Facilities.~~ Facilities. In ~~June 2017,~~February 2021, each of CenterPoint Energy, Houston Electric, ~~and~~ CERC Corp. ~~each entered into amendments to~~and VUHI replaced their ~~respective~~existing revolving credit facilities ~~to extend the termination date thereof from March 3, 2021 to March 3, 2022~~with new amended and ~~to terminate the swingline loan subfacility thereunder.~~restated credit facilities. The ~~amendments to~~size of the CenterPoint Energy ~~and CERC Corp. revolving credit facilities also increased~~facility decreased from $3.3 billion to $2.4 billion, while the aggregate commitments by $100 million and $300 million, respectively, to $1.7 billion and $900 million under their respective revolving credit facilities. No changes were made to the aggregate commitments undersizes of the Houston Electric, ~~revolving credit facility. In connection with the amendments to increase the aggregate commitments under their respective revolving credit facilities, CenterPoint Energy and~~ CERC Corp. ~~each increased the size of their respective commercial paper programs to permit the issuance of commercial paper notes in an aggregate principal amount not to exceed $1.7 billion~~ and ~~$900 million, respectively, at any time outstanding.~~VUHI facilities remained unchanged.

~~As of September 30, 2017 and December 31, 2016, CenterPoint Energy, Houston Electric and CERC Corp.~~The Registrants had the following revolving credit facilities as of September 30, 2021:


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 September 30, 2021 (2)	Termination Date
		(in millions)
February 4, 2021	CenterPoint Energy	$	2,400	1.625%	65.0%	(3)	58.2%	February 4, 2024
February 4, 2021	CenterPoint Energy (4)	400		1.250%	65.0%		49.8%	February 4, 2024

February 4, 2021	Houston Electric	300		1.375%	67.5%	(3)	55.2%	February 4, 2024
February 4, 2021	CERC	900		1.250%	65.0%		61.7%	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 ~~facilities:~~certification.

(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.

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)
CenterPoint Energy $ 1,700
$ —
$ 6
$ 447
(1) $ 1,600
$ —
$ 6
$ 835
(1)
Houston Electric 300
—
4
—
300
—
4
—

CERC Corp. 900
—
—
529
(2) 600
—
4
569
(2)
Total $ 2,900
$ —
$ 10
$ 976
$ 2,500
$ —
$ 14
$ 1,404


~~(1)~~	~~Weighted average interest rate was 1.42% and 1.04% as~~The Registrants, including the subsidiaries of ~~September 30, 2017 and December 31, 2016, respectively.~~


~~(2)~~	~~Weighted average interest rate was 1.43% and 1.03% as of September 30, 2017 and December 31, 2016, respectively.~~

Execution
Date
Company
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 (3)

Termination Date (5)
(in millions)
March 3, 2016 CenterPoint Energy $ 1,700
(1) 1.250% 65% (4) 56.9% March 3, 2022
March 3, 2016 Houston Electric 300
1.125% 65% (4) 49.0% March 3, 2022
March 3, 2016 CERC Corp. 900
(1) 1.250% 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)~~	~~As defined in the revolving credit facility agreement, excluding Securitization Bonds.~~

~~(4)~~

The financial covenant limit will temporarily increase from 65% 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 certification.


~~(5)~~	~~Amended on June 16, 2017 to extend the termination date as noted above.~~

CenterPoint Energy ~~Houston Electric and CERC Corp.~~discussed above, were in compliance with all financial debt covenants as of September 30, ~~2017.~~2021.

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~~(12)~~The table below reflects the utilization of the Registrants’ respective revolving credit facilities:


	September 30, 2021								December 31, 2020
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	$	1,143	0.18	%	$	—	$	11	$	1,078	0.23	%
CenterPoint Energy (2)	—		—		285		0.17	%	—		—		92		0.22	%

Houston Electric	—		—		—		—	%	—		—		—		—	%
CERC	—		—		686		0.17	%	—		—		347		0.23	%
Total	$	—	$	11	$	2,114			$	—	$	11	$	1,517

(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 September 30, 2021, Houston Electric’s assets were subject to liens securing approximately $5.0 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. Houston Electric may issue additional general mortgage bonds on the basis of retired bonds, 70% of property additions or cash deposited with the trustee. As of March 15, 2021, no Houston Electric first mortgage bonds remained outstanding. Houston Electric could issue approximately $4.2 billion of additional general mortgage bonds on the basis of retired bonds and 70% of property additions as of September 30, 2021.

Other. As of September 30, 2021, 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 December 31, 2021. As of September 30, 2021, such financial institutions had issued $1 million of letters of credit on behalf of Vectren and certain of its subsidiaries.

(13) Income Taxes

The Registrants reported the following effective tax rates:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
CenterPoint Energy - Continuing operations (1)	18	%	(8)	%	9	%	9	%
CenterPoint Energy - Discontinued operations (2) (3)	18	%	(7)	%	22	%	20	%
Houston Electric (4)	18	%	14	%	16	%	15	%
CERC - Continuing operations (5) (6)	—	%	60	%	11	%	13	%
CERC - Discontinued operations (7) (8)	—	%	33	%	—	%	3	%

(1)CenterPoint Energy’s higher effective tax rate ~~reported~~on income from continuing operations for the three months ended September 30, ~~2017 was 37%~~2021 compared to ~~35%~~the three months ended September 30, 2020 was primarily driven by an increase in non-deductible executive compensation paid under Milton Carroll’s separation agreement further discussed in Note 5, a decrease in EDIT amortization of the net regulatory EDIT liability, the absence of NOL carryback tax benefit and the recognition of the tax gain on the sale of MES.

(2)CenterPoint Energy’s higher effective tax rate on income from discontinued operations for the ~~same period in 2016. The~~three months ended September 30, 2021 compared to a loss from discontinued operations for the three months ended September 30, 2020 was primarily driven by the impact of higher book earnings for the three months ended September 30, 2021.

(3)CenterPoint Energy’s higher effective tax rate on income from discontinued operations for the nine months ended September 30, 2021 compared to the loss from discontinued operations for the nine months ended September 30, 2020 was primarily due to the absence of tax impacts from the sale of the Infrastructure Services Disposal Group on April 9, 2020 and the sale of the Energy Services Disposal Group on June 1, 2020.

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(4)Houston Electric’s higher effective tax rate for the three and nine months ended September 30, ~~2017~~2021 compared to the same periods in 2020 was primarily driven by a decrease in the amount of amortization of the net regulatory EDIT liability.

(5)CERC’s lower effective tax rate on the loss from continuing operations for the three months ended September 30, 2021 compared to the same period ended September 30, 2020 was primarily due to ~~the tax effects of receiving less nontaxable income~~lower book earnings in the ~~period. The~~three months ended September 30, 2021.

(6)CERC’s lower effective tax rate ~~reported~~on income from continuing operations for the nine months ended September 30, ~~2017 was 36%~~2021 compared to ~~37% for~~ the same period ended September 30, 2020 was primarily driven by a $26 million deferred state tax benefit, detailed further below, that was triggered by state tax law legislation in ~~2016.~~Louisiana combined with the accounting held for sale classification for the Arkansas and Oklahoma Natural Gas sale assets and liabilities in the period ended June 30, 2021. For tax purposes, when the held for sale criteria is met, the CERC state apportionment rates must be updated to account for the sale and applied to the estimated post-sale net deferred tax liability which resulted in an $11 million net state tax benefit being recorded in the prior quarter. A state law change in the NOL carryforward period in Louisiana from 20 years to an indefinite period allowed for the release of the valuation allowance on certain Louisiana NOLs resulting in a benefit of $15 million.

(7)CERC’s higher than statutory tax rate on income from discontinued operations for the three months ended September 30, 2020 was primarily due to the tax impacts from the sale of the Energy Services Disposal Group, the effect of which was compounded by lower book earnings.

(8)CERC’s lower than statutory tax rate on the loss from discontinued operations for the nine months ended September 30, 2020 was primarily due to the tax impacts from the sale of the Energy Services Disposal Group.

On March 11, 2021, the ARPA was enacted in response to continued economic and health impacts of the COVID-19 pandemic. The ARPA expands the definition of “covered employee” under section 162(m) beginning in 2027, and extends the employee retention tax credit through December 31, 2021, among other provisions. CenterPoint Energy does not currently anticipate any material impacts from this legislation. On March 27, 2020, the CARES Act was enacted in response to the COVID-19 pandemic. The CARES Act provides relief to corporate taxpayers by permitting a five-year carryback of 2018-2020 NOLs, deferring the payment of the employer share of payroll taxes for the remaining months of 2020 until 2021 and 2022, increasing the 30% limitation on interest expense deductibility to 50% of adjusted taxable income for 2019 and 2020, and accelerating refunds for minimum tax credit carryforwards, among other provisions. Based on the CARES Act NOL carryback provision, during the three and nine months ended September 30, 2020, CenterPoint Energy recorded a $18 million and $37 million benefit, respectively, resulting from carryback claims to be filed to refund taxes paid.

CenterPoint Energy reported noa net uncertain tax liability, inclusive of interest and penalties, of $4 million as of September 30, ~~2017~~2021. Interest and ~~expects no significant change to~~penalties of $1 million were recorded on the uncertain tax liability ~~over~~for the nine months ended September 30, 2021. In the three months ended September 30, 2021, CenterPoint Energy released a $6 million net uncertain tax liability, including interest and penalties, upon the IRS’ acceptance of an accounting method change filed in 2020. 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 ~~twelve months. Tax~~12 months as a result of a lapse of statutes on older exposures, a tax settlement, and/or a resolution of open audits. For CenterPoint Energy, tax years through ~~2015~~2018 have been audited and settled with the IRS. For the ~~2016 and 2017~~2019 through 2021 tax years CenterPoint Energy is a participant in the IRS’s Compliance Assurance Process. On September 30, 2021, Vectren was notified by the IRS that its pre-Merger 2014 through 2019 tax returns were selected for audit.

~~(13)~~(14) Commitments and Contingencies


~~(a)~~	~~Natural Gas Supply Commitments~~

~~Natural gas supply commitments~~(a)Purchase Obligations (CenterPoint Energy and CERC)

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~~2021 and December 31, ~~2016 as these~~2020. 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, will 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

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approval, which was received on October 27, 2021, Indiana Electric will acquire Posey Solar and its solar array assets for a fixed purchase price.

As of September 30, ~~2017,~~2021, undiscounted minimum purchase obligations are approximately:


	CenterPoint Energy				CERC
	Natural Gas and Coal Supply		Other (1)		Natural Gas Supply
	(in millions)
Remaining three months of 2021	$	258	$	5	$	195
2022	690		12		477
2023	586		399		397
2024	461		221		330
2025	401		30		295
2026	350		30		272
2027 and beyond	1,696		165		1,391

(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.

(b) Guarantees and Product Warranties (CenterPoint Energy)

In the normal course of business, ESG 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 ESG’s role as a general contractor in the performance contracting industry, as of September 30, 2021, there were 50 open surety bonds supporting future performance with an aggregate face amount of approximately $558 million. ESG’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 September 30, 2021, approximately 35% of the work was yet to be completed on projects with open surety bonds. Further, various subcontractors issue surety bonds to ESG. In addition to these performance obligations, ESG 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 September 30, 2021, there were 35 warranties totaling $549 million and an additional $1.2 billion in energy savings commitments not guaranteed by Vectren. Since ESG’s inception in 1994, CenterPoint Energy believes ESG 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 September 30, 2021 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 ESG. 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 September 30, 2021, CenterPoint Energy, primarily through Vectren, has issued parent company level guarantees supporting ESG’s obligations. For those obligations where potential exposure can be estimated, management estimates the maximum exposure under these guarantees to be approximately $513 million as of September 30, 2021. 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.

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(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:~~

(in millions)
Remaining three months of 2017 $ 169
2018 507
2019 348
2020 166
2021 76
2022 and beyond 113


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

~~Legal Matters~~

~~Gas Market Manipulation Cases.~~ ~~CenterPoint Energy, Houston Electric or their predecessor, Reliant Energy,~~contracts and certain of their former subsidiaries have been named as defendants in certain lawsuits described below. Under a master separation agreement between CenterPoint Energy and a former subsidiary, RRI, CenterPoint Energy and its subsidiaries are entitled to be indemnified by RRI and its successors for any losses, including certain attorneys’ feesentered into natural gas related transactions under transportation, storage and other ~~costs, arising out of these lawsuits.~~contracts. In ~~May 2009, RRI sold its Texas retail~~connection with the Energy Services Disposal Group’s business activities prior 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. Nonethe closing of the sale of the ~~retail business,~~Energy Services Disposal Group on June 1, 2020, CERC Corp. issued guarantees to certain of CES’s counterparties to guarantee the ~~merger with Mirant Corporation, or the acquisition~~payment of ~~GenOn~~CES’s obligations. When CES remained wholly owned by ~~NRG alters RRI’s (now GenOn’s) contractual~~CERC Corp., these guarantees did not represent incremental consolidated obligations, but rather, these guarantees represented guarantees of CES’s obligations to ~~indemnify~~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 September 30, 2021, 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 September 30, 2021, management estimates approximately $29 million of exposure remained outstanding under CERC Corp. guarantees issued prior to the closing of the transaction on June 1, 2020. CES has provided replacement credit support to counterparties to whom CERC Corp. had issued guarantees prior to closing representing the full amount of CERC’s remaining exposure under the guarantees. CERC believes that counterparties to whom replacement credit support has been provided would seek payment if needed under such replacement credit support instead of a CERC Corp. guarantee. No additional guarantees were provided by CERC Corp. to CES subsequent 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. If Symmetry Energy Solutions Acquisition fails to reimburse CERC Corp., CERC Corp. has the contractual right to seek payment from Shell Energy North America (US), L.P. in an amount up to $40 million in the aggregate. While there can be no assurance that payment under any of these guarantees will not be required in the future, CenterPoint Energy and ~~its subsidiaries, including Houston Electric, for certain liabilities, including their indemnification obligations regarding~~CERC consider the ~~gas market manipulation litigation.~~likelihood of a material amount being incurred as remote.

A large number of lawsuits were filed against numerous gas market participants in a number of federal and western state courts in connection with the operation of the natural gas markets in 2000–2002. CenterPoint Energy and ~~its affiliates have since been released or dismissed from all such cases. CES, a subsidiary~~CERC recorded no amounts on their respective Condensed Consolidated Balance Sheets as of ~~CERC Corp., was a defendant in a case now pending in federal court in Nevada alleging a conspiracy~~September 30, 2021 and December 31, 2020 related 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~~performance of these guarantees.

(d) Legal, Environmental and Other Matters

Legal Matters

Minnehaha Academy (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 CenterPoint Energy, Houston Electric or CERC could incur liability and be responsible for satisfying the liability. CenterPoint Energy 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.

~~Minnehaha Academy.~~ CERC). 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, and the contractor company working in the school ~~have been~~were named in wrongful death, property damage and personal injury litigation arising out of ~~this incident. Additionally,~~the incident and have now reached confidential settlement agreements in all litigation, and all related governmental matters were previously concluded. CenterPoint ~~Energy is cooperating with ongoing investigations conducted by the National Transportation Safety Board, the Minnesota Occupational Safety~~Energy’s and ~~Health Administration and the Minnesota Office of Pipeline Safety. CenterPoint Energy’s~~CERC’s general and excess liability insurance policies provide coverage for third party bodily injury and property damage claims.

Litigation Related to the Merger (CenterPoint Energy). With respect to the Merger, in July 2018, 7 separate lawsuits were filed against Vectren and the individual directors of Vectren’s Board of Directors in the U.S. District Court for the Southern District of Indiana. These lawsuits alleged violations of Sections 14(a) of the Exchange Act and SEC Rule 14a-9 on the grounds that the Vectren Proxy Statement filed on June 18, 2018 was materially incomplete because it omitted material information concerning the Merger. The District Court consolidated and subsequently dismissed the lawsuits with prejudice, and the plaintiffs appealed. On September 13, 2021, the U.S. Court of Appeals for the Seventh Circuit affirmed the District Court’s order of dismissal. The plaintiffs could seek review by the Supreme Court of the United States; however, the defendants believe that the allegations asserted are without merit and intend to continue to vigorously defend themselves against the claims

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raised. CenterPoint Energy does not expect the ultimate outcome of this matter to have a material adverse effect on its financial condition, results of operations or cash flows.

Litigation Related to the February 2021 Winter Storm Event.With respect to the February 2021 Winter Storm Event, CenterPoint Energy, CERC and Houston Electric, along with ERCOT, have received claims and lawsuits filed by plaintiffs alleging personal injury, property damage and other injuries and damages. Additionally, various regulatory and governmental entities have announced that they intend to conduct or are conducting inquiries, investigations and other reviews of the February 2021 Winter Storm Event and the efforts made by various entities to prepare for, and respond to, this event, including the electric generation shortfall issues.Entities that have announced that they plan to conduct or are conducting such inquiries, investigations and other reviews 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 Texas Attorney General, the PUCT, the City of Houston and other municipal and county entities in Houston Electric’s service territory, among other entities.

Like other Texas TDUs, Houston Electric has become involved in certain of the above-referenced investigations, litigation or other regulatory and legal proceedings regarding their efforts to restore power and their compliance with NERC, ERCOT and PUCT rules and directives. CenterPoint Energy and Houston Electric are responding to inquiries from the Texas Attorney General and the Galveston County District Attorney’s Office, and CenterPoint Energy and CERC are responding to inquiries from the Arkansas, Minnesota and Oklahoma Attorneys General. CenterPoint Energy, Houston Electric and CERC are subject to, and may be further subject to, litigation and claims. Such claims include, or in the future could include, wrongful death, personal injury and property damage claims, lawsuits for impacts on businesses and other organizations and entities and shareholder claims, among other claims or litigation matters. CenterPoint Energy and Houston Electric, along with numerous other entities, have been named as defendants in such litigation, all of which is now pending in state court as part of a multi-district litigation proceeding. CenterPoint Energy and Houston Electric intend to vigorously defend themselves against the claims raised. CenterPoint Energy, Houston Electric and CERC are unable to predict the consequences of any such matters or to estimate a range of potential losses.

Litigation Related to the Enable Merger. In March and April 2021, several lawsuits were filed by persons claiming to be Enable unitholders against various defendants, including Enable, the members of Enable GP’s Board of Directors, Energy Transfer, and other parties to the Enable Merger Agreement, challenging the Enable Merger and the disclosures made in connection therewith. CenterPoint Energy was named in one such lawsuit filed in the United States District Court for the Southern District of New York. The lawsuits alleged violations of Section 14(a) of the Exchange Act and SEC Rule 14a-9 on the grounds that the Registration Statement on Form S-4 filed by Energy Transfer on March 19, 2021, was materially incomplete because it omitted material information about, among other things, Enable's and Energy Transfer's financial projections and the analyses conducted by Enable's financial advisors. The lawsuits further alleged that the individual defendants, including, among others, Energy Transfer and CenterPoint Energy, violated Section 20(a) of the Exchange Act as controlling persons of Enable. Plaintiffs sought to have the court enjoin the Enable Merger, require defendants to disseminate a new registration statement disclosing the allegedly omitted information, declare that defendants violated the Exchange Act, rescind the Enable Merger or award rescissory damages in the event the Enable Merger is consummated, along with attorneys’ fees, costs, and other relief. All of the cases, including the only one against CenterPoint Energy, have now been dismissed, and no plaintiffs have sought to refile or appeal. This matter is now concluded.

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

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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.

(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.


	September 30, 2021
	CenterPoint Energy		CERC
	(in millions, except years)
Amount accrued for remediation	$	12	$	7
Minimum estimated remediation costs	8		5
Maximum estimated remediation costs	54		32
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 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. CenterPoint Energy ~~does~~and CERC do not expect the ultimate outcome of these matters to have a material adverse effect on the financial condition, results of operations or cash flows of either CenterPoint Energy or CERC.

Asbestos.Some facilities owned by ~~CenterPoint Energy~~the Registrants or ~~its~~their predecessors contain or have contained asbestos insulation and other asbestos-containing materials. ~~CenterPoint Energy and its subsidiaries~~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 ~~CenterPoint Energy anticipates~~the Registrants anticipate that additional claims may be asserted in the future. Although their ultimate outcome cannot be predicted at this time, ~~CenterPoint Energy does~~the Registrants do not expect these matters, either individually or in the aggregate, to have a material adverse effect on ~~CenterPoint Energy’s~~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

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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 one F.B. Culley pond (Culley East) and the A.B. Brown pond fail the aquifer placement location 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 September 30, 2021, CenterPoint Energy has recorded an approximate $89 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, ~~CenterPoint Energy 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. ~~CenterPoint Energy 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, ~~CenterPoint Energy 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, ~~CenterPoint Energy 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, ~~CenterPoint Energy does~~the Registrants do not expect these matters, either individually or in the aggregate, to have a material adverse effect on ~~CenterPoint Energy’s~~their financial condition, results of operations or cash flows.

Other Proceedings

~~CenterPoint Energy 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, ~~CenterPoint Energy 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. ~~CenterPoint Energy~~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. ~~CenterPoint Energy does~~The Registrants do not expect the disposition of these matters to have a material adverse effect on ~~CenterPoint Energy’s~~the Registrants’ financial condition, results of operations or cash flows.

~~(14)~~

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(15) Earnings Per Share (CenterPoint Energy)

The 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 outstanding Series C Preferred Stock were 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.

The Series C Preferred Stock included conversion features at a price that was below the fair value of the Common Stock on the commitment date. This beneficial conversion feature, which was approximately $32 million at issuance, represented the difference between the fair value per share of the Common Stock as of the commitment date and the conversion price, multiplied by the number of common shares issuable upon conversion. The beneficial conversion feature was recognized as a discount to Series C Preferred Stock and was amortized as a deemed dividend over the period from the issue date to the first allowable conversion date, which was November 6, 2020.

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 the restricted stock, 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 September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(in millions, except per share and share amounts)
Numerator:
Income from continuing operations	$	150	$	199	$	630	$	347
Less: Preferred stock dividend requirement (Note 19)	23		36		82		102
Less: Amortization of beneficial conversion feature (Note 19)	—		16		—		25
Less: Undistributed earnings allocated to preferred shareholders (1)	—		—		—		—
Income available to common shareholders from continuing operations - basic	127		147		548		220
Add back: Series B Preferred Stock dividend	—		—		—		—
Add back: Undistributed earnings allocated to preferred shareholders (1)	—		—		—		—
Income available to common shareholders from continuing operations - diluted	127		147		548		220
Income (loss) available to common shareholders from discontinued operations - basic and diluted	68		(78)		202		(1,320)
Income (loss) available to common shareholders - basic and diluted	$	195	$	69	$	750	$	(1,100)
Denominator:
Weighted average common shares outstanding - basic	604,607,000		544,811,000		580,819,000		525,160,000
Plus: Incremental shares from assumed conversions:
Restricted stock (2)	4,775,000		3,377,000		4,775,000		—
Series B Preferred Stock (3)	—		—		—		—
Series C Preferred Stock (4)	—		—		15,809,000		—
Weighted average common shares outstanding - diluted	609,382,000		548,188,000		601,403,000		525,160,000

Earnings (Loss) Per Common Share:
Basic earnings per common share - continuing operations	$	0.21	$	0.27	$	0.94	$	0.42
Basic earnings (loss) per common share - discontinued operations	0.11		(0.14)		0.35		(2.52)
Basic Earnings (Loss) Per Common Share	$	0.32	$	0.13	$	1.29	$	(2.10)
Diluted earnings per common share - continuing operations	$	0.21	$	0.27	$	0.91	$	0.42
Diluted earnings (loss) per common share - discontinued operations	0.11		(0.14)		0.34		(2.52)
Diluted Earnings (Loss) Per Common Share	$	0.32	$	0.13	$	1.25	$	(2.10)

(1)There were no undistributed earnings to be allocated to participating securities for the three and nine months ended September 30, 2020.

(2)3,377,000 incremental common shares from assumed conversions of restricted stock have not been included in the computation of diluted earnings (loss) per share ~~calculations:~~for the nine months ended September 30, 2020, as their inclusion would be anti-dilutive.

(3)The computation of diluted earnings per common share outstanding for the three and nine months ended September 30, 2020 excludes 35,940,000 and 35,923,000 potentially dilutive shares of Series B Preferred Stock from the denominator, respectively, because the shares would be anti-dilutive. The computation of diluted earnings per common share outstanding for the three and nine months ended September 30, 2021 excludes 24,179,000 and 31,962,000 potentially dilutive shares of Series B Preferred Stock from the denominator, respectively, because the shares would be anti-dilutive. As of September 30, 2021, all of the outstanding Series B Preferred Stock have been converted into Common Stock. For further information, see Note 19.

(4)The computation of diluted earnings (loss) per common share outstanding for the three and nine months ended September 30, 2020 excludes 47,355,000 and 25,578,000 potentially dilutive shares of Series C Preferred Stock from the denominator, respectively, because the shares would be anti-dilutive. As of September 30, 2021, all of the outstanding Series C Preferred Stock have been converted into Common Stock. For further information, see Note 19.

(16) Reportable Segments

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(in millions, except share and per share amounts)
Net income $ 169
$ 179
$ 496
$ 331

Basic weighted average shares outstanding 431,026,000
430,682,000
430,939,000
430,581,000
Plus: Incremental shares from assumed conversions:
Restricted stock 3,060,000
2,714,000
3,060,000
2,714,000
Diluted weighted average shares 434,086,000
433,396,000
433,999,000
433,295,000

Basic earnings per share
Net income $ 0.39
$ 0.42
$ 1.15
$ 0.77

Diluted earnings per share
Net income $ 0.39
$ 0.41
$ 1.14
$ 0.76

~~(15) Reportable Business Segments~~

~~CenterPoint Energy’s~~The Registrants’ determination of reportable ~~business~~ segments considers the strategic operating units under which ~~CenterPoint Energy~~its CODM manages sales, allocates resources and assesses performance of various products and services to wholesale or retail customers in differing regulatory environments. ~~CenterPoint Energy uses operating~~Each Registrant’s CODM views net income as the measure of profit or loss for the reportable segments. Certain prior year amounts have been reclassified to conform to the current year reportable segment

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presentation described in the Registrants’ combined 2020 Form 10-K and for changes described below.On April 29, 2021, CenterPoint Energy, through its ~~business segments other than Midstream Investments, where it uses equity~~subsidiary CERC Corp., entered into an Asset Purchase Agreement to sell its Arkansas and Oklahoma Natural Gas businesses. The Arkansas and Oklahoma Natural Gas businesses are reflected in ~~earnings~~CenterPoint Energy’s Natural Gas reportable segment and CERC’s single reportable segment, as applicable, and are classified as held for sale as of ~~unconsolidated affiliates.~~September 30, 2021. On August 31, 2021, CenterPoint Energy, through its subsidiary CERC Corp., completed the sale of MES to Last Mile Energy. See Note 3 for further details.

CenterPoint Energy’s ~~reportable business segments include the following: Electric Transmission & Distribution, Natural Gas Distribution, Energy Services,~~ Midstream Investments reportable segment presented in the Registrants’ combined 2020 Form 10-K consisted of the equity investment in Enable (excluding the Enable Series A Preferred Units). In September 2021, CenterPoint Energy’s equity investment in Enable met the held for sale criteria and ~~Other Operations. The~~is reflected as discontinued operations, and as a result this reportable segment is not reflected in the financial data for reportable segments. See Notes 3 and 9 for further information regarding CenterPoint Energy’s equity investment in Enable as held for sale and discontinued operations and the pending Enable Merger.

As of September 30, 2021, reportable segments by Registrant were as follows:

CenterPoint Energy

•CenterPoint Energy’s Electric reportable segment consists of (i) electric transmission services to transmission service customers in the ERCOT region and distribution services to REPs serving the Texas Gulf Coast area and (ii) electric transmission and distribution ~~function~~services primarily to southwestern Indiana and includes power generation and wholesale power operations.

~~(Houston Electric) is reported in the Electric Transmission & Distribution business segment.~~•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. Energy Services represents~~ customers in Arkansas, Indiana, Louisiana, Minnesota, Mississippi, Ohio, Oklahoma and Texas; and (ii) permanent pipeline connections through interconnects with various interstate and intrastate pipeline companies through CEIP.

CenterPoint Energy’s ~~non-rate regulated gas sales~~Corporate and ~~services operations. Midstream Investments~~Other category consists of ~~CenterPoint Energy’s equity investment in Enable (excluding the Series A Preferred Units). Other Operations consists primarily of~~energy performance contracting and sustainable infrastructure services through ESG and other corporate operations which support all of the business operations of CenterPoint ~~Energy’s business operations.~~Energy.

Houston Electric

•Houston Electric’s single reportable segment consists 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 single reportable segment consists of (i) intrastate natural gas sales to, and natural gas transportation and distribution for residential, commercial, industrial and institutional customers in Arkansas, Louisiana, Minnesota, Mississippi, Oklahoma and Texas; and (ii) permanent pipeline connections through interconnects with various interstate and intrastate pipeline companies through CEIP.

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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 September 30,
	2021			2020
	Revenues from External Customers			Net Income (Loss)		Revenues from External Customers			Net Income (Loss)
	(in millions)
Electric	$	1,056	(1)	$	185	$	985	(1)	$	188
Natural Gas	619			5		564			(2)

Corporate and Other	74			(40)		73			13
Continuing Operations	$	1,749		150		$	1,622		199
Discontinued Operations, net				68					(78)
Consolidated				$	218				$	121

	Nine Months Ended September 30,
	2021			2020
	Revenues from External Customers			Net Income (Loss)		Revenues from External Customers			Net Income (Loss)
	(in millions)
Electric	$	2,823	(1)	$	385	$	2,600	(1)	$	160
Natural Gas	3,022			308		2,529			229

Corporate and Other	193			(63)		235			(42)

Continuing Operations	$	6,038		630		$	5,364		347
Discontinued Operations, net				202					(1,320)
Consolidated				$	832				$	(973)

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(in millions)
Affiliates of NRG	$	285	$	243	$	672	$	573
Affiliates of Vistra Energy Corp.	128		128		303		301


	Total Assets
	September 30, 2021		December 31, 2020
	(in millions)
Electric	$	15,612	$	14,493
Natural Gas	15,470		14,976

Corporate and Other, net of eliminations (1)	2,928		3,220

Continuing Operations	34,010		32,689
Assets Held for Sale	3,150		782
Consolidated	$	37,160	$	33,471

(1)Total assets included pension and other postemployment-related regulatory assets of $453 million and $540 million as of September 30, 2021 and December 31, 2020, respectively.

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For the Three Months Ended September 30, 2017
Revenues from
External
Customers Net
Intersegment
Revenues Operating
Income
(in millions)
Electric Transmission & Distribution $ 843
(1) $ —
$ 247
Natural Gas Distribution 390
8
19
Energy Services 861
10
7
Midstream Investments (2)
—
—
—
Other Operations 4
—
6
Eliminations —
(18 ) —
Consolidated $ 2,098
$ —
$ 279
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.

(17) Supplemental Disclosure of Cash Flow Information

For the Three Months Ended September 30, 2016
Revenues from
External
Customers Net
Intersegment
Revenues Operating
Income
(in millions)
Electric Transmission & Distribution $ 908
(1) $ —
$ 257
Natural Gas Distribution 370
7
22
Energy Services 608
6
5
Midstream Investments (2)
—
—
—
Other Operations 3
—
—
Eliminations —
(13 ) —
Consolidated $ 1,889
$ —
$ 284

CenterPoint Energy and CERC elected not to separately disclose discontinued operations on their respective Condensed Statements of Consolidated Cash Flows. The table below provides supplemental disclosure of cash flow information and does not exclude the Infrastructure Services and Energy Services Disposal Groups prior to the closing of the respective transactions.


	Nine Months Ended September 30,
	2021						2020
	CenterPoint Energy		Houston Electric		CERC		CenterPoint Energy		Houston Electric		CERC
	(in millions)
Cash Payments/Receipts:
Interest, net of capitalized interest	$	427	$	172	$	71	$	324	$	176	$	88
Income tax payments (refunds), net	(47)		—		—		117		33		4
Non-cash transactions:
Accounts payable related to capital expenditures	290		208		113		220		121		72
ROU assets obtained in exchange for lease liabilities	2		—		—		14		—		5
Beneficial conversion feature	—		—		—		32		—		—
Amortization of beneficial conversion feature	—		—		—		(25)		—		—

The table below provides a reconciliation of cash, cash equivalents and restricted cash reported in the Condensed Consolidated Balance Sheets to the amount reported in the Condensed Statements of Consolidated Cash Flows.


	September 30, 2021						December 31, 2020
	CenterPoint Energy		Houston Electric		CERC		CenterPoint Energy		Houston Electric		CERC
	(in millions)
Cash and cash equivalents (1)	$	133	$	105	$	—	$	147	$	139	$	1
Restricted cash included in Prepaid expenses and other current assets	23		18		—		20		15		—

Total cash, cash equivalents and restricted cash shown in Condensed Statements of Consolidated Cash Flows	$	156	$	123	$	—	$	167	$	154	$	1

(1)Houston Electric’s Cash and cash equivalents as of September 30, 2021 and December 31, 2020 included $105 million and $139 million, respectively, of cash related to the Bond Companies.

(18) Related Party Transactions(Houston Electric and CERC)

For the Nine Months Ended September 30, 2017

Revenues from
External
Customers

Net
Intersegment
Revenues

Operating
Income
Total Assets as of September 30, 2017
(in millions)
Electric Transmission & Distribution $ 2,234
(1) $ —
$ 489
$ 10,289

Natural Gas Distribution 1,767
24
220
6,067

Energy Services 2,964
34
58
1,337

Midstream Investments (2)
—
—
—
2,481

Other Operations 11
—
9
2,694
(3)
Eliminations —
(58 ) —
(733 )
Consolidated $ 6,976
$ —
$ 776
$ 22,135

For the Nine Months Ended September 30, 2016
Revenues from
External
Customers Net
Intersegment
Revenues Operating
Income Total Assets as of December 31, 2016
(in millions)
Electric Transmission & Distribution $ 2,331
(1) $ —
$ 498
$ 10,211

Natural Gas Distribution 1,672
21
202
6,099

Energy Services 1,433
17
11
1,102

Midstream Investments (2)
—
—
—
2,505

Other Operations 11
—
5
2,681
(3)
Eliminations —
(38 ) —
(769 )
Consolidated $ 5,447
$ —
$ 716
$ 21,829


~~(1)~~	~~Electric Transmission & Distribution revenues from major customers are as follows:~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(in millions)
Affiliates of NRG $ 221
$ 223
$ 540
$ 527
Affiliates of Vistra Energy Corp. 72
71
172
166


~~(2)~~	~~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


~~(3)~~	~~Included~~Houston Electric and CERC participate in ~~total assets of Other Operations as of September 30, 2017 and December 31, 2016 are pension and other postemployment-related regulatory assets of $715 million and $759 million, respectively.~~

~~(16) Subsequent Events~~

~~On October 25, 2017,~~ CenterPoint Energy’s ~~board~~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 ~~directors declared~~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.

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The table below summarizes CenterPoint Energy money pool activity:


	September 30, 2021						December 31, 2020
	Houston Electric			CERC			Houston Electric			CERC
	(in millions, except interest rates)
Money pool investments (borrowings) (1)	$	(40)		$	—		$	(8)		$	—
Weighted average interest rate	0.18		%	0.18		%	0.24		%	0.24		%

(1)Included in Accounts and notes receivable (payable)–affiliated companies on Houston Electric’s and CERC’s respective Condensed Consolidated Balance 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 ~~regular quarterly cash~~composite of assets, gross margin and employees. Houston Electric provides certain 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 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 September 30,								Nine Months Ended September 30,
	2021				2020				2021				2020
	Houston Electric		CERC		Houston Electric		CERC		Houston Electric		CERC		Houston Electric		CERC
	(in millions)
Corporate service charges	$	46	$	51	$	48	$	52	$	136	$	153	$	142	$	156
Net affiliate service charges (billings)	(4)		4		(4)		4		(6)		6		(14)		14

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


	Three Months Ended September 30,								Nine Months Ended September 30,
	2021				2020				2021				2020
	Houston Electric		CERC		Houston Electric		CERC		Houston Electric		CERC		Houston Electric		CERC
	(in millions)
Cash dividends paid to parent	$	—	$	—	$	52	$	8	$	—	$	—	$	457	$	80

Capital distribution to parent associated with the sale of CES	—		—		—		—		—		—		—		286
Property, plant and equipment from parent (1)	—		—		35		23		—		—		35		23

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

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(19) Equity

Dividends Declared and Paid (CenterPoint Energy)


	Dividends Declared Per Share								Dividends Paid Per Share
	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020		2021		2020		2021		2020
Common Stock	$	0.330	$	0.150	$	0.490	$	0.590	$	0.160	$	0.150	$	0.320	$	0.590
Series A Preferred Stock	30.625		30.625		30.625		61.250		30.625		30.625		30.625		61.250
Series B Preferred Stock	17.500		17.500		35.000		52.500		17.500		17.500		35.000		52.500
Series C Preferred Stock (1)	—		0.150		—		0.300		—		0.150		—		0.300

(1)The Series C Preferred Stock was entitled to participate in any dividend ~~of $0.2675~~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 payable on December 8, 2017, to shareholders of record~~Common Stock as if the Series C Preferred Stock were converted into Common Stock. All of the ~~close~~outstanding Series C Preferred Stock was converted to Common Stock during April and May 2021 as described below.

Preferred Stock (CenterPoint Energy)


	Liquidation Preference Per Share		Shares Outstanding as of		Outstanding Value as of
			September 30, 2021	December 31, 2020	September 30, 2021		December 31, 2020
	(in millions, except shares and per share amounts)
Series A Preferred Stock	$	1,000	800,000	800,000	$	790	$	790
Series B Preferred Stock	1,000		—	977,400	—		950
Series C Preferred Stock	1,000		—	625,000	—		623
			800,000	2,402,400	$	790	$	2,363

Conversion of ~~business on November 16, 2017.~~

~~On October 31, 2017, Enable declared a quarterly cash distribution of $0.318 per unit on all of its outstanding common units for~~Series B Preferred Stock. During the ~~quarter~~three and nine months ended September 30, ~~2017. Accordingly, CERC Corp. expects~~2021, 975,903 shares and 977,400 shares of Series B Preferred Stock, respectively, were converted into 35,875,574 shares and 35,921,441 shares of Common Stock. As of September 30, 2021, all shares of Series B Preferred Stock have been converted into shares of Common Stock.

Conversion of Series C Preferred Stock. No shares of Series C Preferred Stock were converted to ~~receive a cash distribution of approximately $74 million from Enable in~~Common Stock during the ~~fourth quarter of 2017 to be made with respect to CERC Corp.’s investment in common units of Enable for the third quarter of 2017.~~

~~On October 31, 2017, Enable declared a quarterly cash distribution of $0.625 per Series A Preferred Unit for the quarter~~three months ended September 30, ~~2017. Accordingly,~~2021. During the nine months ended September 30, 2021, 625,000 shares of Series C Preferred Stock were converted into 40,822,990 shares of Common Stock. As of September 30, 2021, all shares of Series C Preferred Stock have been converted into shares of Common Stock.

Income Allocated to Preferred Shareholders (CenterPoint Energy)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(in millions)
Series A Preferred Stock	$	12	$	12	$	37	$	37
Series B Preferred Stock	11		17		45		51
Series C Preferred Stock	—		7		—		14
Preferred dividend requirement	23		36		82		102
Amortization of beneficial conversion feature	—		16		—		25
Total income allocated to preferred shareholders	$	23	$	52	$	82	$	127

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 ~~expects~~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

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(Total Stock Award) to ~~receive~~be granted in multiple annual awards. In July 2021, 400 thousand restricted stock unit awards were awarded to Mr. Lesar that will vest in December 2022. Restricted stock unit awards covering the remaining 600 thousand shares will be awarded to Mr. Lesar in February 2022 and February 2023, in each case covering the remainder of the Total Stock Award not previously awarded or such lesser number of restricted stock units as may be required pursuant to the annual individual award limitations under the CenterPoint Energy’s LTIP and vesting in December 2023. In the event any shares under the Total Stock Award remain unawarded, in February 2024, a ~~cash distribution~~fully vested stock bonus award of ~~approximately $9~~the remaining shares will be granted.For accounting purposes, the 1 million ~~from Enable~~shares under the Total Stock Award, consisting of both the awarded and unawarded equity-based awards described above, were considered granted in July 2021. In the event of death, disability, termination without cause or resignation for 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 to~~the unawarded equity-based awards, based on the closing trading price 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 ~~made with respect to~~classified as Temporary Equity on CenterPoint Energy’s ~~investment~~Condensed Consolidated Balance Sheets.

Accumulated Other Comprehensive Income (Loss)

Changes in ~~Series A Preferred Units~~accumulated comprehensive income (loss) are as follows:


	Three Months Ended September 30,
	2021						2020
	CenterPoint Energy		Houston Electric		CERC		CenterPoint Energy		Houston Electric		CERC
	(in millions)
Beginning Balance	$	(85)	$	—	$	10	$	(84)	$	—	$	10
Other comprehensive loss before reclassifications:


Other comprehensive income from unconsolidated affiliates	—		—		—		1		—		—
Amounts reclassified from accumulated other comprehensive income (loss):
Prior service cost (1)	1		—		—		—		—		—
Actuarial losses (1)	1		—		—		2		—		—
Settlement (2)	3		—		—		—		—		—
Reclassification of deferred loss from cash flow hedges realized in net income	1		—		—		—		—		—
Tax expense	(1)		—		—		(1)		—		—
Net current period other comprehensive income	5		—		—		2		—		—
Ending Balance	$	(80)	$	—	$	10	$	(82)	$	—	$	10

	Nine Months Ended September 30,
	2021						2020
	CenterPoint Energy		Houston Electric		CERC		CenterPoint Energy		Houston Electric		CERC
	(in millions)
Beginning Balance	$	(90)	$	—	$	10	$	(98)	$	(15)	$	10
Other comprehensive loss before reclassifications:


Other comprehensive income (loss) from unconsolidated affiliates	2		—		—		(2)		—		—
Amounts reclassified from accumulated other comprehensive income (loss):
Prior service cost (1)	1		—		—		1		—		—
Actuarial losses (1)	5		—		—		5		—		—
Settlement (2)	3		—		—		—		—		—
Reclassification of deferred loss from cash flow hedges realized in net income	1		—		—		—		—		—
Reclassification of deferred loss from cash flow hedges to regulatory assets (3)	—		—		—		19		19		—
Tax expense	(2)		—		—		(7)		(4)		—
Net current period other comprehensive income	10		—		—		16		15		—
Ending Balance	$	(80)	$	—	$	10	$	(82)	$	—	$	10

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

(2)Amounts presented represent a one-time, non-cash settlement cost (benefit), prior to regulatory deferrals, which are required when the total lump sum distributions or other settlements of plan benefit obligations during a plan year exceed the service cost and interest cost components of the net periodic cost for that year. Amounts presented in the table above are included in Other income (expense), net in CenterPoint Energy’s Condensed Statements of Consolidated Income, net of regulatory deferrals.

(3)The cost of debt approved by the PUCT as part of Houston Electric’s Stipulation and Settlement Agreement included unrealized gains and losses on interest rate hedges. Accordingly, deferred gains and losses on interest rate hedges were reclassified to regulatory assets or liabilities, as appropriate.

(20) Subsequent Events (CenterPoint Energy)

Enable ~~for the third quarter~~Distributions Declarations (CenterPoint Energy)

Equity Instrument

Declaration Date

Record Date

Payment Date

Per Unit Distribution

Expected Cash Distribution
(in millions)

Enable common units

October 26, 2021

November 8, 2021

November 17, 2021

0.16525

Enable Series A Preferred Units

October 26, 2021

November 12, 2021

0.54030

Table of ~~2017.~~Contents

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


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

The following 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 2020 Form 10-K. When discussing CenterPoint Energy’s consolidated financial information, it includes the results of Houston Electric and 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 used as abbreviated references to CenterPoint Energy, Inc. together with its consolidated subsidiaries. No Registrant makes any representations as to the information related solely to CenterPoint Energy or the subsidiaries of CenterPoint Energy other than itself.

RECENT EVENTS

~~Hurricane Harvey.~~Net Zero Emission Goals. In September 2021, CenterPoint Energy announced new net zero emission 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. For more information regarding CenterPoint Energy’s new net zero emission goals and the risks associated with them, see “Risk Factors — CenterPoint Energy is subject to operational and financial risks and liabilities associated with the implementation and efforts to achieve its carbon emission reduction goals” and “Management’s Discussion and Analysis — Liquidity and Capital Resources” in this combined Form 10-Q.

Sale of 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 of storm-related incremental natural gas costs incurred in the February 2021 Winter Storm Event, subject to certain adjustments set forth in the Asset Purchase Agreement. On August 31, 2021, CenterPoint Energy, through its subsidiary CERC Corp., completed the sale of MES to Last Mile Energy. For further information, see Note 3 to the Interim Condensed Financial Statements.

February 2021 Winter Storm Event. In February 2021, portions of the United States experienced an extreme and unprecedented winter weather event that resulted in corresponding electricity generation shortages, including in Texas, and natural gas shortages and increased wholesale prices of natural gas in the United States. Many customers of Houston Electric’s ~~electric~~REPs and, to a lesser extent, of CERC were severely impacted by outages in electricity and natural gas delivery ~~system and CERC Corp.’s NGD suffered damage as~~during the February 2021 Winter Storm Event. As a result of ~~Hurricane Harvey, which struck~~this weather event, the governors of Texas, ~~coast on Friday, August 25, 2017.~~Oklahoma and Louisiana declared states of either disaster or emergencies in their respective states. Subsequently, President Biden also approved major disaster declarations for all or parts of Texas, Oklahoma and Louisiana.

The February 2021 Winter Storm Event resulted in financial impacts to CenterPoint Energy, Houston Electric and CERC, including substantial increases in prices for natural gas, decreased revenues at Houston Electric due to ERCOT-mandated outages, additional interest expense related to external financing to pay for natural gas working capital, significant impacts to the REPs, including the REPs’ ability to pay invoices from Houston Electric, increases in bad debt expense, issues with counterparties and customers, litigation and investigations or inquiries from government or regulatory agencies and entities, and other financial impacts. However, CenterPoint Energy does not anticipate meaningful long-term financial impacts associated with the February 2021 Winter Storm Event, including changes to its credit profile, credit ratings or liquidity, given the regulatory mechanisms that are in place to recover the extraordinary expenses. For ~~further~~more information regarding ~~the impact of Hurricane Harvey,~~regulatory impacts, debt transactions and litigation, see ~~Note 5~~Notes 6, 12 and 14 to ~~our~~the Interim Condensed Financial ~~Statements.~~Statements and “—Liquidity and Capital Resources —Future Sources and Uses of Cash” and “—Regulatory Matters” below.

Enable Merger Agreement. On February 16, 2021, Enable entered into the Enable Merger Agreement. At the closing of the transactions contemplated by the Enable Merger Agreement, if and when it occurs, Energy Transfer will acquire all of Enable’s outstanding equity interests, including all Enable common units and Enable Series A Preferred Units held by CenterPoint Energy, and in return CenterPoint Energy will receive Energy Transfer common units and Energy Transfer Series G Preferred Units. On September 21, 2021, CNP Midstream entered into a Forward Sale Agreement with an investment banking financial institution to deliver, subject to and immediately following the closing of the Enable Merger, 50 million common units of Energy Transfer expected to be received by CNP Midstream as consideration in the pending Enable Merger in exchange for the proceeds of the forward sale transaction. Additionally, CenterPoint Energy plans for a complete exit from its Midstream Investment reportable segment in 2022. For more information, see Notes 1, 3 and 9 to the Interim Condensed Financial Statements.

Debt Transactions. For information about debt transactions to date in 2021, see Note 12 to the Interim Condensed Financial Statements.

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Preferred Stock Conversions. For information regarding preferred stock conversions to date in 2021, see Note 19 to the Interim Condensed Financial Statements.

Regulatory Proceedings. For ~~details~~information related to our pending and completed regulatory proceedings to date in ~~2017,~~2021, see “—Liquidity and Capital Resources —Regulatory Matters” below.

~~Debt Issuances.~~ ~~In August 2017,~~Board of Directors Actions. On July 22, 2021, CenterPoint Energy ~~issued $500 million aggregate principal amount~~announced the decision of ~~unsecured senior notes~~the independent directors of the Board to implement a new independent Board leadership and ~~CERC Corp. issued $300 million aggregate principal amount~~governance structure and appointed a new independent chair of ~~unsecured senior notes.~~the Board. To implement this new governance structure, the independent directors of the Board eliminated the Executive Chairman position. For further information, ~~about our 2017 debt issuances,~~ see Note 115 to ~~our~~the Interim Condensed Financial Statements.

CENTERPOINT ENERGY CONSOLIDATED RESULTS OF OPERATIONS

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(in millions, except per share amounts)
Revenues $ 2,098
$ 1,889
$ 6,976
$ 5,447
Expenses 1,819
1,605
6,200
4,731
Operating Income 279
284
776
716
Interest and Other Finance Charges (80 ) (83 ) (235 ) (256 )
Interest on Securitization Bonds (18 ) (23 ) (58 ) (70 )
Equity in Earnings of Unconsolidated Affiliate, net 68
73
199
164
Other Income, net 18
25
95
(30 )
Income Before Income Taxes 267
276
777
524
Income Tax Expense 98
97
281
193
Net Income $ 169
$ 179
$ 496
$ 331

Basic Earnings Per Share $ 0.39
$ 0.42
$ 1.15
$ 0.77

Diluted Earnings Per Share $ 0.39
$ 0.41
$ 1.14
$ 0.76

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

~~We reported net income~~For information regarding factors that may affect the future results of ~~$169 million ($0.39 per diluted share) for the three months ended September 30, 2017 compared to net income~~our consolidated operations, please read “Risk Factors” in Item 1A of ~~$179 million ($0.41 per diluted share) for the three months ended September 30, 2016.~~

~~The decrease in net income of $10 million was primarily due to the following key factors:~~

~~a $40 million decrease in the gain on marketable securities included in Other Income, net shown above;~~

~~a $5 million decrease in operating income discussed below by segment;~~

~~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 decrease in miscellaneous other non-operating income included in Other Income, net shown above.~~

~~These decreases in net income were partially offset by the following:~~

~~a $36 million decrease in the loss on the underlying value~~Part I of the ~~indexed debt securities related to the ZENS included~~Registrants’ combined 2020 Form 10-K and in ~~Other Income, net shown above;~~Item 1A of Part II of this combined Form 10-Q.

~~a $5 million decrease in interest expense related to lower outstanding balances of our Securitization Bonds; and~~

~~a $3 million decrease in interest expense due to lower weighted average interest rates on outstanding debt.~~

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

~~We reported net income of $496 million ($1.14 per diluted share) for the~~ ~~nine~~ ~~months ended September 30, 2017 compared to net income of $331 million ($0.76 per diluted share) for the nine months ended September 30, 2016.~~

~~The increase in net income of $165 million was primarily due to the following key factors:~~

a $199 million decrease in the loss on indexed debt securities related to the ZENS included in Other Income, net shown above, resulting from decreased losses of $82 million in the underlying value of the indexed debt securities and a loss of $117 million from the Charter merger in 2016;

~~a $60 million increase in operating income discussed below by segment;~~

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

~~a $21 million decrease in interest expense due to lower weighted average interest rates on outstanding debt;~~

~~a $14 million increase in cash distributions on Series A Preferred Units included in Other Income, net shown above; and~~

~~a $12 million decrease in interest expense related to lower outstanding balances of our Securitization Bonds.~~

~~These increases in net income were partially offset by the following:~~

~~an $88 million increase in income tax expense due to higher net income;~~

~~an $83 million decrease in the gain on marketable securities included in Other Income, net shown above; and~~

~~a $5 million decrease in miscellaneous other non-operating income included in Other Income, net shown above.~~

Income ~~Tax Expense~~

~~Our effective tax rate reported for the three months ended September 30, 2017 was 37% compared~~(loss) available to 35% for the same period in 2016. The higher effective tax rate for the three months ended September 30, 2017 was primarily due to the tax effects of receiving less nontaxable income in the period. The effective tax rate reported for the nine months ended September 30, 2017 was 36% compared to 37% for the same period in 2016. We expect our annual effective tax rate for the fiscal year ending December 31, 2017 to be approximately 36%.

~~RESULTS OF OPERATIONS BY BUSINESS SEGMENT~~

~~The following table presents operating income for each of our business segments~~common shareholders for the three and nine months ended September 30, ~~2017~~2021 and ~~2016. Included~~2020 was as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021		2020		Favorable (Unfavorable)		2021		2020		Favorable (Unfavorable)
	(in millions)
Electric	$	185	$	188	$	(3)	$	385	$	160	$	225
Natural Gas	5		(2)		7		308		229		79
Total Utility Operations	190		186		4		693		389		304

Corporate & Other (1)	(63)		(39)		(24)		(145)		(169)		24
Discontinued Operations	68		(78)		146		202		(1,320)		1,522
Total CenterPoint Energy	$	195	$	69	$	126	$	750	$	(1,100)	$	1,850

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

Three months ended September 30, 2021 compared to three months ended September 30, 2020

Income available to common shareholders increased $126 million primarily due to the following items:

•an increase in ~~revenues~~earnings from discontinued operations; and

•the dividend requirement and amortization of beneficial conversion feature associated with Series C Preferred Stock in 2020.

These increases were partially offset by:

•the impact of the governance changes announced in July 2021; and

•the CARES Act in 2020.

Excluding those items, income available to common shareholders increased $1 million primarily due to the following key factors:

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

•reduced impact of COVID-19;

•continued customer growth; and

•reduced interest expense.

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These increases were partially offset by lower usage in part due to less favorable weather.

Nine months ended September 30, 2021 compared to nine months ended September 30, 2020

Income available to common shareholders increased $1,850 million primarily due to the following items:

•an increase in earnings from discontinued operations;

•goodwill impairment at Indiana Electric in 2020;

•the dividend requirement and amortization of beneficial conversion feature associated with Series C Preferred Stock in 2020; and

•favorable income tax impacts in 2021, partially offset by the CARES Act in 2020.

These increases were also partially offset by the impact of the board-implemented governance changes announced in July 2021

Excluding those items, income available to common shareholders increased $121 million primarily due to the following key factors:

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

•reduced impact of COVID-19;

•continued customer growth; and

•reduced interest expense.

Income Tax Expense. For a discussion of effective tax rate per period, see Note 13 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. Certain prior year amounts have been reclassified to conform to the current year presentation described in the Registrants’ combined 2020 Form 10-K.

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. CenterPoint Energy’s formerly reported Midstream Investments reportable segment results are ~~intersegment sales. We account for intersegment sales as if~~now included in discontinued operations. For additional information regarding the ~~sales were~~Midstream Investments reportable segment, see Notes 3, 9 and 16 to ~~third parties at current market prices.~~the Interim Condensed Financial Statements.

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(in millions)
Electric Transmission & Distribution $ 247
$ 257
$ 489
$ 498
Natural Gas Distribution 19
22
220
202
Energy Services 7
5
58
11
Other Operations 6
—
9
5
Total Consolidated Operating Income $ 279
$ 284
$ 776
$ 716

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Electric ~~Transmission & Distribution~~(CenterPoint Energy)

For information regarding factors that may affect the future results of operations of ~~our~~the Electric ~~Transmission & Distribution business~~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 ~~Electric Transmission & Distribution Business”~~Businesses” and “— ~~Other~~General Risk Factors Affecting Our Businesses and/or ~~Our~~CenterPoint Energy’s Interests in Enable Midstream Partners, LP” in Item 1A of Part I of ~~our 2016~~the Registrants’ combined 2020 Form ~~10-K.~~10-K and in Item 1A of Part II of this combined Form 10-Q.

The following table provides summary data of ~~our~~the Electric ~~Transmission & Distribution business segment~~reportable segment:


	Three Months Ended September 30,									Nine Months Ended September 30,
	2021			2020			Favorable (Unfavorable)			2021			2020			Favorable (Unfavorable)
	(in millions, except operating statistics)
Revenues	$	1,056		$	985		$	71		$	2,823		$	2,600		$	223
Cost of revenues (1)	53			41			(12)			142			108			(34)
Revenues less Cost of revenues	1,003			944			59			2,681			2,492			189
Expenses:
Operation and maintenance	445			427			(18)			1,295			1,232			(63)
Depreciation and amortization	211			177			(34)			569			497			(72)
Taxes other than income taxes	69			68			(1)			205			204			(1)
Goodwill impairment	—			—			—			—			185			185
Total expenses	725			672			(53)			2,069			2,118			49
Operating Income	278			272			6			612			374			238
Other Income (Expense)
Interest expense and other finance charges	(57)			(55)			(2)			(171)			(165)			(6)

Other income, net	7			4			3			19			13			6
Income from Continuing Operations Before Income Taxes	228			221			7			460			222			238
Income tax expense	43			33			(10)			75			62			(13)
Net Income	$	185		$	188		$	(3)		$	385		$	160		$	225
Throughput (in GWh):
Residential	11,174			11,675			(4)		%	25,567			26,113			(2)		%
Total	31,178			29,452			6		%	79,305			74,923			6		%
Weather (percentage of 10-year average for service area):
Cooling degree days	101		%	105		%	(4)		%	102		%	108		%	(6)		%
Heating degree days	100		%	200		%	(100)		%	105		%	73		%	32		%
Number of metered customers at end of period:
Residential	2,480,292			2,420,855			2		%	2,480,292			2,420,855			2		%
Total	2,800,548			2,735,018			2		%	2,800,548			2,735,018			2		%

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

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The following table provides variance explanations by major income statement caption for the ~~three and nine months ended September 30, 2017 and 2016:~~Electric reportable segment:


	Favorable (Unfavorable)
	Three Months Ended September 30, 2021 vs 2020		Nine Months Ended September 30, 2021 vs 2020
	(in millions)
Revenues less Cost of revenues
Transmission Revenues, including TCOS and TCRF and impact of the change in rate design, inclusive of costs billed by transmission providers, partially offset in operation and maintenance	$	29	$	224
Bond Companies, offset in other line items	22		41
Impacts on usage from COVID-19	20		30
Customer growth	9		25
Bond Companies equity return, related to the annual true-up of transition charges for amounts over or under collected in prior periods	3		7
Miscellaneous revenues, primarily related right-of-way revenue, service connections, and off-system sales	7		6
Impacts from increased peak demand in 2020, collected in rates in 2021	—		6
Energy efficiency and pass-through offset in operation and maintenance	(3)		—
Refund of protected and unprotected EDIT, offset in income tax expense	—		(12)
Weather, efficiency improvements and other usage impacts, excluding impacts of COVID-19	(33)		(52)
Customer rates and impact of the change in rate design	5		(86)
Total	$	59	$	189
Operation and maintenance
Support services	$	6	$	11
Labor and benefits	7		6
Energy efficiency and pass-through offset in revenues	2		(1)
Bond Companies, offset in other line items	(1)		(1)
Contract services	(1)		(2)
All other operation and maintenance expense, including materials and supplies and insurance	(8)		(8)

Transmission costs billed by transmission providers, offset in revenues less cost of revenues	(23)		(68)
Total	$	(18)	$	(63)
Depreciation and amortization
Bond Companies, offset in other line items	$	(23)	$	(45)
Ongoing additions to plant-in-service	(11)		(27)
Total	$	(34)	$	(72)
Taxes other than income taxes
Franchise fees and other taxes	$	(2)	$	—
Incremental capital projects placed in service	1		(1)
Total	$	(1)	$	(1)
Goodwill Impairment
Indiana Electric goodwill impairment charge in 2020	$	—	$	185
Total	$	—	$	185
Interest expense and other finance charges
Bond Companies, offset in other line items	$	2	$	6
Reduced interest rates on outstanding borrowings, partially offset by incremental borrowings for capital expenditures	(4)		(12)
Total	$	(2)	$	(6)




Other income (expense), net
Reduction to non-service benefit cost	$	3	$	8

Investments in CenterPoint Energy Money Pool interest income	—		(1)
Bond Companies interest income, offset in other line items	—		(1)
Total	$	3	$	6

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(in millions, except throughput and customer data)
Revenues:
TDU $ 729
$ 725
$ 1,944
$ 1,881
Bond Companies 114
183
290
450
Total revenues 843
908
2,234
2,331
Expenses:
Operation and maintenance, excluding Bond Companies 344
336
1,040
995
Depreciation and amortization, excluding Bond Companies 97
96
296
285
Taxes other than income taxes 59
59
177
173
Bond Companies 96
160
232
380
Total expenses 596
651
1,745
1,833
Operating Income $ 247
$ 257
$ 489
$ 498
Operating Income:
TDU $ 229
$ 234
$ 431
$ 428
Bond Companies (1)
18
23
58
70
Total segment operating income $ 247
$ 257
$ 489
$ 498
Throughput (in GWh):
Residential 10,419
10,776
23,512
23,427
Total 26,453
26,518
67,956
66,839
Number of metered customers at end of period:
Residential 2,156,624
2,116,312
2,156,624
2,116,312
Total 2,435,558
2,389,014
2,435,558
2,389,014


~~(1)~~	~~Represents the amount necessary to pay interest on the Securitization Bonds.~~

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

~~Our Electric Transmission & Distribution business segment reported operating income~~Income Tax Expense. For a discussion of ~~$247 million for the three months ended September 30, 2017, consisting of $229 million from the TDU and $18 million related~~effective tax rate per period by Registrant, see Note 13 to the ~~Bond Companies. For the three months ended September 30, 2016, operating income totaled $257 million, consisting~~Interim Condensed Financial Statements.

Table of ~~$234 million from the TDU and $23 million related to the Bond Companies.~~Contents

~~TDU operating income decreased $5 million, primarily due to the following key factors:~~

~~lower usage of $12 million, largely due to a return to more normal weather in 2017;~~

~~lower equity return of $9 million, primarily related to the annual true-up of transition charges correcting for over-collections that occurred during 2016; and~~

~~lower miscellaneous revenues, including right-of-way, of $7 million.~~

~~These decreases to operating income were partially offset by the following:~~

~~rate increases of $12 million related to distribution capital investments;~~

~~lower operation and maintenance expenses of $4 million; and~~

~~customer growth of $9 million from the addition of over 46,000 new customers.~~

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

Our Electric Transmission & Distribution business segment reported operating income of $489 million for the nine months ended September 30, 2017, consisting of $431 million from the TDU and $58 million related to the Bond Companies. For the nine months ended September 30, 2016, operating income totaled $498 million, consisting of $428 million from the TDU and $70 million related to the Bond Companies.

~~TDU operating income increased $3 million, primarily due to the following key factors:~~

~~rate increases of $39 million related to distribution capital investments; and~~

~~customer growth of $26 million from the addition of over 46,000 new customers.~~

~~These increases to operating income were partially offset by the following:~~

~~lower equity return of $22 million, primarily related to the annual true-up of transition charges correcting for over-collections that occurred during 2016;~~

~~higher depreciation and amortization expense, primarily because of ongoing additions to plant in service, and other taxes of $14 million;~~

~~lower usage of $14 million;~~

~~lower miscellaneous revenues, including right-of-way, of $9 million;~~

~~higher operation and maintenance expenses of $2 million; and~~

~~increased transmission costs billed by transmission providers of $47 million, which were partially offset by higher transmission-related revenues of $46 million.~~

Natural Gas ~~Distribution~~(CenterPoint Energy)

For information regarding factors that may affect the future results of operations of ~~our~~CenterPoint Energy’s Natural Gas ~~Distribution business~~reportable segment, please read “Risk Factors — Risk Factors Associated with Our Consolidated Financial Condition,” “— Risk Factors Affecting ~~Our~~ Natural ~~Gas Distribution and Energy Services~~Gas' Business,” “— Risk Factors Affecting Our Businesses” and “— ~~Other~~General Risk Factors Affecting Our Businesses and/or ~~Our~~CenterPoint Energy’s Interests in Enable Midstream Partners, LP” in Item 1A of Part I of ~~our 2016~~the Registrants’ combined 2020 Form ~~10-K.~~10-K and in Item 1A of Part II of this combined Form 10-Q.

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


	Three Months Ended September 30,									Nine Months Ended September 30,
	2021			2020			Favorable (Unfavorable)			2021			2020			Favorable (Unfavorable)
	(in millions, except operating statistics)
Revenues	$	619		$	564		$	55		$	3,022		$	2,529		$	493
Cost of revenues (1)	173			131			(42)			1,289			888			(401)
Revenues less Cost of revenues	446			433			13			1,733			1,641			92
Expenses:
Operation and maintenance	231			240			9			733			744			11
Depreciation and amortization	129			115			(14)			374			339			(35)
Taxes other than income taxes	53			53			—			184			176			(8)
Total expenses	413			408			(5)			1,291			1,259			(32)
Operating Income	33			25			8			442			382			60
Other Income (Expense)
Gain on sale	8			—			8			8			—			8
Interest expense and other finance charges	(34)			(36)			2			(101)			(115)			14

Other income (expense), net	(1)			1			(2)			1			(1)			2
Income (Loss) From Continuing Operations Before Income Taxes	6			(10)			16			350			266			84
Income tax expense (benefit)	1			(8)			(9)			42			37			(5)
Net Income (Loss)	$	5		$	(2)		$	7		$	308		$	229		$	79



Throughput (in Bcf):
Residential	17			18			(6)		%	175			157			11		%
Commercial and Industrial	79			84			(6)		%	312			317			(2)		%
Total	96			102			(6)		%	487			474			3		%
Weather (percentage of 10-year average for service area):
Heating degree days	39		%	100		%	(61)		%	99		%	90		%	9		%
Number of metered customers at end of period:
Residential	4,332,079			4,295,169			1		%	4,332,079			4,295,169			1		%
Commercial and Industrial	348,443			346,641			1		%	348,443			346,641			1		%
Total	4,680.522			4,641,810			1		%	4,680,522			4,641,810			1		%

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

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The following table provides variance explanations by major income statement caption 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 compared to three months ended September 30, 2016~~

~~Our~~ Natural Gas ~~Distribution business segment reported operating income~~reportable segment:


	Favorable (Unfavorable)
	Three Months Ended September 30, 2021 vs 2020		Nine Months Ended September 30, 2021 vs 2020
	(in millions)
Revenues less Cost of revenues
Customer rates and impact of the change in rate design, exclusive of the TCJA impact	$	9	$	36
Non-volumetric and miscellaneous revenue, excluding impacts from COVID-19	1		21
Weather and usage, excluding impacts from COVID-19	—		16
Customer growth	1		11
Gross receipts tax, offset in taxes other than income taxes	1		9
Impacts of COVID-19, including usage and other miscellaneous charges	5		8

Energy efficiency, offset in operation and maintenance	(2)		(1)
Refund of protected and unprotected EDIT, offset in income tax expense	(2)		(8)
Total	$	13	$	92
Operation and maintenance
Support services and miscellaneous operations and maintenance expenses	$	12	$	17
Contract services	—		3
Merger related expenses, primarily severance and technology	—		2
Energy efficiency, offset in revenues less cost of revenues	2		1
Labor and benefits	(5)		(12)
Total	$	9	$	11
Depreciation and amortization
Incremental capital projects placed in service	$	(14)	$	(35)

Total	$	(14)	$	(35)
Taxes other than income taxes
Gross receipts tax, offset in revenues less cost of revenues	$	(1)	$	(9)
Incremental capital projects placed in service	1		1
Total	$	—	$	(8)
Gain on Sale
Net gain on sale of MES	$	8	$	8
Total	$	8	$	8
Interest expense and other finance charges
Reduced interest rates on outstanding borrowings, partially offset by incremental borrowings for capital expenditures	$	2	$	14

Total	$	2	$	14



Other income (expense), net
Money pool investments with CenterPoint Energy interest income	$	1	$	4
Increase to non-service benefit cost	(3)		(2)
Total	$	(2)	$	2

Income Tax Expense. For a discussion 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~~effective tax rate per period by Registrant, see Note 13 to the ~~timing~~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 ~~decoupling normalization adjustment; and~~

~~higher operation and maintenance expenses~~single reportable segment. Houston Electric’s results of ~~$3 million.~~

~~These decreases were partially offset~~operations are affected 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~~seasonal fluctuations in the ~~related revenues.~~

~~Nine months ended September 30, 2017 compared~~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 ~~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~~collect receivables from ~~Texas jurisdictions of $12 million, Arkansas rate case filing of $10 million~~REPs 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)~~Houston Electric’s ability 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~~

its regulatory assets. For more information regarding factors that may affect the future results of operations of ~~our Energy Services~~Houston Electric’s business, ~~segment,~~ please read “Risk Factors — Risk Factors Associated with Our Consolidated Financial Condition,” “— Risk Factors Affecting ~~Our Natural Gas~~Electric Generation, Transmission and Distribution ~~and Energy Services~~Businesses,” “— Risk Factors Affecting Our Businesses” and “— ~~Other~~General Risk Factors Affecting Our Businesses and/or ~~Our~~CenterPoint Energy’s Interests in Enable Midstream Partners, LP” in Item 1A of Part I of ~~our 2016~~the Registrants’ combined 2020 Form ~~10-K.~~10-K and in Item 1A of Part II of this combined Form 10-Q.


	Three Months Ended September 30,									Nine Months Ended September 30,
	2021			2020			Favorable (Unfavorable)			2021			2020			Favorable (Unfavorable)
	(in millions, except operating statistics)
Revenues:
TDU	$	794		$	770		$	24		$	2,159		$	2,038		$	121
Bond Companies	80			58			22			185			144			41
Total revenues	874			828			46			2,344			2,182			162
Expenses:
Operation and maintenance, excluding Bond Companies	394			380			(14)			1,154			1,100			(54)
Depreciation and amortization, excluding Bond Companies	108			100			(8)			320			300			(20)
Taxes other than income taxes	64			64			—			192			192			—
Bond Companies	76			52			(24)			169			124			(45)
Total expenses	642			596			(46)			1,835			1,716			(119)
Operating Income	232			232			—			509			466			43
Other Income (Expense)
Interest expense and other finance charges	(46)			(43)			(3)			(138)			(127)			(11)
Interest expense on Securitization Bonds	(5)			(7)			2			(16)			(22)			6


Other income, net	4			1			3			12			7			5
Income from Continuing Operations Before Income Taxes	185			183			2			367			324			43
Income tax expense	34			26			(8)			60			47			(13)
Net Income	$	151		$	157		$	(6)		$	307		$	277		$	30
Throughput (in GWh):
Residential	10,723			11,237			(5)		%	24,448			25,028			(2)		%
Total	29,318			28,031			5		%	74,453			71,293			4		%
Weather (percentage of 10-year average for service area):
Cooling degree days	101		%	106		%	(5)		%	103		%	109		%	(6)		%
Heating degree days	—		%	—		%	—		%	105		%	68		%	37		%
Number of metered customers at end of period:
Residential	2,345,920			2,291,038			2		%	2,345,920			2,291,038			2		%
Total	2,646,955			2,586,093			2		%	2,646,955			2,586,093			2		%

The following table provides ~~summary data~~variance explanations by major income statement caption for Houston Electric:


	Favorable (Unfavorable)
	Three Months Ended September 30, 2021 vs 2020		Nine Months Ended September 30, 2021 vs 2020
	(in millions)
Revenues
Transmission Revenues, including TCOS and TCRF and impact of the change in rate design, inclusive of costs billed by transmission providers	$	29	$	224
Bond Companies, offset in other line items	22		41
Customer growth	9		25
Impacts on usage from COVID-19	15		20
Equity return, related to the annual true-up of transition charges for amounts over or under collected in prior periods	3		7
Impacts from increased peak demand in 2020, collected in rates in 2021	—		6
Energy efficiency, offset in operation and maintenance	(2)		—
Miscellaneous revenues, primarily related to right-of-way revenues, and service connections	1		(2)
Refund of protected and unprotected EDIT, offset in income tax expense	—		(12)
Weather impacts and other usage	(31)		(47)
Customer rates and impact of the change in rate design	—		(100)
Total	$	46	$	162
Operation and maintenance, excluding Bond Companies
Support services	$	3	$	8
Labor and benefits	9		8
Contract services	1		2
Energy efficiency, offset in revenues	2		—


Other operation and maintenance expense	(6)		(4)
Transmission costs billed by transmission providers, offset in revenues	(23)		(68)
Total	$	(14)	$	(54)
Depreciation and amortization, excluding Bond Companies
Ongoing additions to plant-in-service	$	(8)	$	(20)
Total	$	(8)	$	(20)
Taxes other than income taxes
Franchise fees and other taxes	$	2	$	4
Incremental capital projects placed in service	(2)		(4)
Total	$	—	$	—
Bond Companies expense
Operations and maintenance and depreciation expense, offset in other line items	$	(24)	$	(45)
	$	(24)	$	(45)
Interest expense and other finance charges
Reduced interest rates on outstanding borrowings, partially offset by incremental borrowings for capital expenditures	$	(3)	$	(11)
Total	$	(3)	$	(11)




Interest expense on Securitization Bonds
Lower outstanding principal balance, offset in other line items	$	2	$	6
Total	$	2	$	6
Other income (expense), net
Reduction to non-service benefit cost	$	3	$	7
Investments in CenterPoint Energy Money Pool interest income	—		(1)
Bond Companies interest income, offset in other line items	—		(1)

Total	$	3	$	5

Income Tax Expense. For a discussion 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 the change in unrealized mark-to-market value and the impact from derivative assets and liabilities acquired through the purchase of Continuum and AEM.~~


~~(2)~~	~~Does not include approximately 66,100 natural gas customers as of September 30, 2017 that are under residential and small commercial choice programs invoiced by their host utility.~~

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

Our Energy Services business segment reported operating income 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 13 to the ~~acquisition and integration~~Interim Condensed Financial Statements.

Table of ~~AEM.~~Contents

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

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

~~Our Energy Services business segment reported operating~~CERC’s CODM views net income as the measure of ~~$58 million~~profit or loss 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~~its reportable segment. CERC’s results 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 incomeoperations are affected by seasonal fluctuations in the ~~first nine months~~demand for natural gas. CERC’s results of ~~2017~~operations are also ~~included $3 million~~affected by, among other things, the actions of ~~expenses related~~various federal, state and local governmental authorities having jurisdiction over rates CERC charges, debt service costs and income tax expense, CERC’s ability to ~~the acquisition~~collect receivables from customers and ~~integration of AEM. The remaining increase in operating income was primarily due~~CERC’s ability to ~~the increased throughput related to the acquisition of AEM in 2017.~~

~~Midstream Investments~~

recover its regulatory assets. For more information regarding factors that may affect the future results of operations ~~of our Midstream Investments~~for CERC’s business, ~~segment,~~ please read “Risk Factors — Risk Factors Associated with Our Consolidated Financial Condition,” “— Risk Factors Affecting Natural Gas’ Business,” “— Risk Factors Affecting Our ~~Interests in Enable Midstream Partners, LP”~~Businesses” and “— ~~Other~~General Risk Factors Affecting Our Businesses and/or ~~Our~~CenterPoint Energy’s Interests in Enable Midstream Partners, LP” in Item 1A of Part I of ~~our 2016~~the Registrants’ combined 2020 Form ~~10-K.~~10-K and in Item 1A of Part II of this combined Form 10-Q.


	Three Months Ended September 30,									Nine Months Ended September 30,
	2021			2020			Favorable (Unfavorable)			2021			2020			Favorable (Unfavorable)
	(in millions, except operating statistics)
Revenues	$	487		$	426		$	61		$	2,238		$	1,920		$	318
Cost of revenues (1)	161			108			(53)			978			730			(248)
Revenues less Cost of revenues	326			318			8			1,260			1,190			70
Expenses:
Operation and maintenance	187			186			(1)			579			574			(5)
Depreciation and amortization	82			78			(4)			242			226			(16)
Taxes other than income taxes	41			40			(1)			141			134			(7)
Total expenses	310			304			(6)			962			934			(28)
Operating Income	16			14			2			298			256			42
Other Income (Expense)
Gain on sale	11			—			11			11			—			11
Interest expense and other finance charges	(24)			(28)			4			(73)			(87)			14

Other income (expense), net	(3)			(1)			(2)			(3)			(5)			2
Income (Loss) From Continuing Operations Before Income Taxes	—			(15)			15			233			164			69
Income tax expense (benefit)	1			(9)			(10)			25			22			(3)
Income (Loss) From Continuing Operations	(1)			(6)			5			208			142			66
Income (Loss) From Discontinued Operations (net of tax expense (benefit) of $1 and ($2), respectively)	—			2			(2)			—			(66)			66
Net Income (Loss)	$	(1)		$	(4)		$	3		$	208		$	76		$	132
Throughput (in Bcf):
Residential	13			14			(7)		%	127			110			15		%
Commercial and Industrial	51			48			6		%	192			189			2		%
Total	64			62			3		%	319			299			7		%
Weather (percentage of 10-year average for service area):
Heating degree days	40		%	100		%	(60)		%	101		%	90		%	11		%
Number of metered customers at end of period:
Residential	3,359,891			3,329,032			1		%	3,359,891			3,329,032			1		%
Commercial and Industrial	260,145			258,660			1		%	260,145			258,660			1		%
Total	3,620,036			3,587,692			1		%	3,620,036			3,587,692			1		%

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

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The following table provides ~~pre-tax equity~~variance explanations by major income statement caption for CERC:


	Favorable (Unfavorable)
	Three Months Ended September 30, 2021 vs 2020		Nine Months Ended September 30, 2021 vs 2020
	(in millions)
Revenues less Cost of revenues
Customer rates and impact of the change in rate design, exclusive of the TCJA impact	$	4	$	19
Non-volumetric and miscellaneous revenue, excluding impacts from COVID-19	(1)		16
Weather and usage, excluding impacts from COVID-19	(1)		15
Gross receipts tax, offset in taxes other than income taxes	2		10
Customer growth	1		8
Impacts on usage from COVID-19	6		7
Energy efficiency, offset in operation and maintenance	(2)		2

Refund of protected and unprotected EDIT, offset in income tax expense	(1)		(7)
Total	$	8	$	70
Operation and maintenance
Contract services	$	2	$	6
Merger related expenses, primarily severance and technology	—		4
Energy efficiency, offset in revenues less cost of revenues	2		(2)
Labor and benefits	—		(5)
Support services and miscellaneous operations and maintenance expenses	(5)		(8)

Total	$	(1)	$	(5)
Depreciation and amortization
Incremental capital projects placed in service	$	(4)	$	(16)

Total	$	(4)	$	(16)
Taxes other than income taxes
Gross receipts tax, offset in revenues less cost of revenues	$	(2)	$	(10)
Incremental capital projects placed in service	1		3
Total	$	(1)	$	(7)
Gain on Sale
Net gain on sale of MES	$	11	$	11
Total	$	11	$	11
Interest expense and other finance charges
Reduced interest rates on outstanding borrowings, partially offset by incremental borrowings for capital expenditures	$	4	$	14
Total	$	4	$	14



Other income (expense), net
Money pool investments with CenterPoint Energy interest income	$	2	$	5
Increase to non-service benefit cost	(4)		(3)
Total	$	(2)	$	2

Income Tax Expense. For a discussion of ~~our Midstream Investments business segment for~~effective tax rate per period, see Note 13 to the ~~three and nine months ended September 30, 2017 and 2016:~~Interim Condensed Financial Statements.

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

~~Other Operations~~

~~The following table shows the operating income of our Other Operations 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)
Revenues $ 4
$ 3
$ 11
$ 11
Expenses (2 ) 3
2
6
Operating Income $ 6
$ —
$ 9
$ 5

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 “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Certain Factors Affecting Future Earnings” in Item 7 of Part II ~~of our 2016 Form 10-K,~~and “Risk Factors” in Item 1A of Part I of ~~our 2016~~the Registrants’ combined 2020 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

Historical Cash Flows

The following table summarizes the net cash provided by (used in) operating, investing and financing activities during the nine months ended September 30, 2021 and 2020:


	Nine Months Ended September 30,
	2021						2020
	CenterPoint Energy		Houston Electric		CERC		CenterPoint Energy		Houston Electric		CERC
	(in millions)
Cash provided by (used in):
Operating activities	$	(551)	$	497	$	(1,466)	$	1,439	$	552	$	646
Investing activities	(2,104)		(1,104)		(534)		(683)		(283)		(339)
Financing activities	2,644		576		1,999		(819)		(316)		(307)

Operating Activities. The following items contributed to increased (decreased) net cash provided by operating activities for the nine months ended September 30, ~~2017 and 2016:~~

Nine Months Ended September 30,
2017 2016
(in millions)
Cash provided by (used in):
Operating activities $ 1,031
$ 1,455
Investing activities (892 ) (739 )
Financing activities (279 ) (710 )

~~Cash Provided by Operating Activities~~

~~Net cash provided by operating activities in the first nine months of 2017 decreased $424 million~~2021 compared to the ~~first~~ nine months ~~of 2016~~ended September 30, 2020:


	CenterPoint Energy		Houston Electric		CERC
	(in millions)
Changes in net income after adjusting for non-cash items	$	2,044	$	138	$	52
Changes in working capital	3		(7)		(107)
Increase in regulatory assets (1)	(2,228)		(195)		(1,999)
Change in equity in earnings of unconsolidated affiliates (2)	(1,757)		—		—
Change in distributions from unconsolidated affiliates (2) (3)	7		—		—

Higher pension contribution	25		—		—
Other	(84)		9		(58)
	$	(1,990)	$	(55)	$	(2,112)

(1)The increase in regulatory assets is primarily due to~~changes~~ the incurred 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~~working capital ($301 million), lower net income after adjusting~~ Enable met the held for ~~non-cash~~sale criteria and ~~non-operating items ($116 million; primarily depreciation~~is reflected as discontinued operations on CenterPoint Energy’s Condensed Statements of Consolidated Income. For further information, see Notes 3 and ~~amortization) and decreased cash from other non-current items ($7 million). The changes in working capital items in~~9 to the ~~first nine months of 2017 primarily related to decreased cash provided by taxes receivable; margin deposits, net; net regulatory assets and liabilities; non-trading derivatives, net; and inventory;~~Interim Condensed Financial Statements.

(3)This change is partially offset by ~~increased~~the change in distributions from Enable in excess of cumulative earnings in investing activities noted in the table below.

~~cash provided by~~Investing Activities.The following items contributed to (increased) decreased net ~~accounts receivable/payable; interest and taxes accrued; net other current assets and liabilities; and fuel cost recovery.~~

~~Cash Used in Investing Activities~~

~~Net~~ cash used in investing activities infor the ~~first~~ nine months ~~of 2017 increased $153 million~~ended September 30, 2021 compared to the ~~first~~ nine months ended September 30, 2020:


	CenterPoint Energy		Houston Electric		CERC
	(in millions)


Capital expenditures	$	(259)	$	(358)	$	53
Net change in notes receivable from affiliated companies	—		(456)		9
Change in distributions from Enable in excess of cumulative earnings (1)	(46)		—		—

Proceeds from divestitures	(1,114)		—		(264)


Other	(2)		(7)		7
	$	(1,421)	$	(821)	$	(195)

Table of ~~2016 primarily due~~Contents

(1)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 Notes 3 and 9 to the Interim Condensed Financial Statements.

FinancingActivities. The following items contributed to (increased) decreased cash received for the repayment of notes receivable from Enable ($363 million), decreased proceeds from the sale of marketable securities associated with the Charter merger ($178 million) and increased cash used for acquisitions ($30 million), which were partially offset by decreased cash used for the purchase of Series A Preferred Units ($363 million), decreased capital expenditures ($53 million) and decreased restricted cash ($10 million). In 2017, we acquired AEM for $132 million in cash and, in 2016, we acquired Continuum for $102 million in cash.

~~Cash Used in Financing Activities~~

~~Net~~net cash used in financing activities infor the ~~first~~ nine months ~~of 2017 decreased $431 million~~ended September 30, 2021 compared to the ~~first~~ nine months of 2016 due to increased proceeds from long-term debt ($496 million), decreased payments of long-term debt ($258 million), decreased distributions to ZENS holders ($178 million) and increased short-term borrowings ($10 million), which were partially offset by increased payments of commercial paper ($491 million), increased payments of common stock dividends ($14 million) and increased debt issuance costs ($4 million).ended September 30, 2020:


	CenterPoint Energy		Houston Electric		CERC
	(in millions)
Net changes in commercial paper outstanding	$	1,653	$	—	$	308
Decreased proceeds from issuances of preferred stock	(723)		—		—
Decreased proceeds from issuances of common stock	(672)		—		—
Net changes in long-term debt outstanding, excluding commercial paper	3,264		417		1,699


Net changes in debt issuance costs	(34)		(9)		(10)
Net changes in short-term borrowings	(64)		(5)		(58)

Decreased payment of Common Stock dividends	31		—		—
Decreased payment of preferred stock dividends	8		—		—
Net change in notes payable from affiliated companies	—		32		—

Dividend to parent	—		457		80
Capital contribution to parent associated with the sale of CES	—		—		286

Other	—		—		1
	$	3,463	$	892	$	2,306

Future Sources and Uses of Cash

~~Our~~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 electric transmission and distribution operations and 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, cash payment to OGE associated with the Enable Merger Agreement further discussed in Note 9 to the Interim Condensed Financial Statements, and cash payment expected to be made at the closing of the sale of the Arkansas and Oklahoma Natural Gas businesses that will be passed through to the Arkansas customers as further discussed in Note 3 of the Interim Condensed Financial Statements, the Registrants’ principal anticipated cash requirements for the remaining three months of ~~2017~~2021 include the following:


	CenterPoint Energy		Houston Electric		CERC
	(in millions)
Estimated capital expenditures	$	1,087	$	493	$	369
Scheduled principal payments on Securitization Bonds	73		73		—
Minimum contributions to pension plans and other post-retirement plans	5		—		1

As a result of the February 2021 Winter Storm Event, from February 12, 2021 to February 22, 2021, management estimates CenterPoint Energy spent approximately an incremental $2.1 billion more on natural gas supplies (inclusive of an incremental $2.0 billion more spent by CERC on natural gas supplies). These amounts are estimates as of September 30, 2021 and remain subject to final settlement. While CenterPoint Energy and CERC will seek to recover the increased costs from its customers (although timing of recovery is uncertain), in the interim, CERC has issued additional external debt financing and used internally generated cash from operations to pay for such natural gas working capital. For further details, see Note 12 to the Interim Condensed Financial Statements. The proceeds from the debt financing, along with existing sources of liquidity,

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provided CERC with sufficient capital to address the settlement of natural gas purchases, including the associated upstream supply charges, at the end of March 2021. Any additional external debt financing and/or partial or delayed recovery may negatively impact CenterPoint Energy’s or CERC’s credit metrics, and may lead to a downgrade of CenterPoint Energy’s or CERC’s credit rating.

Although CenterPoint Energy’s and CERC’s extraordinary costs from the increase in natural gas prices are subject to available natural gas recovery mechanisms in their jurisdictions (although timing of recovery is uncertain), until such amounts are ultimately recovered from customers, CenterPoint Energy and CERC will continue to incur increased finance-related costs, resulting in a significant use of cash. See “— Regulatory Matters — February 2021 Winter Storm Event” below.

Capital Expenditures for Climate-Related Projects. On September 23, 2021, CenterPoint Energy announced its capital expenditure plan for the next 10 years. As part of its 10-year plan to spend over $40 billion on capital expenditures, ~~of approximately $473 million;~~it anticipates spending over $3 billionin clean energy investments and enablement, which may be used to support, among other things, renewable generation and electric vehicle expansion.

~~maturing senior notes of $250 million;~~

~~scheduled principal payments on Securitization Bonds of $64 million;~~

~~restoration costs associated with Hurricane Harvey;~~

~~dividend payments on CenterPoint Energy, Inc. common stock; and~~

~~interest payments on debt.~~

WeThe Registrants expect that borrowings under our credit facilities, proceeds from commercial paper and anticipated cash flows from operations and distributions on our investments in common units and Series A Preferred Units from Enable will be sufficient to meet our anticipated cash needs for the remaining three months of ~~2017.~~2021 will be met with borrowings under their credit facilities, proceeds from the issuance of long-term debt, term loans or common stock, anticipated cash flows from operations, with respect to CenterPoint Energy and CERC, proceeds from commercial paper, with respect to CenterPoint Energy, distributions from Enable until the closing of the Enable Merger which is expected in 2021, including any proceeds therefrom, distributions from Energy Transfer or proceeds from dispositions of Energy Transfer common units or Energy Transfer Series G Preferred Units after the expected closing of the Enable Merger, and, with respect to CERC, proceeds from any potential asset sales, including the announced sale of our Natural Gas businesses in Arkansas and Oklahoma, which is expected to close by the end of 2021, subject to the satisfaction of customary closing conditions, including final orders from the APSC and OCC approving the transaction. Discretionary financing or refinancing may result in the issuance of equity securities of CenterPoint Energy or debt securities of the Registrants in the capital markets or the arrangement of additional credit ~~facilities.~~facilities or term bank loans. Issuances of equity or 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. For further information about the Enable Merger and the announced sale of our Arkansas and Oklahoma Natural Gas businesses, see Notes 3 and 9, respectively, to the Interim Condensed Financial Statements.

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 12 and guarantees as discussed in Note 14(b) to the Interim Condensed Financial Statements, we have no off-balance sheet arrangements.

Regulatory Matters

~~Brazos Valley Connection Project~~COVID-19 Regulatory Matters

~~Construction~~For information about COVID-19 regulatory matters, see Note 6 to the Interim Condensed Financial Statements.

February 2021 Winter Storm Event

For information about the February 2021 Winter Storm Event, see Note 6 to the Interim Condensed Financial Statements. The table below presents the estimated incremental natural gas costs included in regulatory assets as of September 30, 2021 by state as a result of the February 2021 Winter Storm Event and CenterPoint Energy’s and CERC’s requested recovery status as of October 2021:

State

Recovery Status

Legislative Activity

Estimated Incremental Gas Cost
(in millions)

Arkansas

Filed application on April 16, 2021 to recover over a five-year period beginning May 1, 2021. On April 28, 2021, APSC approved CERC to begin recovery effective May 2021 at a customer deposit interest rate of 0.8% over a five year period, subject to a true-up after APSC determines appropriate allocation, length of recovery, and carrying charge. The September 2021 hearing was waived.

A securitization bill has been signed by the Arkansas governor that allows for an alternate recovery period longer than the proposed recovery mechanism.

329

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State

Recovery Status

Legislative Activity

Estimated Incremental Gas Cost
(in millions)

Louisiana

Filed application on April 16, 2021 for North Louisiana to recover over a three-year period beginning May 1, 2021. LPSC approved on April 22, 2021.

None.

Minnesota

Filed application on March 15, 2021 requesting to recover over a two-year period beginning May 1, 2021. Modified request and worked with other utilities to propose common definition of extraordinary gas costs to be recovered over a 27-month period starting September 1, 2021 using volumetric, seasonally adjusted, and stepped surcharge rates. MPUC issued order approving modified cost recovery subject to a prudence review. The prudence review schedule has testimonies being filed by parties October 2021 through February 2022, a hearing scheduled in February 2022, an administrative law judge report in May 2022 and MPUC final order issued by August 2022.

None.

405

Mississippi

Recovery began in September 2021 through normal gas cost recovery.

None.

Oklahoma

Filed application on February 25, 2021 to defer incremental gas costs and OCC approved on July 1, 2021. Securitization application was filed on May 17, 2021. Responsive testimony was filed by Public Utility Division staff on October 18, 2021 which recommended OCC issue a financing order to securitize the extraordinary gas costs and reject CERC’s request to calculate carrying costs using the long-term cost of debt. The Attorney General filed a statement of position on October 22, 2021. The procedural schedule calls for rebuttal testimony to be filed November 15, 2021, a hearing on the merits on December 1, 2021 and order issued by February 25, 2022.

A securitization bill has passed in the Oklahoma legislature.

Texas

Cost currently deferred to a regulatory asset. Securitization application was filed on July 30, 2021. Intervenor and staff testimony was received in September and October and CERC filed rebuttal testimony on October 25, 2021. A joint notice of settlement was filed by the Texas utilities that are requesting securitization, intervenors, and Railroad Commission staff on October 29, 2021. The settlement resolves all contested issues and includes an agreement by all signatories that the costs incurred by the utilities to purchase natural gas volumes during February 2021 are reasonable and necessary and were prudently incurred. As part of the settlement, CERC agreed to limit the interim carrying cost rate to its actual interim financing rate of 0.7%. A merits hearing was held on November 2, 2021. The RRC is expected to make a final decision of the regulatory asset amount on November 10, 2021.

A securitization bill has been signed by the Texas governor which authorizes the Railroad Commission to use securitization financing and issuance of customer rate relief bonds for recovery of extraordinary gas costs.

1,082

Total CERC

1,970

Indiana North

Recovery began September 2021 with 50% of the February 2021 variance recovered evenly over the 12‐month period September 2021 to August 2022, with the remainder of the variance recovered through a volumetric per‐therm allocation over the same 12-month period.

None.

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State

Recovery Status

Legislative Activity

Estimated Incremental Gas Cost
(in millions)

Indiana South

IURC issued order July 28, 2021. Recovery began August 2021 with 50% of the February 2021 variance recovered evenly over the 12‐month period August 2021 to July 2022, with the remainder of the variance recovered through a volumetric per‐therm allocation over the same 12-month period.

None.

Total CenterPoint Energy

2,077

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, will build a 300 MW solar array in Posey County, Indiana through a special purpose entity, Posey Solar. Upon completion of construction, which is projected to be at the end of 2023, and subject to approval by the IURC, 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 is also seeking approval for a 100 MW solar PPA in Warrick County, Indiana. The request accounts 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 and authorizing Indiana Electric to enter into the PPA; however, the IURC denied the request to preemptively offset imputed debt in the PPA cost.

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 ~~Brazos Valley Connection~~facility. A hearing is currently scheduled for January 26 through 31, 2022. The estimated $323 million turbine facility would be constructed at the current site of the A.B. Brown power plant in ~~February 2017,~~Posey County, Indiana and would provide a combined output of 460 MW. Construction of the turbines will begin following receipt of approval by the IURC, which is anticipated in the second half of 2022. The turbines are targeted to be operational in 2024. 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 MWs of solar power, under a 15-year PPA, from Oriden, which is developing a solar project in Vermillion County, Indiana, and 150 MWs of solar power, under a 20-year PPA, from Origis Energy, 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.

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 to seek securitization in the future associated with planned coal generation retirements.

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. VEDO filed a similar application with the PUCO in September 2021. 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. As a part of the restructuring, VUHI may approach certain of its debt holders with an offer to exchange existing VUHI debt for CERC debt. The applications request confirmation of approval to reissue 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. If CenterPoint Energy moves forward with the restructuring, including any VUHI debt exchanges, it is expected to be completed in the first half of 2022.

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Indiana South Base Rate Case (CenterPoint Energy)

On October 30, 2020, and as subsequently amended, Indiana South filed its base rate case with the IURC seeking approval for a revenue increase of approximately $29 million. This rate case filing is required under Indiana TDSIC statutory requirements before the completion of Indiana South’s capital expenditure program, approved in 2014 for investments starting in 2014 through 2020. The revenue increase is based upon a requested ROE of 10.15% and an overall after-tax rate of return of 5.99% on total rate base of approximately $469 million. Indiana South has utilized a projected test year, reflecting its 2021 budget as the basis for the revenue increase requested and proposes to implement rates in two phases. The first phase of rate implementation will occur as of the date of an order in this proceeding, expected in October 2021, and the second phase of rate implementation will occur at the completion of the test year, as of December 31, 2021. On April 23, 2021, a Stipulation and Settlement Agreement was filed resolving all issues in the case. The settlement recommended a revenue increase of $21 million based on a 9.7% ROE and an overall after-tax rate of return of 5.78% on total rate base of approximately $469 million. A settlement hearing was held on June 24, 2021. On October 6, 2021, the IURC issued an order approving the settlement. Phase one rates, reflecting actual plant-in-service and cost of capital through June 2021, became effective in October 2021 and phase two rates, reflecting actual plant-in-service and cost of capital through December 2021 with certain adjustments, will become effective in March 2022.

Indiana North Base Rate Case (CenterPoint Energy)

On December 18, 2020, Indiana North filed its base rate case with the IURC seeking approval for a revenue increase of approximately $21 million. This rate case filing is required under Indiana TDSIC statutory requirements before the completion of Indiana North’s capital expenditure program, approved in 2014 for investments starting in 2014 through 2020. The revenue increase is based upon a requested ROE of 10.15% and an overall after-tax rate of return of 6.32% on total rate base of approximately $1,611 million. Indiana North has utilized a projected test year, reflecting its 2021 budget as the basis for the revenue increase requested and proposes to implement rates in two phases. The first phase of rate implementation will occur as of the date of an order in this proceeding, expected in October 2021, and the second phase of rate implementation will occur at the completion of the test year, as of December 31, 2021. On June 25, 2021, a Stipulation and Settlement Agreement was filed resolving all issues in the case. The settlement recommended a revenue decrease of $6 million based on a 9.8% ROE and an overall after-tax rate of return of 6.16% on total rate base of approximately $1,611 million. A settlement hearing was held August 6, 2021. Under Indiana statutory requirements, the IURC has a minimum of 300 days and maximum of 360 days from the date of the filing of Indiana North’s case-in-chief to issue an order.

Space City Solar Transmission Interconnection Project (CenterPoint Energy and Houston Electric)

On December 17, 2020, Houston Electric filed a CCN application with the PUCT for approval to build a 345 kV transmission line in Wharton County, Texas connecting the Hillje substation on Houston Electric’s transmission system to the planned 610 MW Space City Solar Generation facility being developed by third-party developer EDF Renewables. Depending on the route ultimately approved by the PUCT, the estimated capital cost of the transmission line project ranges from approximately $23 million to $71 million. The actual capital costs of the project will depend on actual land acquisition costs, construction costs, and other factors in addition to route selection. In January 2021, Houston Electric executed a Standard Generation Interconnection Agreement for the Space City Solar Generation facility with EDF Renewables, which also provided security for the transmission line project in the form of a $23 million letter of credit, the amount of which is subject to change depending on the route approved. A hearing at the PUCT was held on June 28, 2021. On September 1, 2021, the administrative law judge issued a proposal for decision recommending a route that costs $25 million. The PUCT will consider the proposal for decision at the November 18, 2021 open meeting. The PUCT is required to issue its final decision on the transmission line project no later than December 2021. Subject to PUCT approval, Houston Electric expects to complete construction and ~~energize~~energization of the ~~Brazos Valley Connection~~transmission line by June 2022.

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Texas Legislation (CenterPoint Energy and Houston Electric)

In addition to the legislative activity discussed above, the Texas legislature enacted the following in 2021:

•Senate Bill 2 reforms the ERCOT board to be comprised of a total of eleven directors: three ex officio representatives, and eight members who are unaffiliated with any market participants. The three ex officio directors—the ERCOT CEO, the Public Counsel of the Office of Public Utility Counsel, and the PUCT Chair—serve on the board by virtue of their official position for as long as they hold that position. Two members are non-voting directors: the ERCOT CEO and the PUCT Chair. The other nine members are voting directors. On October 11, 2021, the PUCT announced the first two selected directors of the ERCOT board, Mr. Paul Foster and Mr. Carlos Aguilar, and simultaneously designated Mr. Foster as the Chair of the ERCOT board. As a result of these selections, the ERCOT board is now constituted in accordance with Senate Bill 2 and is authorized to serve as ERCOT’s governing body. On November 1, 2021, the PUCT announced the selection of three additional directors of the ERCOT board, Mr. William Flores, Ms. Elaine Mendoza and Mr. Zin Smati, and simultaneously designated Mr. Flores as the Vice Chair of the ERCOT board. The remaining three directors of the ERCOT board are expected to be named in the ~~first quarter~~coming months.

•Senate Bill 3 establishes weatherization and other power grid requirements including the design and operation of ~~2018, ahead~~a load management program for nonresidential customers during an energy emergency activation level 2 or higher event and the ability to recover the reasonable and necessary costs of the ~~original June 1, 2018 energization date.~~ program.

•Senate Bill 415 allows a TDU to seek prior PUCT approval to contract with a power generation company for a PUCT assigned proportional share of electric energy storage system at the distribution level and recover certain costs and a reasonable return on contract payments if contract terms satisfy relevant accounting standards for a capital lease or finance lease.

•House Bill 2483 allows a TDU to procure, own and operate, or jointly own with another TDU, transmission and distribution facilities with a lead time of at least six months that would aid in restoring power to the utility's distribution customers following a widespread outage, excluding storage equipment or facilities. Reasonable and necessary costs can be recovered using the rate of return on investment from the most recent base rate proceeding. Recovery of incremental operation and maintenance expenses and any return not recovered in a rate proceeding can be deferred until a future ratemaking proceeding. Additionally, a TDU may lease and operate facilities that provide temporary emergency electric energy to aid in restoring power to the utility’s distribution customers during a widespread power outage. Leasing and operating costs can be recovered using the utility’s rate of return from the most recent base rate proceeding and incremental operation and maintenance expenses can be deferred. The lease must be treated as a capital lease or finance lease for ratemaking purposes.

•Senate Bill 1281 removes the requirement for an electric utility to amend its CCN to construct a transmission line that connects existing transmission facilities to a substation or metering point if certain conditions are met and adds a customer benefit test into consideration. The bill also requires ERCOT to conduct biennial assessments of grid reliability in extreme weather scenarios.

Houston Electric continues to ~~anticipate that~~review the ~~final capital costs~~effects of the ~~project will be within~~legislation, and is working with the ~~estimated range~~PUCT regarding proposed rulemakings and pursuing implementation of ~~approximately $270-$310 million in~~these items where applicable. For example, Houston Electric secured, on a temporary short-term basis, a lease of 135 MWs of mobile generation to address major weather events like Hurricane Nicholas and deployed some of the ~~PUCT’s original order.~~equipment during the restoration process. Houston Electric is ~~eligible~~further evaluating a longer-term mobile generation solution that could include the lease of incremental MWs to ~~continue making filings~~increase the resiliency for customers during future major weather events.

Minnesota Base Rate Cases (CenterPoint Energy and CERC)

On October 28, 2019, CERC filed a general rate case with the MPUC seeking approval for a revenue increase of approximately $62 million with a projected test year ended December 31, 2020. The revenue increase is based upon a requested ROE of 10.15% and an overall after-tax rate of return of 7.41% on a total rate base of approximately $1,307 million. CERC implemented interim rates reflecting $53 million for natural gas used on and after January 1, 2020. In September 2020, a settlement that addressed all issues except the Inclusive Financing/TOB Financing proposal by the City of Minneapolis was signed by a majority of all parties and was filed with the Office of Administrative Hearings. A stipulation between the City of Minneapolis and CERC addressing the TOB proposal was filed on September 2, 2020. The settlement reflects a $39 million increase and was based on an overall after-tax rate of return of 6.86% and does not specify individual cost of capital components. On March 1, 2021, the MPUC issued a written final order approving the $39 million increase and rejected the TOB stipulation. The order also required CERC and the City of Minneapolis to submit a future filing to allow for further development of a potential TOB pilot program and additional or expanded low-income conservation improvement programs. A compliance filing was submitted on March 12, 2021 proposing a final rate implementation on June 1, 2021 and the interim

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refund occurring in June 2021, contingent on final MPUC approval. Pursuant to MPUC approval, final rates were implemented on June 1, 2021 and the interim rate refunds were applied to customer accounts starting on June 12, 2021.

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. If the alternative request is approved, a final rate increase of $40 million would be implemented in the rate case on January 1, 2022. The alternative proposal includes 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 ~~land acquisition~~gas costs incurred to serve customers in February 2021 from the 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.

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 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 ~~interim TCOS updates~~electrolysis with renewable electricity such as solar);

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

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

~~Freeport Project~~

~~In April 2017, Houston Electric submitted a proposal~~CERC expects to ~~ERCOT requesting~~submit its ~~endorsement~~first innovation plan to the MPUC in 2022. The maximum allowable cost for an innovation plan will start at 1.75% of ~~Houston Electric’s approximately $250 million transmission project~~the utility's revenue in the ~~Freeport, Texas area, which includes enhancements~~state and could increase to two existing substations and the construction of a new 345 kv double-circuit transmission line. Capital expenditures for the project will be incremental to its previously disclosed five-year capital plan. Houston Electric anticipates a decision from ERCOT in the fourth quarter of 2017, and if approved, will make the necessary filings with the PUCT.

~~PHMSA Matters~~

On December 14, 2016, PHMSA announced an interim final rule to impose industry-developed recommendations as enforceable safety standards for downhole (underground) equipment, including wells, wellbore tubing, and casing, at both interstate and intrastate underground natural gas storage facilities. Both CERC and Enable own and operate underground storage facilities that are4% 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 and preparedness, training and recordkeeping. This rule went into effect on January 18, 2017, with an announced compliance deadline of January 18, 2018. PHMSA determined, however, that it will not issue enforcement citations to any operators for violations of provisions ofapproval by the interim final rule that had previously been non-mandatory provisions of American Petroleum Institute Recommended Practices 1170 and 1171 until one year after PHMSA issues a final rule, which it expects to publish in January 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 impact of any modifications to this rule.MPUC.

Rate Change Applications

~~Houston Electric and CERC~~The 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. In addition, Houston Electric is periodically involved in proceedings to adjust 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), its cost of service adjustments in Arkansas, Louisiana, Mississippi and Oklahoma (FRP, RSP, RRA and ~~PBRC)~~PBRC, respectively), its decoupling mechanism in Minnesota, and its energy efficiency cost trackers in Arkansas, Minnesota, Mississippi and Oklahoma (EECR, CIP, EECR and ~~EECR)~~EECR, respectively). CenterPoint Energy is periodically involved in proceedings to adjust its capital tracking mechanisms in Indiana (CSIA for gas and 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 2020 Form 10-K was filed with the SEC.

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~~

CenterPoint Energy and Houston Electric (PUCT)

~~AMS~~EECRF

~~N/A~~22

June

~~2017~~

2021

~~TBD~~March 2022

~~TBD~~November 2021

~~Final reconciliation~~The requested $63 million is comprised of ~~AMS surcharge proposing a $28.7~~the following: 2022 Program and Evaluation, Measurement and Verification costs of $38 million, ~~refund for AMS revenue in excess~~2020 under-recovery of ~~expenses, for which a reserve has been recorded. Refunds began in September 2017.~~

~~EECRF (2)~~

~~$11.0~~

~~June~~

~~2017~~

~~TBD~~

~~Annual reconciliation filing for program year 2016~~$3 million including interest, and ~~includes proposed performance~~2020 earned bonus of ~~$11~~$22 million. ~~Anticipated effective date of March 2018.~~

~~DCRF~~

~~41.8~~

~~April~~

~~2017~~

~~September~~

~~2017~~

~~July~~

~~2017~~

~~Based on an increase in eligible distribution-invested capital for 2016 of $479 million. Unanimous Stipulation and Settlement Agreement~~A settlement was filed in ~~June 2017 for $86.8~~September 2021 reducing the amount requested by $315 thousand and recommending 2022 Program and Evaluation, Measurement and Verification costs of $38 million, ~~(a $41.8~~2020 under-recovery of $3 million ~~annual increase). The settlement agreement also included the AMS refund referenced above.~~

~~TCOS~~

~~7.8~~

~~December 2016~~

~~February~~

~~2017~~

~~February~~
~~2017~~

~~Based on an incremental increase in total rate base~~including interest, and 2020 earned bonus of ~~$109.6~~$22 million.

TCOS

~~39.3~~9

~~September 2017~~March 2021

~~TBD~~April
2021

~~TBD~~April 2021

~~Based on an incremental increase in total rate base of $263.4 million.~~

~~South Texas and Beaumont/East Texas (Railroad Commission)~~

~~GRIP~~

~~7.6~~

~~March~~

~~2017~~

~~July~~

~~2017~~

~~June~~

~~2017~~

Based on net change in invested capital of ~~$46.5~~$80 million.

TCOS

August 2021

October 2021

Based on net change of invested capital of $166 million.

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Mechanism

Annual Increase (Decrease) (1)

(in millions)

Filing
Date

Effective Date

Approval Date

Additional Information

CenterPoint Energy and CERC - Arkansas (APSC)

FRP

(10)

April
2021

October 2021

September 2021

Based on ROE of 9.50% with 50 basis point (+/-) earnings band. Revenue decrease of $10.4 million based on prior test year true-up earned return on equity of 11.53%. The initial term of Rider FRP was terminated in September 2021. A petition for rehearing was filed on October 8, 2021. On October 14, 2021, as part of the settlement filed in the asset sale docket, CERC filed a motion to hold the petition for rehearing in abeyance pending closing of the asset sale. The APSC issued an order on October 15, 2021 granting the motion. Additionally, a request to extend the Rider FRP term for an additional five years was filed on May 5, 2021. On October 19, 2021, as part of the settlement filed in the asset sale docket, CERC filed a motion to hold this proceeding in abeyance and the APSC granted the motion on October 21, 2021.

CenterPoint Energy and CERC - Beaumont/East Texas, South Texas, Houston and Texas Coast (Railroad Commission)

~~Rate Case~~GRIP

~~16.5~~28

~~November 2016~~March 2021

~~May~~

~~2017~~

June
2021

~~May~~

~~2017~~

June
2021

~~The Railroad Commission approved a unanimous settlement agreement establishing parameters for future GRIP filings, including a 9.6% ROE~~Based on ~~a 55.15% equity ratio.~~net change in invested capital of $197 million.

~~Texarkana, Texas Service Area (Multiple City Jurisdictions)~~CenterPoint Energy and CERC - Louisiana (LPSC)

~~Rate Case~~

~~1.1~~

~~July~~

~~2017~~RSP (1)

~~September~~

~~2017~~

~~August 2017~~September 2021

~~Approved rates are consistent~~TBD

TBD

Based on authorized ROE of 9.95% 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~~50 basis point (+/-) earnings band. The North Louisiana decrease, with certain non-recurring true-up adjustments outside the earnings band, is a decrease of ~~$0.5~~$1 million based on ~~2016 program performance.~~a test year ended June 2021 and adjusted earned ROE of 14.8%. The South Louisiana increase, with certain non-recurring true-up adjustments outside the earnings band, is an increase of $8 million based on a test year ended June 2021 and adjusted earned ROE of 1.7%. Per the 2020 RSP order, a request to extend the RSP for an additional three year term was filed in July 2021.

~~FRP~~CenterPoint Energy and CERC - Minnesota (MPUC)

Rate Case (1)

~~7.6~~67

~~April~~
~~2017~~November 2021

~~October~~
~~2017~~TBD

TBD

See discussion above under Minnesota Base Rate Case.

Decoupling

N/A

September ~~2017~~2021

September 2021

TBD

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.

Decoupling

N/A

September 2020

March 2021

Represents under-recovery of approximately $2 million recorded for and during the period July 1, 2019 through June 30, 2020, including approximately $1 million related to the period July 1, 2018 through June 30, 2019.

Rate Case

October 2019

June
2021

March 2021

See discussion above under Minnesota Base Rate Case.

CIP Financial Incentive

May
2021

December 2021

October 2021

CIP Financial Incentive based on 2020 activity.

CenterPoint Energy and CERC - Mississippi (MPSC)

RRA

April
2021

September 2021

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~~9.81% 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~~

~~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.~~2020 test year adjusted earned ROE of 7.49%.

CenterPoint Energy and CERC - Oklahoma (OCC)

PBRC

~~2.2~~(1)

March

~~2017~~

2021

~~November 2017~~August 2021

~~October 2017~~August 2021

Based on ROE of 10% with 50 basis point (+/-) earnings band. Revenue credit of approximately $1 million based on 2020 test year adjusted earned ROE of 12.42%. A settlement was filed in June 2021 with a hearing held on July 1, 2021. OCC approved revenue credit of approximately $1 million on August 6, 2021.

CenterPoint Energy - Indiana South - Gas (IURC)

Rate Case

October 2020

October 2021

See discussion above under Indiana South Base Rate Case.

CSIA

(1)

April
2021

July
2021

Requested an increase of $11 million to rate base, which reflects a $(1 million) annual decrease in current revenues. 80% of revenue requirement is included in requested rate increase and 20% is deferred until the next rate case. The mechanism also includes refunds associated with the TCJA, resulting in no change to the previous credit provided, and a change in the total (over)/under-recovery variance of less than $1 million annually.

CenterPoint Energy - Indiana North - Gas (IURC)

Rate Case (1)

December 2020

TBD

See discussion above under Indiana North Base Rate Case.

CSIA

April
2021

July
2021

Requested an increase of $37 million to rate base, which reflects a $5 million annual increase in current revenues. 80% of revenue requirement is included in requested rate increase and 20% is deferred until the next rate case. The mechanism also includes refunds associated with the TCJA, resulting in no change to the previous credit provided, and a change in the total (over)/under-recovery variance of $6 million annually.

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~~(1)~~Mechanism

~~Represents proposed increases when effective date and/or approval date is not yet determined. Approved rates could differ materially from proposed rates.~~

Annual Increase (Decrease) (1)

(in millions)

Filing
Date

Effective Date

Approval Date

Additional Information

~~(2)~~CenterPoint Energy - Ohio (PUCO)

DRR

~~Amounts are recorded when approved.~~

April
2021

September 2021

Requested an increase of $71 million to rate base for investments made in 2020, which reflects a $9 million annual increase in current revenues. A change in (over)/under-recovery variance of $5 million annually is also included in rates.

CenterPoint Energy - Indiana Electric (IURC)

TDSIC

February 2021

May
2021

Requested an increase of $28 million to rate base, which reflects a $3 million annual increase in current revenues. 80% of the revenue requirement is 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

February 2021

June
2021

May
2021

Reflects an $8 million annual increase in current revenues through a non-traditional rate making approach related to a 50 MW universal solar array placed in service in January 2021.

ECA

May
2021

September 2021

Requested an increase of $39 million to rate base, which reflects a $2 million annual increase in current revenues. 80% of the revenue requirement is included in requested rate increase and 20% is deferred until next rate case. The mechanism also included a change in (over)/under-recovery variance of less than $1 million annually.

TDSIC (1)

August 2021

TBD

Requested an increase of $35 million to rate base, which reflects a $3 million annual increase in current revenues. 80% of the revenue requirement is 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.

(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. At the EPA’s request, the D.C. Circuit withheld the portion of its mandate that would effectuate the reinstatement of the CPP rule until the EPA responds to the court’s decision with a rulemaking; this means that the CPP rule will not take effect during the pendency of the EPA’s rulemaking process. As of September 1, 2021, which is the date of the EPA’s latest court filing in the ACE rule litigation, the EPA is still in the process of developing a new rule to replace the CPP and ACE rules; however, 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.

Various states and industry parties have filed petitions for a writ of certiorari with the U.S. Supreme Court seeking review of the circuit court decision vacating the ACE rule; however, the Biden administration has indicated it will not appeal the ACE decision and does not intend to seek reinstatement of the CPP. CenterPoint Energy is currently unable to predict what a new replacement rule would require. President Biden has also signed an executive order requiring agencies to review environmental actions taken by the Trump administration, and the Biden administration has issued a memorandum to departments and agencies to refrain from proposing or issuing rules until a departmental or agency head appointed or designated by the Biden administration has reviewed and approved the rule.

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 has indicated an intent to lead negotiations at the next global climate conference in Glasgow, Scotland. Shortly after taking office in January 2021, President Biden issued a series of executive orders designed to address climate change. Reentry into the Paris Agreement, any revised climate commitments coming out of Glasgow, and President Biden’s executive orders may result in the development of additional regulations or changes to existing regulations. On April 22, 2021, President Biden announced new goals of 50% reduction of economy-wide GHG emissions, and 100% carbon-free electricity by 2035. 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

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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 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 Biden administration 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 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 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.

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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 emission 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’ or Enable’s 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 and Enable’s natural gas gathering, processing and transportation and crude oil gathering businesses could experience lower revenues. 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 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 Facilities

~~Our~~The Registrants may draw on their respective revolving credit facilities ~~may be drawn on by the companies~~ from time to time to provide funds used for general corporate and limited liability company purposes, including to backstop ~~the companies’~~CenterPoint Energy’s and CERC’s commercial paper programs. The facilities may also be utilized to obtain letters of credit. For further details related to ~~our~~the Registrants’ revolving credit facilities, see Note 12 to the Interim Condensed Financial Statements.

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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 September 30, 2021. As of October 21, 2021, the Registrants had the following revolving credit facilities and ~~the 2017 amendments, please see Note 11 to our Interim Condensed Financial Statements.~~

Asutilization of ~~October 26, 2017, we had the following~~such facilities:


			Amount Utilized as of October 21, 2021
Registrant	Size of Facility		Loans		Letters of Credit		Commercial Paper		Weighted Average Interest Rate	Termination Date
	(in millions)
CenterPoint Energy	$	2,400	$	—	$	11	$	1,164	0.18%	February 4, 2024
CenterPoint Energy (1)	400		—		—		265		0.17%	February 4, 2024


Houston Electric	300		—		—		—		—%	February 4, 2024
CERC	900		—		—		715		0.17%	February 4, 2024
Total	$	4,000	$	—	$	11	$	2,144

Company
Size of
Facility

Amount
Utilized at
October 26, 2017 (1)
Termination Date
(in millions)
CenterPoint Energy $ 1,700
$ 403
⁽²⁾
March 3, 2022
Houston Electric 300
4
⁽³⁾
March 3, 2022
CERC Corp. 900
561
⁽⁴⁾
March 3, 2022

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


~~(1)~~	Based on the consolidated debt to capitalization covenant in our revolving credit facility and the revolving credit facility of each of Houston Electric and CERC Corp., we would have been permitted to utilize the full capacity of such revolving credit facilities, which aggregated $2.9 billion as of September 30, 2017.


~~(2)~~	~~Represents outstanding commercial paper of $397 million and outstanding letters of credit of $6 million.~~


~~(3)~~	~~Represents outstanding letters of credit.~~


~~(4)~~	~~Represents outstanding commercial paper.~~

Borrowings under each of the ~~three~~ revolving credit facilities are subject to customary terms and conditions. However, there is no requirement that the borrower ~~make~~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 each of the revolving credit facilities are subject to acceleration upon the occurrence of events of default that we consider customary. The revolving credit facilities also provide for customary fees, including commitment fees, administrative agent fees, fees in respect of letters of credit and other fees. In each of the ~~three~~ revolving credit facilities, the spread to LIBOR and the commitment fees fluctuate based on the borrower’s credit rating. Each 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 the ~~three~~four revolving credit facilities.

Long-term Debt ~~Financing Transactions~~

In January 2017, Houston Electric issued $300 million aggregate principal amount of general mortgage bonds. In February 2017, CenterPoint Energy retired $250 million aggregate principal amount of its 5.95% senior notes at their maturity. In August 2017, CenterPoint Energy issued $500 million aggregate principal amount of unsecured senior notes. In August 2017, CERC Corp. issued $300 million aggregate principal amount of unsecured senior notes. For ~~further~~detailed information about ~~our 2017~~the Registrants’ debt transactions in 2021, see Note 1112 to ~~our~~the Interim Condensed Financial Statements.

Securities Registered with the SEC

On ~~January 31, 2017, CenterPoint Energy, Houston Electric and CERC Corp.~~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 debt securities and junior subordinated debt securities and an indeterminate number of ~~CenterPoint Energy’s~~ shares of ~~common stock,~~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 2021, see Note 12 to the Interim Condensed Financial Statements.

Temporary Investments

As of October ~~26, 2017, we~~21, 2021, the Registrants had no temporary ~~external~~ investments.

Money Pool

~~We have~~The Registrants participate in a money pool through which ~~the holding company~~they and ~~participating~~certain of 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 under ~~our~~CenterPoint Energy’s revolving credit facility or the sale of ~~our~~CenterPoint Energy’s commercial paper. The net funding requirements of the CERC money pool are expected to be met with borrowings under CERC’s revolving credit facility or the sale of CERC’s commercial paper. The money pool may not provide sufficient funds to meet the Registrants’ cash needs.

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The table below summarizes CenterPoint Energy money pool activity by Registrant as of October 21, 2021:


	Weighted Average Interest Rate	Houston Electric		CERC
		(in millions)
Money pool investments (borrowings)	0.18%	$	(133)	$	—

Impact on Liquidity of a Downgrade in Credit Ratings

The interest on borrowings under ~~our~~the credit facilities is based on ~~our~~each respective borrower’s credit ~~rating. On August 4, 2017, S&P revised its rating outlooks on senior debt of CenterPoint Energy, Houston Electric and CERC Corp. to positive from developing and affirmed its~~ ratings. On September 24, 2017, Fitch upgraded Houston Electric’s senior secured debt rating to A+ and maintained its rating outlook of stable. In addition, Fitch revised its rating outlooks on senior debt of CenterPoint Energy and CERC Corp. to positive from stable and affirmed its ratings.

As of October ~~26, 2017,~~21, 2021, Moody’s, S&P and Fitch had assigned the following credit ratings to ~~senior debt of CenterPoint Energy and certain subsidiaries:~~

the borrowers:

~~Moody’s~~

Moody’s

S&P

Fitch

~~Company/Instrument~~Registrant

~~Rating~~Borrower/Instrument

Rating

Outlook (1)

Rating

Outlook (2)

Rating

Outlook (3)

CenterPoint Energy

CenterPoint Energy Senior

Unsecured Debt

~~Baa1~~Baa2

Stable

~~BBB+~~BBB

~~Positive~~Stable

BBB

~~Positive~~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

A1A2

Stable

~~Positive~~Stable

A+A

Stable

CERC

CERC Corp. Senior Unsecured

Debt

~~Baa2~~A3

~~Stable~~Negative

A-BBB+

~~Positive~~Stable

~~BBB~~A-

~~Positive~~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 facilities. If ~~our~~the Registrants’ credit ratings ~~or those of Houston Electric or CERC Corp.~~ 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,~~2021, the impact on the borrowing costs under the ~~three~~four revolving credit facilities would have been ~~immaterial.~~insignificant. A decline in 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, a wholly-owned subsidiary of CERC Corp. 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~~$223 million as of September 30, ~~2017.~~2021. The amount of collateral will depend on seasonal variations in transportation levels.

ZENS and Securities Related to ZENS (CenterPoint Energy)

If ~~our~~CenterPoint Energy’s creditworthiness were to drop such that ZENS holders thought ~~our~~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 TWZENS-Related Securities that ~~we own~~CenterPoint Energy owns or from other sources. ~~We own~~CenterPoint Energy owns shares of TWZENS-Related Securities equal to

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approximately 100% of the reference shares used to calculate ~~our~~its obligation to the holders of the ZENS. ZENS exchanges result in a cash outflow because tax deferrals related to the ZENS and TWshares of ZENS-Related Securities ~~shares~~ would typically cease when ZENS are exchanged or otherwise retired and TWshares of ZENS-Related Securities ~~shares~~ 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 September 30, ~~2017,~~2021, deferred taxes of approximately ~~$472~~$506 million would have been payable in ~~2017.~~2021. If all the TWZENS-Related Securities had been sold on September 30, ~~2017,~~2021, capital gains taxes of approximately ~~$331~~$165 million would have been payable in ~~2017.~~

2021 based on 2021 tax rates in effect. For additional information about ZENS, see Note 1011 to ~~our~~the Interim Condensed Financial Statements.

Cross Defaults

Under ~~our~~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 ~~our~~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 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. As announced in December 2020, CenterPoint Energy’s business strategy incorporated the Business Review and Evaluation Committee’s recommendations to increase its planned capital expenditures in its electric and natural gas businesses to support rate base growth and sell certain of its Natural Gas businesses located in Arkansas and Oklahoma as a means to efficiently finance a portion of such increased capital expenditures, among other recommendations. 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 of storm-related incremental natural gas costs incurred in the February 2021 Winter Storm Event, subject to certain adjustments set forth in the Asset Purchase Agreement. For further information, see Note 3 to the Interim Condensed Financial Statements.

~~In February 2016, we announced that we were~~Additionally, CenterPoint Energy’s process of evaluating and optimizing the various businesses, assets and ownership interests currently held by it included consideration of, among other things, various plans, proposals and other strategic alternatives ~~for our~~with respect to Enable and CenterPoint Energy’s investment in Enable, ~~including~~which may result in the disposition of a ~~sale~~portion or ~~spin-off qualifying under Section 355~~all of its ownership interest in Enable. In February 2021, CenterPoint Energy announced its support of the ~~U.S. Internal Revenue Code. We have determined that we will no longer pursue a spin option. Should the sale option~~Enable Merger, which is expected to close in 2021, subject to customary closing conditions, including Hart-Scott-Rodino antitrust clearance. CenterPoint Energy may not ~~be viable, we intend to reduce our ownership in Enable over time through a sale~~realize any or all of the anticipated strategic, financial, operational or other benefits from the Enable Merger, if completed, or from any disposition or reduction of its anticipated resulting investment in Energy Transfer. On September 21, 2021, CNP Midstream entered into a Forward Sale Agreement with an investment banking financial institution to deliver, subject to and immediately following the closing of the Enable Merger, 50 million common units ~~we hold~~of Energy Transfer expected to be received by CNP Midstream as consideration in the ~~public equity markets, subject to market conditions.~~pending Enable Merger in exchange for the proceeds of the forward sale transaction. Additionally, CenterPoint Energy plans for a complete exit from its Midstream Investment reportable segment in 2022. There can be no assurances that ~~these evaluations~~any disposal of Energy Transfer common units or Energy Transfer Series G Preferred Units will ~~result~~be completed. Any disposal of such securities may involve significant costs and expenses, including in connection with any ~~specific action,~~public offering or private placement, a significant underwriting or other discount. For information regarding the Enable Merger and ~~we do not intend~~the Forward Sale Agreement, see Note 9 to ~~disclose~~the Interim Condensed Financial Statements.

On August 31, 2021, CenterPoint Energy, through its subsidiary CERC Corp., completed the sale of MES to Last Mile Energy. For further ~~developments on these initiatives unless and until our board~~information, see Note 3 to the Interim Condensed Financial Statements.

Table of ~~directors approves a specific action or as otherwise required.~~Contents

Enable Midstream Partners (CenterPoint Energy)

~~We receive~~CenterPoint Energy receives quarterly cash distributions from Enable on its common units and Enable Series A Preferred ~~Units we own.~~Units. A reduction in the cash distributions ~~we receive~~CenterPoint Energy receives from Enable could significantly impact ~~our~~CenterPoint Energy’s liquidity. For additional information about ~~cash distributions from~~ Enable and the transactions contemplated by the Enable Merger Agreement, see Notes 83 and 169 to ~~our~~the Interim Condensed Financial Statements.

Hedging of Interest Expense for Future Debt Issuances

~~During~~From time to time, the ~~first three quarters of 2017, we entered~~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.

Weather Hedge (CenterPoint Energy and CERC)

WeCenterPoint Energy and CERC have historically entered into partial weather hedges for certain ~~NGD~~Natural Gas jurisdictions and ~~Houston Electric’s~~electric operations’ Texas service territory to mitigate the impact of fluctuations from normal weather. WeCenterPoint Energy and CERC remain exposed to some weather risk as a result of the partial hedges. The Registrants do not currently enter into weather hedges. For more information about ~~our~~ weather hedges, see Note ~~6(a)~~7(a) to ~~our~~the Interim Condensed Financial Statements.

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:

•further reductions in the cash distributions we receive from Enable;

•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, including as a result of the February 2021 Winter Storm Event (CenterPoint Energy and CERC);

•increases in interest expense in connection with debt refinancings and borrowings under credit ~~facilities;~~

~~various legislative~~facilities or ~~regulatory actions;~~

~~incremental collateral, if any, that may be required~~term loans or the use of alternative sources of financings due to ~~regulation~~the effects of ~~derivatives;~~COVID-19 and the February 2021 Winter Storm Event on capital and other financial markets;

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

~~the ability of GenOn and its subsidiaries, currently the subject of bankruptcy proceedings, to satisfy their obligations in respect of GenOn’s indemnity obligations to us and our subsidiaries;~~

•the ability of REPs, including REP affiliates of NRG and Vistra Energy Corp., ~~formerly known as TCEH Corp.,~~ to satisfy their obligations to usCenterPoint Energy and ~~our subsidiaries;~~Houston Electric, including the negative impact on such ability related to COVID-19 and the February 2021 Winter Storm Event;

•various legislative or regulatory actions;

•incremental collateral, if any, that may be required due to regulation of derivatives (CenterPoint Energy);

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•slower customer payments and increased write-offs of receivables due to higher natural gas prices, or changing economic ~~conditions;~~conditions, COVID-19 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 2020 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

~~Houston Electric has contractually agreed that it will not issue~~Certain provisions in note purchase agreements relating to debt issued by VUHI have the effect of restricting the amount of additional first mortgage bonds ~~subject to certain exceptions.~~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 facilities, see Note 1112 to ~~our~~the Interim Condensed Financial Statements.

~~NEW~~

CRITICAL ACCOUNTING ~~PRONOUNCEMENTS~~POLICIES

~~See~~Assets held for sale

Generally, a long-lived asset to be sold is classified as held for sale in the period in which management, with approval from the Board of Directors, as applicable, commits to a plan to sell, and a sale is expected to be completed within one year. The Registrants record assets and liabilities held for sale, or the disposal group, at the lower of their carrying value or their estimated fair value less cost to sell. If a disposal group reflects a component of a reporting unit and meets the 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 is not allocated to a portion of a reporting unit that does not meet the definition of a business.

During the three and nine months ended September 30, 2021, as described further in Note 23 to ~~our~~the Interim Condensed Financial Statements, ~~incorporated herein~~certain assets and liabilities representing a business met the held for sale criteria. As a result, goodwill attributable to the natural gas reporting unit of $398 million and $144 million at CenterPoint Energy and CERC, respectively, was deemed attributable to assets held for sale as of September 30, 2021. Neither CenterPoint Energy nor CERC recognized any gains or losses upon classification of held for sale during the three and nine months ended September 30, 2021. No change to the goodwill attributable to the natural gas reporting unit as of September 30, 2021 was identified.

Fair value is the amount at which an asset, liability or business could be bought or sold in a current transaction between willing parties and may be estimated using a number of techniques, including quoted market prices, present value techniques based on estimates of cash flows, or multiples of earnings or revenue performance measures. The fair value could be different if different estimates and assumptions in these valuation techniques were applied.

Fair value measurements require significant judgment and often unobservable inputs, including (i) projected timing and amount of future cash flows, which factor in planned growth initiatives, (ii) the regulatory environment, as applicable, and (iii) discount rates reflecting risk inherent in the future market prices. Changes in these assumptions could have a significant impact on the resulting fair value.

CenterPoint Energy and CERC used a market approach consisting of the contractual sales price adjusted for estimated working capital and other contractual purchase price adjustments to determine fair value of the businesses classified as held for sale. The fair value of the retained businesses within the natural gas reporting unit was estimated based on a weighted combination of income approach and market approaches, consistent with the methodology used in the 2020 and 2021 annual goodwill impairment tests. A third-party valuation specialist was utilized to determine the key assumptions used in the estimate of fair value of the retained natural gas reporting unit as of September 30, 2021. The fair value of the retained natural gas reporting unit at CenterPoint Energy and CERC significantly exceeded the carrying value of the retained businesses within that reporting unit as of September 30, 2021.

No goodwill impairment resulted from assets held for sale as of September 30, 2021, and the annual goodwill impairment test was performed in the third quarter of 2021. An interim goodwill impairment test could be triggered outside of the annual test by ~~reference,~~the following: actual earnings results that are materially lower than expected, significant adverse changes in the operating environment, an increase in the discount rate, changes in other key assumptions which require judgment and are forward looking in nature, if CenterPoint Energy’s market capitalization falls below book value for an extended period of time, or events affecting a ~~discussion~~reporting unit such as a contemplated disposal of ~~new accounting pronouncements that affect us.~~all or part of a reporting unit. Interim goodwill

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impairment tests were not required to be performed for any other reporting unit during the three and nine months ended September 30, 2021.


~~Item 3.~~	~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~

For further information, see Note 3 to the Interim Condensed Financial Statements.

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 September 30, ~~2017, we~~2021, CenterPoint Energy had outstanding long-term debt, lease obligations and obligations under ~~our~~its ZENS that subject usit to the risk of loss associated with movements in market interest rates.

~~Our~~CenterPoint Energy’s floating rate obligations aggregated ~~$976 million~~$4.0 billion and ~~$1.4~~$2.4 billion as of September 30, ~~2017~~2021 and December 31, ~~2016,~~2020, respectively. If the floating interest rates were to increase by 10% from September 30, ~~2017~~2021 rates, ~~our~~CenterPoint Energy’s combined interest expense would increase by approximately ~~$1.4~~$2 million annually.

As of September 30, ~~2017~~2021 and December 31, ~~2016, we~~2020, CenterPoint Energy had outstanding fixed-rate debt (excluding indexed debt securities) aggregating ~~$7.6~~$12.6 billion and ~~$7.1~~$11.1 billion, respectively, in principal amount and having a fair value of ~~$8.1~~$14.0 billion and ~~$7.5~~$12.9 billion, respectively. Because these instruments are fixed-rate, they do not expose usCenterPoint 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 ~~$223~~$359 million if interest rates were to decline by 10% from levels at September 30, ~~2017.~~2021. In general, such an increase in fair value would impact earnings and cash flows only if weCenterPoint 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 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 ~~$120~~$11 million as of September 30, ~~2017~~2021 was a fixed-rate obligation and, therefore, did not expose usCenterPoint 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 ~~$18~~$1 million if interest rates were to decline by 10% from levels at September 30, ~~2017.~~2021. Changes in the fair value of the derivative component, a ~~$776~~$993 million recorded liability at September 30, ~~2017,~~2021, are recorded in ~~our~~CenterPoint Energy’s Condensed Statements of Consolidated Income and, therefore, ~~we are~~it is exposed to changes in the fair value of the derivative component as a result of changes in the underlying risk-free interest rate. If the risk-free interest rate were to increase by 10% from September 30, ~~2017~~2021 levels, the fair value of the derivative component liability would ~~increase~~decrease by approximately $5$1 million,, which would be recorded as an unrealized ~~loss~~gain in ~~our~~CenterPoint Energy’s Condensed Statements of Consolidated Income.

Equity Market Value Risk (CenterPoint Energy)

~~We are~~CenterPoint Energy is exposed to equity market value risk through ~~our~~its ownership of ~~7.1 million~~ ~~shares of TW Common, 0.9~~10.2 million shares of ~~Time~~AT&T Common and 0.9 million shares of Charter Common, which ~~we hold~~CenterPoint Energy holds to facilitate ~~our~~its ability to meet ~~our~~its obligations under the ZENS. See Note 11 to the Interim Condensed Financial Statements for a discussion of 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 decrease of 10% from the September 30, ~~2017~~2021 aggregate market value of these shares would result in a net loss of ~~approximately~~ $1less than $1 million,, which would be recorded as ~~an unrealized~~a loss in ~~our~~CenterPoint Energy’s Condensed Statements of Consolidated Income.

Commodity Price Risk From Non-Trading Activities (CenterPoint Energy)

~~We use derivative instruments as economic hedges~~CenterPoint Energy’s regulated operations in Indiana have limited exposure to ~~offset the~~ commodity price ~~exposure inherent in our businesses. The commodity~~ risk ~~created by these instruments, including the offsetting impact on the market value~~for transactions involving purchases and sales of natural gas, ~~inventory, is described below. We measure this commodity risk~~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 ~~a sensitivity analysis. For purposes~~arrangements with an original term of ~~this analysis, we estimate commodity price risk by applying a $0.50 change in the forward NYMEX price~~up to ~~our net open~~10

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years. This authority has been utilized to secure fixed price ~~position (including forward fixed price physical contracts,~~ natural gas ~~inventory~~using both physical purchases and ~~fixed price~~ financial ~~contracts) at the end of each period.~~derivatives. As of September 30, ~~2017,~~2021, the recorded fair value of ~~our~~ non-trading energy ~~derivatives~~derivative assets was ~~a net asset of $80~~$32 million (before collateral), all of which is related to our Energy Services business segment. A $0.50 change in the forward NYMEX price would have had a combined impact of $3 million on our non-trading energy derivatives net asset and the market value offor CenterPoint Energy’s utility natural gas ~~inventory.~~operations in Indiana.

~~Commodity~~Although CenterPoint Energy’s regulated operations are exposed to limited commodity price risk, ~~is not limited to changes in forward NYMEX prices. Variation of commodity pricing between the different indices used to mark to market portions of our~~ natural gas ~~inventory (Gas Daily)~~ 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 ~~related fair value hedge (NYMEX) can result~~effect natural gas costs may have on CenterPoint Energy’s financial condition. In 2008, the PUCO approved an exit of the merchant function in ~~volatility~~CenterPoint Energy’s Ohio natural gas service territory, allowing Ohio customers to ~~our net income. Over time, any gains or losses on the sale of storage~~purchase substantially all natural gas ~~inventory would be offset by gains or losses on the fair value hedges.~~directly from retail marketers rather than from CenterPoint Energy.


~~Item 4.~~	~~CONTROLS AND PROCEDURES~~

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~~2021 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~~2021 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~~

Item 1.LEGAL PROCEEDINGS

For a description of certain legal and regulatory proceedings, ~~affecting CenterPoint Energy,~~ please read Note ~~13(b)~~14(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 2020 Form 10-K.


~~Item 1A.~~	~~RISK FACTORS~~

~~There~~Item 1A.RISK FACTORS

See below the new risk factors affecting the Registrants’ businesses, in addition to those discussed in “Risk Factors” in Item 1A of Part I of the combined 2020 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 2020 Form 10-K.


~~Item 5.~~	~~OTHER INFORMATION~~

CenterPoint Energy is subject to operational and financial risks and liabilities associated with the implementation and efforts to achieve its carbon emission reduction goals.

~~Ratio~~

In September 2021, CenterPoint Energy announced its new net zero emission goals for Scope 1 and 2 emissions by 2035 and a 20-30% reduction in Scope 3 emissions by 2035. CenterPoint Energy’s analysis and plan for execution requires it to make a number of ~~Earnings~~assumptions. These goals and underlying assumptions involve risks and uncertainties and are not guarantees. Should one or more of CenterPoint Energy’s underlying assumptions prove incorrect, its actual results and ability to ~~Fixed Charges.~~ The ratio of earnings to fixed charges for the nine months ended September 30, 2017 and 2016 was 3.63 and 2.73, respectively. We do not believe that the ratios for these nine-month periods are necessarily indicativeachieve net zero emissions by 2035 could differ materially from its expectations. Certain of the ~~ratios for the 12-month periods due~~assumptions that could impact CenterPoint Energy’s ability to meet its net zero emissions goals include, but are not limited to: emission levels, service territory size and capacity needs remaining in line with expectations (inclusive of changes related to the ~~seasonal nature~~sale of CenterPoint Energy’s Natural Gas businesses in Arkansas and Oklahoma); regulatory approval of Indiana Electric’s generation transition plan; impacts of future environmental regulations or legislation; impact of future carbon pricing regulations or legislation, including a future carbon tax; price, availability and regulation of carbon offsets; price of fuel, such as natural gas; cost of energy generation technologies, such as wind and solar, natural gas and storage solutions; adoption of alternative energy by the public, including

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adoption of electric vehicles; rate of technology innovation with regards to alternative energy resources; CenterPoint Energy’s ability to implement its modernization plans for its pipelines and facilities; the ability to complete and implement generation alternatives to Indiana Electric’s coal generation and retirement dates of Indiana Electric’s coal facilities by 2035; the ability to construct and/or permit new natural gas pipelines; the ability to procure resources needed to build at a reasonable cost, the lack of scarcity of resources and labor, the lack of any project cancellations, construction delays or overruns and the ability to appropriately estimate costs of new generation; impact of any supply chain disruptions; and enhancement of energy efficiencies. Any negative opinions with respect to these goals or CenterPoint Energy’s environmental practices, including any inability to achieve, or a scaling back of these goals, formed by regulators, customers, investors or legislators could harm CenterPoint Energy’s reputation and have an adverse effect on its financial condition.

Compliance with and changes in cybersecurity requirements have a cost and operational impact on our business, and failure to comply with such laws and regulations could adversely impact our reputation, results of operations, financial condition and/or cash flows.

Cyberattacks are becoming more sophisticated, and U.S. government warnings have indicated that infrastructure assets, including pipelines and electric infrastructure, may be specifically targeted by certain groups. In the second quarter of 2021, the TSA announced two new security directives in response to a ransomware attack on the Colonial Pipeline that occurred earlier this year. These directives require critical pipeline owners to comply with mandatory reporting measures, designate a cybersecurity coordinator, provide vulnerability assessments, and ensure compliance with certain cybersecurity requirements. We may be required to expend significant additional resources to respond to cyberattacks, to continue to modify or enhance our protective measures, or to assess, investigate and remediate any critical infrastructure security vulnerabilities. Any failure to remain in compliance with these government regulations or failure in our cybersecurity protective measures may result in enforcement actions which may have a material adverse effect on our business and operations.

While we have implemented and maintain a cybersecurity program designed to protect our information technology, operational technology, and data systems from such attacks, our cybersecurity program does not prevent all breaches or cyberattack incidents. We have experienced an increase in the number of attempts by external parties to access our networks or our company data without authorization. We have experienced, and expect to continue to experience, cyber intrusions and attacks to our information systems. To our knowledge, none of these intrusions or attacks have resulted in a material cybersecurity or data breach. The risk of a disruption or breach of our ~~business. The ratios were calculated pursuant to applicable rules~~operational systems, or the compromise of the ~~SEC.~~data processed in connection with our operations, through cybersecurity breach or ransomware attack has increased as attempted attacks have advanced in sophistication and number around the world.


~~Item 6.~~	~~EXHIBITS~~

We depend on the secure operation of our physical assets to transport the energy we deliver and our information technology to process, transmit and store electronic information, including information and operational technology we use to safely operate our energy transportation systems. Security breaches could expose our business to a risk of loss, misuse or interruption of critical physical assets or information and functions that affect our operations, as well as potential data privacy breaches and loss of protected personal information. Such losses could result in operational impacts, damage to our assets, public or personnel safety incidents, damage to the environment, reputational harm, competitive disadvantage, regulatory enforcement actions, litigation and a potential material adverse effect on our operations, financial position, results of operations and/or cash flows. There is no certainty that costs incurred related to securing against threats will be recovered through rates.

~~The following exhibits are filed herewith:~~

Item 6.EXHIBITS

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 ~~CenterPoint Energy, Inc.,~~the Registrants, any other persons, any state of affairs or other matters.

Pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K, ~~CenterPoint Energy has~~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 ~~CenterPoint Energy~~the Registrants and its subsidiaries on a consolidated basis. ~~CenterPoint Energy~~The Registrants hereby ~~agrees~~agree to furnish a copy of any such instrument to the SEC upon request.

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Exhibit Number	Description	Report or Registration Statement	SEC File or Registration Number	Exhibit Reference	Exhibit Number	Description	Report or Registration Statement	SEC File or Registration Number	Exhibit Reference	CenterPoint Energy	Houston Electric	CERC
2.1*					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	x
2.2*					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		x
2.3*					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		x		x
2.4*					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	x		x
3.1	Restated Articles of Incorporation of CenterPoint Energy	CenterPoint Energy’s Form 8-K dated July 24, 2008	1-31447	3.2	3.1	Restated Articles of Incorporation of CenterPoint Energy	CenterPoint Energy’s Form 8-K dated July 24, 2008	1-31447	3.2	x
3.2	Third Amended and Restated Bylaws of CenterPoint Energy	CenterPoint Energy’s Form 8-K dated February 21, 2017	1-31447	3.1	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		x
3.3	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)	3.3	Certificate of Incorporation of RERC Corp.	CERC Form 10-K for the year ended December 31, 1997	1-13265	3(a)(1)			x
4.1	Form of CenterPoint Energy Stock Certificate	CenterPoint Energy’s Registration Statement on Form S-4	3-69502	4.1
4.2	$1,600,000,000 Credit Agreement, dated as of March 3, 2016, among CenterPoint Energy, as Borrower, and the banks named therein	CenterPoint Energy’s Form 8-K dated March 3, 2016	1-31447	4.1
3.4					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					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					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					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					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					3.9	Bylaws of RERC Corp.	CERC Form 10-K for the year ended December 31, 1997	1-13265	3(b)			x
3.10					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					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					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					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

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Exhibit
Number
Description
Report or Registration
Statement

SEC File or
Registration
Number

Exhibit
Reference
4.3
$300,000,000 Credit Agreement, dated as of March 3, 2016, among Houston Electric, as Borrower, and the banks named therein
CenterPoint Energy’s Form 8-K dated March 3, 2016 1-31447 4.2
4.4
$600,000,000 Credit Agreement, dated as of March 3, 2016, among CERC Corp., as Borrower, and the banks named therein
CenterPoint Energy’s Form 8-K dated March 3, 2016 1-31447 4.3
4.5
First Amendment to Amended and Restated Credit Agreement, dated as of June 16, 2017, by and among CenterPoint Energy, as Borrower, and the banks named therein
CenterPoint Energy’s Form 8-K dated June 16, 2017 1-31447 4.1
4.6
First Amendment to Credit Agreement, dated as of June 16, 2017, among Houston Electric, as Borrower, and the banks named therein
CenterPoint Energy’s Form 8-K dated June 16, 2017 1-31447 4.2
4.7
First Amendment to Credit Agreement, dated as of June 16, 2017, among CERC Corp., as Borrower, and the banks named therein
CenterPoint Energy’s Form 8-K dated June 16, 2017 1-31447 4.3
4.8
Indenture, dated as of May 19, 2003, between CenterPoint Energy and JPMorgan Chase Bank, as Trustee

CenterPoint Energy’s Form 8-K dated May 19, 2003 1-31447 4.1
+4.9
Supplemental Indenture No. 9 to Exhibit 4.8, dated as of August 10, 2017, providing for the issuance of CenterPoint Energy’s 2.50% Senior Notes due 2022

4.10
Indenture, dated as of February 1, 1998, between Reliant Energy Resources Corp. and Chase Bank of Texas, National Association, as Trustee

CERC Corp.’s Form 8-K dated February 5, 1998 1-13265 4.1
+4.11
Supplemental Indenture No. 16 to Exhibit 4.10, 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
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	Form of Certificate representing the 7.00% Series B Mandatory Convertible Preferred Stock of CenterPoint Energy (included as Exhibit A to Exhibit 3.12)	CenterPoint Energy’s Form 8-K dated September 25, 2018	1-31447	4.1	x
4.4	Deposit Agreement, dated as of October 1, 2018, among CenterPoint Energy and Broadridge Corporate Issuer Solutions, Inc., as Depositary, and the holders from time to time of the Depositary Receipts described therein	CenterPoint Energy’s Form 8-K dated September 25, 2018	1-31447	4.2	x
4.5	Form of Depositary Receipt for the Depositary Shares (included as Exhibit A to Exhibit 4.4)	CenterPoint Energy’s Form 8-K dated September 25, 2018	1-31447	4.3	x
4.6	$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
4.7	$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
4.8	$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
4.9	$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
10.1	Form of Restricted Stock Unit Award Agreement (Service-Based Vesting with Performance Goals)	CenterPoint Energy’s Form 10-K for the year ended December 31, 2020	1-31447	10(q)(12)	x
10.2	Form of Restricted Stock Unit Award Agreement for CEO (Service-Based Vesting with Performance Goals)	CenterPoint Energy’s Form 10-K for the year ended December 31, 2020	1-31447	10(q)(13)	x
10.3	Support Agreement, dated as of February 16, 2021, by and among Energy Transfer LP, Elk Merger Sub LLC, Elk GP Merger Sub LLC, Enable Midstream Partners, LP, Enable GP, LLC and CenterPoint Energy	CenterPoint Energy’s Form 8-K dated February 16, 2021	1-31447	10.1	x
10.4	Form of Registration Rights Agreement, to be dated as of the Closing Date, by and among Energy Transfer LP and certain unitholders of Enable Midstream Partners, LP as set forth on Schedule I thereto	CenterPoint Energy’s Form 8-K dated February 16, 2021	1-31447	10.2	x

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Exhibit
Number

Description

Report or Registration
Statement

SEC File or
Registration
Number

Exhibit
Reference

CenterPoint Energy

Houston Electric

CERC

10.5

Change in Control Plan

CenterPoint Energy’s Form 8-K dated April 27, 2017

1-31447

10.1

10.6

First Amendment to Exhibit 10.6

CenterPoint Energy’s Form 10-K for the year ended December 31, 2020

1-31447

10(t)(2)

10.7

Retention Incentive Agreement between CenterPoint Energy, Inc. and David J. Lesar, dated July 20, 2021

CenterPoint Energy’s Form 10-Q for the quarter ended June 30, 2021

1-31447

10.8

Separation Agreement between CenterPoint Energy, Inc. and Milton Carroll, dated July 21, 2021

CenterPoint Energy’s Form 10-Q for the quarter ended June 30, 2021

1-31447

10.9

Form of Restricted Stock Unit Award Agreement

CenterPoint Energy’s Form 8-K dated July 20, 2021

1-31447

10.1

†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 Kenneth M. Mercado

†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 Kenneth M. Mercado

†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

†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.

Table 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, INC.~~


~~By:~~	/s/ Kristie L. Colvin
		Kristie L. Colvin
		Senior Vice President and Chief Accounting Officer

Date: November ~~3, 2017~~4, 2021



(Mark One)
þ☑		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	~~FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2017~~



Texas			74-0694415
(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)


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
(Address of Principal Executive Offices)			(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, Inc.	Depositary Shares for 1/20 of 7.00% Series B Mandatory Convertible Preferred Stock, $0.01 par value	CNP/PB	The New York Stock Exchange
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

o
☐		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	FOR THE TRANSITION PERIOD FROM __________________ TO __________________


CenterPoint Energy, Inc.	628,865,734	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


~~PART I.~~					~~FINANCIAL INFORMATION~~

~~Item 1.~~					CenterPoint Energy Houston Electric, LLC Financial Statements (unaudited)		17

					~~Condensed Statements of Consolidated Income~~
					~~Three and Nine Months Ended September 30, 2017 and 2016 (unaudited)~~

					1CenterPoint Energy Resources Corp. Financial Statements (unaudited)		13

					~~Condensed Statements of Consolidated Comprehensive Income~~
					~~Three and Nine Months Ended September 30, 2017 and 2016 (unaudited)~~


					2Combined Notes to Interim Condensed Financial Statements (unaudited)		19

	~~Condensed Consolidated Balance Sheets~~(1) Background and Basis of Presentation
	~~September 30, 2017 and December 31, 2016 (unaudited)~~	319

	~~Condensed Statements of Consolidated Cash Flows~~(2) New Accounting Pronouncements
	~~Nine Months Ended September 30, 2017 and 2016 (unaudited)~~	520

	~~Notes to Unaudited Condensed Consolidated Financial Statements~~(3) Held for Sale and Divestitures			620
					(4) Revenue Recognition and Allowance for Credit Losses		25
					(5) Employee Benefit Plans		28
					(6) Regulatory Matters		30
					(7) Derivative Instruments		32
					(8) Fair Value Measurements		34
					(9) Unconsolidated Affiliates		36
					(10) Goodwill and Other Intangibles		39
					(11) Indexed Debt Securities (ZENS) and Securities Related to ZENS		41
					(12) Short-term Borrowings and Long-term Debt		41
					(13) Income Taxes		44
					(14) Commitments and Contingencies		45
					(15) Earnings Per Share		51
					(16) Reportable Segments		52
					(17) Supplemental Disclosure of Cash Flow Information		55
					(18) Related Party Transactions		55
					(19) Equity		57
					(20) Subsequent Events		59
Item 2.					Management’s Discussion and Analysis of Financial Condition and Results of Operations		2860
					Recent Events		60
					Consolidated Results of Operations		61
					Results of Operations by Reportable Segment		62
					Certain Factors Affecting Future Earnings		70
					Liquidity and Capital Resources		71
Item 3.					Quantitative and Qualitative Disclosures about Market Risk		4388

Item 4.			Controls and Procedures			4389

PART II.					OTHER INFORMATION

Item 1.			Legal Proceedings			4489

Item 1A.			Risk Factors			4489

Item 5.6.					~~Other Information~~Exhibits		4490

~~Item 6.~~	~~Exhibits~~Signatures			4494


GLOSSARY
ACE		Affordable Clean Energy


~~GLOSSARY~~
~~AEM~~AMA		~~Atmos~~Asset Management Agreement

APSC		Arkansas Public Service Commission

ARO		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, LLC, a Delaware limited liability company and an affiliate of Summit Utilities, Inc.
ASU		Accounting Standards Update
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 III, 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 III		CenterPoint Energy Transition Bond Company III, LLC, ~~previously~~ a wholly-owned subsidiary of ~~Atmos~~Houston Electric
Bond Company IV		CenterPoint Energy ~~Holdings, Inc.,~~Transition Bond Company IV, LLC, a wholly-owned subsidiary of ~~Atmos Energy Corporation~~Houston Electric
~~AMAs~~BTA		~~Asset Management Agreements~~Build Transfer Agreement
~~AMS~~Business Review and Evaluation Committee		~~Advanced Metering System~~
~~APSC~~	~~Arkansas Public Service Commission~~
~~ASU~~	~~Accounting Standards Update~~
~~AT&T~~	~~AT&T Inc.~~
~~AT&T Common~~	~~AT&T common stock~~
~~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~~
~~Bond Companies~~	~~Transition~~Business Review and ~~system restoration bond companies~~
~~Brazos Valley Connection~~	~~A portion~~Evaluation Committee of the ~~Houston region transmission project between Houston Electric’s Zenith substation and the Gibbons Creek substation owned by the Texas Municipal Power Agency~~
~~CenterPoint Energy~~	Board of Directors of CenterPoint Energy, Inc.~~, and its subsidiaries~~
~~CERC Corp.~~Capital Dynamics		~~CenterPoint Energy Resources Corp.~~Capital Dynamics, Inc.
~~CERC~~CARES Act		~~CERC Corp., together with its subsidiaries~~Coronavirus Aid, Relief, and Economic Security Act
~~CES~~CCN		~~CenterPoint Energy Services, Inc., a wholly-owned subsidiary~~Certificate of ~~CERC Corp.~~Convenience and Necessity
~~Charter Common~~CCR		~~Charter Communications, Inc. common stock~~Coal Combustion Residuals
~~Charter merger~~		~~Merger of Charter Communications, Inc. and Time Warner Cable Inc.~~
~~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
~~DCRF~~	~~Distribution Cost Recovery Factor~~
~~EECR~~	~~Energy Efficiency Cost Recovery~~
~~EECRF~~	~~Energy Efficiency Cost Recovery Factor~~
~~Enable~~	~~Enable Midstream Partners, LP~~
~~ERCOT~~	~~Electric Reliability Council of Texas~~
~~FASB~~	~~Financial Accounting Standards Board~~
~~Fitch~~	~~Fitch, Inc.~~
~~Form 10-Q~~	~~Quarterly Report on Form 10-Q~~
~~FRP~~	~~Formula Rate Plan~~
~~Gas Daily~~	~~Platt’s gas daily indices~~
~~GenOn~~	~~GenOn Energy, Inc.~~
~~GRIP~~	~~Gas Reliability Infrastructure Program~~
~~GWh~~	~~Gigawatt-hours~~
~~Houston Electric~~	~~CenterPoint Energy Houston Electric, LLC and its subsidiaries~~
~~IBEW~~	~~International Brotherhood of Electrical Workers~~
~~Interim Condensed Financial Statements~~	~~Condensed consolidated interim financial statements and notes~~
~~IRS~~	~~Internal Revenue Service~~
~~LIBOR~~	~~London Interbank Offered Rate~~
~~LPSC~~	~~Louisiana Public Service Commission~~
~~MGPs~~	~~Manufactured gas plants~~
~~MLP~~	~~Master Limited Partnership~~
~~MMBtu~~	~~One million British thermal units~~



~~GLOSSARY (cont.)~~CEIP						CenterPoint Energy Intrastate Pipelines, LLC, a wholly-owned subsidiary of CERC Corp.
~~Moody’s~~CenterPoint Energy						~~Moody’s Investors Service,~~CenterPoint Energy, Inc., and its subsidiaries
~~MPSC~~CERC						~~Mississippi Public Service Commission~~CERC Corp., together with its subsidiaries
~~MPUC~~CERC Corp.						~~Minnesota Public Utilities Commission~~CenterPoint Energy Resources Corp.
~~NECA~~CES						~~National Electrical Contractors Association~~CenterPoint Energy Services, Inc. (now known as Symmetry Energy Solutions, LLC), previously a wholly-owned subsidiary of CERC Corp.
~~NGD~~Charter Common						~~Natural gas distribution business~~Charter Communications, Inc. common stock
~~NGLs~~CIP						~~Natural gas liquids~~Conservation Improvement Program
~~NRG~~						~~NRG~~
CNG						Compressed Natural Gas
CNP Midstream						CenterPoint Energy Midstream, Inc., a wholly-owned subsidiary of CenterPoint Energy

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
~~NYMEX~~Compensation Committee						~~New York Mercantile Exchange~~Compensation Committee of the Board
~~OCC~~COVID-19						~~Oklahoma Corporation Commission~~Novel coronavirus disease 2019 and related global outbreak that was subsequently declared a pandemic by the World Health Organization
~~OGE~~COVID-19 ERP						~~OGE Energy Corp.~~COVID-19 Electricity Relief Program
~~PBRC~~CPCN						~~Performance Based Rate Change~~Certificate of Public Convenience and Necessity
~~PHMSA~~CPP						~~U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration~~Clean Power Plan
~~PRPs~~CSIA						~~Potentially responsible parties~~Compliance and System Improvement Adjustment


~~PUCT~~		~~Public Utility Commission of Texas~~GLOSSARY
~~Railroad Commission~~DCRF	~~Railroad Commission of Texas~~Distribution Cost Recovery Factor
~~Reliant Energy~~DRR	~~Reliant Energy, Incorporated~~Distribution Replacement Rider
~~REP~~DSMA	~~Retail electric provider~~Demand Side Management Adjustment
~~ROE~~	~~Return on equity~~
~~RRA~~	~~Rate Regulation Adjustment~~
~~RRI~~ECA	~~Reliant Resources, Inc.~~Environmental Cost Adjustment
~~RSP~~EDIT	~~Rate Stabilization Plan~~Excess deferred income taxes
~~SEC~~EECR	~~Securities and Exchange Commission~~Energy Efficiency Cost Recovery
~~Securitization Bonds~~EECRF	~~Transition and system restoration bonds~~Energy Efficiency Cost Recovery Factor
EEFC	Energy Efficiency Funding Component
EEFR	Energy Efficiency Funding Rider


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
Enable GP	Enable GP, LLC, Enable’s general partner
Enable Merger	The proposed 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
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
~~S&P~~Energy Services	~~Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies~~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
~~TBD~~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 Transfer	Energy Transfer LP, a Delaware limited partnership
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
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
ESG	Energy Systems Group, LLC, a wholly-owned subsidiary of Vectren
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
Forward Sale Agreement	Contingent forward sale agreement for 50 million Energy Transfer common units, dated September 21, 2021, by and between CNP Midstream and an investment banking financial institution
FRP	Formula Rate Plan

GHG	Greenhouse gases


GLOSSARY
GRIP						Gas Reliability Infrastructure Program

GWh						Gigawatt-hours
Houston Electric						CenterPoint Energy Houston Electric, LLC and its subsidiaries
IDEM						Indiana Department of Environmental Management
Indiana Electric						Operations of SIGECO’s electric transmission and distribution services, and includes its power generating and wholesale power operations
Indiana Gas						Indiana Gas Company, Inc., a wholly-owned subsidiary of Vectren
Indiana North						Gas operations of Indiana Gas
Indiana South						Gas operations of SIGECO
Indiana Utilities						The combination of Indiana Electric, Indiana North and Indiana South
Infrastructure Services						Provided underground pipeline construction and repair services through VISCO and its wholly-owned subsidiaries, Miller Pipeline, LLC and Minnesota Limited, LLC
Infrastructure Services Disposal Group						Businesses within the Infrastructure Services reporting unit that were sold under the Securities Purchase Agreement
Interim Condensed Financial Statements						Unaudited condensed consolidated interim financial statements and combined notes

IRP						Integrated Resource Plan
IRS						Internal Revenue Service
IURC						Indiana Utility Regulatory Commission
kV						Kilovolt

Last Mile Energy						Last Mile Energy Solutions, LLC, a Texas limited liability company
LIBOR						London Interbank Offered Rate
LNG						Liquefied Natural Gas
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

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

NGLs						Natural gas liquids
NOLs						Net operating losses
NRG						NRG Energy, Inc.


OCC						Oklahoma Corporation Commission
OGE						OGE Energy Corp.
PBRC						Performance Based Rate Change
Posey Solar						Posey Solar, LLC, a special purpose entity


GLOSSARY
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
RSP						Rate Stabilization Plan
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
SEC						Securities and Exchange Commission
Securities Purchase Agreement						Securities Purchase Agreement, dated as of February 3, 2020, by and among Vectren Utility Services, Inc., PowerTeam Services and, solely for purposes of Section 10.17 of the Securities Purchase Agreement, Vectren
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
SOFR						Secured Overnight Financing Rate
S&P						S&P Global Ratings
SRC						Sales Reconciliation Component
Stock Purchase Agreement						Stock Purchase Agreement, dated as of June 24, 2021, by and between CERC Corp. and Last Mile Energy
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
~~TCEH Corp.~~						~~Formerly Texas Competitive Electric Holdings Company LLC, predecessor to Vistra Energy Corp. whose major subsidiaries include Luminant and TXU Energy~~
~~TCOS~~TCJA						Tax reform legislation informally called the Tax Cuts and Jobs Act of 2017
TCOS						Transmission Cost of Service
~~TDU~~TCRF						Transmission Cost Recovery Factor
TDSIC						Transmission, Distribution and Storage System Improvement Charge
TDU						Transmission and distribution utility
~~Time Common~~						~~Time Inc. common stock~~
~~Transition Agreements~~						~~Services Agreement, Employee Transition Agreement, Transitional Seconding Agreement and other agreements entered into in connection with the formation of Enable~~
TWTenaska						~~Time Warner Inc.~~Tenaska Wind Holdings, LLC


~~TW Common~~		~~TW common stock~~GLOSSARY
~~TW Securities~~Texas RE	~~Charter Common, Time Common and TW Common~~Texas Reliability Entity
~~VIE~~TOB	Tariffed On Bill
TSA	The Department of Homeland Security’s Transportation Security Administration

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
VISCO	Vectren Infrastructure Services Corporation, formerly a wholly-owned subsidiary of Vectren
Vistra Energy Corp.	Texas-based energy company focused on the competitive energy and power generation markets, whose major subsidiaries include Luminant and TXU Energy
~~ZENS~~VRP	Voluntary Remediation Program
VUHI	Vectren Utility Holdings, Inc., a wholly-owned subsidiary of Vectren
ZENS	2.0% Zero-Premium Exchangeable Subordinated Notes due 2029
~~2016~~ZENS-Related Securities	As of both September 30, 2021 and December 31, 2020, consisted of AT&T Common and Charter Common
2020 Form 10-K	Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016~~2020 as filed with the SEC on February 25, 2021



	September 30, 2017		December 31, 2016
Current Assets:
Cash and cash equivalents ($200 and $340 related to VIEs, respectively)	$	201	$	341
Investment in marketable securities	1,057		953
Accounts receivable ($65 and $52 related to VIEs, respectively), less bad debt reserve of $16 and $15, respectively	783		740
Accrued unbilled revenues	213		335
Natural gas inventory	252		131
Materials and supplies	190		181
Non-trading derivative assets	64		51
Taxes receivable	—		30
Prepaid expenses and other current assets ($31 and $40 related to VIEs, respectively)	175		161
Total current assets	2,935		2,923

Property, Plant and Equipment:
Property, plant and equipment	18,581		17,831
Less: accumulated depreciation and amortization	5,881		5,524
Property, plant and equipment, net	12,700		12,307

Other Assets:
Goodwill	867		862
Regulatory assets ($1,690 and $1,919 related to VIEs, respectively)	2,539		2,677
Non-trading derivative assets	56		19
Investment in unconsolidated affiliate	2,481		2,505
Preferred units – unconsolidated affiliate	363		363
Other	194		173
Total other assets	6,500		6,599

Total Assets	$	22,135	$	21,829



	Nine Months Ended September 30,
	2017			2016
Cash Flows from Operating Activities:
Net income	$	496		$	331
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	749			873
Amortization of deferred financing costs	18			19
Deferred income taxes	185			150
Unrealized gain on marketable securities	(104		)	(187		)
Loss on indexed debt securities	59			258
Write-down of natural gas inventory	—			1
Equity in earnings of unconsolidated affiliate, net of distributions	(199		)	(164		)
Pension contributions	(46		)	(7		)
Changes in other assets and liabilities, excluding acquisitions:
Accounts receivable and unbilled revenues, net	216			86
Inventory	(52		)	(5		)
Taxes receivable	30			149
Accounts payable	(137		)	(90		)
Fuel cost recovery	(30		)	(43		)
Non-trading derivatives, net	(53		)	23
Margin deposits, net	(49		)	65
Interest and taxes accrued	2			(48		)
Net regulatory assets and liabilities	(135		)	(26		)
Other current assets	21			(9		)
Other current liabilities	19			31
Other assets	(3		)	—
Other liabilities	28			29
Other, net	16			19
Net cash provided by operating activities	1,031			1,455
Cash Flows from Investing Activities:
Capital expenditures	(994		)	(1,047		)
Acquisitions, net of cash acquired	(132		)	(102		)
Decrease in notes receivable – unconsolidated affiliate	—			363
Investment in preferred units – unconsolidated affiliate	—			(363		)
Distributions from unconsolidated affiliate in excess of cumulative earnings	223			223
Decrease (increase) in restricted cash of Bond Companies	8			(2		)
Proceeds from sale of marketable securities	—			178
Other, net	3			11
Net cash used in investing activities	(892		)	(739		)
Cash Flows from Financing Activities:
Increase in short-term borrowings, net	13			3
Proceeds from (payments of) commercial paper, net	(428		)	63
Proceeds from long-term debt, net	1,096			600
Payments of long-term debt	(597		)	(855		)
Debt issuance costs	(13		)	(9		)
Payment of dividends on common stock	(346		)	(332		)
Distribution to ZENS note holders	—			(178		)
Other, net	(4		)	(2		)
Net cash used in financing activities	(279		)	(710		)
Net Increase (Decrease) in Cash and Cash Equivalents	(140		)	6
Cash and Cash Equivalents at Beginning of Period	341			264
Cash and Cash Equivalents at End of Period	$	201		$	270
Supplemental Disclosure of Cash Flow Information:
Cash Payments/Receipts:
Interest, net of capitalized interest	$	306		$	324
Income taxes (refunds), net	14			(105		)
Non-cash transactions:
Accounts payable related to capital expenditures	111			75



	(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
Indexed debt securities derivative	Current Liabilities	—		776
Total		$	164	$	860



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
Indexed debt securities derivative	Current Liabilities	—		717
Total (4)		$	105	$	784



	September 30, 2017
	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
			Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Netting Adjustments (1)			Balance
	(in millions)
Assets
Corporate equities	$	1,060	$	—	$	—	$	—		$	1,060
Investments, including money market funds (2)	67		—		—		—			67
Natural gas derivatives (3)	3		128		33		(44		)	120
Hedged portion of natural gas inventory	65		—		—		—			65
Total assets	$	1,195	$	128	$	33	$	(44	)	$	1,312
Liabilities
Indexed debt securities derivative	$	—	$	—	$	776	$	—		$	776
Natural gas derivatives (3)	3		74		7		(57		)	27
Total liabilities	$	3	$	74	$	783	$	(57	)	$	803



	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	$	(712	)	$	16		$	(704	)	$	12
Purchases (1)	—			—			—			12
Total gains (losses)	(38		)	9			(38		)	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)	$	(750	)	$	17		$	(750	)	$	17
The amount of total gains (losses) for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held at the reporting date (3)	$	(36	)	$	6		$	(42	)	$	14



	September 30, 2017				December 31, 2016
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(in millions)
Financial liabilities:
Long-term debt	$	8,513	$	9,005	$	8,443	$	8,846



	September 30, 2017
	Common	Series A Preferred
CenterPoint Energy	233,856,623	14,520,000
OGE	110,982,805	—



	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	Company	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 (3)	Termination Date (5)
		(in millions)
March 3, 2016	CenterPoint Energy	$	1,700	(1)	1.250%	65%	(4)	56.9%	March 3, 2022
March 3, 2016	Houston Electric	300			1.125%	65%	(4)	49.0%	March 3, 2022
March 3, 2016	CERC Corp.	900		(1)	1.250%	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			Net Intersegment Revenues			Operating Income
	(in millions)
Electric Transmission & Distribution	$	843	(1)	$	—		$	247
Natural Gas Distribution	390			8			19
Energy Services	861			10			7
Midstream Investments (2)	—			—			—
Other Operations	4			—			6
Eliminations	—			(18		)	—
Consolidated	$	2,098		$	—		$	279

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(in millions)

(in years)

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