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 SIGECO.

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

•CenterPoint Energy’s business strategies and strategic initiatives, restructurings, including the ~~performance~~completed Restructuring, joint ventures and acquisitions or dispositions of ~~Enable,~~assets or businesses, including the ~~amount of cash distributions we receive from Enable, Enable’s ability to redeem the Series A Preferred Units in certain circumstances and the value~~completed sales of our ~~interest~~Natural Gas businesses in ~~Enable,~~Arkansas and ~~factors that may~~Oklahoma and Energy Systems Group, and our exit of the midstream sector, which we cannot assure will have ~~a material impact on such performance, cash distributions and value, including factors such as:~~the anticipated benefits to us;


◦	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 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 IRPs;

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

•timely and appropriate rate actions that allow and authorize requested and timely recovery of costs and a reasonable return on ~~investment;~~investment, including the timing and amount of recovery of Houston Electric’s TEEEF leases, and requested or favorable adjustments to rates and approval of other requested items as part of base rate proceedings;

~~future~~ •economic conditions in regional and national markets, including changes to inflation and interest rates, and instability of banking institutions, and their effect on sales, prices and costs;

•weather variations and other natural phenomena, including the impact of severe weather events on operations, capital and ~~capital;~~legislation such as seen in connection with the February 2021 Winter Storm Event;

•volatility in the markets for natural gas as a result of, among other factors, armed conflicts, including the conflict in Israel and any broader related conflict, and the conflict in Ukraine, and the related sanctions on certain Russian entities;

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

•non-payment for our services due to financial distress of our customers and the ability of our customers, including REPs, to satisfy their obligations to CenterPoint Energy, Houston Electric, and CERC, and the negative impact on such ability related to adverse economic conditions and severe weather events;

•public health threats, such as COVID-19, and their effect on our operations, business and financial condition, our industries and the communities we serve, U.S. and world financial markets and supply chains, potential regulatory actions and changes in customer and stakeholder behavior relating thereto;

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

~~tax reform and legislation;~~

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

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

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

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

~~the impact of unplanned facility outages;~~

~~any~~ •direct or indirect effects on our facilities, resources, operations and financial condition resulting from terrorism, ~~cyber-attacks,~~cyber attacks or intrusions, 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;

vii

•tax legislation, including the effects of the CARES Act and the IRA (which includes but is not limited to any potential changes to tax rates, CAMT imposed, tax credits and/or interest deductibility), as well as any changes in tax laws under the current or future administrations, 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 costs that cannot be recouped in rates;

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

•the impact of unplanned facility outages or other closures;

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

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

~~the investment performance of our~~•impacts from CenterPoint Energy’s pension and postretirement benefit ~~plans;~~plans, such as the investment performance and increases to net periodic costs as a result of plan settlements and changes in assumptions, including discount rates;

•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, including disruptions in the banking industry, our access to capital, the cost of such capital, impacts on our vendors, customers and suppliers, and the results of our financing and refinancing efforts, including availability of funds in the debt capital markets;

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

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

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

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

•timely and appropriate regulatory actions, which include actions allowing securitization, for any 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;~~including stranded coal-fired generation asset costs;

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

•acquisition and merger or divestiture activities involving us or our ~~competitors;~~industry, 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 climate change and alternate energy sources on the demand for natural gas and electricity generated or transmitted by us;

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

•the recording of impairment charges;

•political and economic developments, including energy and environmental policies under the ~~effective tax rates;~~current administration;

•CenterPoint Energy’s ability to execute on its strategy, initiatives, targets and goals, including its net zero and carbon

emissions reduction goals and its operations and maintenance expenditure goals;

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

•obligations related to warranties, guarantees and other contractual and legal obligations;

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

•other factors ~~we discuss~~discussed in “Risk Factors” in Item 1A of Part I of ~~our 2016~~the Registrants’ combined 2022 Form 10-K, which isare incorporated herein by reference, and in other reports wethat the Registrants file from time to time with the SEC.

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

Investors should note that the Registrants announce material financial and other information in SEC filings, press releases and public conference calls. Based on guidance from the SEC, the Registrants may use the Investors section of CenterPoint Energy’s website (www.centerpointenergy.com) to communicate with investors about the Registrants. It is possible that the financial and other information posted there could be deemed to be material information. The information on CenterPoint Energy’s website is not part of this combined Form 10-Q.

viii

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,
	2023		2022		2023		2022
	(in millions, except per share amounts)
Revenues:
Utility revenues	$	1,849	$	1,829	$	6,355	$	6,400
Non-utility revenues	11		74		159		210
Total	1,860		1,903		6,514		6,610
Expenses:
Utility natural gas, fuel and purchased power	192		349		1,550		1,860
Non-utility cost of revenues, including natural gas	1		52		98		143
Operation and maintenance	648		670		1,990		2,020
Depreciation and amortization	374		329		1,042		974
Taxes other than income taxes	127		119		395		401

Total	1,342		1,519		5,075		5,398
Operating Income	518		384		1,439		1,212
Other Income (Expense):
Gain (loss) on equity securities	49		(206)		56		(284)
Gain (loss) on indexed debt securities	(47)		210		(52)		381
Gain (loss) on sale	—		—		(12)		303
Interest expense and other finance charges	(176)		(116)		(489)		(375)
Interest expense on Securitization Bonds	(7)		(3)		(11)		(11)




Other income, net	13		8		39		25
Total	(168)		(107)		(469)		39
Income Before Income Taxes	350		277		970		1,251
Income tax expense	68		75		245		328


Net Income	282		202		725		923
Income allocated to preferred shareholders	26		13		50		37
Income Available to Common Shareholders	$	256	$	189	$	675	$	886



Basic Earnings Per Common Share	0.41		0.30		1.07		1.41


Diluted Earnings Per Common Share	$	0.40	$	0.30	$	1.07	$	1.40

Weighted Average Common Shares Outstanding, Basic	631		630		631		629
Weighted Average Common Shares Outstanding, Diluted	633		633		633		633

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,
	2023		2022		2023		2022
	(in millions)
Net Income	$	282	$	202	$	725	$	923
Other comprehensive income (loss):
Adjustment to pension and other postretirement plans (net of tax expense (benefit) of $-0-, $(9), $-0- and $(5))	1		2		—		(20)
Net deferred gain from cash flow hedges (net of tax of $-0-, $-0-, $-0- and $-0-)	2		—		2		—
Reclassification of deferred loss from cash flow hedges realized in net income (net of tax of $-0-, $-0-, $-0- and $-0-)	—		—		—		1


Total	3		2		2		(19)
Comprehensive income	285		204		727		904
Income allocated to preferred shareholders	26		13		50		37
Comprehensive income available to common shareholders	$	259	$	191	$	677	$	867

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, 2023		December 31, 2022
	(in millions)
ASSETS
Current Assets:
Cash and cash equivalents ($118 and $75 related to VIEs, respectively)	$	120	$	74
Investment in equity securities	566		510

Accounts receivable ($32 and $22 related to VIEs, respectively), less allowance for credit losses of $31 and $38, respectively	767		889
Accrued unbilled revenues ($2 and $0 related to VIEs, respectively), less allowance for credit losses of $1 and $4, respectively	340		764

Natural gas and coal inventory	138		241
Materials and supplies	672		635
Non-trading derivative assets	1		10
Taxes receivable	67		20

Regulatory assets	217		1,385
Prepaid expenses and other current assets ($14 and $13 related to VIEs, respectively)	134		171
Total current assets	3,022		4,699
Property, Plant and Equipment:
Property, plant and equipment	39,618		37,728
Less: accumulated depreciation and amortization	10,447		10,585
Property, plant and equipment, net	29,171		27,143
Other Assets:
Goodwill	4,160		4,294
Regulatory assets ($438 and $229 related to VIEs, respectively)	2,481		2,193

Non-trading derivative assets	—		2




Other non-current assets	167		215
Total other assets	6,808		6,704
Total Assets	$	39,001	$	38,546

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, 2023		December 31, 2022
	(in millions, except par value and shares)
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Short-term borrowings	$	4	$	511
Current portion of VIE Securitization Bonds long-term debt	170		156
Indexed debt, net	5		7
Current portion of other long-term debt	1,255		1,346
Indexed debt securities derivative	630		578
Accounts payable	763		1,352

Taxes accrued	244		298
Interest accrued	179		159
Dividends accrued	126		144
Customer deposits	110		110




Other current liabilities	407		452
Total current liabilities	3,893		5,113
Other Liabilities:
Deferred income taxes, net	4,128		3,986

Benefit obligations	533		547
Regulatory liabilities	3,195		3,245

Other non-current liabilities	829		774
Total other liabilities	8,685		8,552
Long-term Debt:
VIE Securitization Bonds, net	408		161
Other long-term debt, net	16,430		14,675
Total long-term debt, net	16,838		14,836
Commitments and Contingencies (Note 13)
Temporary Equity (Note 18)	—		3
Shareholders’ Equity:
Cumulative preferred stock, $0.01 par value, 20,000,000 shares authorized, 0 shares and 800,000 shares outstanding, respectively, $0 and $800 liquidation preference, respectively (Note 18)	—		790
Common stock, $0.01 par value, 1,000,000,000 shares authorized, 631,209,962 shares and 629,535,631 shares outstanding, respectively	6		6
Additional paid-in capital	8,581		8,568
Retained earnings	1,027		709
Accumulated other comprehensive loss	(29)		(31)
Total shareholders’ equity	9,585		10,042
Total Liabilities and Shareholders’ Equity	$	39,001	$	38,546

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,
	2023		2022
	(in millions)
Cash Flows from Operating Activities:
Net income	$	725	$	923


Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	1,042		974

Deferred income taxes	94		26




Loss (gain) on divestitures	12		(303)
Loss (gain) on equity securities	(56)		284
Loss (gain) on indexed debt securities	52		(381)



Pension contributions	(30)		(6)
Changes in other assets and liabilities:
Accounts receivable and unbilled revenues, net	528		95

Inventory	63		(224)
Taxes receivable	(47)		1
Accounts payable	(443)		(119)

Net regulatory assets and liabilities	1,102		148

Other current assets and liabilities	(41)		(199)
Other non-current assets and liabilities	59		34
Other operating activities, net	9		72


Net cash provided by operating activities	3,069		1,325
Cash Flows from Investing Activities:
Capital expenditures	(3,323)		(3,079)






Proceeds from sale of marketable securities	—		702
Proceeds from divestitures, net of cash divested	145		2,075


Other investing activities, net	(12)		73


Net cash used in investing activities	(3,190)		(229)
Cash Flows from Financing Activities:
Increase (decrease) in short-term borrowings, net	(14)		457
Payment of obligation for finance lease	—		(218)
Payments of commercial paper, net	(1,496)		(1,620)
Proceeds from long-term debt and term loans	5,574		2,089
Payments of long-term debt and term loans, including make-whole premiums	(2,613)		(1,519)




Payment of debt issuance costs	(50)		(26)


Payment of dividends on Common Stock	(359)		(328)
Payment of dividends on Preferred Stock	(49)		(48)




Redemption of Series A Preferred Stock	(800)		—
Other financing activities, net	(25)		(7)


Net cash provided by (used in) financing activities	168		(1,220)
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash	47		(124)
Cash, Cash Equivalents and Restricted Cash at Beginning of Period	91		254
Cash, Cash Equivalents and Restricted Cash at End of Period	$	138	$	130

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,
	2023			2022			2023			2022
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount
	(in millions of dollars and shares, except authorized shares and par value amounts)
Cumulative Preferred Stock, $0.01 par value; authorized 20,000,000 shares
Balance, beginning of period	1	$	790	1	$	790	1	$	790	1	$	790
Redemption of Series A Preferred Stock	(1)	(790)		—	—		(1)	(790)		—	—



Balance, end of period	—	—		1	790		—	—		1	790
Common Stock, $0.01 par value; authorized 1,000,000,000 shares
Balance, beginning of period	631	6		629	6		630	6		629	6

Issuances related to benefit and investment plans	—	—		—	—		1	—		—	—
Balance, end of period	631	6		629	6		631	6		629	6
Additional Paid-in-Capital
Balance, beginning of period		8,570			8,544			8,568			8,529

Issuances related to benefit and investment plans		11			13			13			28

Balance, end of period		8,581			8,557			8,581			8,557
Retained Earnings
Balance, beginning of period		1,032			768			709			154
Net income		282			202			725			923
Common Stock dividends declared (see Note 18)		(246)			(227)			(366)			(334)
Preferred Stock dividends declared (see Note 18)		(41)			(24)			(41)			(24)





Balance, end of period		1,027			719			1,027			719
Accumulated Other Comprehensive Loss
Balance, beginning of period		(32)			(85)			(31)			(64)
Other comprehensive loss		3			2			2			(19)
Balance, end of period		(29)			(83)			(29)			(83)
Total Shareholders’ Equity		$	9,585		$	9,989		$	9,585		$	9,989

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,
	2023		2022		2023		2022
	(in millions)
Revenues	$	1,083	$	935	$	2,784	$	2,562
Expenses:
Operation and maintenance	409		395		1,190		1,193
Depreciation and amortization	210		175		555		511
Taxes other than income taxes	70		65		201		196
Total	689		635		1,946		1,900
Operating Income	394		300		838		662
Other Income (Expense):
Interest expense and other finance charges	(69)		(50)		(185)		(148)
Interest expense on Securitization Bonds	(2)		(3)		(6)		(11)



Other income, net	5		5		22		13
Total	(66)		(48)		(169)		(146)
Income Before Income Taxes	328		252		669		516
Income tax expense	72		52		147		108
Net Income	$	256	$	200	$	522	$	408

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,
	2023		2022		2023		2022
	(in millions)
Net income	$	256	$	200	$	522	$	408




Comprehensive income	$	256	$	200	$	522	$	408

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)


	September 30, 2023		December 31, 2022
	(in millions)
ASSETS
Current Assets:
Cash and cash equivalents ($113 and $75 related to VIEs, respectively)	$	113	$	75
Accounts receivable ($30 and $22 related to VIEs, respectively), less allowance for credit losses of $1 and $1, respectively	482		311
Accounts and notes receivable–affiliated companies	409		21
Accrued unbilled revenues	182		142
Materials and supplies	489		471
Taxes receivable	8		—


Prepaid expenses and other current assets ($13 and $13 related to VIEs, respectively)	33		41
Total current assets	1,716		1,061
Property, Plant and Equipment:
Property, plant and equipment	19,056		17,753
Less: accumulated depreciation and amortization	4,425		4,292
Property, plant and equipment, net	14,631		13,461
Other Assets:
Regulatory assets ($107 and $229 related to VIEs, respectively)	775		778

Other non-current assets	37		39
Total other assets	812		817
Total Assets	$	17,159	$	15,339

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)


	September 30, 2023		December 31, 2022
	(in millions)
LIABILITIES AND MEMBER’S EQUITY
Current Liabilities:

Current portion of VIE Securitization Bonds long-term debt	$	159	$	156

Accounts payable	359		413
Accounts and notes payable–affiliated companies	92		755
Taxes accrued	152		150
Interest accrued	93		83

Other current liabilities	90		88
Total current liabilities	945		1,645
Other Liabilities:
Deferred income taxes, net	1,359		1,229
Benefit obligations	38		38
Regulatory liabilities	1,032		1,155

Other non-current liabilities	113		77
Total other liabilities	2,542		2,499
Long-term Debt:
VIE Securitization Bonds, net	81		161
Other long-term debt, net	7,425		6,036
Total long-term debt, net	7,506		6,197
Commitments and Contingencies (Note 13)
Member’s Equity:
Common stock	—		—
Additional paid-in capital	4,745		3,860
Retained earnings	1,421		1,138

Total member’s equity	6,166		4,998
Total Liabilities and Member’s Equity	$	17,159	$	15,339

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,
	2023		2022
	(in millions)
Cash Flows from Operating Activities:
Net income	$	522	$	408
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	555		511
Deferred income taxes	117		44


Changes in other assets and liabilities:
Accounts and notes receivable, net	(211)		(159)
Accounts receivable/payable–affiliated companies	(9)		(35)
Inventory	(18)		(116)
Accounts payable	(23)		(11)
Taxes receivable	(8)		—
Net regulatory assets and liabilities	(113)		(40)
Other current assets and liabilities	18		(43)
Other non-current assets and liabilities	44		(5)
Other operating activities, net	(16)		(9)
Net cash provided by operating activities	858		545
Cash Flows from Investing Activities:
Capital expenditures	(1,724)		(1,727)
Increase in notes receivable–affiliated companies	(400)		(360)


Other investing activities, net	(8)		34
Net cash used in investing activities	(2,132)		(2,053)
Cash Flows from Financing Activities:


Proceeds from long-term debt	1,398		1,589
Payments of long-term debt	(77)		(444)
Decrease in notes payable–affiliated companies	(642)		(512)
Dividend to parent	(239)		(141)
Contribution from parent	885		1,143

Payment of debt issuance costs	(12)		(15)
Payment of obligation for finance lease	—		(218)
Other financing activities, net	(1)		—
Net cash provided by financing activities	1,312		1,402
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash	38		(106)
Cash, Cash Equivalents and Restricted Cash at Beginning of Period	88		233
Cash, Cash Equivalents and Restricted Cash at End of Period	$	126	$	127

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,
	2023			2022			2023			2022
	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		4,510			3,860			3,860			2,678
Non-cash contribution from parent		—			—			—			38
Contribution from parent		235			—			885			1,143
Other		—			—			—			1
Balance, end of period		4,745			3,860			4,745			3,860
Retained Earnings
Balance, beginning of period		1,244			1,085			1,138			944
Net income		256			200			522			408
Dividend to parent		(79)			(74)			(239)			(141)
Balance, end of period		1,421			1,211			1,421			1,211




Total Member’s Equity		$	6,166		$	5,071		$	6,166		$	5,071

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,
	2023		2022		2023		2022
	(in millions)
Revenues:
Utility revenues	$	574	$	663	$	3,014	$	3,206
Non-utility revenues	9		9		31		26
Total	583		672		3,045		3,232
Expenses:
Utility natural gas	141		276		1,399		1,660
Non-utility cost of revenues, including natural gas	1		1		2		3
Operation and maintenance	187		190		616		630
Depreciation and amortization	125		113		365		333
Taxes other than income taxes	53		50		181		185

Total	507		630		2,563		2,811
Operating Income	76		42		482		421
Other Income (Expense):
Gain on sale	—		—		—		557
Interest expense and other finance charges	(44)		(32)		(131)		(91)



Other income (expense), net	6		—		12		(11)
Total	(38)		(32)		(119)		455
Income Before Income Taxes	38		10		363		876
Income tax expense	10		17		80		220


Net Income (Loss)	$	28	$	(7)	$	283	$	656

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,
	2023		2022		2023		2022
	(in millions)
Net income (loss)	$	28	$	(7)	$	283	$	656

Adjustment to pension and other postretirement plans (net of tax of $-0-, $-0- ,$-0- and $-0-)	—		—		(1)		—

Other comprehensive loss	—		—		(1)		—
Comprehensive income (loss)	$	28	$	(7)	$	282	$	656

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)


	September 30, 2023		December 31, 2022
	(in millions)
ASSETS
Current Assets:
Cash and cash equivalents	$	1	$	—
Accounts receivable, less allowance for credit losses of $28 and $34, respectively	234		463
Accrued unbilled revenues, less allowance for credit losses of $1 and $4, respectively	119		573
Accounts receivable–affiliated companies	14		52
Notes receivable–affiliated companies	86		—
Materials and supplies	118		98
Natural gas inventory	92		195
Non-trading derivative assets	1		7
Taxes receivable	—		12


Regulatory assets	205		1,336
Prepaid expenses and other current assets	46		78
Total current assets	916		2,814
Property, Plant and Equipment:
Property, plant and equipment	15,460		14,379
Less: accumulated depreciation and amortization	4,151		3,973
Property, plant and equipment, net	11,309		10,406
Other Assets:
Goodwill	1,583		1,583
Regulatory assets	833		844
Non-trading derivative assets	—		2



Other non-current assets	53		55
Total other assets	2,469		2,484
Total Assets	$	14,694	$	15,704

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)


	September 30, 2023		December 31, 2022
	(in millions)
LIABILITIES AND STOCKHOLDER’S EQUITY
Current Liabilities:
Short-term borrowings	$	4	$	511
Current portion of long-term debt	57		1,331
Accounts payable	289		690
Accounts payable–affiliated companies	209		190

Taxes accrued	178		140
Interest accrued	44		50
Customer deposits	95		94


Other current liabilities	220		200
Total current liabilities	1,096		3,206
Other Liabilities:
Deferred income taxes, net	1,168		1,262


Benefit obligations	76		76
Regulatory liabilities	1,857		1,801

Other non–current liabilities	513		501
Total other liabilities	3,614		3,640
Long-Term Debt	4,186		3,495
Commitments and Contingencies (Note 13)
Stockholder’s Equity:
Common stock	—		—
Additional paid-in capital	4,229		3,729
Retained earnings	1,554		1,618
Accumulated other comprehensive income	15		16
Total stockholder’s equity	5,798		5,363
Total Liabilities and Stockholder’s Equity	$	14,694	$	15,704

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,
	2023		2022
	(in millions)
Cash Flows from Operating Activities:
Net income	$	283	$	656
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	365		333

Deferred income taxes	(113)		217

Gain on divestitures	—		(557)
Changes in other assets and liabilities:
Accounts receivable and unbilled revenues, net	724		271
Accounts receivable/payable–affiliated companies	57		(59)
Inventory	90		(87)

Accounts payable	(384)		(117)



Net regulatory assets and liabilities	1,192		181

Other current assets and liabilities	64		(81)
Other non-current assets and liabilities	(5)		(5)
Other operating activities, net	(3)		1
Net cash provided by operating activities	2,270		753
Cash Flows from Investing Activities:
Capital expenditures	(1,219)		(1,166)
Increase in notes receivable–affiliated companies	(86)		—

Proceeds from divestiture	—		2,075
Other investing activities, net	(15)		12


Net cash provided by (used in) investing activities	(1,320)		921
Cash Flows from Financing Activities:
Increase (decrease) in short-term borrowings, net	(14)		457

Payments of commercial paper, net	(805)		(324)
Proceeds from long-term debt and term loan	2,006		852
Payments of long-term debt and term loan	(2,275)		(425)

Dividends to parent	(347)		(844)
Payment of debt issuance costs	(13)		(11)

Decrease in notes payable–affiliated companies	—		(1,517)
Contribution from parent	500		125


Other financing activities, net	(1)		(1)


Net cash used in financing activities	(949)		(1,688)
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash	1		(14)
Cash, Cash Equivalents and Restricted Cash at Beginning of Period	—		15
Cash, Cash Equivalents and Restricted Cash at End of Period	$	1	$	1

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,
	2023			2022			2023			2022
	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		4,229			3,565			3,729			4,106
Non-cash contribution from parent		—			—			—			54
Contribution from parent		—			—			500			125
Contribution to parent for sale of Arkansas and Oklahoma Natural Gas businesses		—			—			—			(720)

Balance, end of period		4,229			3,565			4,229			3,565
Retained Earnings
Balance, beginning of period		1,562			1,569			1,618			1,017
Net income		28			(7)			283			656
Dividend to parent		(36)			(13)			(347)			(124)
Balance, end of period		1,554			1,549			1,554			1,549
Accumulated Other Comprehensive Income
Balance, beginning of period		15			10			16			10
Other comprehensive loss		—			—			(1)			—
Balance, end of period		15			10			15			10
Total Stockholder’s Equity		$	5,798		$	5,124		$	5,798		$	5,124

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

Included in this combined Form 10-Q are the Interim Condensed Financial Statements of 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 2022 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.~~Background. CenterPoint Energy, Inc. is a public utility holding company. On June 30, 2023, CenterPoint Energy completed the sale of its indirect subsidiary, Energy Systems Group, to an unaffiliated third party. For additional information, see Note 3. CenterPoint Energy completed the Restructuring on June 30, 2022, whereby the equity interests in Indiana Gas and VEDO, both subsidiaries it acquired in its acquisition of Vectren on February 1, 2019, were transferred from VUH to CERC Corp. SIGECO was not acquired by CERC and remains a subsidiary of VUH. On January 10, 2022, CERC Corp. completed the sale of its Arkansas and Oklahoma Natural Gas businesses. For additional information, see Note 3.

As of September 30, 2023, CenterPoint Energy’s operating subsidiaries ~~own~~were as follows:

•Houston Electric owns and ~~operate~~operates electric transmission and distribution ~~and natural gas distribution~~ facilities supply natural gas 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 the Texas ~~Gulf Coast~~gulf coast area that includes the city of Houston;

•CERC Corp.~~, which~~ (i) directly owns and operates natural gas distribution systems in ~~six states;~~Louisiana, Minnesota, Mississippi and

~~CES, which obtains~~ Texas, (ii) indirectly, through Indiana Gas and ~~offers competitive variable~~VEDO, owns and ~~fixed-price physical~~operates natural gas ~~supplies~~distribution systems in Indiana and Ohio, respectively, and (iii) owns and operates permanent pipeline connections through interconnects with various interstate and intrastate pipeline companies through CEIP; and

•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.

As of September 30, ~~2017,~~2023, CenterPoint ~~Energy also owned an aggregate of 14,520,000 Series A Preferred Units in Enable, which owns, operates~~Energy’s reportable segments were Electric, Natural Gas, and ~~develops natural gas~~Corporate and ~~crude oil infrastructure assets,~~Other. Houston Electric and CERC ~~Corp. owned approximately 54.1%~~each consist of ~~the common units representing limited partner interests in Enable.~~a single reportable segment. For a description of CenterPoint Energy’s reportable segments, see Note 15.

As of September 30, ~~2017,~~2023, CenterPoint Energy, Houston Electric and SIGECO had VIEs ~~consisting of~~including the Bond Companies and the SIGECO Securitization Subsidiary, 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 property or facilitating the securitization financing of qualified costs in the second quarter of 2023 associated with the completed retirement of SIGECO’s A.B. Brown coal generation facilities. CenterPoint Energy, through SIGECO, has a controlling financial interest in the SIGECO Securitization Subsidiary and ~~system restoration-related property.~~is the VIE’s primary beneficiary. For further information, see Note 6. Creditors of CenterPoint Energy, Houston Electric and SIGECO have no recourse to any assets or revenues of the Bond ~~Companies.~~Companies or the SIGECO Securitization Subsidiary, as applicable. The ~~bonds~~Securitization Bonds issued by these VIEs are payable only from and secured by transition ~~and system restoration~~or securitization property, as applicable, and the bondholders have no recourse to the general credit of CenterPoint ~~Energy.~~Energy, Houston Electric or SIGECO.

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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.

~~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 standards and recently issued 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~~Divestitures (CenterPoint Energy and CERC)

Divestiture of Energy Systems Group. On May 21, 2023, CenterPoint Energy, through its subsidiary Vectren Energy Services, entered into an Equity Purchase Agreement to sell all of the outstanding limited liability company interests of Energy Systems Group to ESG Holdings Group, for a purchase price of $157 million, subject to customary adjustments set forth in the Equity Purchase Agreement, including adjustments based on Energy Systems Group’s net working capital at closing, indebtedness, cash and cash equivalents and transaction expenses. The transaction closed on June 30, 2023, and CenterPoint Energy received $154 million in cash, subject to finalization of the purchase price adjustment. Additionally, as of September 30, 2023, CenterPoint Energy had a payable to ESG Holdings Group for working capital and other adjustments set forth in the Equity Purchase Agreement that have not yet been finalized.

In May 2023, certain assets and liabilities of Energy Systems Group met the held for sale criteria. The divestiture of Energy Systems Group reflects CenterPoint Energy’s continued strategic focus on its core utility businesses. The historical annual revenues, net income and total assets of Energy Systems Groups did not have a sufficient effect, quantitatively or qualitatively, on CenterPoint Energy’s financial results to be considered a strategic shift. Therefore, the income and expenses associated with Energy Systems Group were not reflected as discontinued operations on CenterPoint Energy’s Condensed Statements of Consolidated Income. For disposal groups that are classified as held for sale but that do not meet the criteria for discontinued operations reporting, the assets and liabilities of the disposal group are required to be separately presented on the face of the balance sheet only in the initial period in which it is classified as held for sale. Therefore, CenterPoint Energy’s Condensed Consolidated Balance Sheet as of December 31, 2022 was not recast to reflect Energy Systems Group’s assets and liabilities as held for sale. Depreciation and amortization of long-lived assets ceased at the end of the quarter in which the held for sale criteria is met. Additionally, as a result of the completion of the sale of Energy Systems Group in June 2023, there were no assets or liabilities classified as held for sale as of September 30, 2023. For a discussion of guarantees and product warranties related to Energy Systems Group prior to the sale, see Note 13(b).

CenterPoint Energy recognized a loss on sale of approximately $12 million, including $3 million of transaction costs, during the nine months ended September 30, 2023, in connection with the closing of the sale of Energy Systems Group. Additionally, CenterPoint Energy recognized a current tax expense of $33 million during the nine months ended September 30, 2023, as a result of the cash taxes payable upon the closing of the sale.

The pre-tax loss for Energy Systems Group, excluding interest and corporate allocations, included in CenterPoint Energy’s Condensed Statements of Consolidated Income is as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(in millions)
Loss from Continuing Operations Before Income Taxes	$	—	$	(1)	$	(4)	$	(5)

Divestiture of Arkansas and Oklahoma Natural Gas Businesses. On April 29, 2021, CenterPoint Energy, through its subsidiary CERC Corp., entered into an Asset Purchase Agreement to sell its Arkansas and Oklahoma Natural Gas businesses for $2.15 billion in cash, including recovery of approximately $425 million in natural gas costs, including storm-related

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incremental natural gas costs associated with the February 2021 Winter Storm Event, subject to certain adjustments set forth in the Asset Purchase Agreement. The assets included approximately 17,000 miles of main pipeline in Arkansas, Oklahoma and certain portions of Bowie County, Texas serving more than half a million customers. The transaction closed on January ~~3, 2017,CES,~~10, 2022.

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

Although the Arkansas and Oklahoma Natural Gas businesses met the held for sale criteria, their disposals did not represent a strategic shift to CenterPoint Energy and CERC, as both retained significant operations in, and continued to invest in, their natural gas businesses. Therefore, the income and expenses associated with the disposed businesses were not reflected as discontinued operations on CenterPoint Energy’s and CERC’s Condensed Statements of Consolidated Income, as applicable. Since the depreciation on the Arkansas and Oklahoma Natural Gas assets continued to be reflected in revenues through customer rates until the closing of the transaction and will be reflected in the carryover basis of the rate-regulated assets, CenterPoint Energy and CERC continued to record depreciation on those assets through the closing of the transaction. 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.

CenterPoint Energy and CERC recognized gains of $303 million and $557 million, respectively, net of transaction costs of $59 million, in connection with the closing of the disposition of the Arkansas and Oklahoma Natural Gas businesses during the year ended December 31, 2022. CenterPoint Energy and CERC collected a receivable of $15 million in May 2022 for full and final settlement of the working capital adjustment under the Asset Purchase Agreement.

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


	Three Months Ended September 30, 2022		Nine Months Ended September 30, 2022 (1)
	(in millions)
Income from Continuing Operations Before Income Taxes	$	—	$	9

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

Effective on the date of the closing of the disposition of the Arkansas and Oklahoma Natural Gas businesses, a subsidiary of CenterPoint Energy ~~completed its acquisition~~entered into the Transition Services Agreement, whereby that subsidiary agreed to provide certain transition services such as accounting, customer operations, procurement, and technology functions for a term of ~~AEM. After working capital adjustments,~~up to twelve months. In November 2022, a significant majority of all services under the ~~final purchase price was $147~~Transition Services Agreement were terminated, and on January 10, 2023, all remaining services were terminated.

CenterPoint Energy’s charges to Southern Col Midco for reimbursement of transition services were $-0- and less than $1 million during the three and nine months ended September 30, 2023 and were $10 million and ~~was allocated~~$29 million during the three and nine months ended September 30, 2022. Actual transitional services costs incurred are recorded net of amounts charged to ~~identifiable assets acquired~~Southern Col Midco. CenterPoint Energy had accounts receivable from Southern Col Midco of $-0- as of September 30, 2023 and ~~liabilities assumed based on their estimated fair values on~~$1 million as of December 31, 2022, for transition services.

(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 ~~acquisition date.~~consideration to which the Registrants expect to be entitled to receive in exchange for these goods or services.

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

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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 ~~table summarizes the final purchase price allocation~~tables disaggregate revenues by reportable segment and ~~the fair value amounts recognized~~major source:

CenterPoint Energy


	Three Months Ended September 30, 2023
	Electric		Natural Gas		Corporate and Other		Total
	(in millions)
Revenue from contracts	$	1,274	$	589	$	1	$	1,864

Other (1)	(13)		8		1		(4)

Total revenues	$	1,261	$	597	$	2	$	1,860

	Nine Months Ended September 30, 2023
	Electric		Natural Gas		Corporate and Other		Total
	(in millions)
Revenue from contracts	$	3,272	$	3,100	$	125	$	6,497
Other (1)	(22)		36		3		17

Total revenues	$	3,250	$	3,136	$	128	$	6,514


	Three Months Ended September 30, 2022
	Electric		Natural Gas		Corporate and Other		Total
	(in millions)
Revenue from contracts	$	1,155	$	686	$	65	$	1,906
Other (1)	(9)		6		—		(3)

Total revenues	$	1,146	$	692	$	65	$	1,903

	Nine Months Ended September 30, 2022
	Electric		Natural Gas		Corporate and Other		Total
	(in millions)
Revenue from contracts	$	3,113	$	3,358	$	182	$	6,653
Other (1)	(21)		(24)		2		(43)

Total revenues	$	3,092	$	3,334	$	184	$	6,610

(1)Primarily consists of income from ARPs and leases. Total lease income was $2 million and $1 million for the ~~assets acquired~~three months ended September 30, 2023 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~~2022, respectively, and $6 million and $5 million resulting from the acquisition reflects the excess of the purchase price over the fair value of the net identifiable assets acquired. The goodwill recorded as part of the acquisition primarily reflects the value of the complementary operational and geographic footprints, scale and expanded capabilities provided by the acquisition.

Identifiable intangible assets were recorded at estimated fair value as determined by management based on available information, which includes a preliminary valuation prepared by an independent third party. The significant assumptions used in arriving at the estimated identifiable intangible asset values included management’s estimates of future cash flows, the discount rate which is based on the weighted average cost of capital for comparable publicly traded guideline companies and projected customer attrition rates. The useful lives for the ~~identifiable intangible assets were determined using methods that approximate the pattern~~nine months ended September 30, 2023 and 2022, respectively.

Houston Electric


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(in millions)
Revenue from contracts	$	1,100	$	949	$	2,821	$	2,597
Other (1)	(17)		(14)		(37)		(35)
Total revenues	$	1,083	$	935	$	2,784	$	2,562

(1)Primarily consists of ~~economic benefit provided by the utilization of the assets.~~

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

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

~~Amortization expense related to the above identifiable intangible assets~~leases. Lease income was ~~$-0- and $1 million~~not significant for the three and nine months ended September 30, ~~2017, respectively.~~2023 and 2022.

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~~Revenues~~

CERC


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(in millions)
Revenue from contracts	$	575	$	667	$	3,012	$	3,257
Other (1)	8		5		33		(25)

Total revenues	$	583	$	672	$	3,045	$	3,232

(1)Primarily consists of ~~approximately $311~~income from ARPs and leases. Lease income was $1 million for both the three months ended September 30, 2023 and ~~$989 million, respectively, and operating~~2022. Lease income ~~of approximately~~was $3 million and ~~$28~~$2 million, respectively, ~~attributable to the AEM acquisition are reported in the Energy Services business segment and included in CenterPoint Energy’s Condensed Statements of Consolidated Income~~ for the ~~three and~~ nine months ended September 30, ~~2017.~~2023 and 2022.

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

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

Contract Balances. When the timing of delivery of service is different from the timing of the payments made by customers and when the right to consideration is conditioned on something other than the passage of time, the Registrants recognize either a contract asset (performance precedes billing) or a contract liability (customer payment precedes performance). Those customers that prepay are represented by contract liabilities until the performance obligations are satisfied. The Registrants’ contract assets are included in Accrued unbilled revenues and contract liabilities are included in Accounts payable and Other current liabilitiesin their Condensed Consolidated Balance Sheets. CenterPoint Energy’s contract assets and contract liabilities primarily related to Energy Systems Group contracts where revenue was recognized using the input method prior to the sale of Energy Systems Group that was completed on June 30, 2023.

The ~~following unaudited pro forma financial information reflects~~opening and closing balances of accounts receivable, other accrued unbilled revenue, contract assets and contract liabilities from contracts with customers are as follows:

CenterPoint Energy


	Accounts Receivable		Other Accrued Unbilled Revenues		Contract Assets			Contract Liabilities
	(in millions)
Opening balance as of December 31, 2022	$	858	$	764	$	4		$	45
Closing balance as of September 30, 2023	733		340		—			5
Decrease	$	(125)	$	(424)	$	(4)	(1)	$	(40)	(1)

(1)Decrease primarily related to the ~~consolidated~~completed sale of Energy Systems Group on June 30, 2023.

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The amount of revenue recognized during the nine-month period ended September 30, 2023 that was included in the opening contract liability was $2 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, 2022	$	271	$	142	$	2
Closing balance as of September 30, 2023	459		182		5
Increase (decrease)	$	188	$	40	$	3

The amount of ~~operations~~revenue recognized during the nine-month period ended September 30, 2023 that was included in the opening contract liability was $2 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, 2022	$	478	$	573
Closing balance as of September 30, 2023	230		119
Decrease	$	(248)	$	(454)

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

Remaining Performance Obligations (CenterPoint Energy).Following the completed sale of Energy Systems Group on June 30, 2023, CenterPoint Energy ~~assuming the AEM acquisition~~ had taken place on January 1, 2016. Adjustments to pro forma net income include intercompany sales, amortization of intangible assets, depreciation of fixed assets, interest expense associated with debt financing to fund the acquisition,no remaining performance obligations.

Practical Expedients 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~~Exemption. Sales taxes and ~~sales at index prices. The effective portion of these hedges~~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.

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 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 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 had no material changes in ~~Other Comprehensive Income. Additionally,~~its methodology to recognize losses on financial assets that fall under the ~~pro forma information does not include~~scope of Topic 326, primarily due to the ~~mark-to-market impact~~nature of ~~physical forward transactions that were previously accounted for as normal purchase~~its customers and ~~sale transactions.~~regulatory environment. For a discussion of regulatory deferrals, including those related to COVID-19, 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

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

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

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,
	2023		2022		2023		2022
	(in millions)
Service cost (1)	$	6	$	7	$	19	$	23
Interest cost (2)	19		20		57		52
Expected return on plan assets (2)	(19)		(21)		(57)		(69)

Amortization of net loss (2)	7		8		21		22
Settlement cost (2) (3)	—		8		—		38

Net periodic cost	$	13	$	22	$	40	$	66

~~(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, 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, 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.

Postretirement Benefits


	Three Months Ended September 30,
	2023						2022
	CenterPoint Energy		Houston Electric		CERC		CenterPoint Energy		Houston Electric		CERC
	(in millions)
Service cost (1)	$	—	$	—	$	—	$	—	$	—	$	1
Interest cost (2)	3		1		1		3		1		1
Expected return on plan assets (2)	(1)		(1)		—		(1)		(1)		(1)
Amortization of prior service credit (2)	(1)		(1)		1		(1)		(1)		—
Amortization of net loss (2)	(2)		(1)		(1)		(1)		(1)		—




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

	Nine Months Ended September 30,
	2023						2022
	CenterPoint Energy		Houston Electric		CERC		CenterPoint Energy		Houston Electric		CERC
	(in millions)
Service cost (1)	$	1	$	—	$	—	$	1	$	—	$	1
Interest cost (2)	9		4		3		7		3		3
Expected return on plan assets (2)	(4)		(3)		—		(3)		(3)		(1)
Amortization of prior service cost (credit) (2)	(2)		(4)		2		(2)		(3)		1
Amortization of net loss (2)	(6)		(3)		(2)		(3)		(2)		(1)




Net periodic cost (benefit)	$	(2)	$	(6)	$	3	$	—	$	(5)	$	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.

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The table below reflects the expected contributions to be made to the pension and postretirement benefit plans ~~are as follows:~~during 2023:


	CenterPoint Energy		Houston Electric		CERC
	(in millions)
Expected contribution to pension plans during 2023	$	31	$	—	$	—
Expected contribution to postretirement benefit plans in 2023	8		1		4

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.~~

~~CenterPoint Energy expects~~The table below reflects the contributions made to ~~contribute a minimum of approximately $46 million to its~~the pension ~~plans in 2017, of which approximately $28 million~~ and ~~$46 million were contributed during the three and nine months ended September 30, 2017, respectively.~~

~~CenterPoint Energy expects to contribute a total of approximately $16 million to its~~ postretirement benefit ~~plan~~plans:


	Three Months Ended September 30, 2023						Nine Months Ended September 30, 2023
	CenterPoint Energy		Houston Electric		CERC		CenterPoint Energy		Houston Electric		CERC
	(in millions)
Pension plans (1)	$	26	$	—	$	—	$	30	$	—	$	—
Postretirement benefit plans	1		—		1		5		—		3

(1)A discretionary contribution in ~~2017,~~the amount of ~~which approximately $4~~$24 million ~~and $12 million were contributed during~~was made in September 2023.

(6) Regulatory Matters

Equity Return

The Registrants are at times allowed by a regulator to defer an equity return as part of the ~~three and nine months ended September 30, 2017, respectively.~~

~~(5) Regulatory Accounting~~

~~Equity Return.~~ Asrecoverable carrying costs of ~~September 30, 2017, Houston Electric has~~a regulatory asset. A deferred equity return is capitalized for rate-making purposes, but it is not ~~recognized an~~included in the Registrant’s regulatory assets on its 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 Registrants is as follows:


	September 30, 2023						December 31, 2022
	CenterPoint Energy (1)		Houston Electric (2)		CERC (3)		CenterPoint Energy (1)		Houston Electric (2)		CERC (3)
	(in millions)
Allowed equity return not recognized	$	205	$	81	$	66	$	188	$	82	$	54

(1)In addition to the amounts described in (2) and (3) below, represents CenterPoint Energy’s allowed equity return on post in-service carrying cost, including investments at SIGECO and securitized qualified costs associated with the completed retirements of SIGECO’s A.B. Brown coal-fired generation facilities.

(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 utilities prior to Texas deregulation to be recovered in rates through 2024 and certain storm restoration, TEEEF and LLTF balances.

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

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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,
	2023						2022
	CenterPoint Energy		Houston Electric		CERC		CenterPoint Energy		Houston Electric		CERC
	(in millions)
Allowed equity return recognized	$	14	$	14	$	—	$	14	$	12	$	1

	Nine Months Ended September 30,
	2023						2022
	CenterPoint Energy		Houston Electric		CERC		CenterPoint Energy		Houston Electric		CERC
	(in millions)
Allowed equity return recognized	$	32	$	30	$	1	$	36	$	33	$	2

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. The February 2021 Winter Storm Event 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 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 cost of natural gas purchased by CenterPoint Energy and CERC of approximately $2 billion. CenterPoint Energy and CERC have completed recovery of natural gas costs in Mississippi, Indiana and Texas discussed further below, and continue to recover the natural gas cost in Louisiana and Minnesota. As of September 30, 2023, CenterPoint Energy and CERC have each recorded current regulatory assets of $92 million and non-current regulatory assets of $141 million associated with the February 2021 Winter Storm Event. As of December 31, 2022, CenterPoint Energy and CERC have each recorded current regulatory assets of $1,175 million and non-current regulatory assets of $202 million associated with the February 2021 Winter Storm Event.

In Minnesota, the MPUC issued its written order on October 19, 2022 disallowing CERC’s recovery of approximately $36 million of the $409 million incurred, and CERC’s regulatory asset balance was reduced to reflect the disallowance. CERC filed a petition for reconsideration on November 8, 2022 and a written order denying the petition for reconsideration was issued on January 6, 2023.

CenterPoint Energy and CERC have approximately $75 million of the total $2 billion of natural gas costs incurred during the February 2021 Winter Storm Event remaining under prudence review in Louisiana, which may impact the amount ultimately recovered in Louisiana. On August 24, 2023, the LPSC Staff issued an Audit Report which recommends some prospective process changes to the gas supply bid process and did not recommend any disallowance of February 2021 Winter Storm Event gas costs incurred in Louisiana. Recovery of such costs remains subject to LPSC approval.

As of both September 30, 2023 and December 31, 2022, as authorized by the PUCT, both CenterPoint Energy and Houston Electric recorded a regulatory asset of $8 million for bad debt expenses resulting from REPs’ default on their obligation to pay delivery charges to Houston Electric net of collateral. Additionally, both CenterPoint Energy and Houston Electric recorded a regulatory asset of $17 million and $16 million as of both September 30, 2023 and December 31, 2022, to defer operations and maintenance costs associated with the February 2021 Winter Storm Event.

See Note 13(c) for further information regarding litigation related to the February 2021 Winter Storm Event.

Texas Public Securitization

The Texas Natural Gas Securitization Finance Corporation issued customer rate relief bonds in March 2023, and on March 23, 2023, CenterPoint Energy and CERC, collectively, received approximately $1.1 billion in cash proceeds from the state’s

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customer rate relief bonds. The proceeds from the state’s customer rate relief bonds included carrying costs incurred through August 2022. Incremental carrying costs incurred after August 2022 until the date the proceeds were received are recorded in a separate regulatory asset to be included for recovery in a subsequent rate proceeding. As CenterPoint Energy and CERC have no future financial obligations for the repayment of the state’s customer rate relief bonds, the customer rate relief bonds are not recorded on CenterPoint Energy’s or CERC’s balance sheets. The $1.1 billion in cash proceeds from the customer rate relief bonds is considered to be a government grant. The state’s customer rate relief bonds are backed in part by customer rate relief property, including customer rate relief charges, which are non-bypassable uniform monthly volumetric charges to be paid by all existing and future customers as a component of each regulated utility’s gas cost or in another manner that the Railroad Commission determines reasonable, separate from their base rate. CERC only acts as a collection agent, whose duties include management, servicing and administration of a portion of the customer rate relief property which is associated with the customer rate relief charge imposed on customers of CERC under the guidance and direction from the Railroad Commission. The Texas Natural Gas Securitization Finance Corporation, and not CenterPoint Energy or CERC, is the owner of the customer rate relief property. The assets of the Texas Natural Gas Securitization Finance Corporation are not available to pay creditors of CenterPoint Energy, CERC, or their affiliates. While the customer rate relief charges will be included by CERC in their monthly billings, the billing amount is established by the Railroad Commission. CERC will remit all customer rate relief charges to the financing entity set up by the Railroad Commission. Therefore, the collection and servicing of customer rate relief charges have no impact on the respective Condensed Statements of Consolidated Income of CenterPoint Energy or CERC.

As U.S. generally accepted accounting principles have no specific accounting guidance for government grants or assistance, the cash proceeds from the state’s customer rate relief bonds were accounted for as a government grant by analogy to the grant model under IAS 20—Accounting for Government Grants and Disclosures of Government Assistance. CenterPoint Energy and CERC reflect the proceeds from the grant as a deduction to natural gas costs and recognized the $1.1 billion of cash proceeds from the state’s customer rate relief bonds within Utility natural gas expense on their respective Condensed Statements of Consolidated Income in the nine months ended September 30, ~~2017 and 2016, Houston Electric recognized approximately $30 million and $52 million, respectively,~~2023, net of the ~~allowed equity return not previously recognized.~~recognition of natural gas cost related to relieving CenterPoint Energy and CERC’s regulatory assets related to the February 2021 Winter Storm Event in the same period.

~~Hurricane Harvey.~~ ~~Houston~~Indiana Electric Securitization of Generation Retirements (CenterPoint Energy)

On January 4, 2023, the IURC issued an order in accordance with Indiana Senate Enrolled Act 386 authorizing the issuance of up to $350 million in securitization bonds to securitize qualified costs associated with the retirements of Indiana Electric’s electric delivery system and CERC Corp.’s NGD suffered damage as a result of Hurricane Harvey, a major storm classified as a Category 4 hurricane on the Saffir-Simpson Hurricane Wind Scale, that first struck the Texas coast on Friday, August 25, 2017 and remained over the Houston area for the next several days. The unprecedented flooding from torrential amounts of rainfall accompanying the storm caused significant damage to or destruction of residences and businesses served by 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~~A.B. Brown coal-fired generation facilities. Accordingly, CenterPoint Energy determined 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. Asretirement of ~~September 30, 2017, Houston Electric recorded an increase of $4 million in~~ property, plant and equipment became probable upon the issuance of the order. No loss on abandonment was recognized in connection with issuance of the order as there was no disallowance of all or part of the cost of the abandoned property, plant and ~~$73 million in regulatory assets, net~~equipment. In the first quarter of ~~$23 million in insurance receivables recorded, for restoration costs incurred. As a result, storm restoration costs should not materially affect Houston Electric’s reported net income for 2017.~~

~~Currently, NGD estimates that total costs~~2023, upon receipt of the order, CenterPoint Energy reclassified property, plant and equipment to restore natural gas distribution facilities damaged as a result of Hurricane Harvey will range from $25 million to $30 million and estimates that the total restoration costs covered by insurance will be approximately $17 million. NGD will defer the uninsured storm restoration costs as management believes it is probable that such costs will be recovered through ~~traditional rate adjustment mechanisms~~securitization to a regulatory asset and such amounts continued to earn a full return until recovered through securitization.

On March 24, 2023, SIGECO and the SIGECO Securitization Subsidiary filed a registration statement on Form SF-1, amended on May 16, 2023, under the Securities Act of 1933, as amended, with the SEC registering the public offering and sale of approximately $341 million aggregate principal amount of the SIGECO Securitization Bonds. The registration statement became effective on June 12, 2023. The SIGECO Securitization Subsidiary issued $341 million aggregate principal amount of the SIGECO Securitization Bonds on June 29, 2023. See Note 11 for ~~capital~~further details of the issuance. The SIGECO Securitization Subsidiary used the net proceeds from the issuance to purchase the securitization property from SIGECO. No gain or loss was recognized.

The SIGECO Securitization Bonds are secured by the securitization property, which includes the right to recover, through non-bypassable securitization charges payable by SIGECO’s retail electric customers, the qualified costs of SIGECO authorized by the IURC order. SIGECO has no payment obligations with respect to the SIGECO Securitization Bonds except to remit collections of securitization charges as set forth in a servicing agreement between SIGECO and the SIGECO Securitization Subsidiary. The non-bypassable securitization charges are subject to a true-up mechanism.

Houston Electric TEEEF

Pursuant to legislation passed in 2021, Houston Electric entered into two leases for TEEEF (mobile generation) which are detailed in Note 19. Houston Electric initially sought recovery of deferred costs and the applicable return as of December 31, 2021 under these lease agreements of approximately $200 million in its DCRF application filed with the PUCT on April 5, 2022, and subsequently amended on July 1, 2022, to show mobile generation in a separate Rider TEEEF. The annual revenue

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increase requested for these lease agreements was approximately $57 million. A final order was issued on April 5, 2023 approving a reduced revenue requirement of $39 million that results in full recovery of costs requested but lengthens the amortization period for the short-term lease to be collected over 82.5 months. On April 28, 2023, and May 1, 2023, certain intervenors filed motions for rehearing of the PUCT’s April 5, 2023 order. On May 25, 2023, the PUCT issued its order on rehearing which clarified some of the findings, but did not change the approval of TEEEF cost recovery. On June 19, 2023, certain intervenors filed motions for rehearing of the PUCT’s May 25, 2023 Order on Rehearing; the PUCT issued an order on August 3, 2023 denying the motions for rehearing. The deadline for a party to file a judicial appeal of the PUCT’s decision was September 5, 2023, and no appeal was filed. As such, the PUCT’s decision on the first TEEEF filing is now final and non-appealable.

On April 5, 2023, Houston Electric made its second TEEEF filing requesting recovery of TEEEF related costs incurred through December 31, 2022. Houston Electric is requesting a new annual revenue requirement of approximately $188 million using 78 months to amortize the ~~next rate proceeding~~related deferred costs for ~~operation~~proposed rates beginning September 2023, a net increase in TEEEF revenues of approximately $149 million. On June 7, 2023, intervenors jointly requested a hearing, and ~~maintenance expenses. As~~on June 14, 2023, the PUCT staff indicated that it does not oppose a hearing in this docket. On June 21, 2023 Houston Electric made a filing that a hearing is not necessary given the PUCT’s decision in the TEEEF docket filed in 2022 and indicated that if the PUCT does refer this case to the State Office of Administrative Hearings, any preliminary order issued by the PUCT should be limited. On July 18, 2023 the PUCT referred the case to the State Office of Administrative Hearings and, on July 20, 2023, the PUCT issued a preliminary order identifying the issues to be addressed. On August 28, 2023, the State Office of Administrative Hearings issued an Order setting interim rates to collect an annual revenue requirement at the filed amount. Interim rates became effective on September 1, 2023 and are subject to surcharge or refund if they differ from the final rates approved by the PUCT. On October 12, 2023, a joint motion to abate was filed because the parties reached an agreement in principle on all issues.The agreement in principle is subject to PUCT approval. The ultimate outcome of these proceedings cannot be predicted at this time.

Houston Electric defers costs associated with the short-term and long-term leases that are probable of recovery and would otherwise be charged to expense in a regulatory asset, including allowed debt returns, and determined that such regulatory assets remain probable of recovery as of September 30, ~~2017, NGD~~2023. Right of use finance lease assets, such as assets acquired under the long-term leases, are evaluated for impairment under the long-lived asset impairment model by assessing if a capital disallowance from a regulator is probable through monitoring the outcome of rate cases and other proceedings. Houston Electric continues to monitor the on-going proceedings and has not recorded ~~approximately $7 million~~any impairments on its right of use assets in the year ended December 31, 2022 or the nine months ended September 30, 2023. See Note 19 for further information.

COVID-19 Regulatory Matters

Regulatory commissions in Indiana Electric’s and CenterPoint Energy’s and CERC’s Natural Gas service territories have either (1) issued orders to record a regulatory ~~assets, net~~asset for incremental bad debt expenses related to COVID-19, including costs associated with the suspension of $2

~~million of insurance receivables recorded, for restoration costs incurred. As a result, storm restoration costs should not materially affect CERC’s reported net income for 2017.~~

~~(6) Derivative Instruments~~

disconnections and payment plans, or (2) provided authority to recover bad debt expense through an existing tracking mechanism. Both CenterPoint Energy isand CERC have recorded estimated incremental uncollectible receivables to the associated regulatory asset of $18 million and $17 million, respectively, as of September 30, 2023 and December 31, 2022. CenterPoint Energy and CERC have $5 million and $4 million, respectively, remaining to recover through rates and other sources as of September 30, 2023, and $11 million and $10 million, respectively, remaining to recover through rates and other sources as of December 31, 2022.

(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 and CERC). CenterPoint Energy ~~elects~~and CERC, 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 enters~~Indiana Utilities they respectively own, enter 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.~~deferred in a regulatory liability or asset. All other financial instruments do not qualify or are not designated as cash flow or fair value hedges.

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Interest Rate Risk Derivative Instruments. From time to time, the Registrants may enter into interest rate derivatives that are designated as economic or cash flow hedges. The objective of these hedges is to offset risk associated with interest rates borne by the Registrants in connection with an anticipated future fixed rate debt offering or 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.

The table below summarizes CenterPoint Energy’s outstanding interest rate hedging activity:

September 30, 2023

December 31, 2022

Hedging Classification

Notional Principal

CenterPoint
Energy

(in millions)

Economic hedge (1)

—

(1)Relates to interest rate derivative instruments at SIGECO that terminated on May 1, 2023.

In May 2023, CenterPoint Energy entered into a forward interest rate agreement having an aggregate notional amount of $75 million, which agreement was amended in June 2023. The agreement was executed to hedge, in part, volatility in the 3-year U.S treasury rate by reducing CenterPoint Energy’s exposure to variability in cash flows related to interest payments of CenterPoint Energy’s $400 million issuance of fixed rate debt in August 2023. The forward interest rate agreement was designated as a cash flow hedge. The realized gains and losses associated with the agreement were immaterial.

In September 2023, SIGECO entered into two forward interest rate agreements having aggregate notional amounts of $50 million and $38 million. The agreements were executed to hedge, in part, volatility in the 5-year and 7-year U.S. treasury rates, respectively, by reducing SIGECO’s exposure to variability in cash flows related to interest payments of SIGECO’s $470 million issuance of fixed rate debt in October 2023. The forward interest rate agreements were designated as cash flow hedges. The realized gains and losses associated with the agreements were immaterial.

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 and ~~Oklahoma. NGD~~Ohio, 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 compared to CenterPoint Energy’s other jurisdictions.~~mechanisms. 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~~weather hedges.

(b)Derivative Fair Values and Income Statement Impacts (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~~ 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.CERC)

~~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~~derivative assets and ~~Liabilities as of September 30, 2017 and December 31, 2016,~~liabilities, while the last table provides a breakdown of the related income statement ~~impacts for~~impacts.

Fair Value of Derivative Instruments and Hedged Items

CenterPoint Energy


		September 30, 2023				December 31, 2022
	Balance Sheet Location	Derivative Assets Fair Value		Derivative Liabilities Fair Value		Derivative Assets Fair Value		Derivative Liabilities Fair Value




Derivatives not designated as hedging instruments:		(in millions)
Natural gas derivatives (1)	Current Assets: Non-trading derivative assets	$	1	$	—	$	9	$	—
Natural gas derivatives (1)	Other Assets: Non-trading derivative assets	—		—		2		—

Interest rate derivatives	Current Assets: Non-trading derivative assets	—		—		1		—



Indexed debt securities derivative (2)	Current Liabilities	—		630		—		578

Total		$	1	$	630	$	12	$	578

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CERC


		September 30, 2023				December 31, 2022
	Balance Sheet Location	Derivative Assets Fair Value		Derivative Liabilities Fair Value		Derivative Assets Fair Value		Derivative Liabilities Fair Value




Derivatives not designated as hedging instruments:		(in millions)
Natural gas derivatives (1)	Current Assets: Non-trading derivative assets	$	1	$	—	$	7	$	—
Natural gas derivatives (1)	Other Assets: Non-trading derivative assets	—		—		2		—






Total		$	1	$	—	$	9	$	—

(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)Derivative component of the ZENS obligation that represents the ZENS holder’s option to receive the appreciated value of the reference shares at maturity and other payments to which they may be entitled. See Note 10 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	2023		2022		2023		2022
Derivatives not designated as hedging instruments:		(in millions)
Indexed debt securities derivative (1)	Gain (loss) on indexed debt securities	$	(47)	$	210	$	(52)	$	381

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

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 net liability position as~~could request immediate payment.As of ~~both~~ September 30, ~~2017~~2023 and December 31, ~~2016 was $1 million. CenterPoint Energy posted no assets as collateral toward derivative instruments that contain~~2022, all derivatives with 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~~risk-related 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.~~in an asset 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

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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 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.basis.

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~~2023 and December 31, ~~2016,~~2022 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


~~(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.~~

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.~~

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


	September 30, 2023						December 31, 2022
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets	(in millions)
Equity securities	$	566	$	—	$	—	$	566	$	510	$	—	$	—	$	510
Investments, including money market funds (1)	31		—		—		31		32		—		—		32
Interest rate derivatives	—		—		—		—		—		1		—		1
Natural gas derivatives	—		1		—		1		—		11		—		11



Total assets	$	597	$	1	$	—	$	598	$	542	$	12	$	—	$	554
Liabilities
Indexed debt securities derivative	$	—	$	630	$	—	$	630	$	—	$	578	$	—	$	578





Total liabilities	$	—	$	630	$	—	$	630	$	—	$	578	$	—	$	578

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

Houston Electric


~~(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.~~


	September 30, 2023						December 31, 2022
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets	(in millions)
Investments, including money market funds (1)	$	14	$	—	$	—	$	14	$	17	$	—	$	—	$	17

Total assets	$	14	$	—	$	—	$	14	$	17	$	—	$	—	$	17


~~(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.

CERC


	September 30, 2023						December 31, 2022
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets	(in millions)

Investments, including money market funds (1)	$	14	$	—	$	—	$	14	$	14	$	—	$	—	$	14
Natural gas derivatives	—		1		—		1		—		9		—		9
Total assets	$	14	$	1	$	—	$	15	$	14	$	9	$	—	$	23

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

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, 2023						December 31, 2022
	CenterPoint Energy (1)		Houston Electric (1)		CERC		CenterPoint Energy (1)		Houston Electric (1)		CERC
Long-term debt, including current maturities	(in millions)


Carrying amount	$	18,263	$	7,665	$	4,243	$	16,338	$	6,353	$	4,826
Fair value	16,283		6,397		3,908		14,990		5,504		4,637

(1)Includes Securitization Bonds, as applicable.

~~(8) Unconsolidated Affiliate~~

~~CenterPoint~~(9) Goodwill and Other Intangibles (CenterPoint Energy ~~has the ability to significantly influence the operating~~ and ~~financial policies of Enable, a publicly traded MLP,~~CERC)

Goodwill (CenterPoint Energy and ~~accordingly, accounts for its investment in Enable’s common units using the equity method of accounting.~~CERC)

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 Series A Preferred Unit investment as presented in the Condensed Consolidated Balance Sheets as of September 30, 2017 and outstanding current accounts receivable from Enable.

~~Transactions with Enable:~~

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


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

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

~~Limited Partner Interest in Enable~~ ~~(1)~~:



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


~~(1)~~	~~Excluding the Series A Preferred Units owned by CenterPoint Energy.~~

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

~~Enable Common Units and Series A Preferred Units Held:~~

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

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

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

~~Summarized unaudited consolidated income information for Enable~~reportable segment is as follows:


	December 31, 2022		Disposals			September 30, 2023
	(in millions)
Electric (1)	$	936	$	—		$	936
Natural Gas	2,920		—			2,920
Corporate and Other	438		134		(2)	304

Total	$	4,294	$	134		$	4,160

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. If cash distributions to Enable’s unitholders exceed $0.330625 per common unit in any quarter, the general partner will receive increasing percentages or incentive distributions rights, up to 50%, of the cash Enable distributes in excess of that amount. In certain circumstances the general partner of Enable will have the right to reset the minimum quarterly distribution and the target

distribution levels at which the incentive distributions receive increasing percentages to higher levels based on Enable’s cash distributions at the time of the exercise of this reset election. To date, no incentive distributions have been made.

~~(9) Goodwill~~

~~Goodwill by reportable business segment as of December 31, 2016 and changes in the carrying amount of goodwill as of September 30, 2017 are as follows:~~

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

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

Total $ 862
$ 5
$ 867

(1) ~~See Note 3.~~

~~(2)~~ Amount presented is net of the accumulated goodwill impairment charge of ~~$252~~$185 million recorded in ~~2012.~~2020.

(2)Represents goodwill attributable to the sale of Energy Systems Group. For further information, see Note 3.

CERC’s goodwill as of both September 30, 2023 and December 31, 2022 is as follows:



	(in millions)
Goodwill	$	1,583

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 described further in Note 3, certain assets and liabilities of Energy Systems Group, including goodwill of $134 million at CenterPoint Energy, were disposed of upon consummation of the sale of Energy Systems Group in the second quarter of 2023. The disposal of goodwill attributable to Energy Systems Group was reflected in the loss on sale of $12 million during the nine months ended September 30, 2023.

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. The estimated fair value of the reporting unit 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~~2023 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.

Table of Contents

Other Intangibles (CenterPoint Energy)

The tables below present information on CenterPoint Energy’s intangible assets, excluding goodwill, recorded in Other non-current assets on CenterPoint Energy’s Condensed Consolidated Balance Sheets and the related amortization expense included in Depreciation and amortization on CenterPoint Energy’s Condensed Statements of Consolidated Income. The intangible assets and associated amortization expense are primarily related to Energy Systems Group prior to the completion of the sale in June 2023 as indicated below. See Note 3 for further information.


	September 30, 2023						December 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Net Balance		Gross Carrying Amount		Accumulated Amortization		Net Balance
	(in millions)
Customer relationships (1)	$	—	$	—	$	—	$	33	$	(16)	$	17

Trade names (1)	—		—		—		16		(6)		10

Operation and maintenance agreements (1) (2)	—		—		—		12		(2)		10
Other	2		(1)		1		2		(1)		1
Total	$	2	$	(1)	$	1	$	63	$	(25)	$	38

(1)Related to Energy Systems Group prior to the completion of the sale in June 2023. Amortization ceased at June 30, 2023, the end of the quarter in which the held for sale criteria was met. See Note 3 for further information.

(2)Amortization expense related to the operation and maintenance agreements is included in Non-utility cost of revenues, including natural gas on CenterPoint Energy’s Condensed Statements of Consolidated Income. Amortization ceased at June 30, 2023, the end of the quarter in which the held for sale criteria was met. See Note 3 for further information.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(in millions)
Amortization expense of intangible assets recorded in Depreciation and amortization	$	—	$	1	$	3	$	4

CenterPoint Energy estimates that amortization expense of intangible assets with finite lives for the next five years will not be significant.

(10) Equity Securities and Indexed Debt Securities (ZENS) ~~and Securities Related to ZENS~~(CenterPoint Energy)

(a) ~~Investment in~~Equity Securities ~~Related to ZENS~~

~~In 1995,~~During the nine months ended September 30, 2022, CenterPoint Energy ~~sold a cable television subsidiary~~completed the execution of its previously announced plan to TWexit the midstream sector by selling the remaining Energy Transfer Common Units and ~~received TW~~Energy Transfer Series G Preferred Units it held.

Gains and losses on equity securities, ~~as partial consideration. A subsidiary~~net of transaction costs, are recorded in Gain (Loss) on Equity Securities in CenterPoint Energy’s Condensed Statements of Consolidated Income.


	Gains (Losses) on Equity Securities
	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(in millions)
AT&T Common	$	(10)	$	(57)	$	(35)	$	(94)
Charter Common	63		(144)		88		(304)
WBD Common	(5)		(5)		3		28
Energy Transfer Common Units	—		—		—		95
Energy Transfer Series G Preferred Units	—		—		—		(9)
Other	1		—		—		—
Total	$	49	$	(206)	$	56	$	(284)

Table of Contents

CenterPoint Energy ~~now holds 7.1~~recorded net unrealized gains of $49 million and $56 million for the three and nine months ended September 30, 2023 and net unrealized losses of $206 million and $370 million for the three and nine months ended September 30, 2022 respectively, for equity securities held as of September 30, 2023 and 2022.

CenterPoint Energy and its subsidiaries hold 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~~securities. Shares of AT&T Common, Charter Common and WBD Common 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 TW Securities are recorded in CenterPoint Energy’s Condensed Statements of Consolidated Income.~~


	Shares Held		Carrying Value
	September 30, 2023	December 31, 2022	September 30, 2023		December 31, 2022
			(in millions)
AT&T Common	10,212,945	10,212,945	$	153	$	188
Charter Common	872,503	872,503	384		296
WBD Common	2,470,685	2,470,685	27		23


Other			2		3
Total			$	566	$	510

(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.~~2023. 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, 2023	December 31, 2022
	(in shares)
AT&T Common	0.7185	0.7185
Charter Common	0.061382	0.061382
WBD Common	0.173817	0.173817

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, 2023, the ZENS, having an original principal amount of $828 million and ~~the~~a contingent principal ~~balance was $507 million.~~

~~On October 22, 2016, AT&T announced that it had entered into a definitive agreement~~amount of $20 million, were outstanding and were exchangeable, at the option of the holders, for cash equal to ~~acquire TW in a stock and cash transaction. On February 15, 2017, TW shareholders approved~~95% of the ~~announced transaction with AT&T. Pursuant~~market value of the reference shares attributable to the merger agreement, upon closing of the merger, TW shareholders 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 shares 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 atZENS.

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 AT&T Common. AT&T has publicly announced that the merger is expected to close by the end of 2017.

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


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

Inventory ~~Financing. NGD currently has~~Financing. CenterPoint Energy’s and CERC’s Natural Gas businesses have third-party AMAs associated with ~~its~~their utility distribution service in ~~Arkansas, north~~Indiana, Louisiana, Minnesota, Mississippi and ~~Oklahoma that extend through 2020.~~Texas. The AMAs have varying terms, the longest of which expires in 2027. Pursuant to the provisions of the agreements, ~~NGD~~CenterPoint Energy’s and CERC’s Natural Gas either sells natural gas to the asset manager and agrees to repurchase an equivalent amount of natural gas ~~during~~throughout the ~~winter heating seasons~~year at the same cost, ~~plus a financing charge. These~~or simply purchases its full natural gas requirements at each delivery point from the asset manager. Certain of these transactions are accounted for as an inventory ~~financing~~financing. CenterPoint Energy and CERC had ~~an associated principal obligation of $48~~$4 million and ~~$35~~$11 million outstanding obligations related to the AMAs as of September 30, ~~2017~~2023 and December 31, ~~2016, respectively.~~2022, respectively, recorded in Short-term borrowings on CenterPoint Energy’s and CERC’s Condensed Consolidated Balance Sheets.


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

Table of Contents

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~~2023, the following debt ~~instruments:~~instruments were issued or incurred:


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

	Issuance Date	Debt Instrument	Aggregate Principal Amount		Interest Rate	Maturity Date
			(in millions)
Houston Electric	January 2017	General mortgage bonds	$	300	3.00%	2027	Houston Electric	March 2023	General Mortgage Bonds (1)	$	600	4.95%	2033
Houston Electric							Houston Electric	March 2023	General Mortgage Bonds (1)	300		5.30%	2053
Houston Electric							Houston Electric	September 2023	General Mortgage Bonds (13)	500		5.20%	2028
									Total Houston Electric	1,400
CERC							CERC	February 2023	Term Loan (2)	500		SOFR (3) + 0.85%	2024
CERC							CERC	February 2023	Senior Notes (4)	600		5.25%	2028
CERC							CERC	February 2023	Senior Notes (4)	600		5.40%	2033
CERC							CERC	May 2023	Senior Notes (5)	300		5.25%	2028
									Total CERC	2,000
CenterPoint Energy (6)							CenterPoint Energy (6)	March 2023	First Mortgage Bonds (7)	100		4.98%	2028
CenterPoint Energy (6)							CenterPoint Energy (6)	March 2023	First Mortgage Bonds (7)	80		5.04%	2033
CenterPoint Energy	August 2017	Unsecured senior notes	500		2.50%	2022	CenterPoint Energy	March 2023	Term Loan (8)	250		SOFR (3) + 1.50%	2023
CERC Corp.	August 2017	Unsecured senior notes	300		4.10%	2047
CenterPoint Energy (9)							CenterPoint Energy (9)	June 2023	Securitization Bonds (10)	341		5.026% - 5.172%	2038-2043
CenterPoint Energy							CenterPoint Energy	August 2023	Convertible Notes (11)	1,000		4.25%	2026
CenterPoint Energy							CenterPoint Energy	August 2023	Senior Notes (12)	400		5.25%	2026
									Total CenterPoint Energy	$	5,571



(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
			NYSE Chicago
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.	631,223,560	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) Divestitures			620
					(4) Revenue Recognition and Allowance for Credit Losses		21
					(5) Employee Benefit Plans		25
					(6) Regulatory Matters		26
					(7) Derivative Instruments		29
					(8) Fair Value Measurements		31
					(9) Goodwill and Other Intangibles		33
					(10) Equity Securities and Indexed Debt Securities (ZENS)		34
					(11) Short-term Borrowings and Long-term Debt		35
					(12) Income Taxes		39
					(13) Commitments and Contingencies		40
					(14) Earnings Per Share		45
					(15) Reportable Segments		46
					(16) Supplemental Disclosure of Cash Flow Information		48
					(17) Related Party Transactions		48
					(18) Equity		49
					(19) Leases		51

Item 2.					Management’s Discussion and Analysis of Financial Condition and Results of Operations		2855
					Recent Events		55
					Consolidated Results of Operations		56
					Results of Operations by Reportable Segment		57
					Certain Factors Affecting Future Earnings		65
					Liquidity and Capital Resources		65
Item 3.					Quantitative and Qualitative Disclosures about Market Risk		4381

Item 4.			Controls and Procedures			4382

PART II.					OTHER INFORMATION

Item 1.			Legal Proceedings			4482

Item 1A.			Risk Factors			4482

Item 5.			Other Information			4483
Item 6.					Exhibits		83
~~Item 6.~~					~~Exhibits~~Signatures		4486


GLOSSARY
ACE						Affordable Clean Energy

AFSI						Adjusted financial statement income
AFUDC						Allowance for funds used during construction

AMA						Asset Management Agreement
Arevon						Arevon Energy, Inc., which was formed through the combination of Capital Dynamics, Inc.’s U.S. Clean Energy Infrastructure business unit and Arevon Asset Management


~~GLOSSARY~~
~~AEM~~ARO						~~Atmos~~Asset retirement obligation

ARP						Alternative revenue program

ASC						Accounting Standards Codification
Asset Purchase Agreement						Asset Purchase Agreement, dated as of April 29, 2021, by and between CERC Corp. and Southern Col Midco

AT&T Common						AT&T Inc. common stock

Bcf						Billion cubic feet
Board						Board of Directors of CenterPoint Energy, ~~Marketing,~~Inc.
Bond Companies						Bond Company IV and Restoration Bond Company, each a wholly-owned, bankruptcy remote entity formed solely for the purpose of purchasing and owning transition or system restoration property through the issuance of Securitization Bonds
Bond Company IV						CenterPoint Energy Transition Bond Company IV, LLC, a wholly-owned subsidiary of Houston Electric
BTA						Build Transfer Agreement

CAMT						Corporate Alternative Minimum Tax

CARES Act						Coronavirus Aid, Relief, and Economic Security Act
CCN						Certificate of Convenience and Necessity
CCR						Coal Combustion Residuals


CECA						Clean Energy Cost Adjustment
CEIP						CenterPoint Energy Intrastate Pipelines, LLC, a wholly-owned subsidiary of CERC Corp.
CenterPoint Energy						CenterPoint Energy, Inc., and its subsidiaries
CERC						CERC Corp., together with its subsidiaries
CERC Corp.						CenterPoint Energy Resources Corp.
CES						CenterPoint Energy Services, Inc. (now known as Symmetry Energy Solutions, LLC), previously a wholly-owned subsidiary of CERC Corp.
Charter Common						Charter Communications, Inc. common stock
CIP						Conservation Improvement Program




CODM						Chief Operating Decision Maker, who is each Registrant’s Chief Operating Executive
Common Stock						CenterPoint Energy, Inc. common stock, par value $0.01 per share
Compensation Committee						Compensation Committee of the Board
Convertible Notes						CenterPoint Energy’s 4.25% Convertible Senior Notes due 2026
Convertible Notes Indenture						Indenture dated as of August 4, 2023 by and between CenterPoint Energy and The Bank of New York Mellon Trust Company, National Association, as trustee
COVID-19						Novel coronavirus disease 2019, and any mutations or variants thereof, and related global outbreak that was subsequently declared a pandemic by the World Health Organization

CPCN						Certificate of Public Convenience and Necessity
CPP						Clean Power Plan

CSIA						Compliance and System Improvement Adjustment
DCRF						Distribution Cost Recovery Factor
DOC						U.S. Department of Commerce
DRR						Distribution Replacement Rider


GLOSSARY
DSMA		Demand Side Management Adjustment


ECA		Environmental Cost Adjustment
EDIT		Excess deferred income taxes
EECR		Energy Efficiency Cost Recovery
EECRF		Energy Efficiency Cost Recovery Factor
EEFC		Energy Efficiency Funding Component
EEFR		Energy Efficiency Funding Rider












Energy Systems Group		Energy Systems Group, LLC, previously a wholly-owned subsidiary of ~~Atmos Energy Holdings, Inc., a wholly-owned subsidiary of Atmos Energy Corporation~~Vectren
~~AMAs~~Energy Transfer		~~Asset Management Agreements~~Energy Transfer LP, a Delaware limited partnership
~~AMS~~Energy Transfer Common Units		~~Advanced Metering System~~
~~APSC~~	~~Arkansas Public Service Commission~~
~~ASU~~	~~Accounting Standards Update~~
~~AT&T~~	~~AT&T Inc.~~
~~AT&T Common~~	~~AT&T~~Energy Transfer common ~~stock~~
~~Bcf~~	~~Billion cubic feet~~
~~BDA~~	~~Billing Determinant Adjustment, which is a revenue stabilization mechanism used to adjust revenues impacted by declines~~units, representing limited partner interests in ~~natural gas consumption which occurred after the most recent rate case~~
~~Bond Companies~~	~~Transition and system restoration bond companies~~
~~Brazos Valley Connection~~	~~A portion 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~~	~~CenterPoint~~ Energy ~~Inc., and its subsidiaries~~
~~CERC Corp.~~	~~CenterPoint Energy Resources Corp.~~
~~CERC~~	~~CERC Corp., together with its subsidiaries~~
~~CES~~	~~CenterPoint Energy Services, Inc., a wholly-owned subsidiary of CERC Corp.~~
~~Charter Common~~	~~Charter Communications, Inc. common stock~~
~~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~~

Transfer

~~GLOSSARY (cont.)~~
~~Moody’s~~	~~Moody’s Investors Service, Inc.~~
~~MPSC~~	~~Mississippi Public Service Commission~~
~~MPUC~~	~~Minnesota Public Utilities Commission~~
~~NECA~~	~~National Electrical Contractors Association~~
~~NGD~~	~~Natural gas distribution business~~
~~NGLs~~	~~Natural gas liquids~~
~~NRG~~	~~NRG~~ Energy ~~Inc.~~
~~NYMEX~~	~~New York Mercantile Exchange~~
~~OCC~~	~~Oklahoma Corporation Commission~~
~~OGE~~	~~OGE Energy Corp.~~
~~PBRC~~	~~Performance Based Rate Change~~
~~PHMSA~~	~~U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration~~
~~PRPs~~	~~Potentially responsible parties~~
~~PUCT~~	~~Public Utility Commission of Texas~~
~~Railroad Commission~~	~~Railroad Commission of Texas~~
~~Reliant Energy~~	~~Reliant Energy, Incorporated~~
~~REP~~	~~Retail electric provider~~
~~ROE~~	~~Return on equity~~
~~RRA~~	~~Rate Regulation Adjustment~~
~~RRI~~	~~Reliant Resources, Inc.~~
~~RSP~~	~~Rate Stabilization Plan~~
~~SEC~~	~~Securities and Exchange Commission~~
~~Securitization Bonds~~	~~Transition and system restoration bonds~~
Transfer Series AG Preferred Units		~~10%~~Energy Transfer Series ~~A Fixed-to-Floating Non-Cumulative~~G Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Units, representing limited partner interests in ~~Enable~~Energy Transfer
~~S&P~~EPA			~~Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies~~Environmental Protection Agency
~~TBD~~
Equity Purchase Agreement			Equity Purchase Agreement, dated as of May 21, 2023, by and between Vectren Energy Services and ESG Holdings Group
ERCOT			Electric Reliability Council of Texas
ESG Holdings Group			ESG Holdings Group, LLC, a Delaware limited liability company, and an affiliate of Oaktree Capital Management
Exchange Act			The Securities Exchange Act of 1934, as amended
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




GHG			Greenhouse gases

GRIP			Gas Reliability Infrastructure Program

GWh			Gigawatt-hours
Houston Electric			CenterPoint Energy Houston Electric, LLC and its subsidiaries
IAS			International Accounting Standards
IBEW			International Brotherhood of Electrical Workers
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., formerly a wholly-owned subsidiary of Vectren, acquired by CERC on June 30, 2022
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


Interim Condensed Financial Statements			Unaudited condensed consolidated interim financial statements and combined notes
IRA			Inflation Reduction Act of 2022

IRP			Integrated Resource Plan
IRS			Internal Revenue Service
IURC			Indiana Utility Regulatory Commission



LIBOR			London Interbank Offered Rate


GLOSSARY
LLTF						Long Lead Time Facilities, which are transmission and distribution facilities that have a lead time of at least six months and would aid in restoring power to Houston Electric’s distribution customers following a widespread power outage under Public Utility Regulatory Act Section 39.918

LPSC						Louisiana Public Service Commission
LTIP						Long-term Incentive Plan

M&DOT						Mortgage and Deed of Trust, dated November 1, 1944, between Houston Lighting and Power Company and Chase Bank of Texas, National Association (formerly, South Texas Commercial National Bank of Houston), as Trustee, as amended and supplemented
MDL						Multi-district litigation
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

MGP						Manufactured gas plant
MISO						Midcontinent Independent System Operator


Moody’s						Moody’s Investors Service, Inc.

MPUC						Minnesota Public Utilities Commission

MW						Megawatt
NERC						North American Electric Reliability Corporation




NRG						NRG Energy, Inc.
NYSE						New York Stock Exchange
Oriden						Oriden LLC
Origis						Origis Energy USA Inc.




OUCC						Indiana Office of Utility Consumer Counselor

Posey Solar						Posey Solar, LLC, a special purpose entity



PPA						Power Purchase Agreement
PRPs						Potentially responsible parties
PTCs						Production Tax Credits
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
Restructuring						CERC Corp.’s common control acquisition of Indiana Gas and VEDO from VUH on June 30, 2022

ROE						Return on equity
ROU						Right of use
RRA						Rate Regulation Adjustment
RSP						Rate Stabilization Plan
S&P						S&P Global Ratings
Scope 1 emissions						Direct source of emissions from a company’s operations
Scope 2 emissions						Indirect source of emissions from a company’s energy usage


GLOSSARY
Scope 3 emissions						Indirect source of emissions from a company’s end-users
SEC						Securities and Exchange Commission

Securitization Bonds						Transition and system restoration bonds issued by the Bond Companies and SIGECO Securitization Bonds issued by the SIGECO Securitization Subsidiary
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



SIGECO						Southern Indiana Gas and Electric Company, a wholly-owned subsidiary of Vectren
SIGECO Securitization Bonds						SIGECO Securitization Subsidiary’s Series 2023-A Senior Secured Securitization Bonds
SIGECO Securitization Subsidiary						SIGECO Securitization I, LLC, a direct, wholly-owned subsidiary of SIGECO
SOFR						Secured Overnight Financing Rate
Southern Col Midco						Southern Col Midco, LLC, a Delaware limited liability company and an affiliate of Summit Utilities, Inc.
SRC						Sales Reconciliation Component


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~~TEEEF						~~Time Inc. common stock~~Assets leased or costs incurred as “temporary emergency electric energy facilities” under the Public Utility Regulatory Act Section 39.918, also referred to as mobile generation







Topic 326						Accounting Standards Update 2016-13 - Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments
Transition ~~Agreements~~Services Agreement						Transition Services Agreement ~~Employee Transition Agreement, Transitional Seconding Agreement~~by and ~~other agreements entered into in connection with the formation of Enable~~between CenterPoint Energy Service Company, LLC and Southern Col Midco
TWVectren						~~Time Warner Inc.~~Vectren, LLC, which converted its corporate structure from Vectren Corporation to a limited liability company on June 30, 2022, a wholly-owned subsidiary of CenterPoint Energy as of February 1, 2019
~~TW Common~~Vectren Energy Services						~~TW common stock~~Vectren Energy Services Corporation, an Indiana corporation and a wholly-owned subsidiary of CenterPoint Energy
~~TW Securities~~VEDO						~~Charter Common, Time Common and TW Common~~Vectren Energy Delivery of Ohio, LLC, which converted its corporate structure from Vectren Energy Delivery of Ohio, Inc. to a limited liability company on June 13, 2022, formerly a wholly-owned subsidiary of Vectren, acquired by CERC on June 30, 2022
VIE						Variable interest entity

Vistra Energy Corp.						Texas-based energy company focused on the competitive energy and power generation markets
~~ZENS~~VRP						Voluntary Remediation Program
VUH						Vectren Utility Holdings, LLC, which converted its corporate structure from Vectren Utility Holdings, Inc. to a limited liability company on June 30, 2022, a wholly-owned subsidiary of Vectren

WBD Common						Warner Bros. Discovery, Inc. Series A common stock
Winter Storm Elliott						From December 21 to 26, 2022, a historic extratropical cyclone created winter storm conditions, including blizzards, high winds, snowfall and record cold temperatures across the majority of the United States and parts of Canada
ZENS						2.0% Zero-Premium Exchangeable Subordinated Notes due 2029


~~2016~~GLOSSARY
ZENS-Related Securities						As of September 30, 2023 and December 31, 2022, consisted of AT&T Common, Charter Common and WBD Common
2022 Form 10-K						Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016~~2022 as filed with the SEC on February 17, 2023



	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	Registrant	Size of Facility		Draw Rate of SOFR plus (1)	Financial Covenant Limit on Debt for Borrowed Money to Capital Ratio		Debt for Borrowed Money to Capital Ratio as of September 30, 2023 (2)	Termination Date
		(in millions)
December 6, 2022	CenterPoint Energy	$	2,400	1.500%	65.0%	(3)	59.2%	December 6, 2027
December 6, 2022	CenterPoint Energy (4)	250		1.125%	65.0%		43.8%	December 6, 2027

December 6, 2022	Houston Electric	300		1.250%	67.5%	(3)	52.4%	December 6, 2027
December 6, 2022	CERC	1,050		1.125%	65.0%		38.2%	December 6, 2027
	Total	$	4,000


~~(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.~~



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.~~


~~(3)~~	~~As defined in the revolving credit facility agreement, excluding Securitization Bonds.~~


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


	CenterPoint Energy						CERC
	Natural Gas Supply		Electric Supply (1)		Other (2)		Natural Gas Supply
	(in millions)
Remaining three months of 2023	$	220	$	51	$	71	$	218
2024	683		160		181		678
2025	588		492		39		584
2026	501		342		39		497
2027	425		105		—		421
2028	380		68		—		376
2029 and beyond	1,710		719		332		1,685



	(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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