![]() The Benefits of a Diversified Electric & Natural Gas Portfolio Full Year 2014 Earnings Supplemental Materials February 26, 2015 Exhibit 99.2 |
![]() investors.centerpointenergy.com February 26, 2015 Cautionary Statement Regarding Forward-Looking Information This presentation contains statements concerning our 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. You should not place undue reliance on forward-looking statements. 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,” “will,” or other similar words. The absence of these words, however, does not mean that the statements are not forward-looking. We have based our forward-looking statements on our management's beliefs and assumptions based on information currently available to our management at the time the statements are made. We caution you that assumptions, beliefs, expectations, intentions, and projections about future events may and often do vary materially from actual results. Therefore, we cannot assure you that actual results will not differ materially from those expressed or implied by our forward-looking statements. Some of the factors that could cause actual results to differ from those expressed or implied by our forward-looking statements include but are not limited to the timing and impact of future regulatory, legislative and IRS decisions, financial market conditions, future market conditions, and other factors described in CenterPoint Energy, Inc.’s Form 10-K for the period ended December 31, 2014 under “cautionary statement regarding forward-looking information,” “Risk Factors” and “ – Liquidity and Capital Resources – Other Matters – Other Factors That Could Affect Cash Requirements” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Certain Factors Affecting Future Earnings,” and in other filings with the SEC by CenterPoint Energy, which can be found at www.centerpointenergy.com on the Investor Relations page or on the SEC’s website at www.sec.gov . This presentation contains time sensitive information that is accurate as of the date hereof. Some of the information in this presentation in unaudited and may be subject to change. We undertake no obligation to update the information presented herein except as required by law. Investors and others should note that we may announce material information using SEC filings, press releases, public conference calls, webcasts and the Investors page of our website. In the future, we will continue to use these channels to distribute material information about the Company and to communicate important information about the Company, key personnel, corporate initiatives, regulatory updates and other matters. Information that we post on our website could be deemed material; therefore, we encourage investors, the media, our customers, business partners and others interested in our Company to review the information we post on our website. Use of Non-GAAP Financial Measures In addition to presenting its financial results in accordance with generally accepted accounting principles (“GAAP”), CenterPoint Energy also provides guidance based on adjusted diluted earnings per share, which is a non-GAAP financial measure. Generally, a non-GAAP financial measure is a numerical measure of a company’s historical or future financial performance that excludes or includes amounts that are not normally excluded or included in the most directly comparable GAAP financial measure. A reconciliation of net income and diluted earnings per share to the basis used in providing 2014 guidance is provided in this presentation on slide 5. Management evaluates financial performance in part based on adjusted diluted earnings per share and believes that presenting this non-GAAP financial measure enhances an investor’s understanding of CenterPoint Energy’s overall financial performance by providing them with an additional meaningful and relevant comparison of current and anticipated future results across periods by excluding items that Management does not believe most accurately reflect its fundamental business performance, which items include the items reflected in the reconciliation table on page 5 of this presentation. This non-GAAP financial measure should be considered as a supplement and complement to, and not as a substitute for, or superior to, the most directly comparable GAAP financial measure and may be different than non-GAAP financial measures used by other companies. 2 |
![]() investors.centerpointenergy.com February 26, 2015 2014 Year Highlights 3 • New management team in place with the right mix of industry experience and functional knowledge • Utility Operations: Strong financial and operational performances Sustained strong economic activity with the addition of nearly 55,000 new meters for Houston Electric and nearly 36,000 new Gas Utility customers Continued interest in our transmission rights-of-way for our electric utility Rate changes and cost management efforts led to a record performance for our natural gas utilities Invested over $1.4 billion in our utility operations, up 14 percent from 2013, to address increasing demands associated with system safety, reliability, growth and ongoing maintenance ERCOT endorsed an approximately $300 MM transmission line, the Brazos Valley Connection, expected to be in service by summer of 2018 • Enable Midstream Partners: Completed their initial public offering Contributed substantially all of CenterPoint’s remaining interest in Southeast Supply Header, LLC (SESH) to Enable in May of 2014, increasing CenterPoint Energy’s limited partner interest in Enable from approximately 54.7% to approximately 55.4% • Increased dividend 4.2% in January 2015; a 19% increase in the quarterly dividend since the formation of Enable in May 2013 |
![]() investors.centerpointenergy.com February 26, 2015 2014 Forecast Summary 4 Compound Annual Growth Rates 2013 -2018 Forecast (Provided June 2014) 1 2014 – 2019 Forecast (Provided Feb 2015) 2 Houston Electric Rate Base 7-10% 8-10% Houston Electric Operating Income 5-7% 5-7% 4 Gas Utilities Rate Base 8-10% 8-10% Gas Utilities Operating Income 4-6% 4-6% 4 Consolidated Rate Base 7-10% 8-10% Utility Operations Earnings 4-6% 3 4-6% 3, 4 1 The 2013 – 2018 forecast does not assume the utilization of bonus depreciation 2 The 2014 – 2019 forecast does not assume bonus depreciation for 2015 and beyond 3 Earnings are expected to be lower during initial years and higher during later years of the forecast 4 The operating and earnings growth rates utilize the same adjustment methodology used to determine the 2014 $0.70 utility operations baseline 5-Year Capital Investment 2014 -2018 Forecast (Provided June 2014) 2015 – 2019 Forecast (Provided Feb 2015) Houston Electric $3.7 - $4.5 B $4.4 B Gas Utilities $2.2 - $2.6 B $2.7 B Utility Operations $6.2 - $7.4 B $7.4 B shown on the next slide |
![]() investors.centerpointenergy.com February 26, 2015 2014 EPS Reconciliation to 2015 Utility Operations Guidance Range of $0.71 to $0.75 per diluted share 5 2014 Fully Diluted EPS $ 1.42 On an adjusted guidance basis: ZENS-related mark to market gains (0.12) CES MTM gain (0.04) Pension Curtailment loss 0.01 2014 Consolidated EPS on a guidance basis $ 1.27 Deferred Tax Benefit (0.07) 2014 Fully Adjusted EPS $ 1.20 Midstream Investments (0.44) 2014 Fully Adjusted Utility Operations EPS $ 0.76 1 2 (1) The Equity Amortization schedule on page 19 details the decrease between the 2014 actual and 2015 projected equity returns (2) 2008 Energy Efficiency Cost Recovery Factor Appeal details are provided in the 2014 10-K |
![]() investors.centerpointenergy.com February 26, 2015 Electric Transmission and Distribution Utility 2014 Operating Income Drivers 6 |
![]() investors.centerpointenergy.com February 26, 2015 Electric Transmission and Distribution Utility Capital Investment Growth 7 $4.4 Billion 2015 – 2019 Capital Plan Capital Plan Includes: 1 A portion of the Houston Import Project Brazos Valley Connection ¹ Reliability/Resiliency Technology Customer Growth Infrastructure improvements Reliability and Technology |
![]() investors.centerpointenergy.com February 26, 2015 Electric Transmission & Distribution Utility Capital Expenditures 2014A 2015E 2016E 2017E 2018E 2019E Transmission 37% 36% 41% 40% 33% 24% Distribution 59% 63% 56% 55% 63% 74% 8 |
![]() investors.centerpointenergy.com February 26, 2015 $6.3 Billion Projected 2019 Rate Base Electric Transmission and Distribution Utility 9 Note: The estimated average annual rate base is subject to change due to actual capital investment, effects of bonus depreciation, deferred taxes, and actual rate base authorized. As an example of the impact of bonus depreciation, 2018 rate base was reduced by approximately $100 MM as a result of the bonus depreciation passed for 2014. Forecasts do not assume bonus depreciation is passed in 2015 and beyond. Projected Average Rate Base |
![]() investors.centerpointenergy.com February 26, 2015 Natural Gas Utilities 2014 Operating Income Drivers 10 |
![]() investors.centerpointenergy.com February 26, 2015 Natural Gas Utilities Capital Investment Growth 11 $2.7 Billion 2015 – 2019 Capital Plan Replacing aging infrastructure Customer growth investment System-wide AMR; 3.4 million meters by Q4 2015 Minnesota Belt Line Project; $400 million over 12 years Capital Plan Includes: |
![]() investors.centerpointenergy.com February 26, 2015 Natural Gas Utilities Capital Expenditures 12 Capital Recovery Method 2014A 2015E 2016E 2017E 2018E 2019E Annual Mechanisms 48% 52% 43% 55% 59% 59% Rate Cases 52% 48% 57% 45% 41% 41% Note: Annual mechanisms reduce the recovery lag time versus traditional rate cases. |
![]() investors.centerpointenergy.com February 26, 2015 $3.5 Billion Projected 2019 Rate Base Natural Gas Utilities 13 Note: The estimated average annual rate base is subject to change due to actual capital investment, effects of bonus depreciation, deferred taxes, and actual rate base authorized. As an example of the impact of bonus depreciation, 2018 rate base was reduced by approximately $64 MM as a result of the bonus depreciation passed for 2014. Forecasts do not assume bonus depreciation is passed in 2015 and beyond. Projected Average Rate Base |
![]() investors.centerpointenergy.com February 26, 2015 CenterPoint Energy Services (CES) 2014 Operating Income Drivers 14 |
![]() investors.centerpointenergy.com February 26, 2015 Rate Mechanism and Estimated Timing 15 Estimated rate filing timelines as of December 31, 2014: * MRP (not shown) is filed monthly. Texarkana TX is not included in Act 310 filings. Natural Gas Utilities Houston Electric Note: Assumes DCRF or similar mechanisms will be in place after original DCRF sunsets on January 1, 2017 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Minnesota Arkansas & Texarkana TX * Oklahoma PBRC PBRC PBRC PBRC PBRC Louisiana RSP RSP RSP RSP RSP RRA RRA RRA RRA RRA Jurisdiction 2015 2016 2017 2018 2019 Mississippi East Texas Texas Coast Rate Case Rate Case Rate Case Houston Gas South Texas Rate Case cont. 2020 Rate Case Rate Case Rate Case Rate Case cont. in 2020 Rate Case BDA BDA 310 310 GRIP 310 GRIP GRIP GRIP GRIP GRIP GRIP GRIP GRIP Interim Rates BDA 310 Interim Rates GRIP BDA 310 GRIP GRIP GRIP GRIP GRIP GRIP GRIP GRIP GRIP GRIP GRIP BDA GRIP GRIP 310 GRIP Interim Rates GRIP GRIP |
![]() investors.centerpointenergy.com February 26, 2015 2014 Financial Results Midstream Operating Income moved to Equity Income on May 1, 2013 16 Operating Income Equity Income As reported, 12 months ended December 31 Note: Both 2013 and 2014 had $5 million in basis difference accretion Key Enable Midstream Dates • For the four months ended April 30, 2013, CenterPoint Energy maintained a 50% ownership interest in SESH and reported its results as Equity Income • Enable Midstream Partners, formed May 1, 2013, which includes CenterPoint Energy’s former Interstate Pipelines and Field Services segments and a 24.95% interest in SESH • Effective May 1, 2013 midstream operations are reported as Equity Income as part of CenterPoint Energy’s midstream investment segment • On April 16, 2014, Enable completed its IPO, reducing CenterPoint Energy’s interest in Enable from approximately 58.3% to 54.7% • Between May 1, 2013 and May 30, 2014, CenterPoint maintained a 25.05% ownership interest in SESH • On May 30, 2014, CenterPoint contributed to Enable a 24.95% interest in SESH, which increased CenterPoint Energy’s limited partner interest in Enable from approximately 54.7% to approximately 55.4% |
![]() investors.centerpointenergy.com February 26, 2015 17 Debt and Capitalization Ratios Excluding Transition and System Restoration Bonds ($ in millions) December 31, December 31, 2014 2013 Short-term Debt: Short-term borrowings 53 $ 43 $ Current portion of transition and system restoration bonds* 372 354 Indexed debt (ZENS)** 152 143 Current portion of other long-term debt 271 - Long-term Debt: Transition and system restoration bonds* 2,674 3,046 Other 5,335 4,771 Total Debt 8,857 $ 8,357 $ Less: Transition and system restoration bonds (including current portion)* 3,046 3,400 Total Debt, excluding transition and system restoration bonds 5,811 $ 4,957 $ Total Shareholders' Equity 4,548 $ 4,329 $ Total Capitalization, excluding transition and system restoration bonds 10,359 $ 9,286 $ Total Debt/Total Capitalization, excluding transition and system restoration bonds 56.1% 53.4% * ** The debt component reflected on the financial statements was $152 million and $143 million as of December 31, 2014 and December 31, 2013, respectively. The principal amount on which 2% interest is paid was $828 million on each of December 31, 2014 and December 31, 2013. The contingent principal amount was $751 million and $763 million as of December 31, 2014 and December 31, 2013, respectively. At maturity or upon redemption, holders of ZENS will receive cash at the higher of the contingent principal amount or the value of the reference shares of Time Warner Inc., Time Warner Cable Inc., AOL Inc. and Time Inc. The value of the reference shares was $930 million and $767 million as of December 31, 2014 and December 31, 2013, respectively. The transition and system restoration bonds are serviced with dedicated revenue streams, and the bonds are non-recourse to CenterPoint Energy and CenterPoint Energy Houston Electric. |
![]() investors.centerpointenergy.com February 26, 2015 Liquidity and Credit Ratings 18 Moody's S&P Fitch Debt Rated Rating Outlook a Rating Outlook b Rating Outlook CenterPoint Energy Sr Unsecured Baa1 Stable BBB+ Stable BBB Stable CenterPoint Energy Houston Electric Sr Secured A1 Stable A Stable A Stable CenterPoint Energy Resources Corp. Sr Unsecured Baa2 Stable A- Stable BBB Stable a A Moody’s rating outlook is an opinion regarding the likely direction of an issuer's rating over the medium term. b An S&P rating outlook assesses the potential direction of long-term credit rating over the intermediate to longer term. c A Fitch rating outlook indicates the direction a rating is likely to move over a one- to two-year period. (in millions) Source of Liquidity on 02/17/2015 Facility Size Amount Utilized 1 Amount Unutilized CenterPoint Energy, Inc. Revolver $ 1,200 $ 170 2 $ 1,030 CenterPoint Houston Electric, LLC Revolver 300 4 3 296 CenterPoint Energy Resources Corp. Revolver 600 248 4 352 Total Bank Facilities $ 2,100 $ 422 $ 1,678 Investments in Money Market Funds 0 Available Liquidity $ 1,678 1 Based on the consolidated debt to capitalization covenant in the CenterPoint Energy, Inc. revolving credit facility and the revolving credit facility of each of CenterPoint Energy Houston Electric, LLC and CenterPoint Energy Resources Corp., the full capacity of such revolving credit facilities, which aggregated $2.1 billion, could have been utilized at December 31, 2014. 2 Represents outstanding letters of credit of $6 million and outstanding commercial paper of $164 million. 3 Represents outstanding letters of credit. 4 Represents outstanding commercial paper. C |
![]() ![]() investors.centerpointenergy.com February 26, 2015 19 Estimated Amortization for Pre-Tax Equity Earnings Associated with the Recovery of Certain Qualified Cost and Storm Restoration Costs The amounts reflected for 2015 through 2024 are based on CenterPoint Energy’s estimates as of December 31, 2014. However, the equity returns to be recognized in future periods with respect to each series of transition or system restoration bonds, as applicable, will be periodically subject to adjustment based on tariff adjustments for any overcollections or undercollections of transition charges or system restoration charges, as applicable. The equity return amounts reflected in the table are reported in the financial statements of CenterPoint Energy and CenterPoint Energy Houston Electric as revenues from electric transmission and distribution utility. TBC II TBC III TBC IV SRBC Total 2005 213,804 $ - $ - $ - $ 213,804 $ 2006 6,644,004 - - - 6,644,004 2007 7,140,194 - - - 7,140,194 2008 6,673,765 4,743,048 - - 11,416,813 2009 7,279,677 6,074,697 - 95,841 13,450,215 2010 9,071,326 5,745,580 - 2,657,384 17,474,291 2011 9,902,590 6,994,650 - 2,840,737 19,737,978 2012 9,717,059 6,837,290 27,873,514 2,473,992 46,901,855 2013 10,383,183 7,251,470 24,082,419 2,235,567 43,952,640 2014 11,442,612 8,699,455 42,944,063 3,680,587 66,766,717 2015 12,386,321 11,321,735 18,385,219 1,847,199 43,940,475 2016 11,998,830 8,301,168 29,248,671 2,795,079 52,343,747 2017 12,939,614 8,587,569 29,899,025 2,944,601 54,370,809 2018 13,946,918 9,293,326 30,817,623 3,115,549 57,173,417 2019 7,910,151 9,643,393 31,870,399 3,311,435 52,735,378 2020 - 842,583 32,937,717 3,506,718 37,287,017 2021 - - 34,186,583 3,705,250 37,891,833 2022 - - 35,552,782 2,244,613 37,797,395 2023 - - 36,978,374 36,978,374 2024 - - 30,008,722 30,008,722 137,650,048 $ 94,335,964 $ 404,785,110 $ 37,454,553 $ 674,225,675 $ As of December 31, 2014 The table provides 1) the pre-tax equity return recognized by CenterPoint Energy, Inc. (CenterPoint Energy) during each of the years 2005 through 2014 related to CenterPoint Energy Houston Electric, LLC’s (CEHE) recovery of certain qualified costs or storm restoration costs, as applicable, pursuant to the past issuance of transition bonds by CenterPoint Energy Transition Bond Company II, LLC (Transition BondCo II) and CenterPoint Energy Transition Bond Company III, LLC (Transition BondCo III) or CenterPoint Energy Transition Bond Company IV, LLC (Transition BondCo IV) or system restoration bonds by CenterPoint Energy Restoration Bond Company, LLC (System Restoration BondCo), as applicable and 2) the estimated pre-tax equity return currently expected to be recognized in each of the years 2015 through 2024 related to CEHE’s recovery of certain qualified costs or storm restoration costs, as applicable, pursuant to the past issuance of transition bonds by Transition BondCo II, Transition BondCo III or Transition BondCo IV or system restoration bonds by System Restoration BondCo, as applicable. |