RISK FACTORS
You should consider carefully the risk factors identified in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (“2023 Form 10-K”) and in Part II, Item 1A “Risk Factors” of our Quarterly Reports on Form 10-Q for the quarters ended June 30, 2024 (“2nd Quarter 2024 Form 10-Q”) and September 30, 2024 (“3rd Quarter 2024 Form 10-Q”), the following information about risks, as well as risks arising from any legal proceedings identified or referenced in “Legal Proceedings” in Part 1, Item 3 of our 2023 Form 10-K and in Part II, Item 1 “Legal Proceedings” of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, our 2nd Quarter 2024 Form 10-Q and our 3rd Quarter 2024 Form 10-Q, as they may be amended, supplemented or superseded from time to time by other reports that we subsequently file with the Securities and Exchange Commission (the “SEC”), together with the other information contained in this prospectus supplement and the accompanying prospectus, before making an investment in the mortgage bonds.
Risks Related to the Company
Hurricane Beryl caused severe disruptions to our operations, customers and markets in certain of our service territories and could have a material adverse impact on our financial condition, results of operations, cash flows and liquidity, which may cause the credit ratings and market value of the mortgage bonds to decline.
In July 2024, Hurricane Beryl made landfall in Texas, bringing sustained winds, storm surges and torrential rain, which impacted our operations, customers and personnel in our Texas gulf coast markets. Hurricane Beryl caused significant damage to our electric delivery system, resulting in a substantial number of our customers (peaking at more than 2.1 million customers out of 2.8 million customers) being without power, many for extended periods of time.
The total cost for the restoration of our electric delivery facilities as a result of Hurricane Beryl is currently estimated to be $1.1 billion, excluding carrying costs, but such estimate is preliminary and restoration costs could vary from that estimate. We believe we are entitled to recover prudently incurred storm restoration costs in accordance with applicable regulatory and legal principles. However, neither the amount nor timing of the recovery is certain. Our failure to recover costs incurred as a result of Hurricane Beryl could adversely affect our liquidity, cash flows and financial condition.
Various federal, state and local governmental and regulatory agencies and other entities, such as the Texas Governor’s office, the Texas Legislature and the Public Utility Commission of Texas (“PUCT”), have called for or are conducting inquiries and investigations into Hurricane Beryl and our efforts to prepare for, and respond to, this event, including the electric service outage issues. Moreover, additional governmental and regulatory agencies and other entities may conduct such inquiries and investigations, as well. Texas Lieutenant Governor Patrick has publicly urged the PUCT to hold us, rather than ratepayers, responsible for paying $800 million, which was the amount the PUCT had previously approved us to recover from ratepayers pursuant to Texas legislation passed after the February 2021 Winter Storm Event (as defined below) relating to emergency responsiveness and the leasing of temporary generation units. On August 12, 2024, Texas Attorney General Ken Paxton opened an investigation to evaluate CenterPoint Energy’s conduct during Hurricane Beryl. There are significant uncertainties around these inquiries and investigations and potential results and consequences, including whether any financial penalties will be assessed or changes to our system, service territories, operations and/or regulatory treatment will result therefrom. If these or other inquiries, investigations or reviews ultimately result in changes to our system, service territories, operations and/or regulatory treatment, such changes could have a material adverse impact on our business, results of operations, cash flows and financial condition.
We and CenterPoint Energy are subject to current and potential future litigation and claims arising out of Hurricane Beryl, which litigation and claims could include allegations of, among other things, personal injury, property damage, various economic losses in connection with loss of power, unlawful business practices, and
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