CNP - Earnings call transcript Q1 2021 | CenterPoint Energy, Inc.

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Operator

Good morning, and welcome to CenterPoint Energy’s First Quarter 2021 Earnings Conference Call with Senior Management.

During the company’s prepared remarks, all participants will be in a listen-only mode. There will be a question-and-answer session after management’s remarks. [Operator Instructions] I would now like to turn the call over to Phil Holder, Senior Vice President of Strategic Planning and Investor Relations. Mr. Holder?

Phil Holder

company’s to Wells, differ conference Webb, topics statements materially our Adviser on discuss Welcome our Dave our and that filings everyone. results. currently We upon XX-Q, Actual available are management’s forward-looking subject statements will forward-looking revise to Jason XXXX information that These uncertainties. Form and CEO; to no CFO; update assumptions undertake the information as beliefs, results will morning, and contain CenterPoint’s factors, publicly statement. management. discuss could other based call. various earnings our materials. Lesar, Senior Management noted projections Good will any and risks quarter forward-looking to certain obligation and first or and based our Tom in earnings SEC other are

now and previously earnings non-GAAP use earnings also We EPS and share. adjusted EPS guidance target. will will EPS we non-GAAP utility guidance X% of guidance or basis, earnings we measure rate. as as it Similarly, our refer We guidance, providing a to rate utility as X% growth In to non-GAAP EPS. referred our target our to utility to per this earnings discuss utility growth refer growth EPS, diluted will

which refer information our our of news found to be please used earnings and both guidance providing a methodology in reconciliation and under For our guidance, on section website. can on measures of the the non-GAAP release Investors presentation,

to website. replay be our announce on is website recorded. material the to information. As can how call a being our reminder, may This Information found on use we access

discussion Dave? Now, I’d to over to the like turn

Dave Lesar

thank our earnings and us for morning, you joining Good for call.

Texas of to sense other a and jurisdictions. normalcy in starting observing many of are our in here return We

believe and year excitement the and what in in is will too. we entails and assets look our update Day, than I a moving continued ago. is We see forward. the we our you Investor you an to opportunity are progress I meet strategy to and months on believe me, to in we we share accountable disciplined against are a in the Today, utility goals our less developing important set. record operate. they outlined want consistent premium during things about that have our that you provide execution CenterPoint to as short of forward accomplished everyone, the you belief just an we of I tell assets the being want to person continued about that Just hope that that we amazing strategy that track with making five our

As to worthy lead you some know, to like quarter. have headlines this and cover ones with I’d we

including higher delivered quarter they not EPS. the $X.XX of gas XXXX, we results costs Because impact first prices the utility of natural quarter’s very for our are business, did results. this pass-through First, strong utility for

with of quarter In first in year in to addition, XX% are first trends quarter the which full EPS. utility line recent contributed the our historical results close

X% utility our utility year of for full EPS and We $X.XX our are, of range to to growth course, annual $X.XX, long-term reaffirming XXXX target. EPS X%

great We the for to are start off year. a

earnings the check let’s box being track. utility as So on

PE and of bids, announced well The we of are approvals. great to anticipated agreement Oklahoma in XX including our regulatory by to XX what most These from this which we is year, beyond and saw second We them. outcome. optimistic is, are of we over And This from firms. The a landmark parties, takeaways rate for price XXXX thought the valuation course, number observers close assets. demonstrated funds was the of interest saw this There key level of headline the the times base. X.X of gas and which achieve. course the premium made big was end LDCs, would got to was Arkansas interest subject extraordinary strategics, by even sell infrastructure the outcome

growth. validates that the their LDCs share gas belief value these our our remaining fuel It’s LDCs assets investors should perfect the in remaining recycling premium to LDC undervalued base natural industry viability is on our This significantly and a our gas rate as in strong source. the Day. gas valuable committed industry. see we efficient, is Investor and and simple leading strength, shows strategy, position it garnered affordable demonstrates efficiently that marketplace investors illustrates multiple, as of transaction also model. how First, a gas of essential value example stated energy finance and that rethink continue to This price. capital This The can the our to an we are of the efficient broader you

with attractive question, would a in being X.X our we sales our LDC capital broader cap explore it we But would sell see this Currently, if similarly You the invest X more way, times to times in and opportunity as the Naturally, consider said, rate begs it portfolio utility at rate working recycle strategy. we base. if mix. base that of another part future.

$XX five-year opportunity will current Our LDC Day. over this the At billion we additional five-year showed spend on $XXX highlighted our to incremental transaction on our basis million plan. plan Investor an with to Day we the Analyst us plan billion compared you an that after-tax of the capital proceeds provide price, have $X

billion incremental be this first part begin additional will – will incremental and us growth provide capital spending million opportunities. allow essential capital Therefore, trajectory. continue to earnings to utility to or into to $X into that this We those This are look XXXX and to is XXXX $XXX to flow plans high opportunities capital value likely customers. in deploy a in not proceeds in long-term of in our spend our services impact earnings spend transaction

support leading rate-based our targets. CAGR X% strongly even committed this previously a announcement and the We to sales on that. XQ more X% to delivered growth in annual will earnings consistent On XX% contrary, industry you we utility believe rate we

being also done. check So that as box let’s

And transaction enable half We transaction. on midstream disciplined between our and to we the said when utility anticipate annual or we reiterate transaction close what eliminating a in the transfer to rate-based the to target of XX% announced the reducing to exposure growth news energy focused to will back CAGR. of this absolutely change our now and approach. the EPS X% Turning completing February, remain year. our transaction second not We a also X% in enable

as to So track remain that we exposure. midstream on reduce stays checked box

Last impacts and questioned and you Turning recovery. of change and to storm quarter, the utility the gas the costs not. likelihood We incremental storms said of will from EPS the the many they range won’t Uri. the target impacts winter timing that

we our had We handle issue, on regulators. the work also believe, said, it a with time but needed we some through to

an Let on what we’ve progress front. me made update you give that on

customers. First, thing actions, costs billion. in engaging, by estimates, to our $XXX is these auditing our customer challenging we over pursuing resulting this and suppliers, We our actively we in our exposure million gas do reduced initial incremental won’t part by right since incremental because gas of the for $X.X believe stop cost have reduced gas

also adjustments our beginning costs are through recovery to mechanisms. cost timely normal of early to We recover seek these the

this house and the through related a recovery incremental being we bill Minnesota, for supported Oklahoma due storm been gas momentum the mechanism existing behind securitization. state have some of has of Both And period. jurisdictions recovery is costs sponsored gas started Louisiana, our passed Arkansas recovery Texas, including there pass well the including In to recovery by have in price on each cost also carrying We over our already nature securitization process and The some politically the and believe in bill. costs, of in legislation are constructive pursuing Thanks carrying Arkansas gas jurisdictions. Senate. We is costs, a costs. legislatures. good these has considered two-year

not us, completely gas are we getting behind closer the costs while incremental to checking box. So

We have along our regulatory working and all is by we this supported that event. belief in relationships progress through have set strong that

we that the bills forward Texas a building of On been There’s side, relationships progress is turnover team. proposal moving the electric undergoing to our protect with and in grid also from some repeat legislative the February. several increase look customers In to a the to systems been the Texas. around new saw and electric we complete proposed resiliency Texas, disruption in intended are have PUC

course We are XX% five as this system very we see billion for and compounded the whole and a ways on growth by over target to the leading encouraged better for opportunity community. progress industry $XX plus years. spending program our remain is We’ve the next find serve rate-based annual our to capital an

seasonality a the on outlined spend as Similar For there full Day. typically year XXXX, is to earnings, where billion up our on we ramp the we to are progresses. track Investor capital spend, our our $X.X to spending

and previously, of in stated us transaction above plan these, Oklahoma choose. we opportunities As our pursue assets the will from the five-year we have $XXX some if current billion to capacity so million and provide incremental for sale our Arkansas of ultimate LDC proceeds additional $XX

the capital as box being So track. spending let’s check on

reasonable customers. again our Despite X% growth quarter-over-quarter, We talked COVID, that our a serve. growing fast organic saw organic about plays have reinforcing for value industry rates in rates. growth about part markets costs the the the leading of we keeping impact of service growth our we That customer

customers. our approach our O&M disciplined In addition, to we a to benefit take expenses reducing

track are by on XXXX. reduce to O&M in We X% to X%

This giving incremental savings this the our year. reinvest to reinvest However, opportunity We have. our the utility some may business. take decision back see great into to to set, in luxury O&M assets a is we

let’s being on as O&M, that So track. XXXX for check box on

Next stewardship. up environmental commitment our is to

making. our earnings believe with require constructive our then news of report reviewed strategy. in are On Indiana, path are with these a of should not and still progress, carbon received to board cannot very are ESG a and well be the we box does front, with preparing rollout communities. check and to our announcing industry developing exciting that in in happy Director’s our progress regulators in underway a Since I’m confidence that updated very we Indiana recently a where is in be zero. Director’s the this both that we transition we will Though, We down received the quarter. have has with last critical the work to positive but leading renewable our us we an call, right here, was what Indiana approval, place we plans Since provided piece IRP headed disclose are net our for plans We the our a IRP. report third

that to time to things exciting our quarter, share every So thank forward long-term you for execute believe strongly turn with strategy we what laid that over all I’ve you have morning. so made so let because I and with offers. to spending CenterPoint Jason. been CenterPoint Day. Investor out we more the than many have demonstrates proposition call a this far on we we With calls these me progress your looking strategy we outlined the value as unique the that,

Jason Wells

morning of this you, call. quarter you Thank for And for thank to us our you first Dave. joining all earnings

Just highlighted. want our to start of we’re the in to in few incremental echo you, a provide as sentiment, continue to and with on forward theme events of by seeing To details Dave reviewing you results more I looking XXXX. quarterly execution as Dave’s well some person delivery,

first get GAAP started XXXX the On reported loss a the quarter compared a to of $X.XX quarter we earnings. for $X.XX of first me of quarter XXXX. our for Let first with basis,

$X.XX reported we X, quarter quarter compared EPS for XXXX the of the Slide first at $X.XX non-GAAP XXXX. first of to for Looking

are Our contributed first growth The notable EPS. across recovery, of $X.XX quarter EPS and makes $X.XX up all to another our comparing customer XXXX, favorable drivers investments quarters midstream strong impact. jurisdictions for when the of of the the was utility rate which $X.XX of while

quarter. Our non-recurring received $X.XX back equity we year. partially the due May The CARES dilution variance from contributed issuance $X.XX another benefit to share positive drivers were disciplined due of to offset XXXX the Act by in the O&M for large management the last $X.XX growth and

received Oklahoma we we our gas pleased for entire to with X, LDCs, a of through process. as conveyed Turning the Slide Arkansas level are we’ve high interest and very

quality As the parties our competitive highly present auction high Dave regulatory interested of and said, the in which there across the supportive process. businesses. frameworks were The that spectrum, all successful are emphasizes nature outcome are

any accelerate regulatory approval to anticipated The of these by the out of commence integration between O&M. end new we’ll jurisdictions as closing. the the year. commitment the with preparing and two nature reducing the allocated owners, operations also integrated will carve process of facilitate We’re we remaining towards delivering work our the on close And process

times transaction this after full of see role some earnings. country’s by to million year that our and lower proceeds gas customers. for at transaction the billion to LDCs, pivotal of multiple slide, proceeds in the in energy $X.XX sale The a after million recovery cost X.X gas priced on recovery. shown paid closing incremental gas for gas highest consistent $XXX this billion of represents This multiples and natural As the inclusive $X.XXX be playing XX of million cost purchase those businesses. regulatory $X.XXX multiple a of XXXX are XXXX reduced $XX efficient supply costs. rate multiple tax affordable, based The to sources debt carbon of continues for with $X.X is market LDCs $XXX earnings on providing the multiple approximately base This net times estimated compared and a XXXX by of earnings billion energy the billion implied our demonstrates price from

Oklahoma of and a have our basis tax $XXX relatively As Arkansas low million. assets approximately

likely focus a $XXX what at tax been will sale we approved million plan in assets than a the and proceeds, million we tax $XXX It earnings Therefore, the incremental plan. five-year XXXX investment XXXX in clear to our process will result of on capital zero headline competitive given the on there’s an low once close capital result important the on generating Day note, incremental were Investor gain in tax in deployed is that use on To funding is as and additional this and been in the of the tax leakage, impact original auction assumed assumed prioritize of increase will be lot capital basis. after has While for in beyond our will in plan. rate the our at was base. full the these proceeds five-year

for of evaluate program We start of proceeds using our XXXX. some that delay excess at-the-market was the equity the will slated also to originally

guidance proven are and source this reinforces undervaluing a fuels change transaction, to also the options. XXXX well reiterate fuel and our to gas been assets. advance to is systems storms multiple like winter viable that Dave’s And through market the natural have through premium reiterate low to important as the states have see capabilities along that many is systems continue utility these these also with range. not grateful recent performance our there the that the renewable this earnings carbon We’re adapt I’d to disposition will achieved It as evolve that has of point the will them. as

on Slide half merger close Turning and transfer to X, Dave discussed look that position to disciplined still And pace the second but midstream manner. liquidate our a of year. in we’re the we’ll efficient to in energy this enable then

to take the million will months will three the $XXX that As any preferred be will we units process units we have a we that $XXX through receive close. reminder, merger two common liquidate after The energy time in registered energy million of at can closes. likely transfer of merger a will transfer after

or the through five either units block dribble to have to marketplace up will into the those offerings. sell flexibility We

the in over in transfer and to past, that enable tax the will effective on XX% units energy carry an noted our tax we’ve sale. basis As result negative will

As can continue strategies tax leakage. a explore across that sales company we to previously reduce with we have to to litigation discussed, continue offset may the confidence and come the the common tax unit burden

the utility units energy that annually. sale X% EPS reaffirm to transfer like I’d X% result, of not will to change a our As of target the growth

costs last storm actively from has down quarter. As incremental from the $X.X $X.X mentioned, to billion the part we to in Dave overall with suppliers, signaled have we worked winter helped reduce which gas billion

few of regulators suit of align recovery months cost and to legislators working over needs addition, the all stakeholders. been the that all on our methods In past have CenterPoint

anniversary initiated securitization, Slide gas laid bill gas to Between recovered $X.X two expect multiple of storm, LDCs be a cost the assuming $X.X X, securitization now the of Texas As securitization and recovery, out us a between enacted in costs incremental has we pending. enabling the recovery. we for already rate billion legislation and billion bill one-year signed the securitization of Two have mechanisms interim available another into to law. sale states have is before the states recovery, the have total the and interim Texas the

of the for grateful diligence team support across are constructive jurisdictions commissions of regulatory our the for to our getting We this point. and our us

our to million gas rate an our $XXX Texas, rate of this giving the notes notes the billion the Turning financing this X, billion pay on offering a this CERC any or $X of with incremental due costs optional in year, And the full storm. issuance. debt billion time us fixed Recovery which of winter flexibility on offset incremental Arkansas issuance, redemption for as the carrying both notes, have impacted updates. consistent closed were $X.X of our we’re included the Louisiana, and floating senior We in The after interest $X.X notes used from proceeds date and for recoveries. will to XXXX. down Oklahoma regulatory the at and help of September such debt states costs pay to X March costs majority

and the $X.X the costs. at Our notes remains payments incremental the strong proceeds liquidity after for current made issuance approximately of the gas billion senior

objective between rating Our is and with debt agencies. and XX% XX.X% the long-term the to consistent is expectations FFO of

is our to plan streamlining investors we our in that on we’re as proceeds asset nicely equity outlined. how We now becoming planning hope delivering actively indicated. outlook the I have large need horizon LDC issuance are we’ve over as our our current them needs that utilize reevaluate story we continue program thresholds to with and sale. engage the and you, depending can and like reiterate, to I’d our prove expected with for they the we from XXXX, our comfortable ATM clear no it’s

We to businesses, and and balance the leading with about growth. to direction the are CenterPoint we intercompany our between share rate-based reducing These taking sheet our efficiently Senior has and our quarter. the to our which our to we call CenterPoint. I’d plan good beyond. and he fund throughout XXXX at execute I to of our O&M closely one to deliverables parent savings updates Webb, excited now exposure and Tom. The advising cannot as debt of realigning are on Tom is reduce the industry discuss cost non-utility to our improvement pieces like news turn continuous here over continue Adviser committing for the Over borrowings and important Both been to reliance Dave to you through you, wait more plan are us.

Tom Webb

much think already really Investor as you humming. volatile to continuous feel Jason. revealing Five businesses executing closures, improvement, non-core premium and sales, LDC with Jason utility operation sweat it. enable, hope strategy CenterPoint, energy, strategy. financing, I details completion, Thanks, think the have and efficient it. are think is as Dave We have gas whole after It’s months additions, so see is improving about heard don’t you a implementing and well strategic our dispensing just each highlighted hope new I underway more you think introducing Day culture. our performance, these its renewable changes coal to. of clean non-utility nearing details,

base needed capital have We rate delivering investment. growth superior

Our outstrips growth of the of target rate average about peer XX% X%.

plan X% look of Coupled we for left. average seek our you costs creates at our our And by in for progress Five needed still the a five-year my growth O&M the for to the investment. here, Slide months expect We X% every mind, would with XXXX increases, see at the on X% Please X% EPS to customer old We customer is this ago, year. we during yet. And lot with can last added showed to celebrate capital X% to XXXX costs year. with We box year target with X% peer the the X, our this start X% the down plan reduce you above growth, fast our X% reducing quartile is utility customer first quarter. of costs faster a company in well results keep X% reduce call. top about each price at On please is to X% headroom in timing. for satisfaction. customer some by down X% quarter the We growth resulting X%. year. every to of still to to first something hold Our at detail

morale enhance right waste; is As things eliminate one and quality, higher the process. to can the tools yes, wear you improve are first see safety and higher morale, day; takes up, processes cost, know, to continuous It time; ramp work be colors. to a our day, heroic our individual it’s improvement dependence better our of we improvement delivery, each day, who repeated. we from to on every time initiative, observed ground I time; more an shifts Continuous things proud doing processes the from that powerful every up doing

tailwinds. As chart we succeed of is our at will the struggle, headwinds. do EPS advantage eliminating so right. details, don’t fall have the on on every you My We the consistently We to. out. deliver cost favorite We commitment really the sweat year. human take the We take

customers investors, leadership no Dave. our Thank our superb reinvesting customers our on this well sooner. customers last it our year. this to may I’ve experienced our from you, the Back win-win. benefit commitment play As less, more, We resources for management me role no deliver you next for and that here. investors, team year, for so on are small no to ahead did Dave, and the to sauce and Jason, know both We this working oars can a pull letting a cost savings reductions do elsewhere, they team. work maximize you team secret

Dave Lesar

we to premium it CenterPoint believe transform into we as a critical can elements reemphasize utility, want we I consider what be.

and growth, safety. continuing we and X% customer while our growth believe focus our deliver on continue organic generate after earnings We robust we XX% industry to can year. sustainable, leading predictable a year X% consistent rate-based to O&M and disciplined management, CapEx will growth With our

a our zero look will that We as leader us ESG net enhanced strategy put for industry forward an to economy. also unveiling

our and credit We will to continue maintaining sheet enhancing profile. on our and keep eyes balance

our executed have absolutely LDC to continue strategy committed We announced opportunities to of our explore to an midstream I exposure economically do to and finally, fully path gas this. base. X at stay investing the will of And business we a times on utility. eventually and model, and will as recycling impact viable our utility transitioning experience at of you rate work more times And to delivering premium continue eliminate move X.X focused remain rate operations this path our improving the towards it. sale through on into we regulated we to minimize on base customers. us hope for CenterPoint a We capital join our

While commitment delivering and can have, team not our predictable only what the What operations and the to. be I is rate-based we’ve our you our growing bright by are new employees service to could CenterPoint. sweat pleased have and this and growth, accomplished world-class in months you more into a you and see consistent We XX investors. the new you, expect we on journey, the we see earnings so details territories, where momentum don’t CenterPoint, to myself, our for future promises

Phil Holder

Thank Dave. you,

will AM We take until questions now X:XX Eastern.

further queue reenter you ask yourself to please if would, you to allow and have all and opportunities callers one limit one and to the If their question Operator? questions. follow-ups follow-up

Operator

you. Instructions] Thank [Operator At taking this questions. time, we begin will

from Insoo is line Goldman your of line Kim Sachs. open. Insoo, Our comes first with question the

Insoo Kim

the is session the to and question regulatory a that the based pending you do coming process? what legislation Texas if different weeks? this are you for pass what My efforts here the is are from more few doesn’t could passed on your in Thanks give close the it first there. in chances within ground, But the session, little on the bit think detail securitization And getting that color a you. Thank for for the pathways there. next

Dave Lesar

in working that answer said, I’m let And Affairs Regulatory our Yes. single number in this. who don’t he as say, it, in hand is leader, essentially one. Jason it’s expected, Ryan, they’re to because I’d handle every hand Jason who you day. question is Austin I going hand Number on a why is with obviously we question? hand working Jason, now the two,

Jason Wells

important that tool of time. understood Insoo. the balance signed in this probably that legislature be sort to into would the And of nature the will gas debt now. the optimistic But sheet constructive is keep I And constructive end customers will the bill good it of it’s much outcome Dave. longer the off it has remain of helps obviously, securitization it And bill front to the the of the LDCs. out a think optimistic say, well number all. Texas by law. we’ve for costs. while recovery or minimizes constructive of Thanks, – commission gas And priorities day, here impact period gas we in to continue the carrying of railroad law morning, for At spreading that it I note eligible LDCs remain the a recovery be will cost recovery has Texas for the been be most over your stakeholders, sorry, reduces all by to right very recover that – point, the will signaling is into signed to the be eligible

about As we look as optimistic is costs three-year probably signed I securitization again that into in to recover remain these bill a period we the law, mentioned. but event over time not the of

make at the with As commission an will this to and commissioners, meet Ryan we this legislative that will a PUC objectives. is other new here aside, little railroad and to team and remain a continue that to supporting our CenterPoint session. in bill be I optimistic state’s Jason Dave there And week signed joining legislatures Austin over the be the I into think sure as said, I law and

Insoo Kim

there? bidders, hydrogen, you do organic investments versus is, multiple the like at and that that potential a color on balance your you balance potential enthusiasm for for of how growth the the Looking systems could is of you’ve but your number That’s RNG items those second from other ultimately, in on utility what color. perhaps opportunity just modernization, do take the given utilities the for potentially, good or you amount the for opportunities it. your advantage Dave just you and My standpoint, gas not the pipe seen recently gave that Got how implied longer-term. that perhaps sale and other jurisdictions gas interest question that the multiple of generated,

Dave Lesar

a than that of reflected value options I demonstrated obviously the share LDCs the of great have, today. is our our more remained that because to that sale think Yes. and behind gas I It’s price think set one is things worth of are clearly

balance in liked As comments, think to we at if do in. an overall Day, look an in I I price options opportunities organization. we to do we look then the remaining we set like my we we do as saw indicated, LDCs. not have said have our look we obligation our current as it have those capital think in But rate would have back gas that an spend to I X% LDCs. something that to business, We at to the a find got and have to that have Analyst unless but We to an we impact I certainly growth them, But significant said, markets X% we’re obligation reinvest the our opportunity sheet. and an that in business, an in at would we opportunity on be our monetizing really so, our as regulated accretive

interest tell was you, that price digesting of got. there, be the place level But great sort a is still it the right now. to can we I we’re of So

Insoo Kim

much. so you Thank it. Got

Operator

is Your the Guggenheim Instructions] comes Pourreza open. of Shar next question [Operator with your Partners. Shar, line line from

Dave Lesar

Hey, Shar.

Shar Pourreza

Hey, good morning, guys.

Dave Lesar

morning. Good

Jason Wells

Good morning.

Shar Pourreza

And was to on the little that just maybe this, more hand a question started David on bit prior but let me theoretical. asked. Just follow-up

light could to you side you seem incremental look multiples. these on efficiently to do further on still LDC maybe be clearly potential capital you really accretive? not you decarbonization optimizations bring you redeploy spending constrained, capitalize point larger Assuming earnings for you further can I as opportunities, especially the capital to plan. have asset that Do out that mean enough believe quick transaction where

there little down. more as a drill a maybe So just you bit of but question thoughts theoretical of

Dave Lesar

we is theoretical different. we’ve we it do anything that first a not base I the crazy billion not as our accretive clearly, it to But your to the fall question. I – wonderful sort Analyst something of approach to I spend X% last business. are not of We’ve anything And discussed own great think I think have here. at rate. is, at is and mean, that of of $XX all, on growth Day. The Yes. capital to top right way it back what $X answered when And gas signaled, billion now. we’re take said I a mean And always I question, X% looking is it’s the very got going I LDCs to do a to strategy. think a to answer doing to our would systematic we’re businesses going I rational, we

think I of want would that do. timing So to that sort we signals the

that getting we the We’re to to strategy do anything balance and timing. think, with more credit to sheet would regulated. of And I metrics and more becoming signal, not of going be want. the our consistent has That the impacts up it our that fixing

in is think of been earlier, got a we’re there the I way opportunity put to as thread I price us has front for with that the that So But LDCs. needle. that these we still digesting said

– or chance either great advantage it, So the of take see how look to options. to we’ll share got give at this and in other us we’ll a up opportunity. what digest show to It’s then price

Shar Pourreza

the shifting and target, for from just some me, tail you’re of to with you X% and enough. end reinvestment plan you reduction guys O&M showed lastly to near heart. modest reinvestment, looks Fair like – cuts It Fair the Webb’s XXXX. dear the X% on and And is enough. cost Mr. which then to

as that at million near-term, may your Dave, a in theoretically, $XX looking the into without capital? with just, you comments Just convert over more million cost bookend elaborate savings on you longer-term customer could impacting your And $XXX of unlock then capital over savings target or rates. of cuts that some you can

some O&M CapEx So versus thoughts maybe ratio. just on

Dave Lesar

Sure.

comment. dear answer and question. heart my everyone let Now to I’ll addition the They’re Tom. heart, specific bit But Jason an near of let heart give me just in editorial a to Jason’s else’s and and

Jason Wells

morning. good and Shar, Thanks, Yes.

Shar Pourreza

Good morning.

Jason Wells

well year, continued incredibly last here. of performance carrying delivered pleased has O&M The discipline through the and we’re with continuous Obviously, really the improvement embraced quarter team results. first that’s our

sort overhead where of gives on sort I capital increase the we five-year we the natural announced that’s us the slide, capital of Analyst enhanced allocate the capital ratio referenced the given to in to as Effectively, the the of that plan O&M. incremental think investment byproduct that’s just terms signaled over $X opportunity a Day of capitalization than of expense that billion capital In of of our part more plan. to presentation

to so And category really has we focus the the been beginning that improvement front wouldn’t some capital a where in. quality. driving us execution the material of I significantly see core changing. opportunities as where change to alluding our I from And in that we’ll modestly investment might Dave It beginning is think of at first-time of But work look standpoint. that’s our opportunities continuous fold of really fundamentally see

Shar Pourreza

guys. Terrific. Congrats Thank execution. the you, on

Dave Lesar

Thanks.

Operator

of Wolfe question Steve, Steve open. line comes from next Fleishman line is the Your with your Research.

Steve Fleishman

Yes, thanks. Good morning.

on such to I’m other the several is of to but were lot outcome can that that the of were targeting? just sales, so you range just that the of like fluke That this a the gas not above speak? kind been bidders had LDC this give range price, you not a kind that was there say of close you sure color, So would bidders there

Dave Lesar

of But Jason close was other. in answer transaction, bidders right all the of decision price things typically answer were anything a I’ll in each the that There an was And certainty was of this and at of a outlier. would on top it Yes. for number were I’ll it. a but Summit on. let throw us. the right you because not clearly and thought look we end, other difficult

Steve Fleishman

that to that beyond plan having some is rate That’s into view? some that? in opportunities redeploy have are $X billion be more other base maybe starting kind there just come being of there just would then thinking future a Thank would your in, And any money talk other very Or the to of increment future sale, to the the tied acquisition of something extending that – it drive – or you. an helpful. in to obviously on the are –

Dave Lesar

to don’t and M&A premium business. to spend we do I No, your view way out drive It I a you your It’s see And sufficient grow want of capital to opportunities grow inefficient the pay. typically business is ever on way. an think to a there. to have having rely that business in because my

the smiling Jason so answer here. I head, nodding him was and asking were you While question, his it from let will

Jason Wells

Dave. opportunities the minimize are, the that of risk outages of event control winter a helping economic levels growth lot looks communities. minimize Thanks, been grid this like about introducing talked things of there $X to outages there we that resiliency, for transmission lot of but with of organic incremental in Yes. point, electric future sure Texas grid Obviously, we’re are to focus like things may the billion of lines, as other the capital that extended storm. and on I to here building materialize, and making have, a that greater There’s criteria impact are think there’s We’ve your opportunities a Steve, pleased different present that at ways the here. state incremental

for transition through the securing for to to signed Indiana redeploy incremental of to continue that amounts I could And power in. into look bills that extent that those a then passed think state coal create incremental legislature and think transition we that, to purchase law, agreement. I owning the by a us as in the renewables are capital possibility at opposed as opportunity

$X So do I been we have potential we’ve think deployment billion the top for that the capital opportunities. on of discussing, increased

Steve Fleishman

That got, just the to better on that just that color more little directors into letter and there? you Okay. the the last tied renewables And could a you program you more one give have then Indiana. visibility doing comment in

Jason Wells

there, on mentioned, a we year, the customer Yes. pleased of this we to, acknowledged into clear – of fuel earlier report feedback natural percentage us community demand, the We recent original with gas-fired director I responsive feedback by sources, Commission. were electric think, facilities. in and more diversity plan The clarity smaller had And sort that we that as it incorporated being the feedback broader the anticipated to both commission to feedback on well of you’re as letter filed that made and the of resource that we director’s have some our consider integrated as progress alluding more effectively, asked sort that Indiana. had the Indiana proposing received

transition that of that we fact plan it’s reflective previously. there the support And have for is coal think strong the we I that so feel outlined

Steve Fleishman

so much. Thanks great. Okay,

Operator

question line next is Durgesh open. your Durgesh, Your line of ISI. Chopra from comes the with Evercore

Durgesh Chopra

morning, Good my taking for team. thanks. questions. Hey Thank you

Dave Lesar

Hi.

Durgesh Chopra

the some kind Dave, costs. I your was curious you’re just comments to sort of of around able reduce – storm

of you Could think said an well. your gas that’s I’m sort million that? some on things. $XXX opportunity I on do you just looking records for peers the as just that audits by elaborate your if wondering to and of some at of – side

Dave Lesar

the paying as for due incurred we’re contract, they’re our have on an that obligation gas customers that focusing for doing we’re trying because contracts what peers the Well, make I know we’re past we to we I don’t excess negotiate. that us, the our cost sure said to per like. we’re earlier, is have looked What – cost to and

We’re listed. they’re trying the into can it audit, covers we it. for are really doing to sure getting make to probably customers as do outcome we’re the costs. But that anything Jason, them add want everything pass-through don’t to best the all but things I said, you – that that, we I because,

Jason Wells

We the as specific. definitely challenged imagine, force many I majeure think event allege those. can some clauses. And of throughout you it’s of suppliers the contract

also serve. storm think that had on impact the communities impact the to some gas of suppliers sort this the I recognize of the has have we broader

about, collective well was I of some of as of sort constructive a think again, we’re think of contract to find continue with the stakeholders. for how advocate we’ll customers. it how to all that progress we’ve working made, the And that a and on And we’ve our behalf contractual sort talked the I – so of – challenging as interpreted effort maybe was as provisions, solution, happy

Durgesh Chopra

the five-year color. share Just you. that the just Enable a for on a sort really you Is you can exit Thank or there? Maybe plan plan? Thank quickly here? XX-year you Excellent. guys. of any can great, it That’s sort extent to color of

Dave Lesar

not or XX execute or But for you more a to a Jason is XX-year in specifically. it for us. have second years. it’s plan. it do It’s But it’s guarantee your let going that. much five him than I I’ll answer five – head, even I’ll not can aggressive

Jason Wells

closes. And But want Our midstream strategy Enable the be efficient once midstream once not disciplined eliminate to the disposition. our from deal to still Energy closes. we’re Transfer, the the we exposure maximize We is – exposure merger our time eliminate to and will aggressively direct proceeds to a line. providing

Durgesh Chopra

questions. Thank All Appreciate right, guys. you. you’re taking Thanks. my

Operator

Julien, question is Your next comes of line your the Bank line from Julien open. America. with of Dumoulin-Smith

Julien Dumoulin-Smith

good your to reduced peers exhausted here? Hey, conversation team. million that brief. to confidence valuing is as can we’ve up last Or go seen there I elements still you et other Have of to largely good costs morning, you stick $XXX it? elaborate see the chunk mean billion litigation, bring what pursue sense with that your Can materially this? you I in and a you some Actually, bring of down cetera. if $X.X here? What’s could

Dave Lesar

think seen to I probably we’ve largest the movement date.

I We would work with a to more a are consider suppliers what much opportunity narrow on set. continuing of to be handful

not see reduction as at look with reported but significant as probably I done today, So we’re the to time conversations. same wouldn’t also we a in those

said, customers. to continue we’ll of I on change. behalf As I it expect to But our advocate wouldn’t materially

Julien Dumoulin-Smith

it. a Got little more bit here. of then a And detail

in back You O&M the about reinvestment talked assets. utility of

on you’re financial XXXX talking bit elaborate something about be just terms timing given both on about you you we talked more should impact come that’s little net Can EPS hand. importantly, back, when on little seeing But the in You that more and XXXX just just bit basis? of imminent a here what a on here? capital more having so a

Dave Lesar

Yes.

let me Jason. start to I by it throw – think again answering and

sales. or get buckets to think Since got really One capital that capital the we that’s we in here. we can until close plus sort don’t end $XXX excess is about of of thereabouts, million think gas the LDC transaction will the you I two from it’s the to year the which that how We, of – we’re of on impacting rate spend give optionality I’ll expect course, savings. in in into let spend how it. XXXX, Jason base where of the go And around might a have might color O&M earnings it, that, reinvestment more XXXX. a spend about start we and little thinking will we lot

Jason Wells

Yes.

have I to some I privilege delivery in with the earnings. to really to a have base here as think mean, said, privilege privilege earnings of a the that growth, industry-leading a on materializes of to we we company, we industry And the rate growth. our we serve important quick we maybe the about top O&M. premium take I have step consistent That U.S. it’s think back for feel there’s think the a think – valuation most like premium jurisdictions

accelerate improvement we And continuous had better-than-expected so or weather. we of the where opportunities maybe some in years

premium think will valuation. look a to back that best for of path the that and service of into creates the to customers. our reinvest benefit some We possible utility the long-term our We customers business for savings the

doing in business. as reinvest progress are as so make on the and if we we expected, likely, And I said, than O&M that will better back we

impact, earnings putting for time investment think of capital just capital I of between then the it XXXX more that the into opportunities, mentioned, Dave rates As as executing really recovery. sort about and that period a given

a you bit O&M gives of progress. and capital how thinking that of we’re little about hopefully, sense opportunity the So

Julien Dumoulin-Smith

Well, process of the far. thus best on right. luck. indeed. Awesome all Congrats All

Jason Wells

Thanks.

Dave Lesar

Thank you.

Operator

comes line with the your open. of Suisse. Michael, next line is Weinstein from Michael Credit Your question

Michael Weinstein

morning, Hey, good guys.

Jason Wells

morning. Good

Dave Lesar

morning. Good

Michael Weinstein

Hey just to continue the opportunities. conversation capital on

reduction, your especially trying fleshing become things anything the to current And RNG investments something Is that carbon bit plan. then to plans? are – go you maybe this that could charging you’re a opportunities talk As EV methane out on and these little could – with upside opportunities as that may emerging reduction? to also be methane zero, net you for about – leakage and

Dave Lesar

of of to our us management zero, toward our our add sitting things is great to You on be front rate – on the again, base. in to net And journey sound the the all the Jason opportunities discussing what ahead we I’ll but we’re there. you’re in able details like also give committee room have get let thinking as

Jason Wells

Yes.

a we’re on clearly Minnesota, the our focus. as done fortunate natural see We’ve gas the work We very highlighted tariff. pilot the we’ve work jurisdictions. renewable in think I constructive green is gas long-term that a in really start hydrogen that to what side, to up on

efficiently well can pilot to that hydrogen to working round our make system introduction. of can projects, we are sure next – generate the that We that responds to actively develop the we

in think Minnesota working certainly front, We footprint. can are suppliers our we are the I with have learnings that we in utilize that broadly on gas RNG more the and experiences

Houston, is I come for to to so hydrogen the about commuter-focused a respect to play the and RNG very with excited there that incredibly company. obviously certainly And the city. a as the And in role it’s largest you in the electrification of transportation the city are sector. is but green we opportunity Thinking fourth think more here said, about U.S., in it

build-out that for charging And we of matter, Houston vehicles and, conversion opportunity with hopefully see in the help will networks of up here the the with in help that distributed electric Evansville. to so

experience, rate next understanding and for the the gain regulators, plan I years, long-term the the And of kind will support that work support see of CapEx so couple but changing base doing I the to profile our don’t these company. of we’re materially help as in think, the

So there’s come on more certainly two a these lot to fronts.

Michael Weinstein

that the this one the in, for are four million throughout flowing already distributed mostly flow we Is all see to can be more just follow-up how we with evenly I the identified guess, going that year, $XX in to quarters? quarter? And in to it going cost savings, on million Or Great. expect summer? first $XX

Jason Wells

of second question appreciate as of to embarked about think that the on can building the last continuous company the a ramping improvement, I with into note is of muscle of over course up the was focus it time. important you quarter year. what’s really the year. I And starting imagine, And sort sort

quarter-over-quarter a reduce the run we from will seeing of likely quarter quarter. we probably in ongoing XXXX. sort into variance the the first standpoint, And rate of largest was at the that kind as so of each here end are And subsequent build what

then year. opportunity a the we continue it’s mentioned you’ll to in So our benefit progress, see for reinvest again, a extent variance to couple the and largest this here, this think to probably really of that as I’ve is customers, business that make incremental do savings I of the will times the And so. we good to look

Michael Weinstein

Great. Thank you very much.

Operator

your Your line is next Jeremy Morgan. question from of Tonet J.P. the open. comes Jeremy, with line

Jeremy Tonet

Hi, good Dave. morning,

Dave Lesar

Good morning.

Jeremy Tonet

You’ve joining the IR got with pickup quite Jackie there.

point, have to there. a is lucky in So he

I I me if there, say remiss So do just… let didn’t but

Dave Lesar

sitting right on smile next with big to me face. a her is She

Jackie Richert

Thank you, Jeremy.

Dave Lesar

thrilled We’re team. to on the have her

Jeremy Tonet

quick just Maybe question a here.

make you this real? guardrails billion what could of bit down about could You here? drivers Or if talked like. it on what drill we a CapEx. bit a milestones $X and the this kind Wondering more look What or could do have

Dave Lesar

first is of real. think, it Well, I all,

resources, we I if think to operative at to spend. internal And back us the with fast to we compliance increase that in ongoing, think resources, is guardrails have you efficiently. that of it the the go have it we around you a really internal sort have still to described project ramp-up is the I Day, sure make capital incumbent our One is of how on engineering the capital management of the Analyst all strategy. sort deploy want

wisely, it rate behalf you’re on your spend you’re it spending you base. customer as into $X, spending your put it when of that So you

reaction sale, billion there Second With clearly O&M sale to that is The could $X help spend The ET, helps finding the proceeds sort the there. LDC of savings of market the capital more ET there. be to sort with there. on Enable on.

doing why is have accumulate our would M&A. spending and we’re just today something company, really forced us, Day. and I To said maybe I for grow sort I want in of hope we front as which of great what So opportunities you’re in Analyst not flavor here the toward earlier, is reiterate have it we we a capital capital we to getting beyond above thought

a in We and to able it and business, protect grow here. to be territories serve and are customers our invest investment on in our going basis our onetime

create So going in times, top us such of spending number as this you to on organic I a for of that’s all throw to opportunities. position is said great capital a because be additional growth that,

here that’s sitting view, we of why, your question, seat So forward. terms really in going business sure in with this the answered in what Not do we’re my catbird but… can that

Jeremy Tonet

just a is you for second quick here. Maybe Thank helpful. That that. one

relates talked Just wondering mitigation LDC share it you if But you wondering here. there the to ET, anything broadly about tax side? on on just there’s can Enable that as strategies,

Dave Lesar

right is That Jason’s into wheelhouse.

So I’ll let him that. answer

Jason Wells

Thanks, Jeremy.

of a was and take of things look that than peers. that I a at when on taxes higher One we fact joined the relative number Dave we were basis, a the be our dug the not what utility say, think of situation availed become to all the, what obvious into have I ourselves as I deductions. has And of paying we’ve we would common necessarily is

tax expense of that taking where deduct essentially been think repairs historically classic opportunity one be fully capitalized. or the are have example would immediately would have investments that. some we to don’t advantage I So otherwise you

in to deductions. the where confident support process the of we’re given level will that the at yet not point again, ready the the what But you it of burden a study to of not that just increase ET currently are that We our help is from tax study sales. be we’re it higher progress conducting an quantify complete. the some available we’ve will mentioned meaningfully that, tax company, reduce made, in result as would for deductions the in confident I’m

earnings on And so opportunity that we update likely will on provide more year. future fulsome calls this a

Jeremy Tonet

remarks. I there. concludes it This session. Thanks. it. call leave Holder Got turn will for over the Phil our question-and-answer That’s helpful. closing back to I

Phil Holder

everyone, thank CenterPoint. and you, interest today for joining Again, you. us for Thank your in

Operator

concludes participation. call. for earnings CenterPoint quarter you Thank This conference your first Energy’s

may disconnect. now You

CenterPoint Energy (CNP) 6 May 212021 Q1 Earnings call transcript