AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 5/6 · 22/10/2026
Moat69
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 3/4 · Houston Electric has an operating network serving approximately 2.86 million metered customers with no other territorial transmission and distribution utility; entry requires a CCN and potentially municipal franchises. This demonstrates a current protected position, with less complete evidence elsewhere in the group.
durability · 3/4 · Certificated operations, rights-of-way and franchise terms typically spanning 30–40 years support durable network access. Non-exclusive franchises and regulatory control prevent an exceptional or guaranteed-durability assessment.
customer dependency · 3/4 · The absence of another territorial delivery utility supports strong dependence on Houston Electric's physical network. Continuous billing demonstrates recurring service, although customers do not have long-term contracts. This is infrastructure dependence rather than brand loyalty.
erosion resilience · 2/4 · Actual reimbursement and recognized allowed equity returns show recovery mechanisms working, and distributed generation has not been significant to date. Actual disallowance and recent recovery deferrals demonstrate limits; municipal entry and changing Indiana rules remain prospective risks.
Pricing power50
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
realized pricing · 2/4 · Effective customer rates, Posey Solar recovery through updated base rates and recognized allowed equity returns demonstrate monetization of approved investment. Regulators have also disallowed costs and required recovery deferrals. Observed outcomes support mixed regulated pricing power without proving discretionary price increases.
retention · 3/4 · Territorial delivery dependence and continuous billing support repeat demand despite the absence of long-term customer contracts. This is an indirect assessment from the operating model and installed customer footprint, not a measured renewal or churn rate.
margin resilience · 2/4 · Dollar-for-dollar recovery of certain commitments, cash reimbursement and recognized equity returns buffer costs. Actual disallowance and deferred recovery show that protection is incomplete. The assessment concerns demonstrated recovery mechanisms rather than inference from reported margins alone.
contractual freedom · 1/4 · The PUCT and municipalities set Houston Electric's rates and service terms under cost-of-service regulation. Actual regulatory deferral confirms that lack of discretion; continuous billing without long-term contracts does not confer freedom to set prices.
Predictability49
Five consecutive annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 50.00
- Revenue growth volatility (pp)
- 8.13
- Positive FCF years (%)
- 0.00
- FCF margin volatility (pp)
- 10.44
Financial strength6
Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- debtFcfGrade
- 0.00
- netDebtEbitGrade
- 0.00
- interestCoverageGrade
- 12.15
- currentRatioGrade
- 12.86
- Net debt / operating income (x)
- 10.87
- Interest coverage (x)
- 2.34
- Current ratio (x)
- 0.91
Capital allocation—
Missing required inputs: sbcRevenue. Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- 3-year pre-tax operating return (%)
- 6.49
- 3-year average dilution (%)
- 1.22
- cashConversionGrade
- 0.00
Management50
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · Completed asset recycling and recovery on an operating solar project provide concrete evidence of capital deployment and funding execution. First-half 2026 operating cash flow of $1.060 billion was below $2.568 billion of capital expenditures, alongside substantial debt financing and actual equity issuance. This supports a mixed assessment; it does not prove value destruction or superior investment returns.
incentive alignment · 2/4 · Actual 2025 arrangements include three-year EPS and relative-TSR performance awards, equity vesting conditions, ownership guidelines and recoupment provisions. Alignment is meaningful but mixed: adjusted EPS and market valuation features do not directly establish capital efficiency, and actual executive holdings and guideline compliance are missing. Disclosed grants are not assumed to have vested.
execution · 2/4 · Posey Solar entered service in May 2025, meeting the previously disclosed second-quarter expectation, and began rate recovery in June. The Louisiana and Mississippi sale also completed. These are demonstrated achievements, balanced against actual storm-related service impairment and cost disallowance; broader claims of superior reliability and future load conversion remain unproven.
governance · 2/4 · Disclosed independent committees, a lead independent director and compensation recoupment support functioning oversight. The combined chair and CEO role concentrates authority, while the passages do not demonstrate exceptional oversight outcomes. Proposed charter changes and advisory votes are not treated as adopted outcomes.
Evidence
The table below reflects the number of REPs and metered customers in Houston Electric’s service area as of December 31, 2025:
Residential
Commercial/
Industrial
Total Customers
Texas Gulf Coast
2,544,880
314,433
2,859,313
Competition
There are no other electric transmission and distribution utilities in Houston Electric’s service area.
Business / Houston Electric / Customers and Competition · Filed 19/02/2026
For another provider of transmission and distribution services to provide such services in Houston Electric’s territory, it would be required to obtain a CCN from the PUCT and, depending on the location of the facilities, may also be required to obtain franchises from one or more municipalities.
Business / Houston Electric / Competition / entry approvals · Filed 19/02/2026
Houston Electric conducts its operations pursuant to a CCN issued by the PUCT that covers its present service area and facilities.
Business / Houston Electric / certificate of convenience and necessity · Filed 19/02/2026
In exchange for payment of fees, these franchises give Houston Electric the right to use the streets and public rights-of-way of these municipalities to construct, operate and maintain its transmission and distribution system and to use that system to conduct its electric delivery business and for other purposes that the franchises permit.
Business / Houston Electric / Franchises / rights-of-way · Filed 19/02/2026
The terms of the franchises, with various expiration dates, typically range from 30 to 40 years.
Business / Houston Electric / Franchises / duration · Filed 19/02/2026
Each of the aforementioned regulatory assets are being amortized over five years beginning April 28, 2025, which was the date that rates became effective following the PUCT’s final order in the Houston Electric rate case.
Note 7 / Regulatory Matters / effective rates and regulatory asset amortization · Filed 19/02/2026
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 issuance and sale of the state’s customer rate relief bonds.
Regulatory Matters / Texas Public Securitization / cash proceeds received · Filed 19/02/2026
The table below reflects the amount of allowed equity return recognized by each Registrant in its Condensed Statements of Consolidated Income for the period presented: Three Months Ended June 30, 2026 2025 CenterPoint Energy Houston Electric CERC CenterPoint Energy Houston Electric CERC (in millions) Allowed equity return recognized $ 35 $ 33 $ 1 $ 7 $ 5 $ 1 Six Months Ended June 30, 2026 2025 CenterPoint Energy Houston Electric CERC CenterPoint Energy Houston Electric CERC (in millions) Allowed equity return recognized $ 47 $ 43 $ 2 $ 9 $ 6 $ 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.
Regulatory Matters / allowed equity return recognized · Filed 28/07/2026
Houston Electric holds non-exclusive franchises from certain incorporated municipalities in its service territory.
Business / Houston Electric / non-exclusive franchises · Filed 19/02/2026
Distributed generation (i.e., power generation located at or near the point of consumption) could result in a reduction of demand for Houston Electric’s distribution services but has not been a significant factor to date.
Business / Houston Electric / Competition / distributed generation · Filed 19/02/2026
If one or more municipalities in our service territories create new or supplemental utilities, or impair the franchises under which we serve customers in the applicable municipalities, it could result in lower growth and reduced demand for and usage of electricity and natural gas in such service territories.
Risk Factors / municipal utilities and franchise impairment · Filed 19/02/2026
For example, in October 2022, the MPUC issued a written order disallowing recovery of approximately $36 million of the $409 million originally requested by CERC in connection with its recovery of costs incurred as a result of the February 2021 Winter Storm Event.
Risk Factors / regulatory recovery / Minnesota storm-cost disallowance · Filed 19/02/2026
On July 9, 2026, the PUCT issued an order that approved the DCRF adjustment but required Houston Electric to defer recovery for certain resiliency measures up front rather than proportionally as proposed in the settlement.
Regulatory Matters / Houston Electric DCRF / July 9, 2026 order · Filed 28/07/2026
The PUCT and certain municipalities have the authority to set the rates and terms of service provided by Houston Electric under cost-of-service rate regulation.
Business / Houston Electric / regulatory authority over rates and terms · Filed 19/02/2026
Houston Electric does not have long-term contracts with any of its customers, but rather operates using a continuous billing cycle, with meter readings being conducted and invoices being distributed to REPs each business day.
Business / Houston Electric / customer contracts and continuous billing · Filed 19/02/2026
Costs arising from certain of these commitments are pass-through costs, generally collected dollar-for-dollar from retail customers through regulator-approved cost recovery mechanisms.
Commitments and Contingencies / regulator-approved dollar-for-dollar pass-through · Filed 28/07/2026
Indiana Electric began recovering on the asset through updated base rates on June 17, 2025.
Held for Sale, Divestitures and Acquisition / Posey Solar / recovery through updated base rates · Filed 23/04/2026
AND SUBSIDIARIES CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS (Unaudited) Six Months Ended June 30, 2026 2025 (in millions) Cash Flows from Operating Activities: Net income $ 560 $ 495 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 868 733 Deferred income taxes 220 74 Loss on sale — 43 (Gain) loss on equity securities 106 (122) (Gain) loss on indexed debt securities (104) 121 Pension and postretirement contributions (40) (87) Changes in other assets and liabilities: Accounts receivable and unbilled revenues, net 349 214 Inventory (8) 24 Accounts payable (330) (330) Other current assets (193) 118 Other current liabilities (235) (251) Other non-current assets (130) (9) Other non-current liabilities (7) 2 Other operating activities, net 4 (55) Net cash provided by operating activities 1,060 970 Cash Flows from Investing Activities: Capital expenditures (2,568) (2,167) Payment for asset acquisition — (357) Proceeds from divestitures — 1,219 Other investing activities, net 41 (36) Net cash used in investing activities (2,527) (1,341) Cash Flows from Financing Activities: Decrease in short-term borrowings, net — (3) Proceeds from (payments of) commercial paper, net (502) 1,056 Proceeds from long-term debt and term loans, net 3,441 735 Payments of long-term debt and term loans, including make-whole premiums (1,271) (1,030) Payment of debt issuance costs (24) (12) Payment of dividends on Common Stock (302) (287) Proceeds from issuances of Common Stock, net 165 — Other financing activities, net (18) (19) Net cash provided by financing activities 1,489 440 Net Increase in Cash, Cash Equivalents and Restricted Cash 22 69 Cash, Cash Equivalents and Restricted Cash at Beginning of Period 49 30 Cash, Cash Equivalents and Restricted Cash at End of Period $ 71 $ 99 Supplemental Disclosure of Cash Flow Information Cash paid for interest, net of capitalized interest $ 510 $ 487 Cash paid (refunds received) for income taxes, net 11 (5) Supplemental Disclosure of Non-cash Transactions Accounts payable related to capital expenditures $ 451 $ 309 See Combined Notes to Interim Condensed Financial Statements 5 Table of Contents CENTERPOINT ENERGY, INC.
CenterPoint Energy / consolidated cash flows / six months ended June 30, 2026 and 2025 · Filed 28/07/2026
On May 1, 2026, CenterPoint Energy issued 4,480,628 shares of Common Stock to the counterparties for cash of approximately $165 million.
Equity / forward sale agreements / May 2026 shares issued for cash · Filed 28/07/2026
On March 31, 2025, CenterPoint Energy, through its subsidiary CERC Corp., completed the sale of its Louisiana and Mississippi natural gas LDC businesses for approximately $1.2 billion.
Business / completed Louisiana and Mississippi natural gas divestiture · Filed 19/02/2026
ELEMENT FORM OF AWARD PERIOD PURPOSE Fixed Base Salary Cash One year ✓ Fixed, competitive level of compensation based on scope and complexity of role, individual experience, and performance to attract and retain top talent At Risk Short-Term Incentive Cash One year ✓ Rewards delivery of near-term financial and non-financial, operational objectives aligned with the Company’s long-term business strategy ✓ Considers individual performance and contributions to Company performance ✓ Short-term incentive funding is based on achieving a non-GAAP Adjusted EPS goal as well as non-financial performance goals relating to safety, operational excellence, and customer satisfaction ✓ Payout of individual awards is wholly subject to discretion of Human Capital and Compensation Committee Long-Term Incentives Performance Share Units (PSUs) 70% Three-year cliff vesting, subject to cumulative Adjusted EPS performance ✓ Rewards creation of long-term value through cumulative Adjusted EPS ✓ Aligns with shareholder interests ✓ PSUs based on cumulative Adjusted EPS represent 35% of total long-term incentive value Three-year cliff vesting, subject to relative stock performance ✓ Incentivizes Company outperformance relative to peer companies ✓ Aligns with shareholder interests ✓ TSR performance based on a percentile achievement based on position relative to peer group ✓ Price-to-earnings (P/E) modifier provides for a minimum payout level if the P/E ratio ranks in the top quartile of our peer group ✓ PSUs based on TSR represent 35% of total long-term incentive value Restricted Stock Units (RSUs) 30% Three-year ratable vesting, subject to continued employment and positive operating income ✓ Promotes retention, facilitates stock ownership, and supports succession planning ✓ Aligns with long-term shareholder interests ✓ RSUs represent 30% of total long-term incentive value and will vest only if CenterPoint Energy achieves positive operating income for the last full calendar year preceding the applicable vesting date CenterPoint Energy, Inc.
Compensation Discussion and Analysis / 2025 compensation components and conditions · Filed 04/03/2026
Our guidelines provide that our President and Chief Executive Officer should own CenterPoint Energy common stock having a market value of five times base salary, our executive vice presidents should own CenterPoint Energy common stock having a market value of three times their respective base salaries, and our senior vice presidents should own CenterPoint Energy common stock having a market value of two times their respective base salaries.
Executive Compensation / executive stock ownership guidelines · Filed 04/03/2026
We also maintain a separate policy for the recoupment of incentive compensation from any officer, regardless of culpability, in the event of an accounting restatement where the restatement would have resulted in a lower amount of incentive compensation and for the recoupment of any compensation, including time-based restricted awards, from any employee who is found to have engaged in wrongdoing in connection with corporate criminal misconduct.
Executive Compensation / compensation recoupment policy · Filed 04/03/2026
The Board has determined that all of the members of each committee are independent within the meaning of the NYSE listing standards and categorical standards noted above.
Corporate Governance / Board committee independence · Filed 04/03/2026
The Board believes its independence and oversight of management and Company risks are maintained effectively through its current leadership structure, including through the robust role of the Lead Independent Director, the strong role of the Board’s independent directors generally, the Board’s overall composition that currently includes ten independent directors, the 100% independent director composition of each Board committee, and the Company’s other sound corporate governance policies and practices.
Corporate Governance / combined leadership structure and independent oversight · Filed 04/03/2026
Posey Solar was placed into service on May 30, 2025.
Held for Sale, Divestiture and Acquisition / Posey Solar / in-service date · Filed 28/07/2026
The Posey Solar project is expected to be placed in service in the second quarter of 2025.
Commitments and Contingencies / Posey Solar / expected second-quarter 2025 service date · Filed 20/02/2025
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.
Regulatory Matters / February 2021 Winter Storm / realized service and supply impacts · Filed 28/07/2026
At this time, Indiana Electric cannot predict the outcome of either investigation or the potential impact, if any, that these proceedings may have on its future rates, cost recovery mechanisms, authorized returns, or financial condition.
Regulatory Matters / Indiana multi-year rate plan investigations / uncertain effects · Filed 28/07/2026
