10-K: CenterPoint Energy Boosts Capital Plan to $65.5B, Reports Net Income Growth

CenterPoint Energy announced an increased 10-year capital plan of $65.5 billion through 2035, alongside net income growth across its Electric and Natural Gas segments for 2025.

Summary

• CenterPoint Energy's net income available to common shareholders increased to $1,052 million in 2025, up from $1,019 million in 2024 and $867 million in 2023.
• The Electric reportable segment's net income increased by $34 million to $705 million in 2025, driven by customer rates, transmission revenues, and customer growth.
• The Natural Gas reportable segment's net income increased by $4 million to $570 million in 2025, primarily due to cost of natural gas offsets in revenues and customer rates.
• An updated 10-year capital plan now targets $65.5 billion in investments from 2026 through 2035, an increase of $500 million from the previously announced $65 billion.
• The company completed the sale of its Louisiana and Mississippi natural gas LDC businesses for approximately $1.2 billion on March 31, 2025, recognizing a $49 million loss on sale for CenterPoint Energy and a $46 million gain for CERC.
• CenterPoint Energy, through its subsidiary CERC Corp., entered into an agreement on October 20, 2025, to sell its Ohio natural gas LDC business for approximately $2.62 billion, expected to close in Q4 2026.
• Houston Electric's Transmission and Distribution System Resiliency Plan (SRP) was approved by the PUCT on November 19, 2025, involving $2.68 billion in capital investments and $185 million in O&M expenses over three years.
• Houston Electric issued $1.1 billion in general mortgage bonds and Restoration Bond Company II issued $401.5 million in securitization bonds in 2025.
• CenterPoint Energy issued $1.0 billion in convertible senior notes due 2028 and $700 million in junior subordinated notes in 2025.
• Indiana Electric acquired Posey Solar, a 191 MW solar array, for approximately $357 million on March 7, 2025, which was placed in service in Q2 2025.
• Indiana Electric placed 460 MW of natural gas combustion turbines into service in Q2 and Q3 2025, with recovery approved by the IURC.
• Houston Electric is releasing its 15 large TEEEF units to the San Antonio area until March 2027 and proposed releasing its five medium TEEEF units, removing associated lease costs from rates.
• The company's workforce includes 3,712 employees represented by collective bargaining agreements, with several agreements expiring in 2025 and 2026.
• CenterPoint Energy's total assets increased to $46,534 million in 2025 from $43,768 million in 2024.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a moderately positive report. The company is demonstrating solid financial performance with increased net income and is aggressively investing in its infrastructure and energy transition, backed by favorable regulatory outcomes. However, significant capital requirements, ongoing litigation, and macroeconomic headwinds present notable challenges.

Positives

• Net income available to common shareholders increased by $33 million to $1,052 million in 2025, demonstrating overall financial growth.
• The Electric segment saw a $34 million increase in net income, driven by favorable customer rates, higher transmission revenues, and customer growth.
• The Natural Gas segment's net income increased by $4 million, benefiting from effective management of natural gas costs and customer rate adjustments.
• The company's 10-year capital plan was increased to $65.5 billion through 2035, signaling strong commitment to infrastructure investment and future growth.
• Strategic divestitures of Louisiana and Mississippi natural gas LDC businesses were completed, generating approximately $1.2 billion in proceeds, and the sale of the Ohio LDC business is planned for $2.62 billion.
• Houston Electric's Transmission and Distribution System Resiliency Plan (SRP) was approved, allowing for significant investments in system safety, reliability, and resiliency.
• Successful debt issuances and securitization bonds in 2025 provided substantial capital for ongoing operations and investments.
• Indiana Electric's acquisition of Posey Solar (191 MW) and the commissioning of 460 MW of natural gas combustion turbines enhance generation capacity and energy transition goals.
• Approximately 85% of the rate base has been subject to rate cases since 2023, providing clarity and stability through 2029 with improved weighted average returns on equity.
• Treasury Notice 2026-7 is expected to prospectively reduce annual Corporate Alternative Minimum Tax (CAMT) liability and allow for prior year tax return amendments for refunds.

Negatives

• Corporate & Other segment's net income decreased by $5 million, primarily due to increased borrowing costs of approximately $37 million, partially offset by gains on early extinguishment of debt.
• Houston Electric's depreciation and amortization increased by $107 million, partly due to lease expense for TEEEF units no longer eligible for regulatory deferral.
• The company experienced a $49 million loss on the sale of its Louisiana and Mississippi natural gas LDC businesses for CenterPoint Energy, despite a gain for CERC.
• Houston Electric incurred incremental storm expenses, including storm hardening, after Hurricane Beryl in 2024, which negatively impacted operation and maintenance expenses.
• MISO interconnection study delays and estimated cost increases led to the termination of several wind and solar projects in Indiana Electric in 2025, impacting renewable energy transition plans.
• The U.S. Department of Energy issued an emergency order directing Indiana Electric to continue operating F.B. Culley Unit 2, a coal-fired generation unit, through March 23, 2026, despite plans for its retirement by the end of 2025.
• The Ohio Gas Rate Case settlement included modifications that resulted in a $7.9 million negative impact on revenue requirement due to extended amortization periods for regulatory assets and a $0.6 million negative impact from a slightly lower approved ROE.
• The collective bargaining agreement with OPEIU Local 12 related to CERC employees in Minnesota expired in December 2025, with negotiations ongoing, posing potential labor disruption risks.

Risks

• Disruptions at third-party or Indiana Electric's power generation facilities, generation inadequacy, or regulatory directives could cause service interruptions and adversely affect financial results.
• Indiana Electric's generation transition plan faces risks including timely recovery of capital investments, increased costs, and delays in developing/constructing new generation facilities.
• Houston Electric's receivables are concentrated in a small number of Retail Electric Providers (REPs), and payment delays or defaults could adversely affect financial condition.
• The use of Temporary Emergency Electric Energy Facilities (TEEEF) is subject to risks including performance issues, procurement allegations, regulatory/environmental requirements, and timely cost recovery.
• Access to natural gas supplies and pipeline transmission/storage capacity is essential, and disruptions or failures by third-party providers could negatively impact the natural gas business.
• Fluctuations in natural gas prices could affect supplier/customer obligations and operations, increasing working capital requirements and potentially uncollectible accounts.
• Competition from alternate energy sources (e.g., electricity) and direct competition from other gas distributors/marketers could reduce natural gas demand and revenues.
• Rate regulation may delay or deny the ability to earn expected returns and fully recover costs, with regulatory lag potentially exacerbated by increased capital investments.
• Successful execution and completion of capital projects, including the 10-year capital plan, are subject to risks like material/labor availability and costs, regulatory approvals, and public opposition.
• Involvement in numerous legal proceedings, including lawsuits related to Hurricane Beryl and the February 2021 Winter Storm Event, could result in uncertain outcomes and negative financial impacts.
• Negative public opinion from stakeholders regarding reliability, safety, response times, rates, or capital plan execution could harm reputation and financial results.
• Operational and financial risks from environmental laws and regulations, including those for Coal Combustion Residuals (CCR) and climate change, could lead to higher compliance costs or fines.
• Operational, financial, and other risks associated with sustainability and energy transition goals, including assumptions about GHG emissions, load growth, and regulatory approvals, may not be realized as expected.
• Extensive regulation could result in higher costs for system improvements, fines, or other sanctions for non-compliance.
• Disruptions to the global supply chain, inflation, labor shortages, and scarcity of materials may impact operations and the ability to execute the capital plan.
• Inability to arrange future financings on acceptable terms could limit the ability to fund capital expenditures and operations or refinance debt.
• CenterPoint Energy's reliance on subsidiary distributions to meet payment obligations and pay dividends, with legal/contractual restrictions potentially limiting these distributions.
• Potential significant cash payments for ultimate tax liability and redemption payments if ZENS are redeemed prior to maturity, or from significant exchanges by ZENS holders.
• Potential business strategies and strategic initiatives, including M&A and asset dispositions, may not be completed or perform as expected.
• Changes in federal income tax laws and regulations, including comprehensive tax reform, could significantly affect financial results.
• Safety risks inherent in utility businesses, including incidents resulting in injury, death, or property loss, and threats of violence against field employees.
• Cyberattacks, physical security breaches, acts of terrorism, or other disruptions could adversely impact business, financial condition, results of operations, and cash flows, including those leveraging AI.
• Revenues and results of operations are seasonal and highly dependent on weather conditions.
• Severe weather events, natural disasters, and other climate-related impacts could increase costs, cause service disruptions, and lead to liabilities not fully covered by insurance.
• Changes in demand and energy consumption, including from new customers (e.g., data centers, AI) and energy efficiency initiatives, could impact revenue and growth.
• Aging infrastructure may lead to increased costs, disruptions, and challenges in maintaining reliability.
• Inability to successfully operate facilities or perform corporate functions due to operator error, equipment failure, labor disputes, or catastrophic events.
• Failure to adapt to, integrate, and implement technological change, including advanced grid infrastructure and AI, could negatively impact regulatory recovery and financial results.
• Insurance coverage may be insufficient to cover all losses, and increased insurance costs may not be fully recoverable in rates.

Future Outlook

CenterPoint Energy anticipates significant growth in electric demand over the next decade, forecasting a nearly 50% increase in peak electric load demand to over 30 GW by 2029 in its Houston Electric territory, potentially doubling by the mid-2030s. This growth is expected to be driven by data centers, energy refining and exports, advanced manufacturing, and logistics. Residential meter growth for Houston Electric is projected to remain around 2% annually, and for CERC's natural gas segment, approximately 1% annually. The company's 10-year capital plan of $65.5 billion is designed to support this anticipated growth and enhance system safety, reliability, and resiliency. Management expects to fund these investments through internally-generated cash, credit facilities, commercial paper, proceeds from strategic divestitures, and capital market issuances. The company will continue to monitor macroeconomic and geopolitical developments, including inflation, supply chain disruptions, and labor market constraints, which could impact its ability to execute its capital plan and affect customer affordability. Regulatory actions and evolving climate policies are also expected to influence future operations and costs.

Management Comments

• We expect our businesses to continue to be affected by the key factors and trends discussed below. Our expectations are based on assumptions made by us and information currently available to us. To the extent our underlying assumptions about, or interpretations of, available information prove to be incorrect, our actual results may vary materially from our expected results.
• We are first and foremost an energy delivery company and it is our intention to remain focused on these regulated segments.
• Our 10-year capital plan is intended to advance economic growth, improve the experience of our customers through enhancing the safety, reliability and resiliency of our systems and deliver consistent value for stakeholders across the jurisdictions in which we operate.
• Management anticipates significant growth in electric demand over the next decade, especially in our Houston Electric territory where we forecast a nearly 50% increase in peak electric load demand to over 30 GW by 2029 and the demand nearly doubling by the mid 2030s, as compared to 2024.
• Management additionally believes that there are increased electric demand opportunities in our Indiana Electric jurisdiction; accordingly, Indiana Electric's 2025 IRP included a large load scenario with a corresponding alternative preferred portfolio.
• We have taken actions across multiple vectors to reduce the impact of such developments on our results of operations, but if such conditions continue, they could negatively impact our ability to procure materials, supplies (such as natural gas) or services necessary for our business and 10-year capital plan at a reasonable cost in a timely manner, result in project cancellations or scope changes, delays, cost overruns, and under-recovery of costs and challenges to our ability to remain in compliance with applicable laws, regulations and policies, which could adversely affect our business, financial condition, results of operations and cash flows.

Industry Context

StockSavvy.ai notes that CenterPoint Energy's increased capital plan aligns with broader utility industry trends focusing on grid modernization, resilience, and energy transition investments. The forecasted rapid load growth in the Houston Electric territory, driven by data centers and advanced manufacturing, reflects a significant demand surge seen in other utility service areas, particularly those benefiting from technological advancements like AI. The strategic divestiture of non-core natural gas LDC businesses is consistent with a trend among utilities to streamline operations and focus on regulated, higher-growth segments. However, the challenges of supply chain disruptions, inflation, and labor shortages are industry-wide concerns that could impact project timelines and costs, as evidenced by Indiana Electric's project cancellations due to MISO interconnection delays and affordability concerns. The ongoing regulatory scrutiny and litigation related to severe weather events like Hurricane Beryl highlight the increasing operational and financial risks faced by utilities in climate-vulnerable regions.

Comparison to Industry Standards

• CenterPoint Energy's 10-year capital plan of $65.5 billion is substantial, comparable to large-scale infrastructure investment programs by other major utilities like NextEra Energy or Duke Energy, which are also heavily investing in grid modernization and renewable integration.
• The forecasted nearly 50% increase in peak electric load demand in Houston Electric's territory by 2029, potentially doubling by the mid-2030s, is a higher growth rate than many mature utility service areas, indicating strong economic activity and demand from sectors like data centers, similar to growth seen in parts of Virginia (Dominion Energy) or Arizona (APS) due to tech industry expansion.
• The approval of Houston Electric's SRP, with $2.68 billion in capital investments for resiliency, is in line with industry best practices for hardening infrastructure against severe weather, a critical focus for utilities in coastal regions like Florida (Florida Power & Light) or the Gulf Coast (Entergy).
• Indiana Electric's acquisition of Posey Solar (191 MW) and commissioning of 460 MW of natural gas combustion turbines reflects a balanced approach to energy transition, similar to peers like Southern Company or Xcel Energy, which are integrating renewables while maintaining dispatchable generation for reliability.
• The termination of certain wind and solar projects by Indiana Electric due to MISO interconnection delays and cost increases is a common challenge across the industry, as grid operators like MISO and ERCOT grapple with integrating a high volume of new renewable projects and associated transmission upgrades.
• The 9.65% Return on Equity (ROE) approved for Houston Electric's rate case is within the typical range for regulated utilities in Texas, generally considered reasonable but potentially lower than some utilities in states with more favorable regulatory environments.
• The ongoing litigation and regulatory inquiries following Hurricane Beryl are typical for utilities operating in areas prone to natural disasters, similar to challenges faced by PG&E in California with wildfires or Florida utilities after major hurricanes, highlighting the significant financial and reputational risks involved.

Management Changes

Corporate Governance

Legal Proceedings

• CenterPoint Energy, CenterPoint Energy Service Company, LLC, and Houston Electric are subject to current and potential future litigation and claims arising out of Hurricane Beryl, including allegations of personal injury, wrongful death, property damage, economic losses, and unlawful business practices.
• A putative shareholder filed a derivative petition in Harris County District Court, Texas, alleging breach of fiduciary duty and unjust enrichment against CenterPoint Energy's current and former directors and officers related to Hurricane Beryl, which is currently stayed.
• Multiple putative class actions were filed against CenterPoint Energy and/or Houston Electric in Harris County, Texas, on behalf of individuals or entities claiming losses due to power outages from Hurricane Beryl, with some class actions amended to individual claims.
• CenterPoint Energy, Utility Holding, Houston Electric, and CERC are involved in investigations, litigation, and regulatory proceedings related to the February 2021 Winter Storm Event, including claims of wrongful death, personal injury, and property damage.
• CERC was named as a defendant in multiple lawsuits alleging gas market manipulation during the February 2021 Winter Storm Event, with claims against CERC dismissed with prejudice but appeals pending.
• Primary Fuels, Inc., a predecessor company of CenterPoint Energy, is a defendant in a lawsuit filed by Jefferson Parish, Louisiana, seeking damages for contamination and erosion of the Louisiana coastline from historical oil and gas operations; the timing and outcome are uncertain.
• CenterPoint Energy and CERC have recorded liabilities for remediation costs at former Manufactured Gas Plant (MGP) sites in Minnesota and Indiana, with ongoing monitoring and potential future remediation requirements.
• CenterPoint Energy has recorded an approximate $175 million Asset Retirement Obligation (ARO) for the closure of ash ponds at A.B. Brown and F.B. Culley facilities, and an additional $11 million ARO for historic ash placement at F.B. Culley under the CCR Legacy Rule.
• The Registrants are from time to time named as defendants in lawsuits claiming injury due to asbestos exposure, but do not expect these matters to have a material adverse effect.

Related Party Transactions

• Houston Electric and CERC participate in CenterPoint Energy's money pool for short-term borrowing and investing, with funding needs aggregated and external borrowing based on the net cash position.
• CenterPoint Energy provides corporate services to Houston Electric and CERC, with costs charged using methods management believes are reasonable (e.g., usage rates, dedicated asset assignment, proportionate corporate formulas).
• Houston Electric provides certain services to CERC (e.g., fleet, shop, geographic, surveying, right-of-way, radio communications, data circuit management, field operations) billed at actual cost.
• CERC provides certain services to Houston Electric (e.g., line locating, miscellaneous services) billed at actual cost.
• As of December 31, 2025, Houston Electric had money pool borrowings of $54 million and CERC had money pool borrowings of $291 million from CenterPoint Energy.
• Interest income, net from affiliate-related transactions for Houston Electric was $1 million in 2025 and for CERC was $7 million in 2025.
• Corporate service charges to Houston Electric were $201 million in 2025 and to CERC were $228 million in 2025.
• Affiliate service charges (billings), net for Houston Electric were ($4) million in 2025 and for CERC were $4 million in 2025.

Stakeholder Impact

• Shareholders: Potential for increased long-term value through strategic capital investments and divestitures, but also exposure to risks from increased debt, regulatory challenges, and litigation.
• Customers: Expected improvements in safety, reliability, and resiliency of electric and natural gas systems due to capital investments. However, rate increases to recover costs, including storm restoration and capital projects, could impact affordability.
• Employees: Continued focus on talent attraction, development, and retention, with comprehensive compensation and benefits. Ongoing collective bargaining negotiations could impact labor relations.
• Regulators: Continuous engagement in rate cases and regulatory proceedings for cost recovery and project approvals, with potential for scrutiny on cost prudency and customer affordability.
• Creditors: Increased debt issuances to fund capital plans, requiring maintenance of investment-grade credit ratings to ensure access to capital on acceptable terms. Credit rating downgrades could increase borrowing costs.
• Suppliers/Vendors: Increased demand for materials and services due to the large capital plan, but also exposure to supply chain disruptions, inflation, and labor shortages affecting project execution and costs.

Next Steps

• CERC Corp. expects to borrow the remaining $300 million under its delayed draw term loan agreement during the first quarter of 2026.
• CERC Corp. will prepay certain senior notes totaling $245 million on March 27, 2026.
• Houston Electric anticipates receiving net proceeds from the sale of Series 2026-A Senior Secured System Restoration Bonds on February 26, 2026.
• Houston Electric expects to complete construction and energization of the Stewart-West Bay Transmission Project in Q3 2027.
• The Kilgore Transmission Project is anticipated to be completed and energized in Q4 2026.
• The Mill Creek Transmission Project is anticipated to be completed and energized in Q2 2027.
• The Space City Solar Transmission Interconnection Project is expected to be energized in Q1 2027.
• Indiana Electric will continue to monitor regulatory activity regarding GHG emission standards.
• Indiana Electric will reevaluate decisions around F.B. Culley Unit 3 in its next IRP in 2028.
• CenterPoint Energy expects to purchase carbon credits in the future in connection with its energy transition goals.
• The sale of the Ohio natural gas LDC business is expected to close in the fourth quarter of 2026.
• Negotiations for the collective bargaining agreement with OPEIU Local 12 (CERC employees in Minnesota) are ongoing.
• Negotiations for collective bargaining agreements with IBEW Locals 1393 and USW Locals 12213 & 7441 (Indiana Gas employees) and IBEW Local 66 (Houston Electric employees) are expected to be completed before their December 2026 and May 2026 expirations, respectively.
• CenterPoint Energy will continue to monitor regulatory and legal developments relating to the Clean Water Act.

Key Dates

Recommendation

CenterPoint Energy's increased capital plan and strategic divestitures position it for long-term growth and enhanced asset quality, which are positive for investors. The company has demonstrated success in securing regulatory approvals for cost recovery, providing a degree of earnings stability. However, the substantial capital expenditure program, coupled with rising interest rates and ongoing macroeconomic pressures like inflation and supply chain disruptions, introduces execution and financing risks. Furthermore, significant litigation exposure related to past severe weather events and the inherent regulatory uncertainties in the utility sector warrant a cautious approach. While the long-term outlook is favorable due to strategic positioning in growing service territories and energy transition efforts, these risks suggest a 'hold' recommendation until there is clearer visibility on the successful execution of the capital plan and resolution of major legal and regulatory challenges.

Keywords

Utility, Electric Transmission, Natural Gas Distribution, SEC Filing, 10-K, Capital Expenditures, Energy Transition, Rate Regulation, Risk Factors, Cybersecurity, Climate Change, Infrastructure Investment, Divestitures, Debt Issuance, Renewable Energy, Texas, Indiana, Ohio, Minnesota, ERCOT, MISO