CenterPoint’s Capital Spending Surges, with Houston Grid Investments Eyed

Houston-based CenterPoint Energy Inc.’s natural gas and electric utility is “on track to meet our current capital investment plan for the year, having invested over $2 billion in the first six months of 2022,” said CEO Dave Lesar. 

During the second quarter conference call, the CEO said CenterPoint has increased its $19.3 billion, five-year capital investment plan twice since last September. 

“Our 10-year plan is still currently expected to be $40 billion-plus in investments to support the safety, resiliency and growth across our system to benefit our customers,” he told investors. In the first six months, CenterPoint invested more than $2 billion, “which is nearly 50% of our 2022 investment plans.”

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Exploring Grid Hardening, Weatherization in Houston

As the utility hones in on investments, CenterPoint’s partnership with the City of Houston has continued as it works to transition from fossil fuels. The regional energy plan, dubbed Resilient Now, is in early stages. The utility may “be in place to better describe the potential additional capital investments related to these customer-driven infrastructure discussions” during the third quarter call, Lesar added.

CenterPoint management has held talks with its Houston industrial customers “to explore their views for further grid and infrastructure hardening and modernization, residential weatherization and investments around renewable energy infrastructure,” with more details also coming later this year. 

Thus far, Lesar noted that as the utility remains “focused on the affordability of our capital spend. From 2013 to 2022, our average Houston Electric charge has only increased by an average of about 1% per year.” That’s been low even as the “Houston area has averaged over 2% annual customer growth for the last 30 years.”

Greening Infrastructure Nationally

On top of its hefty investments, CenterPoint CFO Jason Wells highlighted success with bringing its Minneapolis green hydrogen project to operation earlier this quarter.

“Our Minnesota gas utility is now among the first gas utilities to add green hydrogen to its distribution system,” Wells said.

CenterPoint also gained approval from the Indiana Utility Regulatory Commission for its 460 MW natural gas peaking facility, which the utility expects would “help provide stability to our customers’ energy needs in times of intermittent renewable generation and is targeted to be operational in 2025.” 

As the utility targets reducing Scope 1 and Scope 2 greenhouse gas (GHG) emissions to net-zero by 2035, the utility is aiming to retire or exit several of its coal-fired power plants between 2023 and 2028. Lesar noted that the “Indiana generation transition plan is also tracking on course.” 

According to the utility’s generation transition plan, about 490 MW of its 700 MW coal-fired A.B. Brown Generating Station in Indiana could be among the first units to retire in 2023.

More guidance on the future of the utility’s coal-fired assets is expected to be featured in Centerpoint’s next Integrated Resource Plan (IRP), which Wells said the utility would begin “soon after earnings,” with a filing planned in mid-2023.

“As a foundation for this IRP, we recently conducted an All Source Request for Proposal, where we received nearly 100 proposals from several dozen participants, including wind, solar and battery storage that will help inform our IRP process,” Wells said. 

The request for proposal is expected to help identify additional generation technologies to add capacity by March 2027, according to CenterPoint. The utility had been seeking generation technologies for natural gas and coal, along with wind, solar, battery storage, thermal generation, hydrogen and nuclear. It also is reviewing demand-side and load-modifying resources.

CenterPoint also “recently filed for approval of 130 MW of owned solar generation,” Wells said. “These projects will bring our total owned and contracted solar to over 800 MW, which is tracking well against our Integrated IRP that called for approximately 700-1,000 MW of solar and approximately 300 MW of wind.”

For 2Q2022, CenterPoint reported profits totaling $179 million (28 cents/share), compared with year-ago earnings of $221 million (38 cents). Total revenue increased to $1.9 billion from $1.7 billion.

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