CenterPoint Energy talks post-Beryl restoration efforts, planned improvements

CenterPoint Energy executives July 30 touted the company's restoration efforts in the wake of deadly Hurricane Beryl's devastating impact on its 5,000-square-mile Houston service area, but promised to do better in future storms.

Speaking during CenterPoint's second-quarter earnings call, President and CEO Jason Wells said that as the storm turned toward Houston, CenterPoint called on additional mutual assistance crew members to help with restoration, ultimately adding about 13,000 outside workers to CenterPoint's own 2,000-person workforce to restore service for about 2.26 million customers who lost service. Beryl made landfall on the Texas Coast, about 90 miles south of Houston, on July 8.

"We restored power to over 1 million customers within 48 hours, replaced over 3,000 distribution poles on our system, walked over 8,500 circuit miles to repair damage and deployed mobile generators at 28 sites across the Greater Houston area to various critical facilities," Wells said. "Impacts to our distribution lines and facilities from vegetation, such as uprooted trees and related debris carried by the very high winds were the primary cause of customer outages. In recent years, trees in the Houston area have been weakened due to a combination of high rainfall, prior drought conditions as well as winter freezes. We trimmed or removed approximately 35,000 trees during our restoration process."

About 60% of the vegetation that damaged CenterPoint's utility connections were "from outside our rights of way," added Chris Foster, executive vice president and chief financial officer.

Wells said CenterPoint would boost vegetation management, harden distribution lines, use stronger utility poles, improve forecasts, upgrade its outage tracker, scale up public communication, increase its short-term mobile generation fleet and enhance public awareness and emergency management.

"Whether it is before, during or after any future storm, we will be better prepared to support, communicate with and serve our customers in these times of emergency," Wells said. "The men and women at CenterPoint go to work every day with an unrelenting focus on delivering safe, reliable and resilient energy to our customers while also striving to improve their experience."

Beryl came after a May "derecho" storm that caused widespread outages and the two storms together are estimated to cost the company $1.6 billion-$1.8 billion, Foster said.

"We currently anticipate that we will securitize both the capital and noncapital portion of the $1.5 billion to $1.7 billion distribution costs to limit the impact to our customers on their bills," Foster said. "Based on the total current average residential electric bill, we estimate that these costs could result in an increase of a little more than 2%."

Underground lines widespread

Asked whether Beryl's devastation might increase CenterPoint's use of underground power connections, Wells noted that about 60% of its customers get service from underground lines.

"It's a pretty significant penetration of undergrounding already in the system," Wells said. "But the point of weakness is those communities are often fed with overhead lines at the feeder level, and that's where we saw the tree damage. So, I think we have to find a balance between undergrounding where it makes sense and where we have overhead lines, making sure that they are hardened and more resilient, so that they're not the single point of failure. It's a little bit of all of the above, but I would imagine that undergrounding takes an even greater prominence moving forward."

The earnings call came on the heels of a grilling on July 29 by Texas senators during a 10-hour committee meeting about the week-long recovery period.

During the July 29 Texas Senate Special Committee on Hurricane and Tropical Storm Preparedness, Recovery and Electricity, state Senator Charles Schwertner said the panel was formed to answer "two simple questions."

"Why did 2.25 million people in the greater Houston lose power, and why did it take two weeks to restore power fully?" Schwertner asked. "I have heard a variety of reasons why the outage of power was so great and the restoration of power took so long: ineffective leadership, lack of seriousness regarding the storm, communication failures, poor planning, disorganized operation and coordination of mutual assistance, ineffective mobile generation equipment and dereliction regarding vegetation management."

Wells acknowledged CenterPoint's "response to the impacts of Hurricane Beryl and communications were not acceptable."

"They did not meet our expectations, nor those of our customers," Wells said. "I take personal accountability for that. I want to apologize to our customers and their families for the frustrations they experienced during Hurricane Beryl and the restoration process."

CenterPoint reported second-quarter GAAP earnings of $228 million, or 36 cents/share, in the second quarter, compared with $106 million, or 17 cents/share, in Q2 2023. Big increases in electric and natural gas regulated rate recovery accounted for about almost all of the increase, according to the company's presentation.