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CenterPoint sets new emissions reduction targets

CenterPoint Energy Inc. offered new carbon emissions reduction goals on Feb. 27, with a pipeline replacement program a prime contributor.

"I am proud to announce our goal to reduce carbon emissions by 70% from CenterPoint operations from our 2005 levels by 2035," the company's interim president and CEO, John Somerhalder, said during a call to discuss fourth-quarter 2019 financial results.

"We anticipate achieving this goal by continuing our robust pipeline replacement program, continuing to enhance our generation mix supporting Southern Indiana and partnering with our suppliers to lower their methane emissions," Somerhalder said.

Additionally, CenterPoint wants to reduce carbon emissions from its natural gas customers' usage by 20% to 30% from 2005 levels by 2040, in part through increased energy efficiency.

CenterPoint will publish its full carbon policy during the week of March 2, Somerhalder said.

$13.2B in capital spending

Looking beyond 2020 to a "planning horizon" extending to 2024, CenterPoint Executive Vice President and CFO Xia Liu said the company expects its rate base to grow at a 7.5% compound annual growth rate, driven by about $13.2 billion of regulated capital investment.

"Of our projected $13 billion of investment, approximately 40%, or about $1 billion a year, is anticipated to be deployed for [CenterPoint Energy Houston Electric LLC]," Liu said. "This capital is driven by continued load growth, system hardening and modernization as well as construction of the Bailey-to-Jones Creek transmission project."

The project is a 55.5-mile, 345-kV line through Brazoria, Matagorda and Wharton counties south and west of Houston. The Public Utility Commission of Texas approved the project route Nov. 21, 2019.

On the gas side, Liu said: "Approximately 50% of the capital, or about $1.2 billion per year, is projected to be spent at our gas utilities, primarily for system modernization and pipeline replacement."

Details of quarterly results

The company's earnings show consolidated income totaling $128 million, or 25 cents per share, for the three months ending Dec. 31, 2019, compared with $90 million, or 18 cents per share, for the same period of 2018.

On Feb. 24, CenterPoint announced an agreement to sell its Energy Services retail gas unit to Energy Capital Partners for about $400 million, including estimated working capital at close.

On Feb. 3, CenterPoint announced an agreement to sell its Miller Pipeline and Minnesota Ltd., collectively known as MVerge, to PowerTeam Services, an integrated infrastructure service company, for $850 million in cash.

Net proceeds for both transactions, expected to close in the second quarter of 2020, are to pay down part of CenterPoint's outstanding debt.

Excluding the effects of the Vectren acquisition last year and gas divestments, CenterPoint's earnings for the most recent quarter totaled $231 million, or 45 cents per share, versus $160 million, or 36 cents per share, for the same period in 2018.

CenterPoint will be keeping its interest in Enable Midstream Partners, a master limited partnership, Somerhalder said, as this stake has contributed $2 billion in cash flow without requiring any additional capital investment.

At the end of 2019, CenterPoint's various power and gas utilities had 7.3 million customers in eight states, compared with 6.2 million customers at the end of 2018. The 2019 figure includes the acquisition of Vectren's electric and natural gas utilities in Indiana and Ohio.

Mark Watson is a reporter for S&P Global Platts. S&P Global Platts and S&P Global Market Intelligence are owned by S&P Global Inc.