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CenterPoint CEO reports only minor impact on Q1 earnings from mild weather

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CenterPoint CEO reports only minor impact on Q1 earnings from mild weather

Milderweather in CenterPoint Energy Inc.'sservice territories had only a "slight" impact on the company's first-quarterearnings, CenterPoint Energy President and CEO Scott Prochazka said.

Duringthe company's May 10 earnings call, Prochazka noted that this was mainly due tothe effectiveness of several regulatory changes, including a three-year revenue-decouplingpilot in Minnesota. "Increases due to rate relief, customer growth and midstreaminvestments were partially offset by higher depreciation, O&M expenses and reductionsin usage driven by weather," he said.

CenterPointEnergy on May 10 reported$154 million, or 36 cents per share, in first-quarter net income, up from $131 million,or 30 cents per share, in the first quarter of 2015.

The company'selectric transmission and distribution segment reported first-quarter operatingincome of $83 million, consisting of $59 million from the regulated electric transmissionand distribution utility operations and $24 million related to securitization bonds.Operating income for the first quarter of 2015 was $96 million.

CenterPoint'snatural gas distribution segment reported first-quarter operating income of $160million, compared with $146 million for the same quarter of 2015. Revenues for thequarter totaled $1.98 billion, compared with $2.43 billion in the comparable quarterof 2015, while operating income was $250 million, compared with $256 million inthe 2015 quarter.

CenterPointis focused on investing in its current utility service territories as well as ininvesting in its growth, maintenance, reliability, safety and customer service,according to Prochazka. "Earnings growth will be driven by multiple factors,including customer and sales growth, capital discipline, timely recovery on andof our investments, as well as continued attention to managing financing and operatingcosts," he said.

Utilityoperations at the company are predicted to add 75% to 80% of CenterPoint earningsin 2016, Prochazka said, adding that its gas and electric utilities combined haveadded close to 83,000 customers since the first quarter of 2015.

CenterPointsubsidiary CenterPoint Energy HoustonElectric LLC had a "strong quarter," in line with expectations,said Tracy Bridge, CenterPoint executive vice president and president of the company'selectric division.

The year-over-yearresidential meter growth for Houston Electric was over 2%, Bridge said. "Wecontinue to forecast 2% customer growth for 2016, which equates to approximately$25 million to $30 million in incremental base revenue annually."

Bridgenoted that on April 4 the company filed for $36 million in annualized rate relieffor distribution capital invested in 2015 and anticipates that new rates will beimplemented in September.

The company'snatural gas operations, including both its gas utilities and nonregulated energyservices businesses had a strong quarter, both operationally and financially,Joe McGoldrick, CenterPoint executive vice president and president of CenterPoint Energy's gas division, said."We experienced significantly milder weather across much of our territory,but weather normalization adjustments, our decoupling pilot in Minnesota and ratedesign in Texas have all worked to remove weather sensitivity as a material riskto our natural gas utility revenues," he said.

CenterPointEnergy's Minnesota and Arkansas rate cases are moving ahead, with final decisionson both cases expected in the second and third quarters, respectively, McGoldricksaid, adding that the company is already experiencing high revenues in Minnesotathrough interim rates and that new rates in Arkansas should be implemented duringthe third quarter.

The MinnesotaPublic Utilities Commission on May 5 appearedto authorize CenterPoint Energy subsidiary CenterPointEnergy Resources Corp. an approximate $27 million, or 3.2%, permanentrate increase based on a 9.49% return on equity, a 7.08% overall return, and a testyear ending Sept. 30, 2016.

On April 14, the Arkansas Public Service Commission staff testimony in CenterPoint EnergyResources' pending gas base rate proceeding, recommending a $26.7 million, or 17.7%,rate increase premised upon a 9.5% return on equity.