Blog: Bumpy Ride for Texas-Based Utility Company CenterPoint

 

A smaller price tag in an asset sale is the latest bump in a tumultuous stretch for Houston’s CenterPoint Energy.

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Buffeted by a recent drop in stock prices, the departure of top brass and a bumpy sale of retail assets — it’s been a tumultuous recent stretch for Center Point Energy, the Houston-based company best known for its massive utility operations around Houston and the Gulf Coast.

The latest set back came earlier this month when the company’s sale of a big natural gas retail asset closed for substantially less than anticipated. CenterPoint initially announced a $400 million price tag, but the sale closed for $286 million. Changes in commodity prices and separate factors related to the timing of the deal’s closing led to the 28 percent drop, according to security filings cited by the Houston Chronicle.

CenterPoint serves as the primary electric transmission and distribution utility and natural gas utility for Houston, its surrounding areas and for a large swath of the Texas Gulf Coast. CenterPoint also serves millions of electric and natural gas utility customers in Arkansas, Indiana, Louisiana, Minnesota, Mississippi, Ohio and Oklahoma.

 

Timeline

Here’s a look back at recent CenterPoint developments, roughly in chronological order.

  • In February 2020, CenterPoint received somewhat less than it sought in an electric utility rate settlement. The settlement delivered a $13 million increase to CenterPoint and a 9.4 percent return on equity. The company initially sought $161 million and a 10.4 percent return.
  • In February 2020, the companys then-CEO, Scott Prochazka, unexpectedly resigned. Interim CEO John W. Somerhalder, appointed to replace him, told investors he expected the regulated portions of CenterPoints business to generate nearly 90 percent of its earnings going forward.
  • Prochazka’s departure came as CenterPoint suffered a first-quarter loss of $1.2 billion and a 12-month drop in stock prices of nearly 50 percent, according to reports. The Houston Chronicle also reported in February 2020 that CenterPoints total return had declined by 15.1 percent over the preceding year, which made the company the worst performer in an S&P 500 utility index that gained 26.7 percent during the same period.
  • On April 9, CenterPoint announced it had completed the sale for $850 million of two natural gas distribution and transmission pipeline contractors. CenterPoint will use net revenue to help pay down debt.
— R.A. Dyer