The extent of Elliott’s control may be subject to two different confidentiality agreements between the utility and the hedge fund, according to the complaint.


CenterPoint Energy failed to disclose the details of its new affiliation with the Elliott Management hedge fund, according to a regulatory complaint filed this week by two consumer organizations.

Brought to the Federal Energy Regulatory Commission by Washington-based Public Citizen and Indianapolis-based Citizens Action Coalition of Indiana, the Oct. 5 complaint relates to a $1.35 billion equity infusion orchestrated by Elliott last May.  The consumer groups say CenterPoint made significant concessions to Elliott, including Elliott’s preferred choice for board members and a new CEO.

The complaint alleges that CenterPoint failed to comply with federal rules that require disclosure to FERC of any significant change related to company control within 30 days. The complaint was filed under Section 206 of the Federal Power Act.

“FERC’s change in status requirements are essential to ensure utilities are fully transparent about which entities own and control their operations,” said Tyson Slocum, Energy Program director for Public Citizen and author of the complaint. “FERC should require CenterPoint to report this change and identify Elliott Management Corp as an affiliate.”

Confidentiality Agreements

The extent of Elliott’s control may be subject to two different confidentiality agreements between the utility and the hedge fund and both are hidden to the public, according to the complaint.  You can read a Public Citizen press release about it, here.

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 utility customers in Arkansas, Indiana, Louisiana, Minnesota, Mississippi, Ohio and Oklahoma. The Texas Public Utility Commission regulates CenterPoint within the state; FERC regulates it elsewhere.

The complaint states that while the companies providing the equity investment own less than ten percent of CenterPoint, “the delivery of the cash was a quid pro quo for a management overhaul that results in the new investors exerting control over CenterPoint Energy.” The complaint further states that “the leader of these investors, Elliott Management, should now be considered an affiliate of CenterPoint Energy.”

Flaunting Oversight?

Adrian Shelley, director of Public Citizen’s Texas Office, questioned what a lack of regulatory oversight regarding Elliott Management’s involvement in CenterPoint could mean for reliable and affordable energy in Texas. “Major cash infusions and rapid management changes require federal oversight — Elliott Management is flaunting that oversight,” said Shelley.

Elliott Management previously was the largest creditor to Energy Future Holdings, Oncor’s previous owner. San Diego-based Sempra Energy eventually acquired EFH and Oncor for $9.45 billion.

You can also read more about the consumer groups’ complaint in a report from the Houston Chronicle, found here. A CenterPoint spokeswomen told the newspaper that the company is reviewing the complaint. Elliott Management did not respond to requests for comment from the newspaper.

— R.A. Dyer