After selling gas distribution assets in Oklahoma and Arkansas and gearing up to fully divest from the midstream business, CenterPoint Energy Inc. is pivoting to help Houston develop a "master energy plan."
Summit Utilities Inc. closed its $2.15 billion acquisition of those gas utilities in January, and CenterPoint has sold 70% of its interest in Energy Transfer LP through the pipeline giant's merger with Enable Midstream Partners, which the holding company owned along with OGE Energy Corp. With CenterPoint on track to exit the midstream sector by the end of 2022, and with a rate base now over 60% electric, management said the company is directing its 10-year, $40 billion-plus capital spending plan toward hardening and modernizing Houston's grid.
"It's really focused on what does the power grid need to look like in Houston and the surrounding areas going forward, given the continued fantastic growth that we're seeing in this market, the continued impact of sort of distressed weather patterns ... getting the system more resilient and more hardened, getting the city ready for basically the [electric vehicle] infrastructure that it needs," CenterPoint President and CEO David Lesar said during a Feb. 22 fourth-quarter earnings conference call.
"That really is our North Star," Lesar added.
On the distribution side, CFO and Executive Vice President Jason Wells said the plan could potentially include placing 35,000 miles of wires underground. In the greater Houston area, Wells noted, CenterPoint is "in the final stages of converting our entire transmission system to an extreme wind standard" and in the middle of a 10-year initiative to raise flood-prone substations after Hurricane Harvey.
CenterPoint is also looking outside Houston for transmission infrastructure upgrades, according to Lesar.
"There clearly is a recognition, generally, that the renewables are going to be in West Texas and the demand is in the eastern side of the state," Lesar said. "Having more access points into where our load center is and the load centers around Dallas and places like that is really critical, and I think you'll see some move in that area over the next year or so."
Lesar also said the company is not looking to sell other local gas distributors to help fund future investments, though it remains "a great option to have."
Providing an update on cost recoveries for the February 2021 winter storm, Wells said the company is moving ahead with plans to recover through securitization its remaining $1.1 billion of gas costs in Texas.
The Oklahoma Corporation Commission voted earlier in February to allow subsidiary CenterPoint Energy Resources Corp. to recover $87.7 million over a 15-year period for natural gas used in heating during the severe weather event, equal to a monthly charge of $4.36 for the average residential gas customer.
