- Company plans to spread emergency Derecho response costs of
approximately $450 million across 15
years; Customer bill impact expected to be about $1 per month
- Financial method expected to save customers more than
$50 million in interest
charges
- Derecho storm caused more than an estimated $5 billion in damages across the Greater Houston area unrelated to CenterPoint
infrastructure
HOUSTON, Nov. 8, 2024
/PRNewswire/ -- As part of its commitment to keeping customer
bills more affordable, CenterPoint Energy today filed the first
phase of a securitization plan (a lower cost way of financing
recovery costs over a longer time period time) with the Public
Utility Commission of Texas (PUCT)
that would minimize the customer impact of the major May 2024 Derecho and late May storms, that
resulted in approximately $450
million in repair, equipment and emergency response costs
outside of CenterPoint's normal annual rates as set by the PUCT.
Using this method of financing is expected to save customers more
than $50 million in interest charges
over the 15-year period.
The May 16th Derecho
caused more than an estimated $5
billion in damages across the Greater Houston area not related to
CenterPoint's infrastructure. As reported by numerous media
outlets, the Derecho was a "once-in-a-generation wind event" and
included wind gusts over 100 miles per hour and multiple tornadoes
across the region, shattering thousands of downtown office windows,
destroying homes and businesses, knocking down thousands of power
poles, and impacting hundreds of miles of power lines and other
critical electric equipment across the Greater Houston area.
The fast-moving storm required CenterPoint to activate its
emergency operation plan and mobilize over 7,700 employees,
contractors, and mutual aid partners to assess damage, repair
downed equipment, and restore power.
"The Derecho that struck the Houston region in the spring was an
unprecedented and extreme weather event that caused billions in
damage to our communities and a significant portion of our
electrical infrastructure. This proposed cost recovery plan
reflects our commitment to minimize the impact on our customers'
electric bills while addressing the significant costs related to
mobilizing thousands of frontline workers to repair and rebuild the
damaged portions of the energy system and restore power for our
customers as safely and as quickly as possible," said Jason Ryan, CenterPoint Energy's Executive Vice
President, Regulatory Services and Government
Affairs.
Scope of CenterPoint Emergency Response
In response to
the Derecho, CenterPoint mobilized thousands of frontline crews and
critical resources and coordinated with government, community and
utility partners to address the significant damage to the
electrical system. As a result, CenterPoint restored power to more
than 80 percent of impacted customers within 72 hours. The scope of
the company's emergency response included:
- Mobilizing over 7,700 frontline electrical workers, contractors
and mutual aid resources from eight states to assess system damage
and repair equipment;
- Replacing more than 400 miles of primary electrical wires, more
than1,600 transformers, and approximately 1,600 power poles on its
distribution system;
- Deploying 13 emergency generation units to provide temporary
power to critical facilities including hospitals, cooling centers,
first responder sites, schools and senior centers;
- Establishing nine multi-city staging sites to efficiently
deploy crews and equipment for customer restoration efforts to
impacted areas of Greater Houston;
- Restoring power to approximately 340,000 impacted customers
within the first 24 hours; 550,000 within 48 hours; and 750,000
within 72 hours; and
- Restoring 98 percent of all CenterPoint customers within five
days of the Derecho.
CenterPoint Commitment to Customer Affordability:
Securitizing for Lower Cost Impact
CenterPoint's plan follows the standard electric sector industry
practice used in Texas and across
all Gulf Coast states for financing and recovering costs after
extreme weather and other one-time events. The company plans
to spread the costs over a period of up to 15 years to help
minimize the impact on customers using securitization, which is a
less expensive method to finance those costs. Securitization has
been used 10 times for large named storm-related events in the
previous 25 years in Texas. It was
also used by CenterPoint for the benefit of customers following
Hurricane Ike in 2008.
By securitizing the cost recovery following major storms,
hurricanes or other one-time events, CenterPoint is able spread
cost impacts over several years and at a lower cost when compared
to traditional financing, which results in a significantly lower
monthly impact to customers. CenterPoint's filing will include
costs associated with its emergency response for the May storm
events, which includes the mobilization of frontline workers,
repair and replacement of critical equipment, crew supplies, fuel
and other materials.
Today's filing does not include any costs associated with
CenterPoint's 2024 Hurricane Beryl response.
Estimated Monthly Customer Bill Impact
CenterPoint's filing seeks stakeholder and PUCT review of
approximately $450 million of storm
and emergency response-related costs. The next phase of the
recovery plan will propose to collect those costs over up to 15
years to minimize the impact on customers and is expected to
initially result in an average residential customer surcharge of
just over $1 per month starting in
the second half of 2025, and then dropping below a $1 per month in the second half of 2026. Both
today's filing and the next phase will undergo a thorough, open and
transparent review process at the PUCT with a final decision
expected in 2025.
About CenterPoint Energy
As the only investor-owned
electric and gas utility based in Texas, CenterPoint Energy, Inc. (NYSE: CNP) is
an energy delivery company with electric transmission and
distribution, power generation and natural gas distribution
operations that serve more than 7 million metered customers in
Indiana, Louisiana, Minnesota, Mississippi, Ohio and Texas. With approximately 9,000 employees,
CenterPoint Energy and its predecessor companies have been in
business for more than 150 years. For more information, visit
CenterPointEnergy.com.
Forward-looking Statements
This news release includes
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. When used in this news
release the words "anticipate," "believe," "continue," "could,"
"estimate," "expect," "forecast," "goal," "intend," "may,"
"objective," "plan," "potential," "predict," "projection,"
"should," "target," "will" or other similar words are intended to
identify forward-looking statements. These forward-looking
statements including statements regarding securitization, customer
bill impacts and timing of approvals, are based upon assumptions of
management which are believed to be reasonable at the time made and
are subject to significant risks and uncertainties. Actual events
and results may differ materially from those expressed or implied
by these forward-looking statements. Any statements in this news
release regarding future events that are not historical facts are
forward-looking statements. Each forward-looking statement
contained in this news release speaks only as of the date of this
release. Important factors that could cause actual results to
differ materially from those indicated by the provided
forward-looking information include risks and uncertainties
relating to: (1) the impact of pandemics, including the COVID-19
pandemic; (2) financial market conditions; (3) general economic
conditions; (4) the timing and impact of future regulatory and
legislative decisions; and (5) other factors, risks and
uncertainties discussed in CenterPoint Energy's Annual Report on
Form 10-K for the fiscal year ended December
31, 2023 and CenterPoint's Quarterly Reports on Form 10-Q
for the quarters ended March 31,
2024, June 30, 2024 and
September 30, 2024 and other reports
CenterPoint Energy or its subsidiaries may file from time to time
with the Securities and Exchange Commission.
For more information, contact
Communications
Media.Relations@CenterPointEnergy.com
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SOURCE CenterPoint Energy