HOUSTON, April 1, 2020 /PRNewswire/ -- CenterPoint Energy,
Inc. (NYSE: CNP) today announced a series of measures to strengthen
its financial position and provide multi-year flexibility as to
equity issuances. In a separate news release issued earlier today,
Enable Midstream Partners, LP (Enable) announced a 50% distribution
reduction for common units, representing limited partner interests
in Enable. Given CenterPoint Energy's 53.7% ownership of the
outstanding common units of Enable, this decrease is expected to
reduce distributions to CenterPoint Energy by approximately
$155 million per year on an
annualized basis.
To adjust for this reduction in cash flow and strengthen
CenterPoint Energy's financial position, the company expects to
take the following measures intended to maintain solid investment
grade credit quality:
- A targeted reduction in the company's quarterly common stock
dividend from $0.2900 per share to
$0.1500 per share, targeting a 50% -
55% utility earnings payout ratio;
- An approximately $40 million
target reduction in 2020 operation and maintenance (O&M)
expenses, excluding certain merger costs, utility costs to achieve,
severance and amounts with revenue offsets; previous plans
indicated the company's intent to hold 2020 O&M flat to 2019
levels; and
- An approximately $300 million
reduction in 2020 capital spending from $2.6
billion to $2.3 billion; the
company will continue to target five-year total capital investment
of approximately $13 billion as
previously disclosed.
With the above three steps and the increased earnings
contribution from utilities, the company expects that its financial
position will be strengthened and its credit quality improved,
which will also provide multi-year flexibility as to the timing and
total amount of equity issuances. The company will evaluate market
and economic conditions, including the potential impacts of
COVID-19, and will remain opportunistic as it assesses equity
needs.
"In light of Enable's recent distribution decrease, this
reduction in CenterPoint Energy's common stock dividend strengthens
CenterPoint Energy's business risk profile by significantly
reducing the company's reliance upon cash distributions from
Enable," said John W. Somerhalder
II, interim president and CEO. "We anticipate utility
earnings contribution will approach 90% for 2020 and increase to
nearly 100% over the next few years. The net result of today's
actions supports CenterPoint Energy's firm commitment to
maintaining investment grade credit quality and our continued
strategic focus on growing utility earnings contribution."
A Focus on Safety and Reliability during
COVID-19
CenterPoint Energy continues to be committed to
providing its customers with safe and reliable service during the
current COVID-19 situation. During this challenging time,
CenterPoint Energy is committed to serving its customers and
keeping them informed as the situation continues to evolve.
"We are committed to the safety and well-being of our customers,
employees, contractors and communities," Somerhalder said.
"CenterPoint Energy has implemented its Pandemic Preparedness Plan
and we continue to monitor updates and follow protocols from the
Centers for Disease Control and Prevention (CDC), World Health
Organization (WHO) and state and local officials. We are also
working closely with all regulatory agencies, government entities
and emergency management organizations across our service
territory."
Texas Regulators Support Efforts to Avoid Customer
Disconnections
Following Houston Electric's two-week
voluntary suspension of disconnecting customers who have not paid
their bill to their retail electric provider during COVID-19, and
following collaboration with the Public Utility Commission of
Texas (PUCT) and other market
participants, on March 26, 2020, the
PUCT approved a balanced solution to minimize residential
disconnections. The costs associated with that program will be
recovered by Houston Electric in a surcharge that went into effect
this week. The PUCT also issued an accounting order allowing
Houston Electric to defer for recovery in a future proceeding its
other incremental costs associated with COVID-19. The PUCT
was one of the first utility regulators in the country to take this
COVID-19 recovery action.
Q1 2020 Earnings Call
CenterPoint Energy continues to
analyze the impact of recent events related to COVID-19 and may
experience some reduction in electric and natural gas demand, as
well as increased bad debt expense. While CenterPoint Energy
is assessing the business impact of COVID-19 and
current market and economic conditions, the company is unaware at
this time of any other extraordinary factors currently having a
material effect on business performance and continues to be
confident in its liquidity position. CenterPoint Energy will
release first quarter 2020 results on May 7,
2020, and will address pandemic impacts, capital
expenditures, O&M reductions and 2020 guidance.
Forward Looking Statement
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 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 the impact of COVID-19, including with respect to
regulatory actions, future financial performance and earnings
guidance, utility earnings contribution and targeted utility
earnings payout ratio, anticipated dividend rate reductions, equity
issuances, estimated cash flows decreases, reductions in
distributions from Enable with respect to CenterPoint Energy's
holdings of Enable common units, capital spending, O&M
expenses, expected business risk profile, and future events that
are not historical facts are forward-looking statements.
Risks Related to CenterPoint Energy
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
performance of Enable Midstream Partners, LP (Enable), the amount
of cash distributions CenterPoint Energy receives from Enable,
Enable's ability to redeem the Enable Series A Preferred Units in
certain circumstances and the value of CenterPoint Energy's
interest in Enable, and factors that may have a material impact on
such performance, cash distributions and value, including factors
such as: (A) competitive conditions in the midstream industry, and
actions taken by Enable's customers and competitors, including
drilling, production and capital spending decisions of third
parties and the extent and timing of the entry of additional
competition in the markets served by Enable; (B) the timing and
extent of changes in the supply of natural gas and associated
commodity prices, particularly prices of natural gas and natural
gas liquids (NGLs), the competitive effects of the available
pipeline capacity in the regions served by Enable, and the effects
of geographic and seasonal commodity price differentials, including
the effects of these circumstances on re-contracting available
capacity on Enable's interstate pipelines; (C) economic effects of
the recent actions of Saudi Arabia and Russia which have resulted
in a substantial decrease in oil and natural gas prices and the
combined impact of these events and COVID-19 on commodity prices;
(D) the demand for crude oil, natural gas, NGLs and transportation
and storage services; (E) environmental and other governmental
regulations, including the availability of drilling permits and the
regulation of hydraulic fracturing; (F) recording of goodwill,
long-lived asset or other than temporary impairment charges by or
related to Enable; (G) the timing of payments from Enable's
customers under existing contracts, including minimum volume
commitment payments; (H) changes in tax status; and (I) access to
debt and equity capital; (2) CenterPoint Energy's expected benefits
of the merger with Vectren Corporation (Vectren) and integration,
including the outcome of shareholder litigation filed against
Vectren that could reduce anticipated benefits of the merger, as
well as the ability to successfully integrate the Vectren
businesses and to realize anticipated benefits and commercial
opportunities; (3) industrial, commercial and residential growth in
CenterPoint Energy's service territories and changes in market
demand, including the demand for CenterPoint Energy's non-utility
products and services and effects of energy efficiency measures and
demographic patterns; (4) risks relating to the COVID-19 pandemic
and its effect on CenterPoint Energy, its industry and the
communities it serves, U.S. and world financial markets, potential
regulatory actions, changes in customer and stakeholder behaviors
and impacts on and modifications to CenterPoint Energy's and its
affiliates' operations, business and financial condition relating
thereto; (5) timely and appropriate rate actions that allow
recovery of costs and a reasonable return on investment; (6) future
economic conditions in regional and national markets and their
effect on sales, prices and costs; (7) weather variations and other
natural phenomena, including the impact of severe weather events on
operations and capital; (8) state and federal legislative and
regulatory actions or developments affecting various aspects of
CenterPoint Energy's and Enable's businesses, including, among
others, energy deregulation or re-regulation, pipeline integrity
and safety and changes in regulation and legislation pertaining to
trade, health care, finance and actions regarding the rates charged
by our regulated businesses; (9) tax legislation, including the
effects of the comprehensive tax reform legislation informally
referred to as the Tax Cuts and Jobs Act (which includes any
potential changes to interest deductibility) and uncertainties
involving state commissions' and local municipalities' regulatory
requirements and determinations regarding the treatment of excess
deferred income taxes and CenterPoint Energy's rates; (10)
CenterPoint Energy's ability to mitigate weather impacts through
normalization or rate mechanisms, and the effectiveness of such
mechanisms; (11) the timing and extent of changes in commodity
prices, particularly natural gas and coal, and the effects of
geographic and seasonal commodity price differentials; (12) the
ability of CenterPoint Energy's and CERC's non-utility business
operating in the Energy Services reportable segment to effectively
optimize opportunities related to natural gas price volatility and
storage activities, including weather-related impacts; (13) actions
by credit rating agencies, including any potential downgrades to
credit ratings; (14) changes in interest rates and their impact on
CenterPoint Energy's costs of borrowing and the valuation of its
pension benefit obligation; (15) problems with regulatory approval,
legislative actions, construction, implementation of necessary
technology or other issues with respect to major capital projects
that result in delays or cancellations or in cost overruns that
cannot be recouped in rates; (16) the availability and prices of
raw materials and services and changes in labor for current and
future construction projects; (17) local, state and federal
legislative and regulatory actions or developments relating to the
environment, including, among other things, those related to global
climate change, air emissions, carbon, waste water discharges and
the handling and disposal of coal combustion residuals (CCR) that
could impact the continued operation, and/or cost recovery of
generation plant costs and related assets; (18) the impact of
unplanned facility outages or other closures; (19) any direct or
indirect effects on CenterPoint Energy's or Enable's facilities,
operations and financial condition resulting from terrorism,
cyber-attacks, data security breaches or other attempts to disrupt
CenterPoint Energy's businesses or the businesses of third parties,
or other catastrophic events such as fires, ice, earthquakes,
explosions, leaks, floods, droughts, hurricanes, tornadoes,
pandemic health events or other occurrences; (20) CenterPoint
Energy's ability to invest planned capital and the timely recovery
of CenterPoint Energy's existing and future investments, including
those related to Indiana Electric's anticipated Integrated Resource
Plan; (21) CenterPoint Energy's ability to successfully construct
and operate electric generating facilities, including complying
with applicable environmental standards and the implementation of a
well-balanced energy and resource mix, as appropriate; (22)
CenterPoint Energy's ability to control operation and maintenance
costs; (23) the sufficiency of CenterPoint Energy's insurance
coverage, including availability, cost, coverage and terms and
ability to recover claims; (24) the investment performance of
CenterPoint Energy's pension and postretirement benefit plans; (25)
commercial bank and financial market conditions, CenterPoint
Energy's access to capital, the cost of such capital, and the
results of CenterPoint Energy's financing and refinancing efforts,
including availability of funds in the debt capital markets; (26)
changes in rates of inflation; (27) inability of various
counterparties to meet their obligations to CenterPoint Energy;
(28) non-payment for CenterPoint Energy's services due to financial
distress of its customers; (29) the extent and effectiveness of
CenterPoint Energy's and Enable's risk management and hedging
activities, including but not limited to, financial and weather
hedges and commodity risk management activities; (30) timely and
appropriate regulatory actions, which include actions allowing
securitization, for any future hurricanes or natural disasters or
other recovery of costs, including costs associated with Hurricane
Harvey; (31) CenterPoint Energy's or Enable's potential business
strategies and strategic initiatives, including restructurings,
joint ventures and acquisitions or dispositions of assets or
businesses, including the proposed sales of Infrastructure Services
and CES, which CenterPoint Energy and Enable cannot assure will be
completed or will have the anticipated benefits to CenterPoint
Energy or Enable; (32) the recording of impairment charges,
including any impairment associated with Infrastructure Services
and CES; (33) the performance of projects undertaken by CenterPoint
Energy's non-utility businesses and the success of efforts to
realize value from, invest in and develop new opportunities and
other factors affecting those non-utility businesses, including,
but not limited to, the level of success in bidding contracts,
fluctuations in volume and mix of contracted work, mix of projects
received under blanket contracts, failure to properly estimate cost
to construct projects or unanticipated cost increases in completion
of the contracted work, changes in energy prices that affect demand
for construction services and projects and cancellation and/or
reductions in the scope of projects by customers and obligations
related to warranties and guarantees; (34) acquisition and merger
activities involving CenterPoint Energy or its competitors,
including the ability to successfully complete merger, acquisition
and divestiture plans; (35) CenterPoint Energy's or Enable's
ability to recruit, effectively transition and retain management
and key employees and maintain good labor relations; (36) the
outcome of litigation; (37) the ability of retail electric
providers (REPs), including REP affiliates of NRG Energy, Inc. and
Vistra Energy Corp., formerly known as TCEH Corp., to satisfy their
obligations to CenterPoint Energy and its subsidiaries; (38)
changes in technology, particularly with respect to efficient
battery storage or the emergence or growth of new, developing or
alternative sources of generation; (39) the impact of alternate
energy sources on the demand for natural gas; (40) the timing and
outcome of any audits, disputes and other proceedings related to
taxes; (41) the effective tax rates; (42) the transition to a
replacement for the LIBOR benchmark interest rate; (43) the effect
of changes in and application of accounting standards and
pronouncements; and (44) other factors discussed in CenterPoint
Energy's Annual Report on Form 10-K for the fiscal year ended
December 31, 2019 and other reports CenterPoint Energy or its
subsidiaries may file from time to time with the Securities and
Exchange Commission.
About CenterPoint Energy
Headquartered
in Houston, Texas, CenterPoint Energy, Inc. is an
energy delivery company with regulated utility businesses in eight
states and a competitive energy businesses footprint in nearly 40
states. Through its electric transmission & distribution, power
generation and natural gas distribution businesses, the company
serves more than 7 million metered customers in Arkansas, Indiana, Louisiana, Minnesota, Mississippi, Ohio, Oklahoma and Texas. CenterPoint Energy's competitive
energy businesses include natural gas marketing and energy-related
services; energy efficiency, sustainability and infrastructure
modernization solutions; and construction and repair services for
pipeline systems, primarily natural gas. The company also owns 53.7
percent of the common units representing limited partner interests
in Enable Midstream Partners, LP, a publicly traded master
limited partnership that owns, operates and develops strategically
located natural gas and crude oil infrastructure assets. With
approximately 14,000 employees and nearly $35 billion in
assets, CenterPoint Energy and its predecessor companies
have been in business for more than 150 years. For more
information, visit CenterPointEnergy.com.
For more information contact
Media:
Alicia Dixon
Phone:
713.825.9107
Investors:
David Mordy
Phone: 713.207.6500
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SOURCE CenterPoint Energy, Inc.