Summary
CenterPoint Energy, Inc. (CNP) reported on October 14, 2011, that the Public Utility Commission of Texas (PUC) approved a final order in a "true-up remand proceeding." This order confirms that CenterPoint Energy Houston Electric, LLC (CenterPoint Houston), a subsidiary, is entitled to recover a significant "true-up balance" of $1.695 billion. This amount, once recovered, will not accrue further interest, and CenterPoint Houston will reimburse certain parties for their rate case expenses. The approval aligns with a stipulation agreed upon by CenterPoint Houston, the PUC staff, and intervenors, aiming to resolve long-standing disputes related to a 2004 true-up order.
Key Highlights
- 1CenterPoint Houston approved to recover a $1.695 billion "true-up balance" from the Texas PUC.
- 2The final order in the "true-up remand proceeding" resolves disputes stemming from a 2004 true-up order.
- 3No further interest will accrue on the $1.695 billion recoverable balance.
- 4CenterPoint Houston will reimburse certain parties for their rate case expenses.
- 5A "financing order" is being sought from the Texas PUC to authorize the issuance of transition bonds to securitize the recoverable true-up balance.
- 6CenterPoint Houston will bear the up-front costs associated with issuing these transition bonds.
- 7The timing and completion of any transition bond offering are subject to PUC actions, potential appeals, and market conditions.
Frequently Asked Questions
The "true-up balance" of $1.695 billion represents an amount that CenterPoint Houston is authorized to recover from its customers. This balance arose from prior regulatory proceedings and is significant because it provides a substantial recovery for the company, impacting its financial position and future revenue streams. The final approval from the Texas PUC confirms the company's right to this recovery.
CenterPoint Energy plans to recover this amount through the issuance of "transition bonds" by special purpose subsidiaries. These bonds will be used to securitize the recoverable true-up balance. The approval of a "financing order" from the Texas PUC is a necessary step before these bonds can be issued.
The actual completion of the transition bond offering is subject to several factors. These include further actions and approvals from the Texas Utility Commission (including the financing order itself), the possibility of appeals to the financing order, and prevailing market conditions at the time of the offering. The company also bears the initial costs of issuing these bonds.
The statement that no further interest will accrue means that the $1.695 billion is a fixed amount that CenterPoint Houston is entitled to recover. Any potential interest that might have accumulated on this balance moving forward will not be added, simplifying the final recovery amount and potentially influencing the structure and timing of the recovery mechanism.