8-KOther Events

CENTERPOINT ENERGY INC 8-K Report, Corporate Update (Apr 11, 2018)

Filed April 11, 2018For Securities:CNP

Summary

CenterPoint Energy Inc. (CNP), through its subsidiary Houston Electric, filed an application on April 4, 2018, with the Public Utility Commission of Texas (PUCT) and local municipalities to amend its Distribution Cost Recovery Factor (DCRF). This filing seeks to adjust customer rates to reflect new distribution capital investments made in 2017. The proposed change would result in an approximate $83 million revenue requirement starting September 1, 2018, an increase from the currently effective $58 million DCRF charges. The proposed $83 million revenue requirement reflects approximately $503.6 million in eligible distribution capital invested in 2017. Importantly, this amount includes a significant reduction of approximately $39 million to account for the benefit of the federal corporate tax rate reduction from 35% to 21%. While the proposed revenue requirement is $7 million less than what would have automatically gone into effect under the previous order, it represents a substantial increase compared to current customer charges.

Key Highlights

  • 1Houston Electric filed an application to amend its Distribution Cost Recovery Factor (DCRF) with the PUCT and municipalities.
  • 2The DCRF is an interim rate adjustment mechanism to recover new distribution capital investments.
  • 3The company is seeking an approximate $83 million revenue requirement for the DCRF starting September 1, 2018.
  • 4This proposed revenue requirement is intended to recover approximately $503.6 million in eligible distribution capital invested in 2017.
  • 5The proposed DCRF is approximately $7 million lower than the amount that would have automatically taken effect without this new application.
  • 6The proposed revenue requirement reflects a $39 million benefit from the reduction in the corporate tax rate from 35% to 21%.
  • 7The application is subject to final approval by the PUCT.

Frequently Asked Questions

The primary purpose of this filing is for Houston Electric to apply for an amendment to its Distribution Cost Recovery Factor (DCRF) with the Public Utility Commission of Texas (PUCT) and local municipalities. This mechanism allows the company to adjust customer rates to recover new investments made in its distribution infrastructure.

If approved, the proposed DCRF would lead to an approximate $83 million revenue requirement starting September 1, 2018. This represents an increase from the currently effective DCRF charges, which resulted in about $58 million in revenue. The increase is intended to recover new capital investments, though it is partially offset by tax rate savings.

The corporate tax rate reduction from 35% to 21% is a significant factor in this application. It has resulted in an approximate $39 million reduction in the proposed revenue requirement, mitigating some of the impact of the new capital investments on customer rates.

Houston Electric is seeking to recover approximately $503.6 million in eligible distribution capital that was invested in 2017 through this DCRF application.