Struggling pipeline spinoff hurts CenterPoint’s results
CenterPoint Energy reported a net loss of $391 million for the third quarter, dragged down by its master limited partnership, Enable Midstream Partners.
CenterPoint’s loss compares with a $143 million net gain during the same period last year. Minus a $537 million loss from its MLP pipeline spinoff, the Houston energy transmission company said it would have made a $146 million net gain for the quarter, up slightly from last year.
CenterPoint said its electric transmission and natural gas distribution business segments both took in small operating gains compared with last year.
“We continue to pursue steady earnings growth as we serve the needs of our growing customer base,” CenterPoint president and CEO, Scott Prochazka, said in a statement.
During the earnings call, a CenterPoint executive vice president, Tracy Bridges, said the company built its electricity transmission customer base in Houston by 2 percent for the quarter, despite the struggling energy sector that has led to job losses in the region.
“The Houston economy remains resilient and strong,” Bridges said. “We’re pleased with Houston’s growth prospects.”
But the company’s Enable losses stood out, as the pipeline MLP sector struggles. CenterPoint and subsidiary CenterPoint Energy Resources Corp. took a combined $537 million after-tax impairment charge for the quarter because of Enable’s value decreasing beyond projections. MLPs are publicly traded entities that do not pay corporate income taxes and are required to distribute most of their income to investors called unit holders in payments similar to stock dividends.
Enable’s shrinking stock value decreased the value of CenterPoint’s investment in Enable from $4.5 billion to $3.6 billion.
Enable was created as joint venture by affiliates of CenterPoint, Oklahoma-based power company OGE Energy Corp. and private equity shop ArcLight Capital Partners in May 2013. It went public in 2014, and its parent company is controlled by CenterPoint and OGE.