Customer base up at power distributor
Battered by the oil downturn and a mild winter, Houston’s CenterPoint Energy made a comeback in 2016, when the electricity and natural gas distribution company reported an income of $432 million, compared with a loss of $692 million in 2015.
CenterPoint’s earnings per share more than tripled in value in 2016, a move that puts the company at No. 7 on the Houston Chronicle’s 2017 list of top-performing companies. CenterPoint is a monopoly electricity and natural gas distributor for Houston and the Gulf Coast. The company employs nearly 8,000 people, more than 5,100 of whom are in Houston.
“We had a strong year in 2016, marked by a dividend increase, growth in earnings and customers, and acquisitions,” said Scott Prochazka, CenterPoint’s CEO. The company expects to invest $1.5 billion in capital in its electric and natural gas utilities this year.
Last year, CenterPoint acquired two retail energy companies — Continuum Retail Energy Services, in Houston, and Atmos Energy Marketing, a former subsidiary of Dallas-based Atmos Energy.
An increased customer base and rate hikes in 2016 helped drive up CenterPoint’s earnings last year and offset 2015 losses tied to struggles with the company’s stake in Enable Midstream Partners, an Oklahoma pipeline company. At the start of last year, facing a several hundred million dollar loss driven by Enable’s plunging stock price, CenterPoint announced plans to sell off its majority stake in the pipeline company and a tentative plan to convert its utility businesses into a real estate investment trust.
But CenterPoint ultimately scrapped that financial model, an unusual one in the energy sector, and rejected an offer from its Oklahoma-based partner, OGE Energy, to acquire its stake in Enable. Instead, the company has relied on rate increases for its gas and electricity customers and a broadening customer base to bring in profits.
The company has steadily raised its gas and electric utility rates over the past several years. Most recently, regulators approved in early 2017 a $1.23 gas utility rate hike for Houston customers. In April, CenterPoint announced it was seeking an electricity rate increase to recoup nearly $480 million it spent on its distribution in 2016. The rate increase would add at least 80 cents for 1,000 kilowatt-hours used a month and must be approved by the Public Utility Commission.
CenterPoint started 2017 strong with a firstquarter profit of $192 million, or 44 cents per share, compared with a profit of $154 million, or 36 cents per share, over the same period last year.