More customers and higher rates give power distributor a lift
CENTERPOINT Energy, the electricity and natural gas distribution company, saw its revenue and profit climb in 2017, thanks to higher utility rates, more customers and a one-time boost from the federal tax overhaul that dramatically lowered corporate tax rates.
The company reported a profit of $1.8 billion in 2017 —including a onetime gain of $1.1 billion in federal tax savings — compared with $432 million it earned the previous year.
CenterPoint’s earnings per share grew by more than 300 percent in 2017, a financial performance that put the Houston utility at No. 7 on the Houston Chronicle’s 2018 list of top-performing companies. CenterPoint has nearly 8,000 employees, including more than 5,000 in Houston.
Excluding the tax cuts, CenterPoint’s profit was 18 percent higher in 2017 than the year before, the company said. Higher rates brought in an additional $90 million, and CenterPoint added 71,000 utility customers last year. About 41,000 are electric customers in Texas and 30,000 are natural gas customers in six states.
CenterPoint is expanding in another area — the non-regulated natural gas market. In that competitive marketplace, CenterPoint has 100,000 natural gas customers in 32 states, including the customer base of Atmos Energy Marketing, a unit of Dallas-based Atmos Energy that CenterPoint bought last year.
Part of CenterPoint’s financial strategy centers on raising customer rates to recover its costs, according to financial reports to shareholders. Regulators approved a gas utility rate hike for Houston customers last year, raising the monthly bill about $1.23. CenterPoint said it needed the rate hike to help recover $16.5 million it spent on operating and maintaining its distribution system.
On the electricity side, CenterPoint is asking Texas regulators to approve $82.6 million in rate increases to cover the costs of taking on new electricity customers, paying for restoration projects from Hurricane Harvey and building new substations.
The rate increase would boost the monthly bill of customers using 1,000 kilowatt-hours by 87 cents and, if approved, go into effect in September.
CenterPoint is also raising the base rate customers pay for natural gas by about 70 cents a month —a 4.6 percent increase — to recover $144 million it invested in the Houston area.
The rate increase is nearly twice the U.S. inflation rate of 2.5 percent and is scheduled to go into effect for most customers in July.