CENTERPOINT ENERGY INC 10-K

Item 8. Financial Statements and Supplementary Data Index to Financial Statements CenterPoint Energy, Inc. and Subsidiaries Report of Independent Registered Public Accounting Firm 9 3 Statements of Consolidated Income 9 5 Statements of Consolidated Comprehensive Income 9 6 Consolidated Balance Sheets 9 7 Statements of Consolidated Cash Flows 9 9 Statements of Consolidated Changes in Equity 100 CenterPoint Energy Houston Electric, LLC and Subsidiaries Report of Independent Registered Public Accounting Firm 10 1 Statements of Consolidated Income 10 3 Statements of Consolidated Comprehensive Income 10 4 Consolidated Balance Sheets 10 5 Statements of Consolidated Cash Flows 10 7 Statements of Consolidated Changes in Equity 10 8 CenterPoint Energy Resources Corp. and Subsidiaries Report of Independent Registered Public Accounting Firm 10 9 Statements of Consolidated Income 1 1 1 Statements of Consolidated Comprehensive Income 1 1 2 Consolidated Balance Sheets 1 1 3 Statements of Consolidated Cash Flows 1 1 5 Statements of Consolidated Changes in Equity 1 1 6 91 Combined Notes to Consolidated Financial Statements (1) Background 1 1 7 (2) Summary of Significant Accounting Policies 11 8 (3) Property, Plant and Equipment 1 2 2 (4) Held for Sale and Divestitures 1 2 4 (5) Revenue Recognition 1 2 6 (6) Goodwill 12 9 (7) Regulatory Matters 1 31 (8) Stock-Based Incentive Compensation Plans and Employee Benefit Plans 1 3 7 (9) Fair Value Measurements 1 4 7 (10) Equity Securities and Indexed Debt Securities (ZENS) 14 9 (11) Equity 1 51 (12) Short-term Borrowings and Long-term Debt 1 5 4 (13) Income Taxes 1 60 (14) Commitments and Contingencies 1 6 4 (15) Earnings Per Share (CenterPoint Energy) 1 71 (16) Reportable Segments 1 7 2 (17) Supplemental Disclosure of Cash Flow and Balance Sheet 1 7 6 (18) Related Party Transactions (Houston electric and CERC) 1 7 7 (19) Leases 1 7 8 (20) Subsequent Events 1 81 92 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and the Board of Directors of CenterPoint Energy, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of CenterPoint Energy, Inc. and subsidiaries (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 20, 2025, expressed an unqualified opinion on the Company’s internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Impact of Rate Regulation on the Financial Statements — Refer to Note 7 to the financial statements Critical Audit Matter Description The Company is subject to rate regulation by regulators and commissions in various jurisdictions (collectively, the “Commissions”) that have jurisdiction with respect to the rates of electric and gas transmission and distribution companies in those jurisdictions. Management has determined its regulated operations meet the requirements under accounting principles generally accepted in the United States of America to prepare its financial statements applying the specialized rules to account for the effects of cost-based rate regulation. The impacts of accounting for the economics of rate regulation are pervasive to the financial statements and disclosures. The Company’s rates are subject to regulatory rate-setting processes by the Commissions. Rates are determined and approved in regulatory proceedings based on an analysis of the Company’s costs to provide utility service and a return on, and recovery of, the Company’s investment in the utility business. Regulatory decisions can have an impact on the recovery of costs, the rate of return earned on investment, and the timing and amount of assets to be recovered in rates. The Commissions’ regulation of rates is premised on the full recovery of prudently incurred costs and a reasonable rate of return on invested capital. Decisions 93 to be made by the Commissions in the future will impact the accounting for regulated operations, including decisions about the amount of allowable costs and return on invested capital included in rates and any refunds that may be required. While the Company has indicated it expects to recover costs from customers through regulated rates, there is a risk that the Commissions will not approve: (1) full recovery of the costs of providing utility service, or (2) full recovery of all amounts invested in the utility business and a reasonable return on that investment. We identified rate regulation as a critical audit matter due to the significant judgments made by management to support its assertions about certain affected account balances and disclosures and the high degree of subjectivity involved in assessing the impact of regulatory actions on the financial statements. Management’s judgments include assessing the likelihood of (1) recovery in future rates of incurred costs, (2) a disallowance of capital investments made by the Company and (3) refunds to customers. Given that certain of management’s accounting judgments are based on assumptions about the outcome of decisions by the Commissions, auditing these judgments required specialized knowledge of accounting for rate regulation and the rate setting process. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the potential uncertainty of decisions by the Commissions included the following, among others: • We evaluated the Company’s disclosures related to the effects of rate regulation by testing certain recorded balances and evaluating regulatory developments. • We read relevant regulatory orders issued by the Commissions, regulatory statutes, filings made by the Company and intervenors, and other external information. We evaluated relevant external information and compared it to certain recorded regulatory asset and liability balances for completeness. • For certain regulatory matters, we inspected the Company’s filings with the Commissions and the filings with the Commissions by intervenors to assess the likelihood of recovery in future rates or of a future reduction in rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. /s/ DELOITTE & TOUCHE LLP Houston, Texas February 20, 2025 We have served as the Company's auditor since 1932. 94 CENTERPOINT ENERGY, INC. AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED INCOME Year Ended December 31, 2024 2023 2022 (in millions, except per share amounts) Revenues: Utility revenues $ 8,589 $ 8,524 $ 9,018 Non-utility revenues 54 172 303 Total 8,643 8,696 9,321 Expenses: Utility natural gas, fuel and purchased power 1,715 2,061 2,887 Non-utility cost of revenues, including natural gas 3 99 204 Operation and maintenance 2,949 2,850 2,833 Depreciation and amortization 1,439 1,401 1,288 Taxes other than income taxes 547 525 543 Total 6,653 6,936 7,755 Operating Income 1,990 1,760 1,566 Other Income (Expense): Gain (loss) on equity securities 20 31 ( 227 ) Gain (loss) on indexed debt securities ( 14 ) ( 27 ) 325 Gain (loss) on sale — ( 13 ) 303 Interest expense and other finance charges ( 818 ) ( 684 ) ( 511 ) Interest expense on Securitization Bonds ( 20 ) ( 17 ) ( 13 ) Other income (expense), net 56 37 ( 26 ) Total ( 776 ) ( 673 ) ( 149 ) Income Before Income Taxes 1,214 1,087 1,417 Income tax expense 195 170 360 Net Income 1,019 917 1,057 Income allocated to preferred shareholders — 50 49 Income Available to Common Shareholders $ 1,019 $ 867 $ 1,008 Basic Earnings Per Common Share $ 1.58 $ 1.37 $ 1.60 Diluted Earnings Per Common Share $ 1.58 $ 1.37 $ 1.59 Weighted Average Common Shares Outstanding, Basic 643 631 629 Weighted Average Common Shares Outstanding, Diluted 644 633 632 See Combined Notes to Consolidated Financial Statements 95 CENTERPOINT ENERGY, INC. AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME Year Ended December 31, 2024 2023 2022 (in millions) Net income $ 1,019 $ 917 $ 1,057 Other comprehensive income (loss): Adjustment to pension and other postemployment plans (net of tax expense (benefit) of $ 4 , ($ 1 ) and $ 2 , respectively) 15 ( 5 ) 32 Net deferred gain from cash flow hedges (net of tax of $- 0 -, $- 0 - and $- 0 -) 4 1 — Reclassification of deferred (gain) loss from cash flow hedges realized in net income (net of tax of $- 0 -, $- 0 - and $- 0 -) ( 1 ) — 1 Total 18 ( 4 ) 33 Comprehensive income 1,037 913 $ 1,090 Income allocated to preferred shareholders — 50 49 Comprehensive income available to common shareholders $ 1,037 $ 863 $ 1,041 See Combined Notes to Consolidated Financial Statements 96 CENTERPOINT ENERGY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, 2024 December 31, 2023 (in millions) ASSETS Current Assets: Cash and cash equivalents ($ 21 and $ 90 related to VIEs, respectively) $ 24 $ 90 Investment in equity securities 561 541 Accounts receivable ($ 2 and $ 21 related to VIEs, respectively), less allowance for credit losses of $ 28 and $ 27 , respectively 717 710 Accrued unbilled revenues ($ 2 and $ 2 related to VIEs, respectively), less allowance for credit losses of $ 2 and $ 2 , respectively 521 516 Natural gas and coal inventory 173 197 Materials and supplies 541 573 Taxes receivable 121 94 Current assets held for sale 1,361 — Regulatory assets 239 161 Prepaid expenses and other current assets ($ 2 and $ 15 related to VIEs, respectively) 123 145 Total current assets 4,381 3,027 Property, Plant and Equipment, Net: Property, plant and equipment 42,667 40,396 Less: accumulated depreciation and amortization 10,578 10,543 Property, plant and equipment, net 32,089 29,853 Other Assets: Goodwill 3,943 4,160 Regulatory assets ($ 313 and $ 402 related to VIEs, respectively) 3,108 2,513 Other non-current assets 247 162 Total other assets 7,298 6,835 Total Assets $ 43,768 $ 39,715 See Combined Notes to Consolidated Financial Statements 97 CENTERPOINT ENERGY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS - (continued) December 31, 2024 December 31, 2023 (in millions, except par value and shares) LIABILITIES AND SHAREHOLDERS’ EQUITY Current Liabilities: Short-term borrowings $ 500 $ 4 Current portion of VIE Securitization Bonds long-term debt 13 178 Indexed debt, net 2 5 Current portion of other long-term debt 51 872 Indexed debt securities derivative 619 605 Accounts payable 1,320 917 Taxes accrued 329 291 Interest accrued 274 236 Dividends accrued 143 126 Customer deposits 93 111 Current liabilities held for sale 176 — Other current liabilities 525 519 Total current liabilities 4,045 3,864 Other Liabilities: Deferred income taxes, net 4,389 4,079 Benefit obligations 550 572 Regulatory liabilities 2,999 3,208 Other non-current liabilities 722 766 Total other liabilities 8,660 8,625 Long-term Debt, net: VIE Securitization Bonds, net 308 320 Other long-term debt, net 20,089 17,239 Total long-term debt, net 20,397 17,559 Commitments and Contingencies (Note 14) Shareholders’ Equity: Common stock, $ 0.01 par value, 1,000,000,000 shares authorized, 651,727,276 shares and 631,225,829 shares outstanding, respectively 6 6 Additional paid-in capital 9,105 8,604 Retained earnings 1,572 1,092 Accumulated other comprehensive loss ( 17 ) ( 35 ) Total shareholders’ equity 10,666 9,667 Total Liabilities and Shareholders’ Equity $ 43,768 $ 39,715 See Combined Notes to Consolidated Financial Statements 98 CENTERPOINT ENERGY, INC. AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED CASH FLOWS Year Ended December 31, 2024 2023 2022 (in millions) Cash Flows from Operating Activities: Net income $ 1,019 $ 917 $ 1,057 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,439 1,401 1,288 Deferred income taxes 221 31 20 Loss (gain) on divestitures — 13 ( 303 ) Loss (gain) on equity securities ( 20 ) ( 31 ) 227 Loss (gain) on indexed debt securities 14 27 ( 325 ) Pension contributions ( 30 ) ( 32 ) ( 35 ) Changes in other assets and liabilities: Accounts receivable and unbilled revenues, net ( 84 ) 423 ( 461 ) Inventory 42 167 ( 259 ) Taxes receivable ( 27 ) ( 74 ) ( 19 ) Accounts payable 210 ( 302 ) 203 Current regulatory assets and liabilities ( 86 ) 1,152 67 Non-current regulatory assets and liabilities ( 644 ) ( 109 ) 167 Other current assets and liabilities 101 162 ( 5 ) Other non-current assets and liabilities ( 30 ) 72 109 Other operating activities, net 14 60 79 Net cash provided by operating activities 2,139 3,877 1,810 Cash Flows from Investing Activities: Capital expenditures ( 4,513 ) ( 4,401 ) ( 4,419 ) Proceeds from sale of equity securities, net of transaction costs — — 702 Proceeds from divestitures — 144 2,075 Other investing activities, net 24 24 14 Net cash used in investing activities ( 4,489 ) ( 4,233 ) ( 1,628 ) Cash Flows from Financing Activities: Increase (decrease) in short-term borrowings, net ( 4 ) ( 10 ) 452 Payment of obligation for finance lease — — ( 485 ) Payments of commercial paper, net ( 539 ) ( 1,055 ) ( 74 ) Proceeds from long-term debt and term loans, net 3,955 6,044 2,089 Payments of long-term debt and term loans, including make-whole premiums ( 1,050 ) ( 3,190 ) ( 1,795 ) Payment of debt issuance costs ( 35 ) ( 55 ) ( 36 ) Payment of dividends on Common Stock ( 522 ) ( 485 ) ( 440 ) Payment of dividends on Preferred Stock — ( 50 ) ( 49 ) Proceeds from issuance of Common Stock, net 494 — — Redemption of Series A Preferred Stock — ( 800 ) — Other financing activities, net ( 28 ) ( 25 ) ( 7 ) Net cash provided by (used in) financing activities 2,271 374 ( 345 ) Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash ( 79 ) 18 ( 163 ) Cash, Cash Equivalents and Restricted Cash at Beginning of Period 109 91 254 Cash, Cash Equivalents and Restricted Cash at End of Period $ 30 $ 109 $ 91 See Combined Notes to Consolidated Financial Statements 99 CENTERPOINT ENERGY, INC. AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED CHANGES IN EQUITY 2024 2023 2022 Shares Amount Shares Amount Shares Amount (in millions of dollars and shares, except authorized shares and per share amounts) Cumulative Preferred Stock, $ 0.01 par value; authorized 20,000,000 shares Balance, beginning of year — $ — 1 $ 790 1 $ 790 Redemption of Series A Preferred Stock — — ( 1 ) ( 790 ) — — Balance, end of year — — — — 1 790 Common Stock, $ 0.01 par value; authorized 1,000,000,000 shares Balance, beginning of year 631 6 630 6 629 6 Issuances of Common Stock 19 — — — — — Issuances related to benefit and investment plans 2 — 1 — 1 — Balance, end of year 652 6 631 6 630 6 Additional Paid-in-Capital Balance, beginning of year 8,604 8,568 8,529 Issuances of Common Stock, net of issuance costs 494 — — Issuances related to benefit and investment plans 7 36 39 Balance, end of year 9,105 8,604 8,568 Retained Earnings Balance, beginning of year 1,092 709 154 Net income 1,019 917 1,057 Common Stock dividends declared (see Note 11) ( 539 ) ( 492 ) ( 453 ) Series A Preferred Stock dividends declared (see Note 11) — ( 42 ) ( 49 ) Balance, end of year 1,572 1,092 709 Accumulated Other Comprehensive Loss Balance, beginning of year ( 35 ) ( 31 ) ( 64 ) Other comprehensive income (loss) 18 ( 4 ) 33 Balance, end of year ( 17 ) ( 35 ) ( 31 ) Total Shareholders’ Equity $ 10,666 $ 9,667 $ 10,042 See Combined Notes to Consolidated Financial Statements 100 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Member of CenterPoint Energy Houston Electric, LLC Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of CenterPoint Energy Houston Electric, LLC and subsidiaries (an indirect wholly-owned subsidiary of CenterPoint Energy, Inc.) (the “Company”) as of December 31, 2024 and 2023, the related statements of consolidated income, comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Impact of Rate Regulation on the Financial Statements — Refer to Note 7 to the financial statements Critical Audit Matter Description The Company is subject to rate regulation by the Public Utility Commission of Texas (“PUCT”), which has jurisdiction with respect to the rates of electric transmission and distribution companies in Texas. Management has determined it meets the requirements under accounting principles generally accepted in the United States of America to prepare its financial statements applying the specialized rules to account for the effects of cost-based rate regulation. The impacts of accounting for the economics of rate regulation are pervasive to the financial statements and disclosures. The Company’s rates are subject to regulatory rate-setting processes by the PUCT. Rates are determined and approved in regulatory proceedings based on an analysis of the Company’s costs to provide utility service and a return on, and recovery of, the Company’s investment in the utility business. Regulatory decisions can have an impact on the recovery of costs, the rate of return earned on investment, and the timing and amount of assets to be recovered in rates. The PUCT’s regulation of rates is premised on the full recovery of prudently incurred costs and a reasonable rate of return on invested capital. Decisions to be made by the PUCT in the future will impact the accounting for regulated operations, including decisions about the amount of allowable costs and return on invested capital included in rates and any refunds that may be required. While the Company has 101 indicated it expects to recover costs from customers through regulated rates, there is a risk that the PUCT will not approve: (1) full recovery of the costs of providing utility service, or (2) full recovery of all amounts invested in the utility business and a reasonable return on that investment. We identified rate regulation as a critical audit matter due to the significant judgments made by management to support its assertions about certain affected account balances and disclosures and the high degree of subjectivity involved in assessing the impact of regulatory actions on the financial statements. Management’s judgments include assessing the likelihood of (1) recovery in future rates of incurred costs, (2) a disallowance of capital investments made by the Company, and (3) refunds to customers. Given that certain of management’s accounting judgments are based on assumptions about the outcome of decisions by the PUCT, auditing these judgments required specialized knowledge of accounting for rate regulation and the rate setting process. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the potential uncertainty of decisions by the PUCT included the following, among others: • We evaluated the Company’s disclosures related to the effects of rate regulation by testing certain recorded balances and evaluating regulatory developments. • We read relevant regulatory orders issued by the PUCT, regulatory statutes, filings made by the Company and intervenors, and other external information. We evaluated relevant external information and compared it to certain recorded regulatory asset and liability balances for completeness. • For certain regulatory matters, we inspected the Company’s filings with the PUCT and the filings with the PUCT by intervenors to assess the likelihood of recovery in future rates or of a future reduction in rates based on precedents of the PUCT’s treatment of similar costs under similar circumstances. /s/ DELOITTE & TOUCHE LLP Houston, Texas February 20, 2025 We have served as the Company's auditor since 1932. 102 CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC AND SUBSIDIARIES (AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.) STATEMENTS OF CONSOLIDATED INCOME Year Ended December 31, 2024 2023 2022 (in millions) Revenues $ 3,939 $ 3,677 $ 3,412 Expenses: Operation and maintenance 1,927 1,673 1,650 Depreciation and amortization 762 748 670 Taxes other than income taxes 295 262 261 Total 2,984 2,683 2,581 Operating Income 955 994 831 Other Income (Expense): Interest expense and other finance charges ( 311 ) ( 259 ) ( 202 ) Interest expense on Securitization Bonds ( 3 ) ( 8 ) ( 13 ) Other income, net 43 34 19 Total ( 271 ) ( 233 ) ( 196 ) Income Before Income Taxes 684 761 635 Income tax expense 138 168 125 Net Income $ 546 $ 593 $ 510 See Combined Notes to Consolidated Financial Statements 103 CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC AND SUBSIDIARIES (AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.) STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME Year Ended December 31, 2024 2023 2022 (in millions) Net income $ 546 $ 593 $ 510 Other comprehensive income: Adjustment to pension and other postretirement plans (net of tax of $- 0 -, $- 0 - and $- 0 -) ( 1 ) — — Total ( 1 ) — — Comprehensive income $ 545 $ 593 $ 510 See Combined Notes to Consolidated Financial Statements 104 CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC AND SUBSIDIARIES (AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.) CONSOLIDATED BALANCE SHEETS December 31, 2024 December 31, 2023 (in millions) ASSETS Current Assets: Cash and cash equivalents ($ 14 and $ 76 related to VIEs, respectively) $ 14 $ 76 Accounts and notes receivable, net ($ 0 and $ 19 related to VIEs, respectively), less allowance for credit losses of $ 2 and $ 1 , respectively 307 295 Accounts and notes receivable—affiliated companies 371 251 Accrued unbilled revenues 137 142 Materials and supplies 392 409 Taxes receivable — 38 Prepaid expenses and other current assets ($ 0 and $ 13 related to VIEs, respectively) 44 48 Total current assets 1,265 1,259 Property, Plant and Equipment, Net Property, plant and equipment 21,750 19,515 Less: accumulated depreciation and amortization 4,628 4,469 Property, plant and equipment, net 17,122 15,046 Other Assets: Regulatory assets ($ 0 and $ 74 related to VIEs, respectively) 1,284 752 Other non-current assets 41 29 Total other assets 1,325 781 Total Assets $ 19,712 $ 17,086 See Combined Notes to Consolidated Financial Statements 105 CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC AND SUBSIDIARIES (AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.) CONSOLIDATED BALANCE SHEETS – (continued) December 31, 2024 December 31, 2023 (in millions) LIABILITIES AND MEMBER’S EQUITY Current Liabilities: Short-term borrowings $ 500 $ — Current portion of VIE Securitization Bonds long-term debt — 161 Accounts payable 681 351 Accounts payable—affiliated companies 119 104 Taxes accrued 189 155 Interest accrued 108 99 Other current liabilities 144 111 Total current liabilities 1,741 981 Other Liabilities: Deferred income taxes, net 1,502 1,406 Benefit obligations 32 32 Regulatory liabilities 861 1,025 Other non-current liabilities 95 107 Total other liabilities 2,490 2,570 Long-Term Debt, net 8,322 7,426 Commitments and Contingencies (Note 14) Member’s Equity: Common stock — — Additional paid-in capital 5,589 4,745 Retained earnings 1,571 1,364 Accumulated other comprehensive loss ( 1 ) — Total member’s equity 7,159 6,109 Total Liabilities and Member’s Equity $ 19,712 $ 17,086 See Combined Notes to Consolidated Financial Statements 106 CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC AND SUBSIDIARIES (AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.) STATEMENTS OF CONSOLIDATED CASH FLOWS Year Ended December 31, 2024 2023 2022 (in millions) Cash Flows from Operating Activities: Net income $ 546 $ 593 $ 510 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 762 748 670 Deferred income taxes 61 160 86 Changes in other assets and liabilities: Accounts receivable and unbilled revenues, net ( 10 ) 16 ( 63 ) Accounts receivable/payable–affiliated companies 25 ( 1 ) 47 Inventory 17 62 ( 179 ) Accounts payable 89 ( 60 ) ( 7 ) Taxes receivable 38 ( 38 ) — Current regulatory assets and liabilities 2 6 ( 20 ) Non-current regulatory assets and liabilities ( 608 ) ( 136 ) ( 21 ) Other current assets and liabilities 43 28 ( 20 ) Other non-current assets and liabilities ( 8 ) 35 ( 25 ) Other operating activities, net 3 ( 12 ) ( 12 ) Net cash provided by operating activities 960 1,401 966 Cash Flows from Investing Activities: Capital expenditures ( 2,642 ) ( 2,279 ) ( 2,436 ) Increase in notes receivable–affiliated companies ( 130 ) ( 238 ) — Other investing activities, net 5 14 1 Net cash used in investing activities ( 2,767 ) ( 2,503 ) ( 2,435 ) Cash Flows from Financing Activities: Proceeds from long-term debt and term loan, net 1,397 1,398 1,589 Payments of long-term debt ( 161 ) ( 156 ) ( 720 ) Increase (decrease) in notes payable–affiliated companies — ( 642 ) 130 Payment of debt issuance costs ( 8 ) ( 13 ) ( 17 ) Contribution from parent 844 885 1,143 Dividend to parent ( 339 ) ( 367 ) ( 316 ) Payment of obligation for finance lease — — ( 485 ) Other financing activities, net ( 1 ) ( 2 ) — Net cash provided by financing activities 1,732 1,103 1,324 Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash ( 75 ) 1 ( 145 ) Cash, Cash Equivalents and Restricted Cash at Beginning of the Period 89 88 233 Cash, Cash Equivalents and Restricted Cash at End of the Period $ 14 $ 89 $ 88 See Combined Notes to Consolidated Financial Statements 107 CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC AND SUBSIDIARIES (AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.) STATEMENTS OF CONSOLIDATED CHANGES IN EQUITY 2024 2023 2022 Shares Amount Shares Amount Shares Amount (in millions, except share amounts) Common Stock Balance, beginning of year 1,000 $ — 1,000 $ — 1,000 $ — Balance, end of year 1,000 — 1,000 — 1,000 — Additional Paid-in-Capital Balance, beginning of year 4,745 3,860 2,678 Non-cash contribution from parent — — 38 Contribution from parent 844 885 1,143 Other — — 1 Balance, end of year 5,589 4,745 3,860 Retained Earnings Balance, beginning of year 1,364 1,138 944 Net income 546 593 510 Dividend to parent ( 339 ) ( 367 ) ( 316 ) Balance, end of year 1,571 1,364 1,138 Accumulated Other Comprehensive Loss Balance, beginning of year — — — Other comprehensive loss ( 1 ) — — Balance, end of year ( 1 ) — — Total Member’s Equity $ 7,159 $ 6,109 $ 4,998 See Combined Notes to Consolidated Financial Statements 108 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholder of CenterPoint Energy Resources Corp. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of CenterPoint Energy Resources Corp. and subsidiaries (an indirect wholly-owned subsidiary of CenterPoint Energy, Inc.) (the “Company”) as of December 31, 2024 and 2023, the related statements of consolidated income, comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Impact of Rate Regulation on the Financial Statements — Refer to Note 7 to the financial statements Critical Audit Matter Description The Company is subject to rate regulation by regulators and commissions in various jurisdictions (collectively, the “Commissions”) that have jurisdiction with respect to the rates of gas transmission and distribution companies in those jurisdictions. Management has determined its regulated operations meet the requirements under accounting principles generally accepted in the United States of America to prepare its financial statements applying the specialized rules to account for the effects of cost-based rate regulation. The impacts of accounting for the economics of rate regulation are pervasive to the financial statements and disclosures. The Company’s rates are subject to regulatory rate-setting processes by the Commissions. Rates are determined and approved in regulatory proceedings based on an analysis of the Company’s costs to provide utility service and a return on, and recovery of, the Company’s investment in the utility business. Regulatory decisions can have an impact on the recovery of costs, the rate of return earned on investment, and the timing and amount of assets to be recovered in rates. The Commissions’ regulation of rates is premised on the full recovery of prudently incurred costs and a reasonable rate of return on invested capital. Decisions to be made by the Commissions in the future will impact the accounting for regulated operations, including decisions about the 109 amount of allowable costs and return on invested capital included in rates and any refunds that may be required. While the Company has indicated it expects to recover costs from customers through regulated rates, there is a risk that the Commissions will not approve: (1) full recovery of the costs of providing utility service, or (2) full recovery of all amounts invested in the utility business and a reasonable return on that investment. We identified rate regulation as a critical audit matter due to the significant judgments made by management to support its assertions about certain affected account balances and disclosures and the high degree of subjectivity involved in assessing the impact of regulatory actions on the financial statements. Management’s judgments include assessing the likelihood of (1) recovery in future rates of incurred costs, (2) a disallowance of capital investments made by the Company and (3) refunds to customers. Given that certain of management’s accounting judgments are based on assumptions about the outcome of decisions by the Commissions, auditing these judgments required specialized knowledge of accounting for rate regulation and the rate setting process. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the potential uncertainty of decisions by the Commissions included the following, among others: • We evaluated the Company’s disclosures related to the effects of rate regulation by testing certain recorded balances and evaluating regulatory developments. • We read relevant regulatory orders issued by the Commissions, regulatory statutes, filings made by the Company and intervenors, and other external information. We evaluated relevant external information and compared it to certain recorded regulatory asset and liability balances for completeness. • For certain regulatory matters, we inspected the Company’s filings with the Commissions and the filings with the Commissions by intervenors to assess the likelihood of recovery in future rates or of a future reduction in rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. /s/ DELOITTE & TOUCHE LLP Houston, Texas February 20, 2025 We have served as the Company's auditor since 1997. 110 CENTERPOINT ENERGY RESOURCES CORP. AND SUBSIDIARIES (AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.) STATEMENTS OF CONSOLIDATED INCOME Year Ended December 31, 2024 2023 2022 (in millions) Revenues: Utility revenues $ 3,878 $ 4,107 $ 4,764 Non-utility revenues 47 42 36 Total 3,925 4,149 4,800 Expenses: Utility natural gas 1,489 1,856 2,607 Non-utility cost of revenues, including natural gas 3 3 4 Operation and maintenance 848 904 886 Depreciation and amortization 522 493 448 Taxes other than income taxes 234 243 257 Total 3,096 3,499 4,202 Operating Income 829 650 598 Other Income (Expense): Gain on sale — — 557 Interest expense and other finance charges ( 197 ) ( 178 ) ( 130 ) Other income (expense), net 12 14 ( 64 ) Total ( 185 ) ( 164 ) 363 Income Before Income Taxes 644 486 961 Income tax expense (benefit) 104 ( 26 ) 236 Net Income $ 540 $ 512 $ 725 See Combined Notes to Consolidated Financial Statements 111 CENTERPOINT ENERGY RESOURCES CORP. AND SUBSIDIARIES (AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.) STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME Year Ended December 31, 2024 2023 2022 (in millions) Net income $ 540 $ 512 $ 725 Other comprehensive income: Adjustment to pension and other postretirement plans (net of tax of $- 0 -, $- 0 - and $ 4 ) 1 — 6 Total 1 — 6 Comprehensive income $ 541 $ 512 $ 731 See Combined Notes to Consolidated Financial Statements 112 CENTERPOINT ENERGY RESOURCES CORP. AND SUBSIDIARIES (AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.) CONSOLIDATED BALANCE SHEETS December 31, 2024 December 31, 2023 (in millions) ASSETS Current Assets : Cash and cash equivalents $ 2 $ 1 Accounts receivable, less allowance for credit losses of $ 24 and $ 25 , respectively 349 356 Accrued unbilled revenue, less allowance for credit losses of $ 2 and $ 1 , respectively 338 329 Accounts and notes receivable — affiliated companies 6 43 Material and supplies 105 107 Natural gas inventory 137 156 Taxes receivable 46 101 Current assets held for sale 1,266 — Regulatory assets 238 161 Prepaid expenses and other current assets 50 55 Total current assets 2,537 1,309 Property, Plant and Equipment, Net: Property, plant and equipment 15,552 15,672 Less: accumulated depreciation and amortization 4,146 4,169 Property, plant and equipment, net 11,406 11,503 Other Assets: Goodwill 1,461 1,583 Regulatory assets 903 850 Other non-current assets 118 51 Total other assets 2,482 2,484 Total Assets $ 16,425 $ 15,296 See Combined Notes to Consolidated Financial Statements 113 CENTERPOINT ENERGY RESOURCES CORP. AND SUBSIDIARIES (AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.) CONSOLIDATED BALANCE SHEETS - (continued) December 31, 2024 December 31, 2023 (in millions) LIABILITIES AND STOCKHOLDER’S EQUITY Current Liabilities: Short-term borrowings $ — $ 4 Current portion of long-term debt 10 — Accounts payable 405 392 Accounts payable–affiliated companies 101 99 Taxes accrued 150 145 Interest accrued 82 70 Customer deposits 81 95 Current liabilities held for sale 176 — Other current liabilities 255 282 Total current liabilities 1,260 1,087 Other Liabilities: Deferred income taxes, net 1,370 1,246 Benefit obligations 63 74 Regulatory liabilities 1,887 1,882 Other non-current liabilities 403 458 Total other liabilities 3,723 3,660 Long-Term Debt, net 5,174 4,670 Commitments and Contingencies (Note 14) Stockholder’s Equity: Common stock — — Additional paid-in capital 4,519 4,229 Retained earnings 1,732 1,634 Accumulated other comprehensive income 17 16 Total stockholder’s equity 6,268 5,879 Total Liabilities and Stockholder’s Equity $ 16,425 $ 15,296 See Combined Notes to Consolidated Financial Statements 114 CENTERPOINT ENERGY RESOURCES CORP. AND SUBSIDIARIES (AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.) STATEMENTS OF CONSOLIDATED CASH FLOWS Year Ended December 31, 2024 2023 2022 (in millions) Cash Flows from Operating Activities: Net income $ 540 $ 512 $ 725 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 522 493 448 Deferred income taxes 55 ( 41 ) 178 Gain on divestitures — — ( 557 ) Changes in other assets and liabilities: Accounts receivable and unbilled revenues, net ( 73 ) 410 ( 376 ) Accounts receivable/payable–affiliated companies 38 ( 81 ) 41 Inventory 6 101 ( 50 ) Taxes receivable 55 ( 89 ) — Accounts payable 43 ( 250 ) 190 Current regulatory assets and liabilities ( 85 ) 1,098 112 Non-current regulatory assets and liabilities ( 31 ) 54 132 Other current assets and liabilities 24 85 13 Other non-current assets and liabilities ( 2 ) ( 1 ) ( 2 ) Other operating activities, net ( 24 ) 21 2 Net cash provided by operating activities 1,068 2,312 856 Cash Flows from Investing Activities: Capital expenditures ( 1,439 ) ( 1,619 ) ( 1,661 ) Decrease (increase) in notes receivable–affiliated companies 1 ( 1 ) — Proceeds from divestitures — — 2,075 Other investing activities, net 19 ( 23 ) ( 8 ) Net cash provided by (used in) investing activities ( 1,419 ) ( 1,643 ) 406 Cash Flows from Financing Activities: Increase (decrease) in short-term borrowings, net ( 4 ) ( 10 ) 452 Payments of commercial paper, net 115 ( 321 ) ( 94 ) Proceeds from long-term debt and term loans, net 399 2,006 927 Payments of long-term debt and term loans — ( 2,332 ) ( 475 ) Increase in notes payable-affiliated companies — — ( 1,517 ) Payments of debt issuance costs ( 3 ) ( 14 ) ( 14 ) Contribution from parent 290 500 289 Dividends to parent ( 442 ) ( 496 ) ( 844 ) Other financing activities, net ( 3 ) ( 1 ) ( 1 ) Net cash provided by (used in) financing activities 352 ( 668 ) ( 1,277 ) Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash 1 1 ( 15 ) Cash, Cash Equivalents and Restricted Cash at Beginning of Period 1 — 15 Cash, Cash Equivalents and Restricted Cash at End of Period $ 2 $ 1 $ — See Combined Notes to Consolidated Financial Statements 115 CENTERPOINT ENERGY RESOURCES CORP. AND SUBSIDIARIES (AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF CENTERPOINT ENERGY, INC.) STATEMENTS OF CONSOLIDATED CHANGES IN EQUITY 2024 2023 2022 Shares Amount Shares Amount Shares Amount (in millions, except share amounts) Common Stock Balance, beginning of year 1,000 $ — 1,000 $ — 1,000 $ — Balance, end of year 1,000 — 1,000 — 1,000 — Additional Paid-in-Capital Balance, beginning of year 4,229 3,729 4,106 Non-cash contribution from parent — — 54 Contribution from parent 290 500 289 Dividend to parent for sale of Arkansas and Oklahoma Natural Gas businesses — — ( 720 ) Balance, end of year 4,519 4,229 3,729 Retained Earnings Balance, beginning of year 1,634 1,618 1,017 Net income 540 512 725 Dividend to parent ( 442 ) ( 496 ) ( 124 ) Balance, end of year 1,732 1,634 1,618 Accumulated Other Comprehensive Income Balance, beginning of year 16 16 10 Other comprehensive income 1 — 6 Balance, end of year 17 16 16 Total Stockholder’s Equity $ 6,268 $ 5,879 $ 5,363 See Combined Notes to Consolidated Financial Statements 116 CENTERPOINT ENERGY, INC. AND SUBSIDIARIES CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC AND SUBSIDIARIES CENTERPOINT ENERGY RESOURCES CORP. AND SUBSIDIARIES COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) Background and Basis of Presentation General. This combined Form 10-K is filed separately by three registrants: CenterPoint Energy, Inc., CenterPoint Energy Houston Electric, LLC and CenterPoint Energy Resources Corp. Information contained herein relating to any individual registrant is filed by such registrant solely on its own behalf. Each registrant makes no representation as to information relating exclusively to the other registrants or the subsidiaries of CenterPoint Energy, Inc. other than itself or its subsidiaries. Except as discussed in Note 12, no registrant has an obligation in respect of any other registrant’s debt securities, and holders of such debt securities should not consider the financial resources or results of operations of any registrant other than the obligor in making a decision with respect to such securities. Basis of Presentation . Included in this combined Form 10-K are the consolidated financial statements of the Registrants. The Combined Notes to the Consolidated Financial Statements apply to all Registrants and specific references to Houston Electric and CERC herein also pertain to CenterPoint Energy, unless otherwise indicated. Additionally, certain amounts from prior years have been reclassified to conform to the current presentation. Background. CenterPoint Energy is a public utility holding company. CenterPoint Energy’s operating subsidiaries own and operate electric transmission, distribution and generation facilities and natural gas distribution systems. As of December 31, 2024, CenterPoint Energy’s operating subsidiaries were as follows: • Houston Electric owns and operates electric transmission and distribution facilities in the Texas Gulf Coast area that includes the city of Houston; • CERC Corp. (i) directly owns and operates natural gas distribution systems in Louisiana, Minnesota, Mississippi and Texas, (ii) indirectly, through Indiana Gas and CEOH, owns and operates natural gas distribution systems in Indiana and Ohio, respectively, and (iii) owns and operates permanent pipeline connections through interconnects with various interstate and intrastate pipeline companies through CEIP; and • SIGECO provides energy delivery services to electric and natural gas customers located in and near Evansville in southwestern Indiana and owns and operates electric generation assets to serve its electric customers and optimizes those assets in the wholesale power market. As of December 31, 2024, CenterPoint Energy’s reportable segments were Electric, Natural Gas, and Corporate and Other. Houston Electric and CERC each consist of a single reportable segment. For a description of CenterPoint Energy’s reportable segments, see Note 16. On June 30, 2023, CenterPoint Energy completed the sale of its indirect subsidiary, Energy Systems Group, to an unaffiliated third party. On February 19, 2024, CenterPoint Energy, through its subsidiary CERC Corp., entered into the LAMS Asset Purchase Agreement to sell its Louisiana and Mississippi natural gas LDC businesses. The transaction is expected to close in the first quarter of 2025. For additional information, see Note 4. Principles of Consolidation. The accompanying consolidated financial statements are prepared in conformity with GAAP. The accounts of the Registrants and their wholly-owned and majority-owned and controlled subsidiaries are included in the consolidated financial statements. All intercompany transactions and balances are eliminated in consolidation; however, intercompany profits have not been eliminated when such amounts are probable of recovery under the affiliates’ rate regulation process. 117 As of December 31, 2024, CenterPoint Energy, Houston Electric and SIGECO had VIEs including Bond Company IV and the SIGECO Securitization Subsidiary, which are consolidated. The consolidated VIEs are wholly-owned, bankruptcy-remote, special purpose entities that were formed solely for the purpose of securitizing transition property or facilitating the securitization financing of qualified costs. CenterPoint Energy, through SIGECO, has a controlling financial interest in the SIGECO Securitization Subsidiary and is the VIE’s primary beneficiary. For further information, see Note 7. Houston Electric has a controlling financial interest in Bond Company IV and is the VIE’s primary beneficiary. Creditors of CenterPoint Energy, Houston Electric and SIGECO have no recourse to any assets or revenues of Bond Company IV or the SIGECO Securitization Subsidiary, as applicable. The Securitization Bonds issued by these VIEs are payable only from and secured by transition or securitization property, as applicable, and the bondholders have no recourse to the general credit of CenterPoint Energy, Houston Electric or SIGECO. (2) Summary of Significant Accounting Policies (a) Use of Estimates The preparation of our consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. (b) Revenues The Registrants record revenue for electricity delivery and natural gas sales and services under the accrual method and these revenues are recognized upon delivery to customers. Electricity deliveries not billed by month-end are accrued based on actual AMS meter data, supply volumes, estimated line loss and applicable tariff rates. Natural gas sales not billed by month-end are accrued based upon estimated purchased gas volumes, estimated lost and unaccounted for gas and currently effective tariff rates. For further discussion, see Note 5. (c) MISO Transactions Indiana Electric is a member of the MISO. MISO-related purchase and sale transactions are recorded using settlement information provided by the MISO. These purchase and sale transactions are accounted for on at least a net hourly position, in which net purchases within that interval are recorded as Utility natural gas, fuel and purchased power and net sales within that interval are recorded as Utility revenues on CenterPoint Energy’s Statements of Consolidated Income. On occasion, prior period transactions are resettled outside the routine process due to a change in the MISO’s tariff or a material interpretation thereof. Expenses associated with resettlements are recorded once the resettlement is probable and the resettlement amount can be estimated. Revenues associated with resettlements are recognized when the amount is determinable and collectability is reasonably assured. (d) Environmental Costs The Registrants (i) expense or capitalize environmental expenditures, as appropriate, depending on their future economic benefit; (ii) expense amounts that relate to an existing condition caused by past operations that do not have future economic benefit; and (iii) record undiscounted liabilities related to these future costs when environmental assessments and/or remediation activities are probable and the costs can be reasonably estimated. (e) Cash and Cash Equivalents and Restricted Cash For purposes of reporting cash flows, the Registrants consider cash equivalents to be short-term, highly-liquid investments with maturities of three months or less from the date of purchase. Cash and cash equivalents held by the Bond Companies and the SIGECO Securitization Subsidiary (VIEs) solely to support servicing the Securitization Bonds as of December 31, 2024 and 2023 are reflected on CenterPoint Energy’s and Houston Electric’s Consolidated Balance Sheets. In connection with the issuance of Securitization Bonds, CenterPoint Energy and Houston Electric were required to establish restricted cash accounts to collateralize the bonds that were issued in these financing transactions. These restricted cash accounts are not available for withdrawal until the maturity of the bonds and are not included in cash and cash equivalents. For more information on restricted cash, see Note 17. 118 (f) Accounts Receivable and Allowance for Credit Losses Accounts receivable are recorded at the invoiced amount and do not bear interest. Management reviews historical write-offs, current available information and reasonable and supportable forecasts to estimate and establish allowance for credit losses. Account balances are charged off against the allowance when management determines it is probable that the receivable will not be recovered. See Note 7 for further information about regulatory deferrals of bad debt expense, including those related to COVID-19 and the February 2021 Winter Storm Event. (g) Inventory The Registrants’ inventory consists principally of materials and supplies, and for CERC, natural gas, and for CenterPoint Energy, coal inventory. Materials and supplies are valued at the lower of average cost or market, are recorded to inventory when purchased and subsequently charged to expense or capitalized to plant when installed. Inventory related to CenterPoint Energy’s regulated operations is valued at historical cost consistent with ratemaking treatment. Coal inventory is valued at average cost. Certain natural gas in storage at CenterPoint Energy’s and CERC’s utilities are recorded using the last in, first out (LIFO) method. CenterPoint Energy’s and CERC’s balances in inventory that were valued using LIFO method were as follows: Year Ended December 31, 2024 2023 (1) 2024 2023 (1) CenterPoint Energy CERC (in millions) LIFO inventory $ 94 $ 106 $ 73 $ 86 (1) Based on the average cost of gas purchased during December 2024, CenterPoint Energy’s cost of replacing inventories carried at LIFO cost was $ 1 million less than the carrying value at December 31, 2024. CERC’s cost of replacing inventories carried at LIFO cost was $ 4 million more than the carrying value at December 31, 2024. (h) Long-lived Assets The Registrants record property, plant and equipment at historical cost and expense repair and maintenance costs as incurred. The Registrants periodically evaluate long-lived assets, including property, plant and equipment, when events or changes in circumstances indicate that the carrying value of these assets may not be recoverable. For rate-regulated businesses, recoverability of long-lived assets is assessed by determining if a capital disallowance from a regulator is probable through monitoring the outcome of rate cases and other proceedings. For businesses that are not rate-regulated, recoverability is assessed based on an estimate of undiscounted cash flows attributable to the assets compared to the carrying value of the assets. No long-lived asset impairments were recorded in 2024, 2023 or 2022. The Registrants compute depreciation and amortization using the straight-line method based on economic lives or regulatory-mandated recovery periods. Amortization expense includes amortization of certain regulatory assets. (i) Goodwill CenterPoint Energy and CERC perform goodwill impairment tests at least annually and evaluate goodwill when events or changes in circumstances indicate that its carrying value may not be recoverable. Goodwill is evaluated for impairment by performing a qualitative assessment or using a quantitative test. If CenterPoint Energy or CERC chooses to perform a qualitative assessment and determine it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the quantitative test is then performed; otherwise, no further testing is required. The quantitative test, if required, is performed by comparing the fair value of each reporting unit with the carrying amount of the reporting unit, including goodwill. The estimated fair value of the reporting unit is primarily determined based on an income approach or a weighted combination of income and market approaches. When the carrying amount is in excess of the estimated fair value of the reporting unit, the excess amount is recorded as an impairment charge, not to exceed the carrying amount of goodwill. CenterPoint Energy includes deferred tax assets and liabilities within its reporting unit’s carrying value for the purposes of annual and interim impairment tests, regardless of whether the estimated fair value reflects the disposition of such assets and liabilities. For further information about the goodwill impairment tests, see Note 6. 119 (j) Regulatory Assets and Liabilities The Registrants apply the guidance for accounting for regulated operations within the Electric reportable segment and the Natural Gas reportable segment. The Registrants’ rate-regulated subsidiaries may collect revenues subject to refund pending final determination in rate proceedings. In connection with such revenues, estimated rate refund liabilities are recorded which reflect management’s current judgment of the ultimate outcomes of the proceedings. The Registrants’ rate-regulated businesses recognize removal costs as a component of depreciation expense in accordance with regulatory treatment. In addition, a portion of the amount of removal costs collected from customers that relate to AROs has been reflected as an asset retirement liability in accordance with accounting guidance for AROs. For further detail on the Registrants’ regulatory assets and liabilities, see Note 7. (k) Capitalization and Deferral of Interest, including AFUDC The Registrants capitalize interest and AFUDC as a component of projects under construction and amortize it over the assets’ estimated useful lives once the assets are placed in service. Additionally, the Registrants defer interest costs into a regulatory asset when amounts are probable of recovery. Deferred debt interest is amortized over the recovery period for rate-making purposes. AFUDC represents the composite interest cost of borrowed funds and a reasonable return on the equity funds used for construction for subsidiaries that apply the guidance for accounting for regulated operations. Although AFUDC increases both property, plant and equipment and earnings, it is realized in cash when the assets are included in rates. The table below includes interest capitalized or deferred for the periods presented: Year Ended December 31, 2024 2023 2022 CenterPoint Energy Houston Electric CERC CenterPoint Energy Houston Electric CERC CenterPoint Energy Houston Electric CERC (in millions) Capitalized interest and AFUDC debt (1) $ 33 $ 18 $ 8 $ 32 $ 18 $ 6 $ 26 $ 14 $ 7 AFUDC equity (2) 66 33 17 62 32 14 37 24 5 Deferred debt interest (3) 65 24 36 65 16 43 51 12 36 (1) Included in Interest expense and other finance charges on the Registrants’ respective Statements of Consolidated Income. (2) Included in Other income (expense), net on the Registrants’ respective Statements of Consolidated Income. (3) Represents the amount on certain regulatory assets that are authorized to earn a return, such as debt post in-service carrying costs on property, plant and equipment, gas costs, storm restoration costs, and TEEEF (including returns on both regulatory and lease assets) and is included in Interest expense and other finance charges on the Registrants’ respective Statements of Consolidated Income. (l) Leases An arrangement is determined to be a lease at inception based on whether the Registrant has the right to control the use of an identified asset. ROU assets represent the Registrants’ right to use the underlying asset for the lease term and lease liabilities represent the Registrants’ obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term, including payments at commencement that depend on an index or rate. Most leases in which the Registrants are the lessee do not have a readily determinable implicit rate, so an incremental borrowing rate, based on the information available at the lease commencement date, is utilized to determine the present value of lease payments. When a secured borrowing rate is not readily available, unsecured borrowing rates are adjusted for the effects of collateral to determine the incremental borrowing rate. Each Registrant uses the implicit rate for agreements in which it is a lessor. Lease income and expense for operating leases and ROU amortization for finance leases are recognized on a straight-line basis over the lease term. The Registrants have lease agreements with lease and non-lease components and have elected the practical expedient to combine lease and non-lease components for certain classes of leases, such as office buildings and temporary generation. For classes of leases in which lease and non-lease components are not combined, consideration is allocated between components based on the stand-alone prices. Sublease income is not significant to the Registrants. 120 The Registrants’ lease agreements do not contain any material residual value guarantees, material restrictions or material covenants. Except as described in Note 18, there are no lease transactions between related parties. Agreements in which the Registrants are lessors do not include provisions for the lessee to purchase the assets. Because risk is minimal, the Registrants do not take any significant actions to manage risk associated with the residual value of their leased assets. The Registrants’ operating lease agreements are primarily equipment and real property leases, including land and office facility leases. CenterPoint Energy and Houston Electric also have finance lease agreements for temporary generation. The Registrants’ lease terms may include options to extend or terminate a lease when it is reasonably certain that those options will be exercised. The Registrants have elected an accounting policy that exempts leases with terms of one year or less from the recognition requirements of ASC 842. (m) Income Taxes Houston Electric and CERC are included in CenterPoint Energy’s U.S. federal consolidated income tax return. Houston Electric and CERC report their income tax provision on a separate entity basis pursuant to a tax sharing policy with CenterPoint Energy. Current federal and certain state income taxes are payable to or receivable from CenterPoint Energy. The Registrants use the asset and liability method of accounting for deferred income taxes. Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. A valuation allowance is established against deferred tax assets for which management believes realization is not considered to be more likely than not. The Registrants recognize interest and penalties as a component of income tax expense (benefit), as applicable, in their respective Statements of Consolidated Income. To the extent certain EDIT of the Registrants’ rate-regulated subsidiaries may be recoverable or payable through future rates, regulatory assets and liabilities have been recorded, respectively. See Note 13 for further discussion. The Registrants use the portfolio approach to recognize income tax effects on other comprehensive income from accumulated other comprehensive income. Investment tax credits are deferred and amortized to income over the approximate lives of the related property. Production tax credits extended by the IRA may be used to reduce current federal income taxes payable. (n) Investments in Equity Securities (CenterPoint Energy) CenterPoint Energy reports equity securities at estimated fair value in the Consolidated Balance Sheets, and any gains and losses, net of any transaction costs, are recorded as Gain (loss) on equity securities in the Statements of Consolidated Income. (o) Assets Held for Sale Generally, a long-lived asset to be sold is classified as held for sale in the period in which management, with approval from the Board of Directors, as applicable, commits to a plan to sell, and a sale is expected to be completed within one year. The Registrants record assets and liabilities held for sale, or the disposal group, at the lower of their carrying value or their estimated fair value less cost to sell. If a disposal group reflects a component of a reporting unit and meets the definition of a business, the goodwill within that reporting unit is allocated to the disposal group based on the relative fair value of the components representing a business that will be retained and disposed. Goodwill is not allocated to a portion of a reporting unit that does not meet the definition of a business. As of December 31, 2024, certain assets and liabilities representing the Louisiana and Mississippi natural gas LDC businesses met the held for sale criteria. The sale will be considered an asset sale for tax purposes, requiring net deferred tax liabilities to be excluded from held for sale balances. For further discussion of the sale, see Note 4. Fair value is the amount at which an asset, liability or business could be bought or sold in a current transaction between willing parties and may be estimated using a number of techniques, including quoted market prices, present value techniques based on estimates of cash flows, or multiples of earnings or revenue performance measures. The fair value could be different if different estimates and assumptions in these valuation techniques were applied. 121 Fair value measurements require significant judgment and often unobservable inputs, including (i) projected timing and amount of future cash flows, which factor in planned growth initiatives, (ii) the regulatory environment, as applicable, and (iii) discount rates reflecting risk inherent in the future market prices. Changes in these assumptions could have a significant impact on the resulting fair value. (p) Preferred Stock and Dividends Preferred stock is evaluated to determine balance sheet classification, and all conversion and redemption features are evaluated for bifurcation treatment. Proceeds received net of issuance costs are recognized on the settlement date. Cash dividends become a liability once declared. Income available to common stockholders is computed by deducting from net income the dividends accumulated and earned during the period on cumulative preferred stock. (q) Recent Accounting Pronouncements On December 31, 2024, the Registrants adopted ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which updates segment disclosure requirements through enhanced disclosures around significant segment expenses. The Registrants applied the provision retrospectively to all periods presented for each Registrants’ reportable segment as further described. See Note 16 for further discussion of our segment reporting. In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income (Topic 220): Expense Disaggregation Disclosures (“ASU 2024-03”). This ASU improves disclosure of a public business entity’s expense by requiring disaggregated disclosure of expenses in commonly presented expense captions. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and for interim periods beginning after December 15, 2027. Early adoption is permitted. The Registrants are currently evaluating the impact of this ASU on their respective consolidated financial statements. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). This ASU enhances the transparency of income tax disclosures related to rate reconciliation and income taxes. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The Registrants are currently evaluating the impact of this ASU on their respective consolidated financial statements. Management believes that all other recently adopted and recently issued accounting standards that are not yet effective will not have a material impact on the Registrants’ financial position, results of operations or cash flows upon adoption. (3) Property, Plant and Equipment (a) Property, Plant and Equipment Property, plant and equipment includes the following: December 31, 2024 December 31, 2023 Weighted Average Useful Lives Property, Plant and Equipment, Gross Accumulated Depreciation & Amortization Property, Plant and Equipment, Net Property, Plant and Equipment, Gross Accumulated Depreciation & Amortization Property, Plant and Equipment, Net (in years) (in millions) CenterPoint Energy Electric transmission and distribution 37 $ 21,387 $ 4,810 $ 16,577 $ 19,151 $ 4,762 $ 14,389 Electric generation (1) 25 1,107 154 953 1,381 315 1,066 Natural gas distribution 32 16,399 4,326 12,073 16,492 4,337 12,155 Finance ROU asset (2) 7.5 662 232 430 662 136 526 Other property 22 3,112 1,056 2,056 2,710 993 1,717 Total $ 42,667 $ 10,578 $ 32,089 $ 40,396 $ 10,543 $ 29,853 122 December 31, 2024 December 31, 2023 Weighted Average Useful Lives Property, Plant and Equipment, Gross Accumulated Depreciation & Amortization Property, Plant and Equipment, Net Property, Plant and Equipment, Gross Accumulated Depreciation & Amortization Property, Plant and Equipment, Net (in years) (in millions) Houston Electric Electric transmission and distribution 37 $ 18,645 $ 3,647 $ 14,998 $ 16,800 $ 3,641 $ 13,159 Finance ROU asset (2) 7.5 662 232 430 662 136 526 Other property 20 2,443 749 1,694 2,053 692 1,361 Total $ 21,750 $ 4,628 $ 17,122 $ 19,515 $ 4,469 $ 15,046 CERC Natural gas distribution 32 $ 15,474 $ 4,118 $ 11,356 $ 15,591 $ 4,136 $ 11,455 Other property 11 78 28 50 81 33 48 Total $ 15,552 $ 4,146 $ 11,406 $ 15,672 $ 4,169 $ 11,503 (1) SIGECO and AGC owned a 300 MW unit at the Warrick Power Plant (Warrick Unit 4) as tenants in common as of December 31, 2023. SIGECO’s share of the cost of this unit as of December 31, 2023, was $ 198 million with accumulated depreciation totaling $ 171 million. Under the operating agreement, AGC and SIGECO shared equally in the cost of operation and output of the unit. SIGECO’s share of operating costs was included in Operation and maintenance expense in CenterPoint Energy’s Statements of Consolidated Income. SIGECO exited joint operations of Warrick Unit 4 on January 1, 2024. (2) Houston Electric recognized a finance ROU asset as of December 31, 2024 and December 31, 2023 related to temporary generation. See Note 19 for further discussion. (b) Depreciation and Amortization The following table presents depreciation and amortization expense for 2024, 2023 and 2022: Year Ended December 31, 2024 2023 2022 CenterPoint Energy Houston Electric CERC CenterPoint Energy Houston Electric CERC CenterPoint Energy Houston Electric CERC (in millions) Depreciation $ 1,177 $ 545 $ 492 $ 1,092 $ 484 $ 459 $ 1,013 $ 434 $ 420 Amortization of securitized regulatory assets 90 74 — 163 155 — 191 191 — Other amortization 172 143 30 146 109 34 84 45 28 Total $ 1,439 $ 762 $ 522 $ 1,401 $ 748 $ 493 $ 1,288 $ 670 $ 448 (c) AROs The Registrants account for an ARO at fair value in the period during which the legal obligation is incurred if a reasonable estimate of fair value and its settlement date can be made. At the timing of recording an ARO, the associated asset retirement costs are capitalized as part of the carrying amount of the related long-lived asset. The Registrants recognize a regulatory asset or liability for the timing differences between the recognition of expenses and costs recovered through the ratemaking process. The estimates of future liabilities are developed using a discounted cash flow model based upon estimates and assumptions of future costs, interest rates, credit-adjusted risk-free rates and the estimated timing of settlement. The Registrants have recorded AROs associated with the removal of asbestos and asbestos-containing material in its buildings, including substation building structures. CenterPoint Energy recorded AROs relating to the closure of the ash ponds at A.B. Brown and F.B. Culley as well as certain sites in Indiana pursuant to the CCR Legacy Rule; see Note 14(d) for further discussion. CenterPoint Energy and Houston Electric also recorded AROs relating to treated wood poles for electric distribution, distribution transformers containing PCB (also known as Polychlorinated Biphenyl), and underground fuel storage tanks. CenterPoint Energy and CERC also recorded AROs relating to gas pipelines abandoned in place. A reconciliation of the changes in the ARO liability recorded in Other non-current liabilities on each of the Registrants’ respective Consolidated Balance Sheets is as follows: 123 December 31, 2024 December 31, 2023 CenterPoint Energy Houston Electric CERC CenterPoint Energy Houston Electric CERC (in millions) Beginning balance $ 590 $ 40 $ 380 $ 610 $ 36 $ 420 Additions 11 — — — — — Accretion expense (1) 21 1 16 23 1 16 Revisions in estimates (2) ( 34 ) ( 2 ) ( 33 ) ( 43 ) 3 ( 56 ) Ending balance $ 588 $ 39 $ 363 $ 590 $ 40 $ 380 (1) Reflected in Regulatory assets on each of the Registrants’ respective Consolidated Balance Sheets. (2) In 2024 and 2023, CenterPoint Energy and CERC reflected a decrease in their respective ARO liability, which was primarily attributable to increases in the long-term interest rates used for discounting in the ARO calculation. In 2024, Houston Electric reflected a decrease in its ARO liability attributable to an increase in discount rates, while in 2023, Houston Electric reflected an increase in its ARO liability attributable to an increase in discount rates and disposal costs. (4) Held for Sale and Divestitures (CenterPoint Energy and CERC) Held for Sale. On February 19, 2024, CERC Corp. entered into the LAMS Asset Purchase Agreement, pursuant to which CERC Corp. agreed to sell its Louisiana and Mississippi natural gas LDC businesses. The purchase price for the Louisiana and Mississippi natural gas LDC businesses is $ 1.2 billion and subject to adjustment as set forth in the LAMS Asset Purchase Agreement, including adjustments based on net working capital, regulatory assets and liabilities and capital expenditures at closing. The completion of the proposed transaction is subject to customary closing conditions, including (i) the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (ii) approval of the LPSC, (iii) approval of the MPSC, (iv) no Material Adverse Effect (as defined in the LAMS Asset Purchase Agreement) having occurred and (v) customary closing conditions regarding the accuracy of the representations and warranties and compliance by the parties with the respective obligations under the LAMS Asset Purchase Agreement. The proposed transaction is not subject to a financing condition and is expected to close by the end of the first quarter of 2025, subject to satisfaction of the foregoing conditions. The businesses include approximately 12,000 miles of main pipeline in Louisiana and Mississippi serving more than 300,000 customers. The Louisiana and Mississippi natural gas LDC businesses are reflected in CenterPoint Energy’s Natural Gas reportable segment and CERC’s single reportable segment, as applicable. The transaction was approved by final orders issued by the MPSC on December 3, 2024 and the LPSC on December 17, 2024. In February 2024, certain assets and liabilities representing the Louisiana and Mississippi natural gas LDC businesses met the held for sale criteria. The sale will be considered an asset sale for tax purposes, requiring net deferred tax liabilities to be excluded from held for sale balances. The Registrants record assets and liabilities held for sale at the lower of their carrying value or their estimated fair value less cost to sell. Neither CenterPoint Energy nor CERC recognized any gains or losses upon classification of held for sale during the year ended December 31, 2024. If a disposal group reflects a component of a reporting unit and meets the definition of a business, the goodwill within that reporting unit is allocated to the disposal group based on the relative fair value of the components representing a business that will be retained and disposed. See Note 6 for further disclosure regarding the amount of goodwill allocated to the businesses to be sold. The assets and liabilities of the Louisiana and Mississippi natural gas LDC businesses classified as held for sale in CenterPoint Energy’s and CERC’s Condensed Consolidated Balance Sheets, as applicable, included the following: 124 December 31, 2024 CenterPoint Energy CERC (in millions) Accounts receivable, net $ 27 $ 27 Accrued unbilled revenues 26 26 Materials and supplies 13 13 Natural gas inventory 5 5 Property, plant and equipment, net 1,052 1,052 Goodwill 217 122 Regulatory assets 15 15 Other 6 6 Total current assets held for sale $ 1,361 $ 1,266 Short-term borrowings $ 3 $ 3 Accounts payable 44 44 Customer deposits 14 14 Regulatory liabilities 31 31 Other 84 84 Total current liabilities held for sale $ 176 $ 176 Although the Louisiana and Mississippi natural gas LDC businesses meet the held for sale criteria, their proposed disposals do not represent a strategic shift for CenterPoint Energy and CERC as both will retain significant operations in, and will continue to invest in, their natural gas businesses. Therefore, the assets and liabilities associated with these transactions are not reflected as discontinued operations on CenterPoint Energy’s and CERC’s Condensed Statements of Consolidated Income, as applicable, and the December 31, 2023 Condensed Consolidated Balance Sheets were not required to be recast for assets held for sale. Since the depreciation on the Louisiana and Mississippi natural gas LDC businesses assets will continue to be reflected in revenues through customer rates until the expected closing of the transaction and will be reflected in the carryover basis of the rate-regulated assets once sold, CenterPoint Energy and CERC will continue to record depreciation on those assets through the expected closing of the transaction. The pre-tax income for the Louisiana and Mississippi natural gas LDC businesses, excluding interest and corporate allocations, included in CenterPoint Energy’s and CERC’s Statements of Consolidated Income is as follows: Year Ended December 31, 2024 2023 2022 (in millions) Income Before Income Taxes $ 67 $ 44 $ 42 Divestiture of Energy Systems Group . On May 21, 2023, CenterPoint Energy, through its subsidiary Vectren Energy Services, entered into an Equity Purchase Agreement to sell all of the outstanding limited liability company interests of Energy Systems Group to ESG Holdings Group, for a purchase price of $ 157 million, subject to customary adjustments set forth in the Equity Purchase Agreement, including adjustments based on Energy Systems Group’s net working capital at closing, indebtedness, cash and cash equivalents and transaction expenses. The transaction closed on June 30, 2023, and CenterPoint Energy received $ 154 million in cash. In November 2024, CenterPoint Energy paid $ 2 million to ESG Holdings Group for working capital and other adjustments set forth in the Equity Purchase Agreement. For a discussion of CenterPoint Energy’s pre-disposition guarantees related to Energy Systems Group, see Note 14(c). CenterPoint Energy recognized a loss on sale of approximately $ 13 million, including $ 3 million of transaction costs, during the year ended December 31, 2023, in connection with the closing of the sale of Energy Systems Group. Additionally, CenterPoint Energy recognized a current tax expense of $ 32 million during the year ended December 31, 2023, as a result of the cash taxes payable upon the closing of the sale. 125 The pre-tax income (loss) for Energy Systems Group, excluding interest and corporate allocations, included in CenterPoint Energy’s Statements of Consolidated Income is as follows: Year Ended December 31, 2023 (1) 2022 (in millions) Income (Loss) Before Income Taxes $ ( 4 ) $ 2 (1) Reflects January 1, 2023 to June 30, 2023 results only due to of the sale of Energy Systems Group. Divestiture of Arkansas and Oklahoma Natural Gas Businesses (CenterPoint Energy and CERC). On April 29, 2021, CenterPoint Energy, through its subsidiary CERC Corp., entered into the AROK Asset Purchase Agreement to sell its Arkansas and Oklahoma Natural Gas businesses for $ 2.15 billion in cash, including recovery of approximately $ 425 million in natural gas costs, including storm-related incremental natural gas costs associated with the February 2021 Winter Storm Event, subject to certain adjustments set forth in the AROK Asset Purchase Agreement. The assets included approximately 17,000 miles of main pipeline in Arkansas, Oklahoma and certain portions of Bowie County, Texas serving more than half a million customers. The transaction closed on January 10, 2022. The sale was considered an asset sale for tax purposes, requiring net deferred tax liabilities to be excluded from held for sale balances. The deferred taxes associated with the businesses were recognized as a deferred income tax benefit by CenterPoint Energy and CERC upon closing of the sale in 2022. CenterPoint Energy and CERC recognized gains of $ 303 million and $ 557 million, respectively, net of transaction costs of $ 59 million, in connection with the closing of the disposition of the Arkansas and Oklahoma Natural Gas businesses during the year ended December 31, 2022. CenterPoint Energy and CERC collected a receivable of $ 15 million in May 2022 for full and final settlement of the working capital adjustment under the AROK Asset Purchase Agreement. The pre-tax income for the Arkansas and Oklahoma Natural Gas businesses, excluding interest and corporate allocations, included in CenterPoint Energy’s and CERC’s Statements of Consolidated Income was $9 million for the year ended December 31, 2022, which only reflects January 1, 2022 to January 9, 2022 results due to the sale of the Arkansas and Oklahoma Natural Gas businesses previously described. Effective on the date of the closing of the disposition of the Arkansas and Oklahoma Natural Gas businesses, a subsidiary of CenterPoint Energy entered into the Transition Services Agreement, whereby that subsidiary agreed to provide certain transition services such as accounting, customer operations, procurement, and technology functions for a term of up to twelve months. In November 2022, a significant majority of all services under the Transition Services Agreement were terminated, and on January 10, 2023, all remaining services were terminated. CenterPoint Energy’s charges to Southern Col Midco for reimbursement of transition services was less than $ 1 million and $ 40 million during the years ended December 31, 2023 and 2022, respectively. Actual transition services costs incurred are recorded net of amounts charged to Southern Col Midco. CenterPoint Energy had no accounts receivable as of December 31, 2023 from Southern Col Midco for transition services. (5) Revenue Recognition In accordance with ASC 606, Revenue from Contracts with Customers, revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which the Registrants expect to be entitled to receive in exchange for these goods or services. ARPs are contracts between the utility and its regulators, not between the utility and a customer. The Registrants recognize ARP revenue as other revenues when the regulator-specified conditions for recognition have been met. Upon recovery of ARP revenue through incorporation in rates charged for utility service to customers, ARP revenue is reversed and recorded as revenue from contracts with customers. The recognition of ARP revenues and the reversal of ARP revenues upon recovery through rates charged for utility service may not occur in the same period. 126 The following tables disaggregate revenues by reportable segment and major source: CenterPoint Energy Year Ended December 31, 2024 Electric Natural Gas Corporate and Other Total (in millions) Revenue from contracts with customers $ 4,558 $ 3,990 $ 4 $ 8,552 Other (1) 32 58 3 93 Eliminations — ( 2 ) — ( 2 ) Total revenues $ 4,590 $ 4,046 $ 7 $ 8,643 Year Ended December 31, 2023 Electric Natural Gas Corporate and Other Total (in millions) Revenue from contracts with customers $ 4,275 $ 4,210 $ 127 $ 8,612 Other (1) 15 69 3 87 Eliminations — ( 3 ) — ( 3 ) Total revenues $ 4,290 $ 4,276 $ 130 $ 8,696 Year Ended December 31, 2022 Electric Natural Gas Corporate and Other Total (in millions) Revenue from contracts with customers $ 4,095 $ 4,969 $ 263 $ 9,327 Other (1) 13 ( 23 ) 4 ( 6 ) Total revenues $ 4,108 $ 4,946 $ 267 $ 9,321 (1) Primarily consists of income from ARPs and leases. Houston Electric Year Ended December 31, 2024 2023 2022 (in millions) Revenue from contracts with customers $ 3,930 $ 3,684 $ 3,417 Other (1) 9 ( 7 ) ( 5 ) Total revenues $ 3,939 $ 3,677 $ 3,412 (1) Primarily consists of income from ARPs and leases. CERC Year Ended December 31, 2024 2023 2022 (in millions) Revenue from contracts with customers $ 3,868 $ 4,083 $ 4,816 Other (1) 57 66 ( 16 ) Total revenues $ 3,925 $ 4,149 $ 4,800 (1) Primarily consists of income from ARPs and leases. 127 Revenues from Contracts with Customers Electric (CenterPoint Energy and Houston Electric). Houston Electric distributes electricity to customers over time and customers consume the electricity when delivered. Indiana Electric generates, distributes and transmits electricity to customers over time and customers consume the electricity when delivered. Revenue, consisting of both volumetric and fixed tariff rates set by state regulators, such as the PUCT and the IURC, is recognized as electricity is delivered and represents amounts both billed and unbilled. Discretionary services requested by customers are provided at a point in time with control transferring upon the completion of the service. Revenue for discretionary services provided by Houston Electric is recognized upon completion of service based on the tariff rates set by the PUCT. Payments for electricity distribution and discretionary services are aggregated and received on a monthly basis. Houston Electric performs transmission services over time as a stand-ready obligation to provide a reliable network of transmission systems. Revenue is recognized upon time elapsed and the monthly tariff rate set by the regulator. Payments are received on a monthly basis. Indiana Electric customers are billed monthly and payment terms, set by the regulator, require payment within a month of billing. Natural Gas (CenterPoint Energy and CERC). CenterPoint Energy and CERC distribute and transport natural gas to customers over time and customers consume the natural gas when delivered. Revenue, consisting of both volumetric and fixed tariff rates set by the state governing agency for that service area, is recognized as natural gas is delivered and represents amounts both billed and unbilled. Discretionary services requested by the customer are provided at a point in time with control transferring upon completion of the service. Revenue for discretionary services is recognized upon completion of service based on the tariff rates set by the applicable state regulator. Payments of natural gas distribution, transportation and discretionary services are aggregated and received on a monthly basis. Contract Balances. When the timing of delivery of service is different from the timing of the payments made by customers and when the right to consideration is conditioned on something other than the passage of time, the Registrants recognize a contract liability when customer payment precedes performance. Those customers that prepay are represented by contract liabilities until the performance obligations are satisfied. The Registrants’ contract liabilities are included in Accounts payable and Other current liabilities in their Consolidated Balance Sheets. The opening and closing balances of accounts receivable, accrued unbilled revenues and contract liabilities from contracts with customers are as follows: CenterPoint Energy Accounts Receivable Accrued Unbilled Revenues Contract Liabilities (in millions) Opening balance as of December 31, 2023 $ 652 $ 516 $ 2 Closing balance as of December 31, 2024 666 521 2 Increase $ 14 $ 5 $ — The amount of revenue recognized in the year ended December 31, 2024 that was included in the opening contract liability was $ 2 million. The difference between the opening and closing balances of the contract liabilities primarily results from the timing difference between CenterPoint Energy’s performance and the customer’s payment. Houston Electric Accounts Receivable Accrued Unbilled Revenues Contract Liabilities (in millions) Opening balance as of December 31, 2023 $ 275 $ 142 $ 2 Closing balance as of December 31, 2024 284 137 2 Increase (decrease) $ 9 $ ( 5 ) $ — The amount of revenue recognized in the year ended December 31, 2024 that was included in the opening contract liability was $ 2 million. The difference between the opening and closing balances of the contract liabilities primarily results from the timing difference between Houston Electric’s performance and the customer’s payment. 128 CERC Accounts Receivable Accrued Unbilled Revenues (in millions) Opening balance as of December 31, 2023 $ 330 $ 329 Closing balance as of December 31, 2024 326 338 Increase (decrease) $ ( 4 ) $ 9 CERC does not have any opening or closing contract asset or contract liability balances. Practical Expedients and Exemption. Sales taxes and other similar taxes collected from customers are excluded from the transaction price. For contracts for which revenue from the satisfaction of the performance obligations is recognized in the amount invoiced, the practical expedient was elected and revenue expected to be recognized on these contracts has not been disclosed. Allowance for Credit Losses and Bad Debt Expense CenterPoint Energy and CERC segregate financial assets that fall under the scope of ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, primarily trade receivables due in one year or less, into portfolio segments based on shared risk characteristics, such as geographical location and regulatory environment, for evaluation of expected credit losses. Historical and current information, such as average write-offs, are applied to each portfolio segment to estimate the allowance for losses on uncollectible receivables. Additionally, the allowance for losses on uncollectible receivables is adjusted for reasonable and supportable forecasts of future economic conditions, which can include changing weather, commodity prices, regulations and macroeconomic factors, among others. Houston Electric had no material changes in its methodology to recognize losses on financial assets that fall under the scope of Topic 326, primarily due to the nature of its customers and regulatory environment. For a discussion of regulatory deferrals, see Note 7. The table below summarizes the Registrants’ bad debt expense amounts for 2024, 2023 and 2022, net of regulatory deferrals: Year Ended December 31, 2024 2023 2022 CenterPoint Energy Houston Electric CERC CenterPoint Energy Houston Electric CERC CenterPoint Energy Houston Electric CERC (in millions) Bad debt expense $ 21 $ 1 $ 16 $ 18 $ — $ 16 $ 20 $ — $ 17 (6) Goodwill (CenterPoint Energy and CERC) CenterPoint Energy’s goodwill by reportable segment is as follows for the periods presented: Electric (1) Natural Gas Corporate and Other Total (in millions) Balance at December 31, 2022 $ 936 $ 2,920 $ 438 $ 4,294 Disposal (2) — — 134 134 Balance at December 31, 2023 936 2,920 304 4,160 Held for Sale (3) — 217 — 217 Balance at December 31, 2024 $ 936 $ 2,703 $ 304 $ 3,943 (1) Balances are presented net of the accumulated goodwill impairment charge of $ 185 million recorded in 2020. (2) Represents goodwill attributable to the sale of Energy Systems Group. For further information, see Note 4. (3) Represents goodwill attributable to the Louisiana and Mississippi natural gas LDC businesses classified as held for sale as of December 31, 2024. CenterPoint Energy did not recognize any goodwill impairments within the Natural Gas reportable segment for the year ended December 31, 2024. For further information, see Note 4. 129 There were no events impacting CERC’s goodwill for the year ended December 31, 2023. CERC’s goodwill is as follows for the periods presented: December 31, 2023 Held for Sale (1) December 31, 2024 (in millions) Goodwill $ 1,583 $ 122 $ 1,461 (1) Represents goodwill attributable to CERC to be disposed of as part of the potential sale of the Louisiana and Mississippi natural gas LDC businesses was classified as held for sale as of December 31, 2024. CERC did not recognize any goodwill impairments during the year ended December 31, 2024. For further information, see Note 4. CenterPoint Energy and CERC performed their annual goodwill impairment tests in the third quarter of each of 2024 and 2023 and determined that no goodwill impairment charge was required for any reporting unit as a result of those tests. 130 (7) Regulatory Matters The following is a list of regulatory assets and liabilities reflected on the Registrants’ respective Consolidated Balance Sheets as of December 31, 2024 and 2023: December 31, 2024 CenterPoint Energy Houston Electric CERC (in millions) Regulatory Assets: Future amounts recoverable from ratepayers related to: Benefit obligations (1) $ 373 $ — $ 4 Asset retirement obligations & other 304 80 188 Net deferred income taxes 144 47 69 Total future amounts recoverable from ratepayers 821 127 261 Amounts deferred for future recovery related to: Cost recovery riders 145 — 83 Hurricanes and February 2021 Winter Storm Event Restoration Costs 145 145 — May 2024 Storm Events 86 86 — Hurricane Beryl 458 458 — Hurricane Francine 19 19 — Other regulatory assets 177 87 74 Decoupling 12 — 12 Temporary generation costs 71 71 — Unrecognized equity return (2) ( 115 ) ( 77 ) ( 30 ) Total amounts deferred for future recovery 998 789 139 Amounts currently recovered in customer rates related to: Authorized trackers and cost deferrals 600 47 440 Securitized regulatory assets 343 — — Unamortized loss on reacquired debt and hedging 93 63 10 Gas recovery costs 122 — 122 Decoupling 38 — 38 Extraordinary gas costs 133 — 133 Regulatory assets related to TCJA 47 47 — Hurricanes and February 2021 Winter Storm Event Restoration Costs 31 5 26 Other regulatory assets 34 — 34 Benefit obligations 4 4 — Temporary generation costs 219 219 — Unrecognized equity return (3) ( 136 ) ( 17 ) ( 62 ) Total amounts recovered in customer rates (5) 1,528 368 741 Total Regulatory Assets $ 3,347 $ 1,284 $ 1,141 Total Current Regulatory Assets $ 239 $ — $ 238 Total Non-Current Regulatory Assets $ 3,108 $ 1,284 $ 903 Regulatory Liabilities: Regulatory liabilities related to TCJA $ 1,346 $ 673 $ 501 Estimated removal costs 1,247 — 1,191 Other regulatory liabilities 454 195 235 Total Regulatory Liabilities $ 3,047 $ 868 $ 1,927 Total Current Regulatory Liabilities (6) $ 48 $ 7 $ 40 Total Non-Current Regulatory Liabilities $ 2,999 $ 861 $ 1,887 131 December 31, 2023 CenterPoint Energy Houston Electric CERC (in millions) Regulatory Assets: Future amounts recoverable from ratepayers related to: Benefit obligations (1) $ 379 $ — $ 5 Asset retirement obligations & other 290 75 186 Net deferred income taxes 96 41 42 Total future amounts recoverable from ratepayers 765 116 233 Amounts deferred for future recovery related to: Cost recovery riders 113 — 73 Hurricanes and February 2021 Winter Storm Event restoration costs 149 123 26 Other regulatory assets 147 59 72 Gas recovery costs 27 — 27 Decoupling 17 — 17 COVID-19 incremental costs 12 8 4 Temporary generation costs 48 48 — Unrecognized equity return (2) ( 63 ) ( 39 ) ( 16 ) Total amounts deferred for future recovery 450 199 203 Amounts currently recovered in customer rates related to: Authorized trackers and cost deferrals 535 44 375 Securitized regulatory assets 434 74 — Unamortized loss on reacquired debt and hedging 106 72 11 Gas recovery costs 34 — 34 Extraordinary gas costs 208 — 208 Regulatory assets related to TCJA 47 47 — Hurricane Harvey restoration costs 17 17 — Benefit obligations 11 11 — Temporary generation costs 208 208 — Unrecognized equity return (4) ( 141 ) ( 36 ) ( 53 ) Total amounts recovered in customer rates 1,459 437 575 Total Regulatory Assets $ 2,674 $ 752 $ 1,011 Total Current Regulatory Assets $ 161 $ — $ 161 Total Non-Current Regulatory Assets $ 2,513 $ 752 $ 850 Regulatory Liabilities: Regulatory liabilities related to TCJA $ 1,377 $ 695 $ 505 Estimated removal costs 1,322 91 1,150 Other regulatory liabilities 548 245 260 Total Regulatory Liabilities $ 3,247 $ 1,031 $ 1,915 Total Current Regulatory Liabilities (6) $ 39 $ 6 $ 33 Total Non-Current Regulatory Liabilities $ 3,208 $ 1,025 $ 1,882 (1) Pension and postretirement-related regulatory assets balances are actuarially valued annually. (2) Represents the following: (a) CenterPoint Energy’s allowed equity return on post in-service carrying cost generally associated with investments in Indiana; (b) Houston Electric’s allowed equity return on TEEEF costs and storm restoration costs; and (c) CERC’s allowed equity return on post in-service carrying cost associated with certain distribution facilities replacements expenditures in Texas. (3) Represents the following: (a) CenterPoint Energy’s allowed equity return on post in-service carrying cost generally associated with investments in Indiana; (b) Houston Electric’s allowed equity return on certain storm restoration balances and (c) CERC’s allowed equity return on post in-service carrying cost associated with certain distribution facilities replacements expenditures in Texas. (4) Represents the following: (a) CenterPoint Energy’s allowed equity return on post in-service carrying cost generally associated with investments in Indiana; (b) Houston Electric’s allowed equity return on its true-up balance of stranded costs, other changes and related interest resulting from the formerly integrated electric utilities prior to Texas 132 deregulation to be recovered in rates through 2024 and certain storm restoration balances; and (c) CERC’s allowed equity return on post in-service carrying cost associated with certain distribution facilities replacements expenditures in Texas. (5) Of the $ 1.5 billion, $ 368 million and $ 741 million currently being recovered in customer rates related to CenterPoint Energy, Houston Electric and CERC, respectively, $ 463 million, $ 305 million and $ 158 million is earning a return, respectively. The weighted average recovery period of regulatory assets currently being recovered in base rates, not earning a return, which totals $ 424 million, $ 63 million and $ 328 million for CenterPoint Energy, Houston Electric and CERC, respectively, is 11 years, 27 years and 7 years, respectively. Regulatory assets not earning a return with perpetual or undeterminable lives have been excluded from the weighted average recovery period calculation. (6) Current regulatory liabilities are included in Other current liabilities in each of the Registrants’ respective Consolidated Balance Sheets. The table below reflects the amount of allowed equity return recognized by each Registrant in its Statements of Consolidated Income for the periods presented: Year Ended December 31, 2024 2023 2022 CenterPoint Energy Houston Electric CERC CenterPoint Energy Houston Electric CERC CenterPoint Energy Houston Electric CERC (in millions) Allowed equity return recognized $ 23 $ 20 $ 2 $ 41 $ 38 $ 2 $ 45 $ 42 $ 2 February 2021 Winter Storm Event In February 2021, certain of the Registrants’ jurisdictions experienced an extreme and unprecedented winter weather event that resulted in prolonged freezing temperatures, which impacted their businesses. The February 2021 Winter Storm Event impacted wholesale prices of CenterPoint Energy’s and CERC’s natural gas purchases and their ability to serve customers in their Natural Gas service territories, including due to the reduction in available natural gas capacity and impacts to CenterPoint Energy’s and CERC’s natural gas supply portfolio activities, and the effects of weather on their systems and their ability to transport natural gas, among other things. The overall natural gas market, including the markets from which CenterPoint Energy and CERC sourced a significant portion of their natural gas for their operations, experienced significant impacts caused by the February 2021 Winter Storm Event, resulting in extraordinary increases in the cost of natural gas purchased by CenterPoint Energy and CERC of approximately $ 2 billion. CenterPoint Energy and CERC have completed recovery of natural gas costs in Mississippi, Indiana, Louisiana and Texas, and continue to recover the natural gas cost in Minnesota. As of December 31, 2024, CenterPoint Energy and CERC had each recorded current regulatory assets of $ 67 million and non-current regulatory assets of $ 67 million associated with the February 2021 Winter Storm Event. As of December 31, 2023, CenterPoint Energy and CERC have each recorded current regulatory assets of $ 86 million and non-current regulatory assets of $ 130 million associated with the February 2021 Winter Storm Event. In Minnesota, the MPUC issued its written order on October 19, 2022 disallowing CERC’s recovery of approximately $ 36 million of the $ 409 million incurred, and CERC’s regulatory asset balance was reduced to reflect the disallowance. CERC filed a petition for reconsideration on November 8, 2022 and a written order denying the petition for reconsideration was issued on January 6, 2023. As of December 31, 2024 and 2023, as authorized by the PUCT, both CenterPoint Energy and Houston Electric had each recorded a regulatory asset of $ 8 million for bad debt expenses resulting from REPs’ default on their obligation to pay delivery charges to Houston Electric net of collateral. Additionally, both CenterPoint Energy and Houston Electric had each recorded a regulatory asset of $ 19 million and $ 17 million as of December 31, 2024 and 2023, respectively, and requested reimbursement of costs associated with the February 2021 Winter Storm Event in Houston Electric’s rate case, which was filed in March 2024. On January 29, 2025 Houston Electric announced that a settlement agreement was reached with certain parties to the rate case filed on March 6, 2024, including the City of Houston and other regional municipalities. Subject to PUCT review and approval, the settlement is expected to result in approximately $ 50 million less annual revenue and an average decrease of approximately $ 1 a month for residential customers based on average usage of 1,000 kWh per month. See Note 14(d) for further information regarding litigation related to the February 2021 Winter Storm Event. 133 Texas Public Securitization The Texas Natural Gas Securitization Finance Corporation issued customer rate relief bonds in March 2023, and on March 23, 2023, CenterPoint Energy and CERC, collectively, received approximately $ 1.1 billion in cash proceeds from the issuance and sale of the state’s customer rate relief bonds. The proceeds from the state’s customer rate relief bonds included carrying costs incurred through August 2022. Incremental carrying costs incurred after August 2022 until the date the proceeds were received are recorded in a separate regulatory asset; the most recent CERC rate proceeding in Texas included a request for recovery of this regulatory asset and was included in the settlement agreement approved by the Railroad Commission in June 2024. As CenterPoint Energy and CERC have no future financial obligations for the repayment of the state’s customer rate relief bonds, the customer rate relief bonds are not recorded on CenterPoint Energy’s or CERC’s balance sheets. The state’s customer rate relief bonds are backed in part by customer rate relief property, including customer rate relief charges, which are non-bypassable uniform monthly volumetric charges to be paid by all existing and future sales customers as a component of each regulated utility’s gas cost, separate from their base rate. CERC only acts as a collection agent, whose duties include management, servicing and administration of a portion of the customer rate relief property which is associated with the customer rate relief charge imposed on customers of CERC under the guidance and direction from the Railroad Commission. The Texas Natural Gas Securitization Finance Corporation, and not CenterPoint Energy or CERC, is the owner of the customer rate relief property. The assets of the Texas Natural Gas Securitization Finance Corporation are not available to pay creditors of CenterPoint Energy, CERC, or their affiliates. While the customer rate relief charges will be included by CERC in their monthly billings, the billing amount is established by the Railroad Commission. CERC will remit all customer rate relief charges collected to the financing entity set up by the Railroad Commission. Therefore, the collection and servicing of customer rate relief charges have no impact on the respective Statements of Consolidated Income of CenterPoint Energy or CERC. As U.S. GAAP has no specific accounting guidance for government grants or assistance, the cash proceeds from the state’s customer rate relief bonds were accounted for as a government grant by analogy to the grant model under IAS 20—Accounting for Government Grants and Disclosures of Government Assistance. CenterPoint Energy and CERC reflect the proceeds from the grant as a deduction to natural gas costs and recognized the $ 1.1 billion of cash proceeds from the state’s customer rate relief bonds within Utility natural gas expense on their respective Statements of Consolidated Income in the year ended December 31, 2023, net of the recognition of natural gas cost related to relieving CenterPoint Energy and CERC’s regulatory assets related to the February 2021 Winter Storm Event in the same period. Indiana Electric Securitization of Generation Retirements (CenterPoint Energy) On January 4, 2023, the IURC issued an order in accordance with Indiana Senate Enrolled Act 386 authorizing the issuance of up to $ 350 million in securitization bonds to securitize qualified costs associated with the retirements of Indiana Electric’s A.B. Brown coal-fired generation facilities. Accordingly, CenterPoint Energy determined that the retirement of property, plant and equipment became probable upon the issuance of the order. No loss on abandonment was recognized in connection with issuance of the order as there was no disallowance of all or part of the cost of the abandoned property, plant and equipment. In the first quarter of 2023, upon receipt of the order, CenterPoint Energy reclassified property, plant and equipment to be recovered through securitization to a regulatory asset and such amounts continued to earn a full return until recovered through securitization. The SIGECO Securitization Subsidiary issued $ 341 million aggregate principal amount of the SIGECO Securitization Bonds on June 29, 2023. The SIGECO Securitization Subsidiary used a portion of the net proceeds from the issuance of the SIGECO Securitization Bonds to purchase the securitization property from SIGECO. No gain or loss was recognized. The SIGECO Securitization Bonds are secured by the securitization property, which includes the right to recover, through non-bypassable securitization charges payable by SIGECO’s retail electric customers, the qualified costs of SIGECO authorized by the IURC order. The SIGECO Securitization Subsidiary, and not SIGECO, is the owner of the securitization property, and the assets of the SIGECO Securitization Subsidiary are not available to pay the creditors of SIGECO or its affiliates, other than the SIGECO Securitization Subsidiary. SIGECO has no payment obligations with respect to the SIGECO Securitization Bonds except to remit collections of securitization charges as set forth in a servicing agreement between SIGECO and the SIGECO Securitization Subsidiary. The non-bypassable securitization charges are subject to a true-up mechanism. Houston Electric TEEEF Pursuant to legislation passed in 2021, Houston Electric entered into two leases for TEEEF (temporary generation) which are detailed in Note 19. Houston Electric initially sought recovery of the lease costs and the applicable return as of December 31, 2021 under these lease agreements of approximately $ 200 million in its DCRF application filed with the PUCT on April 5, 134 2022, and subsequently amended on July 1, 2022, to show temporary generation in a separate Rider TEEEF. A final order was issued on April 5, 2023 approving a revenue requirement of $ 39 million that results in full recovery of costs requested but lengthens the amortization period for the short-term lease to be collected over 82.5 months. On May 25, 2023, the PUCT issued its order on rehearing which clarified some of the findings but did not change the approval of TEEEF cost recovery. The PUCT’s decision on the first TEEEF filing is now final and non-appealable. On April 5, 2023, Houston Electric made its second TEEEF filing requesting recovery of TEEEF related costs incurred through December 31, 2022, which requested a new annual revenue requirement of approximately $ 188 million u sing 78 months to amortize the related deferred costs for proposed rates beginning September 2023, a net increase in TEEEF revenues of approximately $ 149 million . On August 28, 2023, the State Office of Administrative Hearings issued an Order setting interim rates to collect an annual revenue requirement at the filed amount. Interim rates became effective on September 1, 2023, subject to surcharge or refund if they differ from the final rates approved by the PUCT. An agreement in principle was reached which reduced the annual revenue requirement by approximately $ 35 million based on recovering the balance as of December 31, 2022 over a 102-month amortization period (instead of the 78-month period in the initial filing) and also allowed for revised interim rates (to incorporate the agreement in principle and the initial interim rates that have been in place since September 1, 2023). The updated interim rates were implemented on December 15, 2023 and approved by the PUCT pursuant to its order issued on February 1, 2024 when the PUCT approved the agreement in principle. The PUCT’s decision on the second TEEEF filing is final and non-appealable. On September 11, 2024, the TCA filed a complaint with the PUCT requesting that the PUCT modify its rulings with respect to its prior decisions related to the TEEEF filings made in 2022 and 2023. Specifically, TCA requested that the PUCT end cost recovery and return on investment on all the large 32 MW and 5 MW TEEEF units approved in docket 53442. On October 2, 2024, Houston Electric filed a response to the TCA complaint and requested that the complaint be dismissed due to the principles of res judicata and collateral estoppel. On October 8, 2024, TCA supplemented its complaint and on October 9, 2024, PUCT staff filed a statement of position stating that Houston Electric’s response provided a strong argument for dismissal of the complaint, but also stating that it would be prudent to have a thorough legal argument from TCA. On October 10, 2024, PUCT issued Order No. 2 finding the TCA complaint insufficient and requiring supplemental information or amendment from TCA by October 24, 2024; TCA filed supplemental information on October 24, 2024. On November 14, 2024, PUCT issued Order No. 4 denying the motion to reconsider and extending a deadline. On December 16, 2024, PUCT issued Order No. 5 granting waiver of the requirement for informal disposition and soliciting commission staff recommendation by January 16, 2025. On January 16, 2025, PUCT staff filed a supplemental recommendation recommending that the TCA has not met its requirement to first present its complaint to the City of Houston prior to presenting it to the PUCT. On January 17, 2025 the case was abated until February 28, 2025 to enable the TCA to present its complaint to the City of Houston. On December 19, 2024, Houston Electric announced a proposal to release Houston Electric’s 15 large 27 MW to 32 MW TEEEF units to the San Antonio area prior to the summer of 2025. The proposal is intended to help ERCOT address a potential energy shortfall and Load Shed risk and to provide additional electric generation capacity to support growing energy demand in the greater San Antonio region. Under the proposal, Houston Electric would not receive revenue or profit from ERCOT and would also not charge Houston-area customers for these TEEEF units for the period when they are in San Antonio serving ERCOT, which is currently expected to be for a period of up to two years. Houston Electric would anticipate receiving revenues from one or more future transactions after the period the units are utilized to temporarily serve an energy need in the San Antonio area, and would therefore plan to continue to not charge customers for these units for any future periods. The proposal has not been finalized and is subject to the negotiation of definitive documentation among the relevant parties, as well as being subject to the approval of ERCOT and other stakeholders. It is not certain that mutually agreeable definitive documentation will be entered into at all or that all approvals will be obtained. Houston Electric defers costs associated with the short-term and long-term leases that are probable of recovery and would otherwise be charged to expense in a regulatory asset, including allowed debt returns, and determined that such regulatory assets remain probable of recovery as of December 31, 2024. Right of use finance lease assets, such as assets acquired under the long-term leases, are evaluated for impairment under the long-lived asset impairment model by assessing if a capital disallowance from a regulator is probable through monitoring the outcome of rate cases and other proceedings. Houston Electric did not record any impairments on its right of use assets or regulatory asset in the years ended December 31, 2024 and 2023. See Note 19 for further information. May 2024 Storm Events Houston Electric’s service territory experienced sudden and destructive severe weather events in May 2024 that included hurricane-like winds and tornadoes. The May 2024 Storm Events caused significant damage to Houston Electric’s electric 135 delivery system. As of December 31, 2024, Houston Electric had recorded $ 345 million in Property, plant and equipment and $ 73 million in Regulatory assets, excluding carrying costs, for such restoration costs. Based on currently available information, as of December 31, 2024, Houston Electric estimates that total costs to restore the electric delivery facilities damaged as a result of the May 2024 Storm Events will be approximately $ 458 million, excluding carrying costs. These preliminary estimates are subject to revision as certain restoration costs are expected to be incurred through the end of 2025. As is common with electric utilities serving coastal regions, the poles, towers, wires, street lights and pole-mounted equipment that comprise Houston Electric’s transmission and distribution system are not covered by property insurance. Houston Electric is deferring certain storm restoration costs as management believes it is probable that such costs will be recovered through the regulatory process. On November 8, 2024, Houston Electric filed an Application for Determination of System Restoration Costs with the PUCT. The application seeks a determination as to the reasonableness and necessity of approximately $ 502 million of costs (including estimated case processing expenses and carrying costs) incurred or expected to be incurred to restore service following the May 2024 Storm Events. On January 10, 2025, intervenors filed testimony recommending various disallowances ranging from $ 4.1 million to $ 101.9 million. On January 17, 2025, PUCT staff filed testimony recommending no adjustments to Houston Electric’s request. Houston Electric’s rebuttal testimony was filed January 21, 2025. On January 29, 2025, the parties represented to the ALJ that a settlement in principle had been reached and requested an abatement to memorialize and finalize the settlement. The case was abated and parties will file finalized settlement documents or a status update by February 26, 2025. Prior to authorizing Houston Electric to recover these costs, the PUCT must first determine the amount of reasonable and necessary system restoration costs. On January 24, 2025, Houston Electric filed a request for a Financing Order for the distribution costs included in the November 8, 2024 Application for Determination of System Restoration Costs. The ultimate recovery of the costs (or a portion thereof) is expected to be sought through the issuance and sale of non-recourse securitization bonds for distribution-related costs and the TCOS capital mechanism for transmission-related costs. However, neither the amount nor timing of the recovery is certain. See Note 12 for further information regarding a term loan facility to fund certain costs related to the May 2024 Storm Events. Hurricane Beryl On July 8, 2024, Hurricane Beryl made landfall in Texas, bringing sustained winds, storm surges and torrential rain into Houston Electric’s service territory. Hurricane Beryl caused significant damage to Houston Electric’s electric delivery system. Based on currently available information, as of December 31, 2024, Houston Electric estimates that total costs to restore the electric delivery facilities damaged as a result of Hurricane Beryl will be approximately $ 1.1 billion, excluding carrying costs. As of December 31, 2024, Houston Electric had recorded $ 654 million in Property, plant and equipment and $ 442 million in Regulatory assets, excluding carrying costs, for such restoration costs. Houston Electric is deferring certain storm restoration costs as management believes it is probable that such costs will be recovered through the regulatory process. Similar to the costs related to the May 2024 Storm Events, insurance coverage was not available for damages to much of our transmission and distribution assets. The ultimate recovery of the costs (or a portion thereof) relating to Hurricane Beryl is expected to be sought through the issuance and sale of non-recourse securitization bonds for distribution-related costs. However, neither the amount nor timing of the recovery is certain. 136 (8) Stock-Based Incentive Compensation Plans and Employee Benefit Plans (a) Stock-Based Incentive Compensation Plans (CenterPoint Energy) CenterPoint Energy has LTIPs that provide for the issuance of stock-based incentives, including stock options, performance awards, restricted stock unit awards and restricted and unrestricted stock awards to officers, employees and non-employee directors. Approximately 30 million shares of Common Stock are authorized under these plans for awards. CenterPoint Energy issues new shares of its Common Stock to satisfy stock-based payments related to LTIPs. Equity awards are granted to employees without cost to the participants. Compensation costs for the performance awards and stock unit awards granted under LTIPs are measured using fair value and expected achievement levels on the grant date. For performance awards with operational goals, the achievement levels are revised as goals are evaluated. The fair value of awards granted to employees is based on the closing stock price of CenterPoint Energy’s Common Stock on the grant date. The compensation expense is recorded on a straight-line basis over the vesting period. Forfeitures are estimated on the date of grant based on historical averages and estimates are updated periodically throughout the vesting period. The performance awards granted in 2024, 2023 and 2022 are distributed based upon the achievement of certain performance conditions or market conditions over a three-year performance cycle. The performance conditions are based on CenterPoint Energy’s cumulative adjusted EPS and certain carbon emissions reduction goals. The market condition is based on CenterPoint Energy’s total shareholder return relative to a specified peer group. Upon vesting, shares under the performance awards, as determined based on achievement of the applicable performance goals, are issued to the participants along with the value of dividend equivalents earned over the performance cycle. The stock unit awards granted in 2024, 2023 and 2022 are service based and subject to CenterPoint Energy’s achievement of positive operating income for the last full calendar year preceding the applicable vesting date. Stock units awarded in 2024 are service based, and vest under a three-year ratable vesting schedule, with one-third vesting as of each of the first three anniversaries of the grant date. Each vesting is subject to the achievement of a performance goal. Stock unit awards granted to employees in 2023 and 2022 cliff vest at the end of a three-year period. Stock unit awards granted to non-employee directors vest immediately upon grant. Upon vesting, shares under the stock unit awards are issued to the participants along with the value of dividend equivalents earned over the applicable vesting period. The following table summarizes CenterPoint Energy’s expenses related to LTIPs for the periods presented: Year Ended December 31, 2024 2023 2022 (in millions) LTIP compensation expense (1) $ 34 $ 65 $ 51 Income tax benefit recognized 8 15 12 Actual tax benefit realized for tax deductions 19 17 6 (1) Included in Operation and maintenance expense in CenterPoint Energy’s Statements of Consolidated Income, net of any amounts capitalized. 137 The following tables summarize CenterPoint Energy’s LTIP activity for the year ended December 31, 2024: Shares (Thousands) Weighted-Average Grant Date Fair Value Remaining Average Contractual Life (Years) Aggregate Intrinsic Value (2) (Millions) Performance Awards (1) Outstanding and nonvested as of December 31, 2023 5,225 $ 25.95 Granted 1,727 27.92 Forfeited or canceled ( 220 ) 28.09 Vested and released to participants ( 1,824 ) 21.87 Outstanding and nonvested as of December 31, 2024 4,908 $ 28.14 1 $ 105 Stock Unit Awards Outstanding and nonvested as of December 31, 2023 1,861 $ 26.91 Granted 438 28.25 Forfeited or canceled ( 43 ) 27.92 Vested and released to participants ( 1,139 ) 25.92 Outstanding and nonvested as of December 31, 2024 1,117 $ 28.20 0.5 $ 36 (1) Reflects maximum performance achievement. (2) Reflects the impact of current expectations of achievement and stock price. Additional information related to the Performance Awards and Stock Unit Awards was as follows for the periods presented: Year Ended December 31, 2024 2023 2022 (in millions, except for per unit amounts) Performance Awards Weighted-average grant date fair value per unit of awards granted $ 27.92 $ 29.18 $ 28.12 Total intrinsic value of awards received by participants 51 47 13 Vested grant date fair value 40 37 13 Stock Unit Awards Weighted-average grant date fair value per unit of awards granted $ 28.25 $ 30.83 $ 28.44 Total intrinsic value of awards received by participants 33 28 14 Vested grant date fair value 30 23 13 As of December 31, 2024, there was $ 39 million of total unrecognized compensation cost related to nonvested performance and stock unit awards which is expected to be recognized over a weighted-average period of 1.7 years. (b) Pension Benefits (CenterPoint Energy) CenterPoint Energy maintains a non-contributory qualified defined benefit pension plan covering certain eligible employees, which is closed to new participants. CenterPoint Energy also maintains three additional qualified defined benefit pension plans, two of which are closed to new participants and one of which is frozen, that cover certain eligible employees and retirees of Vectren and are primarily non-contributory. In addition to the qualified defined benefit pension plans, CenterPoint Energy maintains unfunded non-qualified benefit restoration plans which allow participants to receive the benefits to which they would have been entitled under CenterPoint Energy’s qualified pension plan except for federally mandated limits on qualified plan benefits or on the level of compensation on which qualified plan benefits may be calculated. CenterPoint Energy also maintains a frozen non-qualified supplemental retirement plan covering certain former executives of Vectren. In December 2022, the CenterPoint Energy Retirement Plan, a tax-qualified defined benefit pension plan, completed the 2022 Annuity Purchase to fund the annuities of certain retirees of the non-regulated business units of CenterPoint Energy (including previously divested businesses), as part of a de-risking strategy. The 2022 Annuity Purchase reduced the plan’s benefit obligation by $ 138 million and plan assets by $ 136 million, which were transferred to the annuity provider. The $ 138 million transferred benefit obligation represented 9.4 % of CenterPoint Energy’s total benefit obligation as of its last remeasurement prior to the transaction. As a result of this transaction, CenterPoint Energy incurred a settlement charge of $ 47 million. In addition, CenterPoint Energy was relieved of all responsibility for these pension obligations and the annuity 138 provider assumed the obligation to pay and administer the pension benefits for the 1,119 impacted retirees and beneficiaries, with no changes to the amount, timing or form of the benefit payments. CenterPoint Energy’s net periodic cost includes the following components relating to pension, including the non-qualified benefit plans, for the periods presented: Year Ended December 31, 2024 2023 2022 (in millions) Service cost (1) $ 25 $ 25 $ 29 Interest cost (2) 73 76 73 Expected return on plan assets (2) ( 75 ) ( 76 ) ( 87 ) Amortization of net loss (2) 28 28 31 Settlement cost (2) (3) — — 126 Net periodic cost $ 51 $ 53 $ 172 (1) Included in Operation and maintenance expense in CenterPoint Energy’s Statements of Consolidated Income, net of amounts capitalized and regulatory deferrals. (2) Included in Other income (expense), net in CenterPoint Energy’s Statements of Consolidated Income, net of regulatory deferrals. (3) A one-time, non-cash settlement cost is required when the total lump sum distributions or other settlements of plan benefit obligations during a plan year exceed the service cost and interest cost components of the net periodic cost for that year. In 2023 and 2022, CenterPoint Energy recognized non-cash settlement cost due to lump sum settlement payments. The transfer of assets related to the 2022 Annuity Purchase is considered a lump sum settlement payment. CenterPoint Energy used the following assumptions to determine net periodic cost relating to pension benefits for the periods presented: Year Ended December 31, 2024 2023 2022 Discount rate 4.95 % 5.15 % 2.80 % Expected return on plan assets 6.50 6.50 5.00 Rate of increase in compensation levels 4.97 4.99 4.95 In determining net periodic benefit cost, CenterPoint Energy uses fair value, as of the beginning of the year, as its basis for determining expected return on plan assets except for two of Vectren’s qualified defined benefit pension plans which use a market related value of assets. 139 The following table summarizes changes in the benefit obligation, changes in plan assets, the amounts recognized in the Consolidated Balance Sheets as well as the key actuarial assumptions of CenterPoint Energy’s pension plans. The measurement dates for plan assets and benefit obligations were December 31, 2024 and 2023. December 31, 2024 December 31, 2023 (in millions, except for actuarial assumptions) Change in Benefit Obligation Benefit obligation, beginning of year $ 1,548 $ 1,553 Service cost 25 25 Interest cost 73 76 Benefits paid ( 127 ) ( 147 ) Actuarial (gain) loss (1) ( 42 ) 41 Benefit obligation, end of year 1,477 1,548 Change in Plan Assets Fair value of plan assets, beginning of year 1,204 1,212 Employer contributions 30 32 Benefits paid ( 127 ) ( 147 ) Actual investment return 25 107 Fair value of plan assets, end of year 1,132 1,204 Funded status, end of year $ ( 345 ) $ ( 344 ) Amounts Recognized in Balance Sheets Non-current assets $ 7 $ 4 Current liabilities-other ( 7 ) ( 7 ) Other liabilities-benefit obligations ( 345 ) ( 341 ) Net liability, end of year $ ( 345 ) $ ( 344 ) Actuarial Assumptions Discount rate (2) 5.60 % 4.95 % Expected return on plan assets (3) 7.00 6.50 Rate of increase in compensation levels 4.79 4.97 Interest crediting rate 3.00 3.00 (1) Significant sources of actuarial gain for 2024 include the increase in discount rate from 4.95 % to 5.60 %, offset by losses due to expected return on plan assets exceeding actual return on plan assets. (2) The discount rate assumption was determined by matching the projected cash flows of CenterPoint Energy’s plans against a hypothetical yield curve of high-quality corporate bonds represented by a series of annualized individual discount rates from one-half to 99 years. (3) The expected rate of return assumption was developed using the targeted asset allocation of CenterPoint Energy’s plans and the expected return for each asset class. The following table displays pension benefits related to CenterPoint Energy’s pension plans that have accumulated benefit obligations in excess of plan assets as of the dates presented: December 31, 2024 December 31, 2023 Pension (Qualified) Pension (Non-qualified) Pension (Qualified) Pension (Non-qualified) (in millions) Accumulated benefit obligation $ 1,431 $ 44 $ 1,496 $ 48 Projected benefit obligation 1,433 44 1,500 48 Fair value of plan assets 1,132 — 1,204 — The accumulated benefit obligation for all defined benefit pension plans on CenterPoint Energy’s Consolidated Balance Sheets was $ 1,475 million and $ 1,544 million as of December 31, 2024 and 2023, respectively. 140 (c) Postretirement Benefits CenterPoint Energy provides certain healthcare and life insurance benefits for eligible retired employees on both a contributory and non-contributory basis. The Registrants’ employees (other than employees of Vectren and its subsidiaries) who were hired before January 1, 2018 and who have met certain age and service requirements at retirement, as defined in the plan, are eligible to participate in these benefits, provided, however, that life insurance benefits are available only for eligible retired employees who retired before January 1, 2022. Employees hired on or after January 1, 2018 are not eligible for these benefits, except that such employees represented by IBEW Local Union 66 are eligible to participate in certain of the benefits, subject to the applicable age and service requirements. With respect to retiree medical and prescription drug benefits, and, effective January 1, 2021, dental and vision benefits, employees represented by the IBEW Local Union 66 who retire on or after January 1, 2017, and their dependents, receive any such benefits exclusively through the NECA/IBEW Family Medical Care Plan pursuant to the terms of the applicable collective bargaining agreement. Houston Electric and CERC are required to fund a portion of their obligations in accordance with rate orders. All other obligations are funded on a pay-as-you-go basis. CenterPoint Energy, through Vectren, also maintains a postretirement benefit plan that provides health care and life insurance benefits, which are a combination of self-insured and fully insured programs, to eligible Vectren retirees on both a contributory and non-contributory basis. Postretirement benefits are accrued over the active service period of employees. The net postretirement benefit cost includes the following components for the periods presented: Year Ended December 31, 2024 2023 2022 CenterPoint Energy Houston Electric CERC CenterPoint Energy Houston Electric CERC CenterPoint Energy Houston Electric CERC (in millions) Service cost (1) $ 1 $ — $ 1 $ 1 $ — $ 1 $ 2 $ — $ 1 Interest cost (2) 13 5 4 13 5 5 9 4 3 Expected return on plan assets (2) ( 6 ) ( 4 ) ( 1 ) ( 5 ) ( 4 ) ( 1 ) ( 5 ) ( 4 ) ( 1 ) Amortization of prior service cost (credit) (2) ( 2 ) ( 5 ) 2 ( 2 ) ( 5 ) 2 ( 3 ) ( 4 ) 2 Amortization of net loss (2) ( 8 ) ( 4 ) ( 3 ) ( 8 ) ( 4 ) ( 3 ) ( 4 ) ( 2 ) ( 1 ) Net postretirement benefit cost (credit) $ ( 2 ) $ ( 8 ) $ 3 $ ( 1 ) $ ( 8 ) $ 4 $ ( 1 ) $ ( 6 ) $ 4 (1) Included in Operation and maintenance expense in each of the Registrants’ respective Statements of Consolidated Income, net of amounts capitalized and regulatory deferrals. (2) Included in Other income (expense), net in each of the Registrants’ respective Statements of Consolidated Income, net of regulatory deferrals. The following assumptions were used to determine net periodic cost relating to postretirement benefits for the periods presented: Year Ended December 31, 2024 2023 2022 CenterPoint Energy Houston Electric CERC CenterPoint Energy Houston Electric CERC CenterPoint Energy Houston Electric CERC Discount rate 4.95 % 4.95 % 4.95 % 5.15 % 5.15 % 5.15 % 2.85 % 2.85 % 2.85 % Expected return on plan assets 5.21 5.36 4.77 5.13 5.26 4.69 3.22 3.32 2.86 141 The following table summarizes changes in the benefit obligation, changes in plan assets, the amounts recognized in the Consolidated Balance Sheets and the key actuarial assumptions of the postretirement plans. The measurement dates for plan assets and benefit obligations were December 31, 2024 and 2023. December 31, 2024 December 31, 2023 CenterPoint Energy Houston Electric CERC CenterPoint Energy Houston Electric CERC (in millions, except for actuarial assumptions) Change in Benefit Obligation Benefit obligation, beginning of year $ 263 $ 113 $ 93 $ 263 $ 115 $ 92 Service cost 1 — 1 1 — 1 Interest cost 13 5 4 13 5 5 Participant contributions 5 2 2 6 2 3 Benefits paid ( 21 ) ( 8 ) ( 9 ) ( 20 ) ( 8 ) ( 8 ) Actuarial (gain) loss (1) ( 22 ) ( 9 ) ( 8 ) — ( 1 ) — Other transfers 3 1 2 — — — Benefit obligation, end of year 242 104 85 263 113 93 Change in Plan Assets Fair value of plan assets, beginning of year 112 86 26 109 84 25 Employer contributions 9 1 5 7 — 4 Participant contributions 5 2 2 6 2 3 Benefits paid ( 21 ) ( 8 ) ( 9 ) ( 20 ) ( 8 ) ( 8 ) Actual investment return 6 4 2 10 8 2 Other transfers ( 8 ) ( 8 ) — — — — Fair value of plan assets, end of year 103 77 26 112 86 26 Funded status, end of year $ ( 139 ) $ ( 27 ) $ ( 59 ) $ ( 151 ) $ ( 27 ) $ ( 67 ) Amounts Recognized in Balance Sheets Current liabilities — other $ ( 8 ) $ — $ ( 4 ) $ ( 7 ) $ — $ ( 4 ) Other liabilities — benefit obligations ( 131 ) ( 27 ) ( 55 ) ( 144 ) ( 27 ) ( 63 ) Net liability, end of year $ ( 139 ) $ ( 27 ) $ ( 59 ) $ ( 151 ) $ ( 27 ) $ ( 67 ) Actuarial Assumptions Discount rate (2) 5.60 % 5.60 % 5.60 % 4.95 % 4.95 % 4.95 % Expected return on plan assets (3) 5.21 5.36 4.77 5.13 5.26 4.69 Medical cost trend rate assumed for the next year - Pre-65 6.75 6.75 6.75 7.25 7.25 7.25 Medical/prescription drug cost trend rate assumed for the next year - Post-65 13.74 13.74 13.74 22.76 22.76 22.76 Prescription drug cost trend rate assumed for the next year - Pre-65 10.00 10.00 10.00 9.00 9.00 9.00 Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) 4.50 4.50 4.50 4.50 4.50 4.50 Year that the cost trend rates reach the ultimate trend rate - Pre-65 2034 2034 2034 2033 2033 2033 Year that the cost trend rates reach the ultimate trend rate - Post-65 2034 2034 2034 2033 2033 2033 (1) Significant sources of actuarial gain for 2024 include increase in discount rate from 4.95 % to 5.60 %, offset by losses from updated claims and demographic review. (2) The discount rate assumption was determined by matching the projected cash flows of the plans against a hypothetical yield curve of high-quality corporate bonds represented by a series of annualized individual discount rates from one-half to 99 years. (3) The expected rate of return assumption was developed using the targeted asset allocation of the plans and the expected return for each asset class. 142 (d) Accumulated Other Comprehensive Income (Loss) (CenterPoint Energy and CERC) CenterPoint Energy recognizes the funded status of its pension and other postretirement plans on its Consolidated Balance Sheets. To the extent this obligation exceeds amounts previously recognized in the Statements of Consolidated Income, CenterPoint Energy records a regulatory asset for that portion related to its rate-regulated utilities. To the extent that excess liability does not relate to a rate-regulated utility, the offset is recorded as a reduction to equity in accumulated other comprehensive income. Amounts recognized in accumulated other comprehensive loss (income) consist of the following as of the dates presented: December 31, 2024 December 31, 2023 Pension Benefits Postretirement Benefits Pension Benefits Postretirement Benefits CenterPoint Energy CenterPoint Energy CERC CenterPoint Energy CenterPoint Energy CERC (in millions) Unrecognized actuarial loss (gain) $ 52 $ ( 34 ) $ ( 26 ) $ 69 $ ( 34 ) $ ( 27 ) Unrecognized prior service cost — 9 8 — 12 10 Net amount recognized in accumulated other comprehensive loss (income) $ 52 $ ( 25 ) $ ( 18 ) $ 69 $ ( 22 ) $ ( 17 ) The changes in plan assets and benefit obligations recognized in other comprehensive income for the year ended December 31, 2024 are as follows: Pension Benefits Postretirement Benefits CenterPoint Energy CenterPoint Energy CERC (in millions) Net actuarial loss (gain) $ ( 13 ) $ ( 4 ) $ — Amortization of net actuarial loss (gain) ( 4 ) 2 ( 2 ) Amortization of prior service cost — ( 1 ) 1 Settlement — — — Total recognized in comprehensive income $ ( 17 ) $ ( 3 ) $ ( 1 ) Total recognized in net periodic costs and other comprehensive income $ 34 $ 1 $ 2 (e) Pension Plan Assets (CenterPoint Energy) In managing the investments associated with the benefit plans, CenterPoint Energy’s objective is to achieve and maintain a fully funded plan. This objective is expected to be achieved through an investment strategy that manages liquidity requirements while maintaining a long-term horizon in making investment decisions and efficient and effective management of plan assets. As part of the investment strategy discussed above, CenterPoint Energy maintained the following weighted-average allocation targets for its pension plans as of December 31, 2024: Minimum Maximum U.S. equity 17 % 27 % International equity 9 % 19 % Real estate 2 % 8 % Fixed income 54 % 64 % Cash 0 % 2 % 143 The following tables set forth by level, within the fair value hierarchy (see Note 9), CenterPoint Energy’s pension plan assets at fair value as of the dates presented: December 31, 2024 December 31, 2023 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total (in millions) Cash $ 36 $ — $ — $ 36 $ 21 $ — $ — $ 21 Equity securities: U.S. companies 28 — — 28 30 — — 30 Cash received as collateral from securities lending 88 — — 88 94 — — 94 Obligation to return cash received as collateral from securities lending ( 88 ) — — ( 88 ) ( 94 ) — — ( 94 ) U.S. treasuries and government agencies 156 — — 156 178 — — 178 Corporate bonds: Investment grade or above — 428 — 428 — 469 — 469 Mortgage-backed securities — 12 — 12 — 15 — 15 Asset-backed securities — 1 — 1 — 1 — 1 Municipal bonds — 19 — 19 — 25 — 25 International government bonds — 13 — 13 — 9 — 9 Financial instruments — ( 3 ) — ( 3 ) — ( 4 ) — ( 4 ) Total investments at fair value $ 220 $ 470 $ — 690 $ 229 $ 515 $ — 744 Investments measured by net asset value per share or its equivalent (1) (2) 442 460 Fair value of plan assets $ 1,132 $ 1,204 (1) Represents investments in pooled investment funds and common collective trust funds. (2) The amounts invested in pooled investment funds were 100% allocated to real estate. The amounts invested common collective trust funds were allocated as follows as of the dates presented: December 31, 2024 December 31, 2023 International equities 38 % 40 % U.S. equities 61 % 59 % Fixed income 1 % 1 % Level 2 investments, which do not have a quoted price in active market, are valued using the market data provided by independent pricing services or major market makers, to arrive at a price a dealer would pay for the security. The pension plans utilized both exchange traded and over-the-counter financial instruments such as futures, interest rate options and swaps that were marked to market daily with the gains or losses settled in the cash accounts. The pension plans did not include any holdings of CenterPoint Energy Common Stock as of December 31, 2024 or 2023. (f) Postretirement Plan Assets In managing the investments associated with the postretirement plans, the Registrants’ primary objective is to preserve and improve the funded status of the plan, while minimizing volatility. This objective is expected to be achieved through an investment strategy that manages liquidity requirements while maintaining a long-term horizon in making investment decisions and efficient and effective management of plan assets. 144 As part of the investment strategy discussed above, the Registrants maintained the following weighted-average allocation targets for the postretirement plans as of December 31, 2024: CenterPoint Energy Houston Electric CERC Minimum Maximum Minimum Maximum Minimum Maximum U.S. equities 14 % 24 % 13 % 23 % 15 % 25 % International equities 3 % 13 % 3 % 13 % 2 % 12 % Fixed income 69 % 79 % 69 % 79 % 68 % 78 % Cash 0 % 2 % 0 % 2 % 0 % 2 % The following table sets forth by level, within the fair value hierarchy (see Note 9), the Registrants’ postretirement plan assets, all of which were mutual funds, at fair value as of the dates presented: December 31, 2024 December 31, 2023 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total (in millions) CenterPoint Energy $ 103 $ — $ — $ 103 $ 113 $ — $ — $ 113 Houston Electric 77 — — 77 86 — — 86 CERC 26 — — 26 26 — — 26 The amounts invested in mutual funds were allocated as follows as of the dates presented: December 31, 2024 December 31, 2023 CenterPoint Energy Houston Electric CERC CenterPoint Energy Houston Electric CERC U.S. equities 19 % 18 % 21 % 20 % 19 % 22 % International equities 7 % 8 % 7 % 8 % 9 % 6 % Fixed income 74 % 74 % 72 % 72 % 72 % 71 % (g) Benefit Plan Contributions The Registrants made the following contributions in 2024 and are required to make the following minimum contributions in 2025 to the indicated benefit plans below: Contributions in 2024 Expected Minimum Contributions in 2025 CenterPoint Energy Houston Electric CERC CenterPoint Energy Houston Electric CERC (in millions) Qualified pension plans $ 23 $ — $ — $ 105 $ — $ — Non-qualified pension plans 7 — — 7 — — Postretirement benefit plans 9 1 5 8 1 5 Benefit payments are expected to be paid by the pension and postretirement benefit plans as follows: Pension Benefits Postretirement Benefits CenterPoint Energy CenterPoint Energy Houston Electric CERC (in millions) 2025 $ 144 $ 16 $ 7 $ 6 2026 144 18 8 6 2027 141 19 8 7 2028 138 20 9 7 2029 134 21 9 7 2030-2034 609 102 46 35 145 (h) Savings Plan CenterPoint Energy maintains the CenterPoint Energy Savings Plan, a tax-qualified employee savings plan that includes a cash or deferred arrangement under Section 401(k) of the Code and an employee stock ownership plan under Section 4975(e)(7) of the Code. Under the plan, participating employees may make pre-tax or Roth contributions and, if eligible, after-tax contributions up to certain federally mandated limits. Participating Registrants provide matching contributions and, as of January 1, 2020, for certain eligible employees, non-elective contributions up to certain limits. The CenterPoint Energy Savings Plan has significant holdings of Common Stock. As of December 31, 2024, 7,136,941 shares of Common Stock were held by the savings plan, which represented approximately 6 % of its investments. Given the concentration of the investments in Common Stock, the savings plan and its participants have market risk related to this investment. The savings plan limits the percentage of future contributions that can be invested in Common Stock to 25 % and prohibits transfers of account balances where the transfer would result in more than 25 % of a participant’s total account balance invested in Common Stock. CenterPoint Energy allocates the savings plan benefit expense to Houston Electric and CERC related to their respective employees. The following table summarizes the Registrants’ savings plan benefit expense for the periods presented: Year Ended December 31, 2024 2023 2022 CenterPoint Energy Houston Electric CERC CenterPoint Energy Houston Electric CERC CenterPoint Energy Houston Electric CERC (in millions) Savings plan benefit expenses (1) $ 72 $ 27 $ 23 $ 67 $ 23 $ 20 $ 72 $ 23 $ 22 (1) Amounts presented in the table above are included in Operation and maintenance expense in the Registrants’ respective Statements of Consolidated Income and shown prior to any amounts capitalized. (i) Other Benefits Plans CenterPoint Energy maintains non-qualified deferred compensation plans that provide benefits payable to eligible directors, officers and select employees or their designated beneficiaries at specified future dates or upon termination, retirement or death. Benefit payments are made from the general assets of the participating Registrants or, in the case of certain plans, from a rabbi trust that is a grantor trust and remains subject to the claims of general creditors under applicable state and federal law. Expenses related to other benefit plans were recorded as follows for the periods presented: Year Ended December 31, 2024 2023 2022 CenterPoint Energy Houston Electric CERC CenterPoint Energy Houston Electric CERC CenterPoint Energy Houston Electric CERC (in millions) Deferred compensation plans $ 3 $ — $ — $ ( 1 ) $ — $ — $ 1 $ — $ — Amounts related to other benefit plans were included in Benefit Obligations in the Registrants’ accompanying Consolidated Balance Sheets as follows: December 31, 2024 December 31, 2023 CenterPoint Energy Houston Electric CERC CenterPoint Energy Houston Electric CERC (in millions) Deferred compensation plans $ 22 $ 3 $ 1 $ 26 $ 3 $ 1 Split-dollar life insurance arrangements 46 1 — 46 1 — (j) Change in Control Agreements and Other Employee Matters CenterPoint Energy has a change in control plan, which was amended and restated on May 1, 2017. The plan generally provides, to the extent applicable, in the case of the occurrence of both a change in control of CenterPoint Energy and a covered 146 termination of employment, for severance benefits of up to three times annual base salary plus bonus and other benefits. Certain CenterPoint Energy officers are participants under the plan. As of December 31, 2024, the Registrants’ employees were covered by collective bargaining agreements as follows: Percentage of Employees Covered Agreement Expiration CenterPoint Energy Houston Electric CERC IBEW Local 66 May 2026 17 % 53 % — % OPEIU Local 12 December 2025 2 % — % 2 % Gas Workers Union Local 340 April 2025 5 % — % 12 % IBEW Locals 1393 and USW Locals 12213 & 7441 December 2026 3 % — % 8 % IBEW Locals 949 December 2025 3 % — % 7 % USW Locals 13-227 June 2027 5 % — % 13 % USW Locals 13-1 June 2027 — % — % 1 % IBEW Local 702 June 2025 3 % — % — % Teamsters Local 135/215 September 2027 — % — % — % UWUA Local 175 October 2027 1 % — % 4 % Total 39 % 53 % 47 % The collective bargaining agreements with Gas Workers Union Local 340, IBEW Local 949 and OPEIU Local 12 related to CERC employees in Minnesota, as well as with IBEW Local 702 related to SIGECO employees, are scheduled to expire in April 2025, December 2025, December 2025 and June 2025, respectively, and negotiations of these agreements are expected to be completed before the respective expirations. (9) Fair Value Measurements Assets and liabilities that are recorded at fair value in the Registrants’ Consolidated Balance Sheets are categorized based upon the level of judgment associated with the inputs used to measure their value. Hierarchical levels, as defined below and directly related to the amount of subjectivity associated with the inputs to fair valuations of these assets and liabilities, are as follows: Level 1: Inputs are unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date. The types of assets carried at Level 1 fair value generally are exchange-traded derivatives and equity securities. Level 2: Inputs, other than quoted prices included in Level 1, are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar instruments in active markets and inputs other than quoted prices that are observable for the asset or liability. Fair value assets and liabilities that are generally included in this category are derivatives with fair values based on inputs from actively quoted markets. A market approach is utilized to value the Registrants’ Level 2 natural gas derivative assets or liabilities. CenterPoint Energy’s Level 2 indexed debt securities derivative is valued using an option model and a discounted cash flow model, which uses projected dividends on the ZENS-Related Securities and a discount rate as observable inputs. Level 3: Inputs are unobservable for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. Unobservable inputs reflect the Registrants’ judgments about the assumptions market participants would use in pricing the asset or liability since limited market data exists. The Registrants develop these inputs based on the best information available, including the Registrants’ own data. The Registrants determine the appropriate level for each financial asset and liability on a quarterly basis and recognize transfers between levels at the end of the reporting period. As of December 31, 2024 and December 31, 2023, the Registrants did not have any assets or liabilities classified as Level 3. The following tables present information about the Registrants’ assets and liabilities measured at fair value on a recurring basis as of December 31, 2024 and December 31, 2023 and indicate the fair value hierarchy of the valuation techniques utilized by the Registrants to determine such fair value: 147 CenterPoint Energy December 31, 2024 December 31, 2023 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets (in millions) Equity securities $ 561 $ — $ — $ 561 $ 541 $ — $ — $ 541 Investments, including money market funds (1) 22 — — 22 31 — — 31 Natural gas derivatives (1) — 1 — 1 — — — — Total assets $ 583 $ 1 $ — $ 584 $ 572 $ — $ — $ 572 Liabilities Indexed debt securities derivative $ — $ 619 $ — $ 619 $ — $ 605 $ — $ 605 Natural gas derivatives (2) — 3 — 3 — 12 — 12 Total liabilities $ — $ 622 $ — $ 622 $ — $ 617 $ — $ 617 Houston Electric December 31, 2024 December 31, 2023 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets (in millions) Investments, including money market funds (1) $ 5 $ — $ — $ 5 $ 14 $ — $ — $ 14 Total assets $ 5 $ — $ — $ 5 $ 14 $ — $ — $ 14 CERC December 31, 2024 December 31, 2023 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets (in millions) Investments, including money market funds (1) $ 15 $ — $ — $ 15 $ 15 $ — $ — $ 15 Natural gas derivatives (1) — 1 — 1 — — — — Total assets $ 15 $ 1 $ — $ 16 $ 15 $ — $ — $ 15 Liabilities Natural gas derivatives (2) $ — $ 2 $ — $ 2 $ — $ 11 $ — $ 11 Total liabilities $ — $ 2 $ — $ 2 $ — $ 11 $ — $ 11 (1) Included in Prepaid expenses and other current assets in the respective Consolidated Balance Sheets. (2) Included in Other current liabilities in the respective Consolidated Balance Sheets. Items Measured at Fair Value on a Nonrecurring Basis As a result of classifying the Louisiana and Mississippi natural gas LDC businesses as held for sale, CenterPoint Energy and CERC used a market approach consisting of contractual sales price adjusted for estimated working capital and other contractual purchase price adjustments to determine the fair value of the businesses classified as held for sale, which are Level 2 inputs. Neither CenterPoint Energy nor CERC recognized any gains or losses upon classification as held for sale for the year ended December 31, 2024. See Note 4 for further information. Estimated Fair Value of Financial Instruments The fair values of cash and cash equivalents, investments in equity securities measured at fair value and short-term borrowings under AMAs are estimated to be approximately equivalent to carrying amounts and have been excluded from the table below. The carrying amounts of non-trading derivative assets and liabilities and CenterPoint Energy’s ZENS indexed debt securities derivative are stated at fair value and are excluded from the table below. The fair value of each debt instrument is determined by multiplying the principal amount of each debt instrument by a combination of historical trading prices and 148 comparable issue data. These liabilities, which are not measured at fair value in the Registrants’ Consolidated Balance Sheets, but for which the fair value is disclosed, would be classified as Level 2 in the fair value hierarchy. December 31, 2024 December 31, 2023 CenterPoint Energy (1) Houston Electric (1) CERC CenterPoint Energy (1) Houston Electric (1) CERC Long-term debt, including current maturities (in millions) Carrying amount $ 20,961 $ 8,822 $ 5,184 $ 18,609 $ 7,587 $ 4,670 Fair value 19,597 7,746 5,032 17,804 6,917 4,627 (1) Includes Securitization Bonds, as applicable. (10) Equity Securities and Indexed Debt Securities (ZENS) (CenterPoint Energy) (a) Equity Securities Gains and losses on equity securities, net of transaction costs, are recorded as Gain (loss) on equity securities in CenterPoint Energy’s Statements of Consolidated Income. The following table presents unrealized gains (losses), net on equity securities owned by CenterPoint Energy for each period presented: Year Ended December 31, 2024 2023 2022 (in millions) AT&T Common $ 62 $ ( 17 ) $ ( 63 ) Charter Common ( 40 ) 43 ( 273 ) WBD Common ( 2 ) 5 23 Energy Transfer Common Units (1) — — 95 Energy Transfer Series G Preferred Units (1) — — ( 9 ) Total unrealized gains (losses) on equity securities, net $ 20 $ 31 $ ( 227 ) (1) In 2022, CenterPoint Energy completed the execution of its previously announced plan to exit the midstream sector by selling its remaining Energy Transfer Common Units and Energy Transfer Series G Preferred Units. CenterPoint Energy and its subsidiaries hold shares of certain securities, which are classified as trading securities. Shares of AT&T Common, Charter Common and WBD Common are expected to be held to facilitate CenterPoint Energy’s ability to meet its obligation under the ZENS. The following table presented the shares held by CenterPoint Energy and their carrying value for each period presented: Shares Held at December 31, Carrying Value at December 31, 2024 2023 2024 2023 (in millions) AT&T Common 10,212,945 10,212,945 $ 233 $ 171 Charter Common 872,503 872,503 299 339 WBD Common 2,470,685 2,470,685 26 28 Other 3 3 Total $ 561 $ 541 149 (b) ZENS In September 1999, CenterPoint Energy issued ZENS having an original principal amount of $ 1.0 billion, of which $ 828 million remained outstanding as of December 31, 2024. Each ZENS is exchangeable at the holder’s option at any time for an amount of cash equal to 95 % of the market value of the reference shares attributable to such note. The number and identity of the reference shares attributable to each ZENS are adjusted for certain corporate events. CenterPoint Energy’s reference shares for each ZENS consisted of the following as of the dates presented: December 31, 2024 December 31, 2023 (in shares) AT&T Common 0.7185 0.7185 Charter Common 0.061382 0.061382 WBD Common 0.173817 0.173817 CenterPoint Energy pays interest on the ZENS at an annual rate of 2 % plus the amount of any quarterly cash dividends paid in respect of the reference shares attributable to the ZENS. The principal amount of the ZENS is subject to increases or decreases to the extent that the annual yield from interest and cash dividends on the reference shares attributable to the ZENS is less than or more than 2.309 %. The adjusted principal amount is defined in the ZENS instrument as “contingent principal.” As of December 31, 2024, the ZENS, having an original principal amount of $ 828 million and a contingent principal amount of $ 9 million, were outstanding and were exchangeable, at the option of the holders, for cash equal to 95 % of the market value of the reference shares attributable to the ZENS. As of December 31, 2024, the market value of such shares was approximately $ 558 million, which would provide an exchange amount of $ 640 for each $ 1,000 original principal amount of ZENS. At maturity of the ZENS in 2029, CenterPoint Energy will be obligated to pay in cash the higher of the contingent principal amount of the ZENS or an amount based on the then-current market value of the reference shares, which will include any additional publicly-traded securities distributed with respect to the current reference shares prior to maturity. The ZENS obligation is bifurcated into a debt component and a derivative component (the holder’s option to receive the appreciated value of the reference shares at maturity). The bifurcated debt component accretes through interest charges annually up to the contingent principal amount of the ZENS in 2029. Such accretion will be reduced by annual cash interest payments, as previously described. The derivative component is recorded at fair value and changes in the fair value of the derivative component are recorded as Gain (loss) on indexed debt securities in CenterPoint Energy’s Statements of Consolidated Income. Changes in the fair value of the ZENS-Related Securities held by CenterPoint Energy are expected to substantially offset changes in the fair value of the derivative component of the ZENS. 150 The following table provides summarized financial information related to CenterPoint Energy’s investment in ZENS-Related Securities and each component of CenterPoint Energy’s ZENS obligation for the periods presented: ZENS-Related Securities Debt Component of ZENS Derivative Component of ZENS (in millions) Balance as of December 31, 2021 $ 820 $ 10 $ 903 Accretion of debt component of ZENS — 17 — 2% interest paid — ( 17 ) — Distribution to ZENS holders — ( 3 ) — Gain on indexed debt securities — — ( 325 ) Loss on ZENS-Related Securities ( 313 ) — — Balance as of December 31, 2022 507 7 578 Accretion of debt component of ZENS — 17 — 2% interest paid — ( 17 ) — Distribution to ZENS holders — ( 2 ) — Loss on indexed debt securities — — 27 Gain on ZENS-Related Securities 31 — — Balance as of December 31, 2023 538 5 605 Accretion of debt component of ZENS — 16 — 2% interest paid — ( 17 ) — Distribution to ZENS holders — ( 2 ) — Loss on indexed debt securities — — 14 Gain on ZENS-Related Securities 20 — — Balance as of December 31, 2024 $ 558 $ 2 $ 619 (11) Equity (CenterPoint Energy) Dividends Declared and Paid (CenterPoint Energy) CenterPoint Energy’s dividends declared and dividends paid during 2024, 2023 and 2022 are presented below: Dividends Declared Per Share Dividends Paid Per Share 2024 2023 2022 2024 2023 2022 Common Stock $ 0.830 $ 0.780 $ 0.720 $ 0.810 $ 0.770 $ 0.700 Series A Preferred Stock (1) $ — $ 30.625 $ 61.250 $ — $ 61.250 $ 61.250 (1) All of the outstanding shares of Series A Preferred Stock were redeemed during 2023 as further described below. Common Stock (CenterPoint Energy) (a) Underwritten Offering On August 9, 2024, CenterPoint Energy issued 9,754,194 shares of Common Stock in an underwritten public offering at a price of $ 25.36 per share, for net proceeds of $ 247 million after deducting issuance costs. The proceeds from the offering were used for the repayment of a portion of CenterPoint Energy’s then-outstanding commercial paper. (b) Equity Distribution Agreement On January 10, 2024, CenterPoint Energy entered into an Equity Distribution Agreement with certain financial institutions with respect to the offering and sale from time to time of shares of Common Stock, having an aggregate gross sales price of up to $ 500 million. Sales of Common Stock may be made by any method permitted by applicable law and deemed to be an “at the market offering” as defined in Rule 415 of the Securities Act of 1933, as amended. CenterPoint Energy may also enter into one or more forward sales agreements pursuant to master forward confirmations. The offer and sale of Common Stock under the Equity Distribution Agreement will terminate upon the earliest of (1) the sale of all Common Stock subject to the Equity Distribution Agreement, (2) termination of the Equity Distribution Agreement or (3) May 17, 2026. During the year ended 151 December 31, 2024, CenterPoint Energy issued 8,790,848 shares of Common Stock through the ATM Managers under the Equity Distribution Agreement, representing aggregate cash proceeds of $ 247 million, which was net of compensation paid by CenterPoint Energy to the ATM Managers of $ 2 million. As of December 31, 2024, CenterPoint Energy had not entered into any forward sale agreements under the at-the-market program. Additionally, as of December 31, 2024, CenterPoint Energy had $ 250 million of remaining capacity available under the program. Series A Preferred Stock (CenterPoint Energy) Liquidation Preference Per Share Share Outstanding as of December 31, Outstanding Value as of December 31, 2024 2023 2022 2024 2023 2022 (in millions, except shares and per share amount) Series A Preferred Stock (1) $ 1,000 — — 800,000 $ — $ — $ 790 (1) All of the outstanding shares of Series A Preferred Stock were redeemed during 2023 as further described below. Income Allocated to Series A Preferred Shareholders Year Ended December 31, 2024 2023 2022 (in millions) Series A Preferred Stock $ — $ 50 $ 49 Prior to the redemption of all outstanding shares of Series A Preferred Stock in September 2023, as further described below, the aggregate liquidation value of the Series A Preferred Stock was $ 800 million with a per share liquidation value of $ 1,000 . The Series A Preferred Stock was redeemable at CenterPoint Energy’s election on or after September 1, 2023, for cash at a redemption price of $ 1,000 per share, plus any accumulated and unpaid dividends thereon to, but excluding, the redemption date. Dividends. The Series A Preferred Stock accrued cumulative dividends, calculated as a percentage of the stated amount per share, at a fixed annual rate of 6.125 % per annum to be paid in cash if, when and as declared. If declared, dividends were payable semi-annually in arrears on each March 1 and September 1, beginning on March 1, 2019. Cumulative dividends earned during the applicable periods are presented on CenterPoint Energy’s Statements of Consolidated Income as Preferred stock dividend requirement. Redemption of Series A Preferred Stock. On September 1, 2023, CenterPoint Energy redeemed all 800,000 outstanding shares of Series A Preferred Stock, in whole for cash at a redemption price of $ 1,000 . 152 Accumulated Other Comprehensive Income (Loss) (CenterPoint Energy, Houston Electric and CERC) Changes in accumulated other comprehensive income (loss) are as follows for the periods presented: Year Ended December 31, 2024 2023 CenterPoint Energy Houston Electric CERC CenterPoint Energy Houston Electric CERC (in millions) Beginning Balance $ ( 35 ) $ — $ 16 $ ( 31 ) $ — $ 16 Other comprehensive income (loss) before reclassifications: Remeasurement of pension and other postretirement plans 16 ( 1 ) 2 ( 8 ) — — Net deferred gain from cash flow hedges 4 — — 1 — — Amounts reclassified from accumulated other comprehensive income (loss): Prior service cost (benefit) (1) 1 — 1 1 — ( 2 ) Actuarial losses (gain) (1) 2 — ( 2 ) 1 — 2 Reclassification of deferred gain from cash flow hedges realized in net income ( 1 ) — — — — — Tax benefit (expense) ( 4 ) — — 1 — — Other comprehensive income (loss) 18 ( 1 ) 1 ( 4 ) — — Ending Balance $ ( 17 ) $ ( 1 ) $ 17 $ ( 35 ) $ — $ 16 (1) Amounts are included in the computation of net periodic cost and are reflected in Other income (expense), net in each of the Registrants’ respective Statements of Consolidated Income. 153 (12) Short-term Borrowings and Long-term Debt Short-term Borrowings and Long-term Debt: As of December 31, 2024 and 2023, the Registrants had the following short-term borrowings and long-term debt outstanding: December 31, 2024 December 31, 2023 Long-Term Current (1) Long-Term Current (1) (in millions) CenterPoint Energy: ZENS due 2029 (2) $ — $ 2 $ — $ 5 CenterPoint Energy senior notes 1.45 % to 5.25 % due 2026 to 2049 3,950 — 3,250 850 CenterPoint Energy junior subordinated notes 6.70 % to 7.00 % due 2055 1,300 — — — CenterPoint Energy pollution control bonds 5.125 % due 2028 (3) 68 — 68 — CenterPoint Energy commercial paper (4) 382 — 1,036 — SIGECO first mortgage bonds 3.450 % to 6.00 % due 2025 to 2055 (5) 944 41 825 22 SIGECO securitization bonds 5.026 % to 5.172 % due 2036 to 2041 (6) 311 13 324 17 Unamortized debt issuance costs ( 48 ) — ( 35 ) — Unamortized discount and premium, net ( 6 ) — ( 5 ) — Houston Electric debt (see details below) 8,322 500 7,426 161 CERC debt (see details below) 5,174 10 4,670 4 Total CenterPoint Energy debt $ 20,397 $ 566 $ 17,559 $ 1,059 Houston Electric: Short Term Borrowings: Term loan $ — $ 500 $ — $ — Long-term debt: General mortgage bonds 2.35 % to 6.95 % due 2026 to 2053 (7) $ 8,412 $ — $ 7,512 $ — Other 1 — 1 — Bond Company IV: Transition bonds 3.028 % due 2024 — — — 161 Unamortized debt issuance costs ( 62 ) — ( 59 ) — Unamortized discount and premium, net ( 29 ) — ( 28 ) — Total Houston Electric debt $ 8,322 $ 500 $ 7,426 $ 161 CERC (8): Short-term borrowings: Inventory financing (9) $ — $ — $ — $ 4 Long-term debt: Senior notes 1.75 % to 6.625 % due 2026 to 2047 $ 4,520 $ — $ 4,120 $ — Indiana Gas senior notes 6.34 % to 7.08 % due 2025 to 2029 86 10 96 — Commercial paper (4) 599 — 484 — Unamortized debt issuance costs ( 31 ) — ( 31 ) — Unamortized discount and premium, net — — 1 — Total CERC debt $ 5,174 $ 10 $ 4,670 $ 4 (1) Includes amounts due or exchangeable within one year of the date noted. (2) CenterPoint Energy’s ZENS obligation is bifurcated into a debt component and an embedded derivative component. For additional information regarding ZENS, see Note 10(b). As ZENS are exchangeable for cash at any time at the option of the holders, these notes are classified as a current portion of long-term debt. (3) These pollution control bonds were secured by general mortgage bonds of Houston Electric as of December 31, 2024 and 2023 and are not reflected in Houston Electric’s consolidated financial statements because of the contingent nature of the obligations. (4) Commercial paper issued by CenterPoint Energy and CERC Corp. has maturities up to 60 days and 30 days, respectively, and are backstopped by the respective issuer’s long-term revolving credit facility. Commercial paper is classified as long-term because the termination date of the facility that backstops the commercial paper is more than one year from the balance sheet date. 154 (5) The first mortgage bonds issued by SIGECO subject SIGECO’s properties to a lien under the related mortgage indenture as further discussed below. (6) Scheduled final payment dates are November 15, 2036 and May 15, 2041. The SIGECO Securitization Bonds will be repaid over time through a securitization charge imposed on retail electric customers in SIGECO’s service territory. (7) The general mortgage bonds issued by Houston Electric subject Houston Electric’s properties to a lien under the General Mortgage as further discussed below. (8) Issued by CERC Corp. (9) Represents AMA transactions accounted for as an inventory financing. Debt Transactions Debt Issuances. During 2024, the following debt instruments were issued or incurred: Registrant Issuance Date Debt Instrument Aggregate Principal Amount Interest Rate Maturity Date (in millions, except for interest rates) Houston Electric (1) February 2024 General Mortgage Bonds $ 400 5.15 % 2034 Houston Electric (2) June 2024 Term Loan 500 SOFR (9) + 1.00 % 2025 Houston Electric (3) October 2024 General Mortgage Bonds 500 5.05 % 2035 Total Houston Electric 1,400 CERC (4) June 2024 Senior Notes 400 5.40 % 2034 Total CERC 400 CenterPoint Energy (5) May 2024 Senior Notes 700 5.40 % 2029 CenterPoint Energy (6) August 2024 First Mortgage Bonds 100 5.18 % 2034 CenterPoint Energy (6) August 2024 First Mortgage Bonds 60 5.28 % 2036 CenterPoint Energy (7) August 2024 Junior Subordinated Notes 400 7.00 % 2055 CenterPoint Energy (7) August 2024 Junior Subordinated Notes 400 6.85 % 2055 CenterPoint Energy (8) October 2024 Junior Subordinated Notes 500 6.70 % 2055 Total CenterPoint Energy $ 3,960 (1) Total proceeds from Houston Electric’s February 2024 issuance of general mortgage bonds, net of transaction expenses and fees, were approximately $ 395 million, which were used for general limited liability company purposes, including capital expenditures and working capital purposes. (2) On June 28, 2024, Houston Electric borrowed $ 100 million aggregate principal amount available under the term loan agreement. In September 2024, Houston Electric borrowed $ 200 million aggregate principal amount available under the term loan agreement. In November 2024, Houston Electric requested additional commitments under the term loan agreement and borrowed $200 million under the term loan agreement. Houston Electric has used the proceeds thereof for working capital purposes to support liquidity needs from the May 2024 Storm Events and general limited liability company purposes. (3) Total net proceeds from Houston Electric’s October 2024 issuance of general mortgage bonds, net of transaction expenses and fees, were approximately $ 494 million, which were used for general limited liability company purposes, including capital expenditures and working capital purposes. (4) Total proceeds from CERC’s June 2024 issuance of senior notes, net of transaction expenses and fees, were approximately $ 396 million which were used for general corporate purposes, including the repayment of a portion of CERC’s outstanding commercial paper. (5) Total proceeds from CenterPoint Energy’s May 2024 issuance of senior notes, net of transaction expenses and fees, were approximately $ 693 million which were used for general corporate purposes including the redemption of $ 350 million aggregate principal amount of CenterPoint Energy’s outstanding floating rate senior notes due 2024 and the repayment of a portion of CenterPoint Energy’s outstanding commercial paper. (6) Issued by SIGECO. Total proceeds from SIGECO’s August 2024 issuance of first mortgage bonds, net of transaction expenses and fees, of approximately $ 159 million were used for general corporate purposes, including repaying short-term debt and long-term debt at maturity or otherwise. See Note 20 for additional information. (7) Total proceeds from CenterPoint Energy’s August 2024 issuance of junior subordinated notes, net of transaction expenses and fees, were approximately $ 790 million, which were used for general corporate purposes, including the 155 redemption of $ 500 million aggregate principal amount of CenterPoint Energy’s outstanding 2.50 % senior notes due 2024 and the repayment of a portion of CenterPoint Energy’s outstanding commercial paper. (8) Total proceeds from CenterPoint Energy’s October 2024 issuance of junior subordinated notes, net of transaction expenses and fees, were approximately $ 494 million, which were used for general company purposes including the repayment of a portion of CenterPoint Energy’s outstanding commercial paper. (9) The borrowings under the term loan agreement bear interest at Houston Electric’s option, at a rate equal to either (i) Term SOFR (as defined in the term loan agreement), which includes an adjustment of 0.10 % per annum plus a margin of 1.0 %, or (ii) the Alternate Base Rate (as defined in the term loan agreement) Junior Subordinated Notes. As described in the table above, in August 2024, CenterPoint Energy issued $ 400 million aggregate principal amount of Junior Subordinated Series A Notes and $ 400 million aggregate principal amount of Junior Subordinated Series B Notes. Interest on the August Junior Subordinated Notes accrues from August 14, 2024 and is payable semiannually in arrears on February 15 and August 15 of each year, beginning on February 15, 2025, and maturing on February 15, 2055. The Junior Subordinated Series A Notes bear interest (i) from and including August 14, 2024 to, but excluding, February 15, 2030 at the rate of 7.000 % per annum and (ii) from and including February 15, 2030, during each five-year period following February 15, 2030, at a rate per annum equal to the Five-Year Treasury Rate (as defined in the Junior Subordinated Notes Indenture) as of two business days prior to the beginning of the applicable Junior Subordinated Series A Interest Reset Period plus a spread of 3.254 %, with such rate per annum to be reset on each five-year anniversary of February 15, 2030. The Junior Subordinated Series B Notes bear interest (i) from and including August 14, 2024, but excluding, February 15, 2035 at the rate of 6.850 % per annum and (ii) from and including February 15, 2035, during each five-year period following February 15, 2035, at a rate per annum equal to the Five-Year Treasury Rate (as defined in the Junior Subordinated Notes Indenture) as of two business days prior to the beginning of the applicable Junior Subordinated Series B Interest Reset Period plus a spread of 2.946 %, with such rate per annum to be reset on each five-year anniversary of February 15, 2035. As described in the table above, in October 2024, CenterPoint Energy issued $ 500 million aggregate principal amount of Junior Subordinated Series C Notes. Interest on the Junior Subordinated Series C Notes accrues from October 31, 2024 and is payable semi-annually in arrears on May 15 and November 15 of each year, beginning on May 15, 2025, and maturing on May 15, 2055. The Junior Subordinated Series C Notes bear interest (i) from and including October 31, 2024 to, but excluding May 15, 2030 at the rate of 6.700 % per annum and (ii) from and including May 15, 2030, during each five-year period following May 15, 2030 at a rate per annum equal to the Five-Year Treasury Rate (as defined in the Junior Subordinated Notes Indenture) as of two business days prior to the beginning of the applicable Junior Subordinated Series C Interest Reset Period plus a spread of 2.586 %, with such rate per annum to be reset on each five-year anniversary of May 15, 2030. So long as no event of default (as defined in the prospectus supplement relating to the offering of the Junior Subordinated Notes) with respect to a given series of Junior Subordinated Notes has occurred and is continuing, CenterPoint Energy may, at its option, defer interest payments on such series of Junior Subordinated Notes, from time to time, for one or more deferral periods of up to 20 consecutive semiannual interest payment periods, except that no such optional deferral period (as defined in the prospectus supplement relating to the offering of the Junior Subordinated Notes) may extend beyond the final maturity date of such series of Junior Subordinated Notes or end on a day other than the day immediately preceding an interest payment date. During any optional deferral period, CenterPoint Energy (and its majority-owned subsidiaries, as applicable) will not (subject to certain exceptions as described in the Junior Subordinated Notes Indenture): (i) declare or pay any dividends or distributions on any of CenterPoint Energy’s capital stock; (ii) redeem, purchase, acquire or make a liquidation payment with respect to any of CenterPoint Energy’s capital stock; (iii) pay any principal, interest (to the extent such interest is deferrable) or premium on, or repay, repurchase or redeem any of CenterPoint Energy’s indebtedness that ranks equally with or junior to the Junior Subordinated Notes in right of payment (including debt securities of other series, such as the other series of the Junior Subordinated Notes issued); or (iv) make any payments with respect to any guarantees by CenterPoint Energy of any indebtedness if such guarantees rank equally with or junior to the Junior Subordinated Notes in right of payment. The Junior Subordinated Notes are CenterPoint Energy’s unsecured obligations and rank junior and subordinate in right of payment to the prior payment in full of CenterPoint Energy’s existing and future Senior Indebtedness (as defined in the Junior Subordinated Notes Indenture). Convertible Senior Notes. Interest on the Convertible Notes is payable semiannually in arrears on February 15 and August 15 of each year, beginning on February 15, 2024. The Convertible Notes will mature on August 15, 2026, unless earlier converted or repurchased by CenterPoint Energy in accordance with their terms. Prior to the close of business on the business day immediately preceding May 15, 2026, the Convertible Notes are convertible only under certain conditions. On or after May 15, 2026 until the close of business on the second scheduled trading 156 day immediately preceding the maturity date, holders of the Convertible Notes may convert all or any portion of their Convertible Notes at any time at the conversion rate then in effect, irrespective of the conditions. CenterPoint Energy may not redeem the Convertible Notes prior to the maturity date and no sinking fund is provided for the Convertible Notes. Upon conversion of the Convertible Notes, CenterPoint Energy will pay cash up to the aggregate principal amount of the Convertible Notes to be converted and pay or deliver, as the case may be, cash, shares of Common Stock, or a combination of cash and shares of Common Stock, at CenterPoint Energy’s election, in respect of the remainder, if any, of CenterPoint Energy’s conversion obligation in excess of the aggregate principal amount of the Convertible Notes being converted. The conversion rate for the Convertible Notes is initially 27.1278 shares of Common Stock per $1,000 principal amount of Convertible Notes (equivalent to an initial conversion price of approximately $ 36.86 per share of Common Stock). The initial conversion price of the Convertible Notes represents a premium of approximately 25.0 % over the last reported sale price of the Common Stock on the NYSE on August 1, 2023. Initially, a maximum of 33,909,700 shares of Common Stock may be issued upon conversion of the Convertible Notes based on the initial maximum conversion rate of 33.9097 shares of Common Stock per $1,000 principal amount of Convertible Notes. The conversion rate will be subject to adjustment in some events (as described in the Convertible Notes Indenture) but will not be adjusted for any accrued and unpaid interest. In addition, following certain corporate events that occur prior to the maturity date of the Convertible Notes, CenterPoint Energy will, in certain circumstances, increase the conversion rate for a holder of Convertible Notes who elects to convert its Convertible Notes in connection with such a corporate event. If CenterPoint Energy undergoes a fundamental change (as defined in the Convertible Notes Indenture), holders of the Convertible Notes may require CenterPoint Energy to repurchase for cash all or any portion of their Convertible Notes at a fundamental change repurchase price equal to 100 % of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. The Convertible Notes are senior unsecured obligations of CenterPoint Energy and rank senior in right of payment to any of CenterPoint Energy’s indebtedness that is expressly subordinated in right of payment to the Convertible Notes; equal in right of payment to any of CenterPoint Energy’s unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of CenterPoint Energy’s secured indebtedness it may incur in the future to the extent of the value of the assets securing such future secured indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables but excluding intercompany obligations and liabilities of a type not required to be reflected on a balance sheet of such subsidiaries in accordance with generally accepted accounting principles) of CenterPoint Energy’s subsidiaries. Debt Repayments and Redemptions. During 2024, the following debt instruments were repaid at maturity or redeemed prior to maturity: Registrant Repayment/Redemption Date Debt Instrument Aggregate Principal Interest Rate Maturity Date (in millions) CenterPoint Energy (1) March 2024 First Mortgage Bonds $ 22 3.50 % 2024 CenterPoint Energy (2) May 2024 Senior Notes 350 SOFR + 0.65 % 2024 CenterPoint Energy (3) September 2024 Senior Notes 500 2.50 % 2024 Total CenterPoint Energy $ 872 (1) On February 6, 2024, SIGECO provided notice of redemption and on March 1, 2024, SIGECO paid down the outstanding principal of $ 22 million aggregate principal amount of SIGECO’s outstanding first mortgage bonds due 2024 at a redemption price equal to 100 % of the principal amount of the first mortgage bonds to be redeemed plus accrued and unpaid interest thereon, if any, to, but excluding, the redemption date. (2) On May 13, 2024, CenterPoint Energy redeemed $ 350 million aggregate principal amount of its outstanding floating rate senior notes due 2024 at a redemption price equal to 100 % of the principal amount to be redeemed plus accrued and unpaid interest thereon. (3) In September 2024, CenterPoint Energy redeemed $ 500 million aggregate principal amount of its outstanding 2.50 % senior notes due 2024 at a redemption price equal to 100 % of the principal amount to be redeemed plus accrued and unpaid interest thereon. 157 CenterPoint Energy and Houston Electric recorded the following losses on early extinguishment of debt, including make-whole premiums and recognition of deferred debt related costs, in Interest expense and other finance charges on their respective Statements of Consolidated Income unless specified otherwise: Year Ended December 31, 2024 2023 2022 (in millions) CenterPoint Energy (1) $ — $ 11 $ 47 Houston Electric (2) — — 2 (1) The loss on early extinguishment of debt at CenterPoint Energy during 2023 was recorded as a regulatory asset. (2) The loss on early extinguishment of debt at Houston Electric during 2022 was recorded as a regulatory asset. Securitization Bonds. As of December 31, 2024, CenterPoint Energy, Houston Electric and SIGECO had special purpose subsidiaries including the Bond Companies and the SIGECO Securitization Subsidiary, which are consolidated. The consolidated special purpose subsidiaries are wholly-owned, bankruptcy remote entities that were formed solely for the purpose of securitizing transition property or facilitating the securitization financing of qualified costs in the second quarter of 2023 associated with the completed retirement of SIGECO’s A.B. Brown coal generation facilities through the issuance of securitization bonds and activities incidental thereto. The Securitization Bonds issued by Bond Company IV are payable only through the imposition and collection of transition charges, as defined in the Texas Public Utility Regulatory Act, which are irrevocable, non-bypassable charges to provide recovery of authorized qualified costs. The SIGECO Securitization Bonds are payable only through the imposition of securitization charges payable by SIGECO’s retail electric customers, which are non-bypassable charges to provide recovery of the qualified costs of SIGECO authorized by the IURC order. CenterPoint Energy, Houston Electric and SIGECO have no payment obligations in respect of the Securitization Bonds issued by Bond Company IV or the SIGECO Securitization Bonds other than to remit the applicable transition or securitization charges they collect as set forth in servicing agreements among Houston Electric, the Bond Companies, SIGECO, the SIGECO Securitization Subsidiary and other parties. Each special purpose entity is the sole owner of the right to impose, collect and receive the applicable transition and securitization charges securing the bonds issued by that entity. Creditors of CenterPoint Energy, Houston Electric and SIGECO have no recourse to any assets or revenues of the Bond Companies (including the transition charges) or the SIGECO Securitization Subsidiary, as applicable, and the bondholders have no recourse to the to the general credit of CenterPoint Energy, Houston Electric or SIGECO. Credit Facilities. The Registrants had the following revolving credit facilities as of December 31, 2024: Registrant Execution Date Size of Facility Draw Rate of SOFR plus (1) Financial Covenant Limit on Debt for Borrowed Money to Capital Ratio Debt for Borrowed Money to Capital Ratio as of December 31, 2024 (2) Termination Date (5) (in millions) CenterPoint Energy December 6, 2022 $ 2,400 1.500 % 65 % (3) 59.3 % December 6, 2027 CenterPoint Energy (4) December 6, 2022 250 1.125 % 65 % 44.8 % December 6, 2027 Houston Electric December 6, 2022 300 1.250 % 67.5 % (3) 53.3 % December 6, 2027 CERC December 6, 2022 1,050 1.125 % 65 % 41.4 % December 6, 2027 Total $ 4,000 (1) Based on credit ratings as of December 31, 2024. (2) As defined in the revolving credit facility agreement, excluding Securitization Bonds. (3) For CenterPoint Energy and Houston Electric, the financial covenant limit will temporarily increase to 70 % if Houston Electric experiences damage from a natural disaster in its service territory and CenterPoint Energy certifies to the administrative agent that Houston Electric has incurred system restoration costs reasonably likely to exceed $ 100 million in a consecutive 12 -month period, all or part of which Houston Electric intends to seek to recover through securitization financing. Such temporary increase in the financial covenant would be in effect from the date CenterPoint Energy delivers its certification until the earliest to occur of (i) the completion of the securitization financing, (ii) the first anniversary of CenterPoint Energy’s certification or (iii) the revocation of such certification. (4) This credit facility was issued by SIGECO. 158 (5) See Note 20 for discussion of subsequent events associated with the revolving credit facilities. The Registrants, as well as the subsidiaries of CenterPoint Energy discussed above, were in compliance with all financial debt covenants as of December 31, 2024. As of December 31, 2024 and 2023, the Registrants had the following revolving credit facilities and utilization of such facilities: December 31, 2024 December 31, 2023 Registrant Size of Facility Loans Letters of Credit Commercial Paper Weighted Average Interest Rate Size of Facility Loans Letters of Credit Commercial Paper Weighted Average Interest Rate (in millions, except weighted average interest rate) CenterPoint Energy (1) $ 2,400 $ — $ — $ 382 4.59 % $ 2,400 $ — $ — $ 1,036 5.54 % CenterPoint Energy (2) 250 — — — — % 250 — — — — % Houston Electric 300 — — — — % 300 — — — — % CERC 1,050 — — 599 4.62 % 1,050 — 1 484 5.53 % Total $ 4,000 $ — $ — $ 981 $ 4,000 $ — $ 1 $ 1,520 (1) CenterPoint Energy’s and CERC’s outstanding commercial paper generally have maturities up to 60 days and 30 days, respectively, and are backstopped by the respective issuer’s long-term revolving credit facility. (2) This credit facility was issued by SIGECO. Maturities. As of December 31, 2024, maturities of long-term debt through 2029, excluding the ZENS obligation and unamortized discounts, premiums and issuance costs, were as follows: CenterPoint Energy (1) Houston Electric (1) CERC Securitization Bonds (in millions) 2025 $ 564 $ 500 $ 10 $ 13 2026 2,274 300 60 14 2027 1,320 300 625 14 2028 2,063 500 1,230 15 2029 935 — 30 16 (1) These maturities include Securitization Bonds principal repayments on scheduled payment dates. Liens. As of December 31, 2024, Houston Electric’s assets were subject to liens securing approximately $ 8.4 billion of general mortgage bonds outstanding under the General Mortgage, including approximately $ 68 million held in trust to secure pollution control bonds that mature in 2028 for which CenterPoint Energy is obligated. The general mortgage bonds that are held in trust to secure pollution control bonds are not reflected in Houston Electric’s consolidated financial statements because of the contingent nature of the obligations. Houston Electric may issue additional general mortgage bonds on the basis of retired bonds, 70 % of property additions or cash deposited with the trustee. As of December 31, 2024, approximately $ 4.7 billion of additional general mortgage bonds could be issued on the basis of retired bonds and 70 % of property additions. No first mortgage bonds are outstanding under the M&DOT, and Houston Electric is contractually obligated to not issue any additional first mortgage bonds under the M&DOT and is undertaking actions to release the lien of the M&DOT and terminate the M&DOT. As of December 31, 2024, SIGECO had approximately $ 985 million aggregate principal amount of first mortgage bonds outstanding. Generally, all of SIGECO’s real and tangible property is subject to the lien of SIGECO’s mortgage indenture which was amended and restated effective as of January 1, 2023. As of December 31, 2024, SIGECO was permitted to issue additional bonds under its mortgage indenture up to 70 % of then currently unfunded property additions and approximately $ 899 million of additional first mortgage bonds could be issued on this basis. Houston Electric and CERC participate in a money pool through which they can borrow or invest on a short-term basis. For additional information, see Note 18. 159 (13) Income Taxes The components of the Registrants’ income tax expense (benefit) were as follows for the periods presented: Year Ended December 31, 2024 2023 2022 (in millions) CenterPoint Energy Current income tax expense (benefit): Federal $ ( 17 ) $ 106 $ 294 State ( 9 ) 33 46 Total current expense (benefit) ( 26 ) 139 340 Deferred income tax expense (benefit): Federal 218 119 16 State 3 ( 88 ) 4 Total deferred expense 221 31 20 Total income tax expense $ 195 $ 170 $ 360 Houston Electric Current income tax expense (benefit): Federal $ 62 $ ( 26 ) $ 23 State 15 34 16 Total current expense 77 8 39 Deferred income tax expense: Federal 60 159 86 State 1 1 — Total deferred expense 61 160 86 Total income tax expense $ 138 $ 168 $ 125 CERC Current income tax expense (benefit): Federal $ 55 $ 12 $ 30 State ( 6 ) 3 28 Total current expense 49 15 58 Deferred income tax expense (benefit): Federal 60 95 164 State ( 5 ) ( 136 ) 14 Total deferred expense (benefit) 55 ( 41 ) 178 Total income tax expense (benefit) $ 104 $ ( 26 ) $ 236 160 A reconciliation of income tax expense (benefit) using the federal statutory income tax rate to the actual income tax expense and resulting effective income tax rate were as follows: Year Ended December 31, 2024 2023 2022 (in millions) CenterPoint Energy (1) (2) (3) Income before income taxes $ 1,214 $ 1,087 $ 1,417 Federal statutory income tax rate 21 % 21 % 21 % Expected federal income tax expense 255 228 298 Increase (decrease) in tax expense resulting from: State income tax expense, net of federal income tax 25 25 46 State valuation allowance, net of federal income tax 17 — — State law change, net of federal income tax ( 47 ) ( 69 ) — Equity AFUDC ( 12 ) ( 13 ) ( 8 ) Excess deferred income tax amortization ( 43 ) ( 44 ) ( 51 ) Goodwill impairment — — 84 Sale of Energy Systems Group — 28 — Other, net — 15 ( 9 ) Total ( 60 ) ( 58 ) 62 Total income tax expense $ 195 $ 170 $ 360 Effective tax rate 16 % 16 % 25 % Houston Electric (4) (5) (6) Income before income taxes $ 684 $ 761 $ 635 Federal statutory income tax rate 21 % 21 % 21 % Expected federal income tax expense 144 160 133 Increase (decrease) in tax expense resulting from: State income tax expense, net of federal income tax 12 27 13 Equity AFUDC ( 5 ) — — Excess deferred income tax amortization ( 17 ) ( 17 ) ( 18 ) Other, net 4 ( 2 ) ( 3 ) Total ( 6 ) 8 ( 8 ) Total income tax expense $ 138 $ 168 $ 125 Effective tax rate 20 % 22 % 20 % CERC (7) (8) (9) Income before income taxes $ 644 $ 486 $ 961 Federal statutory income tax rate 21 % 21 % 21 % Expected federal income tax expense 135 102 202 Increase (decrease) in tax expense resulting from: State income tax expense, net of federal income tax 19 ( 40 ) 35 State law change, net of federal income tax ( 45 ) ( 66 ) — State valuation allowance, net of federal income tax 17 — — Goodwill impairment — — 30 Equity AFUDC ( 4 ) — — Excess deferred income tax amortization ( 15 ) ( 23 ) ( 28 ) Other, net ( 3 ) 1 ( 3 ) Total ( 31 ) ( 128 ) 34 Total income tax expense (benefit) $ 104 $ ( 26 ) $ 236 Effective tax rate 16 % ( 5 ) % 25 % (1) Recognized a $ 47 million benefit for the impact of state apportionment changes and Louisiana statutory rate change that resulted in the remeasurement of state deferred taxes, a $ 43 million benefit for the amortization of the net regulatory EDIT liability as decreed by regulators in certain jurisdictions, a $ 17 million valuation allowance established against Louisiana and Mississippi NOL, since those NOLs will not be utilized due to the Louisiana and Mississippi natural gas LDC businesses sale and a $ 12 million benefit for the impact of AFUDC equity. 161 (2) Recognized a $ 69 million benefit for the impact of state apportionment changes that resulted in the remeasurement of state deferred taxes of the unitary group, a $ 44 million benefit for the amortization of the net regulatory EDIT liability as decreed by regulators in certain jurisdictions, a $ 13 million benefit for the impact of AFUDC equity, and a $ 28 million expense for the gain on the Energy Systems Group sale. (3) Recognized a $ 51 million benefit for the amortization of the net regulatory EDIT liability as decreed by regulators in certain jurisdictions, an $ 8 million benefit for the impact of AFUDC equity, and a $ 84 million expense for the goodwill impairment on the Arkansas and Oklahoma Natural Gas business sale. (4) Recognized a $ 17 million benefit for the amortization of the net regulatory EDIT liability as decreed by regulators in Texas. (5) Recognized a $ 17 million benefit for the amortization of the net regulatory EDIT liability as decreed by regulators in certain jurisdictions. (6) Recognized a $ 18 million benefit for the amortization of the net regulatory EDIT liability as decreed by regulators in certain jurisdictions. (7) Recognized a $ 45 million benefit for the impact of state apportionment changes and Louisiana statutory rate change that resulted in the remeasurement of state deferred taxes, a $ 17 million valuation allowance established against Louisiana and Mississippi NOL, since those NOLs will not be utilized due to the Louisiana and Mississippi natural gas LDC businesses sale, and a $ 15 million benefit for the amortization of the net regulatory EDIT liability as decreed by regulators in certain jurisdictions. (8) Recognized a $ 66 million benefit for the impact of state apportionment changes that resulted in the remeasurement of state deferred taxes of the unitary group, and a $ 23 million benefit for the amortization of the net regulatory EDIT liability as decreed by regulators in certain jurisdictions. (9) Recognized a $ 28 million benefit for the amortization of the net regulatory EDIT liability as decreed by regulators in certain jurisdictions, and a $ 30 million expense for the goodwill impairment on the Arkansas and Oklahoma Natural Gas business sale. 162 The tax effects of temporary differences that gave rise to significant portions of deferred tax assets and liabilities were as follows: December 31, 2024 December 31, 2023 (in millions) CenterPoint Energy Deferred tax assets: Benefits and compensation $ 126 $ 131 Regulatory liabilities 348 365 Loss and credit carryforwards 942 76 Asset retirement obligations 98 96 Other 150 124 Valuation allowance ( 35 ) ( 10 ) Total deferred tax assets 1,629 782 Deferred tax liabilities: Property, plant and equipment 4,384 3,580 Regulatory assets 750 401 Investment in ZENS and equity securities related to ZENS 866 788 Other 18 92 Total deferred tax liabilities 6,018 4,861 Net deferred tax liabilities $ 4,389 $ 4,079 Houston Electric Deferred tax assets: Benefits and compensation $ 8 $ 10 Regulatory liabilities 158 176 Loss and credit carryforward 408 — Asset retirement obligations 9 6 Other 16 18 Total deferred tax assets 599 210 Deferred tax liabilities: Property, plant and equipment 1,988 1,497 Regulatory assets 113 119 Total deferred tax liabilities 2,101 1,616 Net deferred tax liabilities $ 1,502 $ 1,406 CERC Deferred tax assets: Benefits and compensation $ 17 $ 21 Regulatory liabilities 150 145 Loss and credit carryforwards 694 276 Asset retirement obligations 82 86 Other 122 65 Valuation allowance ( 25 ) — Total deferred tax assets 1,040 593 Deferred tax liabilities: Property, plant and equipment 1,883 1,602 Regulatory assets 513 171 Other 14 66 Total deferred tax liabilities 2,410 1,839 Net deferred tax liabilities $ 1,370 $ 1,246 Tax Attribute Carryforwards and Valuation Allowance . As of December 31, 2024, CenterPoint Energy has federal NOL carryforwards of $ 3.3 billion, which have an indefinite carryforward period. As of December 31, 2024, CenterPoint Energy has federal charitable contribution carryforwards of $ 51 million which expire between 2029 and 2030. As of December 31, 2024, CenterPoint Energy has federal corporate alternative minimum tax carryforwards of $ 124 million which have an indefinite carryforward period. As of December 31, 2024, CenterPoint Energy has $ 2.1 billion of gross state NOL carryforwards which 163 expire between 2025 and 2043, and $ 3 million of state tax credits, net of valuation allowance, which do not expire. CenterPoint Energy reported a valuation allowance against certain state NOL and credit carryforwards because it is more likely than not that the benefit will not be realized. As of December 31, 2024, Houston Electric has $ 1.7 billion of federal NOL carryforwards which have an indefinite carryforward period. As of December 31, 2024, Houston Electric has federal corporate alternative minimum tax carryforwards of $ 48 million which have an indefinite carryforward period. As of December 31, 2024, CERC has federal NOL carryforwards of $ 2.3 billion which have an indefinite carryforward period. As of December 31, 2024, CERC has federal corporate alternative minimum tax carryforwards of $ 101 million which have an indefinite carryforward period. As of December 31, 2024, CERC has $ 1.2 billion of gross state NOL carryforwards which expire between 2025 and 2043, and $ 3 million of state tax credits, net of valuation allowance, which do not expire. A reconciliation of CenterPoint Energy’s beginning and ending balance of unrecognized tax benefits, excluding interest and penalties, are as follows for the periods presented: Year Ended December 31, 2024 2023 2022 (in millions) Balance, beginning of year $ 25 $ 26 $ 3 Increases related to tax positions of prior years — — 26 Decreases related to tax positions of prior years — — ( 3 ) Lapse of statute of limitations — ( 1 ) — Balance, end of year $ 25 $ 25 $ 26 As of December 31, 2024, CenterPoint Energy reported net unrecognized tax benefits, including penalties and interest, of $ 32 million which were included in Other non-current liabilities in the Consolidated Balance Sheets. Included in the balance of uncertain tax positions as of December 31, 2024 were $ 25 million of tax benefits that, if recognized, would affect the effective tax rate. The Registrants recognize interest accrued related to unrecognized tax benefits and penalties as income tax expense. The above table does not include $ 7 million of accrued penalties and interest as of December 31, 2024. The Registrants believe that it is reasonably possible that there will be a $ 10 million decrease in unrecognized tax benefits, including penalties and interest, in the next 12 months as a result of a lapse of statutes on older exposures, a tax settlement, and/or a resolution of open audits. Tax Audits and Settlements . Tax years through 2022 have been audited and settled with the IRS for CenterPoint Energy. For tax years 2023 and 2024, the Registrants are participants in the IRS’s Compliance Assurance Process. (14) Commitments and Contingencies (a) Purchase Obligations (CenterPoint Energy and CERC) Commitments include minimum purchase obligations related to CenterPoint Energy’s and CERC’s Natural Gas reportable segment and CenterPoint Energy’s Electric reportable segment. Contracts with minimum payment obligations have various quantity requirements and durations and are not classified as non-trading derivative assets and liabilities in CenterPoint Energy’s and CERC’s Consolidated Balance Sheets as of December 31, 2024 and 2023 because these contracts meet an exception as “normal purchases contracts” or do not meet the definition of a derivative. Natural gas and coal supply commitments also include transportation contracts that do not meet the definition of a derivative. On February 1, 2023, Indiana Electric entered into an amended and restated BTA to purchase the 191 MW Posey Solar project for a fixed purchase price over the anticipated 35-year life. On February 7, 2023, Indiana Electric filed a CPCN with the IURC to approve the amended BTA. With the passage of the IRA, Indiana Electric can now pursue PTCs for solar projects. Indiana Electric filed the updated CPCN with a request that project costs, net of PTCs, be recovered in rate base, through base rates or the CECA mechanism, depending on which provides more timely recovery. On September 6, 2023, the IURC issued an order approving the CPCN. The Posey Solar project is expected to be placed in service in the second quarter of 2025. See Note 20 for additional details. On January 11, 2023, the IURC issued an order approving the settlement agreement granting Indiana Electric a CPCN to purchase and acquire the 130 MW Pike County solar project through a BTA and approved the estimated cost. The IURC also 164 designated the project as a clean energy project as well as approved the proposed levelized rate and associated ratemaking and accounting treatment. Due to inflationary pressures, the developer disclosed that costs exceeded the agreed upon levels in the BTA. After negotiations, Indiana Electric and the developer were not able to agree upon updated pricing. As a result, on March 15, 2024, Indiana Electric provided notice to the IURC that it was exercising its right to terminate the BTA, which terminated all further obligations of Indiana Electric with respect to the project. As of December 31, 2024, CenterPoint Energy and CERC had the following undiscounted minimum purchase obligations: CenterPoint Energy CERC Natural Gas Supply Electric Supply (1) Other (2) Natural Gas Supply (in millions) 2025 $ 635 $ 83 $ 95 $ 631 2026 601 130 100 597 2027 517 135 18 513 2028 473 97 8 470 2029 459 94 2 456 Thereafter 1,566 1,303 190 1,544 Total $ 4,251 $ 1,842 $ 413 $ 4,211 (1) Related to PPAs with commitments ranging from 15 years to 25 years. (2) Related primarily to technology hardware and software agreements. Excluded from the table above are estimates for cash outlays from other PPAs through Indiana Electric that do not have minimum thresholds but require payment when energy is generated by the provider. Costs arising from certain of these commitments are pass-through costs, generally collected dollar-for-dollar from retail customers through regulator-approved cost recovery mechanisms. (b) AMAs (CenterPoint Energy and CERC) CenterPoint Energy’s and CERC’s Natural Gas businesses continue to utilize AMAs associated with their utility distribution service in Indiana, Louisiana, Minnesota, Mississippi and Texas. The AMAs have varying terms, the longest of which expires in 2029. Pursuant to the provisions of the agreements, CenterPoint Energy’s and CERC’s Natural Gas either sells natural gas to the asset manager and agrees to repurchase an equivalent amount of natural gas throughout the year at the same cost, or simply purchases its full natural gas requirements at each delivery point from the asset manager. Generally, AMAs are contracts between CenterPoint Energy’s and CERC’s Natural Gas and an asset manager that are intended to transfer the working capital obligation and maximize the utilization of the assets. In these agreements, CenterPoint Energy’s and CERC’s Natural Gas agrees to release transportation and storage capacity to other parties to manage natural gas storage, supply and delivery arrangements for CenterPoint Energy’s and CERC’s Natural Gas and to use the released capacity for other purposes when it is not needed for CenterPoint Energy’s and CERC’s Natural Gas. CenterPoint Energy’s and CERC’s Natural Gas may receive compensation from the asset manager through payments made over the life of the AMAs. CenterPoint Energy’s and CERC’s Natural Gas has an obligation to purchase their winter storage requirements that have been released to the asset manager under these AMAs. For amounts outstanding under these AMAs, see Note 12. (c) Guarantees (CenterPoint Energy) CenterPoint Energy recognizes guarantee obligations at fair value. CenterPoint Energy discloses parent company guarantees of a subsidiary’s obligation when that guarantee results in the exposure of a material obligation of the parent company even if the probability of fulfilling such obligation is considered remote. On May 21, 2023, CenterPoint Energy, through Vectren Energy Services, entered into the Equity Purchase Agreement to sell Energy Systems Group. The sale closed on June 30, 2023. See Note 4 for further information. In the normal course of business prior to the consummation of the transaction on June 30, 2023, CenterPoint Energy, primarily through Vectren, issued parent company level guarantees supporting Energy Systems Group ’s obligations. When Energy Systems Group was wholly-owned by CenterPoint Energy, these guarantees did not represent incremental consolidated obligations, but rather, these guarantees represented guarantees of Energy Systems Group’s obligations to allow it to conduct business without posting other forms of assurance. For those obligations where potential exposure can be estimated, management estimates the maximum exposure under these guarantees to be approximately $ 465 million as of December 31, 2024 and expects the exposure to decrease pro rata. This exposure primarily relates to energy savings guarantees on federal 165 energy savings performance contracts. Other parent company level guarantees, certain of which do not contain a cap on potential liability, were issued prior to the sale of Energy Systems Group in support of federal operations and maintenance projects for which a maximum exposure cannot be estimated based on the nature of the projects. Under the terms of the Equity Purchase Agreement, ESG Holdings Group must generally use reasonable best efforts to replace existing CenterPoint Energy guarantees with credit support provided by a party other than CenterPoint Energy as of and after the closing of the transaction. The Equity Purchase Agreement also requires certain protections to be provided for any damages incurred by CenterPoint Energy in relation to these guarantees not released by closing. No additional guarantees were provided by CenterPoint Energy in favor of Energy Systems Group subsequent to the closing of the sale on June 30, 2023. While there can be no assurance that performance under any of these parent company guarantees will not be required in the future, CenterPoint Energy considers the likelihood of a material amount being incurred to be remote. CenterPoint Energy believes that, from Energy Systems Group ’s inception in 1994 to the closing of the sale of Energy Systems Group on June 30, 2023, Energy Systems Group had a history of generally meeting its performance obligations and energy savings guarantees and its installed products operated effectively. CenterPoint Energy recorded no amounts on its Consolidated Balance Sheets as of December 31, 2024 and 2023 related to its obligation under the outstanding guarantees. (d) Legal, Environmental and Other Matters Legal Matters Litigation Related to Hurricane Beryl. Various federal, state and local governmental and regulatory agencies and other entities, such as the Texas Governor’s office, the Texas legislature and the PUCT, have called for or are conducting inquiries and investigations into Hurricane Beryl, the efforts made by Houston Electric to prepare for, and respond to, this event, including the electric service outage issues, and the procurement of TEEEF. Moreover, additional governmental and regulatory agencies and other entities may conduct such inquiries and investigations, as well. There are significant uncertainties around these inquiries and investigations and potential results and consequences, including with respect to our recovery of costs incurred as a result of Hurricane Beryl and whether any financial penalties will be assessed or changes to Houston Electric’s system, service territories, operations and/or regulatory treatment will result therefrom. Further, on January 22, 2025, a putative shareholder of CenterPoint Energy, Donel Davidson, filed a derivative petition in Harris County District Court, Texas, alleging breach of fiduciary duty and unjust enrichment on behalf of CenterPoint Energy against certain of its current and former directors and officers citing, in part, the topics of these inquiries and investigations. The action seeks to recover damages and other relief from the defendants on behalf of CenterPoint Energy. Additionally, on February 12, 2025, a second putative shareholder of CenterPoint Energy made a demand on the Board to investigate the same basic allegations raised in the derivative petition filed by Donel Davidson. CenterPoint Energy and Houston Electric are subject to current and potential future litigation and claims arising out of Hurricane Beryl, which litigation and claims could include allegations of, among other things, personal injury, property damage, various economic losses in connection with loss of power, unlawful business practices, and others. As of December 31, 2024, three putative class actions had been filed against CenterPoint Energy and/or Houston Electric in the District Courts of Harris County, Texas, on behalf of individuals or entities who claim losses due to power outages lasting at least 48 hours as a result of Hurricane Beryl, such actions consisting of the following proposed classes: (1) all restaurants in Harris County, Galveston County, and Montgomery County; (2) all residential customers; and (3) all health, wellness, medical and beauty facilities in Harris County. These putative classes assert claims and theories of negligence, gross negligence, nuisance, fraud, and/or violation of Houston Electric’s tariff for retail delivery service, and each seeks damages in excess of $ 100 million for, among other things, business interruption, property damage and loss, cost of repair, loss of use and market value, lost income, nuisance, extreme mental anguish and/or punitive damages. In addition, as of December 31, 2024, two individual actions had been filed in Harris County District Courts asserting claims of negligence, negligence per se and/or gross negligence against CenterPoint Energy and Houston Electric. The plaintiffs in these actions allege personal injury and/or property damage from downed power lines and seek damages in excess of $ 1 million. CenterPoint Energy and Houston Electric intend to vigorously defend themselves against the lawsuits. CenterPoint Energy and its subsidiaries have general and excess liability insurance policies that provide coverage for third party bodily injury and property damage claims. Given the nature of some allegations, it is possible that the insurers could dispute coverage for some types of claims or damages that may be alleged by plaintiffs, and CenterPoint Energy has received from two insurers denials of indemnity coverage in the putative class actions based on the failure to supply exclusion. Those insurers have also reserved their rights with respect to coverage in those actions. CenterPoint Energy and Houston Electric intend to continue to pursue all available insurance coverage for all of these matters. To date, there have not been demands, quantification, disclosure or discovery of damages by any party to any of the above legal matters that are sufficient to enable CenterPoint Energy and its subsidiaries to estimate exposure. Given that, as well as the preliminary nature of the proceedings, the numerosity of parties and complexity of issues involved, and the uncertainties of 166 litigation, CenterPoint Energy and its subsidiaries are unable to predict the outcome or consequences of any of the foregoing matters or to estimate a range of potential losses. For more information regarding Hurricane Beryl, see Note 7. Litigation Related to the February 2021 Winter Storm Event. Various legal proceedings are still pending against numerous entities with respect to the February 2021 Winter Storm Event, including against CenterPoint Energy, Utility Holding, Houston Electric, and CERC. Like other Texas energy companies and TDUs, CenterPoint Energy and Houston Electric have become involved in certain investigations, litigation and other regulatory and legal proceedings regarding their efforts to restore power during the storm and their compliance with NERC, ERCOT and PUCT rules and directives. Additionally, like other natural gas market participants, CERC has been named in litigation alleging gas market manipulation. CenterPoint Energy, Utility Holding, and Houston Electric, along with hundreds of other defendants (including ERCOT, power generation companies, other TDUs, natural gas producers, REPs, and other entities) received claims and lawsuits filed by plaintiffs alleging wrongful death, personal injury, property damage and other injuries and damages. As of December 31, 2024, there were approximately 220 pending lawsuits that are consolidated in Texas state court in Harris County, Texas, as part of the MDL proceeding related to the February 2021 Winter Storm Event, and CenterPoint Energy and Houston Electric, along with numerous other entities, have been named as defendants in approximately 155 of those lawsuits. One of the lawsuits in the MDL is a putative class action on behalf of everyone who received electric power via the ERCOT grid and sustained a power outage between February 10, 2021 and February 28, 2021. Additionally, Utility Holding is currently named as a defendant in one lawsuit in which CenterPoint Energy and Houston Electric are also named as defendants. The judge overseeing the MDL issued an initial case management order and stayed all proceedings and discovery. Per the case management order, the judge entertained dispositive motions in five representative or “bellwether” cases and, in late January 2023, issued rulings on them. The judge ruled that ERCOT has sovereign immunity as a governmental entity and dismissed the suits against it. In a subsequent opinion in an unrelated matter, the Texas Supreme Court held that ERCOT is entitled to sovereign immunity. This ruling will apply to claims against ERCOT in the MDL. The MDL judge also dismissed all claims against the natural gas defendants (which list of natural gas defendants incorrectly included Utility Holding) and the REP defendants and some causes of action against the other defendants. CenterPoint Energy expects that the claims against Utility Holding will ultimately be dismissed in light of the judge’s initial rulings. As to the TDU and generator defendants, the judge dismissed some causes of action but denied the motions to dismiss claims for negligence, gross negligence, and nuisance, which denial the TDU defendants and generator defendants asked the courts of appeals to overturn. On April 2, 2024, a three-judge panel of the Court of Appeals for the Fourteenth District of Texas issued an opinion in the TDU mandamus proceeding, granting in part and denying in part the TDUs’ mandamus request. In its opinion, the panel granted the TDUs’ mandamus request relating to the TDUs’ motion to dismiss the plaintiffs’ claims for (1) negligence, (2) negligent nuisance and (3) strict liability nuisance and ordered those claims be dismissed. The panel denied the TDUs’ mandamus request relating to the TDUs’ motion to dismiss the plaintiffs’ gross negligence and intentional nuisance claims. On May 22, 2024, the TDUs filed a mandamus petition with the Supreme Court of Texas, seeking dismissal of the remaining claims. The Supreme Court of Texas subsequently asked for briefing on the merits and, on December 20, 2024, set the TDUs’ mandamus petition for oral argument, which occurred on February 19, 2025. In the generator mandamus proceeding that was pending in the Court of Appeals for the First District of Texas, a three-judge panel granted the generators’ mandamus request and ordered dismissal of all claims asserted against the generators’ defendants. The plaintiffs asked the entire First Court of Appeals to rehear the panel’s decision. On November 26, 2024, the First Court of Appeals denied that motion. The plaintiffs filed a petition for writ of mandamus with the Supreme Court of Texas on January 31, 2025. The MDL judge allowed defendants (including Houston Electric) to file several additional motions on preliminary legal issues. These motions included the TDUs’ motion to dismiss under Chapter 150 of the Texas Civil Practice and Remedies Code, which was filed in one of the bellwether cases and argued that all of plaintiffs’ claims should be dismissed because the plaintiffs did not include a sufficient certificate by a qualified engineer with their petition, as required by Texas law, as well as a motion to deny class certification in the putative class action. On November 13, 2024, the MDL Court granted the TDUs’ motion to dismiss under Chapter 150, and on December 3, 2024, the plaintiffs filed a notice of appeal of that ruling. On January 8, 2025, the MDL Court denied class certification in the putative class action. Following issuance of the order denying class certification, a new lawsuit was filed on behalf of approximately 140 plaintiffs in Harris County District Court against hundreds of defendants, including CenterPoint Energy and Houston Electric. In addition, plaintiffs filed a notice of appeal of the denial of class certification on January 27, 2025. Aside from addressing certain additional preliminary legal issues, the cases remain stayed in the MDL Court. CenterPoint Energy, Utility Holding, and Houston Electric intend to vigorously defend themselves against the claims raised. 167 CenterPoint Energy and Houston Electric have also responded to inquiries from the Texas Attorney General and the Galveston County District Attorney’s Office, and various other regulatory and governmental entities also conducted inquiries, investigations and other reviews of the February 2021 Winter Storm Event and the efforts made by various entities to prepare for, and respond to, the event, including the electric generation shortfall issues. In February 2023, twelve lawsuits were filed in state district court in Harris County and Tom Green County, Texas, against dozens of gas market participants in Texas, including natural gas producers, processors, pipelines, marketers, sellers, traders, gas utilities, and financial institutions. Plaintiffs named CERC as a defendant, along with “CenterPoint Energy Services, Inc.,” incorrectly identifying it as CERC’s parent company (CenterPoint Energy previously divested CenterPoint Energy Services, Inc.). One lawsuit filed in Harris County is a putative class action on behalf of two classes of electric and natural gas customers (those who experienced a loss of electricity and/or natural gas, and those who were charged securitization-related surcharges on a utility bill or were otherwise charged higher rates for electricity and/or gas during the February 2021 Winter Storm Event), potentially including millions of class members. Two other lawsuits ( one filed in Harris County and one in Tom Green County) were brought by an entity that purports to be an assignee of the claims of tens of thousands of persons and entities. These, and nine other similar lawsuits filed in Harris County, generally allege that the defendants engaged in gas market manipulation and price gouging, including by intentionally withholding, suppressing, or diverting supplies of natural gas in connection with the February 2021 Winter Storm Event, Winter Storm Elliott, and other severe weather conditions, and through financial market manipulation. Plaintiffs allege that this manipulation impacted gas supply and prices as well as the market, supply, and price of electricity in Texas and caused blackouts and other damage. Plaintiffs assert claims for tortious interference with existing contract, private nuisance, and unjust enrichment, and allege a broad array of injuries and damages, including personal injury, property damage, and harm from certain costs being securitized and passed on to ratepayers. The lawsuits do not specify the amount of damages sought, but seek broad categories of actual, compensatory, statutory, consequential economic, and punitive damages; restitution and disgorgement; pre- and post-judgment interest; costs and attorneys’ fees; and other relief. All twelve lawsuits have been tagged for transfer to the existing MDL proceeding referenced above, but only three of the cases have been served against the defendants, including CERC. These gas market cases are in addition to the 220 cases noted above regarding electric market issues. On February 2, 2024, CERC filed pleas to the jurisdiction in the three cases in which it was served; CERC also partially joined the other defendants’ motions to dismiss and additional pleas to the jurisdiction. On April 2, 2024, plaintiffs in the three served cases filed amended petitions rather than responding to pleas to the jurisdiction and motions to dismiss. Among other changes, plaintiffs in these three cases dismissed CenterPoint Energy Services, Inc., but maintained the same three causes of action as to the remaining defendants. CERC has vigorously defended itself against the claims raised, including filing updated pleas to the jurisdiction on May 17, 2024 in response to plaintiffs’ amended petitions – and will continue to do so. On August 12, 2024, plaintiffs in the putative class action filed a motion for leave to amend to add additional plaintiffs/class representatives. Defendants opposed this motion on September 20, 2024. On September 23, 2024, the MDL judge heard oral argument on CERC’s plea to the jurisdiction and defendants’ motions to dismiss and other pleas to the jurisdiction. On November 7, 2024 and November 11, 2024, the MDL judge granted defendants’ motion to dismiss and CERC’s plea to the jurisdiction in all three cases. As a result of these rulings, all claims against CERC were dismissed with prejudice. Plaintiffs have appealed these rulings, and the appeals have been assigned to the Court of Appeals for the First District of Texas. On December 4, 2024, the MDL judge denied as moot plaintiff’s motion for leave to amend to add additional plaintiffs/class representatives in the putative class action case. On January 17, 2025, the plaintiffs in the putative class action case filed an unopposed motion to dismiss their appeal, which the Court of Appeals granted on February 4, 2025, dismissing the appeal. Plaintiffs’ opening briefs in the remaining two cases are scheduled to be filed on March 28, 2025. To date, there have not been demands, quantification, disclosure or discovery of damages by any party to any of the above legal matters that are sufficient to enable CenterPoint Energy and its subsidiaries to estimate exposure. Given that, as well as the preliminary nature of the proceedings, the numerosity of parties and complexity of issues involved, and the uncertainties of litigation, CenterPoint Energy and its subsidiaries are unable to predict the outcome or consequences of any of the foregoing matters or to estimate a range of potential losses. CenterPoint Energy and its subsidiaries have general and excess liability insurance policies that provide coverage for third party bodily injury and property damage claims. As CenterPoint Energy previously noted, given the nature of certain of the plaintiffs’ allegations, insurance coverage may not be available other than for third party bodily injury and property damage claims caused by an accident, and one of CenterPoint Energy’s insurers has reserved its rights with respect to coverage for plaintiffs’ intentional nuisance claims as well as plaintiffs’ claims in the gas market cases. CenterPoint Energy and its subsidiaries intend to continue to pursue all available insurance coverage for all of these matters. 168 Jefferson Parish . Several parishes and the State of Louisiana filed 42 suits under Louisiana’s State and Local Coastal Resources Management Act against hundreds of oil and gas companies seeking compensatory damages for contamination and erosion of the Louisiana coastline allegedly caused by historical oil and gas operations. One of the defendants in one of the lawsuits (filed in 2013 only by the Parish of Jefferson) is Primary Fuels, Inc., a predecessor company of CenterPoint Energy, which operated in Louisiana from 1983 to 1989. All 42 suits were removed to Louisiana federal courts twice and were stayed for several years pending the district courts’ consideration of various motions to remand and multiple appeals of remand orders. Recently, several cases involving other parishes that had been remanded to Louisiana state court have begun to resume proceedings in state court. However, as of December 31, 2024, the federal district court had not ruled on Jefferson Parish’s motion to remand to state court the lawsuit which includes Primary Fuels among the defendants. Because of the procedurally preliminary nature of the proceedings, lack of information about both the scope of and damages for Jefferson Parish’s claim against Primary Fuels, Inc., the numerosity of parties and complexity of issues involved, and the uncertainties of litigation, CenterPoint Energy and its subsidiaries are unable to predict the outcome or consequences of this matter or to estimate a range of potential losses. CenterPoint Energy will continue to vigorously defend itself against the claims raised and pursue any and all available insurance coverage. Environmental Matters MGP Sites. CenterPoint Energy, CERC and their predecessors, including predecessors of Vectren, operated MGPs in the past. The costs CenterPoint Energy or CERC, as applicable, expect to incur to fulfill their respective obligations are estimated by management using assumptions based on actual costs incurred, the timing of expected future payments and inflation factors, among others. While CenterPoint Energy and CERC have recorded obligations for all costs which are probable and estimable, including amounts they are presently obligated to incur in connection with activities at these sites, it is possible that future events may require remedial activities which are not presently foreseen, and those costs may not be subject to PRP or insurance recovery. (i) Minnesota MGPs (CenterPoint Energy and CERC) . With respect to certain Minnesota MGP sites, CenterPoint Energy and CERC have completed state-ordered remediation and continue state-ordered monitoring and water treatment. CenterPoint Energy and CERC recorded a liability as reflected in the table below for continued monitoring and any future remediation required by regulators in Minnesota. (ii) Indiana MGPs (CenterPoint Energy and CERC) . In the Indiana Gas service territory, the existence, location and certain general characteristics of 26 gas manufacturing and storage sites have been identified for which CenterPoint Energy and CERC may have some remedial responsibility. A remedial investigation/feasibility study was completed at one of the sites under an agreed upon order between Indiana Gas and the IDEM, and a Record of Decision was issued by the IDEM in January 2000. The remaining sites have been submitted to the IDEM’s VRP. CenterPoint Energy has also identified its involvement in five manufactured gas plant sites in SIGECO’s service territory, all of which are currently enrolled in the IDEM’s VRP. CenterPoint Energy is currently conducting some level of remedial activities, including groundwater monitoring at certain sites. (iii) Other MGPs (CenterPoint Energy and CERC). In addition to the Minnesota and Indiana sites, the EPA and other regulators have investigated MGP sites that were owned or operated by CenterPoint Energy or CERC or may have been owned by one of their former affiliates. Total costs that may be incurred in connection with addressing these sites cannot be determined at this time. The estimated accrued costs are limited to CenterPoint Energy’s and CERC’s share of the remediation efforts and are therefore net of exposures of other PRPs. The estimated range of possible remediation costs for the sites for which CenterPoint Energy and CERC believe they may have responsibility was based on remediation continuing for the minimum time frame given in the table below: December 31, 2024 CenterPoint Energy CERC (in millions, except years) Amount accrued for remediation $ 13 $ 11 Minimum estimated remediation costs 8 7 Maximum estimated remediation costs 47 40 Minimum years of remediation 5 5 Maximum years of remediation 50 50 169 The cost estimates are based on studies of a site or industry average costs for remediation of sites of similar size. The actual remediation costs will depend on the number of sites to be remediated, the participation of other PRPs, if any, and the remediation methods used. CenterPoint Energy and CERC do not expect the ultimate outcome of these matters to have a material adverse effect on the financial condition, results of operations or cash flows of either CenterPoint Energy or CERC. Asbestos. Some facilities owned by the Registrants or their predecessors contain or have contained asbestos insulation and other asbestos-containing materials. The Registrants are from time to time named, along with numerous others, as defendants in lawsuits filed by a number of individuals who claim injury due to exposure to asbestos, and the Registrants anticipate that additional claims may be asserted in the future. Although their ultimate outcome cannot be predicted at this time, the Registrants do not expect these matters, either individually or in the aggregate, to have a material adverse effect on their financial condition, results of operations or cash flows. CCR Rule (CenterPoint Energy). In April 2015, the EPA finalized its CCR Rule, which regulates ash as non-hazardous material under the RCRA. The final rule allows beneficial reuse of ash, and a portion of the ash generated by Indiana Electric’s generating plants will continue to be reused. Indiana Electric has three ash ponds, two at the F.B. Culley facility (Culley East and Culley West) and one at the A.B. Brown facility. Under the CCR Rule, Indiana Electric is required to perform integrity assessments, including ground water monitoring, at its F.B. Culley and A.B. Brown generating stations. Pursuant to the CCR Rule, both the Culley East and A.B. Brown facilities were taken out of service in a timely manner per the commitments made to the EPA in the extension requests filed for both ponds. On April 24, 2019, Indiana Electric received an order from the IURC approving recovery in rates of costs associated with the closure of the Culley West pond, which has already completed closure activities. On August 14, 2019, Indiana Electric filed its petition with the IURC for recovery of costs associated with the closure of the A.B. Brown ash pond, which would include costs associated with the excavation and recycling of ponded ash. This petition was subsequently approved by the IURC on May 13, 2020. On October 28, 2020, the IURC approved Indiana Electric’s ECA proceeding, which included the initiation of recovery of the federally mandated project costs. On November 1, 2022, Indiana Electric filed for a CPCN to recover federally mandated costs associated with closure of the Culley East Pond, its third and final ash pond. Indiana Electric sought accounting and ratemaking relief for the project, and on June 8, 2023, Indiana Electric filed a revised CPCN for recovery of the federally mandated ash pond costs. On February 7, 2024 the IURC approved the federally mandated costs, both incurred and projected, of $ 52 million in capital costs, plus an estimated $ 133,000 in annual operation and maintenance expenses, for recovery through the ECA. As of December 31, 2024, CenterPoint Energy had recorded an approximate $ 121 million ARO, which represents the discounted value of future cash flow estimates to close the ponds at A.B. Brown and F.B. Culley. This estimate is subject to change due to the contractual arrangements; continued assessments of the ash, closure methods, and the timing of closure; implications of Indiana Electric’s generation transition plan; changing environmental regulations; and proceeds received from the settlements in a previously settled insurance proceeding. In addition to these AROs, Indiana Electric also anticipates equipment purchases of between $ 60 million and $ 80 million to complete the A.B. Brown closure project. On April 25, 2024, the EPA released its final Hazardous and Solid Waste Management System; Disposal of Coal Combustion Residuals from Electric Utilities; Legacy CCR Surface Impoundments rule (CCR Legacy Rule), which was published in the federal register in May 2024. The CCR Legacy Rule requires companies to investigate previously closed impoundments that were used historically for ash disposal or locations which have had ash placed on them in amounts set forth in the CCR Legacy Rule. The Registrants have completed their preliminary review of potential sites that will require further investigation under the CCR Legacy Rule and identified certain sites in Indiana for further evaluation. During 2024, Indiana Electric recorded an approximate $ 11 million ARO with a corresponding increase of $ 11 million to Property, plant and equipment for amounts recoverable for electric generation stations that are currently in service. These estimates reflect the discounted value of future estimated capping costs for an area of historic ash placement at F.B. Culley. Indiana Electric will continue to refine the assumptions, engineering analyses and resulting cost estimates associated with this ARO and such refinement could materially impact the amount of the estimated ARO. Clean Water Act Permitting of Groundwater and Power Plant Discharges . In April 2020, the U.S. Supreme Court issued an opinion providing that indirect discharges via groundwater or other non-point sources are subject to permitting and liability under the Clean Water Act when they are the functional equivalent of a direct discharge. On November 27, 2023, the EPA published draft guidance regarding the application of the “functional equivalent” analysis as related to permitting of certain 170 discharges through groundwater to surface waters. The Registrants do not currently anticipate impacts from this guidance, but groundwater monitoring continues under the CCR Rule. In 2015, the EPA finalized revisions to the existing steam electric wastewater discharge standards which set more stringent wastewater discharge limits and effectively prohibited further wet disposal of coal ash in ash ponds. In February 2019, the IURC approved Indiana Electric’s Effluent Limitation Guidelines Compliance Plan for its F.B. Culley Generating Station, which was completed in compliance with the requirements of the Effluent Limitation Guidelines. On April 25, 2024, the EPA released its final Supplemental Effluent Limitation Guidelines and Standards for the Steam Electric Generating Point Source Category. The Registrants currently anticipate that they will be in compliance with the Supplemental ELG Guidelines at the Culley facility due to previous wastewater treatment upgrades. Other Environmental. From time to time, the Registrants identify the presence of environmental contaminants during operations or on property where their predecessors have conducted operations. Other such sites involving contaminants may be identified in the future. The Registrants have and expect to continue to remediate any identified sites consistent with state and federal legal obligations. From time to time, the Registrants have received notices, and may receive notices in the future, from regulatory authorities or others regarding status as a PRP in connection with sites found to require remediation due to the presence of environmental contaminants. In addition, the Registrants have been, or may be, named from time to time as defendants in litigation related to such sites. Although the ultimate outcome of such matters cannot be predicted at this time, the Registrants do not expect these matters, either individually or in the aggregate, to have a material adverse effect on their financial condition, results of operations or cash flows. Other Proceedings The Registrants are involved in other legal, environmental, tax and regulatory proceedings before various courts, regulatory commissions and governmental agencies regarding matters arising in the ordinary course of business. From time to time, the Registrants are also defendants in legal proceedings with respect to claims brought by various plaintiffs against broad groups of participants in the energy industry. Some of these proceedings involve substantial amounts. The Registrants regularly analyze current information and, as necessary, provide accruals for probable and reasonably estimable liabilities on the eventual disposition of these matters. The Registrants do not expect the disposition of these matters to have a material adverse effect on the Registrants’ financial condition, results of operations or cash flows. (15) Earnings Per Share (CenterPoint Energy) Basic earnings per common share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding during the period. Participating securities are excluded from weighted average number of common shares outstanding in the computation of basic earnings per common share. Diluted earnings per common share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding, including all potentially dilutive common shares, if the effect of such common shares is dilutive. Diluted earnings per common share reflects the dilutive effect of potential common shares from share-based awards. The dilutive effect of restricted stock is computed using the if-converted method, which assumes conversion of the restricted stock at the beginning of the period. The dilutive effect of restricted stock is computed using the treasury stock method, as applicable, which includes the incremental shares that would be hypothetically vested in excess of the number of shares assumed to be hypothetically repurchased with the assumed proceeds. Diluted earnings per common share will also reflect the dilutive effect of potential common shares from the conversion of the Convertible Notes. Convertible debt in which the principal amount must be settled in cash is excluded from the calculation of diluted earnings per common share. There would be no interest expense adjustment to the numerator for the cash-settled portion of the Convertible Notes because that portion will always be settled in cash. The conversion spread value in shares will be included in diluted earnings per common share using the if-converted method if the convertible debt is in the money. The denominator of diluted earnings per common share is determined by dividing the conversion spread value of the share-settled portion of the Convertible Notes as of the reporting date by the average share price over the reporting period. For the year ended December 31, 2024, the convertible debt was not in the money; therefore, no incremental shares were assumed converted or included in the diluted earnings per common share calculation below. For further details on the Convertible Notes, see Note 12. 171 The following table reconciles numerators and denominators of CenterPoint Energy’s basic and diluted earnings per common share for the periods presented: Year Ended December 31, 2024 2023 2022 (in millions, except per share and share amounts) Numerator: Net income $ 1,019 $ 917 $ 1,057 Less: Preferred stock dividend requirement (Note 11) — 50 49 Income available to common shareholders - basic and diluted $ 1,019 $ 867 $ 1,008 Denominator: Weighted average common shares outstanding - basic 643,163,000 630,947,000 629,415,000 Plus: Incremental shares from assumed conversions: Restricted stock 974,000 2,232,000 2,931,000 Weighted average common shares outstanding - diluted 644,137,000 633,179,000 632,346,000 Earnings per Common Share: Basic $ 1.58 $ 1.37 $ 1.60 Diluted $ 1.58 $ 1.37 $ 1.59 (16) Reportable Segments The Registrants’ determination of reportable segments considers the strategic operating units under which its CODM manages sales, allocates resources and assesses performance of various products and services to wholesale or retail customers in differing regulatory environments. As of December 31, 2024, reportable segments by Registrant and information about each Registrant’s CODM were as follows: CenterPoint Energy • CenterPoint Energy’s Electric reportable segment consisted of electric transmission and distribution services in the Texas Gulf Coast area in the ERCOT region and electric transmission and distribution services primarily to southwestern Indiana and includes power generation and wholesale power operations in the MISO region. • CenterPoint Energy’s Natural Gas reportable segment consists of (i) intrastate natural gas sales to, and natural gas transportation and distribution for residential, commercial and industrial customers in Indiana, Louisiana, Minnesota, Mississippi, Ohio and Texas; and (ii) permanent pipeline connections through interconnects with various interstate and intrastate pipeline companies through CEIP. • CenterPoint Energy’s Corporate and Other category consists of energy performance contracting and sustainable infrastructure services by Energy Systems Group through June 30, 2023, the date of the sale of Energy Systems Group, and corporate support operations that support all of CenterPoint Energy’s business operations. CenterPoint Energy’s Corporate and Other also includes office buildings and other real estate used for business operations. CenterPoint Energy’s CODM, the Chief Executive Officer, evaluates performance for all of its reportable segments based on segment net income. The CODM uses segment net income to allocate resources as part of the budgeting and forecasting process as well as during periodic budget-to-actual reviews. Houston Electric • Houston Electric’s single reportable segment consisted of electric transmission services to transmission service customers in the ERCOT region and distribution service to REPs in the Texas Gulf Coast area that includes the city of Houston. 172 Houston Electric’s CODM, the President and Chief Executive Officer, evaluates performance for its single reportable segment based on segment net income. The CODM uses segment net income to allocate resources as part of the budgeting and forecasting process as well as during periodic budget-to-actual reviews. CERC • CERC’s single reportable segment following the Restructuring consisted of (i) intrastate natural gas sales to, and natural gas transportation and distribution for residential, commercial and industrial customers in Indiana, Louisiana, Minnesota, Mississippi, Ohio and Texas; and (ii) permanent pipeline connections through interconnects with various interstate and intrastate pipeline companies through CEIP. CERC’s CODM, the President and Chief Executive Officer, evaluates performance for its single reportable segment based on segment net income. The CODM uses segment net income to allocate resources as part of the budgeting and forecasting process as well as during periodic budget-to-actual reviews. Expenditures for long-lived assets include property, plant and equipment. Intersegment sales are eliminated in consolidation, except as described in Note 4. Financial data for reportable segments is as follows: CenterPoint Energy Year Ended December 31, 2024 Electric Natural Gas Corporate and Other Total Reportable Segments Eliminations Total (in millions) Revenues from external customers $ 4,590 $ 4,048 $ 5 $ 8,643 $ — $ 8,643 Intersegment revenues — 2 — 2 ( 2 ) — Utility natural gas, fuel and purchased power 198 1,520 ( 1 ) 1,717 ( 2 ) 1,715 Non-utility cost of revenues, including natural gas — 3 — 3 — 3 Operation and maintenance expenses 2,072 881 ( 4 ) 2,949 — 2,949 Depreciation and amortization 877 542 20 1,439 — 1,439 Taxes other than income taxes 304 237 6 547 — 547 Interest expense 372 207 286 865 ( 27 ) 838 Income tax expense (benefit) 157 108 ( 70 ) 195 — 195 Interest income (1) ( 18 ) ( 2 ) ( 14 ) ( 34 ) 27 ( 7 ) Other income, net (2) ( 43 ) ( 12 ) — ( 55 ) — ( 55 ) Net income (loss) $ 671 $ 566 $ ( 218 ) $ 1,019 $ — $ 1,019 173 Year Ended December 31, 2023 Electric Natural Gas Corporate and Other Total Reportable Segments Eliminations Total (in millions) Revenues from external customers $ 4,290 $ 4,276 $ 130 $ 8,696 $ — $ 8,696 Intersegment revenues — 3 — 3 ( 3 ) — Utility natural gas, fuel and purchased power 176 1,888 — 2,064 ( 3 ) 2,061 Non-utility cost of revenues, including natural gas — 3 96 99 — 99 Operation and maintenance expenses 1,880 949 21 2,850 — 2,850 Depreciation and amortization 872 513 16 1,401 — 1,401 Taxes other than income taxes 272 245 8 525 — 525 Interest expense 303 188 264 755 ( 54 ) 701 Income tax expense (benefit) 189 ( 25 ) 6 170 — 170 Interest income (1) ( 19 ) ( 10 ) ( 34 ) ( 63 ) 54 ( 9 ) Other expense (income), net (2) ( 37 ) ( 5 ) 23 ( 19 ) — ( 19 ) Net income (loss) $ 654 $ 533 $ ( 270 ) $ 917 $ — $ 917 Year Ended December 31, 2022 Electric Natural Gas Corporate and Other Total Reportable Segments Eliminations Total (in millions) Revenues from external customers $ 4,108 $ 4,946 $ 267 $ 9,321 $ — $ 9,321 Utility natural gas, fuel and purchased power 222 2,665 — 2,887 — 2,887 Non-utility cost of revenues, including natural gas — 4 200 204 — 204 Operation and maintenance expenses 1,864 919 50 2,833 — 2,833 Depreciation and amortization 793 466 29 1,288 — 1,288 Taxes other than income taxes 275 261 7 543 — 543 Interest expense 235 137 214 586 ( 62 ) 524 Income tax expense (benefit) 147 243 ( 30 ) 360 — 360 Interest income (1) ( 4 ) ( 2 ) ( 60 ) ( 66 ) 62 ( 4 ) Other income, net (2) ( 27 ) ( 239 ) ( 105 ) ( 371 ) — ( 371 ) Net income (loss) $ 603 $ 492 $ ( 38 ) $ 1,057 $ — $ 1,057 (1) Interest income from Securitization Bonds of $ 3 million, $ 4 million, and less than $ 1 million for the years ended December 31, 2024, 2023 and 2022, respectively, is included in Other income (expense), net on CenterPoint Energy’s Statements of Consolidated Income. (2) Other income (expense), net primarily includes AFUDC equity, non-service cost for pension and postretirement benefits, Gain (loss) on equity securities, Gain (loss) on indexed debt securities and Gain (loss) on sale. Total Assets Expenditures for Long-lived Assets As of December 31, Year Ended December 31, 2024 2023 2024 2023 2022 (in millions) Electric $ 23,936 $ 21,089 $ 3,099 $ 2,660 $ 2,611 Natural Gas 18,583 17,429 1,524 1,697 1,697 Corporate and Other, net of eliminations (1) 1,249 1,197 26 13 107 Continuing Operations 43,768 39,715 4,649 4,370 4,415 Divestitures (2) — — — — 3 Consolidated $ 43,768 $ 39,715 $ 4,649 $ 4,370 $ 4,418 174 (1) Total assets included pension and other postemployment-related regulatory assets of $ 384 million and $ 385 million as of December 31, 2024 and 2023, respectively. (2) For further information regarding CenterPoint Energy’s and CERC’s divestitures, see Note 4. Houston Electric Houston Electric consists of a single reportable segment. For financial data related to income and expenses for the single reportable segment, see Houston Electric’s Statements of Consolidated Income. For financial data related to segment total assets, see Houston Electric’s Consolidated Balance Sheets. Financial data related to interest income and expenditures for long-lived assets is as follows: Year Ended December 31, 2024 2023 2022 (in millions) Interest income (1) $ 16 $ 14 $ 3 Expenditures for long-lived assets 2,738 2,309 2,302 (1) Reflected in Other income (expense), net on Houston Electric’s Statements of Consolidated Income. CERC CERC consists of a single reportable segment. For financial data related to income and expenses for the single reportable segment, see CERC’s Statements of Consolidated Income. For financial data related to segment total assets, see CERC’s Consolidated Balance Sheets. Financial data related to interest income and expenditures for long-lived assets is as follows: Year Ended December 31, 2024 2023 2022 (in millions) Interest income (1) $ 2 $ 10 $ 3 Expenditures for long-lived assets 1,485 1,568 1,616 (1) Reflected in Other income (expense), net on CERC’s Statements of Consolidated Income. Major Customers (Houston Electric) Houston Electric’s revenues from major external customers are as follows: Year Ended December 31, 2024 2023 2022 (in millions) Affiliates of NRG $ 1,169 $ 1,106 $ 1,046 Affiliates of Vistra Energy Corp. 605 539 489 175 Revenues by Products and Services Year Ended December 31, 2024 2023 2022 CenterPoint Energy Houston Electric CERC CenterPoint Energy Houston Electric CERC CenterPoint Energy Houston Electric CERC (in millions) Electric delivery $ 3,963 $ 3,939 $ — $ 3,701 $ 3,677 $ — $ 3,438 $ 3,412 $ — Retail electric sales 622 — — 569 — — 630 — — Wholesale electric sales 4 — — 20 — — 40 — — Retail gas sales 3,837 — 3,716 4,078 — 3,951 4,759 — 4,613 Gas transportation 11 — 11 11 — 11 12 — 12 Energy products and services 206 — 198 317 — 187 442 — 175 Total $ 8,643 $ 3,939 $ 3,925 $ 8,696 $ 3,677 $ 4,149 $ 9,321 $ 3,412 $ 4,800 (17) Supplemental Disclosure of Cash Flow and Balance Sheet Information Supplemental Disclosure of Cash Flow Information The tables below provide supplemental disclosure of cash flow information for the periods presented: 2024 2023 2022 CenterPoint Energy Houston Electric CERC CenterPoint Energy Houston Electric CERC CenterPoint Energy Houston Electric CERC (in millions) Cash Payments (Refunds): Interest, net of capitalized interest $ 805 $ 321 $ 190 $ 664 $ 287 $ 175 $ 480 $ 223 $ 104 Income tax payments (refunds), net (1) ( 9 ) 26 3 215 12 115 421 142 37 Non-cash transactions: Accounts payable related to capital expenditures 467 381 103 246 166 74 335 168 139 ROU assets obtained in exchange for lease liabilities (2) 18 — 13 3 1 — 7 6 — (1) CenterPoint Energy’s $ 215 million income tax payments in 2023 were attributable to recovery of extraordinary gas costs incurred in the February 2021 Winter Storm through the Railroad Commission ordered securitization. (2) Excludes ROU assets obtained through prepayment of the lease liabilities. See Note 19. The table below provides a reconciliation of cash, cash equivalents and restricted cash reported in the Consolidated Balance Sheets to the amount reported in the Statements of Consolidated Cash Flows for the periods presented: December 31, 2024 December 31, 2023 CenterPoint Energy Houston Electric CERC CenterPoint Energy Houston Electric CERC (in millions) Cash and cash equivalents (1) $ 24 $ 14 $ 2 $ 90 $ 76 $ 1 Restricted cash included in Prepaid expenses and other current assets (2) 6 — — 19 13 — Total cash, cash equivalents and restricted cash shown in Statements of Consolidated Cash Flows $ 30 $ 14 $ 2 $ 109 $ 89 $ 1 (1) Cash and cash equivalents related to VIEs as of December 31, 2024 and 2023 included $ 21 million and $ 90 million, respectively, at CenterPoint Energy and $ 14 million and $ 76 million, respectively, at Houston Electric. (2) Restricted cash primarily related to accounts established by CenterPoint Energy and Houston Electric in connection with the issuance of the Securitization Bonds to collateralize the Securitization Bonds that were issued in these financing transactions. These restricted cash accounts are not available for withdrawal until the maturity of the Securitization Bonds. 176 Supplemental Disclosure of Balance Sheet Information Included in other current liabilities on CERC’s Consolidated Balance Sheets as of December 31, 2024 and 2023 was $ 98 million and $ 118 million, respectively, of credits related to customers on budget billing programs. Included in other current liabilities on Houston Electric’s Consolidated Balance Sheets as of December 31, 2024 and 2023 was $ 85 million and $ 47 million, respectively, of builder deposits. (18) Related Party Transactions (Houston Electric and CERC) Houston Electric and CERC participate in CenterPoint Energy’s money pool through which they can borrow or invest on a short-term basis. Funding needs are aggregated and external borrowing or investing is based on the net cash position. The net funding requirements of the CenterPoint Energy money pool are expected to be met with borrowings under CenterPoint Energy’s revolving credit facility or the sale of CenterPoint Energy’s commercial paper. The table below summarizes CenterPoint Energy money pool activity for the periods presented: December 31, 2024 December 31, 2023 Houston Electric CERC Houston Electric CERC (in millions, except interest rates) Money pool investments (1) $ 368 $ — $ 238 $ 1 Weighted average interest rate 4.65 % — % 5.59 % 5.59 % (1) Included in Accounts and notes receivable–affiliated companies in Houston Electric’s and CERC’s respective Consolidated Balance Sheets as of December 31, 2024 and 2023, as applicable. Houston Electric and CERC affiliate-related transactions were as follows: Year Ended December 31, 2024 2023 2022 Houston Electric CERC Houston Electric CERC Houston Electric CERC (1) (in millions) Interest income (expense), net (2) $ 9 $ 2 $ 2 $ 10 $ — $ ( 18 ) (1) Includes affiliate-related net interest expense of Indiana Gas and CEOH to reflect the Restructuring. (2) Interest income is included in Other, net and interest expense is included in Interest expense and other finance charges on Houston Electric’s and CERC’s respective Statements of Consolidated Income. CenterPoint Energy provides some corporate services to Houston Electric and CERC. The costs of services have been charged directly to Houston Electric and CERC using methods that management believes are reasonable. These methods include usage rates, dedicated asset assignment and proportionate corporate formulas based on operating expenses, assets, gross margin, employees and a composite of assets, gross margin and employees. Houston Electric provides certain services to CERC. These services are billed at actual cost, either directly or as an allocation and include fleet services, shop services, geographic services, surveying and right-of-way services, radio communications, data circuit management and field operations. Additionally, CERC provides certain services to Houston Electric. These services are billed at actual cost, either directly or as an allocation and include line locating and other miscellaneous services. These charges are not necessarily indicative of what would have been incurred had Houston Electric and CERC not been affiliates. 177 The table below presents amounts charged for these services, which are included primarily in Operation and maintenance expenses on Houston Electric’s and CERC’s respective Statements of Consolidated Income, for the periods presented: Year Ended December 31, 2024 2023 2022 Houston Electric CERC Houston Electric CERC Houston Electric CERC (in millions) Corporate service charges $ 173 $ 213 $ 173 $ 236 $ 167 $ 237 Net affiliate service charges (billings) ( 5 ) 5 ( 10 ) 10 15 ( 15 ) The table below presents transactions among Houston Electric, CERC and their parent, Utility Holding, for the periods presented: Year Ended December 31, 2024 2023 2022 Houston Electric CERC Houston Electric CERC Houston Electric CERC (in millions) Cash dividends paid to parent $ 339 $ 442 $ 367 $ 496 $ 316 $ 124 Cash dividend paid to parent related to the sale of the Arkansas and Oklahoma Natural Gas businesses — — — — — 720 Cash contribution from parent 844 290 885 500 1,143 289 Net assets acquired in the Restructuring (1) — — — — — 2,345 Non-cash capital contribution from parent in payment for property, plant and equipment below — — — — 38 54 Cash paid to parent for property, plant and equipment below — — — — 65 61 Property, plant and equipment from parent (2) — — — — 103 115 (1) The Restructuring was a common control transaction that required the recasting of financial information to the earliest period presented. Therefore, the net asset transfer was not reflected during the year ended December 31, 2022 on CERC’s Statements of Consolidated Changes in Equity. (2) Property, plant and equipment purchased from CenterPoint Energy at its net carrying value on the date of purchase. (19) Leases In 2021, Houston Electric entered into a temporary short-term lease and long-term leases for temporary generation. The short-term lease agreement expired on December 31, 2022. Effective January 1, 2023, all temporary generation assets were leased under the long-term lease agreement. Expenses associated with the short-term lease, including carrying costs, are deferred to a regulatory asset and totaled $ 89 million and $ 100 million as of December 31, 2024 and 2023, respectively. The long-term lease agreement includes up to 505 MW of TEEEF, all of which was delivered as of December 31, 2022, triggering lease commencement at delivery, with an initial term ending in 2029 for all TEEEF leases. The total cash payments under the long-term lease totaled $ 664 million, with the final $ 485 million paid in 2022. Houston Electric derecognized the finance lease liability when the extinguishment criteria in Topic 405 - Liabilities was achieved. Per the terms of the agreement, lease payments are due and made in full by Houston Electric upon taking possession of the asset, relieving substantially all of the associated finance lease liability at that time. The remaining finance lease liability associated with the commenced long-term TEEEF agreement was not significant as of December 31, 2024 and 2023 and relates to removal costs that will be incurred at the end of the lease term. As of December 31, 2024, Houston Electric had secured a first lien on the assets leased under the prepayment agreement, except for assets with lease payments totaling $ 79 million, which is being held in an escrow account, not controlled by Houston Electric, and the funds will be released when a first lien can be secured by Houston Electric. Expenses associated with the long-term lease, including variable costs associated with the operation and maintenance of the temporary generation assets, depreciation expense on the right of use asset and carrying costs, are deferred to a regulatory asset as a recoverable cost under the 2021 Texas legislation and totaled $ 158 million and $ 124 million as of December 31, 2024 and 2023, respectively. For further discussion of the regulatory impacts, see Note 7. 178 The components of lease cost, included in Operation and maintenance expense on the Registrants’ respective Statements of Consolidated Income, are as follows for the periods presented: Year Ended December 31, 2024 2023 2022 CenterPoint Energy Houston Electric CERC CenterPoint Energy Houston Electric CERC CenterPoint Energy Houston Electric CERC (in millions) Operating lease cost $ 6 $ 3 $ 2 $ 6 $ 3 $ 2 $ 6 $ 1 $ 2 Short-term lease cost 12 11 — 31 30 — 167 166 1 Total lease cost (1) $ 18 $ 14 $ 2 $ 37 $ 33 $ 2 $ 173 $ 167 $ 3 (1) CenterPoint Energy and Houston Electric defer finance lease costs for TEEEF to Regulatory assets for recovery rather than to Depreciation and Amortization in the Statements of Consolidated Income. The components of lease income were as follows for the periods presented: Year Ended December 31, 2024 2023 2022 CenterPoint Energy Houston Electric CERC CenterPoint Energy Houston Electric CERC CenterPoint Energy Houston Electric CERC (in millions) Operating lease income $ 7 $ — $ 5 $ 6 $ 1 $ 4 $ 5 $ 1 $ 3 Variable lease income 1 — — 2 — — 2 — — Total lease income $ 8 $ — $ 5 $ 8 $ 1 $ 4 $ 7 $ 1 $ 3 Supplemental balance sheet information related to leases was as follows for the periods presented: December 31, 2024 December 31, 2023 CenterPoint Energy Houston Electric CERC CenterPoint Energy Houston Electric CERC (in millions) Assets: Operating ROU assets (1) $ 27 $ 5 $ 15 $ 13 $ 6 $ 4 Finance ROU assets (2) 430 430 — 526 526 — Total leased assets $ 457 $ 435 $ 15 $ 539 $ 532 $ 4 Liabilities: Current operating lease liability (3) $ 3 $ 1 $ 1 $ 3 $ 1 $ 1 Non-current operating lease liability (4) 25 3 14 10 5 3 Total leased liabilities (5) $ 28 $ 4 $ 15 $ 13 $ 6 $ 4 (1) Included in Other assets in the Registrants’ respective Consolidated Balance Sheets, net of accumulated amortization. (2) Included in Property, Plant and Equipment in the Registrants’ respective Consolidated Balance Sheets, net of accumulated amortization. (3) Included in Current other liabilities in the Registrants’ respective Consolidated Balance Sheets. (4) Included in Other non-current liabilities in the Registrants’ respective Consolidated Balance Sheets. (5) Finance lease liabilities were not material as of December 31, 2024 or 2023. As of December 31, 2024 and 2023, the weighted-average remaining lease term and weighted-average discount rate for the Registrants’ finance and operating leases were as follows: 179 December 31, 2024 December 31, 2023 CenterPoint Energy Houston Electric CERC CenterPoint Energy Houston Electric CERC Weighted-average remaining lease term (in years) - operating leases 17.7 2.9 20.6 4.7 3.9 3.1 Weighted-average discount rate - operating leases 4.92 % 4.11 % 5.03 % 4.13 % 4.09 % 3.60 % Weighted-average remaining lease term (in years) - finance leases 4.5 4.5 — 5.5 5.5 — Weighted-average discount rate - finance leases 3.60 % 3.60 % — 3.60 % 3.60 % — As of December 31, 2024, finance lease liabilities were not significant to the Registrants. As of December 31, 2024, maturities of operating lease liabilities were as follows: CenterPoint Energy Houston Electric CERC (in millions) 2025 $ 4 $ 2 $ 2 2026 4 1 2 2027 3 1 1 2028 2 — 1 2029 2 — 1 Thereafter 30 — 19 Total lease payments 45 4 26 Less: Interest 17 — 11 Present value of lease liabilities $ 28 $ 4 $ 15 As of December 31, 2024, future minimum finance lease payments to be received were not significant to the Registrants. As of December 31, 2024, maturities of undiscounted operating lease payments to be received were as follows: CenterPoint Energy Houston Electric CERC (in millions) 2025 $ 9 $ 1 $ 6 2026 9 — 6 2027 8 — 7 2028 4 — 2 2029 1 — — Thereafter 1 — — Total lease payments to be received $ 32 $ 1 $ 21 Other information related to leases is as follows for the periods presented: Year Ended December 31, 2024 2023 2022 CenterPoint Energy Houston Electric CERC CenterPoint Energy Houston Electric CERC CenterPoint Energy Houston Electric CERC (in millions) Operating cash flows from operating leases included in the measurement of lease liabilities $ 5 $ 2 $ 2 $ 5 $ 2 $ 2 $ 6 $ 1 $ 2 Financing cash flows from finance leases included in the measurement of lease liabilities — — — — — — 485 485 — See Note 17 for information on ROU assets obtained in exchange for operating lease liabilities. 180 (20) Subsequent Events Credit Facilities On January 29, 2025, CenterPoint Energy, Houston Electric, CERC and SIGECO each entered into Extension Agreements to, among other things, extend the maturity date of the lenders’ commitments under each of their respective Credit Agreements by one year, from December 6, 2027 to December 6, 2028. SIGECO First Mortgage Bonds (CenterPoint Energy) On January 31, 2025, SIGECO issued $ 165 million aggregate principal amount of 5.69 % First Mortgage Bonds, Series 2025A, Tranche A due 2055. Total net proceeds from SIGECO’s January 2025 issuance of first mortgage bonds, net of transaction expenses and fees, were approximately $ 164 million, which will be used for the acquisition of Posey Solar. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.