CenterPoint Energy reported that a growing number of new customers, favorable weather and better cost management helped the company more than double its earnings last year.
“I am very pleased with our 2019 results,” said John W. Somerhalder II, interim president and chief executive officer of the regulated utility that delivers electricity to most of the Houston area. He took over last week after Scott M. Prochazka suddenly left the post he had held for six years.
Recently announced deals to sell some of CenterPoint’s business lines, including a natural-gas retail business for $400 million and two natural gas distribution and transmission pipeline contractors for $850 million, will help the balance sheet going forward, Somerhalder said. CenterPoint will use the money to pay down debt, he said, and allow the company to focus on its core utility business.
Somerhalder also lauded the end of the rate case in a deal approved this month by the Texas Public Utility Commission. The settlement was a blow to CenterPoint, but Somerhalder says it provides clarity on rates and profits for the future.
CenterPoint had asked the commission for a $161 million rate hike and permission to boost its return on equity — a proxy for profits — to 10.4 percent. But the utility eventually agreed to a $13 million increase and a 9.4 percent rate of return, down from the 10 percent return it has been allowed to earn for the past decade, after regulators received complaints of service reliability from H-E-B, the San Antonio-based grocery chain.
CenterPoint reported 2019 earnings of $791 million, more than double the $368 million the company reported in 2018. In the fourth quarter, net income jumped to $157 million, a 31 percent increase over the $120 million the company reported in the same period a year earlier.
Fourth-quarter revenue increased to $3.2 billion from $3 billion a year earlier. For the year, revenue increased to $12.3 billion compared with $10.6 billion in the same period a year earlier.
Somerhalder said he plans to stay on as CEO for the foreseeable future, adding that there is no timeline to find a new permanent chief executive. In the meantime, he said, he’ll focus on the obvious things: managing costs, continuing to strengthen the company’s regulatory relationships and focusing on the balance sheet.
Somerhalder rejected an idea floated by an analyst during Thursday’s conference call that the the company might be better suited to become part of a larger organization.
“Our board is very focused,” he said, and it sees the value of utilities, investment in the rate base, growing earnings and simplifying the business. “We believe we have a very good platform as CenterPoint, as it is structured to do that.”
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