Operator:

Good morning and welcome to CenterPoint Energy Second Quarter 2024 Earnings Conference Call with senior management. During the company's prepared remarks, all participants will be in a listen-only mode. There will be a question-and-answer session after management's remarks. [Operator Instructions]. I will now turn the call over to Jackie Richert, Senior Vice President of Corporate Planning Investor Relations and Treasurer. Ms. Rickert?

Jason Wells :

Thank you, Jackie, and good morning, everyone. Before spending most of my time discussing the impacts of and our response to Hurricane Beryl, I will very briefly touch on our results for the second quarter. I'll then turn it over to Chris for a regulatory update and a more detailed recap of our financial results. For the second quarter, we reported GAAP and non-GAAP EPS of $0.36 per share. In addition, we are reaffirming our full year 2024 non-GAAP EPS guidance range of $1.61 to $1.63. Beyond 2024, we are also reaffirming our long-term guidance, where we expect to grow non-GAAP EPS and dividend per share growth at the mid-to-high end of our 6% to 8% range annually through 2030. Now, to turn to our primary area of focus. Earlier this month, Hurricane Beryl impacted our entire 5,000-square-mile service territory in the greater Houston area, causing power outages for nearly 2.3 million of our customers, or approximately 80% of our Houston electric customer base. We began tracking Hurricane Beryl and preparing for a possible impact nine days before Beryl made landfall. Initial forecasts showed that our service area in greater Houston would be spared a direct impact by the worst of the hurricane. Nonetheless, we remained vigilant and planned for impact. We initially secured 3,000 mutual assistance crew members from locations safely outside of the projected path of the storm. We also coordinated with utilities across Texas and the region to ensure resource availability. As the forecast trajectory changed, we quickly called on additional mutual assistance resources, ultimately activating and deploying over 15,000 CenterPoint mutual assistance crew members. Early in the morning on Monday, July 8, Hurricane Beryl made landfall as a powerful Category 1 hurricane with heavy rains, flooding, and up to 97-mile-hour winds that reached further inland than any storm experienced in Houston since 1983. As part of our response, we restored power to over 1 million customers within 48 hours, replaced over 3,000 distribution poles on our system, walked over 8,500 circuit miles to repair damage, and deployed mobile generators at 28 sites across the greater Houston area to various critical facilities. Impacts to our distribution lines and facilities from vegetation, such as uprooted trees and related debris carried by the very high winds, were the primary cause of customer outages. In recent years, trees in the Houston area have been weakened due to a combination of high rainfall, prior drought conditions, as well as winter freezes. We trimmed or removed approximately 35,000 trees during our restoration process. Through discussion with one of our largest vegetation management companies, 60% of the vegetation it removed were trees that had fallen from outside of our rights-of-way. Over the last 18 months, we proactively worked to address the challenges these conditions present to our distribution system through increased vegetation management. In fact, in 2023, our Houston Electric business increased its vegetation management spend by over 30% from the prior year. We continue to execute and invest at a similar, higher level of vegetation management as we recognize the impacts of the challenging growing seasons experienced in the Houston area over the last three years, and the resulting threat they could have on our lines and infrastructure. In addition, Hurricane Beryl's destructive winds, in combination with already weakened trees, highlighted not only the urgency with which we need to execute on our vegetation management plan, but also the scope. As a result, we have doubled our vegetation management resources and are aggressively tackling the riskier line miles with trees nearby. We will trim or remove trees related to an incremental 2,000 miles of our system by December 31st of this year. This represents a nearly 50% increase compared to our planned work for 2024. The vegetation work we have begun is only a part of a more comprehensive plan to improve customer outcomes and directly address the customer concerns and frustrations voiced with respect to critical aspects of our emergency response. This plan will also help us better prepare our response in key areas to future storms or hurricanes. I will walk through the three pillars of our comprehensive action plan to address our customers' concerns. Our first pillar relates to our resiliency investments. By accelerating the adoption of advanced construction standards, retrofitting existing assets on an accelerated basis, and using predictive modeling and AI, as well as other advanced technologies, we will harden our distribution system to help withstand more extreme weather and improve the speed of restoration. This is in addition to proactive steps we took nearly two years ago when we moved to constructing at the new national standard for high wind and extreme ice loading. Second, we will build a best-in-class customer communications program. Since the derecho that impacted Houston in May, our outage tracker has not been available for our customers. The tracker we previously used was hosted on a physical server that was not able to accommodate the demand of millions of users at one time. To keep our communities informed, we provided daily restoration updates, but we understand that for many, this was insufficient. As one component of our customer communication action plan, we are launching a new, more customer-oriented outage tracker later this week. Our new outage tracker will help provide our customers more of the information they need in a timely fashion. It will also be comparable to what our Texas Peer Utility customers experience. The new tracker is cloud-based, which will also allow us to scale to high levels of demand. Third, we will strengthen our partnerships with government and community leaders. Effective emergency preparedness and response requires close coordination with government officials. We will hire a seasoned emergency response leader to help the company rapidly accelerate its planning capabilities and to develop close community partnerships to help ease the burden of storm events on our more vulnerable communities. We believe the work underlying these three pillars will support our efforts to build and operate a grid that meets the demands of one of the most dynamic economies in the United States here in Houston. The initial set of specific actions we are taking is laid out on slide three. We will also be taking additional actions as we continue to learn from our internal reviews and external independent review, as well as through engagement with emergency response experts, our customers, elected officials, and community stakeholders. Our singular and overarching goal is to improve in every area of our emergency preparedness and response. Whether it is before, during, or after any future storm, we will be better prepared to support, communicate with, and serve our customers in these times of emergency. As we begin to execute this initial plan, we will work to consistently provide updates on our progress. The men and women at CenterPoint go to work every day with an unrelenting focus on delivering safe, reliable, and resilient energy to our customers, while also striving to improve their experience. We will continue to make customer-focused capital investments to achieve better outcomes for the nearly 3 million electric customers and over 4 million gas customers across our six-state footprint. And with that, I'll turn it over to Chris.

Jason Wells :

Thank you, Chris. Regardless of the challenges we face, this management team remains firmly committed to delivering for all of our stakeholders, our customers, our communities, our regulators, our legislators, and our investors.

Operator:

Thank you. At this time, we will begin taking questions. [Operator Instructions]. Thank you. One moment for the first question. The first question will come from Shar Pourreza with Guggenheim Partners. Your line is open.

Jason Wells:

Morning, Shar.

Jason Wells:

Yeah, thanks for the question, Shar. Clearly, as I've said in a number of different forums, we can and will be better. These are important issues for the greater Houston region, for Texas. Ultimately, though, the answer for getting better is continued investment and resiliency of our system. I think that needs to or will be reflected in the continued negotiations that are occurring from a settlement standpoint. There's, again, clear demand that we need to communicate better, that we need to mitigate the risk of these outages moving forward. And I think, ongoing settlement discussions are all just part of putting the company in a position to continue to be able to make that progress.

Jason Wells:

Yeah, I think it's definitely an area of focus. We were investing in resiliency prior to that resiliency legislation. I think we heard loud and clear at the PUCT meeting last week that we need to continue to move forward. We've made commitments to move forward. Ultimately, while we've pulled down the system resiliency plan, and we are working with outside experts, taking feedback, we'll obviously work with parties in the case, we plan to rapidly refile it. I think the short of it means there's probably more support for incremental resiliency investments. I'll give you one example. In the filing, we proposed continued sectionalization of our system, which is an important part of isolating outages, helping minimize the overall number. We proposed a pace of about 20 years in that program. I think that's a program that we need to revisit. I don't think the 20-year pace is no longer a pace that folks expect of us. If anything, I think the bias will be towards accelerating incremental resiliency investment as opposed to delaying it.

Operator:

One moment for the next question. The next question comes from Steve Fleishman with Wolfe Research. Your line is open.

Jason Wells:

Good morning.

Chris Foster :

Morning, Steve. It is fair to say that we're certainly looking at different versions of hybrids to pull in more equity content into the plan. And as I mentioned this morning, the other piece is just to pull forward $250 million. Again, to be clear, that doesn't change the overall guide from 2024 to 2030 of the $1.75 billion total. It's just a pull forward of that piece. And as you can imagine, the point there is to just be able to have that in place to comfortably position the balance sheet until we get the anticipated securitization proceeds. Currently thinking those are probably going to be end of year next year.

Chris Foster :

Sure thing. I think it's fair to say we're having a conversation, Steve, obviously, about both how we're thinking about the plan that Jason has referenced, where we're going to aggressively move forward here in 2024 to do some critical work in the immediate sense. Longer term, we're also talking about some initial thinking on moving forward, ideally in Q1 with a subsequent revised system resiliency plan filing. I think in this case, Texas has had a consistent construct in the state for utilities to securitize costs above the $100 million point. Certainly, that's the case here. And so, sharing certainly that history and consistent history of the state as well in terms of its overall construct. So, fairly fluid conversations, you can imagine, just given how quickly we're moving on a few fronts, but certainly sharing all of our different activities.

Chris Foster :

Thanks, Steve.

Jeremy Tonet :

Hi. Good morning.

Jeremy Tonet :

I wanted to pick up on the storm commentary. Thank you for the detail today. Just pulling it all together, looking at your post-hurricane action plan in the items you laid out here, how do you feel about, I guess, how Houston Electric can respond to the next storm out there? Do you think you have the pieces in place now to see a better response, even if everything's not in place altogether? Just wondering how you guys think you stand now.

Jeremy Tonet :

Got it. Thank you for that. Just to follow up here, you mentioned that 60% of the downfall came from outside of your right-of-ways. What can you do about that going forward? Also, I guess just the assets overall, how did the hardened assets perform during the hurricane? Just want to see what value you think has been delivered with prior hardening here.

Jeremy Tonet :

Got it. Thank you for that.

Nicholas Campanella:

Hey, good morning. Thanks for taking my questions this morning. I appreciate all the details.

Nicholas Campanella:

Morning. Just wanted to follow-up. As we kind of contemplate pulling forward some of this equity from '25 into '24, and then you also talked about doing this equity content financing as well, I know you talked about some kind of one-time issues in the 12-month episode of debt. Where do you think you kind of end at the base year, just based on the current plan today?

Nicholas Campanella:

Okay. Thanks for that. And then I guess you spoke about doubling some of the labor efforts around the tree trimming. Can you remind us, because you do have this 1% to 2%, I think it's an O&M reduction forecast in the long-term plan? Does that need to be reassessed? Can you execute on that, even net of these veg management increases? How do we think about that? Does that stuff get deferred? I'll leave it there. Thanks.

Nicholas Campanella:

That's helpful. Thanks so much.

Durgesh Chopra:

Hey, team. Good morning. Thank you for giving me time. I think, Chris, you mentioned 2% will increase from the securitization of the distribution spending. I have two questions related to that. First, the confidence level in $1.6 billion to $1.8 billion, I guess where I'm getting at with that is have you basically taken a deep dive of your costs? Are you still incurring costs? And the number could be significantly higher. That's one. And second, what that 2% is over -- you're assuming, I guess, cost recovery over a time frame, over multiple years. Maybe just if you could elaborate on that, please. Thank you.

Durgesh Chopra:

Excellent. Thank you. Just one quick clarification, Chris. The 2%, I think you mentioned the 2% impact on customer bills. I guess where I was going with the time frame is that assumes that $1.8 billion is collected over how many years?

Durgesh Chopra:

Thank you. I appreciate the time.

Operator:

Our next question comes from David Arcaro with Morgan Stanley. Your line is open.

Jason Wells:

Good morning, David.

Jason Wells:

A couple of the topics that have come up early on are consistent with my previous discussion around vegetation management. I think the question is, does the state of Texas, do we need to do something different to be able to attack these hazard trees that are outside of right-of-ways and do so in a manner that is obviously constructive with property owners? I think that's obviously a place to look. The other thing that's come up is sort of the unique aspect of the market here in Texas, the fact that we have a service relationship with customers but not a commercial relationship. It's, at the end of the day, inexcusable that we don't have customer contact information at each address since we have that service-related responsibility. There may be something around that as well. Clearly, yesterday, there was a lot of feedback on mobile generation. Right now, we want to be constructive with the policy objectives of the state. As I mentioned in the Senate hearing, we have an order by the PUCT that we cannot allow a customer to go more than 12 hours without power in a load shed event. Those assets are necessary to comply with that order, but if policymakers want to change that direction, obviously, we will work to support the policy direction of the state. There's a lot of different things being discussed now, and I think that they will come into greater focus as we approach the end of the year and, obviously, the start of the legislative session next year.

Chris Foster :

Sure, David. I think what you'll see there naturally is that you'll have the adjustment upward from S&P that will take place, and then Moody's does so upon receipt of proceeds. Again, so you'd be looking at roughly Q4 of next year in this timeframe.

Operator:

And the next question comes from Julien Dumoulin Smith with Jefferies. Your line is open.

Chris Foster :

Sure thing, Julien. In the very near term, as you can imagine, there was a usage impact associated with the storm itself. We also had a situation where we were having to adjust work temporarily as it related to the literal storm response and restoration. But ultimately, as we're looking through the remainder of the year, as you saw, we reaffirmed this morning, gives us confidence that we've got both two things going on. One, the ability for the mutual aid and other crews who joined our colleagues to really effectively work to restore customers quickly. But also, as I mentioned, we have been able to retain confidence in achieving the base CapEx plan as well. So net of the different factors, including interest expense, we're confident that we're still able to reaffirm this morning.

Jason Wells:

Yeah, I mean, I strongly believe we have the most comprehensive mobile gen program consistent with what has been asked of us by the state and its policy objectives. The legislation was passed in 2021, and there was a focus on load shed events. Those are sort of larger units tied to substations. And as I mentioned yesterday, there's been 115 instances since that legislation started to be discussed where there were tight system conditions on our cotton. Those systems, those units may be to be utilized. We had also utilized in 2021 one of the medium-sized units for storm restoration and got a significant amount of pushback. And I think the legislature clarified that in 2023. And as soon as we got that clarification in the fall of 2023, we increased the number of small units. And so, I'm proud that we were able to scale to 18 small units out of a total of 30. The other 12 we borrowed from our utility peers to be part of the storm response. And so, as I said yesterday, we manage a number of different risks, whether those are load shed events or storm response. We've got a portfolio of assets to kind of meet those needs. Now, obviously, as I said, if the policy objectives of the state change, we will change with them. But I think today we are maintaining a diversified portfolio for the diversified set of risks that we manage.

Operator:

Okay. And our last question will come from Anthony Crowdell with Mizuho. Your line is now open.

Chris Foster :

Anthony, morning. I was thinking about it within the $2.7 billion. Keep in mind that we provide that higher end as an articulation of the ability to accelerate some work, and that's really what you're seeing here is a pretty aggressive acceleration here in 2024 to make sure we're doing more work on the system.

Jason Wells:

Yeah, thanks, Anthony. It's a great question, and I think one where there's certainly going to be a greater push for undergrounding, and it will play probably an even more prominent role in our resiliency efforts going forward. But what I think is important as well as to kind of balance it, about 60% of our customers today receive service through underground lines. It's a pretty significant penetration of undergrounding already in the system. But the point of weakness is those communities are often fed with overhead lines kind of at the feeder level. That's where we saw the tree damage. And so, I think we have to find a balance between undergrounding where it makes sense and where we have overhead lines, making sure that they are hardened and more resilient so that they're not the single point of failure, so to speak, from an outage standpoint. So, it's a little bit of an all of the above, but I would imagine that undergrounding takes an even greater prominence moving forward.

Jason Wells:

Thanks, Anthony.

Operator:

Good morning, and welcome to CenterPoint Energy's First Quarter 2024 Earnings Conference Call with senior management. [ Operator Instructions ] I will now turn the call over to Jackie Richert, Senior Vice President of Corporate Planning, Investor Relations and Trustee. Ms. Richert, you may begin.

Christopher Foster:

Thanks, Jason. Today, I'd like to cover 3 areas of focus. First, the details of our strong first quarter financial results. Second, I'll touch on our capital deployment progress this quarter and the potential for incremental capital related to Houston Electric system resiliency plan filing. And finally, I'll provide an update on where we stand with respect to our current financing plan and credit metrics.

Jason Wells:

Thank you, Chris. I look forward to continuing not only to execute on what I believe to be 1 of the most tangible long-term growth plans in the industry, but also enhancing it for the benefit of all of our stakeholders in both the near and long term.

Operator:

[Operator Instructions] And the first question will come from Shahriar Pourreza with Guggenheim Partners.

Jason Wells:

Yes. Thanks, Constantine. Pretty comprehensive question there. Let me kind of start at the highest level. And I think there's 3 main points to this CapEx update. The first is we've got a great base plan, 10% rate base growth through the end of the decade. And the second point I'd make is we've been spending significantly on resiliency because it's the right thing to do for our customers and case in point. We've increased our CapEx plans over 10% since our 2021 Analyst Day. That was largely [indiscernible] increased resiliency efforts.

Christopher Foster:

Sure. Happy to hit it, morning, Constantine. I think if you look at the larger incremental potential CapEx that Jason was just referencing, you should think about it as just the prior approach that we've referenced, which is continuing to incorporate that into our capital plan as we can execute it, finance it and recover it and the way in which we would do it would largely be to fund it in line with our enterprise cap structure.

Konstantin Lednev:

I appreciate that. And maybe a quick follow-up on that. You kind of highlighted the path on credit metrics and how are you thinking about options of refinancing needs on both floating rate exposure and kind of near-term maturities? And is there any optimization opportunities there with convertibles, hybrids, any of these kind of federal loan programs to supplement?

Konstantin Lednev:

Okay. So everything is on the table. And just a quick one on Jason's comments around demand growth that you mentioned and cost shift has kind of become more of a prominent issue with the inflection and load that we are seeing. Do you see any issues in Texas or even Indiana, where you would need to adjust kind of cost allocation? And would those be addressed in the current rate case process or any kind of separate proceedings?

James Thalacker:

I just wanted to follow up on Constantine's question on the system resiliency filing. The plan is $2.2 billion to $2.7 billion, which I think is roughly almost double to $1.3 billion we've been standing over the last couple of years. But if I heard you correctly, the $500 million of incremental capital is kind of in line with the higher end of the filing. So if we kind of run this forward, if the PUCT ultimately decides to approve a spending that's, say, near the bottom this or even below the range, could you talk a little bit about where you see other investment opportunities and how would this change your financing plan, if at all?

Operator:

The next question will come from Steven Fleishman with Wolfe Research.

Jason Wells:

Steve, thanks for the question. We pushed the start of the hearing by day as we continue to explore the potential here for settlement. It's hard to handicap kind of expectations. I think we're working hard with stakeholders to find what we believe would be a constructive path forward.

Steven Fleishman:

Great. And then just on the kind of S&P negative outlook, I just want to clarify. Just -- is your -- I mean, I think these things usually take like a year or so to go through. But just are you -- your intention is just these metrics will get better just as the Uri impact goes away and that should be sufficient -- to meet the targets there? Is that how to think about it?

Jason Wells:

I think -- Steve, if I could add to that. Obviously, as Chris said, we're comfortable. But I think it's important just to highlight the core difference in methodology here because it is transitory in nature. The way that issue I'd add is we've received securitization proceeds from [indiscernible] significant cash inflow. We have to pay taxes on that, cash outflow. S&P's methodology excludes that significant inflow but includes the associated cash outflow, right? That's sort of a transitory effect. And as Chris said, as we look forward, we feel comfortable about the trajectory that we're on. And so just a very sort of idiosycratic impact from their calculation.

Christopher Foster:

Yes. Thanks, Steve. What I would say is, I don't think you can find a more dynamic setting anywhere in the country, particularly on electric sales growth and you can't hear. Residential load growth continues to be best-in-class, right? We continue to see the industrial load growth that I mentioned, transportation, electric load growth. And I think that's really reflective in our sales numbers for the first quarter. On a quarter-over-quarter basis, when we adjust for weather, sales are up 8% over the first quarter last year, driven by strong residential, commercial and large industrial growth. There's electrification at one of our nation's largest ports here in Houston. We continue to see incremental growth in the petrochem complex will becoming one of the dominant areas in the country for life sciences.

Operator:

The next question comes from Nick Campanella with Barclays.

Christopher Foster:

I think about it, is just to be clear, very small, right? We're really talking about component here, where we're looking at the federal program from the loan standpoint, as you mentioned, as well as the specificity that we provided around the GRIP program that's there, which has already been filed. We've also got some Texas Department of Energy -- excuse me, emergency management funds that we've also asked for on the state level. Those would be in the form of grants, again, just a situation where we can get better outcomes in total for customers.

Jason Wells:

Yes. Thanks, Chris. What we've consistently said, Nick, is that we'll come back after these rate cases next year and provide a new 10-year plan well into the mid-2030s to reflect in our continued confidence on long-term growth. What I want to highlight, though, are there's been a handful of things that we've been able to accomplish since we rolled out that guidance, the long-term EPS guidance, which is again, 8% growth here in 2024 and then the mid- to high end of the 6% to 8% range through 2030.

Christopher Foster:

Sure thing, Nick. I'll just say, as we are building the plan heading into 2023. I don't know that any of us really could have appropriately predicted the impact there, but I think you saw the company execute well and overcome that pressure. As we look into 2024 walking into the year, we definitely plan conservatively there. And it's hard for me to be too specific, but just know that if you look across our plant, I hope that you've seen we're consistently bringing forward conservatism so that there are no surprises in the end.

Operator:

The next question comes from Jeremy Tonet with JP Morgan Securities.

Jason Wells:

Yes. Thanks for the comprehensive question. Look, from a wildfire standpoint, as you highlighted, $140 million is in a significant driver of the overall $2.2 billion to $2.7 billion plan. I think it's important to understand why 60% of our system is currently underground. Jeremy, as I know you know, we have high relative humidity here. So all things being equal, we have significantly lower cloud buyer risk than our peers. That being said, obviously, we haven't sat on our hands. We've been addressing this risk with changes in operations, shutting of automatic or closers, enhanced inspections during periods of higher wildfire rigs. But this plan basically addresses about 1% of overhead miles that are in higher fire risk areas. And so this is probably under the current set of conditions sufficient to mitigate our wildfire risk.

Jeremy Tonet:

Got it. Makes sense. If there's one thing we know, it's that Houston is humid, I'll leave it there.

Operator:

And the last question will come from Durgesh Chopra with Evercore.

Christopher Foster:

Yes. Thanks, Durgesh, for the questions. On the first side, the time line for approval of the resiliency plan, I think the legislation call it for about a 6-month approval period. What I will say is this is first of its kind legislation. So we'll have to kind of get in the middle but I'm sure there will be a number of parties sort of intervening, but I would look towards the tail end of this year, calendar year, to get a final decision on the resiliency plan that we file.

Jackie Richert:

Okay. Operator, with that, that concludes our call for the quarter. Thanks, everyone, for joining.

Operator:

Good morning, and welcome to CenterPoint Energy's Fourth Quarter and Full Year 2023 Earnings Conference Call with Senior Management. During the company's prepared remarks, all participants will be in a listen-only mode. There will be a question-and-answer session after management's remarks. [Operator Instructions] I will now turn the call over to Jackie Richert, Vice-President of Corporate Planning, Investor Relations and Treasurer. Ms. Richert, please go ahead.

Jason Wells:

Thank you, Jackie, and good morning everyone. Before I get into the quarter, and the annual results for the first time as CEO, I want to take a moment to thank the Board once again, for entrusting me to lead this great company, into its next chapter. I'm privileged to work with an amazing team, and I couldn't be prouder of how we closed out 2023, and how we're off to an already strong start in 2024. On this morning's call, I'm excited to cover four key topics, before turning it over to Chris, to cover our financial results in more detail. First, I want to discuss my continued commitment, to our strategic objectives, as I have now stepped into this new role. Second, I'll briefly summarize the financial results for the fourth quarter and full year 2023. Third, I'll discuss the rationale for the sale of our Louisiana and Mississippi gas LDCs that, we announced this morning and provide an update, on our long-term capital investment plan. Finally, I'll conclude with an update, on where we stand, with respect to our regulatory calendar. I'm fortunate to step into this role, at a time when CenterPoint is undoubtedly, better positioned than it was, when we held our Analyst Day in 2021. In my time here, I've clearly articulated that, I believe we have one of the most tangible long-term growth plans in the industry. My focus will be continuing, our established track record, of consistently executing this plan and thoughtfully enhancing it, for the benefit of all of our stakeholders. At our 2021 Analyst Day, we put forth a premium value proposition, underpinned by our strategic objectives, which included, delivering consistent and sustainable non-GAAP EPS, and dividend per share growth to our investors, investing in customer-driven capital in our core regulated utility businesses, driving industry-leading rate-based growth, providing affordable service, to our customers through O&M discipline, and maintaining a strong balance sheet, while efficiently funding our capital investments. I want to reiterate my commitment to these strategic objectives and discuss each in more detail. First, looking at delivering consistent and sustainable growth, for our stakeholders. Looking over the last three years, we have demonstrated that not only do we have a great plan in, which we have targeted 8% non-GAAP EPS growth each year, but we also have the ability to execute above expectations. This execution, resulted in us achieving, 9% non-GAAP EPS CAGR over that period, which is top decile in the sector. In addition to growing non-GAAP EPS, we also grew our dividend in line with earnings, leading to one of the highest dividend growth rates in the sector, over that same period of time. To expand on a point I made last quarter, I'm excited about the company's great future, as we continue to be laser-focused, on providing outstanding service, to our customers and communities, and executing consistently, to deliver enhanced stakeholder value. We are collectively focused on, continuously improving service levels, while maintaining customer affordability, by utilizing a lean mindset throughout the organization. Now turning to investing in customer-driven capital, in our regulated businesses. Supporting our strong financial results, is a capital investment plan and resulting rate-based growth that, is among the highest in the sector. At our 2021 Analyst Day, we outlined a $40 billion plus capital investment plan that, translated to an approximately 9% rate-based growth, through 2030. Today, we're once again announcing a capital increase, supported by customer-driven capital investments to $44.5 billion, a nearly 11% increase since the 2021 Analyst Day. This revised capital investment plan, now supports a 10% rate-based growth CAGR, through 2030, which is again one of the highest in the industry. This strong growth will continue to serve, as a solid foundation, for our long-term non-GAAP EPS growth targets. In addition to effectively executing on our capital plan, we also strive to provide affordable service to our customers. We continue to be mindful of the impact of our investments on our customer bills. For this reason, we remain focused on our target of reducing O&M 1% to 2% per year on average through 2030. Our relentless attention to this area has resulted in an average annual reduction of 2% over the last three years. The high end of our target range, despite reinvesting additional savings back into the business, for the benefit of our customers. One of the other targets we put forth in our 2021 Analyst Day, dovetails with our O&M reduction targets. As we target our Net Zero goal for Scope 1 and Scope two emissions by 2035, we are retiring generation from less efficient fuel sources, which translates into a customer savings over the long-term. Finally, turning our focus on maintaining a strong balance sheet, and efficiently financing our customer-driven investments. At our 2021 Analyst Day, we targeted funding our 10-year capital investment plan, through 2030, without reliance on external equity issuances.10-year capital investment plan through 2030 without reliance on external equity issuances. We evolved that message last quarter, with the introduction of a modest ATM program, to support growth capital investment opportunities in 2024. And today, we're continuing that efficient financing evolution, with our strategic transaction we announced this morning. The transaction, which I'll discuss in more detail, will be the fourth, we have pursued to recycle capital, and reinvest transaction proceeds back into our regulated operations, for the benefit of all stakeholders. In addition, as we have incremental financing needs outside of our growth capital investment plans, we're also extending the need, for $250 million per year of equity, or equity-like funding through 2030. Chris will provide further color, regarding our ongoing financing of our business. Moving to my second key topic, I'll briefly cover the fourth quarter and full year 2023 results. This morning, we announced non-GAAP EPS, of $0.32 for the quarter, and full year 2023, non-GAAP EPS, of $1.50. Again, these full year results translate to 9% non-GAAP EPS growth, from prior year actual results, for what is now the third consecutive year. Most importantly, we have rebased our long-term growth targets off, these higher earnings levels each year. Consistent with this practice, we are reaffirming our 2024, non-GAAP EPS guidance range, of $1.61 to $1.63, which would equate, to an 8% growth rate at the midpoint, from our higher base of $1.50. Beyond 2024, we continue to expect to grow non-GAAP EPS, at the mid to high-end of the 6% to 8% range annually, through 2030, and continuing to grow dividends per share, in line with earnings growth. Chris will provide additional details, regarding our financial results, and earnings guidance later. Now I want to discuss, the sale of our Louisiana and Mississippi gas LDCs we announced this morning. We anticipate closing the sale in late first quarter of next year, and it is anticipated to result, in after-tax cash proceeds, of approximately $1 billion, which equates to an earnings multiple of approximately 32 times 2023 earnings. This is a terrific outcome, for all stakeholders. Again, following the execution of this transaction, we will mark our fourth time, over the last few years in, which we have recycled transaction sales proceeds, to efficiently fund our industry-leading growth plan. Although the transaction is a great outcome, it is always hard to part, with a great team as well as great assets. Louisiana and Mississippi are incredible jurisdictions, and we have been privileged, to serve those communities over the years. I want to share color around the decision, to sell these gas LDCs, which was driven principally by three reasons. First, the sale of our Louisiana and Mississippi natural gas LDCs, will allow us to efficiently recycle, the roughly $1 billion in anticipated after-tax cash proceeds, to support our continued capital investment programs. The valuation of about 32 times 2023 earnings, is approximately 75% more cost-effective, than issue in our own common stock, to support our industry-leading rate-based growth, and to maintain the strength of our balance sheet. The valuation also illustrates that, even in a much different cost of capital environment, than our last LDC sale, there continues to be a strong market demand for gas LDCs, particularly for those in high-growth and constructive jurisdictions. Second, we anticipate that the sale of these gas LDCs, will allow us to reprioritize approximately $1 billion, of capital expenditures, to support other jurisdictions. The added benefit of this reallocation of $1 billion of capital investment, is that we expect that we will be able to deploy much of it, in jurisdictions with less regulatory lag, therefore enhancing, the ongoing earnings power of the company. Third, as we work to optimize our portfolio, it made sense for us to focus our time and resources, in jurisdictions where we have both gas and electric service, or where we have a larger presence. This transaction will help support our non-GAAP annual EPS growth target, of 8% in 2024, and at the mid to high-end, of our 6% to 8% non-GAAP EPS growth range, through 2030, while also helping maintain the strength of our balance sheet. Now shifting to how this transaction fits within the broader context of our now $44.5 billion capital investment plan. Today, we're announcing that once again, we have positively revised our capital investment plan, by an increase of $600 million to $44.5 billion, through 2030. $100 million of this increase was already deployed in the fourth quarter of this year, which brought the total capital investments in 2023, to $4.3 billion for the benefit of our customers. This represents a nearly 20% increase over the $3.6 billion we originally guided to at the beginning of 2023. We made the decision, to increase the amount of planned work, on our systems principally related to critical investments, to improve resiliency and reliability in our Houston Electric Service Territory. We did this knowing, we would be able to efficiently fund these investments, once the announced sale of our Louisiana and Mississippi gas LDCs closed. The added benefit of this increased capital spend, is that it will also help offset the loss of approximately $800 million of rate base that, we have invested in those states today. Today's capital increase, will be focused on investments in system resiliency at Houston Electric, in response to the resiliency bill that was enacted in 2023, by the Texas Legislature, as well as targeted investments in our gas businesses. These resiliency investments at Houston Electric will support the prioritizing of operational programs that modernize, harden, and enhance the resiliency and reliability, of our transmission and distribution system, such as asset hardening, distribution automation devices, and substation flood mitigation. We look forward to filing our multi-year resiliency plan, likely early in the second quarter of this year, and sharing further details, on our next earnings call. Before I move on from this capital investment conversation, I want to make a few comments, around our modest pivot, and our long-term financing plans moving forward, which Chris will cover in more detail momentarily. In addition to the efficient recycling, of strategic transaction proceeds I described earlier, we are also planning, to incorporate approximately $250 million of annual equity, or equity-like funding needs, into our long-term financing plans moving forward. This is to allow us to continue to fund our growing capital plans, maintain the strength of our balance sheet, and address incremental annual cash needs that, Chris will describe shortly. Lastly, before turning it over to Chris, I want to provide some color on our rate cases, and put into context what, is a relatively busy regulatory calendar. I think it's important to remember the place where we start from. That although greater than 80%, of total enterprise rate base, is located in jurisdictions, where we are anticipated to have rate cases in the next 12 months, we are uniquely positioned, and that most of these investments, have already been through some regulatory review. As we've stated previously, over 80% of our capital expenditures, are recovered through interim trackers, and as such are already in rates. This is a key differentiator from rate cases in other jurisdictions. Now turning to our largest jurisdiction, Houston Electric. On our previous call, we indicated that, we had requested an extension to file our Houston Electric rate case, from March 9 to the second quarter of this year. However, in the January PUCT open meeting, the Commission decided to stay with the original March 9, 2024 deadline, as ordered in the last rate case. While we preferred the extended filing date, that was supported by all parties in the case, we will be prepared to file the case in early March and anticipate a relatively flat revenue requirement increase. At the same January open meeting, the PUCT finalized its rulemaking for House Bill 2555, better known as the Resiliency Bill. As you may recall from our previous earnings call, the Resiliency Bill allows Texas TDUs, to file a multi-year resiliency plan that would allow, for the recovery of certain costs, through riders or regulatory assets. For Houston Electric, these investments are expected to include investments in upgrading distribution lines, building new and upgrading older substations, and upgrading our transmission system. These upgrades should help support fewer and shorter unplanned outages, faster restoration response time, and greater accuracy, with respect to our restoration times. Additionally, the rulemaking in its final form allows, for deferral of certain costs, such as depreciation and a return on our cost of capital, associated with distribution investments and resiliency, between the time the assets are placed in service, and when rates are updated for those investments. This final rule, is beneficial in reducing regulatory lag, on these critical investments. We initially indicated that we would make our filing, towards the end of the first quarter. However, as the final rulemaking was slightly delayed, our filing will likely be submitted, early in the second quarter. Now I'll highlight, our three recently filed rate cases. In our other electric jurisdiction in Indiana, we filed a rate case in the first week of December, with a requested revenue requirement increase of approximately $119 million distributed over the next three years. Much of this requested revenue requirement increase, is associated with our investments in connection, with a generation transition plan, as we move away from coal to a more efficient and cost-effective fuel types such as renewables and natural gas. As a reminder, we plan to fully exit operating coal generation by the end of 2027. These investments are a continuation of our prudent investing in Indiana as we strive to also keep customer bills affordable. In fact, since rates went into effect from our last rate case in 2009, customer charges have increased at a compounded annual growth rate of 0.5%, well below our peers in the state, which range between 1.7% and 4.7% over that same period of time. Absent a settlement, we expect a final decision in this case in Q4 of this year. Moving on to Texas Gas. We filed our Texas Gas rate case towards the end of October with a requested revenue requirement increase of approximately $37 million. As a reminder, we combined all four of our Texas jurisdictions into a single rate case filing. This combined filing should not only result in a reduced number of filings on a go-forward basis. But in the near term, it should also result in declining bills from many of our customers, specifically those located in more rural areas. We have a third settlement conference later this month, and we look forward to continuing to work towards a constructive resolution of this case. Absent the settlement, we expect a final decision in the middle of the year. Finally, turning to our Minnesota gas business. We filed our rate case on November 1 with the requested revenue increases of approximately $85 million and $52 million for 2024 and 2025, respectively. Interim rates for 2024 were approved in mid-December and went into effect on January 1. The commission will consider interim rates for 2025 towards the end of this year if we have not settled the case before then. This is the first time we have filed a multiyear rate case in Minnesota with the goal of providing smoother revenue increases for the benefit of our customers in the future. The majority of the requested revenue requirement increase could be attributed to the fundamental safety programs we operate as well as some of the projects which we filed for under the Natural Gas Innovation Act. Lastly, I want to mention that we have one other rate case we will be filing in 2024 in our Ohio Gas business. We anticipate filing this rate case midyear, and we'll provide more details as we get closer to the filing. We look forward to working with all of our stakeholders to reach constructive resolutions to all of our rate cases. We believe we are well positioned in all of our cases as we've made prudent investments for our customers and we've made concerted efforts to reduce controllable O&M for the benefit of our customers. I realize that is a lot of information. But given the relevance of the rate cases to all stakeholder groups and our intense focus on successfully executing this activity, I believe it's important to cover it and some depth with you. Those are all of my updates for now with a strong foundation of a simple, focused plan to drive value for all stakeholders. 2023 was another great year here at CenterPoint as we continue a long track record of consistent execution. I am confident in our path forward as we reaffirm our commitment to our proven strategy into our long-term non-GAAP EPS growth guidance target of 8% in 2024 and at the mid- to high end of our 6% to 8% non-GAAP EPS guidance for 2025 through 2030. I want to thank all of our employees, but especially those on the front lines as they worked hard to provide service to our customers even as we faced a historically hot summer in our Houston Electric service territory, damaging severe storms in Indiana and extreme cold throughout our service territories this winter. 2024 will no doubt bring its own unique challenges, but I am confident we have the right team in place here to manage through them. With that, I'll hand it over to Chris for his financial update.

Jason Wells:

Thank you, Chris. I look forward to leading this company for many years to come in executing what I believe to be one of the best, most tangible long-term growth plans in the industry. I am confident in our team and the organization's continued improvement to enhance an already strong track record of delivering for all of our stakeholders.

Operator:

[Operator Instructions] The first question comes from Anthony Crowdell with Mizuho. Your line is now open.

Jason Wells:

Good morning, Anthony, I appreciate the question. Look, I think we've got a proven track record here where we look to fund our industry-leading growth plan, as efficiently as possible. This will be the fourth transaction, over the last three years doing that. As it relates to the remaining composition, after we closed the sale of we don't anticipate, we're really pleased, with the states we have the privilege to serve. I think we pointed out, we have a bias on a dual fuel basis, but we also have a bias where we have presence. And so, we're really happy with the remainder of the portfolio. I'll just say that, we'll continue to look, to fund this growth as efficiently as possible, as we've proven over the last few years.

Chris Foster:

Sure. Anthony, good morning, it's Chris. I think the simple way to think about it, is we've consistently been a cash taxpayer for a number of years. The way, I would think about these kind of coming together, is you have then in 2029. But the interesting attribute of the corporate alt-min tax, is that it actually allows us, to reduce that exposure over time. And so as you look at the different pieces, you'll have the equity component today. You'll have the proceeds from the sale. And offsetting those would be the combination of the alt-min tax, at least at this point, forecasted impacts again because that's not finalized as well as the increased CapEx that we highlighted today.

Chris Foster:

Thanks, Anthony.

Steve Fleishman:

Yes, thank you. And congrats on the sale announcement. And congrats on the sale announcement. So just a follow-up on the question on the taxes. Chris or Jason, do you have a sense of kind of roughly how much cash tax you'll be paying a year, let's say, '24, '25 or just something that we can use for that?

Steve Fleishman:

Okay. And just the - on the alt-min tax, is that mainly kind of we should watch the things we've been watching for the industry like the repair deduction, and things like that could affect, whether that ends up being what you're projecting or not?

Steve Fleishman:

Okay. Great. And then on the - I know, Jason, you went through all the rate cases. I appreciate that. Just be curious your thoughts on the new share of the Texas PUC?

Steve Fleishman:

Great. Thank you.

Constantine Lednev:

Good morning team. It's actually Constantine here for Shar. Congrats on a great quarter and update.

Constantine Lednev:

Just following up on the sale announcement. How are you thinking about the timing of reinvestments and use of proceeds as we just think about the potential accretion versus the plan? And do you anticipate this will create more investment capacity versus the 14% metric you highlighted for '23?

Constantine Lednev:

Excellent. That makes sense. And do you have any thoughts on the cadence of future updates, especially as you look to optimize around Texas resiliency, just would you look at any kind of periodic updates, or what to expect?

Constantine Lednev:

Wonderful. Looking forward to it. And maybe just one last cleanup question following-up on the regulatory side. Just any lessons learned in the active cases, especially as you're considering the Houston filing now in March? And any thoughts on settlement prospects or partial settlements of issues?

Constantine Lednev:

Excellent. That's very helpful. Thank you for taking the questions today. Take care, team.

Operator:

One moment for the next question. The next question comes from Durgesh Chopra with Evercore. Your line is open.

Jason Wells:

It was roughly $800 million of rate base that we have invested in Louisiana and Mississippi. The $700 million is what we increased our capital expenditure plan in 2023, effectively prefunding, the anticipated rate base that will go, with that sale of Louisiana, Mississippi.

Chris Foster:

Sure, Durgesh. And we're going to be consistent here with where we have been. And that is, as we look at the potential for incremental growth CapEx opportunities, you should think about the funding - funding them in line with our regulated cash structure. So again, just directionally, about 50-50 there. And again, as we look even just here in the Houston area, we continue to see really growth on all fronts. The residential side, including housing starts increasing year-over-year and then substantial opportunities, as it relates to the industrial side in particular, most recently, you probably had seen the Department of Energy identified a series of hydrogen hubs across the country. No surprise that one of those is here in Houston. And really what's compelling about it, is not only the opportunities that presents for economic growth for the communities and overall load growth. But the fact that it creates permanent jobs, right? To the tune of over 30,000 to 35,000 jobs is what they've identified there. So that's really the type of growth that, we're excited about there. And it could be hydrogen, it can be residential, it could be small and medium business. We're really just appreciative of the community that, we have the privilege to serve.

Chris Foster:

I would think about that, Durgesh, as the incremental amount.

Durgesh Chopra:

Right. Thanks so much. I appreciate the time again.

Operator:

One moment for our question. The next question comes from Sophie Karp with KeyBanc. Your line is open.

Jason Wells:

Thanks. Good morning, Sophie.

Jason Wells:

Yes. Thanks for the question, Sophie. I wouldn't necessarily think about this resiliency filing is changing the mechanism of recovery. I think we'll continue to pursue constructive distribution and transmission capital trackers that we have currently. I think the real benefit, outside of really putting forward a three-year plan, we look at the cost-benefit analysis of these investments, to make sure that we're prudently investing on behalf of our customers. The real benefit financially, is that the distribution capital that, is subject to that approved three-year plan. Effectively, we will minimize regulatory lag associated with that investment - that regulatory lag is effectively. When we put that capital into service, we begin appreciating it. We began to record interest and taxes on it. Those amounts today fall to the bottom line in the form of regulatory lag, before the capital is put into rates. As we look forward now, we have the opportunity to defer those post in-service carrying costs, until we start collecting, the capital investment in rates. The way that I think about this from a rule of thumb standpoint, is about every $300 million of eligible distribution capital, is worth about $0.01 of savings in terms of regulatory lag. And so, think about this less as a new mechanism for recovery, and more about helping minimize regulatory lag, on our system investment.

Chris Foster:

Sure thing. Sophie. I think it's fairly ratable. I think maybe a couple of the exceptions relate specifically, to a few things that we're looking at in Indiana, in particular, related to some generation projects there. Those tend to be just inherently a little bit larger as we work those into the plan. But otherwise, really across the plan, I think the thing to emphasize here is we don't - there's no real big bet that, we're looking at here. This is very straightforward, just base utility cap that we're looking at.

Jackie Richert:

Operator, I think we have time for one more question, please.

Julien Dumoulin-Smith:

Hi, good morning, team. Thank you guys very much. Appreciate it.

Julien Dumoulin-Smith:

Hi, excellent. So I just wanted to close this out, if you don't mind, on the next quarter here as we think about the multiyear resiliency filing that, you're going to be coming forward with, I just want to clarify this. We've talked a lot about the ATM, the $250 million here. We've talked about the asset sales. How do you think about - especially the asset sales side that, is effectively prefunding any portion of that resiliency plan, to come here in the next quarter? Just want to really clarify how much incremental equity could be coming as part of a yet higher CapEx number associated with a fully dispositive resiliency filing?

Julien Dumoulin-Smith:

Got it. Excellent. I know you commented on the Houston Electric ability to settle here, but the gas side of it assume the same, in terms of broad sentiments. Maybe you can speak to that a little bit more, on timing, too?

Julien Dumoulin-Smith:

All right. Excellent. All right. Best of luck, guys. We'll speak next quarter. Cheers.

Julien Dumoulin-Smith:

Thank you.

Operator:

This concludes CenterPoint's Energy fourth quarter and full year earnings conference call. Thank you for your participation. You may now disconnect.

Operator:

Good morning, and welcome to CenterPoint Energy's Third Quarter 2023 Earnings Conference Call with Senior Management. During the company's prepared remarks, all participants will be in a listen-only mode. There will be a question-and-answer session after management's remarks. [Operator Instructions] I will now turn the call over to Jackie Richert, Vice-President of Corporate Planning, Investor Relations and Treasurer. Ms. Richert, please go ahead.

Dave Lesar:

Thank you, Jackie, and good morning everyone. Before we review our third quarter results, I'd like to touch on the leadership transition announcement we made earlier today. As you've seen, effective January 5th, 2024, Jason Wells will succeed me as CEO and a member of the Board. It has been a great personal and professional experience to work alongside him and our very talented executive team. I am incredibly proud of all that we've accomplished together in the past three and a half years, as we worked hard to position the company to achieve the premium market valuation we have today. We could not have done it without the support and buy-in of our management team and all of our great employees. I have full confidence that Jason is the right person to take the helm. And given how far we've come, now is the right time to advance this transition. As our very strong third quarter results demonstrate, we have great momentum and a solid foundation in place. Making this change at the beginning of 2024 allows Jason and the team to hit the ground running, and as you will hear shortly, this move has no impact on our financial plans, capital growth plans, no impacts to great opportunities ahead for CenterPoint. I have no doubt about CenterPoint's ability to continue to outperform. I'm looking-forward to working closely with Jason and the rest of the management team to support a seamless transition. With that, I'll turn the call over to Jason for a few comments.

Dave Lesar:

Thanks, Jason. Now let's turn to what was a great quarter. I'm excited to announce that despite the continued headwinds the industry faces, our Q3, 2023, represents our 14th consecutive quarter of meeting or exceeding expectations here at CenterPoint. And as you probably saw from the results published this morning, this quarter can squarely be put in the not-only-meets but exceeds column. And as I did last quarter, I will share the quarter's headlines. Headline 1. Strong financial results, even with ongoing macro headwinds. Despite the persistent inflation across the economy and increasing interest rate headwinds, we were able to deliver $0.40 of non-GAAP EPS in the third quarter of 2023. This represents a 25% increase over the comparable quarter of 2022. Headline 2. Strong Q3 results give us visibility and confidence to increase full-year 2023 non-GAAP EPS guidance range from $1.48 to $1.50 to $1.49 to $1.51 per share. At the new and higher midpoint, this projected increase would represent a 9% growth over 2022. This would also be our third consecutive year of 9% growth and our third consecutive year with a compounding beat and raise, reflecting our ongoing strong execution. In addition, we yet again increased our dividend this quarter from $0.19 to $0.20, which represents a 10% increase over the last 12 months; one of the highest increases in this sector. These are just outstanding results. Headline 3. Initiating 2024 non-GAAP EPS guidance of $1.61 to $1.63 per share. Our new 2024 non-GAAP EPS guidance range represents an 8% growth over the midpoint of our new and now higher 2023 guidance range of $1.49 to $1.51. This continues to reflect the compounding effects of our three years of expected beat and raise results, this due to excellent execution over the past several years. As we've said previously, we continue to target year-over-year growth to deliver value to our customers and investors each and every year. We are also demonstrating that we continue to have upside to our previously stated annual growth targets. Headline 4. Another upward revision to our capital plan. We continue to be prudent and formally incorporating incremental capital into our plan. We will not deviate from our practice of only adding an incremental investments when we believe we can operationally execute them, efficiently fund them and effectively recover them. I am delighted to say today, we now have line-of-sight to increase our capital plan by an additional $500 million. This brings our total 10-year capital plan due 2030 to nearly $44 billion, supporting a 10% rate base CAGR throughout that same period. Better, yet, this amount also includes an increase to our 2023 plan from $4 billion to $4.2 billion. This represents a nearly 17% increase since our beginning of the year target of $3.6 billion. The remaining incremental $300 million will be deployed in 2024 and 2025. These additional capital investments will continue to support safety, reliability and resiliency for the benefit of customers, while balancing the impact on their bills. Chris will discuss the funding of this incremental capital a little later in his remarks. Headline 5. O&M discipline continues to help results and benefit customers. We continue on a path of reducing O&M cost by 1% to 2% per year on average over our current 10-year plan. We have successfully been able to reduce overall O&M on an annual basis, even in years when we have pulled forward O&M. This benefits all of our stakeholders. This year's strong results will allow us to pull approximately $0.03 of O&M into '23 from 2024. Now, over time we've discussed a lot of pluses, minuses and pull-forwards to our O&M in our earnings calls over the past three years. And sometimes it's easy to get lost in the weeds on our great progress and we do see in O&M. In fact, that happens to me at times. But here is the bottom-line that you should focus on. Even with higher inflation, we are now on-track to have reduced total controllable O&M from $1.46 billion to $1.28 billion since the beginning of 2021, a reduction of over 12%. Headline 6. Our four upcoming rate case filings remain on-track with a slight modification to the timing of our Houston Electric rate case. With the support of key stakeholders, we are requesting a shift to the timing of our CEHE rate case. With PUCT approval, we will seek to file, a couple of months later, to allow the use of a calendar year test year which should simplify the filing for all parties. Jason will get into that in a few minutes. Headline 7. Houston growth continues at a blistering pace. The Houston area is seen a nearly 15% increase in housing starts through the first three quarters of 2023. This activity continues to support our annual 1% to 2% organic customer growth that benefits customer charges. In fact, 10 years ago our average monthly customer charges were approximately $49. Today, even after historic inflation, our monthly charge is still that same $49. This is a testament to benefits of the decades-long 2% organic customer growth here in the Houston area. Headline 8. Still targeting Houston Electric customer charges at or below the 2% historical rate of inflation. While continuing to heavily invest in the fundamentals of safety, resiliency and reliability, our goal is to keep Houston Electric customer charge increases at or below the 2% historical level of inflation over the longer term. In summary, balancing the economic headwinds, such as higher interest rates and inflationary pressures with the tailwinds of unseasonably warm weather, especially in our Houston service territory, we continue to deliver for both our customers and investors. The third quarter of 2023 highlights this management team's commitment and ability to execute even through adverse macro conditions. We continue to believe that we have one of the most tangible long-term growth plans in the industry, and we believe we have the right team in place to extend our track-record of execution. Before I hand it over to Jason and Chris, I want to express my sincere appreciation to all employees here at CenterPoint that endured extreme weather conditions this summer to keep the power on for our customers when it mattered most. Now, let me turn the call over to Jason.

Chris Foster:

Before I get started on the financial results, Dave, thank you for your support of me as I sought to hit the ground running. And Jason, congratulations to you. Today, I'll cover three areas of focus. First, our Q3 results, including our positive revision to 2023 non-GAAP EPS guidance and the initiation of 2024 non-GAAP EPS guidance. Second, our positively revised capital plan and corresponding financing plan. And third, I look at where we stand today with respect to our balance sheet. Now, let's start with the financial results on Slide 7. As Dave mentioned in his headlines, with three quarters of 2023 behind us, we now have the visibility and confidence to provide an upward revision to our full-year 2023 non-GAAP EPS guidance range from $1.48 to $1.50 per share, to $1.49 to $1.51 per share. This increased guidance range reflects projected 9% growth over full-year 2022 actual non-GAAP EPS of $1.38 when using the midpoint. This would represent our third consecutive year of 9% growth. On a GAAP EPS basis, we reported $0.40 for the third quarter of 2023. Our non-GAAP EPS results for the third quarter, remove the results of our now divested non-regulated business Energy Systems Group. On a non-GAAP basis, we also reported $0.40 for the third quarter of 2023, compared to $0.32 in the third quarter of 2022. Growth in rate recovery contributed $0.09, which was driven by the ongoing recovery of various interim mechanisms for which customer rates were updated earlier in the year, such as the transmission tracker or TCOS at Houston Electric and the Texas Grips. Also contributing, and as Jason noted earlier during the quarter, we began recovery of two separate mechanisms at Houston Electric; DCRF and TEEEF. In addition, we continue to see strong organic growth in the Houston area, extending the long-term trend of 1% to 2% average annual customer growth, which continues to benefit both customers and investors. Weather and usage were $0.05 favorable when compared to the same quarter of 2022, primarily driven by the historic summer heat in our Houston's electric service territory. This Q3 warmer weather impact, partially offset the unfavorable cooler weather impact of $0.06 we experienced in Q1 and Q2 of this year. O&M was flat for the third quarter and $0.02 favorable year-to-date when comparing to the first three quarters of 2022. And we remain laser-focused on reducing O&M by 1% to 2% per year on average, while executing our core work plan to meet our customers' needs. In fact, due to the favorable impact from the weather, we were able to increase Q3 spending on certain O&M items for the benefit of our customers. These O&M activities included accelerated vegetation management, which we see as prudent given the heightened recent drought conditions and other targeted projects that should help us improve safety and reliability for our customers. Our consistent progress on O&M is clear. Over the last couple of years, we have been able to use hotter summers to increase our spend on O&M for the benefit of our customers. However, when looking at our current O&M trajectory, even with this increased spend, we are anticipating reducing controllable O&M by over 12% since 2021. These are excellent results for customers and investors alike. We continue to look for and execute on additional opportunities each year. Closing out the earnings drivers for the quarter, favorability from rate recovery and weather were partially offset by an $0.08 increase in interest expense. We continued rising interest rate expense on short-term borrowings, with the primary driver for this unfavourability when compared to the third quarter of last year. However, we continue to be opportunistic in reducing short-term floating rate debt exposure. I'll discuss this in greater detail in just a moment. Let me now focus a bit on our 2023 capital plan, which you can see here on Slide 8. The third quarter of 2023 represents yet another quarter of sound capital deployment execution as we invested $1.1 billion for the benefit of our customers and communities. This brings our year-to-date total investments to $3.4 billion year-to-date across our various service territories, or over 80% of 2023 capital plan. Additionally, as Dave mentioned in his headlines, we are now able to incorporate an additional $200 million of customer-focused investments in 2023, which increases our full-year 2023 capital plan from $4 billion to $4.2 billion. Let me provide a little context around this update. This year saw a couple of operational factors beyond the second DCRF law that benefited us. First, we did not experience a temporary loss of our great frontline crews to mutual aid requests as they were not major weather events that activated that need. With those crews at the ready to execute more work, we were able to support our continued customer growth of over 2% in our Texas electric business, as well as advance some of our pipeline modernization work at our Texas gas business as opposed to waiting until next year. I'm proud of the team's ability to be nimble in this way as we continue to invest in safety, reliability and resiliency for our customers. Now turning to our 2024 non-GAAP earnings guidance. As we enter the final quarter of 2023 with confidence in our ability to deliver strong full-year results, we are already looking into next year. And going forward, we would intend for our traditional rhythm to be to provide subsequent year non-GAAP EPS guidance for you in the third quarter of the prior year. And as a result, today we are initiating our 2024 non-GAAP EPS guidance range of $1.61 to $1.63 per share. This would represent an 8% earnings growth over our now higher expected 2023 earnings midpoint. Beyond 2024, we continue to target the mid-to-high end of 6% to 8% non-GAAP EPS growth through 2030. We also target growing dividends in-line with earnings, and as some of you may have noticed, we took the step to increase our dividend this quarter from $0.19 to $0.20. Which represents a 10% increase over the last 12 months; one of the highest increases in this sector. Supporting this 2024 growth is our now revised capital plan. For 2024, we are targeting to deploy $3.7 billion of customer-driven capital to support the growth, resiliency and safety of our system for our customers. On top of the incremental $200 million added to the 2023 capital plan, we will add approximately $300 million of incremental capital to the existing $43.4 billion, 10-year capital plan through 2030. This brings our new total amount to $43.9 billion. This $300 million is anticipated to be deployed in 2024 and 2025. Allow me a minute to step-back and give all of you a feel for our thinking here on this upward revision. It's much like we've said before, we need to be able to efficiently execute, fund and recover our costs as we think about including more capital for customers. This additional capital represents our move to take advantage of a few factors. First, we have the opportunity provided by the recent resiliency legislation that passed in the Texas Legislature where we can start to pull some of that work into play soon. And the team has come a long way on better capital execution in recent years. I want to take a moment and put in perspective just how far we've progressed in our capital plan since our last Analyst Day in 2021. The new $43.9 billion capital plan through 2030 is nearly 10% higher than the $40 billion plus plan we outlined, we hosted that Analyst Day, and with our revised 2023 capital target, we will have deployed over $12.5 billion in capital since the beginning of 2021, over $1 billion more than our then-market capitalization. Additionally, the five-year capital target of $18 billion plus communicated back in 2021, which now stands at over $21 billion, represents over a 16% increase in capital. At that same prior Analyst Day, we also announced that we did not need any equity to fund our $40 billion-plus capital plan, nor that we need equity to fund the previous increases to $43.4 billion. And that was still the case when we referenced our most recent revision to $43.4 billion, in part due to the financing lift from the non-core ESG transaction we announced in the last quarter. However, as we have previously said, as our capital plan grows and as we began to spend incremental capital beyond the $43.4 billion plan, equity or equity-like funding would be required. And the reason for this is simple. While we are committed to making customer-focused investments for safety, reliability and resiliency, we are equally committed to preserving a strong balance sheet. As we go-forward and evaluate acceleration of incremental growth capital additions to our plan, you should assume that we will fund in-line with our consolidated capital structure. So, it follows today that in order to efficiently fund the $500 million of incremental capital opportunities I discussed a moment ago, we anticipate initiating a modest ATM program in 2024 of approximately $250 million. Ultimately, we see this capital we highlighted today along with the ATM, introducing additional flexibility for our future plans. And as we've said before, we will continue to evaluate efficient funding for future incremental capital that we formally fold into the plan. To be clear, any ATM program proceeds are dedicated to enhance growth and incremental capital investments. The equity issued under this program will, in no way, reduce our earnings growth targets through 2030. As discussed, we continue to reaffirm our target 8% next year and the mid-to-high end of 6% to 8% thereafter through 2030. With our revised capital plan, we are still intently focused on delivering work affordably. We continue to target our customer delivery charges at Houston Electric to be equal to or less than historic inflation rate of 2%. We have confidence in our ability to achieve this through Houston's tremendous organic growth; securitization charges rolling-off the bill later next year and our plan to reduce O&M 1% to 2% per year on average. A great example of our ability to keep customer charges manageable, even as we make our system more resilient, can be found in Q3. Even with the recovery of more than $700 million in investments in our temporary emergency generation now being included in customer rates, customer charges have increased at less than an annual average of 1%. We have a strong track-record on bringing focus to affordability and smoothing of rates for our customers. Like Dave mentioned earlier, our average charge was $49, 10 years ago, and it's averaging $49 today. Finally, I will cover some of our financing and credit-related topics on Slide 9. As of the end-of-the third quarter, our calculated FFO-to-debt was 14.3%. This represents an expected increase from Q2, as the recovery of our investments accelerates going into the back-half of the year. We anticipate this acceleration to continue through Q4 of this year, as we will have a full-quarter of recovery on our DCRF and TEEEF Investments that we've indicated beginning on September 1st. We continue to target FFO-to-debt of 14% to 15%, which runs through 2030, and importantly, provides at least 100 basis points of cushion to our downgrade threshold of 13%. As a reminder, we are carrying approximately $400 million of debt at the parent, which was issued to fund our higher equity layer at Houston Electric and Texas Gas, which we believe is the proper capitalization of these businesses. Another area in which we've seen improvement is the continued reduction of our exposure to floating-rate debt. Through the third quarter, we reduced floating-rate debt to approximately $1.8 billion, which represents a 60% reduction from the beginning of 2023. We continue to be opportunistic in reducing this balance further, and the convertible bond issuance during this quarter is a great example of capitalizing on opportunities. Our $1 billion convertible issuance allowed us to redeem our $800 million Series A preferred shares that were set to go floating during the quarter on September 1st of the year at nearly 9%. So some good opportunistic savings were achieved there. The remaining approximately $200 million of convertible bond proceeds allowed us to pay down commercial paper, contributing to the net reduction of floating-rate debt exposure. Lastly, after quarter close, we issued $450 million of private placement notes at SIGECO. As we've noted in prior quarters, this was an opportunity to fund the entity on a standalone basis, rather than relying on inter-company borrowings from the parent. On a go-forward basis, this should translate to a lower relative cost of borrowing versus the parent. And as a result, this reduced parent level debt to total borrowing by another 2%. This is a milestone as our final step of the Vectren financing integration. We remain intensely focused on maintaining a strong balance sheet, especially in what appears to be a higher for longer interest-rate environment. We have worked hard to build in additional conservatism in our long-term plan. And today shows another step of progressing that plan for our customers and investors. This shared focus on good planning is what we believe will allow us to continue to execute, even in the face of continued headwinds. With that, I'll now turn the call back over to Dave.

Jackie Richert:

Thank you, Dave. Operator, we'll now turn it back to you for Q&A.

Shar Pourreza:

Hi guys, good morning.

Shar Pourreza:

Good morning. So just on - I wanted to just touch on the confidence that's going into '24 and obviously growing at the top-end from the raised guidance. I guess, how are you kind of maybe addressing the headwinds like interest-rate pressures on about $1 billion worth of the maturities, and you do have, in addition you can talk about this. You have rate cases, right, in Texas, Indiana and Minnesota that you have to get through which could also create some lag. It's a lot of moving pieces, so, I guess where the levers, and just talk about your confidence level in these cases as well as it will dictate '24 and beyond.

Jason Wells:

Yes, thanks Chris. And Shar, I would say that the extension of the filing date for Houston Electric will not create any additional regulatory lag, want to be clear about that. As a quick reminder, you know, we have access to the DCRF and TEEEF cost, the capital recovery mechanisms up to the date that we make that rate case filing. So we don't see this extension in the filing date creating any additional regulatory lag.

Jason Wells:

Yes, thanks Shar, and I think you hit it. At the end of your question there. Candidly, I don't think there is a reason to continue to track, you know, what we had originally in our last quarter articulated is at $2.6 billion. Set capital opportunities are - were outside of the plan. You know, candidly, as we've gone through our planning process for '24 and looking at our long-term plans, the pipeline of additional CapEx opportunities above are now $43.9 billion CapEx plan remains significant, well in excess of that $2.6 billion. And so, I think it just becomes a confusing factor to reconcile that. I think we've earned the confidence in track record that. You know, the pipeline of opportunities is deep, and as we see the opportunity to efficiently execute them, efficiently fund them and efficiently recover them, we will continue to pull them in for the benefit of our customers.

Dave Lesar:

Yes, I'm, not bored of the utility. Thanks, Shar. Thanks.

Steve Fleishman:

Yes, hi, good morning. Thanks. First, my condolences on the Astros, but more importantly, congrats to Dave on a great job and very happy for you, Jason.

Jason Wells:

Thanks Steve.

Dave Lesar:

No, I'm, I'm thanking you for the Astros, and thank you for the -

Dave Lesar:

Yes, so, so true.

ChrisFoster:

Sure, Steve, happy to hit it. I, I think if you just look at what we updated today, we took the plan from $43.4 billion to $43.9 billion. And really, you know, fairly, you know, relatively small amount of the CapEx increase, but one that we thought was reasonably funded with the, the modest movement in the ATM of introducing a 250. Stepping back going-forward, if you - If you look at kind of how we articulated previously, we'd probably be putting ourselves in a position to talk about the longer-term CapEx plan and the associated refresh, really once we get through the key rate cases that are in front of us at this stage. Pointing to kind of the last factor that, that you mentioned, we're going to consistently looking at it, look at the most efficient way to fund our equity going forward. But it's going to be clear that we are talking about at this stage, you know, any future considerations on an ATM would be incremental to the $43.9 billion, right. So there will be growth centric beyond the $43.9 billion that we're talking about today. And again, we're looking to do that larger capital refresh once we can work our way through these cases.

ChrisFoster:

Thanks, Steve.

Operator:

Please standby for the next question. The next question comes from Julien Dumoulin-Smith with Bank of America. Your line is open.

Dave Lesar:

Good morning.

ChrisFoster:

Yes, thanks Julien. There's a, a lot to unpack there. You know, on the CapEx side of things. Let, let me just say, you know, last quarter we had talked about pipeline of opportunities of $2.6 billion outside of the plan, you know, as we've gone through our planning process. It is well, well in excess of that. I think those opportunities are in all kind of aspects of our business. I mean, you hit on it. I think the resiliency opportunity here at Houston Electric remains significant. I think it's a real question around the pace of work and we're in the middle of preparing that filing that I'll come back to in a minute, but resiliency is clearly a key driver. But I equally see an incredible amount of opportunities on our gas side as well, particularly given all the growth that we've seen here in Texas for our Texas gas business. So, I would say they're equally weighted, they're well in excess of, of the $2.6 billion we used to track. We're just moving away from tracking that because it becomes confusing, what's in the plan was out of and how does it adjust quarter-by-quarter, but suffice it to say, it remains a deep pipeline of, of opportunities. With respect to the filing timing, you know, we are waiting for the final set of rules to be voted out by the PUCT, likely in December here. We will then, and we are now currently preparing our filing which will likely be sometime, kind of late in the first quarter for that, that resiliency filings. I think this is a incredible piece of legislation, and we're excited about proposing plans to really enhance, continued to enhance the resiliency of our Houston Electric business. And, so more to come there. I think as it relates to the timing of the filing will likely come in maybe a month or two or so before we file the Houston Electric rate case. So it will be a busy regulatory calendar for, for the Houston Electric business next year. But roughly kind of the same time, as I said, end of first-quarter for their resiliency filing a little bit after that for the, the Houston Electric filing. And then sort of more broadly on assets, as look, we, we love the businesses we run. It's a privilege to serve all of our communities. We constantly receive inbound interest on, you know, all of our assets. And as we think about additional movements increases in our CapEx plan, I think we were in the confidence, we will find the most efficient way to finance that incremental growth. So I would say, we, we will make the right decision to maximize value for, for all of our stakeholders, as we look to funding this incremental, incremental capital pipeline that I articulated.

ChrisFoster:

Well, some of it's already underway. I mean I think some of the capital that we've announced today, you know, we're executing that capital, putting that capital into service that will allow us then to begin to seek recovery of it next year and fully year in on it in '25. And so, you know, this, this pattern of looking out in the plan and seek re-sequencing capital has been something that I think we've built a track record for. You know, originally, when the Department of Commerce opened up its original investigation, that moved the timing on a handful of our original solar projects. We seamlessly accelerated some capital, particularly here in Houston Electric to offset that. And effectively, that's what we're doing today with this CapEx increase. So yes, I think the important part about these renewable generation projects up in Indiana, I, I think it's important to reemphasize, it represents less than 10% of our total CapEx for the company. And so it gives us a great deal of flexibility as we see the potential slowdown in, you know, operational dates for these plants, we can accelerate either in the other electric or gas portions of our business.

ChrisFoster:

Thank you, Julien.

Jeremy Tonet:

Hi, good morning.

Jeremy Tonet:

Congratulations again to Dave and Jason here. Great to see. And maybe just kind of picking up with this point. Obviously, Dave is a big figure in the City of Houston, very ingrained in the culture there. I was just wondering, Jason, if you could maybe speak a bit I guess, you know, having moved to Texas, how you feel your relationships with, you know, local community stakeholders, you know, have evolved over-time, you know, being somewhat newer to the City?

Dave Lesar:

Yes, let me just add little something to that, it's hard. As you know Jason is a humble guy, and he finds it hard to pat himself on the back, but I think he's done a great job in three-plus years he's been here in the Houston community and, and the broader places that CenterPoint serves. And I think he's doing a great job there. He is embedding themselves in the community. I'm not going anywhere. And I think it's going to be all easily handled, and I don't think there should be any concern at all about it.

Jason Wells:

I think just the overall sort of smoothing rate increases for customers. And sort of consistent with the common theme around a lot of our regulatory update today sort of simplifying our rate case schedule. I wouldn't really look at it as much as a, you know, earned return. Minnesota is the one state that we operate in that has a forward-looking test year. You know, historically, what I used to say was that, you know, in even years we would see a revenue increase and, and in odd years, you know, we wouldn't see any increase until we have to overcome that regulatory lag on, on odd years. This filing for a two-year for test year begins to address that profile. And so, again, starts to reduce a little bit of regulatory lag, snooze rate increases for our customers and overall reduces the administrative burden. So we're excited about making that filing next week.

Jackie Richert:

Operator, we have time for one more question.

David Arcaro:

Hi, good morning. Thanks so much for taking my question, and congrats to both Dave and Jason as well.

David Arcaro:

You know, I was, I was wondering just on the Houston Electric rate case filing, appreciate the color there. And just wondering if you could dig a little more into, have there been any changes in your expect, expectations in terms of the size of the revenue requirement ask. Does it gives you an opportunity to capture any kind of chunkier capital projects that might have been, you know, completed in the fourth quarter this year or any O&M savings, things like that as you head into that second-quarter timing.

David Arcaro:

Okay, great, thanks, that's helpful. And maybe just on the floating rate debt that the $1.8 billion you still get out there, do you plan to continue to reduce that and term it out going forward, or is the level it's at now the comfortable balance overall, as you think about capitalization?

Dave Lesar:

Okay. Before we go off the call, I would just want to thank all of our shareholders and analysts that are on the call that have believed in me and our story, and just stick with us because the best is yet to come. Thank you.

Operator:

This concludes CenterPoint Energy's third quarter earnings conference call. Thank you for your participation.

Operator:

Good morning, and welcome to the CenterPoint Energy's Second Quarter 2023 Earnings Conference Call with Senior Management. During the company’s prepared remarks, all participants will be in a listen-only mode. There will be a question-and-answer session after management’s remarks. [Operator Instructions] I will now turn the call over to Jackie Richert, Vice President of Corporate Planning, Investor Relations and Treasurer. Ms. Richert?

Dave Lesar:

Good morning and thank you to everyone joining us for our second quarter 2023 earnings call. I'm excited to announce that this is our 13th consecutive quarter of meeting or exceeding expectations. Additionally, I’m pleased to be joined on today's call by Chris Foster, the newest member of our management team. Chris has hit the ground running. I know most of you already knew what a high-quality executive he is and have had the opportunity to catch up with him. We are happy to have him officially onboard. Since we have three speakers today instead of our usual two, I will limit my time to providing the main headlines for the quarter and let Jason and Chris tell the story. Headline 1, another great quarter is in the books at CenterPoint as our entire team of nearly 9,000 employees continues to execute well on all fronts. Headline 2, overcoming headwinds reaffirming 2023 guidance. We announced second quarter non-GAAP EPS of $0.28 per share overcoming the $0.08 per share headwinds from higher interest expense alone. Other headwinds came from inflationary pressures and generally milder weather throughout our service territories this quarter. Despite these headwinds, we are reaffirming our 2023 non-GAAP EPS guidance target range of $1.48 to $1.50 per share. This represents an 8% growth over last year's actual amount. This follows non-GAAP EPS earnings growth of 9% in both 2021 and 2022. Headline 3, reaffirming industry leading long-term growth for 2024 and beyond. We continue to target 8% non-GAAP EPS growth in 2024 and in the mid to high-end of 6% to 8% annually thereafter through 2030. Headline 4. 2023 capital deployment is on track. We successfully deployed $1.2 billion of capital during the quarter, bringing our year-to-date total to approximately $2.3 billion. This is ahead of our anticipated plans for the year. Headline 5, increasing our 2023 capital spend by over 11%. Let me walk you through the new capital plan. Our prior 10-year capital plan was $43 billion with an incremental $3 billion of additional capital spend identified, but not yet included in our formal plan. Today, we are increasing our 2023 capital plan from $3.6 billion to $4 billion, an increase of over 11%. We are now confident we can efficiently fund, execute and recover this $400 million increase without any external equity issuance. With this, our formal capital plan through 2030 goes from $43 billion to $43.4 billion. As to the remaining $2.6 billion of capital identified, but not yet included in our $43.4 billion, we are now confident in our ability to identify opportunities well beyond this amount. As we have stated in the past, we will continue to add these incremental amounts to our capital plan when we are confident we can efficiently fund, execute and recover them. As we always do, we will continue to identify and execute on constructive opportunities for all of our stakeholders. So to be clear, this is additional capital spending for 2023, not pulling future capital spending forward. These additional capital investments will support safety and resiliency for the benefit of customers in our Houston Electric business while balancing the impact on their bills. Headline 6, O&M planned reductions remain on target. We continue on a path to reducing O&M cost by 1% to 2% per year on average over the current 10-year plan. Headline 7, positive legislation outcomes from across our territories. There were a number of recent legislative outcomes in Texas and Indiana that should benefit our utility customers for years to come. To name just a few from Texas, we now have the ability to file for two DCRFs per year, the ability to recover prudent incentive compensation and the ability to file a comprehensive resiliency focused investment plan. Headline 8, Houston growth continues. People and companies continue to flock to Houston, partly because of its affordable and reliable energy. In 2022, the Houston area was the second fastest growing metro area in the U.S. And amazingly, in 2022, over one-third of Houston's region population growth was from residents moving to Houston from outside the United States. Headline 9, targeting Houston Electric customer charges at or below the 2% historical rate of inflation, while continuing to heavily invest in the fundamentals of safety, resiliency and reliability, we will be aiming to keep Houston Electric customer charge increases at or below the 2% historical level inflation over the longer term. This is a unique luxury among utilities. Headline 10, we plan to be out of operating coal generation by the end of 2027. Using renewables and lower carbon power generation should provide a more affordable alternative for our customers. I want to thank our incredibly dedicated employees in both Houston and Southwestern Indiana, who worked tirelessly to repair our system that was struck by a series of major storms earlier this month. Also, I want to take a moment to thank the Texas and Indiana legislatures and all stakeholders that supported our constructive legislative outcomes. We are grateful that the resiliency and the reliability of the grid continues to be a top priority for all of our stakeholders. In summary, even in the midst of the economic and operational headwinds of higher interest rates, inflationary pressures and unusual weather, we continue to deliver for both our customers and investors. The second quarter of 2023 is just another example of our continued commitment to executing on what we believe is the most tangible long-term growth plan in the industry. I will now let Jason and Chris take it from here.

Chris Foster:

Thanks, Jason, and thanks to all of you for joining our 2023 second quarter call and my first earnings call as CFO of this great company. Although I only recently joined the CenterPoint team, I can certainly say that I've enjoyed meeting more of my coworkers, digging into the long-term plan and representing the company to the investor community while also getting my family settled here with me as a new set of Houston residents. And I'm really pleased to see the recent outcomes the team has achieved, knowing we still have a number of long-term opportunities that are still very much in front of us. Today, I will cover three areas of focus. First, our earnings progress, then a financing update, including our Energy Systems Group transaction and further reduction in floating rate debt. And finally, as Dave introduced, a positive revision to our capital plan. Now let's start with the financial results on Slide 8. As mentioned, we are reaffirming our full year 2023 guidance range of $1.48 to $1.50 of non-GAAP earnings per share which reflects 8% growth over full year 2022 non-GAAP EPS of $1.38 when using the midpoint. On a GAAP EPS basis, we reported $0.17 for the second quarter of 2023. Our non-GAAP EPS results for the first quarter removed the results of our now divested non-regulated business, Energy Systems Group. On a non-GAAP basis, we reported $0.28 for the second quarter of 2023 compared to $0.31 in the second quarter of 2022. Combined with the first quarter, we have now achieved 52% of our full year guidance at the midpoint. Growth in rate recovery contributed $0.07, largely driven by continued recoveries through our electric DCRF capital tracker filed last year and our electric transmission tracker or TCOS in our Houston Electric territory, which went into rates last November. In addition, we continue to see strong organic growth in the Houston area, extending the long-term trend of 1% to 2% average annual growth. O&M was flat for the second quarter and $0.02 favorable year-to-date when compared to the first half of '22 as we continue to find ways to operate more efficiently to target O&M reduction by 1% to 2% per year on average, while remaining focused on meeting our customers' needs. These favorable drivers were offset by an $0.08 increase in interest expense. The continued rising interest rate expense on short-term borrowings was the primary driver for this unfavorability when compared to the second quarter of last year. However, we continue to make progress in reducing our short-term floating rate debt exposure, which I will discuss in more detail shortly. We believe our plan has sufficient conservatism built in to help us overcome these ongoing pressures. Weather and usage were $0.02 unfavorable when compared to the same quarter of 2022, primarily driven by a combination of sustained record-breaking temperatures during Q2 of 2022 when compared year-over-year to the milder April and May weather in both our Houston and Indiana Electric territories this year. However, this trend did change in Houston in mid-June. Next, I cover some financing and credit related topics on Slide 9. As of the end of the second quarter, aligning with Moody's methodology, our FFO to debt was 13.9% as reported. We remain focused on the balance sheet as we target 14% to 15% through 2030. Essentially, we are targeting around 150 basis points of cushion from our downgrade threshold of 13% and we will continue to explore opportunities to strengthen the balance sheet in this rising rate environment. Another area in which we've been executing well is in the reduction of our exposure to floating rate debt. In the first quarter, we reduced floating rate debt by nearly $2 billion through the receipt of Winter Storm Uri proceeds and refinancing floating rate debt to fixed term issuances at the operating companies. We carried this momentum into the second quarter as we reduced floating rate debt by an additional $200 million to approximately 14% of total debt outstanding. That's nearly a 50% year-to-date reduction relative to where we ended 2022. The primary drivers of this reduction were the receipt of the approximately $340 million in securitization proceeds related to the retirement of A.B. Brown, the proceeds of the previously mentioned Energy Systems Group, along with the collection of elevated gas costs incurred in the latter part of 2022. As a reminder, we are carrying approximately $400 million of debt at the parent, which was issued to fund our higher equity layer at Houston Electric and Texas Gas as we head into rate cases. And as we get to the other side of the rate cases, we will either begin recovering at this higher equity content or delever. From the moment I arrived here at CenterPoint, one of my primary areas of focus as we work through our industry-leading growth plan is maintaining the strength of the balance sheet especially in the current interest rate environment. I look forward to working with the team here not only to execute one of the most tangible long-term growth plans in the industry, but also maintaining a strong balance sheet. Coming back to the divestiture of Energy Systems Group. We divested one of our few remaining non-regulated businesses, Energy Systems Group, or ESG, and closed the transaction within Q2, ESG and Energy Services business that implement efficiency solutions through infrastructure and other solutions. It was acquired in the [indiscernible] acquisition in 2019 and was part of its non-regulated portfolio. However, as we've sharpened our focus on our regulated utility businesses, it made sense to find a more natural owner for this business. As a result of this divestiture, today, non-regulated businesses account for less than 5% of our earnings. We are grateful to the employees for their tremendous work and believe they'll have further success under their new owners. We received after-tax proceeds of $121 million from the sale of ESG. The combination of these proceeds as well as those received from the Indiana securitization will help to reduce near-term floating rate debt exposure as well as provide incremental financing flexibility to help fund our capital plan including the additional $400 million capital investments we anticipate making this year. Let me now focus a bit on our CapEx enhancements on Slide 10. For the benefit of our customers and communities, we invested $1.2 billion this quarter and $2.3 billion year-to-date across our various service territories. This represents 64% of our beginning of the year target of $3.6 billion for 2023. We are updating our 2023 capital target from $3.6 billion to $4 billion. This results in an increase to $43.4 billion for our 10-year capital plan target that goes through 2030. This capital increase is a result of having greater visibility operationally to resource additional work and improvements to financing and recoveries. As it relates to the remainder of the balance of the $2.6 billion in incremental capital opportunities, that we have not yet incorporated into the plan, as Dave said, we are now confident in our ability to identify opportunities well beyond this amount. We have communicated that we will include incremental amounts when we can operationally execute, efficiently fund and efficiently recover. We have also stated that the previous $43 billion capital plan we set forth through 2030 does not require external equity funding. The remainder of the incremental amounts beyond today's increase will require some additional financing that is not currently contemplated or reflected in our plan. As we continue to evaluate when to fall in the remaining $2.6 billion and beyond, we will also target the optimal way to finance such investments. Our focus on delivering work affordably has not changed, and we will seek to continue to prudently deploy this capital while being mindful of customer charges. We continue to target our customer charges at Houston Electric to be equal to or less than the historical inflation rate of 2%. We believe we are able to achieve this through Houston's tremendous organic growth, securitization charges rolling off the bill later next year and our plan to reduce O&M 1% to 2% per year on average. I'd like to reiterate the earlier point that while these incremental investments undoubtedly add to the earnings power of the company. This management team will continue to be conservative as it relates to updates to earnings guidance. We are focused on delivering industry leading, sustainable earnings growth year-over-year through 2030. As stated, looking beyond 2023, and from the reaffirmed 2023 non-GAAP EPS guidance of $1.48 to $1.50, we continue to expect to grow non-GAAP EPS 8% in 2024 and at the mid to high-end of 6% to 8% annually, thereafter through 2030. Those are my updates for the quarter. And before turning it back over to Dave, I want to say again how excited I’m sitting in my new seat here at CenterPoint. I felt so welcomed by the excellent management team here. I believe that even with some of the headwinds our sector is facing, our tailwinds exceed the headwinds, and we have a tremendous amount of opportunity in front of us. I will now turn the call back over to Dave.

Jackie Richert:

Thank you, Dave. Operator, we will now turn it back to Q&A.

Jeremy Tonet:

Hi. Good morning.

Jason Wells:

Good morning.

Dave Lesar:

Yes. Let me give you maybe a 50,000 foot view of how we see the sort of recent legislative outcomes and then Jason can go into more of the details. But clearly, point one would be it was a very successful legislative session that is going to clearly benefit our customers and our other stakeholders and, of course, shareholders over time. I think it's important though to understand that these laws will basically get layered in over different time frames and Jason can add a little color on that. But I think the real point is the one that Chris sort of ended his comments with this is just really another tailwind for CenterPoint going forward. So we really like the outcome. We think it's going to be great for everybody. But Jason, maybe you can give a little more color in and around the timing and potential impact.

Jeremy Tonet:

Got it. That's great to hear there. And maybe just looking at the regulatory calendar more broadly here, some of the rate case timing has shifted. And just wondering if you could speak more to the regulatory calendar over the next 18 months and really how you see these cases setting up the business for the period thereafter?

Jeremy Tonet:

Got it. That's very helpful. Thanks. And last one, if I could here. With the recent Indiana IRP filing, just wondering how has a stakeholder engagement trended into the formal launch here? Is there any notable early highlights on this front?

Jeremy Tonet:

Very helpful. I will leave it there. Thank you.

Anthony Crowdell:

Hey, good morning. If I could hit up, Dave, and maybe a follow-up with Chris. Dave, I just want to tough loss last night against the Crosstown Rival there, quarter was better than a game. But just, I guess, on Jeremy's question about moving to more towards 2023, just the headwinds and tailwinds that you're seeing for just 2023. I mean you're coming in first half of the year at, I guess, like $0.58, leaning above the midpoint of where guidance would be just first half of the year. What are the tailwinds that get to maybe slightly above or just maybe address what are the tailwinds or headwinds for the remainder of '23?

Chris Foster:

Yes. Thanks, Dave, and Anthony, thanks for the question. And as you heard me in the prepared remarks, we are beyond the halfway point here, we are beyond halfway through our EPS guidance. And there's a couple of different things I want to point out for you. First is just emphasizing that as you look at the back half of the year, we've got another roughly $220 million in additional revenues from the 2022 distribution investments and our assumption around the mobile generation filing. And so those are either just updated or we anticipate those will be recovered later this year. So those are good tailwinds because really they're just weighted toward the back half of the year. Weather has been more of a mixed bag for us, definitely been trending nicely of late and the impact of the milder winter we had across our jurisdictions in Q1 has been a bit offset from the hotter summer thus far, which has specifically been the case here in Houston. And if Houston remains hot, the weather impacts we are seeing are kind of normalizing some of what we are seeing for the balance of the year. And I should say we are generally conservative when we are incorporating weather impact into our plan in the first place. It's no surprise on the headwind side that they're really interest rate driven. As you can imagine, we've been actively working those since last year. And so we continue to assume high rates as we go through the remainder of the year. And we are taking active steps, you've probably seen to move and improve our position. One of those is the move to fund [indiscernible] on a standalone basis. And there, we were reducing its reliance on roughly $450 million of intercompany debt from the parent, right? So that allows us to take advantage of the relative lower cost of debt, thanks to its high ratings. So we collectively put these together, we like where we are at this stage of the year.

Chris Foster:

Sure. So let me just start with the 39 that we are talking about this morning is in line with our plan. And so we have consistently anticipated this quarter really was going to be the trough for a couple of reasons. First is on the debt side. We've got an incremental of roughly $1 billion of debt in line that's directly in line with feeding our capital plans, and we were front loading -- excuse me, we were front loading funding at the start of the year. Then if you look at the cash flow side, as we previously mentioned, the annual revenue requirement increases of roughly $430 million this year are anticipated. So over $200 million of that is going to become effective from September onwards toward the back end of the year. So if you combine these with higher weather receipts, we see it being additive to the balance of the year's operating cash flows. On the -- has to do also have to say on the qualitative side, as we are making progress on some of these legislative and then regulatory implementation outcomes, we do see some benefit there over time as we're spending time at the rating agencies.

Operator:

Thank you. Our next question is from Shar Pourreza with Guggenheim Partners.

Dave Lesar:

Good morning, Shar.

Shar Pourreza:

Good morning. I guess, Dave, just first off, can you just touch a little bit on what you meant in your prepared remarks, I'm going to paraphrase a little bit here that you now see opportunities well above the $2.6 billion CapEx that remains outside of the plan. I guess can you define kind of what you mean by well above and the source of the opportunities? So what states are you seeing those? And do you anticipate some of that $400 million increase in '23 to be recurring CapEx in the later years as we are thinking about kind of the run rate?

Jason Wells:

Yes. Thanks, Shar, for the question. We've indicated since in our very first Analyst Day that we think that there are a significant number of capital investments that we can make there in our customers' interest and Dave's expression of capital investments beyond the $2.6 billion that we've kind of identified but not yet incorporated in the plan, continue to reflect that confidence, it really kind of runs the gamut across our gas and electric business. We'll start first with sort of resiliency. We incorporated a significant uplift around particularly enhancing grid resiliency here in Houston Electric last year. But I think that there's a potential for more to be done there. I think when we look at the electric transmission side, I think here in the state of Texas, I think all stakeholders will support the fact that there is more transmission needed to help alleviate congestion and help support the continued economic growth of the Greater Houston area. So there's a potential for electric transmission side. I think there are also opportunities on the gas side, particularly kind of given the continued growth of our gas systems potentially incremental gas transmission-related projects as we kind of enhance capacity to serve kind of our growing market. So those are just a handful of the opportunities. I think for us, there is an abundance of opportunities in CapEx. Our focus will continue to be as we've emphasized evaluating whether or not we can efficiently execute it for our customers. We can efficiently finance it for our shareholders and that we can efficiently recover it in rates. And I think we as a management team earned a track record of floating capital into the plan, as soon as we see line of sight on all three of those dimensions. Case in point today, we are increasing our annual guidance here for 2023 by 11%. As it relates to what $400 million increase we do going forward. I do think it puts us in a position to more consistently execute in this higher level of capital moving forward. We are just continuing to evaluate our ability to finance it efficiently and recover it timely, particularly given the fact that we are entering a pretty heavy rate case period, where during that time frame, we don't have access to some of these capital trackers that we've been discussing.

Jason Wells:

Yes. Let me just be very direct. There's no balance sheet repair on the plan. I do think that this focus kind of on our set of credit metrics is -- I don't know. I'll say respectfully a bit displaced. I would rather continue to maintain a healthy cushion between our actual metrics and our downgrade threshold, that remains our commitment targeting, as we've previously discussed around 150 basis points. Some of peer companies that are often cited for having better credit metrics while they may have a higher targeted set of credit metrics, they also have a higher downgrade threshold, they have less cushion. What we are focused on is retaining this healthy cushion between where we are running the company and our downgrade threshold. So our focus has been on delevering this year. Chris highlighted a number of different opportunities where we've also termed out variable rate debt as we are in a period of transition this year with a number of strategic transactions. We will continue to look at opportunities to do that. And again, I just want to emphasize what Chris said about our credit metrics at the end of the second quarter. The end of the second quarter is the period of time just the way our capital recovery mechanisms work, we have sort of the tightest set of credit metrics. Our -- the revenues we get from our capital trackers are definitely back end loaded. And so you will undoubtedly see an improvement in those metrics as we start to collect on the capital that we deployed in 2022 here in the back half of 2023.

Chris Foster:

Appreciate it, Shar. Thank you.

Julien Dumoulin-Smith:

Hey, good morning, team. Thank you very much for the time. Hope you guys are doing well. So I just wanted to follow-up here on the last set of questions, including Shar. Just talking about the -- if you want to call it the new norm here, I wanted to clarify a little bit. As you think about this elevated level of spending, more likely post the next rate case, right, given the recovery dynamics in '24. I just want to clarify, in setting expectations following the last comments. And then to that end, how do you think about the associated financing considerations or opportunities in '25 -- post this rate case? If you could address that a little bit, how do you think about balancing both sides of that equation here into '25? And I got a follow-up.

Chris Foster:

Sure, Julien. You're right in terms of the thinking about the rate case time frame. If you just step back and look at the kind of last case among the ones that Jason referenced earlier would be the Houston Electric case. So we'd be filing that anticipating Q1 of 2024, anticipate somewhere around a year to get it resolved. So that timing would put us somewhere in Q1 of 2025 where we would be on the other side of really the critical mass of all these cases that are in front of us. And so that put us probably at that stage to be in a position to give everybody a more robust update with respect to really the plan through 2030 and with the potential for extending earnings guidance targets really beyond that as we'll have greater visibility at that stage. In terms of financing, I have to say, I mean, Jason mentioned our emphasis really on maintaining the cushion as it relates to FFO to debt. You should also just keep in mind that we are consistently looking at really the debt stack that we have present state and efficiently financing that. But also, we are also evaluating opportunities like the DOE loan program as well, right? At this stage, looking to pulling other opportunities to create financing that is actually cheaper for our customers. So a lot of opportunity there in front of us.

Dave Lesar:

Yes. Thanks for the question, Julian. Ultimately, this is going to be defined by the rule making proceeding that's kind of in front of the commission now. Those rules should be established by the end of '23 and then ultimately our filing, but let me just kind of try to put some high-level thoughts around this. I think clearly, some of the investments related to hardening our grid rate potential undergrounding and distribution lines, shorter spans, composite [indiscernible], et cetera, that all fits sort of squarely in the definition of resiliency. I think there's also clearly work that can be incorporated through [indiscernible] management. I think what we need to work with the commission on is maybe some other aspects, including kind of IT-related spending help from an analytical standpoint and/or reduce concern around kind of IT kind of resource availability for weather-related events. And so I think conservatively, you could probably say there's at least $500 million to $1 billion a year of capital at CE that could qualify for that resiliency definition, ultimately, again, it's going to be shaped by the related proceeding in our filing, but probably somewhere in that ZIP code. I think what's important, I think you highlighted it, Julien, the way the mechanisms work here in Texas, the company is eligible for recovering or effectively keeping the growth and revenues associated with customer account increases. And so about half our capital at CE relates to connecting new customers. So if you think about that supports a higher level of revenues, there's really very limited regulatory lag on that growth related capital, where we've historically seen our regulatory lag is on our resiliency related investments having to kind of wait for the capital trackers to come in. By being able to defer the carrying costs of those investments, depreciation, interest, et cetera, between a time we put that capital into service and before we start to recover in rates, we are all but effectively beginning to eliminate regulatory lag at CE. And so I just want to underscore just how important this bill was to continuing to improve our ability to earn at our allowed return at Houston Electric. And so hopefully, that kind of starts to begin to shape a little bit of that resiliency filing, but more to come as the PUCT [ph] works through the rulemaking and we ultimately file first quarter next year.

Operator:

Thank you. Our next question is from David Arcaro with Morgan Stanley. Your line is now open.

Dave Lesar:

Good morning, David.

David Arcaro:

Good morning. Let's see, we've seen some indications of gas utilities on the market in terms of M&A potential. I was just wondering your latest thoughts on the mix of businesses, balance sheet and how they could weave into funding needs over time?

Dave Lesar:

Yes. I guess -- this is Dave. I guess the way I think about it, I think you should think about it is we are in such a great position right now with the assets we have we can just sit back and play offense. We don't have to play defense at this point in time, which really gives us an opportunity to be very opportunistic with our business as we go forward. So I think that, for me, is the bottom line is we really have preserved almost all our optionality on any direction we want to go. And as Jason said, the inbound inquiries we get on essentially every piece of our business continue to be there every day. So we really like where we are, but we really don't have to do anything other than execute, I think, which is the greatest plan that's out there in the utility space.

Jason Wells:

Yes. Thanks, David. I appreciate the question. I mean I think largely it will be a rate case where we have signaled and actually previewed with the commission stakeholders, many of the elements. I think there are a number of constructive mechanisms out in Indiana. For instance, our grid related investments in our transmission and distribution system, we made a separate filing in advance. We then execute upon it and report. And so this will be sort of a true-up of the execution of a plan that we've already filed and reviewed several times with the commission. Similarly on the generation transition plan, not only have we filed an IRP, but then we filed for the individual project approvals. So much of the kind of element of that case will already be reviewed between the -- with all the key stakeholders. That being said, rates continue to be a focus in Southwestern Indiana. And I would anticipate that will be part of the conversation there as we file the case.

Jackie Richert:

Operator, given the proximity to the end of the hour, I think we have time for one more.

Durgesh Chopra:

Hey, guys. Thanks for squeezing me in here. Just one question for me. You obviously have a lot of [indiscernible] here. You mentioned no equity for the plan, $43 billion. You mentioned that you may need some equity as we go beyond that. Just any sort of color you can provide on timing. Historically, like Q3 last year, you provided a big CapEx update. Just any color on timing when we could see the big CapEx update and potentially a new financing plan? Is it after you go through the rate cases? Any color would be appreciated there. Thank you.

Durgesh Chopra:

It does. Thanks, Chris, and congrats on your first CenterPoint earnings call. Thanks guys.

Jackie Richert:

Great. Operator, with that, I think that's going to conclude our call here for the second quarter of 2023. Thanks, everyone, for dialing in.

Operator:

Good morning. And welcome to the CenterPoint Energy’s First Quarter 2023 Earnings Conference Call with Senior Management. During the company’s prepared remarks, all participants will be in a listen-only mode. There will be a question-and-answer session after management’s remarks. [Operator Instructions] I will now turn the conference over to Jackie Richert, Vice President of Investor Relations and Treasurer. Ms. Richert.

Dave Lesar:

Good morning and thank you to everyone joining us for our first quarter 2023 earnings call. Although it’s been only a few short months since our last call, we continue to see exciting developments here at CenterPoint. First and foremost, the first quarter of 2023 represents yet another quarter of execution. Now our 12th consecutive quarter of meeting or exceeding expectations. This morning, we announced first quarter non-GAAP EPS of $0.50 per share. In addition, we are also reaffirming our 2023 non-GAAP EPS guidance target of $1.48 per share to $1.50 per share, which represents an 8% growth over last year’s actual non-GAAP EPS. As a reminder, we grew non-GAAP EPS 9% in both 2021 and 2022. Additionally, we aim to grow at 8% in 2024 and at the mid- to high-end of 6% to 8% annually thereafter through 2030. Additionally, we continue to execute on our long-term capital plan for the benefit of both customers and investors. During the quarter, we deployed approximately $1 billion of the $3.6 billion capital we have planned for this year, a great way to start the year. Jason will say more on this a bit later. As we continue on our path of executing for the benefit of both customers and investors, I want to highlight that we are now in the third year of consistently delivering under this management team. This has resulted in an increase in investments to further the safety, reliability and resiliency of our systems to benefit our customers. It’s also provided consistent execution and growth for our investors. We are proud of this effort and look to extending this performance well into the future. Along with another quarter of execution, we announced a new CFO a few weeks ago. A little over two years ago, I had the pleasure of announcing Jason Wells at CenterPoint’s CFO. Since that time, Jason has not only been a key contributor in developing what we believe is one of the industry’s best growth plans, but he’s also been a driving force behind its execution. Now as Jason continues his management progression in his role as President, I am excited to introduce Chris Foster as CenterPoint’s next Chief Financial Officer. Chris, of course, is well known to most of you and while we had many quality candidates, we undoubtedly believe we found the right person for this important job. Throughout the search process, Chris continued to impress us with a strong reputation with investors, deep industry knowledge and his passion for delivering for customers. In fact, my discussions with Chris reminded me of the ones I had with Jason during our interview process a couple of years ago. Chris will shortly join the leadership team to help continue the execution of our premium growth plan for years to come. He will also add depth to an already very strong management team. Chris is with us here today and sitting in on this call. So while we can’t yet give him a speaking role, he is clearly getting ready to hit the ground running and I hope you will all join me in welcoming Chris to CenterPoint. Lastly, I want to touch on a couple of constructive regulatory outcomes we had in our Texas Gas and Electric jurisdictions. Starting with Texas Gas. During the quarter, we received approximately $1.1 billion of securitization proceeds related to the extraordinary gas costs incurred in Texas during Winter Storm Uri in 2021. As a reminder, these bonds are issued by the State of Texas and are not on our balance sheet. Although the receipt of these proceeds was delayed longer than we had initially anticipated, we are grateful for the diligent work and careful consideration by all stakeholders to reach this constructive resolution for the benefit of both Texas Gas customers and Texas LDC operators. With relation to our Houston Electric business, the PUCT approved our first application for the recovery of the costs incurred in 2021 on our leased emergency temporary mobile generation units during its open meeting on March 9th. The PUCT’s approval of the use of these units is a great result for our Houston area customers as it highlights the commission’s awareness of the important role of this critical tool can play to help mitigate the number and duration of customer outages during extreme weather events. We at CenterPoint also understand the need for a resilient grid as we hear from stakeholders throughout our Houston Electric Service Territory about the continued importance of reliable energy and for very good reason. As economic data from 2022 continues to come in, one thing is clear, Houston’s economic engine continues to run at a blistering pace. After recovering some of the economic impact of COVID, the Greater Houston area GDP in 2022 was approximately $482 billion or over $1.3 billion per day, up nearly 4% from 2021. The Greater Houston area was also the second fastest-growing metropolitan area in the U.S. last year. While many may think that Houston’s economic growth is primarily driven by the 24 Fortune 500 companies headquartered here, Houston’s small business community is also a significant contributor to its nation’s leading growth rate. Last month marked the fifth consecutive quarter that Houston topped the Paycheck Small Business Employment Watch Index. This consistent job creation and wage growth continues to attract new talent from all over the United States. This only further fuels the strong organic growth in our Houston Electric Service Territory. According to U-Haul relocation data, unsurprisingly, last year, Texas was the number one destination for people moving residences and has been for five years out of the last seven years. Outside of Texas, cities in our Indiana Service Territory continued to thrive as well. Lafayette, Indiana, which is in our North Indiana Gas Service Territory topped last year’s Wall Street Journal’s Emerging Housing Market Index, which identifies top metro areas for homebuyers seeking an appreciating housing market, a strong local economy and appealing lifestyle amenities. The Lafayette area is a manufacturing hub and home to Purdue University. Our portfolio of premium jurisdictions and strong organic growth, O&M discipline and securitization charges rolling off of our Houston Electric customers bills enables us to invest in industry-leading growth for the benefit of our customers, while keeping charges at or below the historic level of inflation of 2%. In fact, over the last 10 years, Houston Electric customer charges have increased less than 1% a year on average, well below the rate of inflation during the same period. And although there may be certain periods when the increase in charges outpaces that historical level, we believe our charges will continue to stay in line or below inflation over the long-term. Although we feel confident in our plan we have outlined through 2030, we certainly recognize and are dealing with the headwinds our industry has faced over the past several quarters. These include higher interest rates, inflation and specific to this quarter, milder winter weather. However, we believe we have the right team in place to successfully manage through these headwinds that we are currently facing today. In closing, the first quarter of 2023 was a great start to the year, as the non-GAAP EPS of $0.50 that we announced this morning represents over a third of our full year 2023 earnings guidance at the midpoint. We believe this sets us up for a great year as we reaffirm our 2023 non-GAAP EPS guidance range of $1.48 to $1.50. With that being said, we remain committed to focusing on execution for 2023 and beyond to the benefit of both our customers and our investors. With that, I am going to turn the call over to Jason, who for the last time, has to wear his CFO hat.

Dave Lesar:

Thank you, Jason. As you have heard from us today, we now have 12 straight quarters of meeting or exceeding expectations. We are a pure-play regulated premium utility and on a course to continue to deliver on incremental long-term growth opportunities to support our customers.

Shar Pourreza:

Great. Thanks. Good morning, guys. Can you hear me?

Shar Pourreza:

Hey. Good morning, guys. Can you hear me?

Shar Pourreza:

Yes. Perfect. There was a little death spot there. Just a quick question on Texas -- the Texas legislator. There’s obviously been several regulatory update builds making traction at the legislature, I mean, including some of it around employee costs, approval of CPCN, storm costs, interim recovery mechanisms. I guess how do we think about some of these, Jason and David, in the context of your longer term plan, your 6% to 8%, what should we really be focused on and could any of these sort of unlock some of that $3 billion of incremental capital opportunity that’s been out there? Thanks.

Shar Pourreza:

Got it.

Shar Pourreza:

Yeah.

Shar Pourreza:

Perfect. And then lastly was -- I mean, obviously, it was a clean quarter and it seems like you guys are offsetting some of the pressures like weather and interest rates despite some reliance on floating rate debt, which obviously in your prepared remarks it’s been stepping down. I guess how do we think about sort of the rest of the year, especially some of the near-term headwinds don’t ease, how much of that sort of contingency have used up like O&M, especially in light of the inflationary pressures out there? Thanks.

Shar Pourreza:

Perfect. And then, Jason, congrats to you and Chris on phase two, it’s a big one for CenterPoint. Thanks, guys.

Jason Wells:

Chris is smiling by the way.

James Thalacker:

Good morning and thank you for taking my question. Can you guys hear me?

Jason Wells:

Yes. Good morning, James.

Dave Lesar:

Well, certainly, you take the lessons learned by watching the interaction with the PUC, watching the strategy that they use. But Oncor is Oncor and we have CenterPoint. And so we have sort of different needs. We have different outcomes. We have sort of different experiences. So I think we use it as a data point. But I think, all in all, we have got a great story to put forward in front of the PUC, we are in an entirely sort of different climate than the Oncor territory is. But as I said, we will take the lessons learned and use them, and we will put the best foot forward to show what a great company CenterPoint is and what we have done for customers with our investments over the past few years.

James Thalacker:

Great. Thanks so much guys. Appreciate it and congratulations on the good quarter.

Operator:

Please stand by for next question. The next question comes from Julien Dumoulin-Smith with Bank of America. Your line is now open.

Dave Lesar:

Hi, Julien.

Julien Dumoulin-Smith:

Absolutely. Hey. So just pivoting here, how do you think about the ability to maintain that 14% debt metric beyond 2023 year, obviously, some slight tweaks from the slides here. Can you elaborate a little bit about how you have thinking about the balance sheet here today considering kind of the status quo, obviously, we saw some of the recent headlines around potential recycling unless you elaborate as you fit? And then related, perhaps, how do you think about funding that $3 billion CapEx upside and the timing there in considering what could be a protracted process for any kind of side growth?

Julien Dumoulin-Smith:

Excellent. Thanks for the clarification there. And then if I can quickly to follow-up on the last one here. On the legislative side, just can you clarify a little bit on the timeline here? I mean, obviously, you have got a little bit of time to the end of the session here, but you have got certain perhaps thresholds that you have got to achieve here to move different bills, et cetera, at least to see them move. Can you clarify a little bit on what we should be seeing or expecting in terms of like the tenth time line to get some progress?

Julien Dumoulin-Smith:

Excellent guys. Thank you very much. [Inaudible] Cheers.

Operator:

Please stand by for our last question. Our last question comes from Jeremy Tonet with J.P. Morgan. Your line is now open.

Dave Lesar:

Good morning, Jeremy.

Jeremy Tonet:

Just wanted to revisit some of the local economic trends you referenced in the script. Just wondering how are these trends across your service story relative to growth expectations coming into the year, any deviations from original expectations?

Jeremy Tonet:

Got it. That’s helpful there. Thanks. And you also -- you mentioned continued feedback on resiliency needs. Could you speak a bit more about your thinking here, how it’s evolved, if at all? Does the current capital plan fully tackle what you would like to prioritize on the resiliency front or is there any potential here covered in the $3 billion incremental capital upside you have spoken to?

Dave Lesar:

For those of you that are wondering, that rumbling in the background is it’s a terrible weather day here in Houston with lots of thunder and lighting. So I hope it’s not impacting the quality of the call here.

Dave Lesar:

All right. Good.

Operator:

This concludes CenterPoint Energy’s first quarter earnings conference call. Thank you for your participation.

Operator:

Good morning, and welcome to CenterPoint Energy's Fourth Quarter 2022 Earnings Conference Call with senior management. [Operator Instructions] I will now turn the call over to Jackie Richert, Vice President of Investor Relations and Treasurer. Ms. Richert?

David Lesar:

Thank you, Jackie. Good morning, and thank you to everyone joining us for our fourth quarter 2022 earnings call. It's been nearly 2.5 years since I was appointed CEO here at CenterPoint. They have certainly been eventful, and I am pleased with the significant amount of progress that we have made to managing through a global pandemic, to operating through historically extreme weather, to now navigating the highest rate of inflation the U.S. has seen in the last four decades. I believe this is a management team that can take on and overcome any challenge. Since I got here, there really hasn't been a dull moment, but make no mistake, I love leading this company and its many great employees. Through these unprecedented times, CenterPoint employees stepped up and continued to deliver results for the benefit of our customers, communities and investors. And as most of you have seen, when Jason took over as CNP's President and COO on January 1, we made a few more management changes to make sure that we are creating a deeper bench and continuing to execute on our succession plan to create a company where our employees have the opportunity to be challenged, grow in their careers and help us execute our winning strategy. We have a more diverse leadership team than when I first started and one that has certainly become well regarded in the industry. I firmly believe that we have the right team to execute on what we believe is one of the most tangible, long-term growth plans in the industry. And of course, we continue to execute well. I'm happy to share that the fourth quarter of 2022 is our 11th consecutive quarter of meeting or exceeding earnings guidance expectations. Today, we announced fourth quarter non-GAAP EPS of $0.28 and full year non-GAAP EPS of $1.38. This annual 9% growth rate over 2021 establishes a new higher base from which we will grow our annual earnings for the balance of our plan through 2030. Also keep in mind, we also grew non-GAAP EPS by 9% in 2021. At CenterPoint, we don't use CAGRs for our EPS growth. We are focused on growing off our delivered results each and every year. Today, we are also reaffirming our 2023 non-GAAP EPS guidance range of $1.48 to $1.50, an 8% growth rate at the midpoint from the new higher base of $1.38. Jason and I believe in having transparency with our business operations, so we can present our investors visibility into our performance by having one of the tightest guidance ranges in one of the longest duration growth rate targets in the industry. I also want to highlight what else we accomplished just last year. We became a pure play regulated utility with the complete divestiture of our investment in Energy Transfer in March of 2022. For the benefit of our stakeholders, we recycle those sales proceeds back into our regulated businesses. As a result of this divestiture, well over 95% of our earnings now come from our regulated utility operations. We closed on the sale of our Arkansas and Oklahoma LDCs for which we received a landmark valuation and once again, we were able to use the sale proceeds to further invest in our regulated businesses for the benefit of both our customers and investors. We completed the final few steps of our Vectren integration, which resulted in a better aligned operational and financing structure to benefit customers and investors going forward. Additionally, we've made great progress on our Indiana Integrated Resource Plan with the approval of the 460-megawatt gas plant earlier this year. The filings for several renewable projects, including our first wind project and as Jason will discuss, the regulatory approval for the first of its kind Indiana securitization of the A.B. Brown coal facility in early January of this year. As we progress on our IRP, we continue to advance towards achieving our net zero carbon emission goals. And finally - in the third quarter of 2022, we increased our 10 year capital plan by $2.3 billion, taking it from $40 billion plus through 2030 to now $43 billion through 2030 with a focus on additional investments in grid reliability and modernization. This $2.3 billion in additional planned capital should not only allow us to provide safer and more reliable energy for our customers, but should also allow us to continue to reduce O&M over the longer term, which additionally benefits both customers and investors alike. As we have stated in the past, the current capital plan can still be executed with no external equity issuance. On top of the $2.3 billion we formally added to our capital plan, we've also identified an additional $3 billion of other potential capital opportunities. As we've said, we will fold in this additional $3 billion of capital when we believe we can operationally execute it, efficiently fund it and minimize the regulatory lag associated in recovering it. 2022 was truly an exciting and productive year here at CenterPoint, and we are confident that this strong momentum will continue into the New Year. Now turning to our earnings guidance. As I stated at the top of my remarks, we earned $0.28 of non-GAAP EPS for the fourth quarter of 2022 and $1.38 for a full year 2022. This represents a 9% growth rate when compared to our 2021 non-GAAP utility EPS. We continue to expect to grow non-GAAP EPS 8% in both 2023 and 2024 and in the mid to high end of the 6% to 8% thereafter annually through 2030. This is an industry leading growth rate. Jason will provide additional details regarding our financial results later. Now let's move to capital investments. In the fourth quarter of 2022, we deployed a CenterPoint record $1.6 billion of capital across our various jurisdictions, bringing our total capital invested for the year to $4.8 billion. The $1.6 billion of fourth quarter capital was approximately $200 million above what we previously indicated on our third quarter call. Some of this increase was due to initial investments made to facilitate the expansion of an already world-class facility, the Texas Medical Center, or TMC, as it begins its expansion to double its size over the next 5 years or so. Over those next 5 years, we are anticipating investing over $200 million in the TMC and surrounding community. These investments will consist of a large new substation and several system hardening projects, impacting and strengthening the resiliency in the TMC area. This will also include reinforcing transmission and distribution lines and strengthening current substation equipment. The expansion of the TMC exemplifies the continued growth in the Houston area as it remains an attractive city in which to live and work. So for those of you that worried that our organic growth would slow post-COVID, it just has not happened. Let's look at the numbers. Since the COVID recession, the state of Texas has added nearly 1.1 million jobs, a testament to the underlying fundamental strength of the Texas economy as a whole. Looking at things more locally. Amazingly, over the past year, the Greater Houston area saw record employment growth with an estimated 179,000 jobs added. It also saw its population increase by almost 300,000 people to nearly 7 million. This is now like adding a city the size of Irvine, California to our footprint in just 1 year. We see this trend continuing as the Texas miracle keeps humming along. Housing starts for the combined Houston and Dallas area over the last year saw a combined 153,000 housing permits in 2022, nearly 40,000 more units than the entire state of California during the same period, which has nearly 25 million more people. This business and residential organic growth continues to drive the potential for the additional upside to our existing $43 billion 10 year capital plan that I discussed earlier. Therefore, our plan also allows for flexibility and potential capital spend upside through 2030 and beyond as we see additional opportunities to support our customers own growth plans. This growth is just one of the reasons we believe we are uniquely positioned as a company. Despite the many moving parts impacting our plan, we remain confident in our continued ability to execute this industry-leading growth plan. We've taken a conservative approach to estimating organic growth and weather trends, among other assumptions, which we see as potential tailwinds to offset the headwinds of higher interest rates, inflation and other potential unknown issues that always arise in business. Additionally, our regulatory return assumptions across all of our jurisdictions are generally consistent with what we currently have approved by our various regulators, and we are using to manage our business today. With all that being said, one of our key priorities is always to limit the impact of our investments on customer bills, especially during these times of high inflation, rising interest rates and a potential recession. We believe our capital plan not only benefits customers from a service reliability standpoint, but also from an affordability perspective as well. For example, in the Houston area, which has the highest concentration of our planned capital spend through 2030, we anticipate that these investments, in combination with our O&M reduction goals, and securitization charges rolling off, should result in an average customer bill increase of only 2% or less per year, well below current inflation rates. We are also encouraged by the recent decline in natural gas prices, which should create some downward pressure on utility bills. We believe our capital plan around modernization of the grid here in Houston will enhance the customer experience for both our new and existing customers. It will also help accommodate the immense residential and industrial growth the Houston region is now experiencing. These investments should help reduce widespread outages and, in turn, reduce service calls. Fewer service calls, a more reliable system and a strong growing organic customer base in the Houston area is also the perfect combination for us to stay on our path of 1% to 2% average annual O&M reductions over the 10 years of our plan. Next, I want to also briefly discuss where we are in our CFO search. First, Jason and I have been thrilled with both the number and quality of the applicants for the CFO position. So far, the process has confirmed what we already knew

David Lesar:

Thank you, Jason. As you've heard from us today, we have 11 straight quarters of meeting or exceeding expectations. We are a pure play, regulated, premium utility and on a course of continuous execution of our plan with incremental growth opportunities to support our customers.

Q - Shahriar Pourreza:

Hey, guys. Good morning.

Shahriar Pourreza:

Jason, I wanted to start off with a question on the capital markets environment and how you're sort of thinking about debt metrics at this point. Deferred costs have obviously been elevated, including fuel. You had a securitization delay in '22. You've seen around a $0.06 of incremental interest drag across the utilities and parent in 4Q. I guess how should we think about resolving some of these carried costs and managing the interest rate experience cost pressures in the near term?

Jason Wells:

Yeah. Good morning, Shahriar. I appreciate the question. Obviously, we're not immune to the interest rate headwinds that everybody is facing these days, but we're confident we can manage through this challenge as we continue to have more tailwinds than we do headwinds overall. As it relates to kind of interest expense, let me make a couple of points. First is we saw interest rates rising last year. We embedded conservative assumptions around interest rate costs in the '23 guidance that we initiated on the third quarter call. So I can - I feel confident that we can accommodate some of the variability that we've recently haven't seen. The second thing, and as I kind of touched on it in my prepared remarks, we ended the year with slightly higher elevated working capital balances due to higher gas costs that we were purchasing in late third quarter, early fourth quarter. As gas prices have come down now, we expect those working capital balances to turn pretty quickly. That should take a little bit of pressure off. And then as you mentioned, while we get to defer the interest expense on the extraordinary gas costs from Winter Storm Uri here in Texas, we still anticipate receiving $1.1 billion in securitization proceeds in the coming future, and that will really help reduce the overall variable rate exposure. So again, we feel confident that we can manage through any interest rate headwinds.

David Lesar:

Well, that's a handful of a question. Let me just answer it by saying, I don't think it behoves us to try to front run what might happen, what bills might get put in. We're early in the session. Jason, Ryan and his team are heavily engaged in Austin with respect to looking at opportunities that are going to be primarily focused on making sure we keep customer bills under control. But I don't think it would make any sense at this point to talk about specific efforts or bills that we would like to see put forward. I would just say watch this space. And I think when we come with our first quarter call, which will be later this spring, we'll be way more into the session at that point in time. And I think you and all of us will have a better idea where that might be headed and what bills are likely to get passed. But for now, I just don't see any upside saying anything more on it. A - Jason Wells Sure, thanks. If I may add. Obviously, as Dave alluded to, we're early in the legislative session. On the regulatory front, though, as we look at the upcoming rate case for Houston Electric, obviously, customer rates are top of mind for all of us here at CenterPoint. I don't anticipate, at this point, much in the way of a revenue requirement increase. I'm proud of the work that the teams have done with respect to O&M. And as you look at where we set the test year for the 2019 rate case and kind of where O&M is currently trending, I think we can offer a fairly significant revenue reduction in the upcoming rate case that would offset any of the other things that we are trying to pursue, like a more equitable equity layer. And in addition, I think we're pretty fortunate in the fact that - maybe unlike Encore, we have very little, relatively speaking, in a way, of deferred costs as regulatory assets. And so, I think we can, again, position the company sort of to have a more equitable equity layer relative to some of the non-ERCOT T&D companies here in Texas. But at the same time, keep the revenue requirement very modest. So we're in, I think, a fairly fortunate place as we prepare for that filing.

Operator:

Thank you. Our next question comes from Nick Campanella with Credit Suisse. Your line is open.

Nick Campanella:

Hey. Good morning. I cut out there, but I think I heard my name. So I hope everyone is doing well. I guess just on the CFO search. I just wanted to tie that off. When is your intention to have something more formally announced here? Is it by the next quarter call? Or are you taking your time? Thank you.

Nick Campanella:

Great. Thanks for that. And then I just thought the annuity lift-out comments were interesting. Can you just maybe walk us through that strategic action a bit more? And I guess, if you were to pursue that, how would that affect your 6 to 8? Presumably, I guess, it would be a headwind. And could you quantify that at all? Thanks.

Jason Wells:

Good morning, Nick. What I would say kind of overall, the annuity lift-out was a strategic decision to derisk our exposure to businesses that we've disposed of. I think about this as part of the continued effort to focus CenterPoint on a strong set of regulated operating companies. We've been very active in exiting unregulated businesses and a handful of a couple of gas utilities in Arkansas and Oklahoma. And so, this is really just a step to derisk any of that tail exposure from those employees that are currently receiving pension annuity benefits. As I said, it was non-cash. There's a really kind of liquid market for this. Insurance companies took the obligation. They took the assets. It has no impact on our pensioners. But to your point, we now don't have any P&L volatility associated with exposure to changes in interest rates, asset returns, et cetera. So it's a great way to derisk future earnings. It's a great way to continue to execute on our strategy of focusing on a set of high quality utility assets and really proud that we get this work done here in the fourth quarter.

Jason Wells:

You too. Thank you.

David Lesar:

Hey, Steve.

David Lesar:

Yes. Let me start, and then I'll ask Jason to put his operations hat on and provide a little bit of color commentary. But I think if you - for those of you that sort of follow Texas closely, as the legislation - legislature, the Governor, Lieutenant Governor came into this session, there is two main topics, Gambling and the Grid. I won't talk at all about Gambling, but there's a big focus on the Grid in Texas, making sure that the Grid stays up with the economic development that is happening in the state. So I think you're going to see sort of everyone rally around that aspect. Now what does it mean? It means different things for different people, obviously, in the state. The T&D companies want one thing, the generators, another, the legislature, another. I think I continue to go back to sort of our main mantra in this area. We're laser focused on customer affordability. So everything we do in and around capital deployment, O&M reductions, things that we're going to push for in Austin are going to be focused and pivoted around customer affordability and that - those - that set of topics. So maybe with that, I'll turn it over to Jason to see if he wants to say anything else.

Steve Fleishman:

Great. Thank you.

Jeremy Tonet:

Hi, good morning.

Jason Wells:

Good morning.

David Lesar:

Okay. Let me ask Jason to put his CFO hat back on and answer that one.

Jeremy Tonet:

Got it. That's very helpful. Thanks for that. And then kind of shifting gears here. And you touched on this a bit a number of times, but maybe just kind of bringing it all together. If you could kind of quantify the bill relief you expect to see based on the decline in natural gas prices. Just wondering how quickly that flows back across your jurisdictions and I guess, how you think about that rate - that relief could materialize over time?

Jeremy Tonet:

Got it. Very helpful. I'll leave it there. Thanks.

Operator:

Thank you. Our last question is from Durgesh Chopra with Evercore ISI. Your line is open.

David Lesar:

Good morning, Durgesh.

Jason Wells:

Thanks, Durgesh. I appreciate the other question. I think it's early days in the application there. So we anticipate that project probably being approved kind of towards the end of 2023. But just given kind of where we are in the stage of filing, as well as finalizing the bill transfer agreement, I'd rather keep the comments brief. I think overall, what we tried to highlight in the prepared remarks is that when we set out on this first phase of this integrated resource plan, we had an objective of owning about 50% of the renewables that we're proposing and contracting for 50% of the balance. The way it's working out with this wind project that we will ultimately own, as well as the solar projects that we previously filed, I think we're on track now to own roughly 60% of the renewables and contract for 40%. So a slight improvement versus our original objectives as we are executing on this first round of the Integrated Resource Plan.

Jason Wells:

Thanks, Durgesh.

Operator:

This concludes CenterPoint Energy's fourth quarter earnings conference call. Thank you for your participation.

Operator:

Good morning. And welcome to CenterPoint Energy’s Third Quarter 2022 Earnings Conference Call with senior management. During the company’s prepared remarks, all participants will be in a listen-only mode. There will be a question-and-answer session after management’s remarks. [Operator Instructions] I will now turn the call over to Jackie Richert, Vice President of Investor Relations and Treasurer. Ms. Richert?

Dave Lesar:

Thank you, Jackie. Good morning, and thank you to everyone joining us for our third quarter 2022 earnings call. Before we get started today, I wanted to congratulate Jason Wells on this morning’s announcement of his pending promotion to President and COO of CenterPoint Energy. Since joining our team a little over two years ago, he has demonstrated that he has the strategic vision, executive mindset, deep industry experience and operational knowledge to be a great leader. Equally important, he has the confidence and support of our organization, our Board and our shareholders. His promotion is a product of an ongoing and thoughtful succession planning process, an executive development journey that’s been a top priority of mine and our entire Board. The Board and I have watched Jason grow as an executive over the last two years and believe now is the perfect time to expand his role within our organization. And for those of you who are wondering, I am not going anywhere. I look forward to continuing to mentor and support Jason in his new role and to working side-by-side to execute on our strategy. I know, I speak for many of you when I say, well done Jason. As you have seen from the press releases we issued this morning, this has been a very busy quarter at CenterPoint. In today’s call may seem a bit like a mini Analyst Day update. When I became the CEO of CenterPoint, nearly two and a half years ago, the company needed to quickly establish a strategic path forward to among other things, realign our relationships with our regulators, customers and investors. We look to immediately set challenging, but executable goals, by which you could measure progress, while collectively adopting a management mindset of over delivering on our commitments. I want to highlight what that has looked like here at CenterPoint over the last two and a half years. So what we have achieved so far. First, we committed to achieving industry-leading non-GAAP EPS growth. Now including this quarter, we have met or exceeded that goal for 10 consecutive quarters. In addition, we have over delivered on that growth by raising our non-GAAP EPS guidance 5 times during that two and a half year span and continue to reiterate that we will grow future earnings off of each new and higher base that we achieve. Second, we committed to becoming a pure-play regulated utility that was not subjected to the earnings volatility of our now divested midstream investment and now more than 95% of our earnings are derived from regulated utility operations. The approximately $1.3 billion of after-tax midstream sale proceeds exceeded your expectations and allowed us to reinvest the money into our regulated utility businesses for the benefit of our customers. Finally, we committed to funding our increased regulated utility investments without reliance on external equity issuances. This led to the sale of our Arkansas and Oklahoma LDCs, for which we obtained a landmark valuation and then recycled those cash proceeds efficiently back into our regulated businesses, all for the benefit of our customers and investors. Now, let’s look at today, we are in $0.32 in the third quarter on a non-GAAP basis. We are also reiterating full year 2022 non-GAAP EPS guidance of $1.37 per share to $1.39 per share, which represents a 9% growth rate at the midpoint versus the comparable 2021 non-GAAP utility EPS of $1.27. And as Jason will discuss, we are also ahead of plan in terms of capital spend for 2022, in spite of supply chain pressures and we have deployed more capital than anticipated. In addition, today we are initiating our full year 2023 non-GAAP EPS guidance target range of $1.48 to $1.50. At the midpoint, this represents an additional 8% growth over our previously raised 2022 non-GAAP EPS guidance. Beyond 2023, we continue to expect 8% non-GAAP EPS growth for 2024 and at the mid-to-high end of 6% to 8% annually thereafter through 2030. I also want to point out that these earnings growth rate targets do not reflect any potential earnings from the $5.3 billion in incremental capital opportunities that we will discuss next. Our track record of over delivering continues with today’s announcement of what is now a third increase to our 2021 Analyst Day $40 billion 10-year capital plan. We continue to anchor around this Analyst Day number to provide consistency, clarity and clearly marked goalpost for our investors to follow. Our new incremental capital opportunities are based on customer-driven investments that were developed through our increased stakeholder engagement strategy. Our strategy initially kicked off with the City of Houston on our collective Resilient Now initiative under the leadership of Mayor Sylvester Turner. It has grown to include over 30 cities and some of our largest industrial customers. With their collective input, we have developed $5.3 billion in additional capital opportunities related to increased systems resiliency, reliability and grid modernization, as well as to facilitate eventual EV adoption. Now there is a well-known saying that demographics is destiny and in looking at its demographics, the City of Houston is destined for great things. As the only investor owned utility headquartered in Texas, we are fortunate to serve customers in the City of Houston and its surrounding areas. The Houston area is one of the fastest growing and most ethnically diverse areas in the nation, averaging more than 2% annual population growth over the last three decades. We believe that this diversity only strengthens Houston’s future growth prospect, which benefits our customers and investors alike. Although Houston today is well-known as the Energy Capital of the world, not as well-known is that it’s also home to one of the largest active ports in the nation and the Houston-based Texas Medical Center, which is the largest medical center in the world. For example, the Port of Houston is the largest port in the U.S. by waterborne tonnage and it’s also the U.S.’ largest exporter with over $140 billion of goods shipped annually. This is more than 35% greater than that of New York, the next largest U.S. shipping exporter. The Houston ship channels, petrochem complex alone boasts 272 chemical plants, refineries and other industrial facilities, which generate about $800 billion a year in business annually. Just this summer, an additional $1 billion project was started to widen and deepen the channel to support immense future growth. In addition, the Port Authority is now looking at electrifying its port operation. This will also benefit our customers and communities who live near the port by helping reduce emissions from idling cargo ships. Turning to the Texas Medical Center or TMC, this complex was standing on its own would already be the eighth largest business district in the United States. And just last month, was announced that the TMC would nearly double its size in the next five years to 10 years. It is now anticipated that this doubling in size of the TMC will alone create over 100,000 new jobs, with a greater focus on the biosciences and biomanufacturing of critical medical products, the TMC should continue to attract diverse talent for years to come. Today, it already sees roughly 8 million patients every year, so much like the region it continues to grow. Lastly and perhaps the purest illustration of Houston’s incredible organic growth, there are over 70,000 births in the Houston area alone last year. That’s a new baby born every seven minutes. While Houston’s natural growth and positioning in the Gulf Coast provides a clear competitive advantage, we are also mindful of our exposure to severe weather. Our Houston Electric customers know what’s at stake. A day without power can equal a loss of up to $1.4 billion of GDP. This is one factor that drives a collective community desire for a more reliable and resilient energy supply. This desire has led to customer-driven investment opportunities that we will be folding into our 10-year capital plan through 2030. For reasons to be discussed next, at this time, we are now only incorporating $2.3 billion of this additional $5.3 billion in capital into the balance of our existing 10-year investment plan through 2030. A $1 billion of this is expected to be deployed by the end of 2025 and another $1.3 billion to be deployed by the end of 2030, all for the benefit of our customers. And while we are not updating our Analyst Day non-GAAP EPS guidance targets previously discussed, the deployment of this increased capital will clearly increase the potential future earnings power of the company. The initial $2.3 billion in capital now being added to our investment plan reflects the subset of opportunities, we believe we can currently and confidently execute efficiently and is comprised of the following, $1.6 billion to $1.8 billion of this new capital will be dedicated toward our distribution system resiliency, reliability and expanded grid modernization. This also includes strategically undergrounding certain parts of our system, replacing poles with higher wind resistant ones and elevating parts of the grid, especially substations to help protect such structures from the threat of flood damage. We recognize our customers want more resiliency more quickly, which is why we have already jumped ahead and began some of these projects in 2022. For example, $300 million of the $1.6 billion to $1.8 billion related to this category of capital spend is expected to be completed by the end of this year. $600 million to $800 million of this new capital will be focused on transmission upgrades. As we have stated before, our Houston Electric service territory comprises just 2.5% of the geographic footprint of the State of Texas, but we consume nearly 25% of ERCOT’s peak summer load. At the same time, our service territories need to import up to 60% of that load from generators outside our territory. This requirement to import a significant portion of the energy that is consumed in the Houston area each and every day creates a risk of disruption. As this summer is illustrated, but Houston endures sustained high temperatures, statewide power generation can struggle to keep up with demand and the need for additional transmission lines to deliver a cheaper and more diverse power supply for our customers in the Houston area becomes even more apparent. On top of the $2.3 billion described above, we have separately identified other capital investment opportunities of $3 billion, which we will opportunistically integrate into our long-term capital plan. These additional opportunities include even more grid modernization and system reliability investments, as well as the increased investments for accelerated electrification in the Houston area, including EVs. As a reminder, we conservatively estimate that each light-duty EV brings approximately $80 in margin to us per year. The Houston area remains a laggard in the adoption, with about 30,000 EVs on its roads today. None of the potential future earnings upside from additional EV penetration is reflected in our current earnings forecast. Furthermore, the $3 billion in additional future capital spend I mentioned earlier, does not fully include the potential impact of increased or accelerated EV adoption. With nearly 5 million cars in the Houston area, that is a lot of potential upside. The remaining $3 billion of opportunities beyond the $2.3 billion that we have added to our investment plan through 2030 also provides capital upside and additional potential earnings power for us. However, as is our management team’s history, we are taking a prudent approach and are not yet adding it to our capital plan. We will start to add these amounts incrementally to our planned capital spend once we are convinced we can access the labor, nail down the availability of the equipment and deploy it to the benefit of our customers. In other words, we fully expect to include the $3 billion balance of the $5.3 billion of these other new capital opportunities on our plan when we believe we can operationally execute it, efficiently fund it and prudently recover it. This approach is no different than our recent history of folding incremental capital into our plan once we are convinced we can efficiently deploy it to benefit our customers. The customer benefits of our revised capital plan are exciting and tangible, enhancing both reliability and resiliency, while also helping us to advance the restoration of service during outages. To summarize this capital spend. This will increase our current capital plan by $2.3 billion, which now totals nearly $43 billion through 2030. As I stated today, we are only including $2.3 billion of investments in our updated capital plan, which we believe we have the crews and materials can efficiently finance, while remaining focused on overall affordability, at the same time, customers are facing rising energy costs. The remaining $3 billion will be folded in once it also meets that same criterion, which we believe will be achievable through prior securitization charges rolling off, our commitment to O&M discipline and the continued organic growth in our Houston Electric service [Audio Gap] territory. This increased capital investment will also contribute to our ongoing efforts to reduce O&M over the longer term, which will help continue to keep customer bills affordable. Included in our capital spend are grid modernization investments such as circuit re-closers and other smart grid investments that will reduce the number of truck rolls to restore power, which should translate into lower O&M costs that directly benefit our customers. The benefit of O&M savings is exemplified by the fact that every dollar saved of O&M roughly translates to $8 that can be invested as capital for the benefit of customers. This ability to reduce O&M along with prior securitization charges coming off the bill in 2022 and 2024, and continued organic growth creates a perfect opportunity to invest incremental capital to the benefit of our customers, while keeping customer charges affordable. We believe our continued O&M discipline and organically growing Houston customer base will also allow us to make these investments, while customer charge increases stay below the average historical level of inflation of 2%. This is in line with the increase to our charges that we have seen for our Houston Electric customers over the last 10 years, which averaged a little over 1% annually. We also still expect to reduce our O&M by 1% to 2% per year on average over our 10-year plan. And in case you are wondering, this updated capital plan still does not require us to issue any additional external equity, nor does it rely on the use of strategic proceeds from the sale of any additional regulated CenterPoint assets as our cash flow remains strong. This is a nice combination and a great position to be in today. Jason will walk you through our capital investment financing plan in a few minutes. Importantly, recovering our updated capital plan does not rely on any big bets as approximately 80% of the total plan can be recovered through interim regulatory mechanisms. And again, Jason, will go into more detail on the funding and financial details of this in his section. So, in summary, before I turn the call over to Jason, our management team is committed to executing on what we believe is one of the most tangible growth stories in the industry, which is driven by the growth profile of our largest jurisdiction, the Houston area. Our customer driven investments are focused on meeting our customer’s desire for reliable and cleaner energy, so they can continue to contribute to one of the country’s strongest and fastest growing economies. We will look to deliver on those investments while keeping customer charges affordable, targeting charge increases at or below an average of 2% annually through 2030. As we continue to engage with stakeholders, we believe additional customer driven opportunities can be identified and we look forward to furthering those customer discussions to help them achieve their own objectives. We reiterate 2022 non-GAAP EPS guidance of $1.37 to $1.39, a 9% growth rate over 2021, while initiating 2023 non-GAAP EPS guidance of $1.48 per share to $1.50 per share, a further 8% growth. After that, we continue to target a further 8% growth through 2024 and at the mid-to-high end of 6% to 8% annually thereafter through 2030, an industry-leading growth rate. As a result of customer driven initiatives, we have identified $2.3 billion of new capital and $3 billion of future capital to increase resiliency, grid modernization, as well as to facilitate expanded electrification that will drive additional potential earnings power. We believe our continued focus on over delivering on our commitments has served our customers and investors well and will continue into the future. We are proud of our 10 consecutive quarters of execution and look to build on that streak, while also delivering above expectations for the benefit of both our customers and our investors. Lastly, we remain focused on achieving our value proposition, which is striving for sustainable, resilient and affordable rates for our customers, sustainable earnings growth for our shareholders and a sustainable positive impact on the environment for our communities. With that, I will turn the call over to Jason.

Dave Lesar:

Thank you, Jason, and once again, congratulations. As you heard from us today, we have 10 straight quarters of meeting or exceeding expectations. We are a pure play regulated utility, with industry-leading incremental growth opportunities driven by our customer demands.

Operator:

[Operator Instructions] Our first question comes from Anthony Crowdell with Mizuho. Your line is now open.

Jason Wells:

Thanks, Anthony.

Dave Lesar:

Okay. No. I think this is going to be a really, really attractive job for a CFO. So we are going to cast that really, really wide essentially across the whole public spear in the U.S. and see what we can find. But as I said, I think, it’s going to be a great opportunity, a great job and I expect that we are going to see some really good candidates.

Dave Lesar:

Yeah. I think the way to think about this is, look at the track record that we have developed as a management team. I think we have done a pretty good job identifying sort of incremental capital opportunities, finding a way to efficiently execute that, fund it and bring it into our rate base at the right time and this is really no different. Maybe it’s a little bit bigger than the ones we have had in the past. But I think from a context standpoint, if you think back to our first Analyst Day, this is the fifth time that we have raised capital. If you go to our second Analyst Day, this is the third time that we have raised capital. So I think we have got a pretty good track record of identifying and bringing this into not only execution and then rate base, but then earnings. And as we said a couple of times, and hopefully, Jason sort of walked you through the numbers, our guidance targets do not include any of the earnings from this. But I think the really important thing to focus on is that we still continue to believe that we will have industry-leading growth as we basically take on all the headwinds and the tailwinds that are thrown at us in this business. But I think the bottomline is…

Dave Lesar:

Yeah. Bottomline, I think, industry-leading growth.

Jason Wells:

Anthony, I would think about it as a couple of cents of pull-forward work that we have incurred already and we continue to look to optimize our plan in the fourth quarter. I think this is just an incredible luxury that we have to continue to do more work on the system for the benefit of our customers, as well as kind of giving us additional flexibility as we enter 2023 from an earnings standpoint. So we are happy to continue to executing on it. We have incurred about $0.02 of that and still have some to go in the fourth quarter.

Dave Lesar:

We are hoping for the best.

Dave Lesar:

Good morning, Steve.

Dave Lesar:

Thanks Steve for the question and that’s right. We wouldn’t spend it, if we didn’t have full confidence that we will earn on it. We continue to stress that. We have got great capital recovery mechanisms here across our jurisdictions, that this is capital that our customers are asking for and so we have confident that as we execute this work, we will fold it into rate base and earn on it. Really, the fact that we haven’t increased the long-term EPS growth targets is really a function of the point that I stressed in our prepared remarks. I mean, we are entering a period here in 2024, where we will have several major rate cases, Houston Electric, Texas Gas, City and Electric, among others. And I think it’s just prudent for us, we have taken conservative assumptions as we approach those rate cases. But I think it’s prudent for us to kind of get to the other side. I think the takeaway, though, is the capital we are deploying will flow at a rate base. We have confidence in that and undoubtedly enhances the long-term earnings power of the company. I think the other thing just to point out beyond the capital from the standpoint of the long-term earnings power of the company, I want to reemphasize what I shared in my prepared remarks, we have already prefunded a higher equity ratio at Houston Electric as well and while we have not assumed that increase in the long-term earnings growth rates that we provided. Should we be successful in achieving that higher equity ratio, that presents yet another tailwind without a financing overhang and so I think we are just continuing to put ourselves in a position to over deliver for our shareholders, our customers and continue to enhance what is an already industry leading growth rate.

Jason Wells:

Sure. Thanks for the question, Steve. No change in our strategy. Our strategy is to finance our incremental capital as efficiently as possible. We are fortunate today as part of this CapEx update to have identified sources of funding that are more efficient than incremental sales of our utility assets. We have had a handful of conservative assumptions around tax positions, which have all resolved themselves favorably for the company. As I said, we prefunded the equity ratio at Houston Electric. We will either have higher FFO coming out of that as a result of that higher equity ratio. We can pull back and use the cash to fund the capital directly. And so, I think, we have not changed our approach to strategy. We just continue to find the most efficient sources of funding this incremental capital. More broadly, to your point though, I -- we have not seen a softening in the private demand for utility assets as we have talked about extensively over the years. With our previous communications, we still continue to receive pretty extensive outreach and interest. We just have not, as I said, needed to take that approach, because we continue to find other sources that are more efficient to fund the CapEx that we have announced today.

Operator:

Please standby for our next question. Our next question comes from Julien Dumoulin-Smith with Bank of America.

Jason Wells:

Thanks, Julien.

Jason Wells:

Thanks, Julien, for the question. There’s a lot there. Let me try to sort of unpack a handful of these items. I wouldn’t ascribe an exact time line to the update on the long-term growth rates of company sort of post these rate cases. As you said, we want to resolve those cases constructively and favorably for all stakeholders as we have better certainty we will provide an update. I think what I want to stress around this point, though, is we would not spend this capital if we didn’t assume and have a high degree of confidence that it would be included in rate base. And so, as you model -- as others model, I would look at enhancing and increasing the long-term earnings power of the company sort of post these rate cases. I think as it relates to kind of navigating a handful of these time lines, we have a fair degree of flexibility with respect to the capital trackers, just given the multiple jurisdictions that we operate in. We will not have access to the capital trackers here in our Texas businesses, while we are in those rate cases. So that does present a small amount of additional regulatory lag as we look to earn on those. We have tried to get in front of that issue by accelerating additional capital here into 2023 that we will file for recovery for, sorry, here in 2022 that will file for recovery in 2023 and we will be fully into the earnings power of the company in 2024. We also have a fair degree of flexibility in Indiana Electric, particularly with the generation transition that will coincide with the timing of these rate cases. As you may recall there, as we bring our renewable projects on the line -- online, we can begin earning at the month they become operational and so there is minimal if any regulatory lag with respect to the investments in Indiana Electric. So we are sequencing these investments, either having accelerated, as I said, this year, we are balancing some of the chunkier projects over the next couple of years to sort of seamlessly work through the rate cases that are on the horizon. But the short of it is, again, we wouldn’t spend this capital if we didn’t believe and have confidence that we would earn on it. And so, the takeaway should be, this enhances the long-term earning power of the company.

Dave Lesar:

Hi. I would say, Julien, I think, you hit on the cost side. I think the big one that we talked about that people sometimes forget about it as soon as we talk about it is our organic growth. I mean, we are spreading a -- as we reduced our O&M where we are spreading a smaller amount of O&M across a larger rate base or a larger customer base year after year after year and that’s just the luxury most other utilities don’t have.

Dave Lesar:

Thanks.

Operator:

Please standby for our next question. Our next question comes from Jeremy Tonet with J.P. Morgan. Your line is now open.

Dave Lesar:

Good morning, Jeremy.

Jeremy Tonet:

Thanks for taking my question here. And just wanted to build a little bit more, I guess, in Houston opportunity and what milestones are you looking for from Houston to incorporate more of this $3 billion potential incremental capital? I am just trying to get a feel for timing possible -- possibilities here?

Dave Lesar:

Yeah. I would just like to add. I think, Jason, did a great job sort of covering the strategic aspects of it coming in and hit on the really important point at the end there. And then, I hope that with all of you, we have developed the confidence. You have the confidence in us that we are always going to do the right thing at the right time. What’s best for our customer and what’s best for our investors. And I think you should think about this $3 billion and no other context than that. When we kind of identify it, we will execute it, we will get it in the rate base and it will help our customers.

Jeremy Tonet:

Yes. Thanks.

Operator:

Please standby for our next question. Our next question comes from Durgesh Chopra with Evercore. Your line is now open.

Jackie Richert:

Thanks, Durgesh.

Jason Wells:

So the 1 point -- it’s for the Texas securitization, because we have two securitizations spending the Texas guests securitization, it’s $1.1 billion of incremental debt that we will pay down and then we have the second securitization in Indiana, which is about another $360 million in proceeds that we expect kind of at the end of the third quarter. That will leave us with about $1.5 billion of variable rate debt as we enter next year. Some of that, as I said, attributable to our Texas gas businesses that we will file a rate case for in the middle of next year that helps reduce any potential long-term earnings drag from that higher level of interest costs that we will see there.

Jackie Richert:

All right, Operator. Thank you so much for the time today everyone for the call. This will conclude our call and we look forward to seeing everyone at EEI.

Jackie Richert:

Thank you.

Operator:

Good morning. And welcome to CenterPoint Energy’s Second Quarter 2022 Earnings Conference Call with senior management. During the company’s prepared remarks, all participants will be in a listen-only mode. There will be a question-and-answer session after management’s remarks. [Operator Instructions] I will now turn the call over to Jackie Richert, Vice President of Investor Relations and Treasurer. Mr. Richert?

Dave Lesar:

Thank you, Jackie. Good morning. And thank you to everyone for joining us for our second quarter 2022 earnings call. It is now been a little over two years since I was appointed as the CEO of this great company and the exciting progress at CenterPoint continues with lots of opportunities still ahead of us. Now that we are a pure-play regulated utility, our quarterly updates will continue to be streamlined and focused on our regulated utility operations. In a minute I will run through our latest highlights and headlines as we continue to build on our consistent track record of earnings delivery. But first a quick side note. As Texas has heated up this summer, we have gotten a number of questions from shareholders that indicate there may be a level of confusion to some shareholders about how we participate in the Texas electric market. I thought it might be helpful to remind everyone about our role. As most of you know the Texas ERCOT market is fully deregulated with respect to the generation and the retailing of electric power in Texas. And CenterPoint does not participate in either of the Texas generation or retail market. The Texas ERCOT market is regulated for the transmission and distribution of power, which is the market that CenterPoint operates in. Therefore CenterPoint only transmits power from third-party generators and delivers it to our territories third-party retail energy providers. Because of this we take no electric generation cost risk and no retail pricing risk in our business in Texas. Think of as much as a regulated toll road that charges by the vehicle. As temperatures rise, we have more traffic in the form of electricity driving on a regulated toll road. In addition, our Houston area transmission and distribution system makes up only about 2.5% of the geographic footprint of Texas, but transmits and delivers about 25% of the total ERCOT summer peak electric load. So we have a very dense power grid in our territory. Because of that CenterPoint imports up to 60% of its electric needs throughout our transmission lines, which connect to generation supply from locations elsewhere in the state. All of this is why investing in resiliency and reliability is so critical. I hope this helps those of you that are just becoming familiar with our story. So now let’s turn to our headlines. We have now delivered nine straight quarters of operational execution under this current management team. We are halfway through 2022 and have increased confidence around our business performance. That increased confidence specifically around Houston Electric’s performance led us to raise our non-GAAP EPS guidance for the year to $1.37 to $1.39. This means that at the new midpoint, we now expect to grow our earnings 9% this year over the prior year. This is also our fifth earnings guidance increase under this new management team, which at the same time is laser focused on taking the steps necessary to keep our bills affordable for customers. This increase to our full year guidance will provide the new and higher starting point for our future earnings guidance growth. In other words, it is from this higher $37 to $39 base that we now intend to grow our non-GAAP EPS 8% annually for 2023 and 2024. And beyond that we intend to grow at a mid- to high-end of our 6% to 8% growth range through 2030. We believe that this will be an industry-leading growth rate and Jason will get into more of these details shortly. Commensurate with our earnings guidance increase, we also announced a $0.01 increase to our second quarter dividend. This quarterly increase is consistent with our objective of growing dividends in line with earnings. We are also on track to meet our current capital investment plan for the year. Having invested over $2 billion in the first six months of 2022, which is nearly 50% of our 2022 investment plan. We are also tracking very well against our five-year and 10-year spending plans that support the safety, resiliency and growth across our system to benefit our customers. As mentioned in recent earnings calls, we are working to develop the details around incremental customer-driven capital opportunities to support a Houston Area Regional Master Energy Plan. This includes our Resilient Now initiative with the City of Houston. We plan to provide an update to our capital investment plan on the third quarter call. We also recently completed the final steps of our Vectren integration. The integrated structure results in a more efficient debt structure, which will help us reach our goal of reducing parent level debt to approximately 20%. So check-in another box on our strategic commitment to strengthen our balance sheet and credit metrics for the benefit of our customers and our shareholders. Jason will discuss it in more detail in his section. Our Indiana generation transition plan is also tracking on course, including the recent commission approval of the natural gas peak heating facility. We have also filed for another tranche of solar generation, which Jason will discuss. As a reminder, our generation transition plan to cleaner fuels aligns with our peer leading 2035 Scope 1 and 2 net zero emissions goals. I am also pleased to say today that despite the well-known challenges around solar power, our recently signed agreements will bring us to over 800 megawatts of owned or contracted solar. So those are our latest headlines. We strive to continue our track record that we have established over the past two plus years of executing on this world class investment thesis. Turning now to our earnings guidance update. As stated, we raised our non-GAAP EPS guidance this morning to $1.37 to $1.39. This represents a 9% growth rate at the mid-point when compared to the 2021 non-GAAP utility EPS of $1.27. And despite the current inflationary environment, we are continuing to see favorable tailwinds such as the combined 1% to 2% organic growth and warmer weather, which led us to raising our guidance this quarter. An example of the continued organic growth in the Houston area can be seen and it’s greater than 6% year-over-year jobs growth, which added over 191,000 new jobs in the last year alone. Even as the Houston area temperatures recently peaked at 105 degrees and continued to be persistently high, our grid has held up well, with limited disruptions for our customers. These limited disruptions are largely related to the typical high intensity afternoon rain and wind storms that are common in Houston during our summer heat waves. Related to these peak heating events, we have also seen a modest uptick this year in customer transformer related outages that have occurred across the industry. However, our operations have responded well. We had virtually all of our customers restored in less than two hours and we continue to expect to meet or exceed the reliability standards set by the Texas Public Utility Commission. During these recent record weather events, we only utilized commercial load management one time and while we didn’t need mobile generation during this recent weather event, we have approximately 500 megawatt of capacity deployed across our system and we will be prepared to utilize it for the benefit of our customers should the conditions call for it. I am pleased with the performance of our system, but more importantly with the performance of our employees, who managed all of our grids for CenterPoint. Now, of course, we still have several weeks of summer in front of us, with more extreme temperatures forecasted and we will remain vigilant. Now let’s move to capital investments. Our five-year capital investment plan of $19.3 billion has been increased twice since our September 2021 Analyst Day. Our 10-year plan is still currently expected to be $40 billion plus in investments to support the safety, resiliency and growth across our system to benefit our customers. This leads to our industry-leading projected rate base growth of 9% CAGR over the 10-year plan. We are making good stride in our strategic conversations with our customers to explore their views for further grid and infrastructure hardening and modernization, residential weatherization and investments around renewable energy infrastructure. This has included workshops with industrial customers the City of Houston and other surrounding cities. Now, I don’t want to front run these conversations this quarter, but we should be in place to better describe the potential additional capital investments related to these customer-driven infrastructure discussions in our third quarter call. We expect that this will include investment updates for the greater Houston Regional Master Energy Plan, which includes the Resilient Now initiative jointly launched with the City of Houston earlier this year. As we invest to meet our customer’s interests, we continue to remain focused on the affordability of our capital spend. We believe we have done a really good job in this area. For example, from 2013 to 2022 our average Houston Electric charge has only increased by an average of about 1% per year. Focus on that fact for a second. That 1% translates to only a $5 increase in the average monthly charge over the last 10 years. That’s the beauty of having strong and continuous organic growth and charges rolling off the bill. The Houston area has averaged over 2% annual customer growths for the last 30 years. To further benefit customer charges, in 2024, our final Houston Electric’s securitization charge will roll off the customer’s bill, which will provide an additional 5% reduction to the current average residential charge. This is on top of the 3% current average residential securitization charge that rolled off just this month. These changes combined with an organically growing customer base O&M discipline across our footprint work to help to reduce the customer impact the capital investment program across our system and we will seek to keep executing on these kinds of opportunities to help keep bills affordable for our customers. As I mentioned in the highlights our Indiana coal generation transition plan is also tracking nicely against the filed IRP and we have some potential bill mitigants such as a recently filed securitization. Jason will cover regulatory items in more detail in just a few minutes. So, in summary, before I turn the call over to Jason, with all of the recent strategic actions behind us, we are focused on our pure-play regulated utility footprint, with a projected 2022 rate base that is approximately 62% electric, which is within the range to some of our premium utility peers. We believe we are one of the most tangible growth stories in the industry. Our capital investments are not contingent on big bets. They are focused on meeting the needs of our customers across our system due to both organic growth and our continued investment in current system safety, reliability and resiliency needs. We expect that this will likely lead to incremental capital above our $40 billion plus included in our current 10-year plan. We anticipate to provide a more detailed update of this additional investment opportunity on our third quarter call. We raised our 2022 non-GAAP EPS guidance to $1.37 to $1.39, a 9% growth over 2021 and from that increased number project to grow at 8% annually in 2023 and 2024, and at the mid-to-high end of 6% to 8% annually thereafter through 2030, an industry leading growth rate. And we have peer leading 2035 net zero goals on the Scope 1 and 2 emissions. And for those of you that continue to track it, we still expect to reduce O&M expenses by 1% to 2% per year on average over the 10-year plan and we still have no plan to issue any equity to meet our current capital spending plans. As I stated in my opening remarks, we are excited about the nine straight quarters of execution and I want to thank all of the great employees here at CenterPoint that are delivering on those results to you each and every day. Lastly, we remain focused on achieving our value proposition, which is sustainable, resilient and affordable rates for our customers, sustainable earnings growth for our shareholders and a sustainable positive impact on the environment for our communities. With that, let me turn the call over to Jason.

Dave Lesar:

Thank you, Jason. As you have heard from us today, we have nine straight quarters of meeting or exceeding expectations. We are a pure-play regulated utility and firmly on the pathway to premium with incremental growth opportunities driven by our customers’ demands.

Operator:

[Operator Instructions] Our first question comes from Shar Pourreza with Guggenheim Partners. Your line is open.

Dave Lesar:

Good morning, Shar.

Shar Pourreza:

Dave, sort of the guidance raise today for 2022 as you call out is now kind of implying 9% growth in 2022, does that kind of imply a stronger trajectory for future years, despite you just reiterating 8% in the near-term? I mean, you obviously showing some confidence in the raise despite sort of the broader backdrop and appending GRC filing potentially end of -- at the end of 2023. So what’s driving it and then any placeholders there with your internal planning assumptions for Resiliency Now in there?

Jason Wells:

Sure. Thanks, Dave. Thanks for the question, Shar. I know the industry has been talking a lot about rising interest rates and pension expense. I think we are in an enviable position on both of those. From an interest expense standpoint, we are really one of the few utilities that significantly paying down parent company debt and floating rate debt. In over the last six months, we paid off $1.1 billion of parent company debt with a weighted average coupon of 3.4%. And as I indicated in the prepared remarks, we are prepared to pay down $1 billion of floating rate debt as soon as the Texas securitization proceeds are received here in the second half of the year. And from a pension expense, we are really fortunate to work in constructive regulatory jurisdictions. We get to defer about two-thirds of our pension expense. So we are in a good spot and maybe not necessarily headwind, what I do want to remind folks of is the fact that we increased capital already $500 million this year and so that provides further tailwinds to address anything that comes up and sort of central to your question, Shar. The guidance raise and resulting increase in subsequent years is before the addition of the Resiliency Now capital. We will provide a comprehensive update as it relates to that incremental capital on the Q3 call.

Shar Pourreza:

Got it. So the incremental capital to be incremental to your guidance. Got it. So that -- then we will look forward to that in the third quarter. And then just -- Dave just looking at sort of that interest rate backdrop, I guess, does that kind of prompt any potential reconsideration of the M&A outlook as we think about the value of potentially monetizing more LDC asset, any change here versus your prior thoughts? It sounded like from your prepared remarks you may be comfortable with sort of that electric gas business mix as you comp closely with other premium names now. So just curious how you are thinking about it just given the change in the capital markets? Thanks.

Shar Pourreza:

Okay. Perfect. Congrats guys on the results. Appreciate it.

Operator:

Our next question comes from Steve Fleishman with Wolfe Research. Your line is open.

Steve Fleishman:

Yeah. Thanks. Hey. Good morning. Great update. Just curious, I know it’s very recent, but the curious on how you think the company is positioned on the corporate minimum tax that’s part of the proposed inflation act from last week?

Jason Wells:

Hey. Good morning, Steve. I appreciate the question. Maybe before turning directly to the minimum tax, I do think the real opportunity here is the opportunity for incremental margin associated with transportation electrification. As we highlighted on our Analyst Day, every electric vehicle that’s connected to our grid is about $80 of margin a year. So we are excited about the continued support of electrification. And then in addition, the extension of the tax credits will help us more efficiently execute our coal transition up in Indiana. So we think those are definitely tailwinds for the company. As it relates to the minimum tax, it’s going to likely be a very modest headwind for the company that we will be able to efficiently overcome. We have been historically cash taxpayer and as you cut through kind of all the one-time transactions as we have been executing on our strategic reset and the timing of the unrecovered natural gas costs, we generally paid federal cash taxes at an effective rate of about 10%. So we see the introduction of a minimum tax that will likely be reduced from the credits that will be generated from the coal transition in Indiana as a modest headwind. But, again, I would emphasize, this is something that we will be able to efficiently overcome and I think that candidly that we are in a much better position than many of our peers, who haven’t been paying federal cash taxes over the years.

Jason Wells:

We do Steve. We continue to get a significant amount of inbound from the market and clearly rising interest rates are having, what I would say, sort of a modest impact. But what I think is more than offsetting that is I think comfort and a much higher terminal value for gas LDCs. I think a confluence of events, whether it would be Winter Storm Uri or the war in Ukraine has kind of led to sort of better comfort for a long-term diversity in energy supply. And so as we get kind of inbound interest we are seeing again much more comfort with a much higher terminal value for gas LDCs particularly Mid-Continent where we are fortunate to operate ours. But I just want to sort of emphasize what Dave already mentioned. We have had a number of incremental improvements to our cash flow forecast since our last update at Analyst Day, couple of things that I will quickly point out is we were really conservative as it related to the tax basis for the gas LDC sales. So we have lowered taxes there than we expected. And a theme of continued to optimize our tax position, we were able to minimize some of the taxes on the sale of the energy transfer common units. We have got about $100 million more of incremental proceeds from the securitization up in Indiana. And so, what I would say, all-in-all, we have a significant amount of positive cash flow developments that will help us efficiently fund our capital update that we plan to provide on the Q3 call.

Jeremy Tonet:

Hi. Good morning.

Jeremy Tonet:

Just wanted to come back to the DC package if could, just wondering on the tax credit side, is there anything particular there that’s catching your interest that you are closely watching that could present more opportunities for CenterPoint?

Jeremy Tonet:

Okay. Got it. So maybe this doesn’t impact generation replacement in Indiana depending on how things fallout here, but just wondering if there’s any more details on that side specifically that you might be able to provide?

Jeremy Tonet:

Got it. Just a real quick last one, as far as the capital update, I know you are not going to front run it here for 3Q, but should we be thinking this is largely Houston focused or could there be other elements of size?

Jeremy Tonet:

Got it. Thank you very much. Happy going.

Operator:

And our next question comes from Andrew Weisel with Scotiabank. Your line is open.

Andrew Weisel:

Thank you. Good morning, everyone.

Andrew Weisel:

First, just a couple of questions on the summer heat waves and how you are managing that, I think you said you only use the commercial load management once. Can you remind us the relative sizes of the voluntary demand response program versus force load shedding and can you specifically comment on the role that cryptocurrency miners played in terms of curtailing demand and if you view that to be a real and reliable lever to pull going forward?

Dave Lesar:

Yeah. It is fair to say that it is on the radar screen of the PUC, because the last time we visited with a number of the PUC commissioners, which was just a few weeks ago, it was really top of mind at that point in time. But as Jason has said there, everybody is trying to get a handle on how much of it really is behind the meter right now and how much of it is addressable if the state continues to get tight on power.

Dave Lesar:

Yeah. Jason, do you want to take that?

Andrew Weisel:

Very good. Then one more if I may. Jason, I think, you said, you are starting to -- you are thinking about pulling forward expenses from future years into 2022. Has that already started, I think you mentioned pre-trimming? How does the hot summer weather impact your ability both physically and in terms of affordability in the context of inflation? And then how are you thinking about the timing of O&M is relative to the Houston Electric rate case you intend to file in 15 months or 18 months or so?

Andrew Weisel:

Great. Thank you very much.

David Arcaro:

Hey. Good morning. Thanks so much for taking my questions.

David Arcaro:

I am wondering if you could talk to load growth for a minute just what you are seeing in terms of weather normal load growth and specifically on the industrial growth side of things. I am also curious if you are seeing just any indications or early indications of any softness in the industrial load levels?

Jason Wells:

I’d add from a residential standpoint, we are continuing to see just north of 2% increase in new customers. On a weather adjusted basis, what I think is really interesting is, at least through the first five months of the year so through May, we saw usage on a weather adjusted basis outpacing customer growth. We didn’t see that as much in June, but June was as we have talked about sort of a record month with weather. But I come back to the sort of usage trend that we are monitoring to see how this unfolds. There could be, what I will call, maybe a new normal in terms of residential usage with more of a work from home model, as we see customers spending a couple of days working from home, while also at the same time businesses are welcoming the employees back, we may see on a longer term basis a trend with a slightly higher usage on a weather adjusted basis than we are seeing in terms of just new customer connections. So base business remained strong as David continued to highlight in terms of new customer connects, whether it’s been great, but we are also seeing a modest uptick in usage.

David Arcaro:

Got it. That’s really helpful color. It sounds like continued strong fundamentals on that basis. And then I was wondering if you could just talk to any transmission growth opportunities that emerge you see, such as tight power market in Texas recently this season, wondering if any transmission related solutions have popped up, whether it’s congestion related around the City of Houston and whether that could be an element of the CapEx upside -- their CapEx update that we see?

Dave Lesar:

Yeah. I think if you look at what came out of the change in Texas law at the end of the last session so that move from reliability based, economic based transmission lines, we are waiting and I know that PUC is focused on getting their regulations that hopefully here by the end of the year in and around how they are going to approach the deciding and putting in of new transmission lines. So, as Jason said, we are excited about it. We think that we can make the case for economic transmission lines. We have just got to wait for that process to get itself completed.

Operator:

Our next question comes from Julien Dumoulin-Smith with Bank of America. Your line is open.

Dave Lesar:

Hi, Julien.

Julien Dumoulin-Smith:

Hey.

Julien Dumoulin-Smith:

Pleasure. Just first off, on the solar update, just can you give us a little bit of a sense of the timeline for those projects now and the CapEx that was moved around and pulled forward to offset the impact of delays previously? Does this kind of imply a higher step up in 2024 and 2025 than previously expected or how should we think about the latitude created and/or exactly where sort of the status of solar projects are today as best you see them?

Julien Dumoulin-Smith:

Got it. All right. This is just a slight shift in earnings still. All right. Excellent. Let me come back to your O&M commentary, I just want to make sure I understand this, because you guys have been had you put forward on this 1% to 2% for a while here, but what’s the gross level, as you can speak of it this way of inflation that you are seeing out there and how much of an incremental spike are you having to put up here to offset that impact? I just wanted -- I guess that you guys made three packages into saying we were -- we reiterate our commitment on the reductions. I just wanted to understand how much of an inflationary pressure you are otherwise having attract against here to maintain that commitment, and obviously, cognizant here of the pull-forward into 2022 here to derisk 2023 as well?

Julien Dumoulin-Smith:

Interesting. And so just as equivalent you have third quarter update here, would you expect there also sort of cascade for that inflationary impact on your core plan in addition to some of these other factors you talked about before or are you thinking about just simply shifting out projects in order to keep your sort of critical core plan in fact, if you will, just given those inflationary pressures on capital?

Julien Dumoulin-Smith:

Yeah.

Jackie Richert:

Operator. We are going to…

Julien Dumoulin-Smith:

Understood. Excellent. See you guys soon. Be well.

Dave Lesar:

Thank you.

Operator:

This concludes CenterPoint Energy’s second quarter earnings conference call. Thank you for your participation. You may now disconnect.

Disclaimer*:

This transcript is designed to be used alongside the freely available audio recording on this page. Timestamps within the transcript are designed to help you navigate the audio should the corresponding text be unclear. The machine-assisted output provided is partly edited and is designed as a guide.:

Jackie Richert:

00:40 Good morning, everyone. Welcome to CenterPoint 's earnings conference call. Dave Lesar, our CEO; and Jason Wells, our CFO will discuss the company's first quarter 2022 results. Management will discuss certain topics that will contain projections and other forward-looking information and statements that are based on management's beliefs, assumptions, and information currently available to management. These forward-looking statements are subject to risks and uncertainties. 01:07 Actual results could differ materially based upon various factors as noted in our Form 10-Q, other SEC filings, and our earnings materials. We undertake no obligation to revise or update publicly any forward-looking statement. We will be discussing certain non-GAAP measures on today’s call. When providing guidance we use the non-GAAP EPS measure of adjusted diluted earnings per share on a consolidated basis referred to as non-GAAP EPS. 01:35 For information on our guidance methodology and a reconciliation of our non-GAAP measures used in providing guidance please refer to our earnings news release and presentation, both of which can be found under the Investors section on our website. As a reminder, we may use our website to announce material information. This call is being recorded. Information on how to access the replay can be found on our website. 01:58 Now, I’d like to turn the call over to Dave.

Jason Wells:

17:24 Thank you, Dave and thank you to all of you for joining us this morning for our first quarter call. I'll start by covering the financial results for the quarter. On a GAAP EPS basis, we reported $0.82 for the first quarter of 2022. This includes Midstream related earnings of $0.05, including the net gain on the sale of the Energy Transfer common and preferred unit sales and the cost associated with the early extinguishment of the related debt, as well as the net after-tax gain on our Arkansas and Oklahoma LDC sale of $0.30. Excluding those and other items as noted, we reported $0.47 of non-GAAP EPS for the first quarter of 2022, which was flat to the comparable quarter of 2021 as shown on Slide 5. 18:11 Our first quarter of 2022 earnings were reduced by $0.03 due to losing the earnings related to Arkansas and Oklahoma operations, which were divested on January 10 and as Dave mentioned, those earnings are seasonally weighted towards the winter months. Our results included favorable growth and rate recovery contributing $0.05 this quarter, while weather usage and other contributed $0.02 when compared to the first quarter of 2021. These positive benefits were partially offset by $0.03 compared to the same quarter last year, due to higher ongoing cost management expenses. $0.01 of which was related to interest expense that was previously allocated to our Midstream segment in the first quarter of 2021, which will be absorbed in the consolidated earnings going forward. The remaining variance is related to the timing of our O&M savings in 2021. 19:02 On the O&M side, and as we discussed throughout last year, we had a fast start to savings in the first quarter, but we reinvested that savings back into the business throughout the remainder of the year that acceleration into last year has driven a higher run rate for O&M in the first quarter of 2022, but we see this as purely a timing related variance. The bottom line is, we fully expect to hit our average annual 1% to 2% O&M reduction over the 10-year plan. 19:29 We continue to have confidence in our ability to drive further O&M efficiencies. One example is the meter program that Dave discussed. We piloted this program back in the first quarter of 2021 and as of April this year, we are now in full deployment mode for the meter program in Texas and anticipate productivity improvements for the remainder of this year. We are also reaffirming our full-year 2022 guidance range of $1.36 to $1.38 of non-GAAP EPS, which reflects 8% growth over the comparable $1.27 non-GAAP EPS results for 2021. 20:04 We expect that our earnings ratio will be somewhat back-end loaded as some of our recovery mechanisms are skewed towards the latter half of the year. Such as our DCRF filing, which I'll discuss shortly. The actions we have taken to simplify our story are illustrated on this page. We expect to have a simpler, more digestible investor story going forward. Beyond 2022, we continue to expect to grow non-GAAP EPS 8% each year through 2024 and at the mid to high point of 6% to 8% annually through 2030. Our focus is to deliver strong growth each and every year. 20:39 Turning to Slide 6. Dave covered a lot of the customer driven capital investment opportunities we have ahead of us. As he said, we are in year two of a very attainable and tangible capital investment plan of $40 billion plus through 2030, which you can see here on this page, these projects are focused on safety, resiliency, reliability, growth and clean enablement. One item to discuss on a clean energy side. Recognizing, there is a lot of conversation regarding the availability of imported solar panels. While we're not immune to the current market factors our next facility is not slated to come into service until the fourth quarter of 2023 and a lot can and will happen between now and then. 21:24 We are working with our developers and suppliers and feel good about their early attention towards identifying possible alternatives if needed. We will obviously be learning more over the coming weeks and months, but we remain firmly committed to our long-term renewable generation transition and our timeline for our net zero and carbon reduction emission goals will remain unchanged. It is important to note that while we are only anticipating less than $0.02 of earnings benefit in 2024 from the generation transition, we have pulled forward some other capital work into 2022 for the latter part of the plan to reduce the risk and to continue to invest for the benefit of our customers. 22:00 As a result of this acceleration, we are now forecasting to spend $4.3 billion in capital expenditures during 2022 and have increased our five-year capital expenditure forecast to $19.3 billion from $19.2 billion. This is our second increase to the plan since Analyst Day. We are also fortunate to have regulatory mechanisms that allow for timely recovery of our capital investment, about 80% of the 10-year capital plan is eligible for recovery and expected to be recovered through interim capital recovery mechanisms. An example of which includes our recent distribution cost recovery factor or DCRF rate, which is expected to go into effect September 1 this year. 22:45 This is a filing for Houston Electric to recover $1.6 billion in distribution capital we have made since 2018. These investments were dedicated to system improvements, load growth, intelligent grid projects and temporary emergency mobile generation. Our continued focus on cost controls and other items should help mitigate the bill impact for our customers. As is often the case with including something new like mobile generation and an existing mechanism, there is more regulatory scrutiny than usual around this year's DCRF, which includes the first tranche of our mobile generation investment. We look forward to working constructively with stakeholders to resolve the rate application on a timeline consistent with the DCRF statute. 23:31 In our Minnesota gas jurisdiction, we recently filed a constructive rate case settlement with all intervening parties specifying a rate of return on equity of 9.39% and resulting in an annual revenue requirement increase of $48.5 million. The settlement is subject to Minnesota PUC's review and the anticipated approval is expected in the third quarter of 2022. That rate case application used a forward test year providing timely recovery of our forecasted capital investments in reliability and safety across our system for the benefit of our customers as well as our first green hydrogen pilot project, which recently went into service. 24:10 We are excited to now have the green hydrogen production facility online, which we'll use about 1 megawatt of renewable generation to produce hydrogen, which is then mixed into our natural gas system. While this is a small pilot project, it's a step in the right direction as we, our customers and our regulators progress towards a better understanding of how hydrogen can fit into our long-term broader carbon emission reduction goals. Additional green hydrogen and other renewable gas projects will be considered in future or Natural Gas Innovation Act filings which we plan to submit later this year. 24:43 Turning towards a broader regulatory update. We have securitization efforts going on in a couple of jurisdictions, which I'll provide an update on. This mechanism allows for a recovery of certain costs while once again lessening the impact to our customers by recovering over a longer period of time. The funds received from securitization can also be redeployed into capital investments for another form of efficient funding. Lastly, from a credit perspective, the rating agencies typically remove the securitization bonds and cash flows from the credit metric calculations. 25:17 In the state of Texas, we still anticipate the statewide securitization bonds to be issued in the coming months, as the Texas public financing authority is currently in their RFP process. We expect that this will provide a 100% recovery of the $1.1 billion of gas costs incurred during last year's winter storm, as well as the carrying costs. In Indiana, and in the coming weeks, we anticipate filing for costs related to the retirement of two coal facilities. This is a first of its kind of filing in Indiana. The current procedural schedule anticipates a decision by the end of 2022 and if the financing order is approved, we would expect a bond issuance in the first quarter of 2023. Outside of these updates on securitization, I'll remind everyone on the regulatory side, we have limited regulatory risks near term with no major rate cases until late 2023. 26:08 Turning to strategic transactions. We sold our remaining 51 million energy transfer common units of preferred units this quarter for approximately of $700 million combined net proceeds or roughly $490 million net of taxes. Along with the 2021 sales, we received approximately $1.3 billion net after tax, which is a 20% premium to the energy transfer unit price when the transaction was announced. Additionally, in January, we received Arkansas and Oklahoma LDC transaction proceeds of $1.6 billion net of taxes, including approximately $400 million for the remaining outstanding incremental gas costs. 26:48 We have now utilized $1.8 billion of the combined LDC and Energy Transfer proceeds to reduce debt, including the $1.2 billion discussed on last quarter's call, as well as paying down CenterPoint parent level debt including $600 million of high coupon senior notes this quarter. These actions are also in line with our goal to reduce parent level debt to approximately 20% of total debt by the end of this year. A goal, we are well on our way towards achieving. 27:19 We plan to use the remaining proceeds to fund the equity portion of our industry-leading rate base growth without external equity issuances. Separately, and as we discussed at our Analyst Day and throughout last year, we've had an ongoing evaluation of our repairs expense deduction methodology, which will be another way for us to mitigate our cash tax position efficiently funding our growth and helping offset customer bills. We currently expect that this process will result in a one-time cash tax benefit of approximately $300 million in 2022 and at least an incremental $25 million annually in future years, which over the five-year period would equate to at least $400 million of capital that we can redeploy into our business for the benefit of our customers and our shareholders. This is approximately $50 million more than what we estimated at our Analyst Day update and is yet another example of efficiently funding our industry leading growth plan. 28:18 Our long-term FFO to debt objective remains between 14% to 15% aligning with Moody's methodology and is consistent with the expectations of the rating agencies. Additionally, let me remind you, Moody's recently revised our downgrade threshold of 13%, noting our improved business risk profile. And to be clear, we're continuing to focus on retaining this incremental credit cushion as opposed to using it to fund our growth. We believe that these improvements in our balance sheet coupled with our efficient recycling of capital, put us in a position of being able to offer industry leading growth without the need for external equity. As we continue to express, we take our commitment to be good stewards of your investment very seriously and we realized our obligation to optimize stakeholder value for all. 29:07 I'll now turn the call back over to Dave.

Jackie Richert:

29:37 Thank you, Dave. We'll now turn to Q&A, and we'll be cognizant of the busy calendar call schedule following us. Operator?

Dave Lesar:

30:16 Good morning.

Dave Lesar:

30:43 No. I think if you set of track all the way back to our Analyst Day and what we've talked about since then the proceeds of the Enable transaction, the original LDC sales when matched up against our $40 billion plus plan, don't really require us to go into the market for any equity, which is a sort of a north -- a North Star for us right now and nor does it require us divesting of any LDCs. So we have sufficient cash flow to meet this plan. 31:18 What we have tried to signal is that as we identify additional capital opportunities either on top of the five-year 19.3 or, so billion plan we have or the $40 billion plus plan, at that point, we would look to selling additional gas LDCs. But right now, we have sufficient cash flow to meet our needs without issuing any more equity.

Dave Lesar:

32:25 No, I think, blocking and tackling that's probably a good way to summarize it, although, if you think about even, Q1 it was still a pretty active quarter for us. We closed on the LDC sales. We got rid of the rest of the Enable transaction proceeds we had. We continue to execute against a very aggressive rate base growth plan. We certainly met our earnings commitment. We reiterated our 8% growth for the next few years and sort of at the top end of the range. Going forward, we met the challenges of inflation and supply chain. So I guess, I would think about it as, yes, blocking and tackling, I think we did a really good job to Q1. I don't anticipate that changing. But I think the pace of change that I'm trying to drive through CenterPoint is going to continue. That's not going to change, and we expect to hit all our marks that we have in our strategy.

Operator:

33:34 Thank you. Our next question is from Ross Fowler from UBS. Your line is open.

Ross Fowler:

33:43Good morning. How are you?

Ross Fowler:

33:46 So just maybe following on Nick’s question and just looking from the Analyst Day, incremental capital changes, so at year-end you accelerated $200 million into 2022. And then you added $300 million around this is 500 megawatts of mobile generation and now you are adding another $100 million into 2022 kind of on industrial demand, if my understanding is correct? So that's $300 million of that total $600 million increase since Analyst Day in 2022, but to point some of that from the back end of the five-year plan. So maybe talk a little bit about that shift, and then your ability to sort of backfill capital in sort of year four and five?

Jason Wells:

34:48 Good morning, Ross and thanks for the question. And as you pointed out, we increased the CapEx forecast for 2022 by $300 million and increased the five-year CapEx plan by $100 million, what we effectively did was brought forward $200 million from 2023 into 2022. And then increase the overall plan by about $100 million really that increase relates to routine work in our gas and electric businesses that we have the luxury to pull-forward because as mentioned in our prepared remarks, we have an efficient way to fund that for our shareholders, in terms of higher incremental proceeds from the tax repairs deduction, as well as higher incremental proceeds from the securitization that's anticipated in Indiana. And this work continues to help kind of benefit our customers by improving again the safety and resiliency of the system, which is why we put it forward, it further helps derisk any impact from solar delays, as I mentioned in my prepared remarks. 35:59 And so as we look at the sort of the longer-term execution to your plan or to your question, we continue to, I think make positive momentum working with the city of Houston around improving resiliency here in Houston. We will likely have an update around that work probably around the Q4, sorry Q3 earnings call. And then, as Dave mentioned in his prepared remarks, we're seeing increased demand from our industrial customers, both here in Houston, as well as Indiana. And as we work to serve those customers’ needs, we hope to have a more holistic update around the longer-term impacts to our CapEx plan later this year. So it's an exciting time here at CenterPoint the best is still yet to come.

Operator:

37:00 Thank you. Our next question is from Anthony Crowdell from Mizuho. Please ask your question.

Dave Lesar:

37:11 Good morning.

Dave Lesar:

37:17 No. He can do both. He can block and tackle as can everybody on our management team today.

Dave Lesar:

37:57 Okay. I'll let Jason handle the AMI question. I think I'll take sort of the former part of your question. I guess, my view is that’s what you pay a management team to do is to sort of take the challenges of supply chain, the challenges of inflation head on. So my view is, every utility is experiencing it, most companies across the U.S. are experiencing it. And it's coming at us every day, believe me. But I think that we have put a standard out there, reducing our O&M 1% to 2% on average every year. And as Jason said, we believe we're going to continue to do that. 38:38 As to AMI, I'll let Jason talk about that.

Anthony Crowdell:

40:08 Great. And just lastly, I guess, Dave, following up on maybe Nick’s question earlier. We've seen LDC valuations have recovered and are more in line with like electric utility valuations. And the team that right now, investors are really focused on maybe energy security and the view of an LDC has kind of changed more favorably. Just, I know you don't have any need for funds in the current five-year or the 10-year plan. But does the recovery in LDC valuations change your view that you view them more as a source of funds or as a prepaid debit card and I'll leave it there.

Anthony Crowdell:

41:51 Great. Solid quarter. Thanks for taking my questions.

Operator:

41:57 Thank you so much. Our next question from Shar Pourreza from Guggenheim Partners. Your line is open.

Dave Lesar:

42:07 Good morning, Shar.

Shar Pourreza:

42:10 You just done this, we're kind of looking broadly at sort of some of the supply chain issues and inflation and mainly obviously the tariff circumvention investigation going on with the commerce department, which could kind of lead to some pricing uncertainty at least through 2023 and maybe beyond. I guess how do these sort of tail risks impact, how you're thinking about the electric IRP process, especially as we are shifting focus to the upcoming ’23?

Shar Pourreza:

44:14 Got it. And then just lastly, I know obviously with the Texas energy legislation passed, you've got resiliency now, there's a lot of incremental opportunities. I guess, at what point, could we start seeing some of these opportunities kind of materially come into plan versus the small bumps, we've been seeing recently?

Jason Wells:

45:24 Yeah. I would just add maybe an editorial comment, I know that we have sort of teased the update here for a couple of quarters, but I also think it's important for everyone there to understand we are working with the city of Houston here. We're not going to front run the outcome. Those discussions are ongoing. But I think it's just in everyone's best interest to wait until the plan is finalized. And we sort of can announce it jointly and we'll do so when us and the city are ready to do it.

Operator:

46:04 Thank you so much. Our next question is from Julien Dumoulin from Bank of America. Your line is open.

Dave Lesar:

46:54 Yeah. Thanks, Julien for the question. At this point, the increase that we've been discussing related to the -- this quarter's update is really a reflection of a pull forward of projects less around inflation. This is a discrete work that we had planned in 2023, pulling forward to 2022 and then plan, the incremental $100 million over the five years was really a component of that $1 billion of capital that we hold and reserve to make sure that we have the opportunity to fold in when we can efficiently execute and fund that works. So, it really isn't a reflection of inflation. 47:30 Now that being said, clearly, we are starting to feel the impacts of inflation. I think our supply chain team has been working effectively with our suppliers to find long-term commitments around work volumes that can be of interest, not only to their workforce but interest to kind of our plans as well. And so I think, today, we're managing the impact of inflation. I wouldn't consider it a driver, I consider it a potential risk depending on how long we continue to face this inflationary pressure. We're not making any assumptions around deflation today on the back end of the plan. We're really just trying to understand how long will be in this inflationary cycle. And so again, it's really driven by work as opposed to inflation at this point.

Dave Lesar:

48:37 Realistically, there could be some inflationary impact. We're starting to monitor what that risk in terms of a cost increase could be, but to date, we have not seen that. The need to fold that into the plan yet, so it will be something we continue to monitor and happy to continue to provide updates in future quarters around it.

Dave Lesar:

49:19 We can continue to be very excited about the opportunity there. It was clear coming out of the legislature last year that the state of Texas, wanted to put a priority around incremental transmission lines bringing more pathways, if you will, to provide electricity. We continue to work with the commission to see how we can accelerate the siting of new transmission projects, how we can execute on that work. So I would say it's early days, but that continues to be another area where we may see incremental upside to the plan and we continue to have excitement around.

Operator:

50:06 Thank you so much. Our next question is from Steve Fleishman from Wolfe Research. Your line is open.

Steve Fleishman:

50:18 Thank you. Good morning, Dave. So just a question on the, I guess, Indiana and the solar projects and IRP. There are other utilities in Indiana, pretty much all of them are going through the same transition you are. So I'm curious just overall political regulatory feedback on this kind of solar anti-circumvention and do they get us, do they have -- do they give you the sense that they understand the cost increases. And just in the context of obviously, everything going on with energy inflation?

Steve Fleishman:

51:56 Great. And then one just other quick one, appreciate you highlighted the shift in the business mix more to Electric. I think 62% now. Do you have any kind of target for that, long term, where you see that going?

Steve Fleishman:

53:28 Great. Thank you.

Operator:

53:37 Okay. Sure. Our last question is from Insoo Kim from Goldman Sachs. Your line is open.

Jason Wells:

54:06 No, I think well, if you remember back two or three calls ago, I can't remember which quarter it was in. We highlighted the fact that we recognize that labor was going to be an issue to basically address the challenges of our capital plans. So we actually moved pretty aggressively at that point in time to tie up crews that were sufficiently large enough for us to handle the capital spend plan that we have. So at this point in time, we've got those crews sort of tied up and sequenced to come in and serve our needs as we do this capital build. So, certainly there’s labor cost pressure, but the actual bodies. I think we're in really good shape on that.

Dave Lesar:

55:18 Well, I think almost any economic indicator you look at, I mean. Houston is doing just great. I saw a note the other day that there were more housing starts in the city of Houston in the last two years than anywhere in the United States. You look at the turmoil going on in Europe and all of a sudden, the pivot toward needing sort of more energy exports out of the U.S. to serve Europe and the whole sort of LNG and petrochem complex, refinery complex that sits in our territory, and in our backyard here in Houston, and the number of conversations that are taking place about either starting new facilities, upgrading facilities they have here. The set of an continued industrial growth outside of the ship channel that's taking place in this area continued population growth, you just sort of go right down the line and you really just got to come here and experience and just get in your car and drive around Houston. In this area, you just see sort of the economic vitality is oozing out of every pore of the city at this point in time.

Dave Lesar:

56:38 All right, thank you.