A smaller price tag in an asset sale is the latest bump in a tumultuous stretch for Houston’s CenterPoint Energy.
Buffeted by a recent stock price drop, the departure of top brass and a bumpy sale of retail assets — it’s been a tumultuous recent stretch for Center Point Energy, the Houston-based company best known for its massive utility operations around Houston and the Gulf Coast.
The latest set back came earlier this month when the company’s sale of a big natural gas retail asset closed for substantially less than anticipated. CenterPoint initially announced a $400 million price tag, but the sale closed for $286 million. Changes in commodity prices and separate factors related to the timing of the deal’s closing led to the 28 percent drop, according to security filings cited by the Houston Chronicle.
CenterPoint serves as the primary electric transmission and distribution utility and natural gas utility for Houston, its surrounding areas and for a large swath of the Texas Gulf Coast. CenterPoint also serves millions of electric and natural gas utility customers in Arkansas, Indiana, Louisiana, Minnesota, Mississippi, Ohio and Oklahoma.
Here’s a look back at recent CenterPoint developments, roughly in chronological order.
- In February 2019, CenterPoint acquired Indiana-based Vectren Corp. for $6 billion. Some analysts speculated that that acquisition caused disagreements between management and the board.
- In February 2020, CenterPoint received somewhat less than it sought in an electric utility rate settlement. The settlement delivered a $13 million increase to CenterPoint and a 9.4 percent return on equity. The company initially sought $161 million and a 10.4 percent return.
- In February 2020, the company’s then-CEO, Scott Prochazka, unexpectedly resigned. Interim CEO John W. Somerhalder, appointed to replace him, told investors he expected the regulated portions of CenterPoint’s business to generate nearly 90 percent of its earnings going forward.
- Prochazka’s departure came as the company suffered a first-quarter loss of $1.2 billion and a 12-month drop in stock prices of nearly 50 percent, according to reports. The Houston Chronicle also reported in February 2020 that CenterPoint’s total return had declined by 15.1 percent over the preceding year, which made the company the worst performer in an S&P 500 utility index that gained 26.7 percent during the same period.
- On April 1, the company announced a reduction in the company’s quarterly common stock dividend.
- On April 2, the company announced the departure of its chief financial officer. S&P Global Ratings also on April 2 revised its outlook on CenterPoint Energy from stable to negative.
- On April 9, CenterPoint announced it had completed the sale for $850 million of two natural gas distribution and transmission pipeline contractors. CenterPoint will use net revenue from that sale and the separate $286 million sale of its natural gas retail business to help pay down debt.
- On May 7, the company announced it had secured $1.4 billion of equity investment and had formed a board committee to review and evaluate its business strategy.
- On May 25, CenterPoint shut down a contentious electric shopping website it had operated in the Texas deregulated market since 2012. Almost from its beginning, the website had prompted complaints from competitors that its association with the monopoly utility gave it an unfair advantage.
- According to an article last month in SNL Daily Gas Report, some analysts have viewed CenterPoint as a potential acquisition target.
Is a policy analyst consultant for TCAP, a coalition of political subdivisions in Texas that purchase electricity in the deregulated market for their own governmental use. Because energy costs are typically a significant budget item to our members, TCAP is consistently looking for ways to save our members money, through cost-saving contracts, energy efficiency or demand response programs.