CenterPoint Energy earnings positive amid grid investment plans

Dive Brief:

CenterPoint Energy reported $185 million in net income for Q1 2014, up from $147 million last year.
CenterPoint said it will invest $1.4 billion of capital in grid infrastructure by the year's end. This is a key part of the utility's plan to grow earnings by 4-6%.
CenterPoint Energy also announced it is challenging a decision by the Electric Reliability Council of Texas (ERCOT) to split responsibility for the $600 million Houston Import Project transmission line, which ERCOT "deemed critical for reliability" last year.

Dive Insight:

The 345 kV Houston Import Project line will run from CenterPoint's Limestone substation through the Gibbons Creek substation, administered by the Cross Texas Transmission Company, to the Zenith substation, also run by CenterPoint.

The pipeline is expected to cost $600 million and be completed by June 2018. Responsibility for constructing, owning and maintaining the power line is split between the Cross Texas Transmission Company, the city of Garland and CenterPoint Energy, who has a 50% share.

When asked by investors and industry analysts if the ERCOT ruling had come as a surprise, Tracy Bridge, EVP and president of the electric division, said, "We knew that the likely outcome was going to go between 50% and 100% ownership. The ERCOT staff chose the former, we are seeking the latter." Normal ERCOT protocol is to award full construction, maintenance and operating responsibility of a transmission line to the company(s) that owns both end substations, which is CenterPoint. The issue is the middle point station, which is operated by a different company. CenterPoint will ideally have a decision on the issue from the Texas Public Utilities Commission by this summer, Bridge said.

Looking ahead, grid infrastructure investment is near the top of CenterPoint's priority list. Utility subsidiary Houston Electric has so far invested $75 million to support service area growth, grid stability, maintenance, and improving distribution and grid reliability, and plans to invest as much as $780 million by year's end. Much of CenterPoint's earnings this last quarter were borne out of poor weather and the company's ability to deliver reliable power despite high demand.