CenterPoint Energy: Mitigating Derecho Storm Bill Impact for Customers
AInvestFriday, Nov 8, 2024 9:29 pm ET
1min read
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CenterPoint Energy, a prominent utility provider in the Greater Houston area, has outlined a strategic plan to minimize the financial burden of the May 2024 Derecho storm on its electric customers. The company aims to spread the estimated $450 million in repair, equipment, and emergency response costs over a 15-year period, using a method called securitization. This approach is expected to save customers more than $50 million in interest charges and keep the monthly bill impact to about $1 per customer.
The May 16th Derecho storm was a "once-in-a-generation wind event," causing over $5 billion in damages across the Greater Houston area, unrelated to CenterPoint's infrastructure. The fast-moving storm required CenterPoint to activate its emergency operation plan, mobilizing over 7,700 employees, contractors, and mutual aid partners to assess damage, repair downed equipment, and restore power. The company successfully restored power to more than 80 percent of impacted customers within 72 hours.
CenterPoint's commitment to customer affordability is evident in its decision to use securitization for cost recovery. This method, widely used in Texas and across Gulf Coast states for financing and recovering costs after extreme weather events, allows the company to spread the costs over a longer time period at a lower cost. By doing so, CenterPoint expects to save customers over $50 million in interest charges and keep the monthly bill impact to a minimum.

The scope of CenterPoint's emergency response to the Derecho storm was extensive. The company mobilized thousands of frontline crews and critical resources, replacing over 400 miles of primary electrical wires, more than 1,600 transformers, and approximately 1,600 power poles on its distribution system. Additionally, CenterPoint deployed 13 emergency generation units to provide temporary power to critical facilities and established nine multi-city staging sites to efficiently deploy crews and equipment for customer restoration efforts.
CenterPoint's securitization plan aligns with industry standards and previous storm recovery efforts in Texas. The company has used this method 10 times for large named storm-related events in the previous 25 years, including after Hurricane Ike in 2008. By spreading costs over 15 years, CenterPoint aims to minimize the impact on customers while ensuring reliable service.

In conclusion, CenterPoint Energy's securitization plan for the May 2024 Derecho storm response costs is a strategic and customer-focused approach to minimizing the financial impact on its customers. By spreading the costs over 15 years, the company expects to save customers over $50 million in interest charges and keep the monthly bill impact to about $1 per customer. This proactive measure demonstrates CenterPoint's commitment to providing reliable service while minimizing financial strain on customers, positioning it favorably in the investment landscape.
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