CenterPoint Energy completes realignment of corporate structure
CenterPoint Energy achieved the final milestone in realigning its corporate structure after it acquired Vectren Corporation in 2019.
The realignment, completed on June 30, will allow the company to fund future capital investments more efficiently and better align with the company’s management and financial reporting.
Included in the transaction was the exchange of $302 million Vectren Utility Holdings, Inc. (VUHI) private placement notes for new private placements notes issued by CenterPoint Energy Resources Corp. (CERC). The exchange permitted the transfer of Indiana Gas Company and Vectren Electric Delivery of Ohio to CERC, thereby consolidating CenterPoint’s natural gas distribution businesses, with the exception of Southern Indiana Gas and Electric Company (SIGECO), under one subsidiary. Those entities will now be financed through CERC.
The greater scale and stronger credit profile of CERC should benefit customers through lower future financing costs, resulting in anticipated customer savings over the long term.
In addition, the exchange enables SIGECO to securitize costs related to the planned retirement of coal facilities by removing certain restrictive covenants previously contained in the VUHI private placement notes. The securitization should decrease the associated retirement costs of those assets by up to $60 million compared to traditional rate making.
“We are excited to complete this strategic transaction, which will allow us to more efficiently finance our natural gas system improvements at CERC and our generation transition investments at SIGECO through the public debt markets in the future, thereby reducing the reliance on parent debt and intercompany borrowings,” EVP and Chief Financial Officer Jason Wells said. “The reduction of parent debt and intercompany borrowings is another step of delivering on our long-term growth plan and delivering value for our customers and investors.”
CenterPoint Energy is an energy delivery company with electric transmission and distribution, power generation, and natural gas distribution operations that serve more than 7 million customers in Indiana, Louisiana, Minnesota, Mississippi, Ohio, and Texas.
