CNP 10-K & 10-Q changes, risk factors and insider trading

Electric Generation,Transmission, TransmissionDistribution and DistributionGeneration (CenterPoint Energy and Houston Electric)

Disruptions at third-party or Indiana Electric’s power generation facilities, generation inadequacy orinadequacy, directives issued by regulatory authorities or other matters could cause interruptions in Houston Electric’s and Indiana Electric’s ability to provide transmission and distribution services and Houston Electric and Indiana Electric may not be able to promptly respond, repair and restart their facilities, which could adversely affect their reputation,businesses, financial condition, results of operations and cash flows.

Houston Electric owns the transmission and distribution infrastructure in its service territory that delivers electric power to its customers, but it does not own or operate any bulk power generation facilities, except for its operation of TEEEF.facilities. Indiana Electric owns and operates power generation facilities in addition to the transmission and distribution infrastructure in its service territory. Both Houston Electric and Indiana Electric must follow the directives issued by their respective independent system operator, ERCOT and MISO, respectively. ERCOT and MISO have in the past and may in the future issue directives requiring members to implement controlled outages as a result of an emergency or reliability issues, andissues. Houston Electric has faced and may in the future face challenges to its planning and preparation for such directives and its implementation of Load Shed, including, for example, allegations that it had discretion as to how to shedLoad loadShed and which customers experienced outages and the duration of those outages. As a result, claims and lawsuits could be filed against HoustonCenterPoint Electric and Indiana ElectricEnergy for personal injury, property damage or other damage or loss as a result of their respectiveits Load Shed planning, preparation, implementation, and decisions in order to meet the directives of ERCOT and MISO, respectively. For example, induring the February 2021,2021 Winter Storm Event, the ERCOT regulated Texas electric system experienced extreme winter weather conditions and an unprecedented power generation shortage.shortage Theas the amount of electricity generated by the state’s power generation companies was insufficient to meet the amount demanded by customers. This resulted in ERCOT directing TDUs to significantly Load Shed, which caused customer outages across the ERCOT electric grid of Texas, including in Houston Electric’s service territory. CenterPoint Energy received various claims and lawsuits with respect to the February 2021 Winter Storm Event, alleging, among other things, wrongful death, personal injury, property damage and other injuries and damages. See Note 7 to the consolidated financial statements and “— Houston Electric’s use of TEEEF ...” for further information. If power generation capacity is severely disrupted or is inadequate for any reason in the future,future or in the event of significant system disturbances, Houston Electric’s or Indiana Electric’s transmission and distribution services may be diminisheddiminished, interrupted or interrupted.halted, which could lead to prolonged customer outages, and Houston Electric and Indiana Electric may not be able to promptly repair and restart their facilities, which could adversely affect our businesses, financial condition, results of operations and cash flows. Further, as with the lawsuits filed in the aftermath of the February 2021 Winter Storm Event, claims and lawsuits could be filed against the Registrants, andwhich could also adversely affect our reputation,business, financial condition, and results of operations and cash flows could be adversely affected.operations.

Additionally, Indiana Electric’s generating facilities are subject to operational risks, and Houston Electric and Indiana Electric are subject to risk relating to the generating facilities that supply the power transmitted by Houston Electric and Indiana Electric; are subject to operationalthese risks thathave havein the past and may in the future result in service interruptions and unscheduled plant outages, unanticipated operation and maintenance expensesexpenses, reputational harm and increased purchase power costs. For example, in June 2022, F.B. Culley Unit 3, a coal-fired generation unit, experienced a boiler feed pump turbine failure that caused the unit to be out of service for nearly nine months. In this time frame, CenterPoint Energy purchased energy on the open market. Such open market purchases have and may again result in increased costs and have an adverse impact on our operations,business, financial condition, results of operations and cash flows. Further, Indiana Electric is party to a number of PPAs with third parties. Indiana Electric’s power generationoperations may be disrupted or otherwise insufficient if third parties do not deliver required power under our PPAs. These operational risks can arise from circumstances such as facility shutdowns or malfunctions due to equipment failure or operator or other human error; aging infrastructure; interruption of fuel supply or increased prices of fuel as a result of, among other things, contract expirations, inflation and/or tariffs; disruptions in the production or delivery of electricity; inability to comply with regulatory or permit requirements; governmental action; labor disputes; orsevere weather; natural disasters,disasters; or cyberattacks, all of which could adversely affect Indiana Electric’s and Houston Electric’s businesses.businesses, including their financial condition, results of operations and cash flows. Further, Indiana Electric currently relies on coal for a portion of its generation capacity. Indiana Electric purchases the majority of its coal supplysupply, and in 2025 purchased all of its coal supply, from a single, unrelated party and, although the coal supply is under long-term contract, the loss of this supplier or transportation interruptions could adversely affect its ability to deliver electricity to its customers and adversely impact Indiana Electric’s business, financial condition, results of operations and cash flows. InFuture labor shortages in the coal industry as well as coal supply shortages (such as those experienced by Indiana Electric in 2021 and part of 2022, Indiana Electric experienced coal supply shortages due to labor shortages that the coal industry experienced. While the coal supply shortage that Indiana Electric experienced did not impact its ability to deliver electricity to its customers, labor shortages as well as supply shortages in the future, whether caused by insufficient supply or supplier bankruptcy or other regulatory and supply issues in the mining industry,2022), may lead to increased cost and have an adverse impact on our operations,business, financial condition, results of operations and cash flows. SeeFurther, “— Disruptions to the global supply...” As Indiana Electric continues its generation transition and more renewable energy sources come online,as Indiana Electric’s generating facilities may experience unanticipated disruptions as a result of renewable supply shortages, including, but not limited to, adverseunfavorable weatherwind and solar conditions such as cloudy or windless days.days, Additionally,and such disruptions could adversely affect its ability to deliver electricity to its customers and adversely impact Indiana Electric’s business, financial condition, results of operations and cash flows.

The operations of Houston Electric and Indiana Electric are subject to the usual hazards associated with high-voltage electricity transmission and distribution, including inclement or severe weather, natural disasters, including wildfires, mechanical failure, contact with electrified facilities by people, equipment, and debris, unscheduled downtime, equipment interruptions, loss or outage of key technology platforms or systems, contamination, remediation, explosions, fires, chemical spills, discharges or releases of toxic or hazardous substances,substances and other environmental risks. Such hazards can cause personal injury and loss of life, severe damage to or destruction of property and equipment, including loss of transmission and distribution lines and related equipment and damage to solar panels, and environmental damage, and may result in suspension of operations, disruption of service to customers, prolonged outages and the imposition of civil or criminal penalties. For example, in 2024, Hurricane Beryl caused significant damage to Houston Electric’s electric delivery system,system resultingand resulted in a substantial number of its customers (peaking at more than 2.1 million customers out of 2.8 million customers) being without power, many for extended periods of time. HoustonAlthough ElectricCenterPoint andEnergy Indianacurrently Electric maintainmaintains property and casualty insurance, this insurance butis arelimited in scope and subject to exceptions, conditions and coverage limitations and may not fullycover insuredthe againstcosts allassociated with potential hazards incident to theirHouston businesses.Electric and Indiana Electric’s businesses, and there is no guarantee that the insurance that CenterPoint Energy currently maintains will continue to be available at rates we believe are reasonable.

Indiana Electric’s execution of its generation transition plan, including its IRP,plan is subject to various risks, including timely recovery of capital investments and increased costs and risks related to the timing and cost of development and/or construction of new generation facilities.

Indiana requires each electric utility to performdevelop and submit an IRP to the IURC every three years, unless extended, that uses economic modeling to consider the costs and risks associated with available resource options to provide reliablereliable, cost effective electric service for the next 20-year period. Indiana Electric has used past IRPs and will continue to use future IRPs to evaluate its mix of generation resources. Indiana Electric engages with the communities it serves, its regulators and third-parties in developing its generation transition plan. Recent IRPsIRPs, including the 2025 IRP, have demonstratedidentified Indianapreferred Electricportfolios canthat most cost effectively serve its customers by transitioning its generation fleet toinclude a wider mix of resources, including renewables. For example, Indiana Electric’s 2019/2020 IRP identified a preferred portfolio that retires 730 MW of coal-fired generation facilities and replaces these resources with a mix of generating resources composedsuch primarilyas ofcoal-fired renewables, includinggeneration, solar, wind, and solar with storage,storage supported byand dispatchable natural gas combustion turbines including a pipeline to serve such natural gas generation. Indiana Electric is continuing its plan to transition generation resources away from coal-fired generation to a more sustainable portfolio of resources, including renewables.turbines. While the IURC does not approve or reject Indiana Electric’s IRP, the IURC does comment on the IRP. Indiana Electric is required to obtain a CPCN prior to constructing or acquiring generating resources. Indiana Electric also obtains IURC approval of PPAs and DSMdemand-side management plans to help ensuresupport cost recovery.

Indiana Electric must manage several risks associated with its generation transition plan. The IURC may delay providing comments on an IRP, requiring Indiana Electric to either wait for comments or proceed to implement its IRP without IURC comments. The IURC comments may raise concerns with Indiana Electric’s IRP that make it difficult to obtain approval of the generation transition plan if not addressed. There is no guarantee that the IURC will approve Indiana Electric’s requests to implement part of its generation transition. If Indiana Electric fails to receive IURC approvals necessary to acquire the projects or resources identified in its IRP,IRP or if other governmental action is taken with respect to Indiana Electric’s generation resources or generation transition plan, Indiana Electric may not be able to implement its generation transition plan in a timely manner or at all. For example, while Indiana Electric’s 2025 IRP (similar to previous IRPs) preferred portfolios included the retirement of F.B. Culley Unit 2, a coal-fired generation unit, by the end of 2025, the U.S. Department of Energy issued emergency order 202(c) in December 2025 directing Indiana Electric to continue operating the unit through March 23, 2026. Additionally, projected changes in how renewable and battery storage resources are accredited to meet MISO’s planning reserve margin requirement makehave made it less economic to pursue these resources in the future.resources. In connection with its IRPs, Indiana Electric’s determinations with respect to the appropriate mix of generation resources may change from plans that were previously announced. For example, while Indiana Electric’s 2022/2023 IRP recommended the conversion of F.B. Culley Unit 3 from coal to natural gas by 2027, the 2025 IRP re-evaluated this conversion in light of customer affordability concerns, among other things, and deferred the decision regarding F.B. Culley Unit 3’s replacement to a future IRP. If Indiana Electric is unable to implement its generation transition plan, it may have an adverse effect on CenterPoint Energy’s ability to execute on its netenergy zero and GHG emissions reductiontransition goals, itsexecute goal to exit the coal plants that Indiana Electric operates,on its growth strategy, achieve its financial goals, and otherwise impact its business, financial condition, results of operations and cash flows.

Houston Electric’s receivables are primarily concentrated in a small number of REPs, and any delay or default in payments of these receivables could adversely affect Houston Electric’s business, financial condition, results of operations and cash flows.

Houston Electric’s receivables from the distribution of electricity are collected from REPs that supply the electricity. As of December 31, 2024,2025, Houston Electric provided electric delivery service to approximately 67 REPs. Adverse conditions, including, but not limited to, the February 2021 Winter Storm Event or other extreme weather (which may result in abnormal power prices), structural problems in the market served by ERCOT, the impact of pandemicpublic health events or similar occurrences, mismanagement by the REPs, inflation or financial difficulties of one or more REPs, have and may in the future impair the ability of these REPs to pay for Houston Electric’s services or cause them to delay such payments. Houston Electric depends on these REPs to remit payments on a timely basis. Applicable PUCT regulations significantly limit the extent to which Houston Electric can apply normal commercial terms to otherwise seek credit protection from firms desiring to provide retail electric service in its service territory, and Houston Electric thus remains at risk for payments relating to services provided prior to any shift to another REP or provider of last resort. Houston Electric’s PUCT-approved tariff outlines the remedies available to Houston Electric in the event that a REP defaults on amounts owed. Among the remedies available to Houston Electric are seeking recourse against any cash deposit, letter of credit, or surety bond provided by the REP or implementing mutually agreeable terms with the REP. Another remedy is to require that customers be shifted to another REP or a provider of last resort. Houston Electric thus incurs risk for payments related to services provided prior to the shift to another REP or the provider of last resort. A significant portion of Houston Electric’s billed receivables from REPs are due from affiliates of NRG and Vistra Energy Corp. Houston Electric’s aggregate billed receivables balance from REPs as of December 31, 20242025 was $263$279 million. Approximately 37% and 21%23% of this amount was owed by affiliates of NRG and Vistra Energy Corp., respectively. Any delay or default in payment by REPs could adversely affect Houston Electric’s business, financial condition, results of operations and cash flows. If a REP was unable to meet its obligations, it could consider, among various options, restructuring under the bankruptcy laws, in which event such REP might seek to avoid honoring its obligations, and claims might be made regarding prior payments Houston Electric had received from such REP. For example, following the February 2021 Winter Storm Event, multiple REPs filed for bankruptcy. We are currently recording the amounts owed by these REPs as a regulatory asset for bad debt expenses, which is subject to a reasonableness review by the PUCT in our current base rate case. As of December 31, 20242025 and 2023,2024, as authorized by the PUCT, CenterPoint Energy and Houston Electric recordedhad a regulatory asset of $7 million and $8 millionmillion, respectively for bad debt expenses resulting from REPs’ defaults on their obligations to pay delivery charges to Houston Electric, net of collateral.collateral Thereand is no guarantee that we will be able to recover any or all of the regulatory assetrecovery in our next base rate case.rates. See “— Rate regulation of the Registrants’ Electricelectric ...” For further information on certain of Houston Electric’s ongoing regulatory proceedings, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Regulatory Matters” in Item 7 of Part II of this report.

Houston Electric’s use of TEEEF is subject to various risks, including failure to obtain and deploy sufficient TEEEF resources, potential performance issues and allegations about Houston Electric’s procurement and deployment of the resources (including the planning, execution and effectiveness of the same), regulatory and environmental requirements, and timely recovery of capital.

If Houston Electric is unable to deploy a sufficient number of TEEEF resources in time to respond to a particular event (including as a result of re-leasingreleasing TEEEF to third parties or similar transactions, as described further below, or if leasing certain TEEEF becomes prohibited by law,transactions as further described below); if TEEEF resources fail to perform, or are perceived to fail to perform, as intended; if Houston Electric is otherwise unable, or perceived as unable, to provide back-up generation resources and restore power (such as intendedin the event of ERCOT issuing a directive requiring TDUs to Load Shed); or if the use of TEEEF resources or their failure to perform causes or is alleged to cause any personal injury, property damage, or other damage or loss due to allegations Houston Electric failed to deploy such units reasonably or effectively and failed to respond to particular power outages, Houston Electric could be subject to claims, demands, litigation, liability, regulatory scrutiny, and loss of reputation.reputation and new legislation could be passed making it no longer viable for Houston Electric to lease TEEEF at the same or similar scale that it currently leases such resources or at all. For example, following Hurricane Beryl, various federal, state and local governmental and regulatory agencies and other entities, such as the Texas Governor’s office, the Texas legislature and the PUCT, haveentities called for or are conductingconducted inquiries and investigations into Hurricane Beryl and the efforts made by Houston Electric to prepare for, and respond to, this event, including, among other things, Houston Electric’s procurement of TEEEF.TEEEF, Texasand Lieutenantcertain Governorgovernment Patrickofficials hasargued publicly urged the PUCT to holdthat Houston Electric, rather than ratepayers, should be held responsible for paying approximately $800 million,million which, as detailed below, was (the amount the PUCT had previously approved Houston Electric to recover from ratepayers relating to Houston Electric’s leasing of TEEEF.TEEEF). Additionally, legislation has been proposed in Texas to, among other things, require the PUCT to review TEEEF leased by TDUs, disallow any leases that do not conform to the terms of the proposed legislation (which include, among other things, requirements relating to the speed with which TEEEF may be deployed), disallow recovery of costs associated with such disallowed leases,Ongoing and implement a process to refund ratepayers the charges paid for the leasing of certain TEEEF. On August 12, 2024, Texas Attorney General Ken Paxton opened an investigation to evaluate CenterPoint Energy’s conduct during Hurricane Beryl, including with respect to its TEEEF resources. There are significant uncertainties around thesefuture inquiries, investigations and proposed legislation andregarding potentialHouston Electric’s TEEEF could adversely affect our business, financial condition, results of operations and consequences,cash flows, including with respect to our recovery of costs incurred as a result of Hurricane Beryl andor whetherfuture anysevere weather events; the assessment of financial penalties will be assessed; whether changes to Houston Electric’s system, service territories, operations and/or regulatory treatment will result therefrom; orand whetherthe it will be viableviability for Houston Electric to continue leasing TEEEF. If it is no longer viable for Houston Electric to lease TEEEF at the same or similar scale at which it currently leases such resources and ERCOT issues a directive requiring TDUs to Load Shed or other conditions occur that could be, or are perceived to have the potential to be, addressed by Houston Electric’s deployment of TEEEF, Houston Electric could be subject to claims, demands, litigation, liability, regulatory scrutiny and loss of reputation. Additionally, while Houston Electric has insurance coverage and indemnity rights for its use of TEEEF resources, if its insurers or indemnitors fail to meet their indemnity obligations, Houston Electric could be liable for personal injury, property damage, or other damage or loss. For further information, see “— Hurricane Beryl caused severe disruptions...,” “— We are involved in numerous legal proceedings...” and “— Our insurance coverage may not...”

OnIn DecemberJune 19, 2024,2025, Houston Electric announcedentered ainto proposalthe ERCOT Transaction, subject to PUCT approval, to release Houston Electric’s 15its large 27 MW to 32 MW TEEEF units to theERCOT Sanat AntonioCPS areaEnergy priorfacilities to the summer of 2025. The proposal is intended to help ERCOT address a potential energy shortfall and Load Shed risk and to provide additional electric generation capacity to support growing energy demand inserve the greater San Antonio region.region Underuntil March 2027 unless terminated earlier pursuant to the proposal,provisions Houstonof Electric would not receive revenue or profit fromthe ERCOT Transaction, reduce its TEEEF fleet capacity and wouldreduce alsoits notrates chargeto Houston-areareflect customersthe forremoval theseof the large TEEEF units forfrom its fleet. Following the periodcompletion theyof areservice in the San Antonio serving ERCOT, which is currently expected to be for a period of up to two years.area, Houston Electric anticipates receivingthat revenuesit fromwould complete one or more future transactions afterinvolving its large TEEEF units; because the period theTEEEF units arewould releasednot be available to temporarily serve thecustomers energyduring needsuch intime, theHouston SanElectric Antonio area, and would therefore planplans to continue to not charge customers for these units for any future periods. AsFurther, ofin theNovember date of the filing of this Form 10-K,2025, Houston Electric estimatesproposed thatto therelease valueits of themedium TEEEF units tofrom beits removedTEEEF fleet and remove the associated lease costs from theits rate base as a result of the aforementioned proposal will be approximately $375 million. The proposal has not been finalized and is subject to the negotiation of definitive documentation among the relevant parties, as well as being subject to the approval of ERCOT and other stakeholders. It is not certain that mutually agreeable definitive documentation will be entered into at all or that all approvals will be obtained. Assuming that a definitive agreement is executed and that all necessary transaction approvals are received, this proposal is expected to result in a reduction to Houston Electric’s customers’ bills thatrates. Houston Electric wouldalso proposeanticipates toentering theinto PUCTand inreceiving therevenue springfrom offuture 2025.transactions Nevertheless,involving thereits medium TEEEF units. There can be no assurance that Houstonthe ElectricPUCT will beapprove ablethe ERCOT Transaction and Houston Electric’s proposal to finalizerelease theits proposal.medium TEEEF units. If the ERCOT Transaction and/or Houston Electric’s proposal isto release its medium TEEEF units are not finalized,approved, it may have an adverse effect on our reputationbusiness, financial condition, results of operations and customercash satisfaction,flows, as well as potentially lead to negative consequences from regulatory authorities or other public authorities. Additionally, suitableSuitable future transactions may not be available on terms and conditions we find acceptable, or the expected benefits of Houston Electric’s proposalrelease to releaseof its 15 large 27and MW to 32 MWmedium TEEEF units to San Antonio or any completed future transactions may not be realized fully or at all, or may not be realized in the anticipated timeframe, which could adversely impact our business, reputation, financial condition, results of operations and cash flows. Finally, if such transactions are successful and thereby result in Houston Electric having fewer TEEEF units to deploy in its own service territory, and if ERCOT issues a directive requiring TDUs to Load Shed or other conditions occur that could be,be or are perceived to have the potential to be,be addressed by Houston Electric’s deployment of TEEEF, Houston Electric could be subject to claims, demands, litigation, liability, regulatory scrutiny and loss of reputation.

Access to natural gas supplies and pipeline transmission and storage capacity are essential components of reliable service for Naturalour Gas’natural gas business customers.

NaturalWe Gas dependsdepend on third-party service providers to maintain an adequate supply of natural gas and for available storage and intrastate and interstate pipeline capacity to satisfy itsour customers’ needs, all of which are critical to system reliability. Substantially all of Natural Gas’our natural gas supply is purchased on intrastate and interstate pipelines. If Naturalwe Gas isare unable to secure an independent natural gas supply of itsour own or if third-party service providers fail to timely deliver natural gas to meet Natural Gas’our requirements, the resulting decrease in natural gas supply in Natural Gas’our service territories could have an adverse effect on itsour business, financial condition, results of operations,operations and cash flows and reputation.flows. Additionally, a significant disruption, whether through reduced intrastate and interstate pipeline transmission or storage deliveries or other events affecting natural gas supply, including, but not limited to, operational failures, hurricanes, tornadoes, floods, severe winter weather conditions, wildfires, acts of terrorism, human error or cyberattacks or changes in legislative or regulatory requirements, could also adverselyhave affecta Naturalnegative Gas’impact businesses.on our businesses, financial condition, results of operations and cash flows. Further, to the extent that Natural Gas’our natural gas requirements cannot be met through access to or continued use of existing natural gas infrastructure or if additional infrastructure, including onshore and offshore exploration and production facilities, gathering and processing systems and pipeline and storage capacity is not constructed at a rate that satisfies demand, then Natural Gas’our operations could be negatively affected.

NaturalWe Gas isare subject to fluctuations in natural gas prices, which could affect the ability of itsour suppliers and customers to meet their obligations or may impact itsour operations, which could adversely affect CERC’sour business, financial condition, results of operations and cash flows.

NaturalWe Gas isare subject to risk associated with changes in the price of natural gas. The regional and other markets in which we purchase natural gas are competitive and can be subject to significant pricing volatility as a result of many factors, including inflation, adverse weather conditions, supply and demand changes, availability of competitively priced alternative energy sources, political and geopolitical instability, commodity production levels and storage capacity, energy and environmental legislation and regulations and economic and financial market conditions. The natural gas market has been, and may continue to be, volatile due to growing domestic demand, increased natural gas exports, weather and other factors. Significant increases in natural gas prices, such as those experienced during the February 2021 Winter Storm Event, might affect Natural Gas’our ability to collect balances due from customers and could create the potential for uncollectible accounts expense to exceed the recoverable levels built into tariff rates. In addition, a sustained period of high natural gas prices could (i) decrease demand for natural gas in the areas in which Naturalwe Gas operates,operate, thereby resulting in decreased sales and revenues and (ii) increase the risk that Natural Gas’our suppliers or customers fail or are unable to meet their obligations. An increase in natural gas prices would also increase working capital requirements by increasing the investment that must be made to maintain natural gas inventory levels.

NaturalOur Gasnatural gas businesses must compete with alternate energy sources, which could result in less natural gas delivered and have an adverse impact on CenterPointour Energy’s and CERC’sbusiness, financial condition, results of operations and cash flows.

NaturalOur Gasnatural competesgas businesses compete primarily with alternate energy sources such as electricity and other fuel sources. In some areas, intrastate pipelines, other natural gas distributors and natural gas marketers also compete directly with Natural Gasus for natural gas sales to end users. In addition, as a result of federal regulatory changes affecting interstate pipelines, natural gas marketers operating on these pipelines may be able to bypass Natural Gas’our facilities and market, sell and/or transport natural gas directly to commercial and industrial customers. Any reduction in the amount of natural gas delivered by Natural Gasus as a result of competition with alternate energy sources may have an adverse impact on CenterPointour Energy and CERC’sbusiness, financial condition, results of operations and cash flows.

Rate regulation of the Registrants’ Electricelectric and Naturalnatural Gasgas businesses may delay or deny their ability to earn an expected return and fully and timely recover their costs.

The Registrants’ Electricelectric and Naturalnatural Gasgas businesses are regulated by certain municipalities, state commissions and federal agencies, such as FERC. Their rates are set in comprehensive base rate proceedings (i.e., general rate cases) based on an analysis of their invested capital, their expenses and other factors in a designated test year (often either fully or partially historic), subject to periodic review and adjustments. Each of these rate proceedings is subject to third-party intervention and appeal, and the timing of a general base rate proceeding may be out of the Registrants’ control. Houston Electric and CERC, with respect to its Ohio gas territory, each filed rate cases during 2024. The Registrants can make no assurance that their or their subsidiaries respective base rate proceedings will result in requested or favorable adjustments to their rates, in full and timely cost recovery or approval of other requested items, including, among other things, capital structure and ROE. Moreover, these base rate proceedings have caused in certain instances, and in the future could cause, the Registrants’ Electricelectric and/or Naturalnatural Gasgas businesses to recover their investments below their requested levels, below the national average return for utilities or below recently approved return levels for other utilities in their respective jurisdictions. For instance, in the 20192024 Houston Electric general rate case, Houston Electric filed a base rate case seeking approval for revenue increases of approximately $194$60 million and a 10.4% ROE, but afterpursuant enteringto intothe afinal Stipulationsettlement and Settlement Agreementagreement filed with the PUCT, Houston Electric received an overall revenue requirement increasedecrease of approximately $13$47 million to current revenues and a 9.4%9.65% ROE.ROE relative to the initial filing. To the extent the regulatory process does not allow the Registrants to make a full and timely recovery of appropriate costs, their businesses, financial condition, results of operations and cash flows could be adversely affected. Further, the Registrants or their subsidiaries might be required to implement additional measures, such as the adoption of ring-fencing measures by Houston Electric in connection with its 2019 rate case proceeding. Such additional measures may adversely impact the Registrants’ businesses and could have an adverse effect on their businesses, financial condition, results of operations and cash flows.

The rates that Registrants’ Electricelectric and Naturalnatural Gasgas businesses are allowed to charge may not match their costs at any given time, a situation referred to as “regulatory lag.” Regulatory lag has been and may be exaggerated in the future under certain circumstances, such as increased capital investments that are recovered in arrears, like those experienced in 2022, 2023 and early 2024.arrears. For example, the MPUC ordered extraordinary gas costs incurred in the February 2021 Winter Storm Event be recovered over a 63-month period from 2022 — 2027 and CERC forego recovery of the associated carrying costs. Though several interim rate adjustment mechanisms have been approved by jurisdictional regulatory authorities and implemented by the Registrants and their subsidiaries to reduce the effects of regulatory lag (for example, CSIA, DCRF, DRR, DSMA, GRIP, RCRA, RRA, RSP, TCOS and TDSIC), such adjustment mechanisms are subject to the applicable regulatory body’s approval, which we cannot assure would be approved, and are subject to certain limitations that may reduce or otherwise impede the Registrants’ or their subsidiaries ability to adjust itstheir rates or result in rates below those requested. Therefore, the Registrants can make no assurance filings for such mechanisms will result in favorable adjustments to rates or in full cost recovery. Further, from time to time, the Registrants’ regulators approve the issuance of system restoration bonds or securitization bonds in order to recoverfacilitate the recovery of certain qualified costs, including costs incurred as a result of severe weather or to recover stranded asset costs. For example, Houston Electric is currently seeking to recover system restoration costs associated with Hurricane Beryl and certain other significant storms through the issuance and sale of non-recourse system restoration bonds. The issuance of thesesystem restoration bonds or securitization bonds may be delayed.delayed due to regulatory or other actions outside of our control. If the issuance of system restoration bonds or securitization bonds is delayed, we may not be able to recover our costs in a timely manner, which could have an adverse effect on CenterPoint Energy’s, CERC’s, and Houston Electric’s businesses, financial condition, results of operations and cash flows.

Inherent in the regulatory process is some level of risk that jurisdictional regulatory authorities may challenge the reasonableness or prudency of operating expenses incurred or capital investments made by the Registrants or their subsidiaries and deny the full recovery of their cost of service in rates. For example, concerns about customer affordability could cause regulators to approve lesser amounts in ratemaking or cost recovery proceedings. From time to time, these reviews and investigations have caused in certain instances, and in the future could cause, the Registrants to recover their costs or investments below their requested levels. For example, in October 2022, the MPUC issued a written order disallowing recovery of approximately $36 million of the $409 million originally requested by CERC in connection with its recovery of costs incurred as a result of the February 2021 Winter Storm Event. Notwithstanding the application of such rate adjustment mechanisms, the regulatory process by which rates are determined is subject to change as a result of legislative processesprocesses, rulemakings or rulemakings,litigation, as the case may be, and may not always be available or result in rates that will produce recovery of the Registrants’ or their subsidiaries’ costs or enable them to earn their authorized return. For example,New legislation hascould beenbe proposedadopted in Texas to require the PUCT to review TEEEF leased by TDUs, disallow any leases that do not conform to the terms of the proposedstates legislationin (which include,we amongoperate otherthat things,could requirements relating toalter the speedregulatory withframework whichand TEEEFprevent mayus befrom deployed),getting disallowtimely recovery of our costs associated with such disallowed leases, and implement a process to refund ratepayers the charges paid for the leasing of certain TEEEF. There can be no assurances that Houston Electric will seek to or be able to recover certain future TEEEF costs or be able to retain those costs previously approved for recovery. For more information regarding TEEEF-related risks, see “— Houston Electric’s use of TEEEF ...”investments. Additionally, changes to the rate case or interim adjustment mechanisms (including the termination of such mechanisms) could result in an increase in regulatory lag or otherwise impact the Registrants’ ability to recover their costs in a timely manner. Additionally, decisionsDecisions from regulators are typically subject to appeal, and any such appeal could further exacerbate regulatory lag and lead to additional uncertainty associated with rate case proceedings. The regulatory process may also be adversely affected by the political, regulatory and economic environment and customer affordability concerns in the states in which we operate. We are also affected by the actions of numerous advocacy groups, and success by any such groups in directly or indirectly influencing legislators and regulators could have a material adverse effect on our business, financial condition, results of operations and cash flows. To the extent the regulatory process does not allow the Registrants to make a full and timely recovery of appropriate costs, their businesses, financial condition, results of operations and cash flows could be adversely affected. For further information on rate case proceedings and interim rate adjustment mechanisms, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Regulatory Matters” in Item 7 of Part II of this report.

The regulated utility businesses, and the energy industry as a whole, have experienced a period of rising costs and investments and an upward trend in spending, especially with respect to infrastructure investments,investments (including those that have already been approved by a regulator). For example, Houston Electric’s SRP, which was approved by the PUCT in November 2025, includes twenty-seven resiliency measures totaling approximately $2.68 billion in capital investments and an estimated $185 million in operations and maintenance expense. Rising costs and investments and the upward trend in spending is likely to continue in the foreseeable future and could result in more frequent rate cases and requests for, and the continuation of, cost recovery mechanisms, all of which could result in adverse cost recovery determinations and/or face resistance from customers and other stakeholdersstakeholders, especially in a rising cost environment, whether due to inflation, tariffs,customer affordability concerns, tariffs or changes to governmental policies and programs, high fuel prices or otherwise, and/or in periods of economic decline or hardship. Significant increases in costs could increase financing needs and otherwise adversely affect our business, financial position,condition, results of operationoperations orand cash flows.

Houston Electric, Indiana Electric and CERC own, develop, construct, manage and operate electric generation,transmission, transmissiondistribution and distributiongeneration facilities or natural gas distribution facilities, as applicable. A key component of our growth is our ability to construct and operate these facilities. As part of these operations, we must periodically apply for licenses and permits from various local, state, federal and other regulatory authorities and abide by their respective conditions. We have previously experienced delays in receiving approval with regards to certain permits and licenses, and have had investigations and enforcement actions with regards to certain of our projects, which have caused delays to our projects in the past. Our projects, such as in the case of Houston Electric’s proposed 765 kV and other transmission projects, have faced and may in the future face opposition from individuals, community organizations, environmental and other activist groups, and other public-interest entities. In the future, these approvals may not be granted in a timely manner (including due to potential staffing issues at U.S. regulatory agencies) or at all or may be modified, rescinded or fail to be extended for a variety of reasons, including due to legal or regulatory changes or political, public and community relations pressure. Should we in the future be unsuccessful in obtaining necessary licenses or permits on acceptable terms or resolving third-party challenges to such licenses or permits, should there be a delay in obtaining or renewing necessary licenses or permits, or should regulatory authorities initiate any associated investigations or enforcement actions or impose related penalties or disallowances, our future net income and cash flows could be reduced and our business, financial condition and results of operations could be impacted. Any failure to negotiate successful project development agreements for new facilities with third parties could also have adverse effects. Additionally, our projects have faced and may in the future face opposition from individuals, community organizations, environmental and other activist groups, and other public-interest entities.

The Registrants are subject to numerous legal proceedings, including lawsuits and environmental matters in addition to regulatory proceedings, the most significant of which are summarized in Note 14 to the consolidated financial statements. Litigation is subject to many uncertainties; recent trends have shown jury verdicts, settlements and other liability have been significantly increasing; and the Registrants cannot predict the outcome of all matters with assurance. Additionally, under some circumstances, the Registrants could potentially have claims filed against them or incur liabilities associated with assets and businesses no longer owned by them as a result of sales, divestitures or other transfers to third parties who may be unable to fulfill their indemnity obligations to the Registrants. Final resolution of these matters, or any potential future claims or liabilities, may require additional expenditures over an extended period of time that may be in excess of established insurance or reserves and may have an adverse effect on the Registrants’ businesses, financial results.condition, results of operations and cash flows. For further information, see “— Our insurance coverage may not...”

Customers’, investors’, legislators’, regulators’regulators’, creditors’, rating agencies’ and creditors’other stakeholders’ opinions of us are affected by many factors, including actual or perceived system reliability,reliability and safety, the speed of our response to service interruptions, rates,rates and customer affordability, our ability to successfully execute our capital plan, media coverage and actions by third parties, and negative opinions developed by such stakeholders could harm our reputation and have an adverse impact on our business, financial condition, results of operations,operations and cash flows and financial condition.flows.

Our results are influenced by the expectations of our customers, investors, legislators, regulatorsregulators, creditors, rating agencies and creditors.other stakeholders. Those expectations are based, in part, on the actual or perceived reliabilityreliability, safety and affordability of our utility services. TheOur speedactual withor whichperceived we are ableability to prevent, mitigate, prepare for and timely respond effectively to electric outages, natural gas leaks or events and related accidents and similar interruptions caused by severe weather, physical or cybersecurity incidents or other unanticipated events, as well as our own or third parties’ actions or failure to act, can affect customer, regulator and legislator satisfaction.satisfaction or potentially subject us to regulatory action and litigation. For example, CenterPoint Energy, CenterPoint Energy Service Company, LLC and Houston Electric are subject to litigation and claims arising out of Hurricane Beryl and various federal, state and local governmental and regulatory agencies and other entities have called for or are conductingconducted inquiries and investigations into Hurricane Beryl and the efforts made by Houston Electric to prepare for, and respond to, this event, including the associated electric service outage issues. CenterPoint EnergyOngoing and future inquiries, investigations and proposed legislation regarding Hurricane Beryl could adversely affect our business, financial condition, results of operations and cash flows, including with respect to our recovery of costs incurred as a result of Hurricane Beryl or future severe weather events; the assessment of financial penalties; changes to Houston Electric’s system, service territories, operations and/or regulatory treatment; and the viability for Houston Electric are also subject to currentcontinue andleasing potential future litigation and claims arising out of Hurricane Beryl. For more information regarding Hurricane Beryl-related risks, see “— Hurricane Beryl caused severe disruptions...”TEEEF. The level of rates,rates and actual or perceived affordability of our services, the timing and magnitude of rate increases, and the volatility of rates can also affect customerthe satisfaction.opinions of customers, legislators, regulators and other political figures of us. For example, in 2025, the Governor of Indiana directed the commissioner of the OUCC to evaluate utilities’ profits and find cost-saving measures to ease the financial burden on customers. Our ability to successfully execute our capital plan may also affect customers’, investors’, legislators’, regulators’regulators’, creditors’, rating agencies’ and creditors’other stakeholders’ opinions and actions. Opinions of us can alsoadditionally be affected by media coverage, including social media, which may include information, whether factual or not, that damages our brand and reputation. Our efforts to secure permits and/or acquire land and easements (including through eminent domain) for infrastructure investments, including with respect to Houston Electric’s proposed 765 kV and other transmission projects, as well as execute on and/or obtain regulatory approvals for transmission, generation and other facilities can also affect opinions of us. We are also subject to adverse publicity related to actual or perceived environmental practices or impacts, including in relation to climate change and our ability to timely achieve our energy transition goals, as well as negative opinions regarding the appropriateness of our climate-related goals. If customers, investors, legislators, regulatorsregulators, creditors, rating agencies or creditorsother stakeholders have or develop a negative opinion of us or our utility services, this could result in, among other things, less favorable legislative and regulatory outcomes (including but not limited to failure to obtain requested approvals on capital investments) or increased regulatory oversight, negative effects on our access to, and the cost of, capital, project delays or cancellations, increased litigation and negative public perception. The foregoing may harm our reputation and have adverse effects on our business, financial condition, results of operations,operations and cash flow and financial condition.flows.

Regulatory agencies have also adopted, and from time to time consider adopting, new legislation and/or modifying existing laws and regulations to reduce GHGs. There continues to be a wide-ranging policy and regulatory debate, at the state level, nationally and internationally, regarding the possible means for their regulation. The trend in environmental regulation in previous years has been to place more restrictions and limitations on activities that may impact the environment. On April 22, 2021,Although the United States announcedwithdrew newfrom goalsthe ofParis 50%Agreement reductionin of economy-wide GHG emissions2026, and 100%more carbon-free electricity by 2035, which formed the basis ofrecently the United States’Nations commitmentsFramework announcedConvention on Climate Change, and the current federal administration has revised and is expected to further revise compliance requirements under a number of federal environmental regulatory programs, many states and localities continue to pursue their own climate policies, and differences in Glasgow,energy Scotland.policy Thesepriorities renewedadopted climateby commitmentsfuture comingfederal outadministrations ofcould the 2021 United Nations Climate Change Conference heldresult in Glasgowadditional andGHG certainreduction executive orders resultedrequirements in the developmentUnited of additional regulations and changes to existing regulations. For example, in May 2023, the EPA proposed regulations setting new GHG emission reduction targets for coal and gas-fired electric generating units that could potentially require additional operating costs or operating restrictions related to operation of Indiana Electric’s natural-gas fired units. On April 25, 2024, the EPA released its New Source Performance Standards for Greenhouse Gas Emissions From New, Modified, Reconstructed Fossil Fuel-Fired Units; Emission Guidelines for Greenhouse Gas Emissions From Existing Fossil Fuel-Fired Electric Generating Units; and Repeal of the Affordable Clean Energy Rule. CenterPoint Energy is currently reviewing this rule.States. As a distributor and transporter of natural gas and electricity, and a generator of electricity in Indiana, the Registrants’ revenues, operating costs and capital requirements could be adversely affected as a result of any regulatory action that would require installation of new control technologies or a modification of itstheir operations or that would have the effect of reducing the consumption of natural gas or electricity or prevent the use of certain fuel types. Nevertheless, on January 20, 2025, President Trump signed an executive order to withdraw the United States from the Paris Agreement, marking a significant shift in U.S. climate policy. Pursuant to the terms of the Paris Agreement, the withdrawal will take effect on January 27, 2026. Additionally, in January 2025, President Trump signed executive orders that, among other things, direct federal executive departments and agencies to initiate a regulatory freeze for certain rules that have not taken effect, pending review by the newly appointed agency head, and call upon the EPA to submit a report on the continuing applicability of its endangerment finding for GHGs under the Clean Air Act and issue guidance on the “social cost of carbon” to consider whether such metric should be eliminated. There can be no assurance as to the amount or timing of future expenditures for environmental compliance or remediation, and actual future expenditures may be greater than the amounts we currently anticipate, which could adversely affect our business, financial condition, results of operations and cash flows. Likewise, incentives to conserve energy or use energy sources other than natural gas could result in a decrease in demand for our services. For further discussion, see “Business—Environmental Matters” in Item 1 and “ —NaturalOur Gasnatural gas businesses must compete with…” Evolving investor sentiment related to the use of fossil fuels and initiatives to restrict continued production of fossil fuels may have substantial impacts on CenterPoint Energy’s and CERC’sour electric generation and natural gas businesses. For example, because Indiana Electric currently relies on coal for a portion of its generation capacity, certain financial institutions may choose not to participate in CenterPoint Energy’s financing arrangements until future coal generation closures satisfy their thresholds for investments. Further, some investors choose to not invest in CenterPoint Energy due to CenterPoint Energy’s and CERC’s use of fossil fuels. Also, certain cities in CenterPoint Energy’s and CERC’s Natural Gas operational footprint have discussed the adoption of initiatives to prohibit the construction of new natural gas facilities that would provide service and focus on electrification. For example, Minneapolis has adopted carbon emission reduction goals in an effort to decrease reliance on fossil natural gas. Certain state and local governments have also passed, or are considering, legislation banning the use of natural gas-fired appliances in new homes, which could affect consumer use of natural gas. Should such bans be enacted within NaturalCenterPoint Gas’Energy’s and CERC’s operational footprint, they could adversely affect consumer demand for natural gas. Any such initiatives and legislation could adversely affect CenterPoint Energy’s and CERC’s businesses, financial condition, results of operations.operations and cash flows.

Further, certain investors, lenders, regulators and other stakeholders are focusing on issues related to environmental justice, which may result in increased scrutiny of our applicable regulatory processes and additional costs of compliance or may adversely affect our reputation. While President Trump in January 2025 signed an executive order calling to terminate all environmental justice offices and positions in the federal government, as well as any environmental justice initiatives, programs or other activities, the focus on environmental justice matters by certain stakeholders may nevertheless provide communities opposed to our operations with greater opportunities to challenge or delay our projects. Opposition to our projects or successful challenges or appeals to permits issued for our projects could result in cancellation of such projects and the loss of investments we have made with respect thereto.

CenterPoint Energy is subject to operationaloperational, financial and financialother risks and potential liabilities associated with itsour sustainability and related activities, including the implementation of and efforts to achieve itsour GHGenergy emissions reductiontransition goals.

In September 2021, CenterPoint Energy announcedhas itsadopted netenergy zero emissiontransition goals for Scope 1 and certain Scope 2 emissions by 2035 and a 20-30% reduction in certain Scope 3 emissions by 2035 as compared to 2021 levels. CenterPoint Energy’sits analysis and planplans for execution requiresrequire it to make a number of assumptions. These goals and underlying assumptions involve risks and uncertainties and are not guarantees.guarantees, and our ability to achieve these goals will ultimately be driven by the needs of our business, the needs and desires of the customers, jurisdictions and other stakeholders we serve and our performance for our shareholders. In addition, forecasting is inherently speculative and the trajectory of the greater energy transition is uncertain. Should one or more of CenterPoint Energy’s underlying assumptions require updating, itsour actual results and ability to achievemake itsprogress net zerotowards and GHGachieve emissionsour reductionenergy transition goals byand 2035the timing thereof could differ materially from its expectations.expectations, and CenterPoint Energy may elect to modify or update such goals. Further, there can be no guarantee that CenterPoint Energy will sustain or achieve these goals. Certain of the assumptions that could impact CenterPoint Energy’s ability to meet itsour netenergy zero and GHG emissions reductiontransition goals and the timing thereof include, but are not limited to: GHG emission levels, service territory size andsize, capacity needs and customer demand remaining in line with CompanyCenterPoint expectations,Energy’s expectations when such goals were announced, including with respect to demand for our services and in relation to the announcedrecent sale of CenterPoint Energy’s Louisiana and Mississippi natural gas LDC businesses and the announced sale of CenterPoint Energy’s Ohio natural gas LDC business; the ability to appropriately estimate and effectively manage business opportunities from and maintain reliability in connection with new customers and load growth resulting from, among other things, expansion of data centers,centers (associated with, among other things, increasing demand for AI), energy export facilities, including hydrogen facilities, electrification of industrial processesrefining and transportexports, advanced manufacturing and logistics in our service territories; regulatory approvals related to Indiana Electric’s generation transition plan and our ability to obtain such approvals; the ability to execute anticipated divestitures, portfolio optimizations or other strategic transactions; interconnection delays in the footprints of regional transmission organizations and/or interconnection costs; impactscost onand affordability of customer rates and related concerns; customer demand for GHG emission free or lower GHG emissions energy; impacts of futureregulations, regulationslegislation or legislation,other governmental action, including those related to our operation of certain generating facilities (including the U.S. Department of Energy’s December 2025 emergency 202(c) order directing Indiana Electric to continue operating F.B. Culley Unit 2 through March 23, 2026), the environment and tax (including the effects of the OBBBA, Executive Order 14315, the IRA and any further changes to or the repeal of the renewable energy tax credits enacted in the IRA); federal and state executive, legislative and regulatory actions (including regulatory uncertainty resulting from changes in federal energy policy) and support for certain types of generation; impacts of future carbon pricing regulation or legislation, including a future carbon tax; price, availability and regulation of carbon offsets; price of fuel, such as natural gas; cost and technological development/innovation, adoption and commercialization of energy generation technologies, such as wind and solar, natural gas and storage solutions;solutions, adoption ofand alternative energy by the public,energy, including adoption of electric vehicles; rate of technology innovation with regards to alternative energy resources; CenterPoint Energy’sour ability to implement itsour modernization plans for its pipelines and facilities; the ability to complete and timely implement generationand alternatives,maintain suchsystem asreliability solarduring and windafter generation,transitioning to generation alternatives to Indiana Electric’s coal generation; andexecution of the retirement or fuel conversion dates of Indiana Electric’s coal facilities byon 2035anticipated timelines or at all; the ability to construct and/or permit new natural gas pipelines; the ability to procure resources needed to build at a reasonable cost, the lack of or scarcity of resources and labor, any project cancellations, construction delays or overruns (including as a result of tariffs,changes legislation,in bans,U.S. retaliatoryor foreign trade measures taken against the United States or related governmental actionpolicies) and the ability to appropriately estimate costs of new generation; impact of any supply chain disruptions; changes in applicable standards, metrics, methodologies or frameworks; and enhancement of energy efficiencies. Our businesses may face increased scrutiny from investors, governmental authorities and other stakeholders related to our sustainability and human capital management activities, including the goals, targets, and objectives we announce, our methodologies and timelines for pursuing them, our progress towards achieving them, and related disclosures. We could also face challenges with managing conflicting requirements and our various stakeholders’ expectations. If our sustainability practices do not align with investor or other stakeholder expectations and standards, which continue to evolve, vary, and sometimes conflict, our reputation, our ability to attract or retain employees, and our attractiveness as an investment or business partner could be negatively affected. Similarly, our failure or perceived failure to pursue, fulfill or demonstrate meaningful progress towards our sustainability-focused goals, targets, and objectives, to comply with or otherwise meet ethical, environmental or other standards, regulations, or expectations, which may be varied or conflicting, or to satisfy various reporting standards with respect to these matters (including if there are real or perceived inaccuracies in the data and information we report or if we are exposed to allegations that certain public statements regarding sustainability-related matters are false and misleading “greenwashing” campaigns), within the timelines we announce, or at all, could adversely affect our business or reputation, as well as expose us to government enforcement actions and private litigation.

Developing and implementing plans for compliance with voluntary climate commitments can lead to additional capital, personnel and operation and maintenance expenditures and could significantly affect the economic position of existing facilities and proposed projects. To the extent that we believe any of these costs are recoverable in rates, cost recovery could be resisted by our regulators and the public, and our regulators might attempt to deny or defer timely recovery of these costs. Moreover, we cannot predict the ultimate impact of achieving our emissions reduction goals, or the various implementation aspects, on our system reliability or our business, financial condition andcondition, results of operations.operations and cash flows.

We are subject to regulatoryextensive compliance and proceedings,regulation, which could result in higher costs for system improvements, as well as fines or other sanctions.

Houston Electric and Indiana Electric are members of ERCOT and MISO, respectively, which serve the electric transmission needs of their applicable regions. As a result of their respective participation in ERCOT and MISO, Houston Electric and Indiana Electric do not have sole operational control over their transmission facilities and are subject to certain costs for improvements to these regional electric transmission systems. In addition, FERC has jurisdiction with respect to ensuring the reliability of electric transmission service, including transmission facilities owned by Houston Electric and other utilities within ERCOT and Indiana Electric and other utilities within MISO, respectively. FERC has designated NERC as the ERO to promulgate standards, under FERC oversight, for all owners, operators and users of the bulk power system. FERC has approved the delegation by NERC of authority for reliability in ERCOT to the Texas RE, a Texas non-profit corporation, and for reliability in the portion of MISO that includes Indiana Electric to ReliabilityFirstReliability First Corporation, a Delaware non-profit corporation. Compliance with mandatory reliability standards may subject Houston Electric and Indiana Electric to higher operating costs and may result in increased capital expenditures, which may not be fully recoverable in rates. While Houston Electric and Indiana Electric have received minor fines in the past for noncompliance,noncompliance. ifIf Houston Electric or Indiana Electric were to be found to be in noncompliance with applicable mandatory reliability standards again, they would be subject to additional sanctions, including potential monetary penalties, which could range as high as over a million dollars per violation per day, and non-monetary penalties, such as having to file a mitigation plan to prevent recurrence of a similar violation and having certain milestones in such plan tracked.

Additionally, compliance with existing and potential new regulations related to CERC’s operation and maintenance of natural gas infrastructure could result in significant costs. The PHMSA is responsible for administering the DOT’s national regulatory program to assure the safe transportation of natural gas, petroleum and other hazardous materials by pipelines. The PHMSA continues to develop regulations and other approaches to risk management to assure safety in design, construction, testing, operation, maintenance and emergency response of natural gas pipeline infrastructure. We have programs in place to comply with regulations related to CERC’s operation and maintenance of natural gas infrastructure, such as leak detection surveys and corrosion and critical valve inspections, and we systematically monitor and renew infrastructure over time; however, CERC has receivedfailed minorto finesmaintain compliance with applicable regulations in the past and has received fines for noncompliance,past andnoncompliance. aA significant incident or material finding of non-compliance in the future could result in penaltiesenforcement andaction, penalties, higher costs of operations.operations and adverse impacts on our regulatory proceedings, any of which could have an adverse effect on our business, financial condition, results of operations and cash flows.

Our businesses may be adversely affected by the intentional misconduct of our employees.employees, consultants, contractors, suppliers and vendors.

The following combined discussion and analysis should be read in combination with the consolidated financial statements included in Item 8 herein. The discussion of CenterPoint Energy’s consolidated financial information includes the results of CenterPoint Energy Houston Electric, LLC and CenterPoint Energy Resources Corp., which, along with CenterPoint Energy, Inc., are collectively referred to as the Registrants. Where appropriate, information relating to a specific registrantRegistrant has been segregated and labeled as such. Unless the context indicates otherwise, specific references to Houston Electric and CERC also pertain to CenterPoint Energy. In this combined Form 10-K, the terms “our,” “we” and “us” are used as abbreviated references to CenterPoint Energy, Inc. together with its consolidated subsidiaries, including Houston Electric and CERC, unless statedotherwise otherwise.stated. No registrantRegistrant makes any representationsrepresentation as to the information related solelyrelating to CenterPointthe Energy,other Inc.Registrants or the subsidiaries of CenterPoint Energy, Inc. other than itself.itself or its subsidiaries.

CERC Corp. is an indirect, wholly-owned subsidiary of CenterPoint Energy, which (i) directly owns and operates natural gas distribution systems in Louisiana, Minnesota, MississippiMinnesota and Texas, (ii) indirectly, through Indiana Gas and CEOH, owns and operates natural gas distribution systems in Indiana and Ohio, respectively, and (iii) owns and operates permanent pipeline connections through interconnects with various interstate and intrastate pipeline companies through CEIP.

On FebruaryOctober 19,20, 2024,2025, CenterPoint Energy, through its subsidiary CERC Corp., entered into the LAMSOhio AssetSecurities Purchase Agreement to sell itsall Louisianaof the issued and Mississippioutstanding naturalequity gasinterests LDCin businesses.CEOH. The transaction is expected to close in the firstfourth quarter of 2025.2026, subject to the satisfaction of customary closing conditions. For further information, see Note 4 to the consolidated financial statements.

Below is a summary of CenterPoint Energy’s reportable segments as of December 31, 2024.2025. For a detailed description of each reportable segment, as well as the assets included in each reportingreportable segment, see Part I, Item 1. Business.Business and Item 2. Properties.

•The Natural Gas reportable segment includesconsisted of (i) intrastate natural gas sales to, and natural gas transportation and distribution forfor, residential, commercial and industrial customers in Indiana, Louisiana, Minnesota, Mississippi, Ohio and Texas; (ii) permanent pipeline connections through interconnects with various interstate and intrastate pipeline companies through CEIP; and (iii) homeresidential appliance maintenancerepair and repairmaintenance services along with HVAC equipment sales to customers in Minnesota; and (iv) home repair protection plans to natural gas customers in Indiana, Mississippi, Ohio and Texas through a third party. The Louisiana and Mississippi natural gas LDC businesses were included in the Natural Gas reportable segment through March 31, 2025. See Note 4 for additional detail.

•The Corporate and Other reportable segment includesconsisted of (i) energy performance contracting and sustainable infrastructure services by Energy Systems Group through June 30, 2023, the date of the sale of Energy Systems Group; (ii) corporate support operations that support the business operationsall of CenterPoint EnergyEnergy’s business operations; and (iii) office buildings and other real estate used for business operations.

We are an energy delivery company with electric transmissiontransmission, distribution and distribution,generation power generation,operations and natural gas distribution operations that serve more than seven million metered customers across sixfour jurisdictions.states. The majority of our revenues are generated from the transmission and delivery of electricity and the sale of natural gas by our subsidiaries.

We continue to execute on our strategic goals for our businesses that were set in September 2025. Pursuant to this business strategy and in light of the nature of our businesses, significant amounts of capital investmentinvestments are reflected in our currentnew 10-year capital plan,plan. In September 2025, we announced our new 10-year capital plan to invest $65 billion from 2026 through 2035, inclusive of a $2 billion increase in previously planned capital expenditures through 2030, and in February 2026, we announced an additional increase to reflect total expenditures of approximately $65.5 billion. Our 10-year capital plan is intended to advance economic growth, improve the experience of our customers through enhancing the safety, reliability and resiliency of our systems and deliver consistent value for stakeholders across the jurisdictions in which haswe increased to nearly $47.5 billion through 2030. These investments include a focus on additional system resiliency, reliability, and grid modernization.operate. These investments are not only intended to meet our customers’ current needs, but are also in anticipation forof furtherfuture organic growth andfrom a diverse set of economic drivers. This organic growth is anticipated to result in rapid load growth from increased electrification in our service territories.territories (as further discussed below). To fund these capital investments, we rely on internally-generated cash, borrowings under our credit facilities, proceeds from commercial paper, cash proceeds from strategic transactions (such as the divestitures of our Arkansas and Oklahoma LDC businesses in 2022, our Energy Systems Group divestiture in 2023 and2023, the proposed sale of our Louisiana and Mississippi natural gas LDC businesses,businesses in 2025 and the announced sale of our Ohio natural gas LDC business, which is expected to close in the firstfourth quarter of 20252026), and issuances of equity and debt securities in the capital markets, including the issuance of non-recourse securitizationsystem restoration bonds at Houston Electric relatedto torecover costs incurred primarily during the year ended December 31, 2024 due to the May 2024 Storm EventsEvents, as well as Hurricane Beryl and Hurricaneother Beryl.significant storms.

We strive to maintain investment grade ratings for our debt securities to access the capital markets on terms we consider reasonable. A reduction in our ratings generally would result in an increase in our borrowing costs for new issuances of debt, as well as borrowing costs under our existing revolving credit facilities, and may prevent us from accessing the commercial paper markets. Disruptions in the financial markets along with high or rising interest rates can also affect the availability of newexternal capitalfinancing on terms we consider attractive. In those circumstances, we may not be able to obtain certain types of external financing or may be required to accept terms less favorable than we would otherwise accept which, among other things, would negatively impact our ability to finance our capital plan. For that reason, we seek to maintain adequate liquidity for our businesses through existing credit facilities and prudent refinancing of existing debt.

To assess our financial performance, our management primarily monitors the recovery of costs and return on investments by the evaluation ofevaluating net income and capital expenditures, among other things,metrics, from our regulated service territories within our reportable segments. Within these broader financial measures, we monitor margins, natural gas and fuel costs, interest expense, capital spend, working capital requirements,requirements and operation and maintenance expense.expense, among other significant metrics. In addition to these financial measures, we also monitor a number of variables that management considers important to gauge the performance of our reportable segments, including the number of customers, throughput, commodity prices, heating and cooling degree days, environmental impacts, safety factors, system reliability and customer satisfaction.

CenterPoint Energy and CERC have weather normalization or other rate mechanisms that largely mitigate the impact of weather on Naturaltheir Gasnatural gas distribution businesses in Indiana, Louisiana, Mississippi, Minnesota and Ohio, as applicable. CenterPoint Energy’s and CERC’s Naturalnatural Gasgas distribution businesses in Texas and CenterPoint Energy’s electric operations in Texas and Indiana do not have such mechanisms, although fixed customer charges are historically higher in Texas for Natural Gas compared to its other jurisdictions.mechanisms. As a result, fluctuations from normal weather may have a positive or negative effect on CenterPoint Energy’s and CERC’s Naturalnatural Gas’gas distribution business’ results in Texas and on CenterPoint Energy’s electric operations’ results in its Texas and Indiana service territories.

Assets Held for Sale. On FebruaryOctober 19,20, 2024,2025, CenterPoint Energy, through its subsidiary CERC Corp.Corp., entered into the LAMSOhio AssetSecurities Purchase AgreementAgreement, pursuant to which CERC Corp. has agreed to sell itsall Louisianaof the issued and Mississippioutstanding naturalequity gasinterests LDCin businesses.CEOH. The purchase price foris $2.62 billion, which is comprised of the Louisianafollowing: and(i) Mississippi natural gas LDC businesses is $1.2$1.42 billion andin cash payable to CERC Corp. upon closing of the transaction, subject to adjustmentadjustments as set forth in the LAMSOhio AssetSecurities Purchase Agreement, including adjustments based on net working capital, regulatory assets and liabilities and capital expenditures at closing.closing of the transaction; and (ii) a 364-day seller promissory note, in the original principal amount of $1.2 billion, to be issued by NFGC at the closing of the transaction and payable to CERC Corp. as provided by the terms and conditions of the Seller Note Agreement. The transaction is not subject to a financing condition and is expected to close byin the end of the firstfourth quarter of 2025,2026, subject to satisfaction of customary closing conditions. TheAs businessesof includeDecember 31, 2025, the assets included approximately 12,0006,000 miles of maintransmission and distribution pipeline in Louisiana and MississippiOhio serving moreapproximately than337,000 300,000metered customers. TheCEOH Louisiana and Mississippi natural gas LDC businesses areis reflected in CenterPoint Energy’s Natural Gas reportable segment and CERC’s single reportable segment, as applicable. For further information, see Note 4 to the consolidated financial statements.

Regulatory Proceedings. In 2024, Houston Electric filed an Application for Determination of System Restoration Costs and a Financing Order with the PUCT for the May 2024 Storm Events, which were settled in 2025. In 2025, Houston Electric filed an Application for Determination of System Restoration Costs and a Financing Order with the PUCT for Hurricane Beryl and subsequent storm events, which were settled in 2025. For further information, see Note 7 to the consolidated financial statements. For information related to our pending and completed regulatory proceedings to date in 20242025 and to date in 2025,2026, see “—Liquidity and Capital Resources —Regulatory Matters” below.

•The business strategies and strategic initiatives, restructurings, joint ventures and acquisitions or dispositions of assets or businesses involving us or our industry, including the ability to successfully complete such strategies, initiatives, transactions or plans on the timelines we expect or at all, such as the announced sale of our Louisiana and MississippiOhio natural gas LDC businesses,business, which we cannot assure will have the anticipated benefits to us;

•industrial, commercial and residential growth in our service territories and changes in market demand,demand and energy consumption, including in relation to the expansion of data centers,centers (associated with, among other things, increasing demand for AI), energy export facilities, including hydrogen facilities, electrification of industrial processesrefining and transportexports, advanced manufacturing and logistics, as well as the effects of energy efficiency measuresmeasures, technological advances and demographic patternspatterns, and our ability to appropriately estimate/forecast and effectively manage such demand and the business opportunities relating to such matters;

•our ability to fund and invest planned capital and the timely recovery of our investments, including the timing of and amounts sought for those related to Indianaour Electric’s10-year generation transitioncapital plan as part of its IRPs and Houston Electric’s GHRI and SRP;

•our ability to successfully construct, operate, repairrepair, maintain, replace and maintainrestart electric generating facilities, natural gas facilities, TEEEF and electric transmission facilities, as applicable, including in the event of an outage and in relation to complying with applicable environmentalenvironmental, standardsreliability and thesafety implementation of a well-balanced energy and resource mix, as appropriatestandards;

•timely and appropriate rate actions that allow and authorize timely recovery of costs and a reasonable return on investment, including the timing of and amounts sought for recovery of Houston Electric’s applicable TEEEF leases and restoration costs relating toto, theamong Mayother 2024 Storm Events andthings, Hurricane Beryl, and requested or favorable adjustments to rates and approval of other requested items as part of base rate proceedings or interim rate mechanisms;

•the timing and success of, and our ability to finalizeobtain approval for matters relating to, Houston Electric’s proposalrelease to releaseof its 15 large 27 MW to 32 MW TEEEF units to the San Antonio areaarea, proposed release of its medium TEEEF units, reduction of its TEEEF fleet capacity and reduction of rates to reflect the removal of the large and medium TEEEF units from Houston Electric’s TEEEF fleet, as well as Houston Electric’s ability to complete one or more other future transactions involving the large and medium TEEEF units on acceptable terms and conditions within the anticipated timeframe;

•economic conditions in regional and national markets, including economic uncertainty and volatility, potential for recession, changes to and increases in inflation and interest rates, and their effect on sales, prices and costs;

•severe weather variationsevents, natural disasters and other naturalclimate-related phenomena,impacts, including the impact of severe weather events on operations, capital, legislation and/or regulations, such as seen in connection with the February 2021 Winter Storm Event, the May 2024 Storm Events and Hurricane Beryl;

•federal, state and federallocal legislativelegislative, executive and regulatory actions or developments affecting various aspects of our businesses, including, among others, any actions resulting from the May 2024 Storm Events and/or Hurricane Beryl, energy deregulation or re-regulation, pipeline integrity and safetysafety, actions relating to our facilities and changes in regulationregulation, legislation and legislationgovernmental action pertaining to trade,the utility model, trade (including tariffs, bans, retaliatory trade measures taken against the United States or related governmental action), the implementation of budget and spending cuts to federal government agencies and programs, effects of government shutdowns, policies incentivizing or disincentivizing the development or utilization of alternative sources of generation (including distributed generation), health care, finance and actions regarding the rates charged by our regulated businesses;

TEEEF. In June 2025, Houston Electric entered into the ERCOT Transaction, subject to PUCT approval, to release its 15 large (27 MW to 32 MW) TEEEF units to ERCOT at CPS Energy facilities to serve the greater San Antonio region until March 2027 unless terminated earlier pursuant to the provisions of the ERCOT Transaction, reduce its TEEEF fleet capacity and reduce its rates to reflect removal of the large TEEEF units from its fleet. Following the completion of service in the San Antonio area, Houston Electric anticipates that it would complete one or more future transactions involving its large TEEEF units. As the large TEEEF units would not be available to serve Houston Electric customers during such time, Houston Electric plans to continue to not charge customers for these units for any future periods. In November 2025, Houston Electric proposed to remove its five medium (5.7 MW) TEEEF units and to remove the associated lease costs from its rates effective January 1, 2026. On AprilJune 10,26, 2026, Houston Electric requestedfiled continueda abatementstipulation untiland Aprilagreement 24,supporting 2026removal dueof the 15 large units and 5 medium units effective May 1, 2025 and January 1, 2026, respectively, an agreed motion for interim rates effective August 15, 2026, settlement testimony, and agreed motion to continuedadmit settlementevidence discussions.and remand proceeding back to the PUCT. On June 29, 2026, SOAH granted the requested motions and remanded the proceeding to the PUCT. For additional information, see Note 6 to the Interim Condensed Financial Statements.

Net income (loss) for the three and six months ended MarchJune 31,30, 2026 and 2025 was as follows:

Three months ended MarchJune 31,30, 2026 compared to three months ended MarchJune 31,30, 2025

•ana increasedecrease in net income of $22$6 million for the Natural Gas reportable segment, as further discussed below; and

•an increase in net lossincome of $35$98 million for the Corporate and OtherElectric reportable segment, primarilyas duefurther todiscussed the impact of accrued income tax expense offset in other segments.below;

The following table provides variance explanations for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025 as well as for the six months ended June 30, 2026 compared to the six months ended June 30, 2025 by major income statement caption for CenterPoint Energy’s Electric reportable segment:

The following table provides variance explanations for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025 as well as for the six months ended June 30, 2026 compared to the six months ended June 30, 2025 by major income statement caption for CenterPoint Energy’s Natural Gas reportable segment:

The following table provides variance explanations for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025 as well as for the six months ended June 30, 2026 compared to the six months ended June 30, 2025 by major income statement caption for Houston Electric:

The following table provides variance explanations for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025 as well as for the six months ended June 30, 2026 compared to the six months ended June 30, 2025 by major income statement caption for CERC:

Income Tax Expense. For a discussion of effective tax rate per period, see Note 10 to the Interim Condensed Financial Statements.Statements

Operating Activities. The following items contributed to increased (decreased) net cash provided by operating activities for the threesix months ended MarchJune 31,30, 2026 compared to the threesix months ended MarchJune 31,30, 2025:

Investing Activities. The following items contributed to (increased) decreased net cash used in investing activities for the threesix months ended MarchJune 31,30, 2026 compared to the threesix months ended MarchJune 31,30, 2025:

Financing Activities. The following items contributed to (increased) decreased net cash provided by (used in) financing activities for the threesix months ended MarchJune 31,30, 2026 compared to the threesix months ended MarchJune 31,30, 2025:

The Registrants expect that anticipated cash needs for the remainder of 2026 will be met with available cash flow from operations, proceeds from the sale of our Ohio natural gas LDC business, contributions in aid of construction as well as cash flows from financing (such as issuances of debt securities and equity securities upon physical settlement of outstanding forward sale agreements and borrowings under credit facilities, commercial paper issuances or other sources). At this time, CenterPoint Energy does not anticipate the need for furtherany sales of shares of Common Stock under the 2026 Equity Distribution Agreement.Agreement in 2026. The issuance of securities in the capital markets and borrowings under additional credit facilities and term loans may not, however, be available on acceptable terms. The Registrants may, from time to time, redeem, repurchase or otherwise acquire their outstanding debt securities through open market purchases, tender offers or pursuant to the terms of such securities.

On May 1, 2024, Indiana Electric filed with the IURC seeking approval to purchase 147 MW of wind power under a 25-year PPA with an affiliate of NextEra Energy, Inc., which is developing a wind project in Knox County, Illinois. On November 6, 2024, the IURC approved the Knox County wind PPA, which provided for the recovery of the purchase power costs through the fuel adjustment clause proceedings over the term of the PPA. The facility iswas targeted to be in operation in late 2026.2026, however construction was recently halted by the developer following the Department of War’s pause on approving the required mitigation plan, and it is uncertain, when, if at all, the project will become operational.

While Indiana Electric’s 2025 IRP (similar to previous IRPs) preferred portfolios included the retirement of F.B. Culley Unit 2, a coal-fired generation unit, by the end of 2025, the U.S. Department of Energy issued emergency 202(c) orders (the “DOE Order”) in December 20252025, March 2026 and MarchJune 2026 directing Indiana Electric to continue operating the unit through JuneSeptember 21,19, 2026. Indiana Electric has filed a complaint with the FERC to request creation of a cost recovery/cost allocation mechanism. On March 19, 2026, FERC directed MISO to adopt a tariff amendment that would authorize the F.B. Culley unit to recover costs across load-serving entities situated in MISO’s north and central local reliability zones, otherwise known as MISO North and Central. A separate filing will be made at a later date with the FERC to seek recovery of all costs incurred to comply with the U.S. Department of Energy’s emergency 202(c) orders. Indiana Electric has also filed an application with the IURC in Cause No. 46350 to recover any compliance costs associated with the emergency 202(c) orders that are not recovered through the FERC proceedings. On April 15, 2026, Indiana Electric filed a Motion to Intervene in the United States Court of Appeals for the D.C. Circuit in response to the Public Interest Organizations’ appeal of the December 2025 DOE Order. Indiana Electric intervened as the owner of F.B. Culley 2 that is the subject of the DOE Order representing Indiana Electric’s authority to recover the costs it has incurred to comply with the DOE Order. On May 8, 2026, the D.C. Circuit granted Indiana Electric’s motion to intervene and consolidated Indiana Electric’s case with the Public Interest Organizations’ appeal of the DOE emergency 202(c) order issued to Northern Indiana Public Service Company in December 2025 for its Schahfer plant. On June 29, 2026, the D.C. Circuit granted the U.S. Department of Energy’s unopposed motion to hold the consolidated appeals of the Culley and Schahfer DOE 202(c) orders in abeyance pending disposition of the People of the State of Michigan v. United States Department of Energy (the appeal of DOE’s 202(c) order issued to the Consumer Energy Company’s Campbell plant.) A modification to Indiana Electric’s wastewater discharge permit for F.B Culley Unit 2 has been proposed that would provide for the continued utilization of bottom ash transport water at the facility during the pendency of the DOE Order. The public comment period for the proposed modification closed on July 20, 2026, with a final agency decision expected later in the third quarter of 2026. On July 20, 2026, the Sierra Club and Environmental Law & Policy Center filed a petition with the United States Court of Appeals for the D.C. Circuit for review of FERC’s March 19, 2026 order related to the cost recovery/cost allocation mechanism and FERC’s subsequent procedural denial of the rehearing requests on the March 19th order.

Indiana Electric is evaluatingactively working to comply with legislation passed in 2026, includingparticularly, the following pieces of legislation that became law in Indiana’s 124th General Assembly:

House Enrolled Act 1002, a multi-faceted billlaw aimed at improving the affordability of electric rates, would doincludes the following provisions:

Based on the consolidated debt to capitalization covenant in the Registrants’ revolving credit facilities, the Registrants would have been permitted to utilize the full capacity of such revolving credit facilities, which aggregated approximately $4.0 billion as of MarchJune 31,30, 2026. As of AprilJuly 15,22, 2026, the Registrants had the following revolving credit facilities and utilization of such facilities:

On May 17,15, 2023,2026, the Registrants filed a joint shelf registration statement with the SEC registering indeterminate principal amounts of Houston Electric’s general mortgage bonds, CERC Corp.’s senior debt securities and CenterPoint Energy’s senior debt securities and junior subordinated debt securities and an indeterminate number of shares of Common Stock, shares of preferred stock, depositary shares, as well as stock purchase contracts and equity units. The joint shelf registration statement will expire on May 17,15, 2026.2029. For information related to the Registrants’ debt issuances of securities to date in 2026, see Note 9 to the Interim Condensed Financial Statements.

For information related to shares of Common Stock sold or issued pursuant to the forward sale agreements and the 2026 Equity Distribution Agreement in 2025,Agreement, see Note 15 to the Interim Condensed Financial Statements. No shares of Common Stock were sold or issued pursuant to a forward sale agreement or the Equity Distribution Agreement during the three months ended March 31, 2026.

The table below summarizes CenterPoint Energy money pool activity by Registrant as of AprilJuly 15,22, 2026:

The interest rate on borrowings under the credit facilities is based on the respective credit rating of each borrower. As of AprilJuly 15,22, 2026, Moody’s, S&P and Fitch had assigned the following credit ratings to the borrowers:

A decline in credit ratings could increase borrowing costs under the Registrants’ revolving credit facilities. If the Registrants’ credit ratings had been downgraded one notch by S&P and Moody’s from the ratings that existed as of MarchJune 31,30, 2026, the impact on the borrowing costs under the four revolving credit facilities would have been insignificant. A decline in credit ratings would also increase the interest rate on long-term debt to be issued in the capital markets and could negatively impact the Registrants’ ability to complete capital market transactions and to access the commercial paper market. Additionally, a decline in credit ratings could increase cash collateral requirements and reduce earnings of CenterPoint Energy’s and CERC’s Natural Gas reportable segments.

Pipeline tariffs and contracts typically provide that if the credit ratings of a shipper or the shipper’s guarantor drop below a threshold level, which is generally investment grade ratings from both Moody’s and S&P, cash or other collateral may be demanded from the shipper in an amount equal to the sum of three months’ charges for pipeline services plus the unrecouped cost of any lateral built for such shipper. If the credit ratings of CERC Corp. decline below the applicable threshold levels, CERC might need to provide cash or other collateral of up to $233$232 million as of MarchJune 31,30, 2026. The amount of collateral will depend on seasonal variations in transportation levels.

If CenterPoint Energy’s creditworthiness were to drop such that ZENS holders thought CenterPoint Energy’s liquidity was adversely affected or the market for the ZENS were to become illiquid, some ZENS holders might decide to exchange their ZENS for cash. Funds for the payment of cash upon exchange could be obtained from the sale of the shares of ZENS-Related Securities that CenterPoint Energy owns or from other sources. CenterPoint Energy owns shares of ZENS-Related Securities equal to approximately 100% of the reference shares used to calculate its obligation to the holders of the ZENS. ZENS exchanges result in a cash outflow because tax deferrals related to the ZENS and shares of ZENS-Related Securities would typically be reversed when ZENS are exchanged or otherwise retired and shares of ZENS-Related Securities are sold. The ultimate tax liability related to the ZENS and ZENS-Related Securities continues to increase by the amount of the tax benefit realized each year, and there could be a cash outflow when the taxes are paid as a result of the retirement or exchange of the ZENS. If all ZENS had been exchanged for cash on MarchJune 31,30, 2026, deferred taxes of approximately $911$964 million would have been payable in 2026, subject to reduction on account of available net operating loss carryforwards and CAMT carryforwards. If all the ZENS-Related Securities had been sold on MarchJune 31,30, 2026, capital gains taxes of approximately $81$49 million would have been payable in 2026 based on 2026 tax rates in effect. As of MarchJune 31,30, 2026, CenterPoint Energy had both net operating loss and CAMT carryforwards available from its filed 2024 federal income tax return that can be applied to largely offset the cash outflow that would result from a retirement or exchange of the ZENS. For additional information about ZENS, see Note 8 to the Interim Condensed Financial Statements.

From time to time, the Registrants consider the acquisition or the disposition of assets or businesses or possible joint ventures, strategic initiatives or other joint ownership arrangements with respect to assets or businesses. Any determination to take action in this regard will be based on market conditions and opportunities existing at the time, and accordingly, the timing, size or success of any efforts and the associated potential capital commitments are unpredictable. The Registrants may seek to fund all or part of any such efforts with proceeds from debt and/or equity issuances. Debt or equity financing may not, however, be available to the Registrants at that time due to a variety of events, including, among others, maintenance of our credit ratings, industry conditions, general economic conditions, market conditions and market perceptions. As announced in FebruaryJuly 2026, CenterPoint Energy has increased its planned capital expenditures in its Electric and Natural Gas businesses pursuant to its newupdated 10-year capital plan, which calls for investment of at least $65.5$66.7 billion through 2035, and CenterPoint Energy may continue to increase such planned capital investments in the future. The Registrants may continue to explore asset sales as a means to efficiently finance a portion of their increased capital expenditures in the future, subject to the considerations listed above. For further information, see Note 3 to the Interim Condensed Financial Statements.

•restoration costs and revenue losses resulting from future natural disasters such as hurricanes or other severe weather events and the timing of and amounts sought for recovery of such restoration costs; and

A critical accounting policy is one that is both important to the presentation of the Registrants’ financial condition and results of operations and requires management to make difficult, subjective or complex accounting estimates. An accounting estimate is an approximation made by management of a financial statement element, item or account in the financial statements. Accounting estimates in the Registrants’ historical consolidated financial statements measure the effects of past business transactions or events, or the present status of an asset or liability. Additionally, different estimates that the Registrants could have used or changes in an accounting estimate that are reasonably likely to occur could have a material impact on the presentation of their financial condition, results of operations or cash flows. The circumstances that make these judgments difficult, subjective and/or complex have to do with the need to make estimates about the effect of matters that are inherently uncertain. Estimates and assumptions about future events and their effects cannot be predicted with certainty. The Registrants base their estimates on historical experience and on various other assumptions that they believe to be reasonable under the circumstances, the results of which form the basis for making judgments. These estimates may change as new events occur, as more experience is acquired, as additional information is obtained and as the Registrants’ operating environment changes. Our critical accounting policies that we deemed the most material in nature were reported in our combined 2025 Form 10-K. There hashave been no material changes with regard to these critical accounting policies.