CenterPoint Energy Inc. (CNP) announced that the Texas Supreme Court has denied all motions for rehearing in its true-up appeal. The appeal is related to the electric restructuring law in Texas.
In the restructuring the regulatory structure governing electric utilities was amended in order to allow retail competition for electric customers beginning in January 2002.
The Texas electric restructuring law required the Public Utility Commission of Texas (“PUC”) to conduct a “true-up” proceeding to determine CenterPoint’s stranded costs and certain other costs resulting from the transition to a competitive retail electric market and to provide for its recovery of those costs.
The matter will now move to the Texas Public Utility Commission for action consistent with the Court's March 18, 2011 decision.
In March 2011, Texas Supreme Court issued a ruling on the appeal filed by CenterPoint Energy related to the stranded cost true-up order issued earlier in 2004 by the PUC. The Court affirmed in part and reversed in part the PUC's 2004 decision and remanded the case to the PUC for further action. If there is no detrimental hearing from PUC, CenterPoint Energy estimates that it will be entitled to seek recovery of approximately $922 million, plus interest.
CenterPoint Energy, headquartered in Houston, Texas, is a domestic energy delivery company that includes electric transmission & distribution, natural gas distribution, competitive natural gas sales and services, interstate pipelines and field services operations. The company serves more than five million metered customers primarily in Arkansas, Louisiana, Minnesota, Mississippi, Oklahoma, and Texas.
CenterPoint Energy with its balanced portfolio of electric and natural gas businesses, provides a diversified risk profile, along with stable earnings and cash flow. Going forward, our bullish outlook for the company is supported by stable regulated operations, higher rates, ongoing infrastructure development projects, a strong balance sheet and a high dividend yield.
However, this is partially offset by pending regulatory cases, tepid economy, lower demand for electricity, falling wholesale natural gas prices and a significant presence in a hurricane prone section of the U.S.
We continue to retain our long-term Neutral stance on CenterPoint Energy in the absence of any positive triggers. In the near-term however, we assign a Zacks #3 Rank (short-term Hold recommendation) to the stock, in line with peers like Dominion Resources Inc. (D) and Xcel Energy Inc. (XEL).
CENTERPOINT EGY (CNP): Free Stock Analysis Report
DOMINION RES VA (D): Free Stock Analysis Report
Be the first to comment