HOUSTON – From electric rates to power outages, it seems like we have heard a lot lately about CenterPoint Energy.
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In this week’s “Ask Amy” segment, investigative reporter Amy Davis answers a question from viewer Don Conger:
”Why are we stuck with CenterPoint? Why don’t they have any competition? Can they be fired?”
To understand today’s situation, we need to go back to 2002.
The beginning: Deregulation in 2002
That was the year the Texas legislature decided to deregulate the state’s electric market, a move aimed at increasing competition and lowering costs for consumers.
At the time, Houston Lighting & Power (HL&P) was the sole provider of electricity in the Houston area. Deregulation split the company into two:
- Reliant Energy: Took over selling electricity to consumers.
- CenterPoint Energy: Gained control of the physical infrastructure—power lines, utility poles, and meters in the Houston area.
CenterPoint’s role today
While you can now choose your electricity provider, CenterPoint remains in control of the transmission and distribution of that electricity. Essentially, the company owns the “last mile” of the power supply—the poles, wires, and meters that deliver electricity to your home.
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Even though the electric market is deregulated, CenterPoint is still regulated by the state’s Public Utility Commission (PUC), which approves rate increases and ensures they maintain the infrastructure.
Why can’t CenterPoint be replaced?
Can CenterPoint be “fired” as Don asks? Technically, yes—but not easily.
Since they own all the infrastructure, another company would have to purchase everything from CenterPoint. It’s not as simple as a competitor coming in and setting up their own poles and wires. For another company to enter, there would need to be a large-scale agreement, and the state of Texas can’t just seize CenterPoint’s assets.
The bigger picture
CenterPoint is the only investor-owned electric and gas utility based in Texas, with operations in multiple states. It’s a publicly traded company with a responsibility to its shareholders, which has led to significant growth. Last year, the company generated over $6.5 billion in revenue, marking a 5% increase from the previous year.
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So, while deregulation was supposed to break up monopolies, it has, in many ways, created a new kind of monopoly—one where CenterPoint controls the infrastructure that delivers power to your home.
While competition exists in electricity providers, CenterPoint’s control over the physical infrastructure makes it very difficult to replace them.
CenterPoint Energy’s Response
While CenterPoint didn’t dispute any of the above facts, it provided more background.
“The investor-owned utility model serves around 250 million Americans across the country, so it is not unique. The Texas model of not having CenterPoint generate energy or own the billing relationship with customers is the unique part in Texas deregulation.”
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Responding to the $6.5 billion in revenue in 2023, the spokesperson wrote:
“In addition, for an investor-supported electric utility like CenterPoint, “profit” is measured as “net income available for shareholders.” On February 20, we reported income available to common shareholders of $192 million, or $0.30 per diluted share on a GAAP basis for the fourth quarter of 2023, compared to $0.19 per diluted share in the previous comparable period of 2022, and $867 million, or $1.37 per diluted share for the year ended December 31, 2023, compared to $1,008 million, or $1.59 per diluted share for the year ended December 31, 2022.
Here is the link to our 2023 results news release online.
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Company-wide across all six states we operate in, the net income available for shareholders was $867 million in 2023, which was down, compared to over $1 billion for the full year 2022.
In response to Mr. Conger: We are committed to re-earning the trust of our customers. It is a privilege to serve our customers and the entire Houston community – that is a responsibility we take seriously, all across our company. We want our customers to hear directly from us how seriously we take that commitment, how determined we are to take action and re-earn their trust, and to hear directly from them about how and what we can do better going forward. So, we invite Mr. Conger to attend one of the open houses we are hosting across the Greater Houston area.
Members of our CenterPoint team, including leadership, will be on hand to talk about a variety of topics that are of vital importance this hurricane season. We will have topic-specific stations around the room that will highlight our 40-plus key actions including our efforts to strengthen resiliency, improve our communications and strengthen our partnerships. In addition, customers will be invited to share their feedback, sign up for our Power Alert Service and see a demonstration of our new outage tracker. We want to provide as much information and answer as many questions as we can. We think our customers will be very interested to see the number of areas we will cover when they visit an open house and meet with our CenterPoint team members.
A list of the remaining open houses can be found here: https://centerpointenergy.com/openhouses”
Got more questions? Ask Amy at AskAmy@kprc.com.