CenterPoint Energy has officially filed the first phase of a securitization plan, which happens to be a lower cost way of financing recovery costs over a longer time period time, with the Public Utility Commission of Texas (PUCT).
According to certain reports, this plan would effectively minimize the customer impact of major May 2024 Derecho and late May storms that resulted in approximately $450 million in repair, equipment and emergency response costs outside of CenterPoint’s normal annual rates, as set by the PUCT. All in all, once approved, the securitization plan will save customers more than $50 million in interest charges over the 15-year period.
To give you a slight recap, the May 16th Derecho caused more than an estimated $5 billion in damages across the Greater Houston area not related to CenterPoint’s infrastructure. Described as “once-in-a-generation wind event,”, it packed together wind gusts over 100 miles per hour and multiple tornadoes across the region, shattering thousands of downtown office windows, destroying homes and businesses, knocking down thousands of power poles, and impacting hundreds of miles of power lines and other critical electric equipment.
Anyway, CenterPoint’s plan follows the standard electric sector industry practice used in Texas and across all Gulf Coast states for financing and recovering costs after extreme weather and other one-time events. You see, by securitizing the cost recovery following major storms, hurricanes or other one-time events, one is able to spread cost impacts over several years and at a lower cost when compared to traditional financing, causing a significantly lower monthly impact on customers. For instance, with the whole arrangement spread across a 15-year timeline, it will likely generate an average residential customer surcharge of just over $1 per month starting in the second half of 2025, and then dropping below a $1 per month in the second half of 2026.
“The Derecho that struck the Houston region in the spring was an unprecedented and extreme weather event that caused billions in damage to our communities and a significant portion of our electrical infrastructure. This proposed cost recovery plan reflects our commitment to minimize the impact on our customers’ electric bills while addressing the significant costs related to mobilizing thousands of frontline workers to repair and rebuild the damaged portions of the energy system and restore power for our customers as safely and as quickly as possible,” said Jason Ryan, CenterPoint Energy’s Executive Vice President, Regulatory Services and Government Affairs.
The development in question also follows up on CenterPoint mobilizing thousands of frontline crews and critical resources in coordination with government, community and utility partners. Given this swift response, the company was successful in restoring power to more than 80 percent of impacted customers within 72 hours.
Talk about the scope of CenterPoint’s emergency response on a slightly deeper level, it includes mobilizing over 7,700 frontline electrical workers, contractors and mutual aid resources from eight states to assess system damage and repair equipment. Next up, it oversaw the replacement of more than 400 miles of primary electrical wires, more than 1,600 transformers, and approximately 1,600 of power poles on its distribution system.
The stated responses also included deployment of emergency generation units to provide temporary power across critical facilities, including hospitals, cooling centers, first responder sites, schools, and senior centers. Another detail worth a mention here is rooted in how CenterPoint established nine multi-city staging sites to efficiently deploy crews and equipment for customer restoration efforts to impacted areas across Greater Houston.
Among other things, the company also restored power to approximately 340,000 impacted customers within the first 24 hours; 550,000 within 48 hours; and 750,000 within 72 hours. It also restored 98 percent of all CenterPoint customers within five days of the Derecho.
