Employee Benefit Plans

9 Months Ended

Sep. 30, 2020

Retirement Benefits [Abstract]

Employee Benefit Plans [Text Block]

Employee Benefit Plans

The Registrants’ net periodic cost, before considering amounts subject to overhead allocations for capital expenditure projects or for amounts subject to deferral for regulatory purposes, includes the following components relating to pension and postretirement benefits:

Pension Benefits (CenterPoint Energy)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in millions)
Service cost (1)	$	10	$	10	$	32	$	30
Interest cost (2)	18		25		56		73
Expected return on plan assets (2)	(28)		(27)		(85)		(79)
Amortization of prior service cost (2)	—		2		—		6
Amortization of net loss (2)	10		13		31		39
Settlement cost (2) (3)	1		1		2		2
Curtailment gain (2) (4)	—		—		—		(1)
Net periodic cost	$	11	$	24	$	36	$	70

(1)Amounts presented in the table above are included in Operation and maintenance expense in CenterPoint Energy’s Condensed Statements of Consolidated Income, net of amounts capitalized and regulatory deferrals.

(2)Amounts presented in the table above are included in Other income (expense), net in CenterPoint Energy’s Condensed Statements of Consolidated Income, net of regulatory deferrals.

(3)A one-time, non-cash settlement cost is required when the total lump sum distributions or other settlements of plan benefit obligations during a plan year exceed the service cost and interest cost components of the net periodic cost for that year. In each of the three and nine months ended September 30, 2020 and 2019, CenterPoint Energy recognized non-cash settlement costs due to lump sum settlement payments from Vectren pension plans.

(4)A curtailment gain or loss is required when the expected future services of a significant number of employees are reduced or eliminated for the accrual of benefits. In the nine months ended September 30, 2019, CenterPoint Energy recognized a pension curtailment gain related to Vectren employees whose employment was terminated after the Merger closed.

Postretirement Benefits

	Three Months Ended September 30,
	2020						2019
	CenterPoint Energy		Houston Electric		CERC		CenterPoint Energy		Houston Electric		CERC
	(in millions)
Service cost (1)	$	1	$	—	$	1	$	2	$	—	$	—
Interest cost (2)	2		1		—		4		1		2
Expected return on plan assets (2)	(1)		(1)		(1)		(3)		(1)		—
Amortization of prior service cost (credit) (2)	(1)		(1)		1		(1)		(1)		—
Net periodic cost (income)	$	1	$	(1)	$	1	$	2	$	(1)	$	2
	Nine Months Ended September 30,
	2020						2019
	CenterPoint Energy		Houston Electric		CERC		CenterPoint Energy		Houston Electric		CERC
	(in millions)
Service cost (1)	$	2	$	—	$	1	$	3	$	—	$	1
Interest cost (2)	8		4		2		12		5		4
Expected return on plan assets (2)	(4)		(3)		(1)		(6)		(3)		(1)
Amortization of prior service cost (credit) (2)	(3)		(4)		1		(3)		(4)		—
Net periodic cost (income)	$	3	$	(3)	$	3	$	6	$	(2)	$	4

(1)Amounts presented in the tables above are included in Operation and maintenance expense in each of the Registrants’ respective Condensed Statements of Consolidated Income, net of amounts capitalized and regulatory deferrals.

(2)Amounts presented in the tables above are included in Other income (expense), net in each of the Registrants’ respective Condensed Statements of Consolidated Income, net of regulatory deferrals.

The table below reflects the expected contributions to be made to the pension and postretirement benefit plans during 2020:

	CenterPoint Energy		Houston Electric		CERC
	(in millions)
Expected minimum contribution to pension plans during 2020	$	84	$	—	$	—
Expected contribution to postretirement benefit plans in 2020	11		3		3

The table below reflects the contributions made to the pension and postretirement benefit plans during 2020:

	Three Months Ended September 30, 2020						Nine Months Ended September 30, 2020
	CenterPoint Energy		Houston Electric		CERC		CenterPoint Energy		Houston Electric		CERC
	(in millions)
Pension plans	$	79	$	—	$	—	$	84	$	—	$	—
Postretirement benefit plans	2		1		1		8		3		2

COVID-19 Impacts. The uncertainties related to the COVID-19 pandemic have had a negative impact on financial markets, which has resulted in volatility of the fair value of plan assets during the nine months ended September 30, 2020. The Registrants remeasure the funded status of each plan as of December 31 each year, and at an interim period when a curtailment, settlement, or material plan amendment occurs. On the measurement date, actuarial gains or losses are recognized in accumulated other comprehensive income, or when cost is recovered through regulated rates, as a regulatory asset or liability. During the nine months ended September 30, 2020, the fair value of pension plan assets increased by approximately $115 million or 5.7% from December 31, 2019, excluding CenterPoint Energy’s contributions to, and benefit distributions

from, the pension plans. The fair value of pension plan assets on the plan remeasurement date impacts the funded status, net period cost, and the required cash contributions; however, changes to pension plan assets do not impact the Condensed Statements of Consolidated Income or Condensed Consolidated Balance Sheets in interim periods when a plan remeasurement is not required. An interim remeasurement of the plans is not required as a result of plan asset increase or decline in fair value, and therefore, an interim remeasurement did not occur during the nine months ended September 30, 2020 as a result of changes to plan asset fair value.