
	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
CenterPoint Energy - Continuing operations (1) (2)	(9)	%	15	%	29	%	12	%
CenterPoint Energy - Discontinued operations (3) (4)	—	%	46	%	(13)	%	30	%
Houston Electric (5)	14	%	18	%	15	%	18	%
CERC - Continuing operations (6) (7)	60	%	23	%	13	%	9	%
CERC - Discontinued operations (8) (9)	33	%	40	%	3	%	21	%

(1)CenterPoint Energy’s lower effective tax rate on income from continuing operations for the three months ended September 30, 2020 compared to the three months ended September 30, 2019 was primarily driven by the recognition of additional tax benefit for increased NOL carryback claims under the CARES Act and the effects of the lower book earnings on other rate drivers in the three months ended September 30, 2020.

(2)CenterPoint Energy’s higher effective tax rate on the loss from continuing operations for the nine months ended September 30, 2020 compared to the income from continuing operations for the nine months ended September 30, 2019 was primarily due to lower earnings from the impairment of CenterPoint Energy’s investment in Enable. Other effective tax rate drivers include the tax benefit for the NOL carryback claims under the CARES Act, which was partially offset by the non-deductible goodwill impairment at the Indiana Electric Integrated reporting unit.

(3)CenterPoint Energy’s lower effective tax rate on the loss from discontinued operations for the three months ended September 30, 2020 compared to the income from discontinued operations for the three months ended September 30, 2019 was primarily due to lower book earnings in the three months ended September 30, 2020.

(4)CenterPoint Energy’s lower effective tax rate on the loss from discontinued operations for the nine months ended September 30, 2020 compared to the income from discontinued operations for the nine months ended September 30, 2019 was primarily due to the tax impacts from the sale of the Infrastructure Services Disposal Group on April 9, 2020 and the sale of the Energy Services Disposal Group on June 1, 2020, the effect of which was compounded by lower book earnings in the nine months ended September 30, 2020. See Note 3 for further information.

(5)Houston Electric’s lower effective tax rate for the three and nine months ended September 30, 2020 compared to the same periods for 2019 was primarily due to an increase in the amount of amortization of the net regulatory EDIT liability.

(6)CERC’s higher effective tax rate on the loss from continuing operations for the three months ended September 30, 2020 compared to the three months ended September 30, 2019 was driven by an increase in the amount of amortization of the net regulatory EDIT liability and a larger return-to-accrual tax benefit recognized in the three months ended September 30, 2020. These were partially offset by the absence of state deferred tax benefits as a result of certain state tax law changes and the release of a valuation allowance on certain state NOLs that were reported in the three months ended September 30, 2019.

(7)CERC’s higher effective tax rate on income from continuing operations for the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019 was driven by the absence of state deferred tax benefits as a result of certain state tax law changes and the release of a valuation allowance on certain state NOLs that were reported in the nine months ended September 30, 2019. These were partially offset by an increase in the amount of amortization of the net regulatory EDIT liability and a larger return-to-accrual tax benefit recognized in the nine months ended September 30, 2020.

(8)CERC’s lower effective tax rate on income from discontinued operations for the three months ended September 30, 2020 compared to the income from discontinued operations for the three months ended September 30, 2019 was primarily due to lower book earnings in the three months ended September 30, 2020.

(9)CERC’s lower effective tax rate on the loss from discontinued operations for the nine months ended September 30, 2020 compared to the income from discontinued operations for the nine months ended September 30, 2019 was primarily due to the tax impacts of the sale of the Energy Services Disposal Group on June 1, 2020, the effect of which was compounded by lower book earnings in the nine months ended September 30, 2020. See Note 3 for further information.

On March 27, 2020, the CARES Act was enacted in response to the COVID-19 pandemic. The CARES Act provides relief to corporate taxpayers by permitting a five-year carryback of 2018-2020 NOLs, deferring the payment of the employer share of payroll taxes for the remaining months of 2020 until 2021 and 2022, increasing the 30% limitation on interest expense deductibility to 50% of adjusted taxable income for 2019 and 2020, and accelerating refunds for minimum tax credit carryforwards, among other provisions. As such, during the nine months ended September 30, 2020, CenterPoint Energy recorded a $37 million benefit resulting from carryback claims to be filed to refund taxes paid.

CenterPoint Energy reported a net uncertain tax liability, inclusive of interest and penalties, of $9 million as of September 30, 2020. The reserve has net zero change for the nine month period ending September 30, 2020. The Registrants believe that it is reasonably possible that a decrease of up to $5 million in unrecognized tax benefits may occur in the next 12 months as a result of a lapse of statutes on older exposures and/or the filing of applications for accounting method changes. For CenterPoint Energy, tax years through 2018 have been audited and settled with the IRS. For the 2019 and 2020 tax years, CenterPoint Energy is a participant in the IRS’s Compliance Assurance Process. Legacy Vectren is not currently under audit with the IRS, and the 2017-2019 tax years are still open for examination.