Income Taxes (Tables)

12 Months Ended

Dec. 31, 2021

The components of the Registrant’s income tax expense (benefit) were as follows:


	Year Ended December 31,
	2021		2020		2019
	(in millions)
CenterPoint Energy - Continuing Operations
Current income tax expense (benefit):
Federal	$	—	$	(36)	$	(6)
State	(28)		32		13
Total current expense (benefit)	(28)		(4)		7
Deferred income tax expense (benefit):
Federal	78		63		48
State	60		21		(25)
Total deferred expense	138		84		23
Total income tax expense	$	110	$	80	$	30


	Year Ended December 31,
	2021		2020		2019
	(in millions)
CenterPoint Energy - Discontinued Operations
Current income tax expense:
Federal	$	91	$	152	$	54
State	35		28		8
Total current expense	126		180		62
Deferred income tax expense (benefit):
Federal	127		(422)		26
State	(52)		(91)		20
Total deferred expense (benefit)	75		(513)		46
Total income tax expense (benefit)	$	201	$	(333)	$	108
Houston Electric
Current income tax expense:
Federal	$	22	$	76	$	84
State	22		19		20
Total current expense	44		95		104
Deferred income tax expense (benefit):
Federal	31		(42)		(24)
State	1		—		—
Total deferred expense (benefit)	32		(42)		(24)
Total income tax expense	$	76	$	53	$	80

CERC - Continuing Operations
Current income tax expense (benefit):
State	$	(26)	$	4	$	5
Total current expense (benefit)	(26)		4		5
Deferred income tax expense (benefit):
Federal	49		26		26
State	28		67		(34)
Total deferred expense (benefit)	77		93		(8)
Total income tax expense (benefit)	$	51	$	97	$	(3)

CERC - Discontinued Operations
Current income tax expense:
State	—		—		2
Total current expense	—		—		2
Deferred income tax expense (benefit):
Federal	—		—		13
State	—		(2)		2
Total deferred expense (benefit)	—		(2)		15
Total income tax expense (benefit)	$	—	$	(2)	$	17

Reconciliation of Expected Federal Income Tax Expense to Actual

A reconciliation of income tax expense (benefit) using the federal statutory income tax rate to the actual income tax expense and resulting effective income tax rate is as follows:


	Year Ended December 31,
	2021			2020			2019
	(in millions)
CenterPoint Energy - Continuing Operations (1) (2) (3)
Income before income taxes	$	778		$	563		$	545
Federal statutory income tax rate	21		%	21		%	21		%
Expected federal income tax expense	163			118			114
Increase (decrease) in tax expense resulting from:
State income tax expense, net of federal income tax	63			40			27
State valuation allowance, net of federal income tax	(15)			1			(4)
State law change, net of federal income tax	(23)			—			(33)

Excess deferred income tax amortization	(75)			(76)			(55)
Goodwill impairment	—			39			—
Net operating loss carryback	—			(37)			—
Other, net	(3)			(5)			(19)
Total	(53)			(38)			(84)
Total income tax expense	$	110		$	80		$	30
Effective tax rate	14		%	14		%	6		%
CenterPoint Energy - Discontinued Operations (4)(5) (6)
Income (loss) before income taxes	$	1,019		$	(1,589)		$	384
Federal statutory income tax rate	21		%	21		%	21		%
Expected federal income tax expense (benefit)	214			(334)			81
Increase (decrease) in tax expense resulting from:
State income tax expense, net of federal income tax	14			(60)			9

State law change, net of federal income tax	(27)			—			12
Goodwill impairment	—			25			8
Tax impact of sale of Energy Services and Infrastructure Services Disposal Groups	—			30			—
Other, net	—			6			(2)



Total	(13)			1			27
Total income tax expense (benefit)	$	201		$	(333)		$	108
Effective tax rate	20		%	21		%	28		%
Houston Electric (7) (8) (9)
Income before income taxes	$	457		$	387		$	436
Federal statutory income tax rate	21		%	21		%	21		%
Expected federal income tax expense	96			81			92
Increase (decrease) in tax expense resulting from:
State income tax expense, net of federal income tax	18			15			16


Excess deferred income tax amortization	(41)			(42)			(21)
Other, net	3			(1)			(7)
Total	(20)			(28)			(12)
Total income tax expense	$	76		$	53		$	80
Effective tax rate	17		%	14		%	18		%


	Year Ended December 31,
	2021			2020			2019
	(in millions)
CERC - Continuing Operations (10) (11) (12)
Income before income taxes	$	305		$	244		$	186
Federal statutory income tax rate	21		%	21		%	21		%
Expected federal income tax expense	64			51			39
Increase (decrease) in tax expense resulting from:
State income tax expense, net of federal income tax	33			55			(15)
State law change, net of federal income tax	(15)			—			(4)
State valuation allowance, net of federal income tax	(15)			1			(4)


Excess deferred income tax amortization	(16)			(16)			(18)

Other, net	—			6			(1)
Total	(13)			46			(42)
Total income tax expense (benefit)	$	51		$	97		$	(3)
Effective tax rate	17		%	40		%	(2)		%
CERC - Discontinued Operations (13) (14)
Income (loss) before income taxes	$	—		$	(68)		$	40
Federal statutory income tax rate	—		%	21		%	21		%
Expected federal income tax expense (benefit)	—			(14)			8
Increase in tax expense resulting from:
State income tax expense, net of federal income tax	—			(2)			3


Goodwill impairment	—			10			8


Other, net	—			4			(2)
Total	—			12			9
Total income tax expense (benefit)	$	—		$	(2)		$	17
Effective tax rate	—		%	3		%	43		%

(1)Recognized a $75 million benefit for the amortization of the net regulatory EDIT liability as decreed by regulators in certain jurisdictions, a $23 million benefit for the impact of state law changes that resulted in the remeasurement of state deferred taxes in those jurisdictions, and a $15 million benefit for the impact of a change in the NOL carryforward period in Louisiana from 20 years to an indefinite period allowing for the release of the valuation allowance on certain Louisiana NOLs.

(2)Recognized a $76 million benefit for the amortization of the net regulatory EDIT liability as decreed by regulators in certain jurisdictions, a $39 million deferred tax expense for the non-deductible portion of the goodwill impairment on SIGECO, and a $37 million benefit for the NOL carryback claim allowed by the CARES Act.

(3)Recognized a $55 million benefit for the amortization of the net regulatory EDIT liability as decreed by regulators in certain jurisdictions, a $33 million net benefit for the impact of state law changes that resulted in the remeasurement of state deferred taxes in those jurisdictions, and a $4 million net benefit for the reduction in valuation allowances on certain state NOLs that are now expected to be realized.

(4)Recognized a $27 million benefit for the impact of state law changes that resulted in the remeasurement of state deferred taxes in those jurisdictions.

(5)Recognized a $25 million deferred tax expense for the non-deductible portion of the goodwill impairment on both the Energy Services and Infrastructure Services Disposal Groups. Also, recognized a $30 million net tax expense on both the sale of the Energy Services and Infrastructure Services Disposal Groups.

(6)Recognized a $12 million deferred tax expense for the impact of state law changes that resulted in the remeasurement of state deferred taxes in those jurisdictions, and an $8 million deferred tax expense for the non-deductible portion of the goodwill impairment on the Energy Services Disposal Group.

(7)Recognized a $41 million benefit for the amortization of the net regulatory EDIT liability as decreed by regulators in certain jurisdictions.

(8)Recognized a $42 million benefit for the amortization of the net regulatory EDIT liability as decreed by regulators in certain jurisdictions.

(9)Recognized a $21 million benefit for the amortization of the net regulatory EDIT liability as decreed by regulators in certain jurisdictions.

(10)Recognized a $15 million benefit for the impact of state law changes that resulted in the remeasurement of state deferred taxes in those jurisdictions, a $16 million benefit for the amortization of the net regulatory EDIT liability as decreed by regulators in certain jurisdictions, and a $15 million benefit for the impact of a change in the NOL carryforward period in Louisiana from 20 years to an indefinite period allowing for the release of the valuation allowance on certain Louisiana NOLs.

(11)Recognized a $16 million benefit for the amortization of the net regulatory EDIT liability as decreed by regulatory in certain jurisdictions.

(12)Recognized an $18 million benefit for the amortization of the net regulatory EDIT liability as decreed by regulators in certain jurisdictions, a $4 million net benefit for the impact of state law changes that resulted in the remeasurement of state deferred taxes in those jurisdictions and a $4 million net benefit for the reduction in valuation allowances on certain state NOLs that are now expected to be realized.

(13)Recognized a $10 million deferred tax expense for the non-deductible portion of the goodwill impairment on the Energy Services Disposal Group.

(14)Recognized an $8 million deferred tax expense for the non-deductible portion of the goodwill impairment on the Energy Services Disposal Group.

Tax Assets and Liabilities

The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities were as follows:


	December 31,
	2021		2020
	(in millions)
CenterPoint Energy
Deferred tax assets:
Benefits and compensation	$	120	$	141
Regulatory liabilities	396		435
Loss and credit carryforwards	76		103
Asset retirement obligations	130		152
Indexed debt securities derivative	36		47
Investment in unconsolidated affiliates	1		—
Other	50		52
Valuation allowance	(11)		(26)
Total deferred tax assets	798		904
Deferred tax liabilities:
Property, plant and equipment	2,912		2,790
Investment in unconsolidated affiliates	—		624
Regulatory assets	741		325
Investment in ZENS and equity securities related to ZENS	693		649
Investment in equity securities	195		—
Other	161		119
Total deferred tax liabilities	4,702		4,507
Net deferred tax liabilities	$	3,904	$	3,603

Houston Electric
Deferred tax assets:
Regulatory liabilities	$	175	$	201
Benefits and compensation	13		17
Asset retirement obligations	9		9
Other	10		9
Total deferred tax assets	207		236
Deferred tax liabilities:
Property, plant and equipment	1,215		1,159
Regulatory assets	114		118

Total deferred tax liabilities	1,329		1,277
Net deferred tax liabilities	$	1,122	$	1,041


	December 31,
	2021		2020
	(in millions)
CERC
Deferred tax assets:
Benefits and compensation	$	25	$	28
Regulatory liabilities	139		147
Loss and credit carryforwards	571		143
Asset retirement obligations	118		140
Other	26		26
Valuation allowance	—		(15)
Total deferred tax assets	879		469
Deferred tax liabilities:
Property, plant and equipment	948		916
Regulatory assets	514		53
Other	97		84
Total deferred tax liabilities	1,559		1,053
Net deferred tax liabilities	$	680	$	584

Schedule of Unrecognized Tax Benefits Roll Forward

A reconciliation of CenterPoint Energy’s beginning and ending balance of unrecognized tax benefits, excluding interest and penalties, for 2021 and 2020 are as follows:


	Year Ended December 31,
	2021		2020
	(in millions)
Balance, beginning of year	$	7	$	8



Increases related to tax positions of prior years	—		3
Decreases related to tax positions of prior years	(4)		(4)


Balance, end of year	$	3	$	7