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Income Taxes
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The components of the Registrant’s income tax expense (benefit) were as follows:
Year Ended December 31,
202220212020
(in millions)
CenterPoint Energy - Continuing Operations
Current income tax expense (benefit):
Federal$294 $— $(36)
State46 (28)32 
Total current expense (benefit)340 (28)(4)
Deferred income tax expense (benefit):
Federal16 78 63 
State4 60 21 
Total deferred expense 20 138 84 
Total income tax expense$360 $110 $80 
CenterPoint Energy - Discontinued Operations
Current income tax expense:
Federal$— $91 $152 
State— 35 28 
Total current expense— 126 180 
Deferred income tax expense (benefit):
Federal— 127 (422)
State— (52)(91)
Total deferred expense (benefit)— 75 (513)
Total income tax expense (benefit)$— $201 $(333)
Houston Electric
Current income tax expense:
Federal$23 $22 $76 
State16 22 19 
Total current expense39 44 95 
Deferred income tax expense (benefit):
Federal86 31 (42)
State— 1 — 
Total deferred expense (benefit)86 32 (42)
Total income tax expense$125 $76 $53 
CERC - Continuing Operations
Current income tax expense (benefit):
Federal$30 $— $— 
State28 (25)2 
Total current expense (benefit)58 (25)2 
Deferred income tax expense (benefit):
Federal164 67 42 
State14 34 73 
Total deferred expense (benefit)178 101 115 
Total income tax expense (benefit)$236 $76 $117 
Year Ended December 31,
202220212020
(in millions)
CERC - Discontinued Operations
Current income tax expense:
Federal$— $— $— 
State— — — 
Total current expense— — — 
Deferred income tax expense (benefit):
Federal— — — 
State— — (2)
Total deferred expense (benefit)— — (2)
Total income tax expense (benefit)$— $— $(2)

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,
202220212020
(in millions)
CenterPoint Energy - Continuing Operations (1) (2) (3)
Income before income taxes$1,417 $778 $563 
Federal statutory income tax rate21 %21 %21 %
Expected federal income tax expense298 163 118 
Increase (decrease) in tax expense resulting from:
State income tax expense, net of federal income tax46 63 40 
State valuation allowance, net of federal income tax— (15)1 
State law change, net of federal income tax— (23)— 
Excess deferred income tax amortization(51)(75)(76)
Goodwill impairment84 — 39 
Net operating loss carryback — — (37)
Other, net(17)(3)(5)
Total62 (53)(38)
Total income tax expense$360 $110 $80 
Effective tax rate25 %14 %14 %
CenterPoint Energy - Discontinued Operations (4)(5)
Income (loss) before income taxes $— $1,019 $(1,589)
Federal statutory income tax rate— %21 %21 %
Expected federal income tax expense (benefit)— 214 (334)
Increase (decrease) in tax expense resulting from:
State income tax expense, net of federal income tax— 14 (60)
State law change, net of federal income tax— (27)— 
Goodwill impairment— — 25 
Tax impact of sale of Energy Services and Infrastructure Services Disposal Groups— — 30 
Other, net— — 6 
Total— (13)1 
Total income tax expense (benefit)$— $201 $(333)
Effective tax rate— %20 %21 %
Year Ended December 31,
202220212020
(in millions)
Houston Electric (6) (7) (8)
Income before income taxes$635 $457 $387 
Federal statutory income tax rate21 %21 %21 %
Expected federal income tax expense133 96 81 
Increase (decrease) in tax expense resulting from:
State income tax expense, net of federal income tax13 18 15 
Excess deferred income tax amortization(18)(41)(42)
Other, net(3)3 (1)
Total(8)(20)(28)
Total income tax expense$125 $76 $53 
Effective tax rate20 %17 %14 %
CERC - Continuing Operations (9) (10) (11)
Income before income taxes$961 $466 $382 
Federal statutory income tax rate21 %21 %21 %
Expected federal income tax expense202 98 80 
Increase (decrease) in tax expense resulting from:
State income tax expense, net of federal income tax35 31 59 
State law change, net of federal income tax— (9)— 
State valuation allowance, net of federal income tax— (15)1 
Excess deferred income tax amortization(28)(30)(29)
Goodwill Impairment30 — — 
Other, net(3)1 6 
Total34 (22)37 
Total income tax expense (benefit)$236 $76 $117 
Effective tax rate25 %16 %31 %
CERC - Discontinued Operations (12)
Income (loss) before income taxes$— $— $(68)
Federal statutory income tax rate— %— %21 %
Expected federal income tax expense (benefit)— — (14)
Increase in tax expense resulting from:
State income tax expense, net of federal income tax— — (2)
Goodwill impairment— — 10 
Other, net— — 4 
Total— — 12 
Total income tax expense (benefit)$— $— $(2)
Effective tax rate— %— %3 %

(1)Recognized a $51 million benefit for the amortization of the net regulatory EDIT liability as decreed by regulators in certain jurisdictions, and a $84 million expense for the goodwill impairment on the Arkansas and Oklahoma Natural Gas business sale.
(2)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.
(3)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.
(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 $18 million benefit for the amortization of the net regulatory EDIT liability as decreed by regulators in certain jurisdictions.
(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 $28 million benefit for the amortization of the net regulatory EDIT liability as decreed by regulators in certain jurisdictions, and a $30 million expense for the goodwill impairment on the Arkansas and Oklahoma Natural Gas business sale.
(10)Recognized a $9 million benefit for the impact of state law changes that resulted in the remeasurement of state deferred taxes in those jurisdictions, a $30 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 $29 million benefit for the amortization of the net regulatory EDIT liability as decreed by regulatory in certain jurisdictions.
(12)Recognized a $10 million deferred tax expense for the non-deductible portion of the goodwill impairment on the Energy Services Disposal Group.

The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities were as follows:
December 31,
20222021
(in millions)
CenterPoint Energy
Deferred tax assets:
Benefits and compensation$121 $120 
Regulatory liabilities378 396 
Loss and credit carryforwards84 76 
Asset retirement obligations95 130 
Indexed debt securities derivative— 36 
Investment in unconsolidated affiliates— 1 
Other49 50 
Valuation allowance(10)(11)
Total deferred tax assets717 798 
Deferred tax liabilities:
Property, plant and equipment3,228 2,912 
Regulatory assets601 741 
Investment in ZENS and equity securities related to ZENS722 693 
Investment in equity securities— 195 
Other152 161 
Total deferred tax liabilities4,703 4,702 
Net deferred tax liabilities$3,986 $3,904 
December 31,
20222021
(in millions)
Houston Electric
Deferred tax assets:
Regulatory liabilities$184 $175 
Benefits and compensation10 13 
Asset retirement obligations6 9 
Other13 10 
Total deferred tax assets213 207 
Deferred tax liabilities:
Property, plant and equipment1,330 1,215 
Regulatory assets112 114 
Total deferred tax liabilities1,442 1,329 
Net deferred tax liabilities$1,229 $1,122 
CERC
Deferred tax assets:
Benefits and compensation$9 $17 
Regulatory liabilities151 181 
Loss and credit carryforwards466 585 
Asset retirement obligations86 118 
Other25 30 
Total deferred tax assets737 931 
Deferred tax liabilities:
Property, plant and equipment1,427 1,264 
Regulatory assets381 536 
Other191 159 
Total deferred tax liabilities1,999 1,959 
Net deferred tax liabilities$1,262 $1,028 

Tax Attribute Carryforwards and Valuation Allowance.  CenterPoint Energy has no federal NOL carryforwards and no federal charitable contribution carryforwards as of December 31, 2022. As of December 31, 2022, CenterPoint Energy had $1.1 billion of state NOL carryforwards that expire between 2023 and 2042, and $17 million of state tax credits that do not expire. CenterPoint Energy reported a valuation allowance of $10 million because it is more likely than not that the benefit from certain state NOL carryforwards will not be realized.

CERC has $1.8 billion of federal NOL carryforwards which have an indefinite carryforward period. CERC has $827 million of gross state NOL carryforwards which expire between 2023 and 2042 and $17 million of state tax credits which do not expire.

A reconciliation of CenterPoint Energy’s beginning and ending balance of unrecognized tax benefits, excluding interest and penalties, for 2022 and 2021 are as follows:
Year Ended December 31,
20222021
(in millions)
Balance, beginning of year$3 $7 
   Increases related to tax positions of prior years26 — 
   Decreases related to tax positions of prior years(3)(4)
Balance, end of year$26 $3 

CenterPoint Energy’s net unrecognized tax benefits, including penalties and interest, were $28 million as of December 31, 2022 and are included in other non-current liabilities in the Consolidated Financial Statements. Included in the balance of uncertain tax positions as of December 31, 2022 are $26 million of tax benefits that, if recognized, would affect the effective
tax rate. The Registrants recognize interest accrued related to unrecognized tax benefits and penalties as income tax expense. The above table does not include $2 million of accrued penalties and interest as of December 31, 2022. The Registrants believe that it is reasonably possible that there will be no change in unrecognized tax benefits, including penalties and interest, in the next 12 months as a result of a lapse of statutes on older exposures, a tax settlement, and/or a resolution of open audits.Tax Audits and Settlements. Tax years through 2018 have been audited and settled with the IRS for CenterPoint Energy. For the 2019-2021 tax years, the Registrants are participants in the IRS’s Compliance Assurance Process. Vectren’s pre-Merger 2014-2019 tax years have been audited and settled with the IRS.