Income Taxes

3 Months Ended

Mar. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Registrants reported the following effective tax rates:

	Three Months Ended March 31,
	2023		2022
CenterPoint Energy (1)	19	%	27	%
Houston Electric (2)	23	%	22	%
CERC (3)	22	%	25	%

(1)CenterPoint Energy’s lower effective tax rate for the three months ended March 31, 2023 compared to the same periods ended March 31, 2022 was primarily driven by the decrease in state income taxes and the absence of the non-deductible goodwill associated with the sale of the Natural Gas businesses in Arkansas and Oklahoma in 2022 which is partially offset by the decrease in the amount of amortization of the net regulatory EDIT liability.

(2)Houston Electric’s higher effective tax rate for the three months ended March 31, 2023 compared to the same period in 2022 was primarily driven by an increase in state income taxes which is partially offset by an increase in the amount of amortization of the net regulatory EDIT liability.

(3)CERC’s lower effective tax rate for the three months ended March 31, 2023 compared to the same period ended March 31, 2022 was primarily driven by a decrease in state income taxes and the absence of the non-deductible goodwill associated with the sale of the Natural Gas businesses in Arkansas and Oklahoma in 2022 which is partially offset by the decrease in the amount of amortization of the net regulatory EDIT liability.

CenterPoint Energy reported a net uncertain tax liability, inclusive of interest and penalties, of $28 million as of March 31, 2023. 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 2019-2022 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.