Income Taxes (Tables)

12 Months Ended

Dec. 31, 2023

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


	Year Ended December 31,
	2023		2022		2021
	(in millions)
CenterPoint Energy - Continuing Operations
Current income tax expense (benefit):
Federal	$	106	$	294	$	—
State	33		46		(28)
Total current expense (benefit)	139		340		(28)
Deferred income tax expense (benefit):
Federal	119		16		78
State	(88)		4		60
Total deferred expense	31		20		138
Total income tax expense	$	170	$	360	$	110

CenterPoint Energy - Discontinued Operations
Current income tax expense:
Federal	$	—	$	—	$	91
State	—		—		35
Total current expense	—		—		126
Deferred income tax expense (benefit):
Federal	—		—		127
State	—		—		(52)
Total deferred expense (benefit)	—		—		75
Total income tax expense (benefit)	$	—	$	—	$	201

Houston Electric
Current income tax expense (benefit):
Federal	$	(26)	$	23	$	22
State	34		16		22
Total current expense	8		39		44
Deferred income tax expense (benefit):
Federal	159		86		31
State	1		—		1
Total deferred expense (benefit)	160		86		32
Total income tax expense	$	168	$	125	$	76


CERC - Continuing Operations
Current income tax expense (benefit):
Federal	$	12	$	30	$	—
State	3		28		(25)
Total current expense (benefit)	15		58		(25)
Deferred income tax expense (benefit):
Federal	95		164		67
State	(136)		14		34
Total deferred expense (benefit)	(41)		178		101
Total income tax expense (benefit)	$	(26)	$	236	$	76

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,
	2023			2022			2021
	(in millions)
CenterPoint Energy - Continuing Operations (1) (2) (3)
Income before income taxes	$	1,087		$	1,417		$	778
Federal statutory income tax rate	21		%	21		%	21		%
Expected federal income tax expense	228			298			163
Increase (decrease) in tax expense resulting from:
State income tax expense, net of federal income tax	25			46			63
State valuation allowance, net of federal income tax	—			—			(15)
State law change, net of federal income tax	(69)			—			(23)

Equity AFUDC	(13)			(8)			(6)
Excess deferred income tax amortization	(44)			(51)			(75)
Goodwill impairment	—			84			—

Sale of Energy Systems Group	28			—			—
Other, net	15			(9)			3
Total	(58)			62			(53)
Total income tax expense	$	170		$	360		$	110
Effective tax rate	16		%	25		%	14		%
CenterPoint Energy - Discontinued Operations (4)
Income before income taxes	$	—		$	—		$	1,019
Federal statutory income tax rate	—		%	—		%	21		%
Expected federal income tax expense	—			—			214
Increase (decrease) in tax expense resulting from:
State income tax expense, net of federal income tax	—			—			14

State law change, net of federal income tax	—			—			(27)






Total	—			—			(13)
Total income tax expense	$	—		$	—		$	201
Effective tax rate	—		%	—		%	20		%
Houston Electric (5) (6) (7)
Income before income taxes	$	761		$	635		$	457
Federal statutory income tax rate	21		%	21		%	21		%
Expected federal income tax expense	160			133			96
Increase (decrease) in tax expense resulting from:
State income tax expense, net of federal income tax	27			13			18


Excess deferred income tax amortization	(17)			(18)			(41)
Other, net	(2)			(3)			3
Total	8			(8)			(20)
Total income tax expense	$	168		$	125		$	76
Effective tax rate	22		%	20		%	17		%


	Year Ended December 31,
	2023			2022			2021
	(in millions)
CERC - Continuing Operations (8) (9) (10)
Income before income taxes	$	486		$	961		$	466
Federal statutory income tax rate	21		%	21		%	21		%
Expected federal income tax expense	102			202			98
Increase (decrease) in tax expense resulting from:
State income tax expense, net of federal income tax	(40)			35			31
State law change, net of federal income tax	(66)			—			(9)
State valuation allowance, net of federal income tax	—			—			(15)

Goodwill impairment	—			30			—
Excess deferred income tax amortization	(23)			(28)			(30)

Other, net	1			(3)			1
Total	(128)			34			(22)
Total income tax expense (benefit)	$	(26)		$	236		$	76
Effective tax rate	(5)		%	25		%	16		%

(1)Recognized a $69 million benefit for the impact of state apportionment changes that resulted in the remeasurement of state deferred taxes of the unitary group, a $44 million benefit for the amortization of the net regulatory EDIT liability as decreed by regulators in certain jurisdictions, a $13 million benefit for the impact of AFUDC equity, and a $28 million expense for the gain on the Energy Systems Group sale.

(2)Recognized a $51 million benefit for the amortization of the net regulatory EDIT liability as decreed by regulators in certain jurisdictions, an $8 million benefit for the impact of AFUDC equity, and a $84 million expense for the goodwill impairment on the Arkansas and Oklahoma Natural Gas business sale.

(3)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, a $6 million benefit for the impact of AFUDC equity, 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.

(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 $17 million benefit for the amortization of the net regulatory EDIT liability as decreed by regulators in certain jurisdictions.

(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 $66 million benefit for the impact of state apportionment changes that resulted in the remeasurement of state deferred taxes of the unitary group, and a $23 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.

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,
	2023		2022
	(in millions)
CenterPoint Energy
Deferred tax assets:
Benefits and compensation	$	131	$	121
Regulatory liabilities	365		378
Loss and credit carryforwards	76		84
Asset retirement obligations	96		95


Other	124		49
Valuation allowance	(10)		(10)
Total deferred tax assets	782		717
Deferred tax liabilities:
Property, plant and equipment	3,580		3,228

Regulatory assets	401		601
Investment in ZENS and equity securities related to ZENS	788		722

Other	92		152
Total deferred tax liabilities	4,861		4,703
Net deferred tax liabilities	$	4,079	$	3,986

Houston Electric
Deferred tax assets:
Benefits and compensation	$	10	$	10

Regulatory liabilities	176		184
Asset retirement obligations	6		6
Other	18		13
Total deferred tax assets	210		213
Deferred tax liabilities:
Property, plant and equipment	1,497		1,330
Regulatory assets	119		112

Total deferred tax liabilities	1,616		1,442
Net deferred tax liabilities	$	1,406	$	1,229
CERC
Deferred tax assets:
Benefits and compensation	$	21	$	9
Regulatory liabilities	145		151
Loss and credit carryforwards	276		466
Asset retirement obligations	86		86
Other	65		25

Total deferred tax assets	593		737
Deferred tax liabilities:
Property, plant and equipment	1,602		1,427
Regulatory assets	171		381
Other	66		191
Total deferred tax liabilities	1,839		1,999
Net deferred tax liabilities	$	1,246	$	1,262

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 2023 and 2022 are as follows:


	Year Ended December 31,
	2023		2022
	(in millions)
Balance, beginning of year	$	26	$	3



Increases related to tax positions of prior years	—		26
Decreases related to tax positions of prior years	—		(3)

Lapse of statute of limitations	(1)		—

Balance, end of year	$	25	$	26