The Registrants are exposed to various market risks. These risks arise from transactions entered into in the normal course of business. The Registrants, from time to time, utilize derivative instruments such as swaps and options to mitigate the impact of changes in commodity prices, weather and interest rates on operating results and cash flows.

Commodity Derivative Instruments (CenterPoint Energy and CERC). CenterPoint Energy and CERC, through the Indiana Utilities they respectively own, enter into certain derivative instruments to mitigate the effects of commodity price movements. Outstanding derivative instruments designated as economic hedges at the Indiana Utilities hedge long-term variable rate natural gas purchases. The Indiana Utilities have authority to refund and recover mark-to-market gains and losses associated with hedging natural gas purchases, and thus the gains and losses on derivatives are deferred in a regulatory liability or asset. All other financial instruments do not qualify or are not designated as cash flow or fair value hedges.

Interest Rate Risk Derivative Instruments (CenterPoint Energy and Houston Electric). From time to time, the Registrants may enter into interest rate derivatives that are designated as economic or cash flow hedges. The objective of these hedges is to offset risk associated with interest rates borne by the Registrants in connection with an anticipated future fixed rate debt offering or other exposure to variable rate debt. Houston Electric and the Indiana Utilities have authority to refund and recover mark-to-market gains and losses associated with hedging financing activity, and thus the gains and losses on derivatives are deferred in a regulatory liability or asset.


	June 30, 2024		December 31, 2023
Hedging Classification	Notional Principal

	(in millions)
CenterPoint Energy:

Cash flow hedge (1) (2)	$	—	$	200
Houston Electric:
Cash flow hedge (2)	$	—	$	100

(1)Relates to interest rate derivative instruments at CenterPoint Energy with a termination date of December 31, 2029. The interest rate swap agreements were designated as cash flow hedges of forecasted transactions. CenterPoint Energy records all changes in the fair value of cash flow hedges in accumulated other comprehensive income (loss) until the underlying hedged transaction occurs, when it reclassifies that amount into earnings.

(2)Relates to interest rate derivative instruments at Houston Electric with a termination date of June 28, 2024. The interest rate treasury lock agreements were designated as cash flow hedges of forecasted transactions. Houston Electric records all changes in the fair value of cash flow hedges to a regulatory asset or liability, which is amortized over the life of the associated debt being hedged.

CenterPoint Energy and Houston Electric had no outstanding interest rate derivatives designated as cash flow hedges as of June 30, 2024. CenterPoint Energy’s interest rate derivatives designated as cash flow hedges were not material as of December 31, 2023 and were included in current Non-trading derivative liabilities on CenterPoint Energy’s Condensed Consolidated Balance Sheets. Houston Electric’s interest rate derivatives designated as cash flow hedges were not material as of December 31, 2023 and were included in Prepaid expenses and other current assets on Houston Electric’s Condensed Consolidated Balance Sheets.

The following tables provide a balance sheet overview of CenterPoint Energy’s derivative assets and liabilities as well as its offsetting of natural gas derivative activity in the periods presented:


		June 30, 2024				December 31, 2023
	Balance Sheet Location	Derivative Assets Fair Value		Derivative Liabilities Fair Value		Derivative Assets Fair Value		Derivative Liabilities Fair Value
CenterPoint Energy:		(in millions)




Derivatives not designated as hedging instruments:
Natural gas derivatives (1)	Current Liabilities: Non-trading derivative liabilities	$	—	$	4	$	—	$	9
Natural gas derivatives (1)	Other Liabilities: Non-trading derivative liabilities	—		1		—		3





Indexed debt securities derivative (2)	Current Liabilities	—		538		—		605

	Total	$	—	$	543	$	—	$	617

(1)As of June 30, 2024 and December 31, 2023, the notional volume of natural gas derivatives were 32,251 MMBtu per day and 27,421 MMBtu per day, respectively.

(2)Derivative component of the ZENS obligation that represents the ZENS holder’s option to receive the appreciated value of the reference shares at maturity and other payments to which they may be entitled. See Note 10 for further information.


	June 30, 2024						December 31, 2023
	Gross Amounts Recognized		Gross Amount Offset		Net Amount		Gross Amounts Recognized		Gross Amount Offset		Net Amount
CenterPoint Energy:	(in millions)
Assets
Current Assets: Non-trading derivative assets	$	2	$	(2)	$	—	$	—	$	—	$	—
Total Assets	$	2	$	(2)	$	—	$	—	$	—	$	—

Liabilities
Current Liabilities: Non-trading derivative liabilities	$	6	$	(2)	$	4	$	9	$	—	$	9
Other Liabilities: Non-trading derivative liabilities	1		—		1		3		—		3
Total Liabilities	$	7	$	(2)	$	5	$	12	$	—	$	12

The following tables provide a balance sheet overview of CERC’s derivative assets and liabilities as well as its offsetting of natural gas derivative activity in the periods presented:


		June 30, 2024				December 31, 2023
	Balance Sheet Location	Derivative Assets Fair Value		Derivative Liabilities Fair Value		Derivative Assets Fair Value		Derivative Liabilities Fair Value
CERC:		(in millions)




Derivatives not designated as hedging instruments:
Natural gas derivatives (1)	Current Liabilities: Non-trading derivative liabilities	$	—	$	3	$	—	$	8
Natural gas derivatives (1)	Other Liabilities: Non-trading derivative liabilities	—		1		—		3






	Total	$	—	$	4	$	—	$	11

(1)As of June 30, 2024 and December 31, 2023, the notional volume of natural gas derivatives were 27,644 MMBtu per day and 23,504 MMBtu per day, respectively.


	June 30, 2024						December 31, 2023
	Gross Amounts Recognized		Gross Amount Offset		Net Amount		Gross Amounts Recognized		Gross Amount Offset		Net Amount
CERC:	(in millions)
Assets
Current Assets: Non-trading derivative assets	$	2	$	(2)	$	—	$	—	$	—	$	—
Total Assets	$	2	$	(2)	$	—	$	—	$	—	$	—

Liabilities
Current Liabilities: Non-trading derivative liabilities	$	5	$	(2)	$	3	$	8	$	—	$	8
Other Liabilities: Non-trading derivative liabilities	1		—		1		3		—		3
Total Liabilities	$	6	$	(2)	$	4	$	11	$	—	$	11


		Three Months Ended June 30,				Six Months Ended June 30,
	Income Statement Location	2024		2023		2024		2023
CenterPoint Energy:						(in millions)
Derivatives not designated as hedging instruments:
Indexed debt securities derivative (1)	Gain (loss) on indexed debt securities	$	(18)	$	34	$	67	$	(5)

(1)The indexed debt securities derivative is recorded at fair value and changes in the fair value are recorded in CenterPoint Energy’s Condensed Statements of Consolidated Income.

Certain of CenterPoint Energy’s and CERC’s derivative instruments contain provisions that require CenterPoint Energy and CERC to maintain an investment grade credit rating on their respective long-term unsecured unsubordinated debt from S&P and Moody’s. If CenterPoint Energy’s or CERC’s debt were to fall below investment grade, it would be in violation of these provisions, and the counterparties to the derivative instruments could request immediate payment or additional collateral. The table below sets forth additional detail for the periods presented: