Employee Benefit Plans

6 Months Ended

Jun. 30, 2019

Employee Benefit Plans

As a result of the Merger, CenterPoint Energy now maintains three additional qualified defined benefit pension plans which are closed to new participants, a non-qualified SERP and a postretirement benefit plan. The defined benefit pension plans cover eligible full-time regular employees of Vectren and are primarily non-contributory. The postretirement benefit plan provides health care and life insurance benefits to certain Vectren retirees, which are a combination of self-insured and fully insured programs, to eligible retirees on both a contributory and non-contributory basis.

CenterPoint Energy, through its Infrastructure Services reportable segment, participates in several industry wide multi-employer pension plans for its collective bargaining employees which provide for monthly benefits based on length of service. The risks of participating in multi-employer pension plans are different from the risks of participating in single-employer pension plans in the following respects: (1) assets contributed to the multi-employer plan by one employer may be used to provide benefits to employees of other participating employers, (2) if a participating employer stops contributing to the plan, the unfunded obligations

of the plan allocable to such withdrawing employer may be borne by the remaining participating employers and (3) if CenterPoint Energy stops participation in some of its multi-employer pension plans, CenterPoint Energy may be required to pay those plans an amount based on its allocable share of the underfunded status of the plan, referred to as a withdrawal liability.

CenterPoint Energy, through Vectren, also acquired additional defined contribution retirement savings plans qualified under sections 401(a) and 401(k) of the Internal Revenue Code.

The Registrants’ net periodic cost, before considering amounts subject to overhead allocations for capital expenditure projects or for amounts subject to deferral for regulatory purposes, includes the following components relating to pension and postretirement benefits:

Pension Benefits (CenterPoint Energy)



	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
	(in millions)
Service cost (1)	$	10		$	9		$	20		$	18
Interest cost (2)	25			19			48			39
Expected return on plan assets (2)	(27		)	(26		)	(52		)	(53		)
Amortization of prior service cost (2)	2			2			4			4
Amortization of net loss (2)	13			11			26			22
Settlement cost (3)	1			—			1			—
Curtailment gain (4)	—			—			(1		)	—
Net periodic cost	$	24		$	15		$	46		$	30


(1)	Amounts presented in the table above are included in Operation and maintenance expense in each of the Registrants’ respective Condensed Statements of Consolidated Income, net of amounts capitalized and regulatory deferrals.


(2)	Amounts presented in the table above are included in Other income (expense), net in each of the Registrants’ respective Condensed Statements of Consolidated Income, net of regulatory deferrals.


(3)	A one-time, non-cash settlement cost is required when the total lump sum distributions or other settlements of plan benefit obligations during a plan year exceed the service cost and interest cost components of the net periodic cost for that year. In June 2019, CenterPoint Energy recognized a non-cash settlement cost of $1 million due to lump sum settlement payments from Vectren pension plans.


(4)	A curtailment gain or loss is required when the expected future services of a significant number of employees are reduced or eliminated for the accrual of benefits. In February 2019, CenterPoint Energy recognized a pension curtailment gain of $1 million related to Vectren employees whose employment was terminated after the Merger closed.

Postretirement Benefits



	Three Months Ended June 30,
	2019									2018
	CenterPoint Energy			Houston Electric			CERC			CenterPoint Energy			Houston Electric			CERC
	(in millions)
Service cost (1)	$	—		$	—		$	1		$	1		$	—		$	—
Interest cost (2)	4			2			1			4			2			1
Expected return on plan assets (2)	(1		)	(1		)	(1		)	(2		)	(1		)	(1		)
Amortization of prior service cost (credit) (2)	(1		)	(2		)	—			(1		)	(2		)	1
Net periodic cost (income)	$	2		$	(1	)	$	1		$	2		$	(1	)	$	1

	Six Months Ended June 30,
	2019									2018
	CenterPoint Energy			Houston Electric			CERC			CenterPoint Energy			Houston Electric			CERC
	(in millions)
Service cost (1)	$	1		$	—		$	1		$	1		$	—		$	—
Interest cost (2)	8			4			2			7			4			2
Expected return on plan assets (2)	(3		)	(2		)	(1		)	(3		)	(2		)	(1		)
Amortization of prior service cost (credit) (2)	(2		)	(3		)	—			(2		)	(3		)	1
Net periodic cost (income)	$	4		$	(1	)	$	2		$	3		$	(1	)	$	2


(1)	Amounts presented in the tables above are included in Operation and maintenance expense in each of the Registrants’ respective Condensed Statements of Consolidated Income, net of amounts capitalized and regulatory deferrals.


(2)	Amounts presented in the tables above are included in Other income (expense), net in each of the Registrants’ respective Condensed Statements of Consolidated Income, net of regulatory deferrals.

The table below reflects the expected contributions to be made to the pension and postretirement benefit plans during 2019:



	CenterPoint Energy		Houston Electric		CERC
	(in millions)
Expected minimum contribution to pension plans during 2019	$	94	$	—	$	—
Expected contribution to postretirement benefit plans in 2019	20		10		4

The table below reflects the contributions made to the pension and postretirement benefit plans during 2019:



	Three Months Ended June 30, 2019						Six Months Ended June 30, 2019
	CenterPoint Energy		Houston Electric		CERC		CenterPoint Energy		Houston Electric		CERC
	(in millions)
Pension plans	$	27	$	—	$	—	$	29	$	—	$	—
Postretirement benefit plans	3		2		1		8		5		2