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Derivative Instruments (Tables)

9 Months Ended

Sep. 30, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Notional Amounts of Outstanding Derivative Positions [Table Text Block]

The table below summarizes the Registrants’ outstanding interest rate hedging activity:



	September 30, 2019				December 31, 2018
Hedging Classification	Notional Principal
	CenterPoint Energy (1)		Houston Electric		CenterPoint Energy		Houston Electric
	(in millions)
Economic hedge	$	84	$	—	$	—	$	—
Cash flow hedge	—		—		450		450

(1)

Relates to interest rate derivative instruments at SIGECO.

Schedule of Fair Value Hedging Instruments, Statements of Financial Performance and Financial Position, Location [Table Text Block]

The tables below summarize CenterPoint Energy’s and CERC’s current weather hedge gain (loss) activity:



	Three Months Ended September 30,
	2019							2018
Texas Operations	Winter Season	Bilateral Cap		CenterPoint Energy		CERC		Winter Season	Bilateral Cap		CenterPoint Energy		CERC
	(in millions)
NGD	2018 – 2019	$	9	$	—	$	—	2017 – 2018	$	8	$	—	$	—
Electric operations	2018 – 2019	8		—		—		2017 – 2018	9		—		—
Total (1)				$	—	$	—				$	—	$	—



	Nine Months Ended September 30,
	2019							2018
Texas Operations	Winter Season	Bilateral Cap		CenterPoint Energy		CERC		Winter Season	Bilateral Cap		CenterPoint Energy			CERC
	(in millions)
NGD	2018 – 2019	$	9	$	—	$	—	2017 – 2018	$	8	$	—		$	—
Electric operations	2018 – 2019	8		3		—		2017 – 2018	9		(4		)	—
Total (1)				$	3	$	—				$	(4	)	$	—

(1)

Weather hedge gains (losses) are recorded in Revenues in the Condensed Statements of Consolidated Income.

Fair Value of Derivative Instruments [Table Text Block]

The following tables present information about derivative instruments and hedging activities. The first three tables provide a balance sheet overview of Derivative Assets and Liabilities, while the last two tables provide a breakdown of the related income statement impacts.

Fair Value of Derivative Instruments and Hedged Items

CenterPoint Energy



		September 30, 2019				December 31, 2018
	Balance Sheet Location	Derivative Assets Fair Value		Derivative Liabilities Fair Value		Derivative Assets Fair Value		Derivative Liabilities Fair Value
		(in millions)
Derivatives designated as cash flow hedges:
Interest rate derivatives	Current Liabilities: Non-trading derivative liabilities	$	—	$	—	$	—	$	24
Derivatives designated as fair value hedges:
Natural gas derivatives (1) (2) (3)	Current Liabilities: Non-trading derivative liabilities	7		—		1		7
Derivatives not designated as hedging instruments:
Natural gas derivatives (1) (2) (3)	Current Assets: Non-trading derivative assets	123		3		103		3
Natural gas derivatives (1) (2) (3)	Other Assets: Non-trading derivative assets	65		—		38		—
Natural gas derivatives (1) (2) (3)	Current Liabilities: Non-trading derivative liabilities	69		154		62		173
Natural gas derivatives (1) (2) (3)	Other Liabilities: Non-trading derivative liabilities	13		68		16		25
Interest rate derivatives	Other Liabilities	—		15		—		—
Indexed debt securities derivative	Current Liabilities	—		817		—		601
Total CenterPoint Energy		$	277	$	1,057	$	220	$	833


(1)	The fair value shown for natural gas contracts is comprised of derivative gross volumes totaling 2,252 Bcf or a net 374 Bcf long position and 1,674 Bcf or a net 140 Bcf long position as of September 30, 2019 and December 31, 2018, respectively. Certain natural gas contracts hedge basis risk only and lack a fixed price exposure.

(2)

Natural gas contracts are presented on a net basis in CenterPoint Energy’s Condensed Consolidated Balance Sheets as they are subject to master netting arrangements. This netting applies to all undisputed amounts due or past due and causes derivative assets (liabilities) to be ultimately presented net in a liability (asset) account within CenterPoint Energy’s Condensed Consolidated Balance Sheets. The net of total non-trading natural gas derivative assets and liabilities is detailed in the Offsetting of Natural Gas Derivative Assets and Liabilities table below.


(3)	Derivative Assets and Derivative Liabilities include no material amounts related to physical forward transactions with Enable.

Houston Electric



		September 30, 2019				December 31, 2018
	Balance Sheet Location	Derivative Assets Fair Value		Derivative Liabilities Fair Value		Derivative Assets Fair Value		Derivative Liabilities Fair Value
		(in millions)
Derivatives designated as cash flow hedges:
Interest rate derivatives	Current Liabilities: Non-trading derivative liabilities	$	—	$	—	$	—	$	24
Total Houston Electric		$	—	$	—	$	—	$	24

CERC



		September 30, 2019				December 31, 2018
	Balance Sheet Location	Derivative Assets Fair Value		Derivative Liabilities Fair Value		Derivative Assets Fair Value		Derivative Liabilities Fair Value
		(in millions)
Derivatives designated as fair value hedges:
Natural gas derivatives (1) (2) (3)	Current Liabilities: Non-trading derivative liabilities	$	7	$	—	$	1	$	7
Derivatives not designated as hedging instruments:
Natural gas derivatives (1) (2) (3)	Current Assets: Non-trading derivative assets	123		3		103		3
Natural gas derivatives (1) (2) (3)	Other Assets: Non-trading derivative assets	65		—		38		—
Natural gas derivatives (1) (2) (3)	Current Liabilities: Non-trading derivative liabilities	69		148		62		173
Natural gas derivatives (1) (2) (3)	Other Liabilities: Non-trading derivative liabilities	13		54		16		25
Total CERC		$	277	$	205	$	220	$	208


(1)	The fair value shown for natural gas contracts is comprised of derivative gross volumes totaling 2,252 Bcf or a net 374 Bcf long position and 1,674 Bcf or a net 140 Bcf long position as of September 30, 2019 and December 31, 2018, respectively. Certain natural gas contracts hedge basis risk only and lack a fixed price exposure.

(2)

Natural gas contracts are presented on a net basis in CERC’s Condensed Consolidated Balance Sheets as they are subject to master netting arrangements. This netting applies to all undisputed amounts due or past due and causes derivative assets (liabilities) to be ultimately presented net in a liability (asset) account within CERC’s Condensed Consolidated Balance Sheets. The net of total non-trading natural gas derivative assets and liabilities is detailed in the Offsetting of Natural Gas Derivative Assets and Liabilities table below.


(3)	Derivative Assets and Derivative Liabilities include no material amounts related to physical forward transactions with Enable.

Cumulative Basis Adjustment for Fair Value Hedges (CenterPoint Energy and CERC)



		September 30, 2019
	Balance Sheet Location	Carrying Amount of Hedged Assets/(Liabilities)				Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of Hedged Item
		CenterPoint Energy		CERC		CenterPoint Energy			CERC
		(in millions)
Hedged items in fair value hedge relationship:
Natural gas inventory	Current Assets: Natural gas inventory	$	42	$	42	$	(7	)	$	(7	)
Total		$	42	$	42	$	(7	)	$	(7	)



		December 31, 2018
	Balance Sheet Location	Carrying Amount of Hedged Assets/(Liabilities)				Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of Hedged Item
		CenterPoint Energy		CERC		CenterPoint Energy		CERC
		(in millions)
Hedged items in fair value hedge relationship:
Natural gas inventory	Current Assets: Natural gas inventory	$	57	$	57	$	1	$	1
Total		$	57	$	57	$	1	$	1

Offsetting of Natural Gas Derivative Assets and Liabilities [Table Text Block]

Offsetting of Natural Gas Derivative Assets and Liabilities (CenterPoint Energy and CERC)

CenterPoint Energy



	September 30, 2019									December 31, 2018
	Gross Amounts Recognized (1)			Gross Amounts Offset in the Consolidated Balance Sheets			Net Amount Presented in the Consolidated Balance Sheets (2)			Gross Amounts Recognized (1)			Gross Amounts Offset in the Consolidated Balance Sheets			Net Amount Presented in the Consolidated Balance Sheets (2)
	(in millions)
Current Assets: Non-trading derivative assets	$	199		$	(79	)	$	120		$	166		$	(66	)	$	100
Other Assets: Non-trading derivative assets	78			(14		)	64			54			(16		)	38
Current Liabilities: Non-trading derivative liabilities	(157		)	107			(50		)	(183		)	81			(102		)
Other Liabilities: Non-trading derivative liabilities	(68		)	36			(32		)	(25		)	20			(5		)
Total CenterPoint Energy	$	52		$	50		$	102		$	12		$	19		$	31

CERC



	September 30, 2019									December 31, 2018
	Gross Amounts Recognized (1)			Gross Amounts Offset in the Consolidated Balance Sheets			Net Amount Presented in the Consolidated Balance Sheets (2)			Gross Amounts Recognized (1)			Gross Amounts Offset in the Consolidated Balance Sheets			Net Amount Presented in the Consolidated Balance Sheets (2)
	(in millions)
Current Assets: Non-trading derivative assets	$	199		$	(79	)	$	120		$	166		$	(66	)	$	100
Other Assets: Non-trading derivative assets	78			(14		)	64			54			(16		)	38
Current Liabilities: Non-trading derivative liabilities	(151		)	107			(44		)	(183		)	81			(102		)
Other Liabilities: Non-trading derivative liabilities	(54		)	36			(18		)	(25		)	20			(5		)
Total CERC	$	72		$	50		$	122		$	12		$	19		$	31


(1)	Gross amounts recognized include some derivative assets and liabilities that are not subject to master netting arrangements.


(2)	The derivative assets and liabilities on the Registrant’s respective Condensed Consolidated Balance Sheets exclude accounts receivable or accounts payable that, should they exist, could be used as offsets to these balances in the event of a default.

Income Statement Impact of Derivative Activity [Table Text Block]

Income Statement Impact of Hedge Accounting Activity (CenterPoint Energy and CERC)



	Three Months Ended September 30,
	2019						2018
	Location and Amount of Gain (Loss) recognized in Income on Hedging Relationship (1)
	Non-utility cost of revenues, including natural gas
	CenterPoint Energy			CERC			CenterPoint Energy			CERC
	(in millions)
Total amounts presented in the statements of income in which the effects of hedges are recorded	$	852		$	687		$	864		$	864
Gain (loss) on fair value hedging relationships:
Commodity contracts:
Hedged items - Natural gas inventory	2			2			1			1
Derivatives designated as hedging instruments	(2		)	(2		)	(1		)	(1		)
Amounts excluded from effectiveness testing recognized in earnings immediately	(59		)	(59		)	6			6



	Nine Months Ended September 30,
	2019						2018
	Location and Amount of Gain (Loss) recognized in Income on Hedging Relationship (1)
	Non-utility cost of revenues, including natural gas
	CenterPoint Energy			CERC			CenterPoint Energy			CERC
	(in millions)
Total amounts presented in the statements of income in which the effects of hedges are recorded	$	3,013		$	2,627		$	2,927		$	2,927
Gain (loss) on fair value hedging relationships:
Commodity contracts:
Hedged items - Natural gas inventory	(8		)	(8		)	(13		)	(13		)
Derivatives designated as hedging instruments	8			8			13			13
Amounts excluded from effectiveness testing recognized in earnings immediately	(138		)	(138		)	(73		)	(73		)


(1)	Income statement impact associated with cash flow hedge activity is related to gains and losses reclassified from Accumulated other comprehensive income into income. Amounts are immaterial for each Registrant in the three and nine months ended September 30, 2019 and 2018, respectively.

CenterPoint Energy



		Three Months Ended September 30,						Nine Months Ended September 30,
	Income Statement Location	2019			2018			2019			2018
		(in millions)
Effects of derivatives not designated as hedging instruments on the income statement:
Commodity contracts	Gains (losses) in Non-utility revenues	$	69		$	2		$	159		$	70
Indexed debt securities derivative	Loss on indexed debt securities	(62		)	(44		)	(216		)	(316		)
Total CenterPoint Energy		$	7		$	(42	)	$	(57	)	$	(246	)

CERC



		Three Months Ended September 30,				Nine Months Ended September 30,
	Income Statement Location	2019		2018		2019		2018
		(in millions)
Effects of derivatives not designated as hedging instruments on the income statement:
Commodity contracts	Gains (losses) in Non-utility revenues	$	69	$	2	$	159	$	70
Total CERC		$	69	$	2	$	159	$	70

Disclosure of Credit Derivatives [Table Text Block]

CenterPoint Energy and CERC enter into financial derivative contracts containing material adverse change provisions. These provisions could require CenterPoint Energy or CERC to post additional collateral if the S&P or Moody’s credit ratings of CenterPoint Energy, Inc. or its subsidiaries, including CERC Corp., are downgraded.



	September 30, 2019				December 31, 2018
	CenterPoint Energy		CERC		CenterPoint Energy		CERC
	(in millions)
Aggregate fair value of derivatives containing material adverse change provisions in a net liability position	$	1	$	1	$	1	$	1
Fair value of collateral already posted	—		—		—		—
Additional collateral required to be posted if credit risk contingent features triggered	1		1		—		—

- Definition

Tabular disclosure of credit derivatives which includes information by sellers of credit derivatives, about each credit derivative, or each group of similar credit derivatives, including (a) the nature of the credit derivative - its term, how it arose, the events or circumstances that would require the seller to perform under the credit derivative, and the current status of the payment/performance risk of the credit derivative; (b) the maximum potential amount of future payments (undiscounted) the seller could be required to make under the credit derivative; (c) the current fair value of the credit derivative; and (d) the nature of any recourse provisions under the credit derivative, and any assets held either as collateral or by third parties. A credit derivative is a derivative instrument (1) in which one or more of its underlyings are related to the credit risk of a specified entity (or a group of entities) or an index based on the credit risk of a group of entities and (2) that exposes the seller to potential loss from credit-risk-related events specified in the contract. Examples of credit derivatives within the scope of this paragraph include, but are not limited to, credit default swaps, credit spread options, and credit index products; also includes a hybrid instrument that has an embedded credit derivative (for example, but not limited to, a credit-linked note).

+ References + Details