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Unconsolidated Affiliate (CenterPoint Energy and CERC)
 6 Months Ended
Jun. 30, 2021
Equity Method Investments and Joint Ventures [Abstract]  
Unconsolidated Affiliates (CenterPoint Energy and CERC) Unconsolidated Affiliates (CenterPoint Energy and CERC)
CenterPoint Energy has the ability to significantly influence the operating and financial policies of Enable, a publicly traded MLP, and, accordingly, accounts for its investment in Enable’s common units using the equity method of accounting. Enable is considered to be a VIE because the power to direct the activities that most significantly impact Enable’s economic performance does not reside with the holders of equity investment at risk. However, CenterPoint Energy is not considered the primary beneficiary of Enable since it does not have the power to direct the activities of Enable that are considered most significant to the economic performance of Enable. As of June 30, 2021, CenterPoint Energy’s maximum exposure to loss related to Enable is limited to its investment in unconsolidated affiliates, its investment in Enable Series A Preferred Units and outstanding current accounts receivable from Enable.

On February 16, 2021, Enable entered into the Enable Merger Agreement. At the closing of the transactions contemplated by the Enable Merger Agreement, if and when it occurs, Energy Transfer will acquire all of Enable’s outstanding equity interests, resulting in the exchange of Enable common units owned by CenterPoint Energy at the transaction exchange ratio of 0.8595x Energy Transfer common units for each Enable common unit. CenterPoint Energy will also receive $5 million in cash in exchange for its interest in Enable GP and Energy Transfer Series G Preferred Units with an aggregate liquidation preference of approximately $385 million in exchange for all of its Enable Series A Preferred Units. Pursuant to previously disclosed support agreements, CenterPoint Energy and OGE, who collectively own approximately 79.2% of Enable’s common units, delivered written consents approving the Enable Merger Agreement and, on a non-binding, advisory basis, the compensation that will or may become payable to Enable’s named executive officers in connection with the transactions contemplated by the
Enable Merger Agreement. The transactions contemplated under the Enable Merger Agreement are expected to be completed in 2021, subject to customary closing conditions, including Hart-Scott-Rodino antitrust clearance. Upon the consummation of the transaction, the agreements relating to Enable between CenterPoint Energy, OGE and Enable and certain of their affiliates will terminate, and CenterPoint Energy will pay $30 million to OGE (or other mutually agreed upon consideration). Because CenterPoint Energy will retain an investment in the midstream industry at the completion of this transaction, the transaction does not represent a strategic shift that will have a major effect on CenterPoint Energy’s operations or financial results, and as such, Enable is not classified and presented as discontinued operations. Equity method investments that do not qualify for discontinued operations are not presented as assets held for sale.

Investment in Unconsolidated Affiliates (CenterPoint Energy):
June 30, 2021December 31, 2020
(in millions)
Enable$881 $782 
Other1 1 
  Total$882 $783 

As of June 30, 2021, Enable’s common unit price closed at $9.11 per unit.

Equity in Earnings (Losses) of Unconsolidated Affiliates, net (CenterPoint Energy):
Three Months Ended June 30,Six Months Ended June 30,
202120202021
2020 (1)
(in millions)
Enable$67 $43 $175 $(1,432)
        Total$67 $43 $175 $(1,432)

(1)Includes an impairment charge on CenterPoint Energy’s investment in Enable of $1,541 million.


Limited Partner Interest and Units Held in Enable (CenterPoint Energy):

June 30, 2021
Limited Partner Interest (1)
Common Units
Enable Series A Preferred Units (2)
CenterPoint Energy (3)
53.7 %233,856,623 14,520,000 
OGE25.5 %110,982,805 — 
Public unitholders20.8 %91,026,711 — 
        Total units outstanding100.0 %435,866,139 14,520,000 

(1)Excludes the Enable Series A Preferred Units owned by CenterPoint Energy.
(2)The carrying amount of the Enable Series A Preferred Units, reflected as Preferred units - unconsolidated affiliate on CenterPoint Energy’s Condensed Consolidated Balance Sheets, was $363 million as of both June 30, 2021 and December 31, 2020. There were no settled transactions in the six months ended June 30, 2021 and 2020 that would indicate a stand-alone, observable, and readily determinable fair value for securities identical or similar to Enable Series A Preferred Units. No impairment charges or adjustment due to observable price changes were required or recorded during the current or prior reporting periods.
(3)Held indirectly through CNP Midstream.

Generally, sales to any person or entity (including a series of sales to the same person or entity) of more than 5% of the aggregate of the common units CenterPoint Energy owns in Enable or sales to any person or entity (including a series of sales to the same person or entity) by OGE of more than 5% of the aggregate of the common units it owns in Enable are subject to mutual rights of first offer and first refusal set forth in Enable’s Agreement of Limited Partnership.
Interests Held in Enable GP (CenterPoint Energy):

CenterPoint Energy and OGE held the following interests in Enable GP as of both June 30, 2021 and December 31, 2020:

June 30, 2021
Management
Rights (1)
Incentive Distribution Rights (2)
CenterPoint Energy (3)
50 %40 %
OGE50 %60 %

(1)Enable is controlled jointly by CenterPoint Energy and OGE. Sale of CenterPoint Energy’s or OGE’s ownership interests in Enable GP to a third party is subject to mutual rights of first offer and first refusal, and CenterPoint Energy is not permitted to dispose of less than all of its interest in Enable GP.
(2)If cash distributions to Enable’s unitholders exceed $0.330625 per common unit in any quarter, Enable GP will receive increasing percentages or incentive distributions rights, up to 50%, of the cash Enable distributes in excess of that amount. In certain circumstances Enable GP will have the right to reset the minimum quarterly distribution and the target distribution levels at which the incentive distributions receive increasing percentages to higher levels based on Enable’s cash distributions at the time of the exercise of this reset election. To date, no incentive distributions have been made.
(3)Held indirectly through CNP Midstream.

Distributions Received from Enable (CenterPoint Energy):

Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
Per UnitCash DistributionPer UnitCash DistributionPer UnitCash DistributionPer UnitCash Distribution
(in millions, except per unit amounts)
Enable common units$0.16525 $38 $0.16525 $39 $0.33050 $77 $0.49575 $116 
Enable Series A Preferred Units0.58730 9 0.62500 9 1.21230 18 1.25000 18 
  Total CenterPoint Energy$47 $48 $95 $134 

Transactions with Enable (CenterPoint Energy and CERC):

The transactions with Enable in the following tables exclude transactions with the Energy Services Disposal Group.
CenterPoint Energy and CERC
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
(in millions)
Natural gas expenses, includes transportation and storage costs $16 $17 $48 $44 
CenterPoint Energy and CERC
June 30, 2021December 31, 2020
(in millions)
Accounts payable for natural gas purchases from Enable$5 $9 
Accounts receivable for amounts billed for services provided to Enable1 1 
Summarized Financial Information for Enable (CenterPoint Energy)

Summarized unaudited consolidated income information for Enable is as follows:
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
(in millions)
Operating revenues$787 $515 $1,757 $1,163 
Cost of sales, excluding depreciation and amortization426 177 945 403 
Depreciation and amortization103 105 209 209 
Goodwill and long-lived assets impairments— — — 28 
Operating income124 80 330 226 
Net income attributable to Enable common units79 35 234 138 
Reconciliation of Equity in Earnings (Losses), net:
CenterPoint Energy’s interest$42 $19 $125 $74 
Basis difference amortization (1)
25 24 50 36 
Loss on dilution, net of proportional basis difference recognition— — — (1)
Impairment of CenterPoint Energy’s equity method investment in Enable — — — (1,541)
CenterPoint Energy’s equity in earnings (losses), net$67 $43 $175 $(1,432)
(1)Equity in earnings of unconsolidated affiliate includes CenterPoint Energy’s share of Enable earnings adjusted for the amortization of the basis difference of CenterPoint Energy’s investment in Enable and its underlying equity in net assets of Enable. The basis difference is being amortized through the year 2048 or will cease upon the sale of CenterPoint Energy’s investment in Enable.

Summarized unaudited consolidated balance sheet information for Enable is as follows:
June 30, 2021December 31, 2020
(in millions)
Current assets$475 $381 
Non-current assets11,284 11,348 
Current liabilities1,317 582 
Non-current liabilities3,249 4,052 
Non-controlling interest25 26 
Preferred equity362 362 
Accumulated other comprehensive loss(3)(6)
Enable partners’ equity6,809 6,713 
Reconciliation of Investment in Enable:
CenterPoint Energy’s ownership interest in Enable partners’ equity$3,651 $3,601 
CenterPoint Energy’s basis difference (1)
(2,770)(2,819)
CenterPoint Energy’s equity method investment in Enable$881 $782 

(1)The basis difference is being amortized through the year 2048 or will cease upon sale of CenterPoint Energy’s investment in Enable.