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Goodwill and Other Intangibles (CenterPoint Energy and CERC)
 12 Months Ended
Dec. 31, 2021
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Other Intangibles (CenterPoint Energy and CERC) Goodwill and Other Intangibles (CenterPoint Energy and CERC)
CenterPoint Energy’s goodwill by reportable segment as of December 31, 2020 and changes in the carrying amount of goodwill as of December 31, 2021 are as follows:
December 31, 2020Held for SaleDisposalsDecember 31,
2021
(in millions)
Electric (1)
$936 $— $— $936 
Natural Gas3,323 398 (2)5 (3)2,920 
Corporate and Other 438 — — 438 
Total$4,697 $398 $5 $4,294 
CERC’s goodwill is as follows:
December 31, 2020Held for SaleDisposalsDecember 31,
2021
(in millions)
Goodwill$757 $144 (2)$2 (3)$611 
(1)Amount presented is net of the accumulated goodwill impairment charge of $185 million recorded in 2020.
(2)Represents goodwill attributable to the Natural Gas businesses. For further information, see Note 4.
(3)Represents goodwill attributable to the MES disposal. For further information, see Note 4.

When a disposal group reflects a component of a reporting unit and meets the definition of a business, the goodwill within that reporting unit is allocated to the disposal group based on the relative fair value of the components representing a business that will be retained and disposed. As a result, goodwill attributable to the Natural Gas businesses to be disposed is classified as held for sale as of December 31, 2021, and goodwill attributable to MES was reflected in the gain on sale during the year ended December 31, 2021.

CenterPoint Energy and CERC perform goodwill impairment tests at least annually and evaluate goodwill when events or changes in circumstances indicate that its carrying value may not be recoverable. The impairment evaluation for goodwill is performed by comparing the fair value of each reporting unit with the carrying amount of the reporting unit, including goodwill. The estimated fair value of a reporting unit is primarily determined based on an income approach or a weighted combination of income and market approaches. If the carrying amount of the reporting unit is in excess of the estimated fair value of the reporting unit, then the excess amount is the impairment charge that should be recorded, not to exceed the carrying amount of goodwill. See Note 2(g) for further discussion.

CenterPoint Energy and CERC performed the annual goodwill impairment tests in the third quarter of each of 2021 and 2020 and determined that no goodwill impairment charge was required for any reporting unit as a result of those tests.

In connection with their preparation of the financial statements for the three months ended March 31, 2020, CenterPoint Energy and CERC identified triggering events to perform interim goodwill impairment tests for each of their reporting units due to the macroeconomic conditions related in part to the COVID-19 pandemic and the resulting decrease in CenterPoint Energy’s enterprise market capitalization below book value from the decline in CenterPoint Energy’s Common Stock price.

CenterPoint Energy’s interim impairment test in the three months ended March 31, 2020 resulted in a non-cash goodwill impairment charge in the amount of $185 million for a reporting unit, Indiana Electric, within the Electric reportable segment.
The fair value analysis resulted in an implied fair value of goodwill of $936 million for this reporting unit as of March 31, 2020, and as a result, the non-cash impairment charge was recorded in the year ended December 31, 2020.

CenterPoint Energy estimated the fair value of the Indiana Electric reporting unit using primarily an income approach. Under the income approach, the fair value of the reporting unit is determined by using the present value of future expected cash flows, which include management’s projections of the amount and timing of future capital expenditures and the cash inflows from the related regulatory recovery. These estimated future cash flows are then discounted using a rate that approximates the weighted average cost of capital of a market participant. The selection of the discount rate requires significant judgment.

With the exception of Indiana Electric reporting unit discussed above, the fair value of each of CenterPoint Energy’s and CERC’s reporting units exceeded their carrying value, resulting in no goodwill impairment from the March 31, 2020 interim impairment test. See Note 4 for goodwill impairments included within discontinued operations.

The tables below present information on CenterPoint Energy’s other intangible assets recorded in Other in Other Assets on the Consolidated Balance Sheets and the related amortization expense included in Depreciation and amortization on CenterPoint Energy’s Statements of Consolidated Income, unless otherwise indicated in the tables below.
December 31, 2021December 31, 2020
Gross Carrying AmountAccumulated AmortizationNet BalanceGross Carrying AmountAccumulated AmortizationNet Balance
(in millions)
Customer relationships$33 $(12)$21 $33 $(8)$25 
Trade names16 (5)11 16 (3)13 
Construction backlog (1)
— — — 5 (5)— 
Operation and maintenance
      agreements (1)
12 (1)11 12 (1)11 
Other2 (1)1 2 (1)1 
Total$63 $(19)$44 $68 $(18)$50 

(1)Amortization expense related to the operation and maintenance agreements and construction backlog is included in Non-utility cost of revenues, including natural gas on CenterPoint Energy’s Statements of Consolidated Income.
Year Ended December 31,
202120202019
(in millions)
Amortization expense of intangible assets recorded in Depreciation and amortization (1) (2)
$6 $6 $5 
Amortization expense of intangible assets recorded in Non-utility cost of revenues, including natural gas (2)
1 2 4 

(1)Includes $5 million for the year ended December 31, 2019 of amortization expense related to intangibles acquired in the Merger.
(2)Assets held for sale are not amortized. The table reflects amortization on continuing operations. For further information on discontinued operations, see Note 4.

CenterPoint Energy estimates that amortization expense of intangible assets with finite lives for the next five years will be as follows:
Amortization Expense
(in millions)
2022$6 
20236 
20245 
20255 
20265