Equity Securities and Indexed Debt Securities (ZENS) (CenterPoint Energy)

3 Months Ended

Mar. 31, 2023

Investments, Debt and Equity Securities [Abstract]

Equity Securities and Indexed Debt Securities (ZENS) (CenterPoint Energy)

(a) Equity Securities

During the three months ended March 31, 2022, CenterPoint Energy completed the execution of its previously announced plan to exit the midstream sector by selling the remaining Energy Transfer Common Units and Energy Transfer Series G Preferred Units it held.

Gains and losses on equity securities, net of transaction costs, are recorded in Gain (Loss) on Equity Securities in CenterPoint Energy’s Condensed Statements of Consolidated Income.


		Gains (Losses) on Equity Securities
	Three Months Ended March 31,
		2023		2022
		(in millions)
AT&T Common		$	9	$	(10)
Charter Common		16		(93)
WBD Common		14		—
Energy Transfer Common Units		—		95
Energy Transfer Series G Preferred Units		—		(9)
Other		(1)		—
Total		$	38	$	(17)

CenterPoint Energy recorded net unrealized gains (losses) of $38 million and $(103) million for the three months ended March 31, 2023 and 2022 respectively, for equity securities held as of March 31, 2023 and 2022.

CenterPoint Energy and its subsidiaries hold shares of certain securities detailed in the table below, which are classified as trading securities. Shares of AT&T Common, Charter Common and WBD Common are expected to be held to facilitate CenterPoint Energy’s ability to meet its obligation under the ZENS.


	Shares Held		Carrying Value
	March 31, 2023	December 31, 2022	March 31, 2023		December 31, 2022
			(in millions)
AT&T Common	10,212,945	10,212,945	$	197	$	188
Charter Common	872,503	872,503	312		296
WBD Common	2,470,685	2,470,685	37		23


Other			2		3
Total			$	548	$	510

(b) ZENS

In September 1999, CenterPoint Energy issued ZENS having an original principal amount of $1.0 billion of which $828 million remained outstanding as of March 31, 2023. Each ZENS is exchangeable at the holder’s option at any time for an amount of cash equal to 95% of the market value of the reference shares attributable to such note. The number and identity of the reference shares attributable to each ZENS are adjusted for certain corporate events.

CenterPoint Energy’s reference shares for each ZENS consisted of the following:


	March 31, 2023	December 31, 2022
	(in shares)
AT&T Common	0.7185	0.7185
Charter Common	0.061382	0.061382
WBD Common	0.173817	0.173817

CenterPoint Energy pays interest on the ZENS at an annual rate of 2% plus the amount of any quarterly cash dividends paid in respect of the reference shares attributable to the ZENS. The principal amount of the ZENS is subject to increases or decreases to the extent that the annual yield from interest and cash dividends on the reference shares attributable to the ZENS is less than or more than 2.309%. The adjusted principal amount is defined in the ZENS instrument as “contingent principal.” As of March 31, 2023, the ZENS, having an original principal amount of $828 million and a contingent principal amount of $24 million, were outstanding and were exchangeable, at the option of the holders, for cash equal to 95% of the market value of the reference shares attributable to the ZENS.