The Registrants are exposed to various market risks. These risks arise from transactions entered into in the normal course of business. The Registrants, from time to time, utilize derivative instruments such as swaps and options to mitigate the impact of changes in commodity prices, weather and interest rates on operating results and cash flows.

Commodity Derivative Instruments (CenterPoint Energy and CERC). CenterPoint Energy and CERC, through the Indiana Utilities they respectively own, enter into certain derivative instruments, including physical forward contracts, to mitigate the effects of commodity price movements. Outstanding derivative instruments designated as economic hedges at the Indiana Utilities hedge long-term variable rate natural gas purchases. The Indiana Utilities have authority to refund and recover mark-to-market gains and losses associated with hedging natural gas purchases, and thus the gains and losses on derivatives are deferred in a regulatory liability or asset. All other financial instruments do not qualify or are not designated as cash flow or fair value hedges. As of both December 31, 2023 and 2022, the notional volumes of both CenterPoint Energy’s and CERC’s natural gas derivatives were 27,421 MMBtu per day.

Interest Rate Risk Derivative Instruments. From time to time, the Registrants may enter into interest rate derivatives that are designated as economic or cash flow hedges. The objective of these hedges is to offset risk associated with interest rates borne by the Registrants in connection with an anticipated future fixed rate debt offering or other exposure to variable rate debt. Houston Electric and the Indiana Utilities have authority to refund and recover mark-to-market gains and losses associated with hedging financing activity, and thus the gains and losses on derivatives are deferred in a regulatory liability or asset. For the impacts of cash flow hedges to Accumulated other comprehensive income, see Note 12.


	December 31, 2023		December 31, 2022
Hedging Classification	Notional Principal
	(in millions)
CenterPoint Energy:
Economic hedge (1)	$	—		$	84
Cash flow hedge (2) (3)	200			—
Houston Electric:
Cash flow hedge (3)	100			—

(2)Relates to interest rate derivative instruments at CenterPoint Energy with a termination date of December 31, 2029. The interest rate swap agreements were designated as cash flow hedges of forecasted transactions. CenterPoint Energy records all changes in the fair value of cash flow hedges in accumulated other comprehensive income (loss) until the underlying hedged transaction occurs, when it reclassifies that amount into earnings.

(3)Relates to interest rate derivative instruments at Houston Electric with a termination date of June 28, 2024. The interest rate treasury lock agreements were designated as cash flow hedges of forecasted transactions. Houston Electric records

CenterPoint Energy’s outstanding interest rate derivatives designated as cash flow hedges described above were not material as of December 31, 2023 and are included in current non-trading derivative liabilities on CenterPoint Energy’s Consolidated Balance Sheets. Houston Electric’s outstanding interest rate derivatives designated as cash flow hedges described above were not material as of December 31, 2023 and are included in prepaid expenses and other current assets on Houston Electric’s Consolidated Balance Sheets.


		December 31, 2023				December 31, 2022
	Balance Sheet Location	Derivative Assets Fair Value		Derivative Liabilities Fair Value		Derivative Assets Fair Value		Derivative Liabilities Fair Value
CenterPoint Energy:		(in millions)






Derivatives not designated as hedging instruments:
Natural gas derivatives (1)	Current Assets: Non-trading derivative assets	$	—	$	—	$	9	$	—
Interest rate derivatives	Current Assets: Non-trading derivative assets	—		—		1		—
Natural gas derivatives (1)	Other Assets: Non-trading derivative assets	—		—		2		—
Natural gas derivatives (1)	Current Liabilities: Non-trading derivative liabilities	—		9		—		—

Natural gas derivatives (1)	Other Liabilities: Non-trading derivative liabilities	—		3		—		—

Indexed debt securities derivative (2)	Current Liabilities	—		605		—		578
	Total	$	—	$	617	$	12	$	578

(1)Natural gas contracts are subject to master netting arrangements. This netting applies to all undisputed amounts due or past due. However, the mark-to-market fair value of each natural gas contract is in a liability or asset position with no offsetting amount as of December 31, 2023 and 2022, respectively.

(2)Derivative component of the ZENS obligation that represents the ZENS holder’s option to receive the appreciated value of the reference shares at maturity and other payments to which they may be entitled. See Note 11 for further information.


		December 31, 2023				December 31, 2022
	Balance Sheet Location	Derivative Assets Fair Value		Derivative Liabilities Fair Value		Derivative Assets Fair Value		Derivative Liabilities Fair Value




CERC:		(in millions)
Derivatives not designated as hedging instruments:
Natural gas derivatives (1)	Current Assets: Non-trading derivative assets	$	—	$	—	$	7	$	—
Natural gas derivatives (1)	Other Assets: Non-trading derivative assets	—		—		2		—
Natural gas derivatives (1)	Current Liabilities: Non-trading derivative liabilities	—		8		—		—

Natural gas derivatives (1)	Other Liabilities: Non-trading derivative liabilities	—		3		—		—



Total		$	—	$	11	$	9	$	—


		Year Ended December 31,
	Income Statement Location	2023		2022		2021
CenterPoint Energy:		(in millions)
Effects of derivatives not designated as hedging instruments:
Indexed debt securities derivative (1)	Gain (loss) on indexed debt securities	$	(27)	$	325	$	50

Total CenterPoint Energy		$	(27)	$	325	$	50

Certain of CenterPoint Energy’s and CERC’s derivative instruments contain provisions that require CenterPoint Energy and CERC to maintain an investment grade credit rating on their respective long-term unsecured unsubordinated debt from S&P and Moody’s. If CenterPoint Energy’s or CERC’s debt were to fall below investment grade, it would be in violation of these provisions, and the counterparties to the derivative instruments could request immediate payment or additional collateral.


	December 31, 2023				December 31, 2022
	CenterPoint Energy		CERC		CenterPoint Energy		CERC
	(in millions)
Aggregate fair value of derivatives containing material adverse change provisions in a net liability position	$	9	$	8	$	—	$	—
Fair value of collateral already posted	—		—		—		—
Additional collateral required to be posted if credit risk contingent features triggered	9		8		—		—