CenterPoint's (CNP) Indiana Clients to See Reduced Electric Bills
CenterPoint Energy, Inc’s CNP electric customers in Indiana are expected to witness a reduction in their electric bills beginning next month. This is due to the company's securitization plan that allows for the removal of the remaining value of its A.B. Brown coal plant assets from customer rates.
The securitization financing is in sync with CNP’s goal to deliver safe and reliable services, while prioritizing customer savings.
CenterPoint is the first utility to use this type of financing in Indiana. The company will reinvest proceeds from the securitization bonds into its generation transition plan, including renewable resources such as wind and solar powered generation. Both of these will be supported by natural gas generation resources to maintain reliability.
Rationale Behind the Move
All residential customers, small businesses and industrial electric customer groups in Indiana will see savings. Residential consumers who use about 900 kilowatt hours per month are anticipated to receive a monthly bill credit of more than $5. The extra fee that was added to consumers' bills to pay for the securitization bonds will be more than offset by the credits from the securitization of A.B. Brown assets.
A financing order for the coal retirement securitization bonds was granted by the Indiana Utility Regulatory Commission in January 2023. This is anticipated to result in a $53-million overall decline in consumers' electric bills.
In 2021, a legislation was approved in Indiana that permits a securitization pilot program for CenterPoint’s power consumers in the state. The business awaited the chance to show how this service may help customers save money compared to traditional utility financing.
A.B. Brown coal units 1 and 2 will be shut down by CenterPoint in October 2023, as part of its long-term electric power transition plan. By issuing the securitization bonds at a reduced long-term interest rate, the residual value of the coal plants and other qualified costs are financed.
Price Performance
In the past month, shares of CenterPoint have risen 1.4% compared with the industry’s 1.1% growth.
Image Source: Zacks Investment Research
Zacks Rank & Stocks to Consider
CenterPoint currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the same industry are PPL Corporation PPL, NiSource Inc. NI and DTE Energy Company DTE, each carrying Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
PPL’s long-term (three- to five-year) earnings growth rate is 7.4%. The Zacks Consensus Estimate for 2023 earnings per share (EPS) indicates a year-over-year increase of 12.8%.
NiSource’s long-term earnings growth rate is 7%. The Zacks Consensus Estimate for 2023 EPS indicates a year-over-year improvement of 8.8%.
DTE’s long-term earnings growth rate is 6%. The Zacks Consensus Estimate for 2023 EPS implies year-over-year growth of 1.6%.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
PPL Corporation (PPL) : Free Stock Analysis Report
NiSource, Inc (NI) : Free Stock Analysis Report
DTE Energy Company (DTE) : Free Stock Analysis Report
CenterPoint Energy, Inc. (CNP) : Free Stock Analysis Report
