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CenterPoint Energy: Delivering Electricity In Texas

ISTJ Investor profile picture
ISTJ Investor


  • Texas is the largest electricity market in the United States, with steadily growing demand setting records in 2023.
  • We review the largely deregulated Texas market, and identify eight publicly traded investor-owned utilities with significant operations in Texas.
  • CenterPoint Energy, Inc. is number two in the preferred transmission and distribution market segment, and provides the most concentrated focus on Texas.

Highway road 84 near Snyder, Texas countryside with cars in traffic and power lines cables

Power transmission lines in North Central Texas

krblokhin/iStock Editorial via Getty Images

Investment Thesis

Texas is the largest electricity market in the United States, both producing and consuming more electricity than any other state. Record demand in June 2023 was well over

This article was written by

ISTJ Investor profile picture
Myers-Briggs ISTJ. Detail oriented, data driven, planner, long time horizon. Individual investor for 20 plus years. Did the CFP exam for grins years ago, but never certified. Interest in energy, tech.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of CNP either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

This is not advice to buy or sell this stock. I am not an accountant or investment advisor. This article is intended to provide information to interested parties and is in no way a recommendation to buy or sell the securities mentioned. As I have no knowledge of individual investor circumstances, goals, and/or portfolio concentration or diversification, readers are expected to do their own due diligence before investing.

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Comments (14)

Center Point Energy serves the portion of Texas with the worst climate in the state. Houston's extreme heat and humidity make living there unpleasant. IF global warming accelerates over the next quarter century, some scientists believe Houston may become virtually unlivable. Some residents of Houston believe it already is. I'd put my utility investment money in areas farther north of Texas.
I have lived here for past 60 years. The first 10 without AC. We did not know how bad we had it.

" some scientists believe Houston may become virtually unlivable"

When My mother came from north Texas to Houston in the early 50's there were about 150,000 people and then AC made it so yankees could survive here.
People actually changed the sheets on beds every day. Houses were built with tall ceiling and orientated to catch the prevailing breeze. People knew how to dress for the heat.

Texas was a pretty cool place back in those days and I would love to go back to the early 60's myself.
People that don't want to live here Move all the time and we are growing like crazy. There are so many contract line companies working for CenterPoint and they pay so good that CNP is losing damn good 10-year linemen to these contractors.
Most people know how to take the heat.
Everybody and their brother are trying to get here for several reasons.
One You can start your own business and be as successful as you want to be.
Two There is no zoning in Houston.
Three People love the Texas way of live and the freedom to live the way you want.
If we could clean the communist out of city hall and the court house Houston would be fine.
ISTJ Investor profile picture
@xomstock Thanks for reading and the long term Houstonian perspective. The growth really has been phenomenal. The Texas Medical Center is one example - the largest medical complex in the world, with over 100,000 people working there.

The info on CNP linemen is interesting. I understand that linemen with a couple of year experience can earn well over $100K a year, plus overtime.
@ISTJ Investor
I am watching this growth happen day to day year after year, decade after decade and it still is unbelievable.

I have a friend who is a CNP head lineman, and he makes 200k or more a year with OT. I think a first-year apprentice makes about 35 an hour. A fresh journeyman is making like 45 or so. But overtime is very available and young people do not want it.

I have a ex-employee who left CNP to go to work for contractors and makes 50 an hour and all OT is double-time. It is easy to get 600 hours of OT a year.

Many of the CNP employees that go to contractors have some sort of problem, but in the last few years they have been losing good seasoned 10 year+ employees. These type of loses are hard on a company, even a union company because these are your rising stars that become foremen and supervisors. They know how you do things and why, which is why they are poached by the contractors.

CNP and the union are working on a contract right now and from what I have heard it is not going well. If we have a strike in this heat all the union contractors will NOT cross the line and then our most active hurricane time is August and September. Could be a perfect storm.

By the way we all worked through covid and for the most part could not or would not wear mask. You simply cannot do that kind of work with the air restriction. Right now, in the morning it's the humidity and in the evening, it is dry heat.

I live to the southwest of Houston and AEP has a lot of territory out to the west that will go crazy in the next 30 years.
Excellent and fascinating tutorial on Texas electric energy system.

Dumb question: must have missed it in the article, but what does "TDU" stand for?

Retired Texas investor (very long utilities)
ISTJ Investor profile picture
@usiah Thanks for reading and taking the time to comment.

TDU is Transmission and Distribution Utility, i.e. they own the wires and transformers used to deliver electricity, but do not generate or sell electricity.
I am a small real estate investor/developer in metro Houston area. Your article provided valuable information regarding population growth estimates. Thank you for boosting my confidence. Will recommend your article to friends.
ISTJ Investor profile picture
@jilani Thanks for the comment, and glad you found it useful.

The shopping center REITs like Kimco and Regency have on their website some quite interesting current population estimates (usually for a 3 mile radius) for their properties; they both have some properties in the Houston metro area. They buy the data from someone, no idea what it costs.
thkalinke profile picture
Quite an interesting read, thanks!
ISTJ Investor profile picture
@thkalinke Thanks for reading and the positive comment. As usual, I learned a fair bit writing it.
atom profile picture
I'd concur that CNP is a hold. I have a substantial position in it and have had that position for 3-4 years. Only done so-so in terms of capital appreciation and the dividend is modest, but I have had lots of luck selling calls against CNP. Overall, a good investment for me (in the past), and I'm happy to wait for better days, but its not going to be a major winner. Selling is always a possibility.
ISTJ Investor profile picture
@atom Thanks for taking the time to leave a detailed comment. I've been pretty impressed with the new (since 2020 I think) management team. They have executed the plan they laid out, and stuck to running the utility, which makes them an exception.

The Houston metro area is booming, and should keep them busy and growing for decades. I do wish they would sell Indiana electric (a residue of the previous management's enthusiasm) and simplify their electric business to focus solely on Texas.
atom profile picture
@ISTJ Investor Their position in Houston was one of the reasons I originally bought CNP so actions that tighten the focus on Houston are likely to be productive, as you imply.
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