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Stock-Based Incentive Compensation Plans and Employee Benefit Plans
12 Months Ended
Dec. 31, 2018
Disclosure of Stock-Based Incentive Compensation Plans and Employee Benefit Plans [Abstract]  
Stock-Based Incentive Compensation Plans and Employee Benefit Plans [Text Block]
Stock-Based Incentive Compensation Plans and Employee Benefit Plans

(a) Stock-Based Incentive Compensation Plans (CenterPoint Energy)

CenterPoint Energy has LTIPs that provide for the issuance of stock-based incentives, including stock options, performance awards, restricted stock unit awards and restricted and unrestricted stock awards to officers, employees and non-employee directors.  Approximately 14 million shares of Common Stock are authorized under these plans for awards. CenterPoint Energy issues new shares of its Common Stock to satisfy stock-based payments related to LTIPs. Equity awards are granted to employees without cost to the participants.

Compensation costs for the performance and stock awards granted under LTIPs are measured using fair value and expected achievement levels on the grant date.  For performance awards with operational goals, the achievement levels are revised as goals are evaluated. The fair value of awards granted to employees is based on the closing stock price of CenterPoint Energy’s Common Stock on the grant date.  The compensation expense is recorded on a straight-line basis over the vesting period.  Forfeitures are estimated on the date of grant based on historical averages and estimates are updated periodically throughout the vesting period.  
 
The performance awards granted in 2018, 2017 and 2016 are distributed based upon the achievement of certain objectives over a three-year performance cycle. The stock unit awards granted in 2018, 2017 and 2016 are service based. The stock unit awards generally vest at the end of a three-year period, provided, however, that stock unit awards granted to non-employee directors vested at the end of a one-year period (for awards granted in 2017 and 2016) or vested immediately upon grant (for awards granted in 2018). Upon vesting, both the performance and stock awards are issued to the participants along with the value of dividend equivalents earned over the performance cycle or vesting period.

The following table summarizes CenterPoint Energy’s expenses related to LTIPs for 2018, 2017 and 2016:
 
Year Ended December 31,
 
2018
 
2017
 
2016
 
(in millions)
LTIP Compensation expense (1)
$
26

 
$
21

 
$
19

Income tax benefit recognized
6

 
8

 
7

Actual tax benefit realized for tax deductions
5

 
6

 
5


(1)
Included in Operation and maintenance expense in CenterPoint Energy’s Statements of Consolidated Income and not capitalized as a part of Inventory or Property, Plant and Equipment.
 
The following tables summarize CenterPoint Energy’s LTIP activity for 2018:
 
Year Ended December 31, 2018
 
Shares
(Thousands)
 
Weighted-Average
Grant Date
Fair Value
 
Remaining Average
Contractual
Life (Years)
 
Aggregate
Intrinsic
Value (2) (Millions)
Performance Awards (1)
 
 
 
 
 
 
 
Outstanding and non-vested as of December 31, 2017
3,627

 
$
22.15

 
 
 
 
Granted
1,321

 
26.74

 
 
 
 
Forfeited or canceled
(721
)
 
21.72

 
 
 
 
Vested and released to participants
(409
)
 
21.31

 
 
 
 
Outstanding and non-vested as of December 31, 2018
3,818

 
$
23.91

 
1
 
$
57

 
 
 
 
 
 
 
 
Stock Awards
 
 
 
 
 
 
 
Outstanding and non-vested as of December 31, 2017
980

 
$
22.68

 
 
 
 
Granted
409

 
26.62

 
 
 
 
Forfeited or canceled
(29
)
 
25.31

 
 
 
 
Vested and released to participants
(300
)
 
22.84

 
 
 
 
Outstanding and non-vested as of December 31, 2018
1,060

 
$
24.08

 
1.1
 
$
30

 
(1)
Reflects maximum performance achievement.

(2)
Reflects the impact of current expectations of achievement and stock price.

The weighted average grant date fair values per unit of awards granted were as follows for 2018, 2017 and 2016:
 
Year Ended December 31,
 
2018
 
2017
 
2016
 
(In millions, except for per unit amounts)
Performance Awards
 
Weighted-average grant date fair value per unit of awards granted
$
26.74

 
$
26.64

 
$
18.98

Total intrinsic value of awards received by participants
12

 
7

 
7

Vested grant date fair value
9

 
5

 
7

 
 
 
 
 
 
Stock Awards
 
 
 
 
 
Weighted-average grant date fair value per unit of awards granted
$
26.62

 
$
26.77

 
$
19.24

Total intrinsic value of awards received by participants
9

 
9

 
6

Vested grant date fair value
7

 
7

 
6


 
As of December 31, 2018, there was $27 million of total unrecognized compensation cost related to non-vested performance and stock awards which is expected to be recognized over a weighted-average period of 1.7 years.

(b) Pension Benefits (CenterPoint Energy)

CenterPoint Energy maintains a non-contributory qualified defined benefit pension plan covering substantially all employees, with benefits determined using a cash balance formula. Substantially all of the Registrants’ employees participate in CenterPoint Energy’s non-contributory qualified defined benefit plan. Under the cash balance formula, participants accumulate a retirement benefit based upon 5% of eligible earnings and accrued interest. Participants are 100% vested in their benefit after completing three years of service. In addition to the non-contributory qualified defined benefit pension plans, CenterPoint Energy maintains unfunded non-qualified benefit restoration plans which allow participants to receive the benefits to which they would have been entitled under CenterPoint Energy’s non-contributory qualified pension plan except for federally mandated limits on qualified plan benefits or on the level of compensation on which qualified plan benefits may be calculated.

CenterPoint Energy’s net periodic cost includes the following components relating to pension, including the non-qualified benefit restoration plan:
 
Year Ended December 31,
 
2018
 
2017
 
2016
 
(in millions)
Service cost (1)
$
37

 
$
36

 
$
38

Interest cost (2)
79

 
89

 
93

Expected return on plan assets (2)
(107
)
 
(97
)
 
(101
)
Amortization of prior service cost (2)
9

 
9

 
9

Amortization of net loss (2)
43

 
58

 
63

Net periodic cost
$
61

 
$
95

 
$
102

 

(1)
Amounts presented in the table above are included in Operation and maintenance expense in CenterPoint Energy’s Statements of Consolidated Income, net of regulatory deferrals and amounts capitalized. See Note 2(r).

(2)
Amounts presented in the table above are included in Other, net in CenterPoint Energy’s Statements of Consolidated Income, net of regulatory deferrals. See Note 2(r).

CenterPoint Energy used the following assumptions to determine net periodic cost relating to pension benefits:
 
Year Ended December 31,
 
2018
 
2017
 
2016
Discount rate
3.65
%
 
4.15
%
 
4.40
%
Expected return on plan assets
6.00

 
6.00

 
6.25

Rate of increase in compensation levels
4.45

 
4.50

 
4.15



In determining net periodic benefit cost, CenterPoint Energy uses fair value, as of the beginning of the year, as its basis for determining expected return on plan assets.

The following table summarizes changes in the benefit obligation, plan assets, the amounts recognized in the Consolidated Balance Sheets as well as the key assumptions of CenterPoint Energy’s pension plans. The measurement dates for plan assets and obligations were December 31, 2018 and 2017.
 
December 31,
 
2018
 
2017
 
(in millions, except for actuarial assumptions)
Change in Benefit Obligation
 
 
 
Benefit obligation, beginning of year
$
2,225

 
$
2,197

Service cost
37

 
36

Interest cost
79

 
89

Benefits paid
(201
)
 
(168
)
Actuarial (gain) loss (1)
(127
)
 
71

Benefit obligation, end of year
2,013

 
2,225

Change in Plan Assets
 

 
 

Fair value of plan assets, beginning of year
1,801

 
1,656

Employer contributions
69

 
48

Benefits paid
(201
)
 
(168
)
Actual investment return
(153
)
 
265

Fair value of plan assets, end of year
1,516

 
1,801

Funded status, end of year
$
(497
)
 
$
(424
)
 
 
 
 
 
December 31,
 
2018
 
2017
 
(in millions, except for actuarial assumptions)
Amounts Recognized in Balance Sheets
 

 
 

Current liabilities-other
$
(7
)
 
$
(7
)
Other liabilities-benefit obligations
(490
)
 
(417
)
Net liability, end of year
$
(497
)
 
$
(424
)
Actuarial Assumptions
 
 
 
Discount rate (2)
4.35
%
 
3.65
%
Expected return on plan assets (3)
6.00

 
6.00

Rate of increase in compensation levels
4.60

 
4.45

Interest crediting rate
3.75

 
3.75


(1)
Significant sources of gain for 2018 include the increase in discount rate from 3.65% to 4.35% and the mortality projection scale change from MP2017 to MP2018. For 2017, the significant source of loss was the decrease in the discount rate from 4.15% to 3.65%.

(2)
The discount rate assumption was determined by matching the projected cash flows of CenterPoint Energy’s plans against a hypothetical yield curve of high-quality corporate bonds represented by a series of annualized individual discount rates from one-half to 99 years.

(3)
The expected rate of return assumption was developed using the targeted asset allocation of CenterPoint Energy’s plans and the expected return for each asset class.

The following table displays pension benefits related to CenterPoint Energy’s pension plans that have accumulated benefit obligations in excess of plan assets:
 
December 31,
 
2018
 
2017
 
Pension
(Qualified)
 
Pension
(Non-qualified)
 
Pension
(Qualified)
 
Pension
(Non-qualified)
 
(in millions)
Accumulated benefit obligation
$
1,930

 
$
61

 
$
2,090

 
$
74

Projected benefit obligation
1,952

 
61

 
2,151

 
74

Fair value of plan assets
1,516

 

 
1,801

 



The accumulated benefit obligation for all defined benefit pension plans on CenterPoint Energy’s Consolidated Balance Sheets was $1,991 million and $2,164 million as of December 31, 2018 and 2017, respectively.
 
(c) Postretirement Benefits

CenterPoint Energy provides certain healthcare and life insurance benefits for retired employees on both a contributory and non-contributory basis. The Registrants’ employees who were hired before January 1, 2018 and who have met certain age and service requirements at retirement, as defined in the plans, are eligible to participate in these benefit plans. Employees hired on or after January 1, 2018 are not eligible for these benefits, except that employees represented by IBEW Local Union 66 are eligible to participate in certain of the benefits, subject to the applicable age and service requirements. With respect to retiree medical and prescription drug benefits, employees represented by the IBEW Local Union 66 who retire on or after January 1, 2017, and their dependents, receive any such benefits exclusively through the NECA/IBEW Family Medical Care Plan pursuant to the terms of the renegotiated collective bargaining agreement entered into in May 2016. Houston Electric and CERC are required to fund a portion of their obligations in accordance with rate orders. All other obligations are funded on a pay-as-you-go basis.

Postretirement benefits are accrued over the active service period of employees. The net postretirement benefit cost includes the following components:
 
Year Ended December 31,
 
2018
 
2017
 
2016
 
CenterPoint Energy
 
Houston Electric
 
CERC
 
CenterPoint Energy
 
Houston Electric
 
CERC
 
CenterPoint Energy
 
Houston Electric
 
CERC
 
(in millions)
Service cost (1)
$
2

 
$

 
$
1

 
$
2

 
$
1

 
$
1

 
$
2

 
$
1

 
$
1

Interest cost (2)
13

 
8

 
4

 
16

 
9

 
5

 
16

 
10

 
4

Expected return on plan assets (2)
(5
)
 
(4
)
 
(1
)
 
(5
)
 
(4
)
 
(1
)
 
(6
)
 
(5
)
 
(1
)
Amortization of prior service cost (credit) (2)
(5
)
 
(5
)
 
1

 
(5
)
 
(6
)
 
1

 
(3
)
 
(4
)
 

Amortization of net loss (2)

 

 

 

 

 

 
1

 
1

 
1

Curtailment (3)

 

 

 

 

 

 
(5
)
 
(4
)
 
(1
)
Net postretirement benefit cost (credit)
$
5

 
$
(1
)
 
$
5

 
$
8

 
$

 
$
6

 
$
5

 
$
(1
)
 
$
4


(1)
Amounts presented in the table above are included in Operation and maintenance expense in CenterPoint Energy’s Statements of Consolidated Income, net of regulatory deferrals and amounts capitalized. See Note 2(r).

(2)
Amounts presented in the table above are included in Other, net in each of the Registrants’ respective Statements of Consolidated Income, net of regulatory deferrals. See Note 2(r).

(3)
A curtailment gain or loss is required when the expected future services of a significant number of current employees are reduced or eliminated for the accrual of benefits. During 2016, postretirement healthcare benefits were amended resulting in a net curtailment gain of $5 million. In May 2016, Houston Electric entered into a renegotiated collective bargaining agreement with the IBEW Local Union 66 that provides that for Houston Electric bargaining unit employees covered under the agreement who retire on or after January 1, 2017, retiree medical and prescription drug coverage will be provided exclusively through the NECA/IBEW Family Medical Care Plan in exchange for the payment of monthly premiums as determined under the agreement. As a result, the accrued postretirement benefits related to such future CenterPoint Energy and Houston Electric union retirees were eliminated. Houston Electric recognized a curtailment gain of $3 million as an accelerated recognition of the prior service credit that would otherwise be recognized in future periods for the postretirement plan. CenterPoint Energy also recognized an additional curtailment gain of $2 million in October 2016 related to other amendments in the postretirement plan.

The following assumptions were used to determine net periodic cost relating to postretirement benefits:
 
Year Ended December 31,
 
2018
 
2017
 
2016
 
CenterPoint Energy
 
Houston Electric
 
CERC
 
CenterPoint Energy
 
Houston Electric
 
CERC
 
CenterPoint Energy
 
Houston Electric
 
CERC
Discount rate
3.60
%
 
3.60
%
 
3.60
%
 
4.15
%
 
4.15
%
 
4.15
%
 
4.35
%
 
4.35
%
 
4.35
%
Expected return on plan assets
4.55

 
4.75

 
3.85

 
4.50

 
4.75

 
3.60

 
4.80

 
5.00

 
3.95



The following table summarizes changes in the benefit obligation, plan assets, the amounts recognized in consolidated balance sheets and the key assumptions of the postretirement plans. The measurement dates for plan assets and benefit obligations were December 31, 2018 and 2017.
 
December 31,
 
2018
 
2017
 
CenterPoint Energy
 
Houston Electric
 
CERC
 
CenterPoint Energy
 
Houston Electric
 
CERC
 
(in millions)
Change in Benefit Obligation
 
 
 
 
 
 
 
 
 
 
 
Benefit obligation, beginning of year
$
386

 
$
225

 
$
109

 
$
383

 
$
217

 
$
115

Service cost
2

 

 
1

 
2

 
1

 
1

Interest cost
13

 
8

 
4

 
16

 
9

 
5

Participant contributions
7

 
2

 
4

 
7

 
2

 
3

Benefits paid
(25
)
 
(13
)
 
(9
)
 
(26
)
 
(14
)
 
(9
)
Actuarial (gain) loss (1)
(52
)
 
(56
)
 
1

 
4

 
10

 
(6
)
Benefit obligation, end of year
331

 
166

 
110

 
386

 
225

 
109

Change in Plan Assets
 
 
 
 
 

 
 

 
 
 
 

Fair value of plan assets, beginning of year
120

 
93

 
26

 
113

 
88

 
25

Employer contributions
14

 
9

 
4

 
16

 
10

 
5

Participant contributions
7

 
2

 
4

 
7

 
2

 
3

Benefits paid
(25
)
 
(13
)
 
(9
)
 
(26
)
 
(14
)
 
(9
)
Actual investment return
(2
)
 
(2
)
 

 
10

 
7

 
2

Fair value of plan assets, end of year
114

 
89

 
25

 
120

 
93

 
26

Funded status, end of year
$
(217
)
 
$
(77
)
 
$
(85
)
 
$
(266
)
 
$
(132
)
 
$
(83
)
Amounts Recognized in Balance Sheets
 
 
 
 
 

 
 

 
 
 
 

Current liabilities-other
$
(6
)
 
$

 
$
(3
)
 
$
(6
)
 
$

 
$
(4
)
Other liabilities-benefit obligations
(211
)
 
(77
)
 
(82
)
 
(260
)
 
(132
)
 
(79
)
Net liability, end of year
$
(217
)
 
$
(77
)
 
$
(85
)
 
$
(266
)
 
$
(132
)
 
$
(83
)
Actuarial Assumptions
 
 
 
 
 
 
 
 
 
 
 
Discount rate (2)
4.35
%
 
4.35
%
 
4.35
%
 
3.60
%
 
3.60
%
 
3.60
%
Expected return on plan assets (3)
4.60

 
4.70

 
4.15

 
4.55

 
4.75

 
3.85

Medical cost trend rate assumed for the next year - Pre-65
5.95

 
5.95

 
5.95

 
6.15

 
6.15

 
6.15

Medical/prescription drug cost trend rate assumed for the next year - Post-65
28.60

 
28.60

 
28.60

 
23.85

 
23.85

 
23.85

Prescription drug cost trend rate assumed for the next year - Pre-65
9.20

 
9.20

 
9.20

 
9.85

 
9.85

 
9.85

Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)
4.50

 
4.50

 
4.50

 
4.50

 
4.50

 
4.50

Year that the cost trend rates reach the ultimate trend rate - Pre-65
2026

 
2026

 
2026

 
2026

 
2026

 
2026

Year that the cost trend rates reach the ultimate trend rate - Post-65
2027

 
2027

 
2027

 
2024

 
2024

 
2024



(1)
Significant sources of gain for 2018 include the increase in the discount rate from 3.60% to 4.35%, favorable benefit claims experience and cost trend rates in addition to the change in mortality projection scale from MP2017 to MP2018.

(2)
The discount rate assumption was determined by matching the projected cash flows of the plans against a hypothetical yield curve of high-quality corporate bonds represented by a series of annualized individual discount rates from one-half to 99 years.

(3)
The expected rate of return assumption was developed using the targeted asset allocation of the plans and the expected return for each asset class.

(d) Accumulated Other Comprehensive Income (Loss) (CenterPoint Energy and CERC)

CenterPoint Energy recognizes the funded status of its pension plans and other postretirement plans on its Consolidated Balance Sheets. To the extent this obligation exceeds amounts previously recognized in the Statements of Consolidated Income, CenterPoint Energy records a regulatory asset for that portion related to its rate regulated utilities.  To the extent that excess liability does not relate to a rate regulated utility, the offset is recorded as a reduction to equity in accumulated other comprehensive income.

Amounts recognized in accumulated other comprehensive loss (gain) consist of the following:
 
December 31,
 
2018
 
2017
 
Pension
Benefits
 
Postretirement
Benefits
 
Pension
Benefits
 
Postretirement
Benefits
 
CenterPoint Energy
 
CenterPoint Energy
 
CERC
 
CenterPoint Energy
 
CenterPoint Energy
 
CERC
 
(in millions)
Unrecognized actuarial loss (gain)
$
109

 
$
(7
)
 
$
(3
)
 
$
94

 
$
(8
)
 
$
(2
)
Unrecognized prior service cost
1

 
5

 
5

 
1

 
6

 
6

Deferred tax benefit (1)

 

 
(9
)
 

 

 
(11
)
Net amount recognized in accumulated other comprehensive loss (gain)
$
110

 
$
(2
)
 
$
(7
)
 
$
95

 
$
(2
)
 
$
(7
)


(1)
CenterPoint Energy’s and CERC’s postretirement benefit obligation is reduced by the impact of previously non-taxable government subsidies under the Medicare Prescription Drug Act. Because the subsidies were non-taxable, the temporary difference used in measuring the deferred tax impact was determined on the unrecognized losses excluding such subsidies.

The changes in plan assets and benefit obligations recognized in other comprehensive income during 2018 are as follows:
 
Pension
Benefits
 
Postretirement
Benefits
 
CenterPoint Energy
 
CenterPoint Energy
 
CERC
 
(in millions)
Net loss (gain)
$
22

 
$

 
$
(1
)
Amortization of net loss
(6
)
 

 

Amortization of prior service cost
(1
)
 

 
(1
)
Total recognized in comprehensive income
$
15

 
$

 
$
(2
)
Total expense recognized in net periodic costs and Other comprehensive income
$
76

 
$
5

 
$
3



(e) Pension Plan Assets (CenterPoint Energy)

In managing the investments associated with the benefit plans, CenterPoint Energy’s objective is to achieve and maintain a fully funded plan.  This objective is expected to be achieved through an investment strategy that manages liquidity requirements while maintaining a long-term horizon in making investment decisions and efficient and effective management of plan assets.

As part of the investment strategy discussed above, CenterPoint Energy maintained the following weighted average allocation targets for its pension plans as of December 31, 2018:
U.S. equity
12 - 28%
International developed market equity
7 - 17%
Emerging market equity
5 - 11%
Fixed income
55 - 65%
Cash
0 - 2%


The following tables set forth by level, within the fair value hierarchy (see Note 10), CenterPoint Energy’s pension plan assets at fair value as of December 31, 2018 and 2017:
 
Fair Value Measurements as of December 31,
 
2018
 
2017
 
(Level 1)
 
(Level 2)
 
(Level 3)
 
Total
 
(Level 1)
 
(Level 2)
 
(Level 3)
 
Total
 
(in millions)
Cash
$
19

 
$

 
$

 
$
19

 
$
18

 
$

 
$

 
$
18

Corporate bonds:
 
 
 
 
 
 
 
 
 

 
 

 
 

 
 
Investment grade or above

 
368

 

 
368

 

 
432

 

 
432

Equity securities:
 
 
 
 
 
 
 

 
 

 
 

 
 

 
 

U.S. companies
60

 

 

 
60

 
76

 

 

 
76

Cash received as collateral from securities lending
77

 

 

 
77

 
76

 

 

 
76

U.S. treasuries
196

 

 

 
196

 
67

 

 

 
67

Mortgage backed securities

 
6

 

 
6

 

 
8

 

 
8

Asset backed securities

 
1

 

 
1

 

 
1

 

 
1

Municipal bonds

 
27

 

 
27

 

 
47

 

 
47

Mutual funds (2)
167

 

 

 
167

 
211

 

 

 
211

International government bonds

 
16

 

 
16

 

 
17

 

 
17

Obligation to return cash received as collateral from securities lending
(77
)
 

 

 
(77
)
 
(76
)
 

 

 
(76
)
Total investments at fair value
$
442

 
$
418

 
$

 
860

 
$
372

 
$
505

 
$

 
877

Investments measured by net asset value per share or its equivalent (1) (2)
 
 
 
 
 
 
656

 
 
 
 
 
 
 
924

Total Investments
 
 
 
 
 
 
$
1,516

 
 
 
 
 
 
 
$
1,801


(1)
Represents investments in common collective trust funds.

(2)
The amounts invested in mutual funds and common collective trust funds were allocated as follows:
 
As of December 31,
 
2018
 
2017
 
Mutual Funds
 
Common Collective Trust Funds
 
Mutual Funds
 
Common Collective Trust Funds
International equities
51
%
 
37
%
 
57
%
 
34
%
Emerging market equities
34
%
 
4
%
 
30
%
 
5
%
U.S. equities
15
%
 
5
%
 
13
%
 
6
%
Fixed income

 
54
%
 

 
55
%


The pension plan utilized both exchange traded and over-the-counter financial instruments such as futures, interest rate options and swaps that were marked to market daily with the gains/losses settled in the cash accounts. The pension plan did not include any holdings of CenterPoint Energy Common Stock as of December 31, 2018 or 2017.

(f) Postretirement Plan Assets

In managing the investments associated with the postretirement plans, the Registrants’ objective is to achieve and maintain a fully funded plan.  This objective is expected to be achieved through an investment strategy that manages liquidity requirements while maintaining a long-term horizon in making investment decisions and efficient and effective management of plan assets.

As part of the investment strategy discussed above, the Registrants maintained the following weighted average allocation targets for the postretirement plans as of December 31, 2018:
 
CenterPoint Energy
 
Houston Electric
 
CERC
U.S. equity
13 - 23%
 
13 - 23%
 
15 - 25%
International developed market equity
3 - 13%
 
3 - 13%
 
2 - 12%
Fixed income
69 - 79%
 
69 - 79%
 
68 - 78%
Cash
0 - 2%
 
0 - 2%
 
0 - 2%


The following table presents mutual funds by level, within the fair value hierarchy, the Registrants’ postretirement plan assets at fair value as of December 31, 2018 and 2017:
 
Fair Value Measurements as of December 31,
 
2018
 
2017
 
Mutual Funds
 

(Level 1)
 

(Level 2)
 

(Level 3)
 
Total
 

(Level 1)
 

(Level 2)
 

(Level 3)
 
Total
 
(in millions)
CenterPoint Energy
$
114

 
$

 
$

 
$
114

 
$
120

 
$

 
$

 
$
120

Houston Electric
89

 

 

 
89

 
93

 

 

 
93

CERC
25

 

 

 
25

 
26

 

 

 
26


The amounts invested in mutual funds were allocated as follows:
 
As of December 31,
 
2018
 
2017
 
CenterPoint Energy
 
Houston Electric
 
CERC
 
CenterPoint Energy
 
Houston Electric
 
CERC
Fixed income
74
%
 
74
%
 
73
%
 
74
%
 
74
%
 
71
%
U.S. equities
19
%
 
19
%
 
21
%
 
18
%
 
18
%
 
21
%
International equities
7
%
 
7
%
 
6
%
 
8
%
 
8
%
 
8
%


(g) Benefit Plan Contributions

The Registrants made the following contributions in 2018 and expect to make the following minimum contributions in 2019 to the indicated benefit plans below:
 
Contributions in 2018
 
Expected Minimum Contributions in 2019
 
CenterPoint Energy
 
Houston Electric
 
CERC
 
CenterPoint Energy
 
Houston Electric
 
CERC
 
(in millions)
Qualified pension plan
$
60

 
$

 
$

 
$
86

 
$

 
$

Non-qualified pension plan
9

 

 

 
7

 

 

Postretirement benefit plan
14

 
9

 
4

 
17

 
10

 
4



The following benefit payments are expected to be paid by the pension and postretirement benefit plans:
 
Pension
Benefits
 
Postretirement Benefits
 
CenterPoint
Energy
 
CenterPoint
Energy
 
Houston Electric
 
CERC
 
(in millions)
2019
$
141

 
$
16

 
$
9

 
$
5

2020
146

 
19

 
10

 
6

2021
154

 
20

 
11

 
6

2022
155

 
21

 
11

 
7

2023
156

 
22

 
12

 
7

2024-2028
759

 
116

 
61

 
37



(h) Savings Plan

The Registrants participate in CenterPoint Energy’s tax-qualified employee savings plan that includes a cash or deferred arrangement under Section 401(k) of the Internal Revenue Code of 1986, as amended (the Code), and an employee stock ownership plan under Section 4975(e)(7) of the Code. Under the plan, participating employees may make pre-tax or Roth contributions up to 50%, and after tax contributions up to 16%, of their eligible compensation, not to exceed certain federally mandated limits. The Registrants match 100% of the first 6% of each employee’s compensation contributed. The matching contributions are fully vested at all times.

Effective January 1, 2016, the savings plan was amended to limit the percentage of future contributions that could be invested in Common Stock to 25% and to prohibit transfers of account balances where the transfer would result in more than 25% of a participant’s total account balance invested in Common Stock.

The savings plan has significant holdings of Common Stock. As of December 31, 2018, 12,062,915 shares of Common Stock were held by the savings plan, which represented approximately 16% of its investments. Given the concentration of the investments in Common Stock, the savings plan and its participants have market risk related to this investment.

CenterPoint Energy allocates to Houston Electric and CERC the savings plan benefit expense related to their respective employees. The following table summarizes the Registrants’ savings plan benefit expense for 2018, 2017 and 2016:
 
Year Ended December 31,
 
2018
 
2017
 
2016
 
CenterPoint Energy
 
Houston Electric
 
CERC
 
CenterPoint Energy
 
Houston Electric
 
CERC
 
CenterPoint Energy
 
Houston Electric
 
CERC
 
(in millions)
 
 
Savings plan benefit
 expenses
$
43

 
$
17

 
$
18

 
$
41

 
$
17

 
$
17

 
$
38

 
$
15

 
$
16



(i) Other Benefits Plans

The Registrants participate in CenterPoint Energy’s plan that provides postemployment benefits for certain former or inactive employees, their beneficiaries and covered dependents, after employment but before retirement (primarily healthcare and life insurance benefits for participants in the long-term disability plan).

The Registrants participate in CenterPoint Energy’s non-qualified deferred compensation plans that provide benefits payable to directors, officers and select employees or their designated beneficiaries at specified future dates or upon termination, retirement or death. Benefit payments are made from the general assets of the Registrants.

Expenses related to other benefit plans were recorded as follows:
 
Year Ended December 31,
 
2018
 
2017
 
2016
 
CenterPoint Energy
 
Houston Electric
 
CERC
 
CenterPoint Energy
 
Houston Electric
 
CERC
 
CenterPoint Energy
 
Houston Electric
 
CERC
 
(in millions)
 
 
Postemployment benefits
$
3

 
$
4

 
$
1

 
$
6

 
$
1

 
$
4

 
$
5

 
$
3

 
$
3

Deferred compensation plans
3

 
1

 

 
3

 
1

 

 
3

 
1

 


Amounts related to other benefit plans were included in Benefit Obligations in the Registrants’ accompanying Consolidated Balance Sheets as follows:
 
December 31, 2018
 
December 31, 2017
 
CenterPoint Energy
 
Houston Electric
 
CERC
 
CenterPoint Energy
 
Houston Electric
 
CERC
 
(in millions)
Postemployment benefits
$
11

 
$
3

 
$
7

 
$
20

 
$
3

 
$
14

Deferred compensation plans
42

 
9

 
3

 
45

 
10

 
3

Split-dollar life insurance arrangements
36

 
1

 

 
39

 
1

 



(j) Change in Control Agreements and Other Employee Matters

CenterPoint Energy has a change in control plan, which was amended and restated on May 1, 2017.  The plan generally provides, to the extent applicable, in the case of a change in control of CenterPoint Energy and covered termination of employment, for severance benefits of up to three times annual base salary plus bonus, and other benefits.  CenterPoint Energy officers, including the Executive Chairman, are participants under the plan.

As of December 31, 2018, the Registrants’ employees were covered by collective bargaining agreements as follows:
 
 
 
Percentage of Employees Covered
 
Agreement Expiration
 
CenterPoint Energy
 
Houston Electric
 
CERC
IBEW Local 66
May 2020
 
18
%
 
51
%
 

OPEIU Local 12 and Mankato
March and May 2021
 
3
%
 

 
3
%
Gas Workers Union Local 340
April 2020
 
6
%
 

 
12
%
IBEW Local 949
December 2020
 
3
%
 

 
7
%
USW Locals 13-227 and 13-1
June and July 2022
 
5
%
 

 
11
%
Total
 
 
35
%
 
51
%
 
33
%