Short-Term Borrowings and Long-term Debt

9 Months Ended

Sep. 30, 2019

Debt Disclosure [Abstract]

Short-term Borrowings and Long-term Debt [Text Block]

Short-term Borrowings and Long-term Debt

(a) Short-term Borrowings (CenterPoint Energy and CERC)

Inventory Financing. NGD has AMAs associated with its utility distribution service in Arkansas, Louisiana, Mississippi, Oklahoma and Texas. The AMAs have varying terms, the longest of which expires in 2021. Pursuant to the provisions of the agreements, NGD sells natural gas and agrees to repurchase an equivalent amount of natural gas during the winter heating seasons at the same cost. These transactions are accounted for as an inventory financing. CenterPoint Energy and CERC had no outstanding obligations related to the AMAs as of both September 30, 2019 and December 31, 2018.

(b) Long-term Debt

Debt Transactions. During the nine months ended September 30, 2019, the following debt instruments were issued or incurred:

	Issuance Date	Debt Instrument	Aggregate Principal Amount		Interest Rate as of September 30, 2019		Maturity Date
			(in millions)
Houston Electric	January 2019	General mortgage bonds	$	700	4.25	%	2049
CenterPoint Energy (1)	February 2019	Variable rate term loan	25		2.88	%	2020
CenterPoint Energy	May 2019	Variable rate term loan	1,000		2.81	%	2021
CenterPoint Energy	August 2019	Unsecured senior notes	500		2.50	%	2024
CenterPoint Energy	August 2019	Unsecured senior notes	400		2.95	%	2030
CenterPoint Energy	August 2019	Unsecured senior notes	300		3.70	%	2049

(1) Draw down by VCC on its variable rate term loan.

Proceeds from Houston Electric’s debt issuance were used for general limited liability company purposes, including capital expenditures. Proceeds from VCC’s draw down of its term loan were used for general corporate purposes. Proceeds from CenterPoint Energy’s debt issuances were used for general corporate purposes, including the repayment of commercial paper.

Acquired Debt (CenterPoint Energy). The table below summarizes the long-term external debt of Vectren and its subsidiaries that remained outstanding as of September 30, 2019:

	(in millions)
Long-term debt:
Senior notes due 2020 to 2045 (1)	$	637
Variable rate term loan due 2020 (2)	300
Variable rate term loan due 2020 (3)	200
First mortgage bonds due 2022 to 2055 (4)	293
Commercial paper (5)	278
Bank revolver (6)	—
Total Vectren debt	$	1,708

(1) Consists of $532 million of senior notes issued by VUHI, $96 million of senior notes issued by Indiana Gas, and $9 million of senior notes issued by VCC. The senior notes have stated interest rates that range from 3.33% to 7.08%. The senior notes issued by VUHI are guaranteed by SIGECO, Indiana Gas and VEDO. The senior notes issued by VCC are guaranteed by Vectren. In connection with the Merger, two of CenterPoint Energy’s acquired wholly-owned subsidiaries, VUHI and VCC, made offers to prepay certain outstanding guaranteed senior notes as required pursuant to certain note purchase agreements previously entered into by VUHI and VCC. In turn, VUHI and VCC borrowed $568 million and $191 million, respectively, from CenterPoint Energy to fund note redemptions effected pursuant to these prepayment offers. To fund these prepayments and payments of approximately $5 million of accrued interest, CenterPoint Energy issued approximately $764 million of commercial paper.

(2) Issued by VUHI and guaranteed by SIGECO, Indiana Gas and VEDO. As of September 30, 2019, the term loan was fully drawn upon. The term loan’s interest rate is currently priced at one-month LIBOR, plus a credit spread ranging from 70 to 90 basis points depending on credit rating.

(3) Issued by VCC and guaranteed by Vectren. As of September 30, 2019, the term loan was fully drawn upon, exclusive of any potential incremental term loans under the related facility’s accordion feature. The term loan’s interest rate is currently priced at one-month LIBOR, plus a credit spread of 70 basis points.

(4) The first mortgage bonds issued by SIGECO subject SIGECO’s properties to a lien under the related mortgage indenture. The first mortgage bonds have stated interest rates that range from 2.375% to 6.72%.

(5) Issued by VUHI with maturities up to 30 days.

(6) Represents borrowings under the VCC credit facility, which is guaranteed by Vectren.

Maturities (CenterPoint Energy). As of September 30, 2019, maturities of CenterPoint Energy’s long-term debt were as follows:

	(in millions)
Remaining three months of 2019	$	69
2020	831
2021	2,761
2022	2,998
2023	713
2024	1,184
2025 and thereafter	6,447

Credit Facilities. The Registrants had the following revolving credit facilities as of September 30, 2019:

Execution  Date	Registrant	Size of Facility		Draw Rate of LIBOR plus (1)	Financial Covenant Limit on Debt for Borrowed Money to Capital Ratio		Debt for Borrowed Money to Capital Ratio as of September 30, 2019 (2)	Termination Date
		(in millions)
March 3, 2016	CenterPoint Energy	$	3,300	1.500%	65%	(3)	58.6%	March 3, 2022
July 14, 2017	CenterPoint Energy (4)	400		1.125%	65%		52.9%	July 14, 2022
July 14, 2017	CenterPoint Energy (5)	200		1.250%	65%		57.1%	July 14, 2022
March 3, 2016	Houston Electric	300		1.125%	65%	(3)	48.7%	March 3, 2022
March 3, 2016	CERC	900		1.250%	65%		47.5%	March 3, 2022
	Total	$	5,100

(1) Based on current credit ratings.

(2) As defined in the revolving credit facility agreements, excluding Securitization Bonds.

(3) For CenterPoint Energy and Houston Electric, the financial covenant limit will temporarily increase from 65% to 70% if Houston Electric experiences damage from a natural disaster in its service territory and CenterPoint Energy certifies to the administrative agent that Houston Electric has incurred system restoration costs reasonably likely to exceed $100 million in a consecutive 12-month period, all or part of which Houston Electric intends to seek to recover through securitization financing. Such temporary increase in the financial covenant would be in effect from the date CenterPoint Energy delivers its certification until the earliest to occur of (i) the completion of the securitization financing, (ii) the first anniversary of CenterPoint Energy’s certification or (iii) the revocation of such certification.

(4) This credit facility was issued by VUHI, is guaranteed by SIGECO, Indiana Gas and VEDO and includes a $10 million swing line sublimit and a $20 million letter of credit sublimit. This credit facility backstops VUHI’s commercial paper program.

(5) This credit facility was issued by VCC, is guaranteed by Vectren and includes a $40 million swing line sublimit and an $80 million letter of credit sublimit.

The Registrants, including the subsidiaries of CenterPoint Energy discussed above, were in compliance with all financial debt covenants as of September 30, 2019.

The table below reflects the utilization of the Registrants’ respective revolving credit facilities:

	September 30, 2019								December 31, 2018
Registrant	Loans		Letters of Credit		Commercial Paper		Weighted Average Interest Rate		Loans		Letters of Credit		Commercial Paper		Weighted Average Interest Rate
	(in millions, except weighted average interest rate)
CenterPoint Energy (1)	$	—	$	6	$	1,383	2.28	%	$	—	$	6	$	—	—	%
CenterPoint Energy (2)	—		—		278		2.30	%	—		—		—		—
CenterPoint Energy (3)	—		—		—		—	%	—		—		—		—
Houston Electric	—		—		—		—	%	—		4		—		—
CERC	—		1		310		2.28	%	—		1		210		2.93	%
Total	$	—	$	7	$	1,971			$	—	$	11	$	210

(1) CenterPoint Energy’s outstanding commercial paper generally has maturities of 60 days or less.

(2) This credit facility was issued by VUHI and is guaranteed by SIGECO, Indiana Gas and VEDO.

(3) This credit facility was issued by VCC and is guaranteed by Vectren.

Other. As of September 30, 2019, certain financial institutions agreed to issue, from time to time, up to $50 million of letters of credit on behalf of Vectren and certain of its subsidiaries in exchange for customary fees. These agreements to issue letters of credit expire on December 31, 2019. As of September 30, 2019, such financial institutions had issued $21 million of letters of credit on behalf of Vectren and certain of its subsidiaries. 

Houston Electric had $68 million and $68 million of general mortgage bonds outstanding as of September 30, 2019 and December 31, 2018, respectively, as collateral for long-term debt of CenterPoint Energy that matures in 2028. These bonds are not reflected in Houston Electric’s consolidated financial statements because of the contingent nature of the obligations.