CENTERPOINT ENERGY INCCNP
CENTERPOINT ENERGY INC Fair Value Disclosure
Fair Value Measurements
Assets and liabilities that are recorded at fair value in the Registrants’ Consolidated Balance Sheets are categorized based upon the level of judgment associated with the inputs used to measure their value. Hierarchical levels, as defined below and directly related to the amount of subjectivity associated with the inputs to fair valuations of these assets and liabilities, are as follows:
Level 1: Inputs are unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date. The types of assets carried at Level 1 fair value generally are exchange-traded derivatives and equity securities.
Level 2: Inputs, other than quoted prices included in Level 1, are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar instruments in active markets and inputs other than quoted prices that are observable for the asset or liability. Fair value assets and liabilities that are generally included in this category are derivatives with fair values based on inputs from actively quoted markets. A market approach is utilized to value the Registrants’ Level 2 interest rate derivative assets or liabilities and natural gas derivative assets or liabilities. CenterPoint Energy’s Level 2 indexed debt securities derivative is valued using an option model and a discounted cash flow model, which uses projected dividends on the ZENS-Related Securities and a discount rate as observable inputs.
Level 3: Inputs are unobservable for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. Unobservable inputs reflect the Registrants’ judgments about the assumptions market participants would use in pricing the asset or liability since limited market data exists. The Registrants develop these inputs based on the best information available, including the Registrants’ own data.
The Registrants determine the appropriate level for each financial asset and liability on a quarterly basis and recognize transfers between levels at the end of the reporting period. As of December 31, 2025 and December 31, 2024, the Registrants did not have any assets or liabilities classified as Level 3.
The following tables present information about the Registrants’ assets and liabilities measured at fair value on a recurring basis as of the dates presented and indicate the fair value hierarchy of the valuation techniques utilized by the Registrants to determine such fair value:
CenterPoint Energy
| December 31, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||||||||||||||||||
| Assets | (in millions) | ||||||||||||||||||||||||||||||||||||||||||||||
Investments in equity securities | $ | 510 | $ | — | $ | — | $ | 510 | $ | 561 | $ | — | $ | — | $ | 561 | |||||||||||||||||||||||||||||||
| Investments, including money market funds (1) | 23 | — | — | 23 | 22 | — | — | 22 | |||||||||||||||||||||||||||||||||||||||
| Total assets | $ | 533 | $ | — | $ | — | $ | 533 | $ | 583 | $ | — | $ | — | $ | 583 | |||||||||||||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||||||||||||||||||||
| Indexed debt securities derivative | $ | — | $ | 564 | $ | — | $ | 564 | $ | — | $ | 619 | $ | — | $ | 619 | |||||||||||||||||||||||||||||||
| Total liabilities | $ | — | $ | 564 | $ | — | $ | 564 | $ | — | $ | 619 | $ | — | $ | 619 | |||||||||||||||||||||||||||||||
Houston Electric
| December 31, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||||||||||||||||||
| Assets | (in millions) | ||||||||||||||||||||||||||||||||||||||||||||||
Investments, including money market funds (2) | $ | 6 | $ | — | $ | — | $ | 6 | $ | 5 | $ | — | $ | — | $ | 5 | |||||||||||||||||||||||||||||||
| Total assets | $ | 6 | $ | — | $ | — | $ | 6 | $ | 5 | $ | — | $ | — | $ | 5 | |||||||||||||||||||||||||||||||
CERC
| December 31, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||||||||||||||||||
| Assets | (in millions) | ||||||||||||||||||||||||||||||||||||||||||||||
| Investments, including money market funds (1) | $ | 16 | $ | — | $ | — | $ | 16 | $ | 15 | $ | — | $ | — | $ | 15 | |||||||||||||||||||||||||||||||
| Total assets | $ | 16 | $ | — | $ | — | $ | 16 | $ | 15 | $ | — | $ | — | $ | 15 | |||||||||||||||||||||||||||||||
(1)Primarily included in Other non-current assets in the respective Consolidated Balance Sheets.
(2)Primarily included in Prepaid expenses and other current assets in the Consolidated Balance Sheets.
Items Measured at Fair Value on a Nonrecurring Basis
As a result of classifying the Ohio Natural Gas LDC business and Louisiana and Mississippi Natural Gas LDC businesses as held for sale at December 31, 2025 and 2024, respectively, CenterPoint Energy and CERC used a market approach consisting of contractual sales price adjusted for estimated working capital and other contractual purchase price adjustments to determine the fair value of the businesses classified as held for sale, which are Level 2 inputs. Neither CenterPoint Energy nor CERC recognized any gains or losses from held for sale for the years ended December 31, 2025 and 2024. See Note 4 for further information.
Estimated Fair Value of Financial Instruments
The fair values of cash and cash equivalents and investments in equity securities measured at fair value are estimated to be approximately equivalent to carrying amounts and have been excluded from the table below. Additionally, CenterPoint Energy’s ZENS indexed debt securities derivative is stated at fair value and is excluded from the table below. The fair value of each debt instrument included below is determined by multiplying the principal amount of each debt instrument by a combination of historical trading prices and comparable issue data. These liabilities, which are not measured at fair value in the Registrants’ Consolidated Balance Sheets, but for which the fair value is disclosed, would be classified as Level 2 in the fair value hierarchy.
| December 31, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||||||||
| CenterPoint Energy (1) | Houston Electric (1) | CERC | CenterPoint Energy (1) | Houston Electric (1) | CERC | ||||||||||||||||||||||||||||||
Short-term borrowings and long-term debt, including current maturities | (in millions) | ||||||||||||||||||||||||||||||||||
| Carrying amount | $ | 22,980 | $ | 10,079 | $ | 4,717 | $ | 20,961 | $ | 8,822 | $ | 5,184 | |||||||||||||||||||||||
| Fair value | 22,377 | 9,292 | 4,711 | 19,597 | 7,746 | 5,032 | |||||||||||||||||||||||||||||
(1)Includes Securitization Bonds.
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 19, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
| 2023 | Feb 20, 2024 | |
| 2022 | Feb 17, 2023 | |
| 2021 | Feb 22, 2022 | |
| 2020 | Feb 25, 2021 | |
| 2019 | Feb 27, 2020 | |
| 2018 | Feb 28, 2019 | |
| 2017 | Feb 22, 2018 | |
| 2016 | Feb 28, 2017 | |
| 2015 | Feb 26, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.