Large-Load Customer Growth Drive Up CenterPoint Energy Capex Plans

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Written by John Egan for IIR News Intelligence (Sugar Land, Texas)

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Summary

The continued strong growth of large energy users has caused CenterPoint Energy Incorporated to increase its planned capital spending program to meet the current and future electric needs of customers in its Texas and Indiana service areas.

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Planned Data Centers Push Up CenterPoint Overall Capex

Centerpoint Energy Incorporated has increased its planned capital spending program by several billion dollars to meet actual and projected growth in electric demand from large energy users such as data centers in its Texas and Indiana service areas.

In an earnings call with investors October 27, Chairman and Chief Executive Jason Wells said "unprecedented" growth in its largest service area, the Greater Houston metropolitan region, caused the company to increase its overall planned capital expenditures (capex) for its three-state service area by about US$4 billion, approximately US$38.7 billion, over the 2026-2030 period. In addition to that new spending, CenterPoint will accelerate the spending of approximately US$1.5 billion from the 2031-2035 period to the 2026-2030 period.

The company's 10-year capex program rose to approximately US$70.7 billion over the 10-year, 2026-2035 period, a 6% increase over what CenterPoint officials projected only three months ago on a prior earnings call.

CenterPoint serves two areas where large energy loads, such as data centers, are pushing up electric load and utility capital outlays: Greater Houston and southwestern Indiana. Its Texas electric service area is far more significant than the Indiana service area. It also operates local gas utilities in Texas, Minnesota and Indiana.

Wells told investors the 10-year, corporate-wide plan "represents only a portion of the opportunities in front of us." Beyond the US$70.7 billion the company plans to invest over the next decade, he said an additional US$10 billion could be invested in

• Electric transmission investments
• Resiliency and grid modernization
• Next-generation electric smart meter deployment
• Data center-related investments in Indiana

Large Capex Spend Seen for Greater Houston Area

Because the Greater Houston area is far and away the company's largest and fastest-growing service area, that metropolitan area will garner most of CenterPoint's planned five-year capex, which is projected to rise from about US$4 billion in 2026 to US$6 billion in 2030.

All told, the company plans to invest about US$26.1 billion in its Greater Houston electric business over the 2026-2030 period. CenterPoint provides electricity to about 2.8 million customers in the Greater Houston area.

The company plans to invest about US$5.7 billion in 11 electric capital projects in the Greater Houston area, according to Industrial Info Resources' Global Market Intelligence™ platform. Subscribers can view reports on these planned projects by clicking here.

Industrial Info Resources is tracking plans by developers to construct six data centers in Harris County, Texas, home to Houston, that are valued at about US$1.6 billion. Readers can view these projects here.

"Greater Houston growth continues to accelerate," Wells told investors and analysts October 27. "We expect to energize at least 14 gigawatts (GW) of new customer electric demand by the end of 2030." Most of that projected load already has been submitted to the Electric Reliability Council of Texas (ERCOT) under the grid manager's "batch-zero" process for scheduling the interconnection of large loads to the state's electric grid.

"This incredible demand (growth) Is creating a powerful multiplier effect, as large industrial expansions drive broader commercial growth across our territory," he continued, adding that industrial and commercial leasing activity is up 30% from last year.

The utility operates a large transmission grid in and around the Greater Houston area, which it is highlighting as a market advantage to large energy users looking for a speedy interconnection.

To ensure the region's growth momentum continues, CenterPoint officials said they are considering a total of 12 specific transmission investments in the Greater Houston area that would expand transmission import capacity; enhance system stability; and boost intra-regional transmission capacity. A final transmission study is scheduled to be released next year.

Most of the Houston-area planned transmission projects are slated to be constructed within CenterPoint's existing rights of way, which would provide "a faster and more straightforward path to expanding our system capacity," Chris Foster, CenterPoint's chief financial officer, told analysts October 27.

"We are building the system needed to meet the unprecedented demand growth across the Greater Houston area," he added.

By the Numbers

• 38.7: The dollar value, in U.S. billions, of capital investments CenterPoint Energy plans to make across its three-state service area over the 2026-2030 period.
• 70.7: The dollar value, in U.S. billions, that CenterPoint Energy plans to invest in its business over the next decade, 2026-2035.
• 10: The incremental investment opportunities, over the US$70.7 billion, that CenterPoint could make in associated lines of business.

Smaller Outlays Seen for Indiana Electric

Capital spending in CenterPoint's southwestern Indiana electric service area, by contrast, is currently targeted to average about US$380 million per year over the next five years, for a total of approximately US$1.9 billion. But Wells told investors, "We anticipate signing a deal with a large (energy) load (in Indiana) by the end of 2026."

In its southwestern Indiana service area, the company plans to invest about US$566 million in nine capital projects. Subscribers can view those projects here.

CenterPoint provides natural gas to about 739,000 customers in Indiana.

Smaller Spend Slated for Gas Utilities in Texas, Ohio, Minnesota

In addition to its Houston and Indiana electric businesses, CenterPoint also operates gas utilities in Texas, Minnesota and Indiana. Those areas are slated to get far less in capital investments than CenterPoint's Houston electric business.

Under the capital plan released October 27, here are the aggregate investments CenterPoint plans to make it its gas businesses over the 2026-2030 period:

• Texas gas business: US$4.1 billion
• Indiana gas business: US$3.9 billion
• Minnesota gas business: US$2.3 billion

CenterPoint recently sold its Ohio gas utility business for about US$2.6 billion.

Key Takeaways

• Dramatic growth in the Greater Houston area has caused CenterPoint Energy to raise its five-year electric capital budget for that area to about US$26.1 billion.
• Data centers and other large energy-using customers are driving growth in the Greater Houston area.
• As a company, CenterPoint's increased its planned capital spending for the 2026-2030 period to about US$38.7 billion.
• CenterPoint's 10-year planned capital budget is about US$70.7 billion.
• In addition to this 10-year capex plan, up to an additional US$10 billion in capital investments could be made in CenterPoint's energy business.

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Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 trillion (USD).