CENTERPOINT ENERGY INC

The Registrants reported the following effective tax rates:

(1)CenterPoint Energy’s lower effective tax rate for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 was primarily due to the absence of impacts associated with the sale of Energy Systems Group recorded in 2023 and a decrease in state income taxes. CenterPoint Energy’s lower effective tax rate for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 was primarily due to the absence of impacts associated with the sale of Energy Systems Group recorded in 2023, a decrease in state income taxes, and the tax impacts of the state deferred remeasurement benefit of $25 million related to the Louisiana and Mississippi natural gas LDC businesses sale, which met the held for sale criteria in the first quarter of 2024 and is described further below, partially offset by the tax impacts of the valuation allowance of $21 million established against Louisiana and Mississippi NOLs, since those NOLs will not be utilized due to the Louisiana and Mississippi natural gas LDC businesses sale. See Note 3 for further details.

(2)Houston Electric’s lower effective tax rate for the three and six months ended June 30, 2024 compared to the same period ended June 30, 2023 was primarily driven by a decrease in state income taxes.

(3)CERC’s higher effective tax rate for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 was primarily driven by an increase in state income taxes. CERC’s lower effective tax rate for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 was primarily driven by the tax impacts of the state deferred remeasurement benefit of $24 million associated with the Louisiana and Mississippi natural gas LDC businesses sale meeting the held for sale criteria in the first quarter of 2024. For tax purposes, when the held for sale criteria is met, the CERC and unitary state apportionment rates must be updated to account for the sale and applied to the estimated post-sale net deferred tax liability. This impact was partially offset by the tax impacts of a valuation allowance of $21 million against Louisiana and Mississippi NOLs, since those NOLs will not be utilized due to the Louisiana and Mississippi natural gas LDC businesses sale.

CenterPoint Energy reported a net uncertain tax liability, inclusive of interest and penalties, of $30 million as of June 30, 2024. The Registrants believe that it is reasonably possible that the Registrants will recognize a $3 million tax benefit, including penalties and interest, in the next 12 months as a result of a lapse of statutes on the 2020 Indiana state return.

Tax Audits and Settlements. Tax years through 2022 have been audited and settled with the IRS for CenterPoint Energy. For tax years 2023-2024, the Registrants are participants in the IRS’s Compliance Assurance Process. Vectren’s pre-Merger 2014-2019 tax years have been audited and settled with the IRS.