Infrastructure
CenterPoint Outlines Its Own Hurricane Ike Costs (CNP)
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CenterPoint Energy Inc. (NYSE: CNP) has come out this morning with a filing to show its expected costs for restoring power and from outages in the Houston-Galveston area as a result of Hurricane Ike. The Houston-based electricity and gas supplier for roughly 5 million metered customers in Texas, Arkansas, Louisiana, Minnesota, Mississippi, and Oklahoma has said that it sees charges now of $350 million to $500 million for restoring power to the greater Houston area after much of its infrastructure was damaged by the storm.
The storm left 90% of its 2 million customers without power, the most in its history. The company noted thatsome 8,000 workers brought in from other areas in the U.S. and Canadaand its own crews have restored power to roughly two-thirds of the affected customers. Essentially alltransmission circuits are back in service, and service has beenrestored to industrial customers directly served by these circuits, according to CenterPoint.
Its electric unit will defer uninsured costs related to restoration andanticipates that it will seek passage of legislation to allowsecuritization of storm restoration costs. Temporary outages caused bythe storm are expected to have a negative impact on CenterPoint’searnings for the third quarter and for the full year 2008 mostly onreduced revenues, although it is not giving the exact financial impacttoday.
Shares are only down about 5% from their pre-hurricane levels and wherethis one opens is really anyone’s guess. Much of the Houston area isstill in the dark and trips are taking twice as long due to many traffic lights and other power stillbeing out of service.
There are still many upset customers in the Houston-area without power. The problem is that with downed lines that takes an entire crew and can take much time. There is no way to automate that restoration process. The good news for the company is that it is essentially the only game in town.
Jon C. Ogg
September 23, 2008
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