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CenterPoint to sell Louisiana, Mississippi natgas assets for $1.2 billion

The headquarters of natural gas and power utility CenterPoint Energy is seen in Houston, Texas, U.S. September 27, 2020. Picture taken September 27, 2020. REUTERS/Gary McWilliams/File Photo  

(Reuters) -CenterPoint Energy said on Tuesday it would sell its natural gas assets in Louisiana and Mississippi for $1.2 billion to Bernhard Capital Partners, as the electric and gas utility plans to focus on its regulated business.

Several U.S. utilities have disposed of their unregulated assets to avoid relying on returns dictated by market dynamics, while regulated operations offer steady returns that are preferred by investors.

Last year, Duke Energy (NYSE:DUK) and American Electric Power (NASDAQ:AEP) announced sales of unregulated assets.

In regulated states, a utility could be responsible for electricity generation, transmission and distribution, while in non-regulated states, generation is separate from distribution and transmission, and consumers can choose to buy their power from different providers.

“From an operational and strategic perspective, we remain confident in and committed to our regulated natural gas utilities in Texas, Indiana, Minnesota, and Ohio where we have significant footprints and rate bases,” said CEO Jason Wells in a statement.

CenterPoint plans to use the roughly $1 billion in expected cash proceeds, after taxes, from the sale toward capital investments in locations with fewer regulatory constraints and where the utility already has a large presence.

CenterPoint said the assets being sold include 12,000 miles (19,312 kilometers) of main pipelines, which serve about 380,000 customers in Louisiana and Mississippi.

The deal is expected to close toward the end of the first quarter of 2025 and not affect the company’s targeted adjusted profit growth rate of 8% in 2024, and the mid-to-high end of 6%-8% annually from 2025 through 2030.

CenterPoint raised its capital expenditures plan through 2030 by $600 million to $44.5 billion. Last year, its capital investments hit $4.3 billion, about 20% above CenterPoint’s forecast at the start of 2023, mainly to invest in its Texas network.

“We made the decision to increase the amount of planned work on our systems, principally related to critical investments to improve resiliency and reliability in our Houston Electric service territory,” Wells said on a call with investors.

CenterPoint reported fourth-quarter revenue of $2.18 billion, missing the average analyst estimate of $2.69 billion, according to LSEG data, while adjusted profit of 32 cents was in-line with expectations.

The company said growth and rate recovery in the quarter was offset by increased interest expense.

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