Leaders of CenterPoint Energy Inc. have signed an agreement to sell the company’s Louisiana and Mississippi natural gas distribution subsidiaries to the investment firm that last fall also said it will buy Entergy Inc.’s natural gas operations in New Orleans and Baton Rouge.
Bernhard Capital Partners has agreed to pay $1.2 billion for CenterPoint’s gas assets in the two states, which combined have a rate base of about $800 million, or less than 4% of CenterPoint’s total. The units employ about 550 people, operate about 12,000 miles of pipeline and have roughly 380,000 metered customers. Their sale, which needs various regulatory approvals, is expected to close in about a year.
Houston-based CenterPoint also runs natural gas businesses in its home state as well as Indiana, Minnesota and Ohio. President and CEO Jason Wells said the company’s leaders “remain confident in and committed to” those units since they have larger footprints.
Wells and his team had been planning to invest roughly $1 billion in capital projects at the natural gas business between now and 2030. Most of that capital will now go to resiliency projects at Houston Electric. CenterPoint is preparing a multi-year resiliency plan for Houston Electric that, in addition to ongoing investments, will upgrade distribution lines and transmission assets as well as add and upgrade substations.
“This will mark the fourth time over the past few years in which we have recycled sales proceeds and reinvested them in our regulated businesses,” Wells said in a statement. “The efficiency of this transaction and portfolio optimization will further enhance our ability to continue executing our industry-leading long-term growth strategy for years to come.”
The team at Bernhard is making the CenterPoint move via its Delta Utilities portfolio company, which also is in line to pick up more than 200,000 Entergy customers in Louisiana via deals worth more than $480 million. Jeff Jenkins, Bernhard’s founder, said in a separate statement that the two planned acquisitions will make Delta Utilities one of the 40 largest natural gas providers in the country.
CenterPoint’s deal with Bernhard extends a trend of electric utilities shedding ancillary business focused on gas or renewables to focus on their core regulated assets. Most recently, Eversource Energy leaders said they’ve agreed to sell their last offshore wind project holdings. More similar to—and much larger than—Bernhard’s plans is the $9.4 billion agreement struck in September by Dominion Energy Inc. and Enbridge Inc., which covered 3 million customers in five states.
