Why CenterPoint says it's stuck with barely used generators it leased for $800M

Claire Hao | Source: Houston Chronicle | Posted 08/16/2024

Jason Ryan, CenterPoint's executive vice president of regulatory services and government affairs, told the Public Utility Commission of Texas that the contract can’t be terminated unless the vendor, Life Cycle Power, fails to meet its contractual obligations. The lease ends in 2029, he said.

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CenterPoint Energy executives revealed that the company is unable to terminate a lease for generators that have already cost $800 million, leaving regulators dismayed. The contract with Life Cycle Power can only be terminated if the vendor fails to meet contractual obligations, with the lease set to conclude in 2029. A provision allowing termination if regulators found the investment imprudent expired in 2023, as discussed during a Public Utility Commission of Texas meeting.

Despite regulators' concerns and the generators remaining largely unused, CenterPoint Energy is exploring options like negotiating to switch generator types or extending cost recovery time through rate increases. The company is also willing to discuss the necessity of leasing generators to mitigate power outage risks. The lease costs, ranging from $120,000 to $900,000 per month, have impacted residential bills and may lead to future rate increases for customers.

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Why CenterPoint says it's stuck with barely used generators it leased for $800M

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