CenterPoint Energy made $1 billion in 2025; but the investor-owned utility says it doesn’t profit from the rates customers pay on their electric bills. If that’s true, how does the Fortune 500 company actually make money?
What’s on your bill
Start with this real electricity bill below: $354 total.
Of that, $150 — about 42% — went directly to CenterPoint just to carry the electricity across its wires.
On most bills, those fees are labeled “TDSP” or “TDU,” short for Transmission and Distribution Utility.
The rates change frequently. Currently, all CenterPoint ratepayers pay a flat $4.90 plus 5.1 cents per kilowatt-hour of electricity used.
How CenterPoint makes money
The Texas Public Utility Commission approves those fees. Each time CenterPoint needs to build new infrastructure, it submits a request to the PUC to raise rates and cover the cost of the capital improvement.
When the PUC approves a rate increase, it includes what is called an allowed return on equity — the percentage of profit that flows directly to investors. That structure is advantageous to investors because it guarantees returns when they buy CenterPoint shares.
CenterPoint then uses shareholder money for expenses including executive salaries. The company points to that arrangement to explain how CEO Jason Wells received a 30% compensation increase from 2024 to 2025 — arguing shareholders, not ratepayers, covered the cost.
RELATED: CenterPoint CEO Jason Wells’ pay jumped to $12 million following the deadly Beryl outages.
What researchers say
Krysti Shallenberger, a researcher with the Energy and Policy Institute, said the dynamic is becoming more common across the utility industry.
“As customer bills rise, utilities’ profits increased because utilities are proposing more and more big projects, big gas plants, big transmission lines,” Shallenberger said. “Investors see an opportunity to basically reap a nice profit off of this.”
Shallenberger said CenterPoint Energy posted a 9.65% return on equity in 2025. More detail is available in EPI’s utility profit report here.
Public Citizen’s Tyson Slocum said investor-owned utilities like CenterPoint make money by growing what is known as their rate base.
“That means building more infrastructure where they’re able to then essentially bill customers over 30 or so years and every cycle, they get to add their rate of return on that infrastructure,” Slocum said. “The goal of a utility is to build as much infrastructure as possible into rate base so that they can earn decades of profit margin off of that.”
The maintenance exception
Not all utility spending works the same way.
CenterPoint does not earn a return on equity for maintenance costs. Ratepayers saw rates increase to cover expenses such as vegetation trimming near power lines — but once that work is done, no profit is realized from it. This is why Slocum says CenterPoint has little incentive to trim trees and vegetation.
CenterPoint rate increases
Since 2025, PUC filings show CenterPoint has asked for 10 rate increases to collect more than $8 billion.
To date, the PUC has approved nine of the 10, adjusting the requested amounts and authorizing CenterPoint to collect $5.1 billion from ratepayers.
CenterPoint’s response
In a statement, CenterPoint Energy said:
“Compensation for CenterPoint’s executive leadership, including Chair & CEO, is reviewed and approved annually by the company’s Board of Directors. Jason Wells leads a Fortune 400 company that serves more than 7 million metered customers across four states. His compensation reflects the scale, complexity and strategic responsibilities of overseeing a large, multi-state utility.
“Regulated utilities make money by investing in and operating the electric and gas systems. When we invest in infrastructure, we’re allowed to earn a regulated return on that investment, which is set by the Public Utility Commission of Texas in rate cases. Those capital costs are recovered gradually over time, typically over decades. Day to day operating and maintenance costs are passed through to customers without a profit.”
GLOSSARY
Rate of return: A metric that measures an investment’s gain or loss over a specified period of time, expressed as a percentage of the initial investment cost. Investors use it to evaluate performance and compare assets.
Return on equity (ROE): A financial metric that measures how efficiently a company uses its shareholders’ equity to generate profit.
KPRC 2 continues to dig into how Houston customers’ money flows through one of the state’s most powerful utilities — and is asking for viewer questions.