CenterPoint Energy CNP announced that it has signed an agreement with Neara, an Artificial Intelligence (AI)-powered infrastructure modeling platform for engineering-grade simulations and analytics. The aim is to deploy Neara's AI capabilities across CenterPoint's 5,000-square-mile Greater Houston service area.
How Will This Agreement Benefit CNP?
As part of CNP’s efforts to improve customer and community outcomes following Hurricane Beryl, the company is committed to utilizing technology and AI. CenterPoint's preparations and activities before, during and after major weather events will be informed using Neara's platform and tools, which simulate the possible impact of severe weather events on CNP’s infrastructure and consumers. This should help reduce the impact and duration of power outages.
With the help of Neara's technology, CenterPoint should be able to continue to address vegetation that poses a greater risk near power lines and identify necessary equipment modifications, such as pole replacements or strengthening.
Furthermore, CenterPoint will be able to choose particular assets and areas where grid hardening enhancements can maximize system-wide advantage. As targeted system upgrades are completed, CNP will be able to quantify performance increases at the individual asset level and forecast, deliver and measure resilience improvements.
CNP’s Focus on Infrastructure Strengthening
In late August 2024, CenterPoint announced the completion, ahead of schedule, of core resiliency actions as part of the first phase of its Greater Houston Resiliency Initiative (“GHRI”). This includes a series of targeted immediate actions to improve the resiliency of CenterPoint Houston Electric's grid.
The company also revealed the most ambitious set of resiliency measures in its history. These measures include a longer-term resilience plan, which will be filed following discussions with stakeholders, elected officials, and customers. It will also involve nearly $5 billion in resiliency investment from 2026 to 2028, potentially doubling its previously planned investment.
A second phase of the GHRI, which is currently in progress from Sept. 1, 2024, to June 1, 2025, will include system hardening, strategic undergrounding, self-healing grid technology and additional improvements to the company's outage tracker.
The company has five-year and 10-year capital expenditure plans of $21.3 billion and $44.5 billion, respectively, for further strengthening its infrastructure. Such investments and initiatives should improve its customer reliability and offer safe, resilient energy.
Utilities Prioritize Infrastructure Modernization
To provide reliable services to customers, utilities continue to make systematic investments to upgrade transmission and distribution lines. The objective is to warrant a proper supply of electricity to millions of customers across the United States.
Along with CNP, other electric power companies like Dominion Energy D, Exelon Corporation EXC and Entergy Corporation ETR are also taking initiatives to strengthen their existing infrastructure.
Dominion plans to upgrade electric infrastructure by installing smart meters and taking initiatives to strengthen its grid. It is also working on a project of strategic undergrounding of 4,000 miles of distribution lines. It has already undergrounded nearly 2,000 miles of outage-prone overhead power distribution lines in Virginia. These initiatives should increase the resilience of its operations and enable it to serve the expanding customer base more efficiently.
D’s long-term (three to five years) earnings growth rate is 13.6%. The Zacks Consensus Estimate for 2024 earnings per share (EPS) implies a year-over-year improvement of 38.2%.
Exelon invests substantially in infrastructure projects and plans to invest nearly $34.5 billion during 2024-2027 in regulated utility operations. The company is set to invest $21 billion in electric distribution and $9.7 billion in electric transmission in the 2024-2027 time frame to further strengthen its operations.
EXC’s long-term earnings growth rate is 5.7%. The Zacks Consensus Estimate for 2024 EPS implies year-over-year growth of 2.9%.
ETR plans to invest $10.63 billion in transmission and distribution during 2024-2026. Also, in April 2024, the company got approval for the first phase of Entergy Louisiana’s resilience and grid-hardening plan. The plan includes 2,100 projects totaling $1.9 billion of investments over five years.
ETR’s long-term earnings growth rate is 7.3%. The Zacks Consensus Estimate for 2024 EPS implies a year-over-year increase of 6.7%.
CNP’s Stock Price Performance
In the past month, shares of CenterPoint have risen 11.3% compared with the industry’s 3.2% growth.
Image Source: Zacks Investment Research
CNP’s Zacks Rank
The company currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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