1. Temple University Investment Association CenterPoint Energy NYSE: CNP Leads: Ryne Dudley & Kyle Perkins Associate Analysts: Hinal Patel, Hicham Belkssir, Zachary Maszlanka Current: $20.79Target: $21.99Total Return: 10.57%

2. Company Overview Subsidiaries o CenterPoint Energy Houston Electric, LLC o CenterPoint Energy Resources Corporation Operations o Natural Gas Services o Electric Transmission and Distribution Services o Wholesale Energy services Geographic presence o Arkansas o Louisiana o Minnesota o Mississippi o Oklahoma o Texas

3. Segment Overview Electric transmission and distribution o offers electric transmission and distribution services to end retail, industrial, and commercial users o Regulated by FERC Natural Gas distribution o sells regulated intrastate natural gas o provides NG transportation services for residential, commercial, industrial, and transportation customers o offers unregulated services comprising residential appliance repair and maintenance services Energy Services o offers variable and fixed-priced physical natural gas supplies primarily to commercial and industrial customers

4. Industry Overview Electric UtilitiesGas Distribution Utilities Structure o Generation - Competitive o Transmission - Regulated o Distribution - Competitive US electric utilities sector is massive, producing about 20% of world’s total electric supply Demand for US electricity from commercial, industrial, and residential consumers is expected to increase about 29% in the period from 2012 to 2040. Structure o Upstream operations: Exploration, production, gathering Competitive o Midstream Operations: Transmission, storage Regulated o Downstream Operations: Distribution Competitive US shifting from a natural gas importer to exporter

5. Investment Thesis 5 Undervalued on a 5 year P/E of 14.91x to itself Undervaluation reasons - Rising interest rates - Credit Suisse Downgrade - ENBL lacking growth - Lowered 2015 guidance Fair Value: 20.35x P/E, target price of $21.99 Coming Back to Fair Value: - ENBL growth, Increase Capex, Dividend Growth - Wide Economic Moat

6. Catalysts 6 Increasing Capex - Doubling annual expenditures to $140 million - Potential projects costing ~$384 million would raise the allowed net income by $14 million using the rate base formula Dividend Growth - Return from Capex going to shareholders - Positive dividend growth in the next 3 years, 11% in 2015 ENBL Growth - Increased revenue when commodities turn up - CNP holds a 55.4% stake in this company

7. ENBL EBITDA

8. Economic Moats Wide CNPs operation as a legal monopoly CNPs competitive energy services segment benefit from the economies of scale and purchasing power of the larger parent company

9. Positives & Risks Positives In late 2008, CNP invested in electric grid technology Freeport LNGs construction of an LNG export terminal Not only the highest Return on Equity in our Comps, but in the entire utilities sector as a whole Risks REPS, which are Retail Electric Providers are what revenues from consumers first go to Like all utility company's, CNP is adversely exposed to rising interest rates Continued low natural gas prices

10. Financials & Returns Financials & Returns ROE:ROA: Highest ROE in the sectorLow ROA due to projects 2015: 10.57%2015: 2.9% 2016: 11.04%2016: 3.2%

11. Financials Dividend Yield:  Current DY: 4.80%  Projected 1 year growth: 11.63%  Projected 3 year growth: 6.49% Operating Margin:

12. Rate Cases o 2 types of rate cases Cost of gas / electricity Costs of everything else o Revenue collection Rev requirement = Expenses + (rate base x cost of capital) o Cost of Capital = Cost of debt + Shareholder expected return o Return on rate base CNPNITEGCMSPNW 4.44%2.87%3.35%2.99%3.52%

13. Undervaluation 5 year P/E to itself Why? Currently 14.73x Target multiple 20.36

14. Reasons for Undervaluation Poor performance from ENBL

15. Reasons for Undervaluation Credit Suisse Downgrade o Outperform to underperform o Energy customer base layoffs Lowered Earnings Guidance o 2014 guidance$1.14 - $1.21 per share o 2014 actual$1.42 per share o 2015 guidance$1.00 - $1.10 per share

16. Price Target P/E 5 year to itself o Target multiple of 20.36x Consensus NFY EPS = $1.08 20.36 * 1.08 = $21.99 Return = 10.57% o 4.80% dividend yield o 5.77% price appreciation

17. Peer Group Selected for size and segments Competition not a determinant

18. Conclusion Positives o Investments in growth and efficiency Catalysts o New CAPEX to raise rate base o Dividend growth 20.36x P/E for $21.99 Expected return = 10.57%

19. Any Questions?

20. Appendix Charts 5 year CNP vs S&P

21. Appendix Charts CNP 5 year E/V to itself

22. Appendix Charts CNP net plant in service

23. Appendix Charts 5 year P/E spread ratio to S&P

24. Appendix Charts CNP supply chain based on revenues

25. Appendix Charts S&P 500 vs S&P utilities sector