(Reuters) - CenterPoint Energy Inc (CNP.N) is exploring the sale of two services units that could fetch more than $1 billion, people familiar with the matter said on Tuesday, as the U.S. power utility seeks to raise capital and simplify its structure.
The divestitures could compensate for a regulator’s refusal to grant CenterPoint its desired rate increase for what it charges to deliver electricity to energy providers in Houston.
Last month, the Public Utility Commission of Texas (PUCT) said CenterPoint would be allowed to earn a 9.25% return on equity, lower than the 10.5% return which the company had requested. The regulator wanted to make sure that consumer bills did not soar and that the utility continued to invest in its network.
CenterPoint had been working with advisers on an auction for the services businesses even before the PUCT’s decision, the sources said, cautioning that no deal is certain and asking not to be identified because the matter is confidential.
CenterPoint, which has a market value of $13 billion and net long-term debt of $14 billion, did not respond to a request for comment.
Headquartered in Houston, CenterPoint serves more than 7 million electricity and gas metered customers in Arkansas, Indiana, Louisiana, Minnesota, Mississippi, Ohio, Oklahoma and Texas. In February, it completed the $6 billion acquisition of peer Vectren Corp.
CenterPoint is seeking to sell its energy services business, which provides advice to municipalities and companies on how to best source their gas supply, as well as its infrastructure services unit, which helps utilities plan and maintain gas pipes.
A number of U.S. utilities have in recent years sold off unregulated parts of their businesses to focus on their regulated operations, which have more stable revenue streams.
Reporting by David French in New York; Editing by Steve Orlofsky