CenterPoint spent $800M on mobile generators. Where are they post-Hurricane Beryl?

Over the last three years, CenterPoint Energy – the company in charge of delivering power to millions of customers in the Houston region – has spent $800 million on 20 massive generators. The hefty price tag was controversial at the time, but state regulators approved it because CenterPoint claimed the generators would keep the lights on during an extended power outage. 

Last week, Hurricane Beryl led to massive outages in and around the nation’s fourth-largest city, leaving more than a million people in the dark for days. So, where were those generators?

It turns out that almost none of them were deployed in the wake of Hurricane Beryl, the Chronicle has found – even as some 90,000 people remained in the dark as of Tuesday afternoon.

That’s partly because even though CenterPoint has referred to the equipment as “mobile generation,” the vast majority of it is not actually that mobile. Fifteen of the generators – each with a capacity of 32 megawatts, big enough to power entire neighborhoods – take several days to assemble and cannot be moved without a special permit, which itself can take days to secure. 

None of those generators have been put in service since CenterPoint first began renting them in 2021. Indeed, the company told the Chronicle this week that they are “not for rapid response use” and “are not designed to be ‘mobile’,” even though it has repeatedly described them as “mobile” in news releases, regulatory filings and memos to investors. 

In Beryl’s wake, CenterPoint has deployed three of its remaining five large generators at a water processing plant and two senior living centers. Each of those is the size of a tractor-trailer and has a capacity of about five megawatts.

“It’s something that we have seen tremendous value from,” said CenterPoint executive Eric Easton in an interview with the Chronicle on Tuesday. He acknowledged that the larger 32-megawatt generators have never been used, but said they serve as a crucial “insurance policy” for even bigger power outages. 

Houston-area leaders, consumer advocates and many trade groups disagree. They launched a fierce protest when CenterPoint first asked in 2022 to hike rates to cover the cost of leasing the generators. 

But state regulators overruled them, ultimately allowing CenterPoint to recoup the cost of the generators – plus a 6.5% profit. They’ve already added about $1 per month to the average residential customer’s bill, and are expected to hike rates by at least another $3 a month in the coming years, records show.  

“The math of these things just doesn’t work,” said Doug Lewin, a Texas energy analyst and publisher of the Texas Energy and Power Newsletter. “There are far better ways to spend money to get resiliency and reliability.” 

The massive pieces of equipment will likely continue to be a source of controversy for CenterPoint, which has faced harsh criticism from Houston-area lawmakers and Republican Gov. Greg Abbott for its response to Beryl. Abbott has directed state regulators to investigate how the utility handled the storm, including its use of mobile generation. 

A worthwhile investment?

State lawmakers from both political parties supported CenterPoint’s decision to spend $800 million on the large generators. 

Three years ago, they changed Texas law to allow utility companies to lease mobile generators themselves. Last year, they made it easier for companies to recoup the costs of the generators, and other investments, from consumers. 

Lawmakers and regulators said they believed CenterPoint’s arguments that the generators were one of the best ways to protect Texans from massive outages, whether from extreme weather or such as occurred during Winter Storm Uri in 2021, when almost 250 people died. 

It hasn’t turned out that way. In the wake of Beryl, the disconnect was made abundantly clear in a desperate late-night email plea from a senior Houston emergency response official. Transtar director Brian Mason pleaded with CenterPoint officials to help get five “top top top priority critical infrastructure sites” back online, saying he’d repeatedly sought help and received no updates. He added that it wasn’t even clear if the company’s equipment could actually work at some of the sites. 

City officials said Friday that most of those critical facilities operated on backup power, but none of it came from CenterPoint generators. Houston Public Works officials said all five facilities had power back by Tuesday.

Easton said the company deployed numerous additional mobile generators after Beryl to power community centers, call centers and nursing homes. But those are all part of a fleet of much smaller generators CenterPoint obtained late last year, he said. They’re not included in its procurement of 20 large generators.

The true cost of CenterPoint’s generators has almost never been discussed publicly. Previous reports pegged the price tag for consumers at $200 million. The actual number, $800 million, is buried in thousands of pages of workpapers and technical documents filed with the Public Utility Commission, which regulates power providers in Texas. 

Phil King, a Republican state senator from Weatherford and a strong supporter of CenterPoint’s decision to lease the massive generators, said he still thinks the company’s investment is worth it. 

“I’m always astounded by the cost, too,” he said in an interview. “Believe me, I think everybody was surprised at how expensive this turned out to be. But you’ve got to look at the longevity of those generators, too. They last decades.” 

Still, King acknowledged that the largest and most expensive ones might deserve another look. 

“We all have some questions about the large units’ practicality and expense,” he said. 

An ‘unreasonable’ burden

A few years ago, CenterPoint wasn’t even allowed to handle mobile generators. In Texas, the company is known as a “transmission and distribution utility,” which means it can only deliver electricity to customers. Other companies get to generate that power using natural gas, coal, wind and solar.

But after Uri in 2021, everyone was reeling. King says he sat down with the company and other TDUs and asked, ‘what do you wish you’d had to prevent this?’

They wanted generators that they could move around during emergencies. So King authored a law that would allow them to rent mobile generators, and the Texas House and Senate both approved it unanimously. 

“We had over 200 people die during Uri,” King said. “And I’m absolutely convinced that if we had had a fleet of mobile generators across the state, that a lot of those lives could have been saved.” 

Several companies jumped at the opportunity. But most chose to start small. Texas’ largest utility, Oncor – with more than five times as many customers as CenterPoint – procured just 11 megawatts of generation for $3.1 million. Only CenterPoint decided to go big and lease a whopping 500 megawatts, all for generators much larger than what Oncor acquired.

It happened fast. By December 2021, CenterPoint had already agreed to lease all the generators from a single company for $800 million, paying most of that upfront. The following year, it asked the PUC for permission to charge consumers for the cost. 

That’s common practice. Utilities will often make large investments and hope to get permission to recoup them later. But this time the opposition was particularly fierce from consumer advocates, trade groups and a coalition representing dozens of cities including Houston. They asked for the State Office of Administrative Hearings, which presides over various disputes for government agencies in Texas, to step in. 

The protesters said the generators weren’t worth the astronomical cost, but money wasn’t their only concern. CenterPoint had moved quickly to choose a little-known company to provide all its generators. 

Potential vendors only had two days to respond to its request for proposals. On top of that, the company’s former CEO had been convicted of violating federal environmental protection laws in 2012.

The State Office of Administrative Hearings considered the protesters’ concerns at a lengthy hearing in the fall of 2022 – and the judges found against CenterPoint. 

“It is unreasonable to place the burden on ratepayers of expenses imprudently incurred,” they wrote. 

But it was the PUC that had the final say, and four of the five commissioners voted with CenterPoint.

“Winter Storm Uri in February 2021 was a devastating storm,” the PUC wrote in its opinion, issued in April 2023. “Given CenterPoint's experience… and its long-established history with hurricanes, CenterPoint acted reasonably.” 

Consumers still ‘on the hook’

Since then, the state has made things even easier for CenterPoint. Last year, the Legislature allowed utility companies to ask for rate hikes even more frequently, giving members of the public less time to protest. They also allowed CenterPoint and its peers to begin deploying its massive generators not just in the middle of emergencies, but before they even hit – and to charge its customers for doing so even if they were never plugged in. 

Houston officials pushed back. 

“These (generators) are not nimble and easy to move facilities, and they will not save lives” after hurricanes, “despite representations to the contrary,” city officials wrote in testimony to lawmakers last year. 

 “Ratepayers will still be on the hook for every minute that a [generator] is being stored, transported, and operated,” they wrote. 

Indeed, in August 2023, CenterPoint reported that it decided to “stage” two five-megawatt generators on Pelican Island due to concerns about an extended power outage there. It never deployed either of them, but the cost of just the staging was more than $600,000, according to disclosures made by the company to state regulators. 

Experts say the money could be better spent on a host of other methods to harden infrastructure like replacing or burying power lines. 

"They could have spent $800 million on infrastructure improvements,” said David Power, a former utility executive who later worked for the consumer advocacy group Public Citizen. “But it wasn’t as profitable.” 

King, the Texas state senator, said it would all be worth it the next time the demand for power is so high the state is forced to implement rolling blackouts. 

“If this summer we have a few power plants that go out, and they plug in those 32 megawatt generators, they’re going to be heroes,” he said of CenterPoint. “Because those are going to power entire communities.”

However, how useful these generators can be during increasingly more common occurrences, like hurricanes, or even during rare weather events, like May’s derecho, remains in question.

During the derecho, the company touted its use of mobile generation in various social media posts – but everything deployed had a capacity of around two megawatts or less, and so it was not part of the $800 million spent on large units, according to Easton, the CenterPoint executive. 

For now, it seems like CenterPoint could use more of the smaller units. After Beryl, the company had to ask for more of them from Oncor, which supplied a handful to a cooling center, a water plant and a medical center, according to King. 

As for the 15 massive generators that CenterPoint has leased, consumers are paying for and that have never been deployed, “CenterPoint made the decision that they believe these 32-megawatt units can help,” said King. “And you know, we’ll see.”