A state-commissioned audit has found that CenterPoint Energy did not adequately assess risks or address potential conflicts of interest before entering into an $800 million lease for mobile generators — equipment that went unused during widespread power outages caused by Hurricane Beryl in July 2023.
The audit was ordered by the Public Utility Commission of Texas (PUCT) following public concern over CenterPoint’s failure to deploy the generators during the storm, which left more than 2.2 million homes and businesses in the Houston area without electricity. Several fatalities were linked to the prolonged outages.
Accounting firm Moss Adams LLP conducted the audit and presented its findings to the PUCT in a public meeting last Thursday.
Inadequate Risk Assessment
Maria Stroth, a senior manager at Moss Adams, told commissioners that while CenterPoint followed general best practices in arranging the lease, it failed in two key areas. The first involved the company’s risk assessment procedures.
Stroth explained that although CenterPoint claimed to have evaluated potential risks — including the financial stability of vendors — these assessments were not fully documented.
“We saw that some risks were considered via email, but the full process was not clearly followed or recorded,” Stroth said.
Moss Adams recommended that CenterPoint formally assess vendor risks in all procurement deals and keep detailed records of those evaluations.
In a statement to Houston Public Media, CenterPoint said it values the feedback and is working on improvements.
“CenterPoint greatly appreciates the valuable insights provided by Moss Adams as well as the many other stakeholders who have provided feedback over the last year,” the company stated. “We have already completed or are making progress toward completing each of Moss Adams’ key recommendations.”
Conflict of Interest Procedures Not Followed
The second major concern involved how CenterPoint handled potential conflicts of interest. While the company has a policy in place, the audit found that it was not fully followed during the generator leasing process.
“We did not see evidence that the vendor risk assessment was fully completed,” Stroth said. “When we interviewed staff involved at the time, they said they weren’t asked about any possible conflicts of interest.”
Although the audit did not determine whether a conflict of interest actually existed, it concluded that CenterPoint had not properly considered the issue.
Lt. Gov. Dan Patrick previously raised concerns about possible corruption in the lease agreement during a special PUCT meeting in Houston last year. However, those allegations have not been substantiated.
CenterPoint addressed this issue in its official response, stating that it sees no evidence of a conflict.
“In the spirit of continuous improvement, we welcome the recommendations to enhance the conflict-of-interest policies and procedures we already have in place to bolster stakeholder confidence,” the company wrote. “CenterPoint respectfully disagrees, however, with suggestions that there was any conflict of interest regarding the [mobile generators].”
Public Miscommunication on Generator Use
The audit also criticized how CenterPoint communicated the purpose of the generators to the public.
Stroth said CenterPoint had not made it clear that the mobile generators were meant for use during situations like the 2021 winter storm — when power plants shut down — not for events like Hurricane Beryl, which caused damage to infrastructure such as power lines.
“CenterPoint’s messaging implied the generators could be used broadly during major outages,” Stroth said. “But they didn’t explain that there are technical and situational limits on when and how the units can be used.”
In its filing with the PUCT, CenterPoint acknowledged the issue and said it is already working on improving public communication.
“For the small and medium units, we have already developed a comprehensive communications strategy with the objective of increasing high-level awareness and managing public expectations on the operational limitation and development criteria of the Company’s leased [generators],” the company wrote.
Next Steps
Following the presentation, the PUCT discussed the possibility of having CenterPoint return in several months to report on its progress implementing the audit’s recommendations. A specific date for that follow-up presentation has not yet been set.
