CenterPoint faces probe from Texas attorney general

Texas Attorney General Ken Paxton on Monday said he has opened an investigation into CenterPoint Energy's response to Hurricane Beryl last month.

Why it matters: As many as 2.3 million CenterPoint customers were without power after the storm amid temperatures around 100 degrees.

• At least eight people died in Harris County as a result of the heat.
• More than 268,000 customers were still without power almost a week after the storm .

The big picture: The AG's investigation will try to determine whether there was "fraud, waste, and improper use of taxpayer-provided funds," according to a press release from Paxton's office .

• It did not outline any specific allegations or evidence.

Between the lines: Paxton's announcement came after state lawmakers and local leaders spent weeks grilling CenterPoint over its disaster readiness, largely questioning its $800 million lease of 20 large generators in 2021 that were never mobilized after Beryl.

The intrigue: The state, through legislation and approval by the Public Utility Commission of Texas, allows CenterPoint to pass the cost of leasing mobile generators onto ratepayers while also adding a 6.5% surcharge to boost profits.

• The utility stands to make a $30 million profit on the $800 million lease by charging customers extra, industry consultant Doug Lewin told the Houston Chronicle .

The legislation, passed in 2021 with widespread bipartisan support, was intended to give utilities the ability to lease mobile generators for quick deployment in emergency situations, like a freeze or hurricane.

Yes, but: CenterPoint leaders told the Chronicle that the 20 generators they leased under the law are "not for rapid response use" and "are not designed to be 'mobile.'"

• Instead, they require days to assemble and special permits to move.
• North Texas electric utility company Oncor under the law spent $3.1 million on smaller generators that CenterPoint borrowed in Beryl's wake, the Chronicle reported.

Follow the money: The former CenterPoint CEO who brokered the deal, David Lesar, also had a longstanding relationship with the business development head at Life Cycle Power, from which CenterPoint leased the larger generators, according to Texas Monthly .

• Before requesting bids, CenterPoint brass — including then-CFO and current CEO Jason Wells — met with Life Cycle Power to discuss terms of the deal, Texas Monthly reported.
• CenterPoint soon after announced a tight, two-day deadline on bidding and ultimately awarded the $800 million contract to Life Cycle Power.

As these details of CenterPoint's lack of mobile generation capabilities came to light, and after hours of contentious testimony in Austin, Lt. Gov. Dan Patrick upped the criticism.

• "Call it potential fraud, deceptive practices, poor money management, or whatever you wish," Patrick said last month . "CenterPoint purposely violated the intent of the legislation to make a profit while not helping their customers during a crisis."

The other side: "We look forward to cooperating with the Texas attorney general or any other agency and have made clear our commitment to upholding the values of our company," CenterPoint spokesperson John Sousa said.

• In July, Wells apologized for the utility's response when speaking to the PUC, pledging that "we will do better."
• "While we cannot erase the frustrations and difficulties so many of our customers endured, I and our entire leadership team will not make excuses," Wells said then.

The bottom line: "If the investigation uncovers unlawful activity, that activity will be met with the full force of the law," Paxton said Monday.