Businessmodel of CenterPoint Energy

Customer Segments

CenterPoint has a segmented market business model, with customers that have slightly different needs. The company targets its offerings at both consumers and businesses.

Value Proposition

CenterPoint’s offers two primary value propositions: accessibility and brand/status.

The company offers accessibility by providing a broad range of options and being widely available. Its services can be broken down as follows:

• Natural Gas Distribution – The company delivers natural gas to 3.2 million residential homes and businesses in Arkansas, Louisiana, Minnesota, Mississippi, Oklahoma, and Texas, including the high-growth areas of Houston and Minneapolis.
• Electric Transmission & Distribution – The company maintains the wires, poles, and electric infrastructure for its 5,000-square-mile electric service territory in the Houston metropolitan area.
• Competitive Natural Gas Sales and Services – The company’s CenterPoint Energy Services (CES) division sells non rate-regulated natural gas and related services to 100,000 commercial, industrial, and wholesale customers in 26 states.

• Home Service Plus – The company’s Home Service Plus (HSP) division provides heating and cooling solutions for Minnesota homeowners. These are supplemented with expert repair, service and maintenance plans, and professional sales for gas and electric equipment. The company has established a strong brand due to its success. It serves over five million metered customers total and operates over 48,230 miles of power distribution lines, 8,000 miles of interstate gas pipeline, and 3,800 miles of gas gathering pipeline. It has over 7,800 employees and owns a 55.4% limited partner interest in Enable Midstream Partners, a public master limited partnership it jointly controls with OGE Energy. Its prominent subscribers include retail electric providers such as Ambit Energy, Bounce Energy, Champion Energy, Cirro Energy, Direct Energy, Dynowatt, First Texas Energy Corporation, Gexa Energy, Kona Energy, Mxenergy, NRG Energy, Stream Energy, and Texas Power. Lastly, it has won many honors, including the following:

• EPRI Power Delivery and Utilization Technology Transfer Award (2016)
• AESP Energy Awards, Pricing & Demand Response Category (2016)
• POWERGRID International – Project of the Year Award for grid optimization (2016)
• SEE Industry Excellence Award, Cable Life Extension Program (2016) ### Channels

CenterPoint’s main channel is its direct sales team. The company promotes its offering through its website and social media pages.

Customer Relationships

CenterPoint’s customer relationship is primarily of a automated nature. Customers utilize its services while having limited interaction with employees. That said, there is a personal assistance component in the form of phone and e-mail support.

Key Activities

CenterPoint’s business model entails generating electricity and natural gas and delivering the products to its customers.

Key Partners

CenterPoint’s key partners are the suppliers that provide it with the equipment and materials it needs to manage its operations.

Key Resources

CenterPoint’s main resources are its physical resources, which include its power plants and its natural gas plant facilities. It also relies heavily on its human resources, who include the full-time employees and contractors that generate its resources and provide services.

Cost Structure

CenterPoint has a cost-driven structure, aiming to minimize expenses through significant automation. Its biggest cost driver is operation and maintenance, a fixed cost. Other major drivers are in the areas of cost of services and administration.

Revenue Streams

CenterPoint has one revenue stream:  revenues it generates from fees paid by customers for the transmission of electricity and the delivery of natural gas.