CNP CenterPoint Energy Inc

Notes to Financial Statements

December 31, 2016 and 2015

The following description of the CenterPoint Energy Savings Plan (Plan) provides only general information. Participants (as defined below) should refer to the Plan document for a more complete description of the Plan’s provisions. In the case of any discrepancy between this summary and the Plan document, the Plan document will govern.

The Plan is a defined contribution plan established in accordance with Sections 401(a) and 401(k) of the Internal Revenue Code of 1986, as amended (IRC), and is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (ERISA). Effective January 1, 2009, the Plan is a “safe harbor” 401(k) plan under the IRC, which means it is deemed to satisfy certain deferral and contribution nondiscrimination testing requirements.

Participants include all employees of CenterPoint Energy, Inc. (Company or CenterPoint Energy) and those subsidiaries and affiliates of the Company that have adopted the Plan except (a) employees covered by a collective bargaining agreement unless such agreement provides for participation in the Plan, (b) leased employees, (c) independent contractors and (d) non-resident aliens who receive no United States sourced income (Participants).

Participants may make pre-tax and/or, effective October 1, 2015, Roth contributions up to 50% and after-tax contributions up to 16%, of eligible compensation, not to exceed the Internal Revenue Service (IRS) limits as defined in the Plan. Active Participants age 50 or over may contribute an additional pre-tax and/or Roth contribution not to exceed the IRS limit ($6,000 for 2016); however, the Company generally does not provide the match on such “catch-up” contributions, unless a matching contribution is required to meet the safe harbor plan provisions under the IRC. Participants may also contribute amounts representing rollover eligible distributions from other defined benefit or defined contribution plans, IRC Section 403(b) annuity plans, IRC Section 457 governmental plans or Individual Retirement Accounts. Participants direct their contributions into the various eligible investment options offered by the Plan.

All new employees are automatically enrolled in the Plan to make pre-tax contributions unless they elect otherwise. An employee who has been automatically enrolled is deemed to have elected to defer pre-tax contributions (Automatic Contribution). The initial pre-tax contribution is three percent (before January 1, 2016) or 6% (on or after January 1, 2016) of the employee’s eligible compensation on a payroll-period basis. Prior to January 1, 2016, the contribution percentage was increased by an increment of one percent on April 1 in each of the following years until it reached six percent of compensation on a payroll-period basis. Effective January 1, 2016, the initial Automatic Contribution percentage is 6%.

A notice is provided to all employees who are scheduled to be automatically enrolled in the Plan (Automatic Enrollment Notice). In general, an employee has 30 days after receiving the Automatic Enrollment Notice to elect not to make any pre-tax contributions or choose a different contribution percentage.

Contributions, including all related employer matching contributions, made under the Automatic Contribution provision of the Plan are invested in the default investment fund as defined in the Plan. Employees may elect to change the Automatic Contribution percentage and/or direct the contributions to any of the investment options offered under the Plan at any time after the commencement of the Automatic Contribution. The Company matches 100% of the first six percent of eligible compensation contributed by a Participant to the Plan (excluding catch-up contributions unless required to meet the safe harbor plan provisions under the IRC).

Prior to January 1, 2016, Participants could elect to invest all or a portion of their contributions to the Plan in the CenterPoint Energy, Inc. Common Stock Fund (CenterPoint Energy Stock Fund). In addition, Participants may elect to have dividends paid on their investment in the CenterPoint Energy Stock Fund either reinvested in the CenterPoint Energy Stock Fund or paid to them in cash, and they can transfer all or part of their investment in the CenterPoint Energy Stock Fund to the other investment options offered by the Plan. However, effective January 1, 2016, a Participant may not elect (i) that more than 25% of future contributions (including Company matching contributions) be invested in the CenterPoint Energy Stock Fund or (ii) a transfer of any portion of his or her current account balance that would result in more than

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CENTERPOINT ENERGY SAVINGS PLAN

Notes to Financial Statements

December 31, 2016 and 2015

25% of the total account balance invested in the Company Stock Fund. Furthermore, any transfer of funds into or out of the CenterPoint Energy Stock Fund and other elections under the Plan that impact investments in the CenterPoint Energy Stock Fund are subject to the Company’s Insider Trading Policy. Employer contributions are made in the form of cash and are invested in accordance with Participant elections.

Contributions are subject to certain limitations as set forth under the IRC or the limits set forth in the Plan document.

The Plan offered the following investment funds (Funds) as of December 31, 2016:

Upon enrollment in the Plan, Participants may direct contributions, in one percent increments, in any of the investment options; provided, however, that effective January 1, 2016, a Participant may not elect to invest more than 25% of future contributions (including Company matching contributions) in the CenterPoint Energy Stock Fund. Participants should refer to the Plan prospectus for a detailed description of each Fund.

Individual accounts are maintained for each Participant. Each Participant’s account is credited with the Participant’s contributions and with allocations of the Company contributions and Plan earnings. Each Participant’s account is also charged with an allocation of administrative expenses. Allocations are based on Participant account balances. A Participant is entitled to their vested account balance.

Participants are immediately fully vested in all contributions and actual earnings thereon. As a result, there are no forfeitures.

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CENTERPOINT ENERGY SAVINGS PLAN

Notes to Financial Statements

December 31, 2016 and 2015

A Participant may borrow against their vested account balance. The maximum amount that a Participant may borrow is the lesser of (a) $50,000, reduced by the excess, if any, of the highest outstanding balance of loans to the Participant from all plans maintained by the Company or an affiliated entity during the one-year period ending on the day before the date on which such loan is made, over the outstanding balance of loans from the Plan on the date on which such loan is made or (b) 50% of the value of the Participant’s vested account balance under the Plan.

The loans are secured by the pledge of a portion of the Participant’s right, title and value of the Participant’s vested account balance under the Plan as determined immediately after the loans are made. The minimum loan amount is $500. Loans may be repaid over a period of up to five years and are subject to a $50 origination fee. Interest rates are fixed at the prime rate listed in The Wall Street Journal for the first of each month in which the loan is requested plus one percent. Loan transactions are treated as a transfer to (from) the investment fund from (to) notes receivable from participants.

Upon termination of employment, a Participant whose account exceeds $1,000 (or $5,000 effective January 1, 2016) may elect, upon written request at any time, to receive a distribution in a single lump-sum payment or fixed monthly, quarterly, semi-annual or annual installments over a period of ten years or less. Effective January 1, 2016, a Participant may also elect a partial distribution of his or her account upon termination of employment. Such distributions are generally paid in the form of cash; however, if the Participant has investments in the CenterPoint Energy Stock Fund, the Participant may elect an in-kind distribution of the Participant’s account balance in the CenterPoint Energy Stock Fund.

Generally, to the extent a Participant has not requested a distribution by the time he or she reaches age 70  ¹ ⁄ ₂ , required minimum distributions will be made consistent with the terms and conditions of the Plan and the requirements of the IRC. Immediate lump-sum distributions are made for accounts which do not exceed $1,000 (or $5,000 effective January 1, 2016, subject to direct roll over to an individual retirement account if greater than $1,000 but not exceeding $5,000, unless the Participant directs the distribution otherwise).

A Participant who is under age 59  ¹ ⁄ ₂ may make a withdrawal from amounts attributable to after-tax contributions and, if applicable, rollover contributions in the Plan and associated earnings. If a Participant who is under age 59  ¹ ⁄ ₂ and has less than five years of service withdraws matched after-tax contributions, the Participant will be suspended from making after-tax contributions to the Plan for six months. A Participant who is age 59  ¹ ⁄ ₂ or older may make unlimited withdrawals from pre-tax contributions, Roth contributions, after-tax contributions, vested portion of prior Plan accounts, rollover account and any associated earnings.

The Plan allows active participants under age 59  ¹ ⁄ ₂ to apply for a “hardship” withdrawal from amounts attributable to pre-tax or Roth contributions (not including any earnings and gains thereon) in accordance with Plan provisions. Participants are not permitted to make any pre-tax, Roth, or after-tax contributions for a period of six months immediately following a hardship withdrawal.

The assets of the Plan are held in trust by The Northern Trust Company (Trustee). Voya has replaced Aon Hewitt as the recordkeeper for the Plan since October 1, 2015. The Benefits Committee of CenterPoint Energy, Inc. (Committee), appointed by the Board of Directors of the Company, is the Plan Administrator (Plan Administrator). The Committee retains an independent investment consultant to provide investment advice with respect to the Funds other than the CenterPoint Energy Stock Fund. Changes to the CenterPoint Energy Stock Fund may be made only by the Board of Directors of the Company.

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CENTERPOINT ENERGY SAVINGS PLAN

Notes to Financial Statements

December 31, 2016 and 2015

Although it has not expressed any intent to do so, the Company may terminate the Plan at any time subject to the provisions of ERISA and must give written notice to the Trustee.

The financial statements of the Plan are prepared on the accrual basis of accounting in conformity with generally accepted accounting principles in the United States of America (GAAP). The preparation of the Plan financial statements in conformity with GAAP requires the Plan Administrator to make estimates and assumptions that affect the reported amounts of net assets available for benefits at the date of the financial statements and the changes in net assets available for benefits during the reporting period and, when applicable, disclosures of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.

In July 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2015-12, “(Part I) Fully Benefit-Responsive Investment Contracts , (Part II) Plan Investment Disclosures , (Part III) Measurement Date Practical Expedient ” The ASU (i) requires a pension plan to use contract value as the only measure for fully benefit-responsive investment contracts, (ii) requires an employee benefit plan to disaggregate its investments only by general type and eliminates the requirement to disaggregate by nature, characteristics and risks of the investment, eliminates the requirement to disclose the net appreciation or depreciation in fair value of investments by general type, eliminates the requirement to disclose individual investments with a value equal to or greater than 5% of net assets available for benefits, and eliminates the requirement to disclose the fair value information about significant investment strategies for an investment in a fund that files an annual report on Form 5500 as a direct filing entity when that investment is measured using the net asset value per share practical expedient, and (iii) allows a plan with a fiscal year end that does not end at the end of a calendar month to measure its investments and investment-related accounts using the month end closest to its fiscal year end. The ASU is effective for fiscal years beginning after December 15, 2015, with early application permitted. An entity is required to apply the amendments retrospectively for all statements presented.

The adoption of ASU 2015-12 has changed the presentation of certain information in the prior year financial statements but did not have any effect on the changes in net assets or the financial position of the Plan.

The investments in all Funds, except for the fully benefit-responsive investment contracts, of the Plan are reported at fair value. Fair value is the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Investments are reflected at fair value in the financial statements, except for fully benefit-responsive investment contracts which are stated at contract value. Security transactions are recorded as of the trade date. Interest income is recorded on the accrual basis. Dividends are recorded as of the ex-dividend date.

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CENTERPOINT ENERGY SAVINGS PLAN

Notes to Financial Statements

December 31, 2016 and 2015

Notes receivable from participants are measured at their unpaid principal balance plus any accrued but unpaid interest. Delinquent participant notes are reclassified as distributions based upon the terms of the Plan. Interest income on notes receivable from participants is recorded when it is earned.

Benefits are recorded when paid.

Direct Plan expenses such as trustee, recordkeeping, auditing and investment management fees and certain general administrative expenses are paid from the Plan assets. These expenses are shown as a separate component in the Statement of Changes in Net Assets Available for Plan Benefits. Plan expenses other than the aforementioned items are included as a component of investment gains and losses and reported on Schedule C of Form 5500 as indirect compensation.

FASB ASC 820, Fair Value Measurements and Disclosures establishes a framework for measuring fair value as it relates to financial assets and liabilities and to non-financial assets and liabilities measured at fair value on a recurring basis. That framework provides a three-level valuation hierarchy based upon observable and unobservable inputs, with preference given to observable inputs. The three levels of the fair value hierarchy under FASB ASC 820 are described below:

Following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used at December 31, 2016 and 2015:

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

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The Plan has significant holdings of Company common stock. As a result, the values of the Plan’s investments may be materially impacted by the changes in the fair value of this security.

Stable Value Fund

The Stable Value Fund utilizes synthetic guaranteed investment contracts (Synthetic GICs). A Synthetic GIC includes a wrap contract issued by an insurance company or other financial institution and a portfolio of fixed income assets that are owned by the Stable Value Fund. The wrap contract provides that realized and unrealized gains and losses on the assets covered by the wrap contract are not reflected immediately in the net assets of the Stable Value Fund, but rather are amortized over the duration of the assets or other agreed upon period, through adjustments to the future interest crediting rates. The wrap contract provides a guarantee that all qualified participant withdrawals will occur at contract value which represents contributions made under the contract, plus earnings, less withdrawals made under the contract and administrative expenses. As of December 31, 2016, the investments held by the Stable Value Fund consist of:

Wrap contracts provide that withdrawals associated with certain events not in the ordinary course of fund operations may be paid at market rather than contract value. Examples of such circumstances may include significant plan design changes, complete or partial plan terminations, severance programs, early retirement programs, the closing or sale of a subsidiary, bankruptcy of the plan sponsor or the failure of the trust to qualify for exemption from federal income taxes or any required prohibited transaction exemption under ERISA. The Plan Administrator does not believe the occurrence of the above events that would limit the Plan’s ability to conduct transactions with Participants at contract value is probable.

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CENTERPOINT ENERGY SAVINGS PLAN

Notes to Financial Statements

December 31, 2016 and 2015

The Plan provides for investments in Company common stock, commingled and mutual funds and other investments. Investments, in general, are exposed to various risks, such as interest rate, credit and overall market volatility risk. Due to the level of risk associated with certain investments, it is reasonably possible that changes in the values of investments will occur in the near term and that such changes could materially affect the amounts reported in the Statements of Net Assets Available for Benefits and Participant account balances. Rates of return will vary, and returns will depend on the market value of the Plan’s investments.

The IRS has determined and informed the Company by letter dated September 13, 2013 that the Plan is qualified and the trust fund established is tax-exempt under the appropriate sections of the IRC. Although the Plan has been amended and restated since receiving the determination letter, the Plan Administrator and the Plan sponsor’s counsel believe these amendments have not adversely affected the Plan’s qualified status and the related trust’s tax-exempt status as of the financial statement date.

GAAP requires the Plan Administrator to evaluate tax positions taken by the Plan and recognize a tax liability (or asset) if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the IRS. The Plan Administrator has analyzed the tax positions taken by the Plan, and has concluded that as of December 31, 2016 and 2015, there are no uncertain positions taken or expected to be taken that would require recognition of a liability (or asset) or disclosure in the financial statements. The Plan is subject to routine audits by the IRS; however, there are currently no audits for any tax periods in progress. The Plan Administrator believes it is generally no longer subject to income tax examinations for years prior to 2013.

During 2016, the Plan purchased and sold shares of the Company’s common stock and units of short-term investment funds managed by the Trustee as temporary investments (party-in-interest transactions) as shown below:

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