How trust sparked tax transformation at CenterPoint Energy

For power and utility leaders, record-high power consumption, the push for sustainability and clean energy, and efforts to prioritize affordability while meeting customer expectations are top concerns. For tax teams navigating these disruptions while shielding the business from risk, the pressure to do more with less has never been greater.

Talent attraction and retention remains a major hurdle. Manual, repetitive tasks, along with legacy systems, overwhelm teams and limit their potential. What’s more, these ways of working also lead to employee burnout, which more than half of power and utility responders to the EY Tax and Finance Operations (TFO) survey in the US say is a challenge.

One company facing these types of challenges was CenterPoint Energy, Inc. (CNP), a domestic energy delivery company headquartered in Houston, Texas. Their tax team was struggling with processes and systems that needed investment and resourcing, as well as high turnover. Simply stated, the tax operating model struggled to meet the company’s needs. When Jennifer Story joined the company as Vice President of Tax in late 2022, she immediately recognized the urgent need for change.

“Without enough people, we needed external help again for our tax returns. But I also knew we had to do something different — I just didn’t know what. I came into the process with a very open mind,” says Story. The most pressing need, however, was for support filing their tax returns. Ernst & Young LLP (EY US) was one of the firms that Jennifer invited to bid on the work.

EY US began the proposal meeting by outlining their approach for addressing CNP’s immediate tax compliance needs. Next, EY US raised the underlying challenge that many power and utility firms face: how to develop a tax operating model that balances people, processes and technology to reduce risk, meet deadlines and unlock capacity for more strategic, value-added work. EY US shared a framework for developing an effective tax operating model and explained that if EY US were engaged to address the short-term tax compliance need, they would also host an EY wavespace^TM session that would involve leading CNP through designing their own tax operating model. An EY wavespace session is an innovative lab experience that combines business leadership, design thinking and technology to accelerate transformation and drive measurable outcomes.

“I usually approach challenges with the belief that there is always a way, and that meeting with EY confirmed my belief that there was a better way,” says Story. “The EY team didn’t just offer to get the work done in the short term — they deeply understood the kind of model that would work for us in the long run.”

CNP selected EY US as its tax compliance preparer and eagerly embraced the EY wavespace session. During the two-day collaboration session, EY professionals worked with the company to identify the critical business drivers that would determine the optimal model design. Each CNP workstream lead was paired with an EY professional, whose experience matched his or her area of focus. These EY professionals guided their peers through the various alternatives.

“From the start, we shared with CNP that the goal of the EY wavespace session was to guide them through the process of identifying the right tax operating model for their unique needs, whether they decided to build it all in house, team together with the right co-source partner or rely on a tax managed service,” says Brock Griffiths, EY US Tax Account Leader for CNP. “We wanted to be sure CNP knew we were not there to sell them anything, but to support them in the process of selecting the alternative that would best meet their business priorities. By the end of the two-day session, it became clear to CNP that elements of a tax managed service would be required to address their business objectives.”

The EY Tax and Finance Operate model supports organizations transform their tax functions through technology, skilled global talent and standardized methodologies — supporting innovation and sustainable transformation. As part of this engagement, there are times when a client will rebadge select tax department employees to EY US, which can enhance compliance and efficiency without disrupting the workforce. Rebadged staff also gain exposure to leading platforms, automation tools and professional development opportunities.

An operating model for the future

Following the session, CNP continued to evaluate the model designed during the two-day session. They met with another EY US client who had previously selected a similar model and also spoke with former power and utility industry employees, who had been rebadged to EY US. Ultimately, CNP’s leadership determined that engaging EY US to implement the model they had designed would in fact be the right approach for their organization. They were confident that EY US had the right skill set, processes and culture to drive the change they needed.

Scope of the TFO engagement

“Jennifer has accomplished something very difficult,” says Griffiths. “Without her vision, diligence and intellectual curiosity, it would never have been possible to implement this model.” 

For Story, the ability to work on broader strategic initiatives instead of being consumed by day-to-day tax operations has been a true game changer. “I’ve gone from fighting fires to having time to be strategic and thoughtful due to the teaming with EY professionals and my CenterPoint colleagues,” says Story. She also appreciates the speed at which EY teams can move, and that whenever she has a question she can “just pick up the phone, and there’s somebody that I can speak with immediately who’s the subject-matter professional on the topic.” 

What’s more, Story says that the engagement with EY US isn’t just a financial transaction but rather a catalyst for enhancing the company’s culture and operational efficiency. EY professionals also helped with crafting change management communications to help all stakeholders understand the benefits driving this transition and to support CNP in delivering greater value to stakeholders. “We’re now in our second year, and the relationship keeps getting stronger,” says Story.

Story’s advice for future tax leaders considering a new tax operating model

Leading a tax function in today’s rapidly changing environment requires a trailblazer at the helm. Following are Story’s learnings from working with EY teams: