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CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING INFORMATION
From time
to time we make statements concerning our expectations, beliefs, plans,
objectives, goals, strategies, future events or performance and underlying
assumptions and other statements that are not historical facts. These statements
are "forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Actual results may differ materially from those
expressed or implied by these statements. You can generally identify our
forward-looking statements by the words "anticipate," "believe," "continue,"
"could," "estimate," "expect," "forecast," "goal," "intend," "may," "objective,"
"plan," "potential," "predict," "projection," "should," "will" or other similar
words.
We have
based our forward-looking statements on our management’s beliefs and assumptions
based on information available to our management at the time the statements are
made. We caution you that assumptions, beliefs, expectations, intentions and
projections about future events may and often do vary materially from actual
results. Therefore, we cannot assure you that actual results will not differ
materially from those expressed or implied by our forward-looking
statements.
Some of
the factors that could cause actual results to differ from those expressed or
implied by our forward-looking statements are described under "Risk Factors" in
Item 1A of this report.
You
should not place undue reliance on forward-looking statements. Each
forward-looking statement speaks only as of the date of the particular
statement.
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Business
OUR
BUSINESS
Overview
We are a public utility holding company whose indirect wholly owned subsidiaries
include:
•
CenterPoint
Energy Houston Electric, LLC (CenterPoint Houston), which engages in the
electric transmission and distribution business in a 5,000-square mile
area of the Texas Gulf Coast that includes the city of
Houston; and
CenterPoint
Energy Resources Corp. (CERC Corp. and, together with its subsidiaries,
CERC), which owns and operates natural gas distribution systems in six
states. Subsidiaries of CERC Corp. own interstate natural gas pipelines
and gas gathering systems and provide various ancillary services. A wholly
owned subsidiary of CERC Corp. offers variable and fixed-price physical
natural gas supplies primarily to commercial and industrial customers and
electric and gas utilities.
Our
reportable business segments are Electric Transmission & Distribution,
Natural Gas Distribution, Competitive Natural Gas Sales and Services, Interstate
Pipelines, Field Services and Other Operations. From time to time, we consider
the acquisition or the disposition of assets or businesses.
Our
principal executive offices are located at 1111 Louisiana, Houston, Texas 77002
(telephone number: 713-207-1111).
We make
available free of charge on our Internet website our annual report on
Form 10-K, quarterly reports on Form 10-Q, current reports on
Form 8-K and amendments to those reports filed or furnished pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as
reasonably practicable after we electronically file such reports with, or
furnish them to, the Securities and Exchange Commission (SEC). Additionally, we
make available free of charge on our Internet website:
our
Code of Ethics for our Chief Executive Officer and Senior Financial
Officers;
our
Ethics and Compliance Code;
our
Corporate Governance Guidelines;
and
the
charters of the audit, compensation, finance, governance and strategic
planning committees of our Board of
Directors.
Any
shareholder who so requests may obtain a printed copy of any of these documents
from us. Changes in or waivers of our Code of Ethics for our Chief Executive
Officer and Senior Financial Officers and waivers of our Ethics and Compliance
Code for directors or executive officers will be posted on our Internet website
within five business days of such change or waiver and maintained for at least
12 months or reported on Item 5.05 of Form 8-K. Our website
address is www.centerpointenergy.com.
Except to the extent explicitly stated herein, documents and information
on our website are not incorporated by reference herein.
Electric
Transmission & Distribution
In 1999,
the Texas legislature adopted the Texas Electric Choice Plan (Texas electric
restructuring law) that led to the restructuring of certain integrated electric
utilities operating within Texas. Pursuant to that legislation, integrated
electric utilities operating within the Electric Reliability Council of Texas,
Inc. (ERCOT) were required to unbundle their integrated operations into separate
retail sales, power generation and transmission and distribution companies. The
legislation also required that the prices for wholesale generation and retail
electric sales be unregulated, but
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services
by companies providing transmission and distribution service, such as
CenterPoint Houston, would remain regulated by the Public Utility Commission of
Texas (Texas Utility Commission). The legislation provided for a transition
period to move to the new market structure and provided a true-up mechanism for
the formerly integrated electric utilities to recover stranded and certain other
costs resulting from the transition to competition. Those costs were recoverable
after approval by the Texas Utility Commission either through the issuance of
securitization bonds or through the implementation of a competition transition
charge (CTC) as a rider to the utility’s tariff.
CenterPoint
Houston is our only business that continues to engage in electric utility
operations. It is a transmission and distribution electric utility that operates
wholly within the state of Texas. Neither CenterPoint Houston nor any other
subsidiary of CenterPoint Energy makes retail or wholesale sales of electric
energy, or owns or operates any electric generating facilities.
On behalf
of retail electric providers (REPs), CenterPoint Houston delivers electricity
from power plants to substations, from one substation to another and to retail
electric customers taking power at or above 69 kilovolts (kV) in locations
throughout CenterPoint Houston’s certificated service territory. CenterPoint
Houston constructs and maintains transmission facilities and provides
transmission services under tariffs approved by the Texas Utility
Commission.
Electric
Distribution
In ERCOT,
end users purchase their electricity directly from certificated REPs.
CenterPoint Houston delivers electricity for REPs in its certificated service
area by carrying lower-voltage power from the substation to the retail electric
customer. CenterPoint Houston’s distribution network receives electricity from
the transmission grid through power distribution substations and delivers
electricity to end users through distribution feeders. CenterPoint Houston’s
operations include construction and maintenance of distribution facilities,
metering services, outage response services and call center operations.
CenterPoint Houston provides distribution services under tariffs approved by the
Texas Utility Commission. Texas Utility Commission rules and market protocols
govern the commercial operations of distribution companies and other market
participants. Rates for these existing services are established pursuant to rate
proceedings conducted before municipalities that have original jurisdiction and
the Texas Utility Commission.