View:
August
21, 2008
Securities
and Exchange Commission
100 F
Street, NE
Washington,
DC 20549
Attention:
James Allegretto
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Re:
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Response
to Comment of Staff Regarding CenterPoint Energy, Inc.’s Form 10-K for the
Fiscal Year Ended December 31, 2007 (File No.
1-31447)
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Dear Mr.
Allegretto:
CenterPoint
Energy, Inc.’s (the “Company”) response to the comment of the Staff of the
Division of Corporation Finance contained in your letter dated August 1, 2008
with respect to the Company’s Annual Report on Form 10-K for the year ended
December 31, 2007 is included in the enclosed memorandum of the Company to the
Staff. The Company hereby acknowledges in connection with its
responses to the Staff’s comments that:
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the
Company is responsible for the adequacy and accuracy of the disclosure in
the filing;
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staff
comments or changes to disclosure in response to staff comments do not
foreclose the Commission from taking any action with respect to the
filing; and
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the
Company may not assert staff comments as a defense in any proceeding
initiated by the Commission or any person under the federal securities
laws of the United States.
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Please
contact the undersigned (713-207-7425) with any questions or comments you may
have regarding the enclosed.
Very
truly yours,
CenterPoint
Energy, Inc.
By: /s/ Walter L.
Fitzgerald
Walter
L. Fitzgerald
Senior
Vice President and
Chief
Accounting Officer
cc: Yong
Kim
Securities
and Exchange Commission
Rufus S.
Scott
CenterPoint
Energy, Inc.
Gerald M.
Spedale
Baker
Botts L.L.P.
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August
21, 2008
CENTERPOINT
ENERGY, INC.
Memorandum
in Response to Staff Comment
Annual
Report on Form 10-K
for the
Fiscal Year Ended December 31, 2007
(Registration
No. 1-31447)
Originally
filed February 28, 2008
This
memorandum sets forth the response of CenterPoint Energy, Inc. (the Company) to
the comment of the staff (the Staff) of the Securities and Exchange Commission
(the Commission) in its comment letter dated August 1, 2008 (the Comment Letter)
relating to the Company’s Annual Report on Form 10-K for the year ended December
31, 2007 (the Form 10-K) that was filed on February 28, 2008 (File No.
1-31447). For your convenience, we have repeated the comment of the
Staff as given in the Comment Letter, and set forth below such comment is the
response of the Company. Capitalized terms used in this letter that
are not defined have the meanings given to them in the Form 10-K.
Notes to Consolidated
Financial Statements, page 71
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(1)
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Background and Basis
of Presentation, page 71
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(e) Regulatory Assets and
Liabilities, page 73
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1.
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It
is not clear from the presented disclosure whether you are earning a
return on all your regulatory assets. To the extent you are not
earning a return, please provide the disclosures required in paragraph 20
of SFAS 71.
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Response: Paragraph
20 of SFAS 71 states that a regulator may permit an enterprise to include a cost
that would be charged to expense by an unregulated enterprise as an allowable
cost over a period of time by amortizing that cost for rate-making purposes
without providing a return during the recovery period. If recovery of
such major costs is provided without a return on investment during the recovery
period, Paragraph 20 requires that the enterprise disclose the remaining amounts
of such assets and the remaining recovery period applicable to
them. Paragraph 34 of SFAS 71 requires the disclosures prescribed in
Paragraph 20 if the amounts being recovered without a return on investment are
material.
On page
73 of the Form 10-K, we disclose in tabular format the Company’s regulatory
assets totaling $3 billion. Of this $3 billion in regulatory assets,
$51 million is not earning a return on investment during the recovery period,
consisting of $24 million related to storm damage being recovered over a
remaining six years, and $27 million related to rate case expenses and other
allowed costs being recovered over a remaining seven years. The
Company has not considered these amounts being recovered without a return on
investment to be material in relation to its total regulatory
assets. The Company’s practice is to review regulatory assets not
earning a return on
investment for materiality each reporting period in accordance with paragraph 20
of SFAS 71. The Company will disclose in future filings that
regulatory assets not earning a return on investment are not
material. However, if the Company does record material amounts being
recovered without a return on investment in the future, we will provide the
disclosures prescribed in Paragraph 20 of SFAS 71.
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