CenterPoint Energy, Inc.
CENTERPOINT ENERGY INC (Form: 8-K, Received: 06/06/2005 10:21:13)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): JUNE 6, 2005


CENTERPOINT ENERGY, INC.
(Exact name of registrant as specified in its charter)

            TEXAS                         1-31447               74-0694415
(State or other jurisdiction     (Commission File Number)      (IRS Employer
      of incorporation)                                     Identification No.)

                   1111 LOUISIANA
                   HOUSTON, TEXAS                                77002
     (Address of principal executive offices)                  (Zip Code)

Registrant's telephone number, including area code: (713) 207-1111


CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC
(Exact name of registrant as specified in its charter)

            TEXAS                         1-3187                 22-3865106
(State or other jurisdiction     (Commission File Number)      (IRS Employer
      of incorporation)                                     Identification No.)

                   1111 LOUISIANA
                   HOUSTON, TEXAS                                77002
     (Address of principal executive offices)                  (Zip Code)

Registrants' telephone number, including area code: (713) 207-1111


CENTERPOINT ENERGY RESOURCES CORP.
(Exact name of registrant as specified in its charter)

          DELAWARE                        1-13265               76-0511406
(State or other jurisdiction     (Commission File Number)      (IRS Employer
      of incorporation)                                     Identification No.)

                   1111 LOUISIANA
                   HOUSTON, TEXAS                                77002
     (Address of principal executive offices)                  (Zip Code)

Registrant's telephone number, including area code: (713) 207-1111


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


ITEM 7.01 REGULATION FD DISCLOSURE.

A copy of the slide presentation that CenterPoint Energy, Inc. ("CenterPoint Energy") expects will be presented to various members of the financial and investment community from time to time is attached to this report as Exhibit 99.1.

The slide presentation is being furnished, not filed, pursuant to Regulation FD. Accordingly, the slide presentation will not be incorporated by reference into any registration statement filed by CenterPoint Energy, CenterPoint Energy Houston Electric, LLC ("CenterPoint Houston") or CenterPoint Energy Resources Corp. ("CERC") under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated therein by reference. The furnishing of the slide presentation is not intended to, and does not, constitute a determination or admission by CenterPoint Energy, CenterPoint Houston or CERC that the information in the slide presentation is material or complete, or that investors should consider this information before making an investment decision with respect to any security of CenterPoint Energy, CenterPoint Houston, CERC or any of their affiliates.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.

The exhibit listed below is furnished pursuant to Item 7.01 of this Form 8-K.

(c) Exhibits.

99.1 CenterPoint Energy, Inc. slide presentation

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

Some of the statements in the exhibit attached to this report 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 "potential", "will", "intend", "expect" 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.

Changes in federal, state and local regulations affecting CenterPoint Energy's businesses, the inability of CenterPoint Energy, CenterPoint Houston or CERC to arrange future financings on acceptable terms, the timing and amount of recovery of the true-up components or the timing and outcome of any legal proceeding related to the true-up proceeding could cause actual results to differ materially from those expressed or implied in forward-looking statements. You should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of the particular statement.


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

CENTERPOINT ENERGY, INC.

Date: June 6, 2005                               By: /s/ James S. Brian
                                                     ---------------------------
                                                     James S. Brian
                                                     Senior Vice President and
                                                     Chief Accounting Officer

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

CENTERPOINT ENERGY HOUSTON
ELECTRIC, LLC

Date: June 6, 2005                               By: /s/ James S. Brian
                                                     --------------------------
                                                     James S. Brian
                                                     Senior Vice President and
                                                     Chief Accounting Officer

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

CENTERPOINT ENERGY RESOURCES
CORP.

Date: June 6, 2005                               By: /s/ James S. Brian
                                                     ---------------------------
                                                     James S. Brian
                                                     Senior Vice President and
                                                     Chief Accounting Officer


EXHIBIT INDEX

Exhibit
Number                     Exhibit Description
-------         -------------------------------------------
99.1            CenterPoint Energy, Inc. slide presentation


 

Exhibit 99.1

RBC Capital Markets 2005 North American Energy Conference Boston, MA June 6, 2005 David M. McClanahan President & Chief Executive Officer NYSE:CNP www.CenterPointEnergy.com


 

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 in CenterPoint Energy, Inc.'s Form 10-K for the period ended December 31, 2004 under "Risk Factors" beginning on page 24 and under "Management's Discussion and Analysis of Financial Condition and Results of Operations - Certain Factors Affecting Future Earnings" beginning on page 45 and in CenterPoint Energy, Inc.'s Form 10-Q for the quarterly period ended March 31, 2005 under "Management's Narrative Analysis of the Results of Operations - Certain Factors Affecting Future Earnings" beginning on page 16 . You should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of the particular statement, and we undertake no obligation to publicly update or revise any forward-looking statements. Cautionary Statement Regarding Forward-Looking Information


 

Discussion Points Company Overview 2005 First Quarter Financial Results Completing Transition Post Transition - What's Next Opportunities Challenges Industry/Sector perspective


 

Company Overview


 

Houston • • Little Rock • Minneapolis Large-scale, diversified regulated domestic energy delivery business with nearly 5 million metered customers One of the nation's largest combined gas and electric utilities Balanced mix of electric and natural gas assets Attractive service territories Houston and Minneapolis above national average in growth and consumption Diversified from a geographic, economic and regulatory standpoint Predictable, stable earnings and cash flow Approximately 85-90% of operating income from regulated operations Low risk, primarily regulated businesses No electric commodity obligation at electric utility No Provider of Last Resort risk at electric utility Low commodity risk exposure at gas LDCs CenterPoint Energy A low risk, diversified business with large scale Electric Transmission & Distribution Interstate Gas Pipelines Natural Gas Distribution


 

Operating Income - adjusted* 2004 : $441MM(1) 2003 : $408MM(2) Natural Gas Distribution Pipelines & Gathering Electric Transmission & Distribution Three segments focused primarily on regulated domestic energy delivery NYSE: CNP CenterPoint Energy Resources Corp. 3 local distribution companies (LDCs) Houston Gas Southern Gas Operations Minnesota Gas CenterPoint Energy Gas Services (CEGS) CenterPoint Energy Resources Corp. CenterPoint Energy Gas Transmission Company CenterPoint Energy - Mississippi River Transmission Corporation CenterPoint Energy Field Services, Inc CenterPoint Energy Houston Electric, LLC Operating Income 2004 : $222MM 2003 : $202MM * See reconciliation on page 30. (1) Results exclude $38mm of operating income from the Transition Bond Company and the reversal of $15MM of the reserve associated with the Final Fuel Reconciliation. (2) Results exclude $661MM of ECOM, $87MM reserve for Final Fuel Reconciliation and $38MM of operating income from the Transition Bond Company. Operating Income 2004 : $180MM 2003 : $158MM


 

2005 First Quarter Financial Results


 

Statement of Consolidated Income (unaudited, in millions except per share amounts)


 

Operating Income by Segment (unaudited, in millions)


 

Completing Transition


 

We are in the final stage of transition Reliant Energy Texas Adopts Restructuring Legislation RRI Spin-off 09/30/02 2002 2001 2000 1999 Electric retail competition begins RRI IPO 2003 NYSE:CNP- first day of trading 2004 Texas PUC Authorized $2.3+ billion true-up amount Texas Genco sale completed $700 million 2006 2005 Texas Genco fossil sale $2.231 billion TGN sale agreement signed Recover true-up balance Repay $1.31 billion term loan


 

Determination of true-up balance December 2004: PUC Final True-up Order authorized recovery of $2.3 billion $2.3 billion includes approximately $300 million of interest from January 1, 2002 through August 31, 2004 Final true-up amount will be increased for the principal portion of Excess Mitigation Credits (EMCs) paid September 1, 2004 through April 29, 2005 Final true-up amount will be increased for interest accrued on adjusted true-up balance from September 1, 2004 until transition bonds are issued or competition transition charges (CTCs) are implemented Final true-up amount will be decreased for the benefit associated with certain deferred taxes True-up Order appealed by the Company and numerous intervenors Court ordered mediation took place in May 2005 Hearing in Travis County District court scheduled for early August 2005 Company appealed issues valued at more than $1.3 billion


 

Recovery of true-up balance March 2005: PUC Final Financing Order authorized securitization of approximately $1.8 billion assuming transition bonds are issued mid- 2005 Assumes EMCs paid through April 2005, interest until transition bonds are issued and certain costs of transition bond issuance Appeals of Financing Order will delay issuance of transition bonds Law restricts appeals to whether Financing Order is consistent with constitution or law or was beyond the Commission's authority April 2005: PUC Hearing on the Merits held to determine CTC CTC will recover non-securitized true-up balance, plus a return, as a non- bypassable wires charge CTC Order expected in June CTC can be implemented despite an appeal of the CTC Order Return will accrue on true-up balance until transition bonds are issued or CTC is implemented


 

Next steps 2006 2007 2005 Retail Clawback Received ($177 million) 2004 Implement CTC PUC True-up Order PUC Financing Order Appeals of Financing Order Appeals of True-up Order Sell Transition Bonds Results of True-up Order appeals Results of Financing Order appeals


 

Post Transition - What's Next


 

Opportunities Maximize value potential of current portfolio through productivity improvements and rate relief Achieve top quartile operating and cost performance Leverage scale and synergies across businesses Share common systems and processes Embrace continuous productivity and process improvements Continue to focus on revenue enhancement through appropriate rate requests and rate design


 

Opportunities (cont.) Grow and expand current businesses Capture organic growth in existing service territories of regulated business Attractive service territories Annual growth rate of 2% plus Expand current asset footprint Capture economic pipeline expansion opportunities Expand field services footprint Expand gas marketing business Pursue complementary businesses Expand ServiceStar (remote data monitoring and communication services) Explore broadband over power lines (BPL) Pursue complementary/synergistic acquisitions Industry consolidation expected Focus on both gas and electric assets Seek complementary business expansion that leverages our core businesses/skills


 

Opportunities (cont.) Continued de-leveraging/enhancement of balance sheet Issuance of transition bonds True-up appeal Growth financed through equity Adjust dividend payout to be consistent with sustainable earnings 50-75% long-term dividend payout ratio Grow dividend consistent with earnings growth


 

Challenges Compliance with Public Utility Holding Company Act of 1935 Achievement of 30% equity guideline Managing dividend declarations Issues eliminated after PUHCA repeal Improving market perception of the company Long, complex transition period Recognition and proper valuation of low-risk business with moderate growth Executing disciplined growth plan Investments consistent with risk tolerance of company and shareholder expectations


 

Industry/sector perspective Electric retail deregulation not expected to spread in near term Integrated electric utility will remain entrenched Pure T&D utilities, like CNP, few and far between Gas opportunities will increase Price volatility will drive innovation/change Customers seek risk mitigation services Industry consolidation will continue Pace of consolidation will be primarily driven by unique or strategic circumstances, i.e., management succession, generation needs Probably not "50" in five Repeal of PUHCA will accelerate M&A activity


 

Houston • • Little Rock • Minneapolis Large-scale, diversified regulated domestic energy delivery business Attractive service territories Predictable, stable earnings and cash flow Approximately 85-90% of operating income from regulated operations Low risk, primarily regulated businesses CenterPoint Energy A low risk, diversified business with large scale Electric Transmission & Distribution Interstate Gas Pipelines Natural Gas Distribution


 

RBC Capital Markets 2005 North American Energy Conference Boston, MA June 6, 2005 David M. McClanahan President & Chief Executive Officer NYSE:CNP www.CenterPointEnergy.com


 

Appendix


 

Company Management


 

Numbers in parentheses indicate years with company / years of business experience. Skilled management team with significant regulatory and industry experience Gary Whitlock (4/33) EVP & CFO David McClanahan (33/33) President & CEO Byron R. Kelley (3/34) Sr. VP & Group President Pipelines & Field Services Tom Standish (23/34) Sr. VP & Group President Houston Electric & IT Gary Cerny (25/25) President & COO Minnesota Gas Dean Liollio (21/27) President & COO Southern Gas Operations Georgianna Nichols (22/36) President & COO Houston Gas Wayne Stinnett (22/28) Sr. VP CenterPoint Energy Gas Services Scott Rozzell (4/30) EVP, General Counsel & Corporate Secretary Johnny Blau (33/33) Sr. VP Process Improvement Preston Johnson (5/28) Sr. VP HR & Shared Services


 

2004 Financial Results


 

2002 2003 2004 703 743 810 (in millions, except per share amounts) Financial Results- Consolidated Year ended December 31, 2004 * Adjusted operating income excludes ECOM, the Transition Bond Company and the Final Fuel Reconciliation components of the Electric Transmission & Distribution utility's results (see reconciliation on page 28). Adjusted Operating Income* 703 743 811


 

Reconciliation of Operating Income to Adjusted Operating Income - Consolidated (in millions)


 

Operating Income by business segment 2002 2003 2004 (in millions) * * Operating income is adjusted to exclude ECOM, the Transition Bond Company and the Final Fuel Reconciliation components of the Electric Transmission & Distribution utility's results (see reconciliation on page 30).


 

Reconciliation of Operating Income to Adjusted Operating Income - Electric Transmission & Distribution (in millions)


 

Recent financial actions further strengthen company Received $2.931 billion from sale of Texas Genco $2.231 billion received December 2004 $700 million received April 2005 After-tax proceeds of $2.5 billion used primarily to reduce debt Contributed $476 million to the pension plan in 2004 $350 million increase to shareholders' equity Reduced interest costs, extended maturities and improved terms with three new bank credit facilities negotiated in the first quarter 2005 Includes a $1.31 billion backstop facility for a November 2005 maturity No significant debt maturities after 2005 until 2010


 

Business Segments


 

CenterPoint Energy Houston Electric Electric Transmission & Distribution Utility Focused strictly on energy delivery 5,000 square mile service area in and around Houston Approximately 1.89 million metered customers added nearly 47,000 metered customers in 2004, a 2.5% increase Reputation for reliability and high quality service No commodity risk or supply obligation Regulated by PUC of Texas 11.25% authorized ROE on 40% equity Rate base of $3.3 billion Recent process improvements have resulted in improved service reliability and reduced capital expenditures Adjusted Operating Income: 1Q05 : $71MM(1) 2004 : $441MM(2) 2003 : $408MM(3) (1) Results exclude $9MM of operating income from the Transition Bond Company (see reconciliation on page 34). (2) Results exclude $38MM operating income from the Transition Bond Company and the reversal of $15MM of the reserve associated with the Final Fuel Reconciliation (see reconciliation on page 30). (3) Results exclude $661MM of ECOM, $87MM for Final Fuel Reconciliation and $38MM operating income from the Transition Bond Company (see reconciliation on page 30).


 

Reconciliation of Operating Income to Adjusted Operating Income - Electric Transmission & Distribution (in millions)


 

CenterPoint Energy Resources Corp. Natural Gas Distribution Three LDCs serving 3 million customers in 6 states One of U.S.'s largest natural gas distribution operations in terms of number of customers served Attractive service territories Added 45,000 metered customers in 2004 Recognized for high quality service Gas adjustment clauses mitigate fuel price risk; gas procurement plans reviewed with commissions Regulated by various city and state jurisdictions Approximate range of 10 -11% authorized ROEs on 50% equity Approximate combined rate base of $1.5 billion Nearly $95 million in annualized rate increases obtained since January 2002; additional rate applications pending A complementary unregulated commercial and industrial natural gas products and services business Operating Income: Minnesota Gas Houston Gas Southern Gas Operations 1Q05 : $139MM 2004 : $222MM 2003 : $202MM


 

CenterPoint Energy Resources Corp. Natural Gas Pipelines and Gathering Two FERC-regulated pipelines: Current system at or near capacity at peak Potential growth in ancillary services Potential expansion opportunity driven by U.S. supply shifts An unregulated gas gathering subsidiary Minor liquids exposure Good growth potential overall; well-head/field compression monitoring services Pipelines strategically located at the center of the nation's gas transportation infrastructure Connected to over 20 other pipelines Operating Income: 1Q05 : $ 64MM 2004 : $180MM 2003 : $158MM Pipelines Gathering basins


 

Vision and Strategy


 

To Be Recognized As America's Leading Energy Delivery Company...and More Focused on domestic energy delivery businesses Focus on continental, U.S. market Focus on regulated energy delivery Will pursue carefully targeted growth opportunities Look for complementary businesses that leverage our core businesses Participate in industry consolidation Our Vision "...America's... Energy Delivery..." "...and More" Our corporate vision is simple and focused


 

Achieve high levels of service reliability and customer satisfaction Use applicable bench marking and best practices to achieve top quartile operating and cost performance Embrace continuous productivity and process improvements Maintain constructive, responsive and credible relationships with elected officials, regulators and community leaders Use a disciplined approach to defining, evaluating and pursuing investments to create shareholder value Create a single, high performance culture Refine business model and remove barriers between business units Leverage scale and synergies Share common systems and processes Continue to build name recognition and a single brand identity Grow Get It Right Maintain focus on domestic energy delivery Enhance and expand existing core businesses Build and expand complementary and synergistic businesses Acquire additional energy delivery assets One Company Our strategy is reflected in three simple phrases: One Company, Get It Right and Grow


 

True-up


 

True-up Final Order CNP issues on appeal $1.3 billion value of CenterPoint Energy's issues on appeal Market value $250 million Capacity auction true-up $819 million EMCs $180 million Fuel reconciliation $ 75 million Resolution of appeal items may take up to 3 years Travis County District Court 3rd Court of Appeals Texas Supreme Court


 

Debt & Maturity Schedules As of March 31, 2005


 

(6) Advances under the $250 million receivables facility, which was increased to $375 million on January 19, 2005, are not reflected as debt on the balance sheet. (7) The term loan and pollution control bonds are collateralized by general mortgage bonds. (8) Borrowings under $200 million bank facility. For financial reporting purposes, the trust preferred is deconsolidated and, therefore, $103 million of junior subordinated debentures issued to the trust is reflected on CenterPoint Energy's consolidated financial statements. For financial reporting purposes, the trust preferred is deconsolidated and, therefore, $6 million of junior subordinated debentures issued to the trust is reflected on the financial statements of CenterPoint Energy Resources Corp. Borrowings under $75 million bank facility. On April 13, 2005, the sale of Texas Genco Holdings, Inc. was completed. CenterPoint Energy, Inc. ZENS Convertible Senior Notes Senior Notes Collateralized Pollution Control Bonds First Mortgage Bond Collateral General Mortgage Bond Collateral Uncollateralized Pollution Control Bonds Bank Loans Total CenterPoint Energy Resources Corp. Debentures / Notes Convertible Subordinated Debentures Note Payable Bank Loans Total Off Balance Sheet Receivables Facility CenterPoint Energy Houston Electric, LLC First Mortgage Bonds General Mortgage Bonds Collateralized Term Loan Collateralized Pollution Control Bonds Bank Loans Total HL&P Capital Trust II NorAm Financing I Gas Pipelines Transition Bonds $660 $ 108 830 600 151 527 519 656 $3,391 Texas Genco Holdings, Inc. Trust Preferred Securities $100 $ 2,242 72 36 0 $ 2,350 $181 $ 103 1,262 1,310 229 55 $2,959 CenterPoint Energy Transition Bond Company, LLC Trust Preferred Securities $0.3 (1) Principal amount on which 2% interest is paid is $840.3 million. The debt component reflected on financial statements is $108 million. The contingent principal amount payable at maturity is $851.3 million. (2) The collateralized pollution control bonds aggregating $678 million are obligations of CenterPoint Energy, Inc. However, CenterPoint Energy Houston Electric, LLC has issued first mortgage bonds aggregating $151 million and general mortgage bonds aggregating $527 million as collateral for the CenterPoint Energy, Inc. obligations. (3) Borrowings under $1 billion bank facility. (4) Non-interest bearing obligation to a former affiliate related to monies previously advanced to CenterPoint Energy Resources Corp. by a third party and for which the former affiliate remains obligated. Payable in June 2005. (5) Borrowings under $250 million bank facility. ($ in millions) Utility Holding, LLC (1) (2) (2) (3) (4) (5) (6) (7) (7) (8) (9) (10) Principal amounts of external debt and trust preferred securities As of March 31, 2005 Texas Genco GP, LLC Texas Genco LP, LLC Texas Genco, LP Bank Loans $ 75 (11) 99% 1% (12)


 

Principal amounts of external debt and trust preferred securities As of March 31, 2005


 

Principal amounts of external debt As of March 31, 2005


 

Principal amounts of external debt and trust preferred securities As of March 31, 2005


 

Principal amounts of external debt As of March 31, 2005


 

Principal amounts of external debt and trust preferred securities As of March 31, 2005 ($ in millions)


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