(Mark
One)
|
|
R
|
ANNUAL
REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For
the fiscal year ended December 31, 2008
|
|
or
|
|
£
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
|
For
the transition period from
to
|
Texas
|
22-3865106
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(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
1111
Louisiana
|
|
Houston,
Texas 77002
|
(713)
207-1111
|
(Address
and zip code of principal executive offices)
|
(Registrant’s
telephone number, including area
code)
|
Title of each class
|
Name of each exchange on which
registered
|
9.15%
First Mortgage Bonds due 2021
|
New
York Stock Exchange
|
6.95%
General Mortgage Bonds due 2033
|
New
York Stock Exchange
|
Page
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||
PART I
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||
Item
1.
|
1
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Item
1A.
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12
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Item
1B.
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19
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Item
2.
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19
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Item
3.
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19
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Item
4.
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19
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PART II
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||
Item
5.
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20
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Item
6.
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20
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Item
7.
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20
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Item
7A.
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31
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Item
8.
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32
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Item
9.
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56
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Item
9A(T).
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56
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Item
9B.
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56
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PART III
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||
Item
10.
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56
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Item
11.
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56
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Item
12.
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56
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Item
13.
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56
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Item
14.
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57
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PART IV
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||
Item
15.
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57
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|
Ex.
12
|
Computation of Ratios of Earnings to Fixed Charges | |
Ex.
23
|
Consent of Deloitte & Touche LLP | |
Ex.
31.1
|
Rule 13a-14(a)/15d-14(a) Certification of David M. McClanahan | |
Ex.
31.2
|
Rule 13a-14(a)/15d-14(a) Certification of Gary L. Whitlock | |
Ex.
32.1
|
Section 1350 Certification of David M. McClanahan | |
Ex.
32.2
|
Section 1350 Certification of Gary L. Whitlock |
|
•
|
reversed
the Texas Utility Commission’s ruling that had denied recovery of a
portion of the capacity auction true-up
amounts;
|
|
•
|
reversed
the Texas Utility Commission’s ruling that precluded us from recovering
the interest component of the EMCs paid to REPs;
and
|
|
•
|
affirmed
the True-Up Order in all other
respects.
|
|
•
|
reversed
the district court’s judgment to the extent it restored the capacity
auction true-up amounts;
|
|
•
|
reversed
the district court’s judgment to the extent it upheld the Texas Utility
Commission’s decision to allow us to recover EMCs paid to Reliant Energy,
Inc. (RRI);
|
|
•
|
ordered
that the tax normalization issue described below be remanded to the Texas
Utility Commission as requested by the Texas Utility Commission;
and
|
|
•
|
affirmed
the district court’s judgment in all other
respects.
|
|
•
|
the
lien of a Mortgage and Deed of Trust (the Mortgage) dated November 1,
1944, as supplemented; and
|
|
•
|
the
lien of a General Mortgage (the General Mortgage) dated October 10,
2002, as supplemented, which is junior to the lien of the
Mortgage.
|
|
•
|
restricting
the way we can handle or dispose of
wastes;
|
|
•
|
limiting
or prohibiting construction activities in sensitive areas such as
wetlands, coastal regions, or areas inhabited by endangered
species;
|
|
•
|
requiring
remedial action to mitigate pollution conditions caused by our operations,
or attributable to former operations;
and
|
|
•
|
enjoining
the operations of facilities deemed in non-compliance with permits issued
pursuant to such environmental laws and
regulations.
|
|
•
|
construct
or acquire new equipment;
|
|
•
|
acquire
permits for facility operations;
|
|
•
|
modify
or replace existing and proposed equipment;
and
|
|
•
|
clean
up or decommission waste disposal areas, fuel storage and management
facilities and other locations and
facilities.
|
|
•
|
reversed
the Texas Utility Commission’s ruling that had denied recovery of a
portion of the capacity auction true-up
amounts;
|
|
•
|
reversed
the Texas Utility Commission’s ruling that precluded us from recovering
the interest component of the EMCs paid to
REPs; and
|
|
•
|
affirmed
the True-Up Order in all other
respects.
|
|
•
|
reversed
the district court’s judgment to the extent it restored the capacity
auction true-up amounts;
|
|
•
|
reversed
the district court’s judgment to the extent it upheld the Texas Utility
Commission’s decision to allow us to recover EMCs paid to
RRI;
|
|
•
|
ordered
that the tax normalization issue described below be remanded to the Texas
Utility Commission as requested by the Texas Utility
Commission; and
|
|
•
|
affirmed
the district court’s judgment in all other
respects.
|
|
•
|
the
resolution of the true-up components, including, in particular, the
results of appeals to the courts regarding rulings obtained to
date;
|
|
•
|
our
recovery of costs arising from Hurricane
Ike;
|
|
•
|
general
economic and capital market
conditions;
|
|
•
|
credit
availability from financial institutions and other
lenders;
|
|
•
|
investor
confidence in us and the markets in which we
operate;
|
|
•
|
maintenance
of acceptable credit ratings by us and CenterPoint
Energy;
|
|
•
|
market
expectations regarding our future earnings and cash
flows;
|
|
•
|
market
perceptions of our and CenterPoint Energy’s ability to access capital
markets on reasonable terms;
|
|
•
|
our
exposure to RRI as our customer and in connection with its indemnification
obligations arising in connection with its separation from CenterPoint
Energy; and
|
|
•
|
provisions
of relevant tax and securities
laws.
|
|
•
|
our
payment of dividends;
|
|
•
|
decisions
on our financings and our capital raising
activities;
|
|
•
|
mergers
or other business combinations; and
|
|
•
|
our
acquisition or disposition of
assets.
|
|
•
|
restricting
the way we can handle or dispose of
wastes;
|
|
•
|
limiting
or prohibiting construction activities in sensitive areas such as
wetlands, coastal regions, or areas inhabited by endangered
species;
|
|
•
|
requiring
remedial action to mitigate pollution conditions caused by our operations,
or attributable to former
operations; and
|
|
•
|
enjoining
the operations of facilities deemed in non-compliance with permits issued
pursuant to such environmental laws and
regulations.
|
|
•
|
construct
or acquire new equipment;
|
|
•
|
acquire
permits for facility operations;
|
|
•
|
modify
or replace existing and proposed
equipment; and
|
|
•
|
clean
up or decommission waste disposal areas, fuel storage and management
facilities and other locations and
facilities.
|
|
•
|
merchant
energy, energy trading and REP businesses transferred to RRI or its
subsidiaries in connection with the organization and capitalization of RRI
prior to its initial public offering in
2001; and
|
|
•
|
Texas
electric generating facilities transferred to Texas Genco Holdings, Inc.
(Texas Genco) in 2004 and early
2005.
|
|
•
|
the
resolution of the true-up components, including, in particular, the
results of appeals to the courts regarding rulings obtained to
date;
|
|
•
|
state
and federal legislative and regulatory actions or developments, including
deregulation, re-regulation, environmental regulations, including
regulations related to global climate change, and changes in or
application of laws or regulations applicable to the various aspects of
our business;
|
|
•
|
timely
and appropriate legislative and regulatory actions allowing securitization
or other recovery of costs associated with Hurricane
Ike;
|
|
•
|
timely
and appropriate rate actions and increases, allowing recovery of costs and
a reasonable return on investment;
|
|
•
|
industrial,
commercial and residential growth in our service territory and changes in
market demand and demographic
patterns;
|
|
•
|
weather
variations and other natural
phenomena;
|
|
•
|
changes
in interest rates or rates of
inflation;
|
|
•
|
commercial
bank and financial market conditions, our access to capital, the cost of
such capital, and the results of our financing and refinancing efforts,
including availability of funds in the debt capital
markets;
|
|
•
|
actions
by rating agencies;
|
|
•
|
non-payment
for our services due to financial distress of our customers, including
Reliant Energy, Inc. (RRI);
|
|
•
|
the
ability of RRI and its subsidiaries to satisfy their other obligations to
us, including indemnity
obligations;
|
|
•
|
the
outcome of litigation brought by or against
us;
|
|
•
|
our
ability to control costs;
|
|
•
|
the
investment performance of CenterPoint Energy’s employee benefit
plans;
|
|
•
|
our
potential business strategies, including acquisitions or dispositions of
assets or businesses, which we cannot assure will be completed or will
have the anticipated benefits to us;
and
|
|
•
|
other
factors we discuss under “Risk Factors” in Item 1A of this report and
in other reports we file from time to time with the Securities and
Exchange Commission.
|
Year
Ended December 31,
|
||||||||||||
2006
|
2007
|
2008
|
||||||||||
(In
millions,
except
throughput and customer data)
|
||||||||||||
Revenues:
|
||||||||||||
Electric
transmission and distribution utility
|
$ | 1,516 | $ | 1,560 | $ | 1,593 | ||||||
Transition
bond companies
|
265 | 277 | 323 | |||||||||
Total
Revenues
|
1,781 | 1,837 | 1,916 | |||||||||
Expenses:
|
||||||||||||
Operation
and maintenance, excluding transition bond companies
|
611 | 652 | 703 | |||||||||
Depreciation
and amortization, excluding transition bond companies
|
243 | 243 | 277 | |||||||||
Taxes
other than income taxes
|
212 | 223 | 201 | |||||||||
Transition
bond companies
|
139 | 158 | 190 | |||||||||
Total
Expenses
|
1,205 | 1,276 | 1,371 | |||||||||
Operating
Income
|
576 | 561 | 545 | |||||||||
Interest
and other finance charges
|
(110 | ) | (107 | ) | (109 | ) | ||||||
Interest
on transition bonds (1)
|
(130 | ) | (123 | ) | (136 | ) | ||||||
Other
Income, net
|
67 | 68 | 43 | |||||||||
Income
Before Income Taxes
|
403 | 399 | 343 | |||||||||
Income
Tax Expense
|
(132 | ) | (126 | ) | (121 | ) | ||||||
Net
Income
|
$ | 271 | $ | 273 | $ | 222 | ||||||
Throughput
(in gigawatt-hours (GWh)):
|
||||||||||||
Residential
|
23,955 | 23,999 | 24,258 | |||||||||
Total
|
75,877 | 76,291 | 74,840 | |||||||||
Average
number of metered customers:
|
||||||||||||
Residential
|
1,743,963 | 1,793,600 | 1,821,267 | |||||||||
Total
|
1,980,960 | 2,034,074 | 2,064,854 |
2008
|
$ | 481 | ||
2009
|
422 | |||
2010
|
591 | |||
2011
|
579 | |||
2012
|
504 | |||
2013
|
506 |
Contractual
Obligations
|
Total
|
2009
|
2010-2011 | 2012-2013 |
2014
and
thereafter
|
|||||||||||||||
Transition
bond debt (1)
|
$ | 2,589 | $ | 208 | $ | 461 | $ | 546 | $ | 1,374 | ||||||||||
Other
long-term debt
|
1,842 | — | — | 746 | 1,096 | |||||||||||||||
Interest
payments - transition bond debt (1) (2)
|
794 | 140 | 227 | 177 | 250 | |||||||||||||||
Interest
payments - other long-term debt (2)
|
1,319 | 118 | 261 | 246 | 694 | |||||||||||||||
Capital
leases
|
1 | — | — | — | 1 | |||||||||||||||
Benefit
obligations (3)
|
— | — | — | — | — | |||||||||||||||
Income
taxes (4)
|
3 | 3 | — | — | — | |||||||||||||||
Total
contractual cash obligations
|
$ | 6,548 | $ | 469 | $ | 949 | $ | 1,715 | $ | 3,415 |
(1)
|
Transition
charges are adjusted at least annually to cover debt service on transition
bonds.
|
(2)
|
We
calculated estimated interest payments for long-term debt as follows: for
fixed-rate debt and term debt, we calculated interest based on the
applicable rates and payment dates; for variable-rate debt and/or non-term
debt, we used interest rates in place as of December 31, 2008. We
typically expect to settle such interest payments with cash flows from
operations and
short-term borrowings.
|
(3)
|
We
expect to contribute approximately $8 million to our postretirement
benefits plan in 2009 to fund a portion of our obligations in accordance
with rate orders or to fund pay-as-you-go costs associated with the
plan.
|
(4)
|
Represents
estimated income tax liability for settled positions for tax years under
examination. In addition, as of December 31, 2008, the liability for
uncertain income tax positions was $123 million. However, due to the
high degree of uncertainty regarding the timing of potential future cash
flows associated with these liabilities, we are unable to make a
reasonably reliable estimate of the amount and period in which these
liabilities might be paid.
|
Date
Executed
|
Type
of Facility
|
Size
of Facility
|
Amount
Utilized at
February
13, 2009
|
Termination
Date
|
||||||
June
29, 2007
|
Revolver
|
$ | 289 | $ | 4 | (1) |
June
29, 2012
|
|||
November
25, 2008
|
Revolver
|
600 | — |
November
24, 2009
|
(1)
|
Includes
$4 million of outstanding letters of
credit.
|
Year
|
Third-Party
|
Affiliate
|
Sub-Total
|
Transition
Bonds
|
Total
|
|||||||||||||||
2009
|
$ | — | $ | — | $ | — | $ | 208 | $ | 208 | ||||||||||
2010
|
— | — | — | 221 | 221 | |||||||||||||||
2011
|
— | — | — | 240 | 240 | |||||||||||||||
2012
|
297 | — | 297 | 262 | 559 | |||||||||||||||
2013
|
450 | — | 450 | 283 | 733 | |||||||||||||||
2014
|
300 | — | 300 | 188 | 488 | |||||||||||||||
2015
|
— | 151 | 151 | 201 | 352 | |||||||||||||||
2016
|
— | — | — | 215 | 215 | |||||||||||||||
2017
|
127 | — | 127 | 231 | 358 | |||||||||||||||
2018
|
— | — | — | 247 | 247 | |||||||||||||||
2019
|
— | — | — | 264 | 264 | |||||||||||||||
2020
|
— | — | — | 29 | 29 | |||||||||||||||
2021
|
102 | — | 102 | — | 102 | |||||||||||||||
2023
|
200 | — | 200 | — | 200 | |||||||||||||||
2027
|
56 | — | 56 | — | 56 | |||||||||||||||
2033
|
312 | — | 312 | — | 312 | |||||||||||||||
Total
|
$ | 1,844 | $ | 151 | $ | 1,995 | $ | 2,589 | $ | 4,584 |
Issued
Directly
to
Third Parties
|
Issued
as
Collateral
for Our
Debt
|
Issued
as Collateral
for
CenterPoint
Energy’s
Debt
|
Total
|
|||||||||||||
First
Mortgage Bonds
|
$ | 102 | $ | — | $ | 151 | $ | 253 | ||||||||
General
Mortgage Bonds
|
1,262 | 829 | 527 | 2,618 | ||||||||||||
Total
|
$ | 1,364 | $ | 829 | $ | 678 | $ | 2,871 |
Year
|
First
Mortgage
Bonds
|
General
Mortgage
Bonds
|
Total
|
|||||||||
2011
|
$ | — | $ | 19 | $ | 19 | ||||||
2015
|
151 | — | 151 | |||||||||
2018
|
— | 50 | 50 | |||||||||
2019
|
— | 200 | 200 | |||||||||
2020
|
— | 90 | 90 | |||||||||
2026
|
— | 100 | 100 | |||||||||
2028
|
— | 68 | 68 | |||||||||
Total
|
$ | 151 | $ | 527 | $ | 678 |
Moody’s
|
S&P
|
Fitch
|
||||||||||
Instrument
|
Rating
|
Outlook(1)
|
Rating
|
Outlook(2)
|
Rating
|
Outlook(3)
|
||||||
Senior
Secured Debt (First Mortgage Bonds)
|
Baa2
|
Stable
|
BBB+
|
Stable
|
A-
|
Stable
|
||||||
Senior
Secured Debt (General Mortgage Bonds)
|
Baa2
|
Stable
|
BBB+
|
Stable
|
BBB+
|
Stable
|
(1)
|
A
“stable” outlook from Moody’s indicates that Moody’s does not expect to
put the rating on review for an upgrade or downgrade within 18 months from
when the outlook was assigned or last
affirmed.
|
(2)
|
An
S&P rating outlook assesses the potential direction of a long-term
credit rating over the intermediate to longer
term.
|
(3)
|
A
“stable” outlook from Fitch encompasses a one-to-two year horizon as to
the likely ratings direction.
|
|
•
|
increases
in interest expense in connection with debt refinancings and borrowings
under our credit facilities;
|
|
•
|
various
regulatory actions;
|
|
•
|
the
ability of RRI and its subsidiaries to satisfy their obligations as our
principal customers and in respect of RRI’s indemnity obligations to
us;
|
|
•
|
the
outcome of litigation brought by and against
us;
|
|
•
|
restoration
costs and revenue losses resulting from natural disasters such as
hurricanes and the timing of recovery of such costs;
and
|
|
•
|
various
other risks identified in “Risk Factors” in Item 1A of this
report.
|
|
•
|
Inflation adjustment -
The estimated cash flows are adjusted for inflation estimates for labor,
equipment, materials, and other disposal
costs;
|
|
•
|
Discount rate - The
estimated cash flows include contingency factors that were used as a proxy
for the market risk premium; and
|
|
•
|
Third party markup
adjustments - Internal labor costs included in the cash flow
calculation were adjusted for costs that a third party would incur in
performing the tasks necessary to retire the
asset.
|
|
•
|
Pertain
to the maintenance of records that in reasonable detail accurately and
fairly reflect the transactions and dispositions of the assets of the
company;
|
|
•
|
Provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company
are being made only in accordance with authorizations of management and
directors of the company; and
|
|
•
|
Provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the company’s assets that
could have a material effect on the financial
statements.
|
/s/ DAVID
M. MCCLANAHAN
|
|
Chairman
|
|
/s/ GARY
L. WHITLOCK
|
|
Executive
Vice President and Chief
|
|
Financial
Officer
|
Year
Ended December 31,
|
||||||||||||
2006
|
2007
|
2008
|
||||||||||
(In
Millions)
|
||||||||||||
Revenues
|
$ | 1,781 | $ | 1,837 | $ | 1,916 | ||||||
Expenses:
|
||||||||||||
Operation
and maintenance
|
614 | 655 | 709 | |||||||||
Depreciation
and amortization
|
379 | 398 | 460 | |||||||||
Taxes
other than income taxes
|
212 | 223 | 202 | |||||||||
Total
|
1,205 | 1,276 | 1,371 | |||||||||
Operating
Income
|
576 | 561 | 545 | |||||||||
Other
Income (Expense):
|
||||||||||||
Interest
and other finance charges
|
(110 | ) | (107 | ) | (109 | ) | ||||||
Interest
on transition bonds
|
(130 | ) | (123 | ) | (136 | ) | ||||||
Other,
net
|
67 | 68 | 43 | |||||||||
Total
|
(173 | ) | (162 | ) | (202 | ) | ||||||
Income
Before Income Taxes
|
403 | 399 | 343 | |||||||||
Income
tax expense
|
(132 | ) | (126 | ) | (121 | ) | ||||||
Net
Income
|
$ | 271 | $ | 273 | $ | 222 |
December 31,
|
||||||||
2007
|
2008
|
|||||||
(In
Millions)
|
||||||||
ASSETS
|
||||||||
Current
Assets:
|
||||||||
Cash
and cash equivalents
|
$ | 128 | $ | 166 | ||||
Accounts
and notes receivable, net
|
172 | 227 | ||||||
Accounts
and notes receivable—affiliated companies
|
25 | 30 | ||||||
Accrued
unbilled revenues
|
102 | 60 | ||||||
Inventory
|
60 | 74 | ||||||
Taxes
receivable
|
3 | 8 | ||||||
Deferred
tax asset
|
— | 1 | ||||||
Other
|
70 | 82 | ||||||
Total
current assets
|
560 | 648 | ||||||
Property,
Plant and Equipment, net
|
4,391 | 4,604 | ||||||
Other
Assets:
|
||||||||
Regulatory
assets
|
2,621 | 2,832 | ||||||
Notes
receivable—affiliated companies
|
750 | 750 | ||||||
Other
|
36 | 48 | ||||||
Total
other assets
|
3,407 | 3,630 | ||||||
Total
Assets
|
$ | 8,358 | $ | 8,882 | ||||
LIABILITIES
AND MEMBER’S EQUITY
|
||||||||
Current
Liabilities:
|
||||||||
Current
portion of long-term debt
|
$ | 159 | $ | 208 | ||||
Accounts
payable
|
47 | 150 | ||||||
Accounts
and notes payable—affiliated companies
|
75 | 36 | ||||||
Taxes
accrued
|
87 | 87 | ||||||
Interest
accrued
|
83 | 100 | ||||||
Other
|
74 | 89 | ||||||
Total
current liabilities
|
525 | 670 | ||||||
Other
Liabilities:
|
||||||||
Accumulated
deferred income taxes, net
|
1,189 | 1,506 | ||||||
Unamortized
investment tax credits
|
28 | 21 | ||||||
Benefit
obligations
|
176 | 187 | ||||||
Regulatory
liabilities
|
354 | 313 | ||||||
Notes
payable—affiliated companies
|
151 | 151 | ||||||
Other
|
134 | 170 | ||||||
Total
other liabilities
|
2,032 | 2,348 | ||||||
Long-Term
Debt
|
3,743 | 4,224 | ||||||
Commitments
And Contingencies (Note 8)
|
||||||||
Member’s
Equity
|
2,058 | 1,640 | ||||||
Total
Liabilities and Member’s Equity
|
$ | 8,358 | $ | 8,882 |
Year
Ended December 31,
|
||||||||||||
2006
|
2007
|
2008
|
||||||||||
(In
Millions)
|
||||||||||||
Cash
Flows from Operating Activities:
|
||||||||||||
Net
income
|
$ | 271 | $ | 273 | $ | 222 | ||||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||||||
Depreciation
and amortization
|
379 | 398 | 460 | |||||||||
Deferred
income taxes
|
(76 | ) | (73 | ) | 347 | |||||||
Amortization
of deferred financing costs
|
12 | 11 | 13 | |||||||||
Changes
in other assets and liabilities:
|
||||||||||||
Accounts
and notes receivable, net
|
14 | (14 | ) | (13 | ) | |||||||
Accounts
receivable/payable, affiliates
|
(36 | ) | 23 | (5 | ) | |||||||
Taxes
receivable
|
(6 | ) | 31 | (5 | ) | |||||||
Inventory
|
(3 | ) | 3 | (14 | ) | |||||||
Accounts
payable
|
8 | (24 | ) | 21 | ||||||||
Interest
and taxes accrued
|
1 | (20 | ) | 17 | ||||||||
Net
regulatory assets and liabilities
|
56 | 67 | (376 | ) | ||||||||
Other
current assets
|
(2 | ) | — | (2 | ) | |||||||
Other
current liabilities
|
17 | 7 | 13 | |||||||||
Other
assets
|
9 | (1 | ) | 1 | ||||||||
Other
liabilities
|
17 | (18 | ) | (5 | ) | |||||||
Other,
net
|
(6 | ) | 1 | (9 | ) | |||||||
Net
cash provided by operating activities
|
655 | 664 | 665 | |||||||||
Cash
Flows from Investing Activities:
|
||||||||||||
Capital
expenditures
|
(381 | ) | (402 | ) | (462 | ) | ||||||
Increase
in restricted cash of transition bond companies
|
(32 | ) | (1 | ) | (11 | ) | ||||||
Other,
net
|
1 | 12 | 14 | |||||||||
Net
cash used in investing activities
|
(412 | ) | (391 | ) | (459 | ) | ||||||
Cash
Flows from Financing Activities:
|
||||||||||||
Long-term
revolving credit facility, net
|
— | 50 | 201 | |||||||||
Proceeds
from long-term debt
|
— | — | 488 | |||||||||
Payments
of long-term debt
|
(74 | ) | (147 | ) | (159 | ) | ||||||
Increase
(decrease) in short-term notes payable with affiliates
|
49 | (70 | ) | (39 | ) | |||||||
Debt
issuance costs
|
— | — | (19 | ) | ||||||||
Contribution
to parent
|
(36 | ) | — | — | ||||||||
Dividend
to parent
|
(100 | ) | (100 | ) | (640 | ) | ||||||
Net
cash used in financing activities
|
(161 | ) | (267 | ) | (168 | ) | ||||||
Net
Increase in Cash and Cash Equivalents
|
82 | 6 | 38 | |||||||||
Cash
and Cash Equivalents at Beginning of the Year
|
40 | 122 | 128 | |||||||||
Cash
and Cash Equivalents at End of the Year
|
$ | 122 | $ | 128 | $ | 166 | ||||||
Supplemental
Disclosure of Cash Flow Information:
|
||||||||||||
Cash
Payments:
|
||||||||||||
Interest,
net of capitalized interest
|
$ | 198 | $ | 221 | $ | 235 | ||||||
Income
taxes (refunds), net
|
304 | 180 | (231 | ) | ||||||||
Non-cash
transactions:
|
||||||||||||
Accounts
payable related to capital expenditures
|
$ | 23 | $ | 23 | $ | 42 |
2006
|
2007
|
2008
|
||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
|||||||||||||||||||
(In
millions of dollars and shares)
|
||||||||||||||||||||||||
Preference
Stock, none outstanding
|
— | $ | — | — | $ | — | — | $ | — | |||||||||||||||
Cumulative
Preferred Stock, $0.01 par value; authorized 20,000,000 shares,
none outstanding
|
— | — | — | — | — | — | ||||||||||||||||||
Common
Stock, $0.01 par value; authorized
1,000,000,000 shares
|
||||||||||||||||||||||||
Balance,
beginning of year
|
1,000 | — | 1,000 | — | 1,000 | — | ||||||||||||||||||
Balance,
end of year
|
1,000 | — | 1,000 | — | 1,000 | — | ||||||||||||||||||
Additional
Paid-in-Capital
|
||||||||||||||||||||||||
Balance,
beginning of year
|
1,719 | 1,712 | 1,712 | |||||||||||||||||||||
Contribution
to parent
|
(8 | ) | — | — | ||||||||||||||||||||
Dividend
to parent
|
— | — | (482 | ) | ||||||||||||||||||||
Other
|
1 | — | — | |||||||||||||||||||||
Balance,
end of year
|
1,712 | 1,712 | 1,230 | |||||||||||||||||||||
Retained
Earnings (Deficit)
|
||||||||||||||||||||||||
Balance,
beginning of year
|
(1 | ) | 170 | 346 | ||||||||||||||||||||
Net
income
|
271 | 273 | 222 | |||||||||||||||||||||
Dividend
to parent
|
(100 | ) | (100 | ) | (158 | ) | ||||||||||||||||||
Cumulative
effect of uncertain tax positions standard
|
— | 3 | — | |||||||||||||||||||||
Balance,
end of year
|
170 | 346 | 410 | |||||||||||||||||||||
Total
Member’s Equity
|
$ | 1,882 | $ | 2,058 | $ | 1,640 |
(1)
|
Background
|
(2)
|
Summary
of Significant Accounting Policies
|
(a)
|
Use
of Estimates
|
(b)
|
Principles
of Consolidation
|
(c)
|
Revenues
|
(d)
|
Long-Lived
Assets and Intangibles
|
Weighted
Average Useful
|
December 31,
|
|||||||||||
Lives
(Years)
|
2007
|
2008
|
||||||||||
(In
millions)
|
||||||||||||
Transmission
|
38
|
$ | 1,456 | $ | 1,597 | |||||||
Distribution
|
26
|
4,757 | 4,853 | |||||||||
Other
|
17
|
780 | 806 | |||||||||
Total
|
6,993 | 7,256 | ||||||||||
Accumulated
depreciation
|
2,602 | 2,652 | ||||||||||
Property,
plant and equipment, net
|
$ | 4,391 | $ | 4,604 |
(e)
|
Regulatory
Assets and Liabilities
|
December 31,
|
||||||||
2007
|
2008
|
|||||||
(In
millions)
|
||||||||
Electric
generation-related regulatory assets (1)
|
$ | 545 | $ | 3 | ||||
Securitized
regulatory asset (1)
|
2,131 | 2,430 | ||||||
Unrecognized
equity return
|
(220 | ) | (207 | ) | ||||
Unamortized
loss on reacquired debt
|
79 | 73 | ||||||
Hurricane
Ike restoration cost (2)
|
— | 435 | ||||||
Postretirement-related
regulatory asset (3)
|
39 | 50 | ||||||
Other
long-term regulatory assets
|
47 | 48 | ||||||
Total
regulatory assets (2)
|
2,621 | 2,832 | ||||||
Electric
generation-related regulatory liabilities (1)
|
44 | — | ||||||
Estimated
removal costs
|
290 | 301 | ||||||
Other
long-term regulatory liabilities
|
20 | 12 | ||||||
Total
regulatory liabilities
|
354 | 313 | ||||||
Total
regulatory assets and liabilities, net
|
$ | 2,267 | $ | 2,519 |
|
(1)
|
As
discussed in Note 6(b), the Company securitized approximately
$483 million of electric generation-related regulatory assets, net,
in February 2008.
|
|
(2)
|
Pending
review and approval by the Public Utility Commission of Texas (Texas
Utility Commission), the Company is not recording a return on its
Hurricane Ike restoration costs, see Note 3(a). Other
regulatory assets that are not earning a return were not material at
December 31, 2007 and 2008.
|
|
(3)
|
The
Company has recorded a regulatory asset for the unrecognized costs of its
postretirement plans because it has historically recovered and currently
recovers postretirement expenses in
rates.
|
(f)
|
Depreciation
and Amortization Expense
|
Year
Ended December 31,
|
||||||||||||
2006
|
2007
|
2008
|
||||||||||
(In millions)
|
||||||||||||
Depreciation
expense
|
$ | 245 | $ | 251 | $ | 256 | ||||||
Amortization
of securitized regulatory assets
|
135 | 155 | 183 | |||||||||
Other
amortization
|
(1 | ) | (8 | ) | 21 | |||||||
Total
depreciation and amortization
|
$ | 379 | $ | 398 | $ | 460 |
(g)
|
Allowance
for Funds Used During Construction
|
(h)
|
Income
Taxes
|
(i)
|
Accounts
Receivable and Allowance for Doubtful
Accounts
|
(j)
|
Inventory
|
(k)
|
Statements
of Consolidated Cash Flows
|
(l)
|
New
Accounting Pronouncements
|
(m)
|
Employee
Benefit Plans
|
Year
Ended December 31,
|
||||||||||||
2006
|
2007
|
2008
|
||||||||||
(In
millions)
|
||||||||||||
Service
cost— benefits earned during the period
|
$ | 1 | $ | 1 | $ | 1 | ||||||
Interest
cost on projected benefit obligation
|
16 | 17 | 17 | |||||||||
Expected
return on plan assets
|
(11 | ) | (11 | ) | (11 | ) | ||||||
Amortization
of transition obligation
|
6 | 6 | 6 | |||||||||
Net
postretirement benefit cost
|
$ | 12 | $ | 13 | $ | 13 |
Year
Ended December 31,
|
||||||||||||
2006
|
2007
|
2008
|
||||||||||
Discount
rate
|
5.70 | % | 5.85 | % | 6.40 | % | ||||||
Expected
return on plan assets
|
8.50 | % | 8.00 | % | 8.00 | % |
Year
Ended December 31,
|
||||||||
2007
|
2008
|
|||||||
(In
millions)
|
||||||||
Change
in Benefit Obligation
|
||||||||
Accumulated
benefit obligation, beginning of year
|
$ | 294 | $ | 281 | ||||
Service
cost
|
1 | 1 | ||||||
Interest
cost
|
17 | 17 | ||||||
Benefits
paid
|
(17 | ) | (18 | ) | ||||
Participant
contributions
|
1 | 1 | ||||||
Medicare
drug reimbursement
|
— | 2 | ||||||
Actuarial
gain
|
(15 | ) | (12 | ) | ||||
Accumulated
benefit obligation, end of year
|
$ | 281 | $ | 272 | ||||
Change
in Plan Assets
|
||||||||
Plan
assets, beginning of year
|
$ | 138 | $ | 142 | ||||
Benefits
paid
|
(17 | ) | (18 | ) | ||||
Employer
contributions
|
9 | 9 | ||||||
Participant
contributions
|
1 | 1 | ||||||
Actual
investment return (loss)
|
11 | (19 | ) | |||||
Plan
assets, end of year
|
$ | 142 | $ | 115 | ||||
Amounts
Recognized in Balance Sheets
|
||||||||
Other
liabilities-benefit obligations
|
$ | (139 | ) | $ | (157 | ) | ||
Net
liability, end of year
|
$ | (139 | ) | $ | (157 | ) | ||
Actuarial
Assumptions
|
||||||||
Discount
rate
|
6.40 | % | 6.90 | % | ||||
Expected
long-term return on assets
|
8.00 | % | 8.00 | % | ||||
Healthcare
cost trend rate assumed for the next year
|
7.00 | % | 6.50 | % | ||||
Prescription
drug cost trend rate assumed for the next year
|
13.00 | % | 12.00 | % | ||||
Rate
to which the cost trend rate is assumed to decline (ultimate trend
rate)
|
5.50 | % | 5.50 | % | ||||
Year
that the healthcare rate reaches the ultimate trend rate
|
2012
|
2011
|
||||||
Year
that the prescription drug rate reaches the ultimate trend
rate
|
2015
|
2014
|
1%
Increase
|
1%
Decrease
|
|||||||
(In
millions)
|
||||||||
Effect
on the postretirement benefit obligation
|
$ | 11 | $ | (9 | ) | |||
Effect
on total of service and interest cost
|
1 | (1 | ) |
December 31,
|
||||||||
2007
|
2008
|
|||||||
Domestic
equity securities
|
30 | % | 29 | % | ||||
International
equity securities
|
11 | 10 | ||||||
Debt
securities
|
59 | 61 | ||||||
Total
|
100 | % | 100 | % |
Domestic
equity securities
|
25-35 | % | ||
International
equity securities
|
5-15 | % | ||
Debt
securities
|
55-65 | % | ||
Cash
|
0-2 | % |
Postretirement
Benefit Plan
|
||||||||
Benefit
Payments
|
Medicare
Subsidy
Receipts
|
|||||||
2009
|
$ | 20 | $ | (2 | ) | |||
2010
|
21 | (2 | ) | |||||
2011
|
22 | (2 | ) | |||||
2012
|
23 | (2 | ) | |||||
2013
|
24 | (3 | ) | |||||
2014-2018
|
132 | (16 | ) |
|
Postemployment
Benefits
|
(n)
|
Other
Current Assets and Liabilities
|
(3)
|
Regulatory
Matters
|
(a)
|
Hurricane
Ike
|
(b)
|
Recovery
of True-Up Balance
|
|
•
|
reversed
the Texas Utility Commission’s ruling that had denied recovery of a
portion of the capacity auction true-up
amounts;
|
|
•
|
reversed
the Texas Utility Commission’s ruling that precluded the Company from
recovering the interest component of the EMCs paid to retail electric
providers (REPs); and
|
|
•
|
affirmed
the True-Up Order in all other
respects.
|
|
•
|
reversed
the district court’s judgment to the extent it restored the capacity
auction true-up amounts;
|
|
•
|
reversed
the district court’s judgment to the extent it upheld the Texas Utility
Commission’s decision to allow the Company to recover EMCs paid to Reliant
Energy, Inc. (RRI);
|
|
•
|
ordered
that the tax normalization issue described below be remanded to the Texas
Utility Commission as requested by the Texas Utility Commission;
and
|
|
•
|
affirmed
the district court’s judgment in all other
respects.
|
(c)
|
Rate
Proceedings
|
(4)
|
Fair
Value Measurements
|
(5)
|
Related
Party Transactions and Major
Customers
|
(a)
|
Related
Party Transactions
|
(b)
|
Major
Customers
|
(6)
|
Short-term
Borrowings and Long-term Debt
|
December 31,
2007
|
December 31,
2008
|
|||||||||||||||
Long-Term
|
Current(1)
|
Long-Term
|
Current(1)
|
|||||||||||||
(In
millions)
|
||||||||||||||||
Long-term
debt:
|
||||||||||||||||
First
mortgage bonds 9.15% due 2021(2)
|
$ | 102 | $ | — | $ | 102 | $ | — | ||||||||
General
mortgage bonds 5.60% to 6.95% due 2013 to 2033(2)
|
1,262 | — | 1,262 | — | ||||||||||||
Pollution
control bonds 3.625% to 5.60% due 2012 to 2027(3)
|
229 | — | 229 | — | ||||||||||||
Transition
Bonds 4.192% to 5.63% due 2008 to 2020
|
2,101 | 159 | 2,381 | 208 | ||||||||||||
Bank
loans due 2012(4)
|
50 | — | 251 | — | ||||||||||||
Other
|
(1 | ) | — | (1 | ) | — | ||||||||||
Total
long-term debt
|
$ | 3,743 | $ | 159 | $ | 4,224 | $ | 208 |
(1)
|
Includes
amounts due or scheduled to be paid within one year of the date
noted.
|
(2)
|
Excludes
$151 million of first mortgage bonds and $527 million of general
mortgage bonds that the Company had issued as collateral for long-term
debt of CenterPoint Energy, and general mortgage bonds that the Company
had issued as collateral for its debt aggregating $229 million at
both December 31, 2007 and 2008. Debt issued as collateral is
excluded from the financial statements because of the contingent nature of
the obligation.
|
(3)
|
These
series of debt are secured by the Company’s general mortgage
bonds.
|
(4)
|
Classified
as long-term debt because the termination date of the facility under which
the funds were borrowed is more than one year beyond the dates referenced
in the table.
|
(a)
|
Short-term
Borrowings
|
(b)
|
Long-term
Debt
|
(7)
|
Income
Taxes
|
Year
Ended December 31,
|
||||||||||||
2006
|
2007
|
2008
|
||||||||||
(In
millions)
|
||||||||||||
Current:
|
||||||||||||
Federal
|
$ | 208 | $ | 199 | $ | (236 | ) | |||||
State
|
— | — | 10 | |||||||||
Total
current
|
208 | 199 | (226 | ) | ||||||||
Deferred:
|
||||||||||||
Federal
|
(76 | ) | (73 | ) | 345 | |||||||
State
|
— | — | 2 | |||||||||
Total
deferred
|
(76 | ) | (73 | ) | 347 | |||||||
Income
tax expense
|
$ | 132 | $ | 126 | $ | 121 |
|
A
reconciliation of the federal statutory income tax rate to the effective
income tax rate is as follows:
|
Year
Ended December 31,
|
||||||||||||
2006
|
2007
|
2008
|
||||||||||
(In
millions)
|
||||||||||||
Income
before income taxes
|
$ | 403 | $ | 399 | $ | 343 | ||||||
Federal
statutory rate
|
35 | % | 35 | % | 35 | % | ||||||
Income
taxes at statutory rate
|
141 | 139 | 120 | |||||||||
Net
addition (reduction) in taxes resulting from:
|
||||||||||||
State
income taxes (benefit), net of valuation allowance and federal income
tax
|
— | — | 8 | |||||||||
Amortization
of investment tax credit
|
(7 | ) | (7 | ) | (7 | ) | ||||||
Other,
net
|
(2 | ) | (6 | ) | — | |||||||
Total
|
(9 | ) | (13 | ) | 1 | |||||||
Income
tax expense
|
$ | 132 | $ | 126 | $ | 121 | ||||||
Effective
income tax rate
|
32.7 | % | 31.6 | % | 35.4 | % |
December 31,
|
||||||||
2007
|
2008
|
|||||||
(In
millions)
|
||||||||
Deferred
tax assets:
|
||||||||
Current:
|
||||||||
Allowance
for doubtful accounts
|
$ | — | $ | 1 | ||||
Non-current:
|
||||||||
Employee
benefits
|
74 | 84 | ||||||
Other
|
35 | 18 | ||||||
Total
non-current deferred tax assets
|
109 | 102 | ||||||
Total
deferred tax assets
|
109 | 103 | ||||||
Deferred
tax liabilities:
|
||||||||
Non-current:
|
||||||||
Depreciation
|
463 | 697 | ||||||
Regulatory
assets, net
|
826 | 910 | ||||||
Other
|
9 | 1 | ||||||
Total
deferred tax liabilities
|
1,298 | 1,608 | ||||||
Accumulated
deferred income taxes, net
|
$ | 1,189 | $ | 1,505 |
December 31,
|
||||||||
2007
|
2008
|
|||||||
Balance,
beginning of year
|
$ | 70 | $ | 92 | ||||
Tax
Positions related to prior years:
|
||||||||
Additions
|
30 | 16 | ||||||
Reductions
|
(12 | ) | (1 | ) | ||||
Tax
Positions related to current year:
|
||||||||
Additions
|
4 | 16 | ||||||
Balance,
end of year
|
$ | 92 | $ | 123 |
(8)
|
Commitments
and Contingencies
|
(a)
|
Lease
Commitments
|
(b)
|
Legal
and Environmental Matters
|
(9)
|
Estimated
Fair Value of Financial Instruments
|
December 31,
2007
|
December 31,
2008
|
|||||||||||||
Carrying
Amount
|
Fair
Value
|
Carrying
Amount
|
Fair
Value
|
|||||||||||
(In
millions)
|
||||||||||||||
Financial
liabilities:
|
||||||||||||||
Long-term
debt (including $151 million of long-term notes payable to
parent)
|
$ | 4,052 | $ | 4,083 | $ | 4,582 | $ | 4,424 |
(10)
|
Unaudited
Quarterly Information
|
Year
Ended December 31, 2007
|
||||||||||||||||
First
Quarter
|
Second
Quarter
|
Third
Quarter
|
Fourth
Quarter
|
|||||||||||||
(In
millions)
|
||||||||||||||||
Revenues
|
$ | 406 | $ | 465 | $ | 528 | $ | 438 | ||||||||
Operating
income
|
104 | 157 | 196 | 104 | ||||||||||||
Net
income
|
41 | 77 | 105 | 50 |
Year
Ended December 31, 2008
|
||||||||||||||||
First
Quarter
|
Second
Quarter
|
Third
Quarter
|
Fourth
Quarter
|
|||||||||||||
(In
millions)
|
||||||||||||||||
Revenues
|
$ | 409 | $ | 510 | $ | 552 | $ | 445 | ||||||||
Operating
income
|
91 | 164 | 202 | 88 | ||||||||||||
Net
income
|
26 | 72 | 98 | 26 |
Year
Ended December 31,
|
||||||||
2007
|
2008
|
|||||||
Audit
fees (1)
|
$ | 476,050 | $ | 679,550 | ||||
Audit-related
fees (2)
|
96,000 | 105,000 | ||||||
Total
audit and audit-related fees
|
572,050 | 784,550 | ||||||
Tax
fees
|
— | — | ||||||
All
other fees
|
— | — | ||||||
Total
fees
|
$ | 572,050 | $ | 784,550 |
(1)
|
For
2008 and 2007, amounts include fees for services provided by the principal
accounting firm relating to the integrated audit of financial statements
and internal control over financial reporting, statutory audits, attest
services, and regulatory filings.
|
(2)
|
For
2008 and 2007, includes fees for consultations concerning financial
accounting and reporting standards and various agreed-upon or expanded
procedures related to accounting records to comply with financial
accounting or regulatory reporting
matters.
|
(a)(1)
Financial Statements.
|
|
32
|
|
34
|
|
35
|
|
36
|
|
37
|
|
38
|
|
(a)(2)
Financial Statement Schedules for the Three Years Ended December 31,
2008.
|
|
58
|
|
59
|
Column
A
|
Column
B
|
Column
C
|
Column
D
|
Column
E
|
||||||||||||
Description
|
Balance
At
Beginning
of
Period
|
Additions
Charged
to
Income
|
Deductions
From
Reserves(1)
|
Balance
At
End
Of
Period
|
||||||||||||
Year
Ended December 31, 2008:
|
||||||||||||||||
Accumulated
provisions:
|
||||||||||||||||
Uncollectible
accounts receivable
|
$ | 1 | $ | 2 | $ | 1 | $ | 2 | ||||||||
Year
Ended December 31, 2007:
|
||||||||||||||||
Accumulated
provisions:
|
||||||||||||||||
Uncollectible
accounts receivable
|
$ | 1 | $ | 1 | $ | 1 | $ | 1 | ||||||||
Year
Ended December 31, 2006:
|
||||||||||||||||
Accumulated
provisions:
|
||||||||||||||||
Uncollectible
accounts receivable
|
$ | 5 | $ | (2 | ) | $ | 2 | $ | 1 |
(1)
|
Deductions
from reserves represent losses or expenses for which the respective
reserves were created. In the case of the uncollectible accounts reserve,
such deductions are net of recoveries of amounts previously written
off.
|
CENTERPOINT
ENERGY HOUSTON ELECTRIC, LLC
|
|
(Registrant)
|
|
By:
|
/s/
DAVID M. MCCLANAHAN
|
David
M. McClanahan
|
|
Manager
|
Signature
|
Title
|
|
/s/
DAVID M. MCCLANAHAN
|
Manager
and Chairman
|
|
(David
M. McClanahan)
|
(Principal
Executive Officer)
|
|
/s/
GARY L. WHITLOCK
|
Executive
Vice President and Chief Financial Officer
|
|
(Gary
L. Whitlock)
|
(Principal
Financial Officer)
|
|
/s/
WALTER L. FITZGERALD
|
Senior
Vice President and Chief Accounting Officer
|
|
(Walter
L. Fitzgerald)
|
(Principal
Accounting
Officer)
|
Exhibit
Number
|
Description
|
Report
or Registration Statement
|
SEC
File or
Registration
Number
|
Exhibit
Reference
|
||||
3(a)
|
Articles
of Conversion of REI
|
Form
8-K dated August 31, 2002 filed with the SEC on September 3,
2002
|
1-3187
|
3(a)
|
||||
3(b)
|
Articles
of Organization of CenterPoint Energy Houston Electric, LLC (“CenterPoint
Houston”)
|
Form
8-K dated August 31, 2002 filed with the SEC on September 3,
2002
|
1-3187
|
3(b)
|
||||
3(c)
|
Limited
Liability Company Regulations of CenterPoint Houston
|
Form
8-K dated August 31, 2002 Filed with the SEC on September 3,
2002
|
1-3187
|
3(c)
|
||||
4(a)(1)
|
Mortgage
and Deed of Trust, dated November 1, 1944 between Houston Lighting and
Power Company (“HL&P”) and Chase Bank of Texas, National Association
(formerly, South Texas Commercial National Bank of Houston), as Trustee,
as amended and supplemented by 20 Supplemental Indentures
thereto
|
HL&P’s
Form S-7 filed on August 25, 1977
|
2-59748
|
2(b)
|
||||
4(a)(2)
|
Twenty-First
through Fiftieth Supplemental Indentures to Exhibit 4(a)(1)
|
HL&P’s
Form 10-K for the year ended December 31, 1989
|
1-3187
|
4(a)(2)
|
||||
4(a)(3)
|
Fifty-First
Supplemental Indenture to Exhibit 4(a)(1) dated as of March 25,
1991
|
HL&P’s
Form 10-Q for the quarter ended June 30, 1991
|
1-3187
|
4(a)
|
||||
4(a)(4)
|
Fifty-Second
through Fifty- Fifth Supplemental Indentures to Exhibit 4(a)(1) each dated
as of March 1, 1992
|
HL&P’s
Form 10-Q for the quarter ended March 31, 1992
|
1-3187
|
4
|
||||
4(a)(5)
|
Fifty-Sixth
and Fifty-Seventh Supplemental Indentures to Exhibit 4(a)(1) each dated as
of October 1, 1992
|
HL&P’s
Form 10-Q for the quarter ended September 30, 1992
|
1-3187
|
4
|
||||
4(a)(6)
|
Fifty-Eighth
and Fifty-Ninth Supplemental Indentures to Exhibit 4(a)(1) each dated as
of March 1, 1993
|
HL&P’s
Form 10-Q for the quarter ended March 31, 1993
|
1-3187
|
4
|
||||
4(a)(7)
|
Sixtieth
Supplemental Indenture to Exhibit 4(a)(1) dated as of July 1,
1993
|
HL&P’s
Form 10-Q for the quarter ended June 30, 1993
|
1-3187
|
4
|
||||
4(a)(8)
|
Sixty-First
through Sixty-Third Supplemental Indentures to Exhibit 4(a)(1) each dated
as of December 1, 1993
|
HL&P’s
Form 10-K for the year ended December 31, 1993
|
1-3187
|
4(a)(8)
|
Exhibit
Number
|
Description
|
Report
or Registration Statement
|
SEC
File or
Registration
Number
|
Exhibit
Reference
|
||||
4(a)(9)
|
Sixty-Fourth
and Sixty-Fifth Supplemental Indentures to Exhibit 4(a)(1) each dated as
of July 1, 1995
|
HL&P’s
Form 10-K for the year ended December 31, 1995
|
1-3187
|
4(a)(9)
|
||||
4(b)(1)
|
General
Mortgage Indenture, dated as of October 10, 2002, between CenterPoint
Energy Houston Electric, LLC and JPMorgan Chase Bank, as
Trustee
|
Quarterly
Report on Form 10-Q for the quarterly period ended September 30,
2002
|
1-3187
|
4(j)(1)
|
||||
4(b)(2)
|
Second
Supplemental Indenture to Exhibit 4(b)(1), dated as of October 10,
2002
|
Quarterly
Report on Form 10-Q for the quarterly period ended September 30,
2002
|
1-3187
|
4(j)(3)
|
||||
4(b)(3)
|
Third
Supplemental Indenture to Exhibit 4(b)(1), dated as of October 10,
2002
|
Quarterly
Report on Form 10-Q for the quarterly period ended September 30,
2002
|
1-3187
|
4(j)(4)
|
||||
4(b)(4)
|
Fourth
Supplemental Indenture to Exhibit 4(b)(1), dated as of October 10,
2002
|
Quarterly
Report on Form 10-Q for the quarterly period ended September 30,
2002
|
1-3187
|
4(j)(5)
|
||||
4(b)(5)
|
Fifth
Supplemental Indenture to Exhibit 4(b)(1), dated as of October 10,
2002
|
Quarterly
Report on Form 10-Q for the quarterly period ended September 30,
2002
|
1-3187
|
4(j)(6)
|
||||
4(b)(6)
|
Sixth
Supplemental Indenture to Exhibit 4(b)(1), dated as of October 10,
2002
|
Quarterly
Report on Form 10-Q for the quarterly period ended September 30,
2002
|
1-3187
|
4(j)(7)
|
||||
4(b)(7)
|
Seventh
Supplemental Indenture to Exhibit 4(b)(1), dated as of October 10,
2002
|
Quarterly
Report on Form 10-Q for the quarterly period ended September 30,
2002
|
1-3187
|
4(j)(8)
|
||||
4(b)(8)
|
Eighth
Supplemental Indenture to Exhibit 4(b)(1), dated as of October 10,
2002
|
Quarterly
Report on Form 10-Q for the quarterly period ended September 30,
2002
|
1-3187
|
4(j)(9)
|
||||
4(b)(9)
|
Officer’s
Certificates dated October 10, 2002, setting forth the form, terms and
provisions of the First through Eighth Series of General Mortgage
Bonds
|
CenterPoint
Energy, Inc.’s (“CNP’s”) Form 10-K for the year ended December 31,
2003
|
1-31447
|
4(c)(10)
|
||||
4(b)(10)
|
Ninth
Supplemental Indenture to Exhibit 4(b)(1), dated as of November 12,
2002
|
CNP’s
Form 10-K for the year ended December 31, 2002
|
1-31447
|
4(e)(10)
|
||||
4(b)(11)
|
Officer’s
Certificate dated November 12, 2002 setting forth the form, terms and
provisions of the Ninth Series of General Mortgage Bonds
|
CNP’s
Form 10-K for the year ended December 31, 2003
|
1-31447
|
4(e)(12)
|
||||
4(b)(12)
|
Tenth
Supplemental Indenture to Exhibit 4(b)(1), dated as of March 18,
2003
|
Form
8-K dated March 13, 2003
|
1-3187
|
4.1
|
Exhibit
Number
|
Description
|
Report
or Registration Statement
|
SEC
File or
Registration
Number
|
Exhibit
Reference
|
||||
4(b)(13)
|
Officer’s
Certificate dated March 18, 2003 setting forth the form, terms and
provisions of the Tenth Series and Eleventh Series of General Mortgage
Bonds
|
Form
8-K dated March 13, 2003
|
1-3187
|
4.2
|
||||
4(b)(14)
|
Eleventh
Supplemental Indenture to Exhibit 4(b)(1), dated as of May 23,
2003
|
Form
8-K dated May 16, 2003
|
1-3187
|
4.1
|
||||
4(b)(15)
|
Officer’s
Certificate dated May 23, 2003 setting forth the form, terms and
provisions of the Twelfth Series of General Mortgage Bonds
|
Form
8-K dated May 16, 2003
|
1-3187
|
4.2
|
||||
4(b)(16)
|
Twelfth
Supplemental Indenture to Exhibit 4(b)(1), dated as of September 9,
2003
|
Form
8-K dated September 9, 2003
|
1-3187
|
4.2
|
||||
4(b)(17)
|
Officer’s
Certificate dated September 9, 2003 setting forth the form, terms and
provisions of the Thirteenth Series of General Mortgage Bonds
|
Form
8-K dated September 9, 2003
|
1-3187
|
4.3
|
||||
4(b)(18)
|
Thirteenth
Supplemental Indenture to Exhibit 4(b)(1), dated as of February 6,
2004
|
CNP’s
Form 10-K for the year ended December 31, 2005
|
1-31447
|
4(e)(16)
|
||||
4(b)(19)
|
Officer’s
Certificate dated February 6, 2004 setting forth the form, terms and
provisions of the Fourteenth Series of General Mortgage Bonds
|
CNP’s
Form 10-K for the year ended December 31, 2005
|
1-31447
|
4(e)(17)
|
||||
4(b)(20)
|
Fourteenth
Supplemental Indenture to Exhibit 4(b)(1), dated as of February 11,
2004
|
CNP’s
Form 10-K for the year ended December 31, 2005
|
1-31447
|
4(e)(18)
|
||||
4(b)(21)
|
Officer’s
Certificate dated February 11, 2004 setting forth the form, terms and
provisions of the Fifteenth Series of General Mortgage Bonds
|
CNP’s
Form 10-K for the year ended December 31, 2005
|
1-31447
|
4(e)(19)
|
||||
4(b)(22)
|
Fifteenth
Supplemental Indenture to Exhibit 4(b)(1), dated as of March 31,
2004
|
CNP’s
Form 10-K for the year ended December 31, 2005
|
1-31447
|
4(e)(20)
|
||||
4(b)(23)
|
Officer’s
Certificate dated March 31, 2004 setting forth the form, terms and
provisions of the Sixteenth Series of General Mortgage Bonds
|
CNP’s
Form 10-K for the year ended December 31, 2005
|
1-31447
|
4(e)(21)
|
||||
4(b)(24)
|
Sixteenth
Supplemental Indenture to Exhibit 4(b)(1), dated as of March 31,
2004
|
CNP’s
Form 10-K for the year ended December 31, 2005
|
1-31447
|
4(e)(22)
|
||||
4(b)(25)
|
Officer’s
Certificate dated March 31, 2004 setting forth the form, terms and
provisions of the Seventeenth Series of General Mortgage
Bonds
|
CNP’s
Form 10-K for the year ended December 31, 2005
|
1-31447
|
4(e)(23)
|
||||
4(b)(26)
|
Seventeenth
Supplemental Indenture to Exhibit 4(b)(1), dated as of March 31,
2004
|
CNP’s
Form 10-K for the year ended December 31, 2005
|
1-31447
|
4(e)(24)
|
Exhibit
Number
|
Description
|
Report
or Registration Statement
|
SEC
File or
Registration
Number
|
Exhibit
Reference
|
||||
4(b)(27)
|
Officer’s
Certificate dated March 31, 2004 setting forth the form, terms and
provisions of the Eighteenth Series of General Mortgage Bonds
|
CNP’s
Form 10-K for the year ended December 31, 2005
|
1-31447
|
4(e)(25)
|
||||
4(b)(28)
|
Nineteenth
Supplemental Indenture to Exhibit 4(b)(1), dated as of November 26,
2008
|
CNP’s
Form 8-K dated November 25, 2008
|
1-31447
|
4.2
|
||||
4(b)(29)
|
Officer’s
Certificate date November 26, 2008 setting forth the form, terms and
provisions of the Twentieth Series of General Mortgage Bonds
|
CNP’s
Form 8-K dated November 25, 2008
|
1-31447
|
4.3
|
||||
4(b)(30)
|
Twentieth
Supplemental Indenture to Exhibit 4(b)(1), dated as of December 9,
2008
|
Form 8-K
dated January 6, 2009
|
1-3187
|
4.2
|
||||
4(b)(31)
|
Twenty-First
Supplemental Indenture to Exhibit 4(b)(1), dated as of January 9,
2009
|
CNP’s
Form 10-K for the year ended December 31, 2008
|
1-31447
|
4(e)(31)
|
||||
4(b)(32)
|
Officer’s
Certificate date January 20, 2009 setting forth the form, terms and
provisions of the Twenty-First Series of General Mortgage
Bonds
|
CNP’s
Form 10-K for the year ended December 31, 2008
|
1-31447
|
4(e)(32)
|
||||
4(c)(1)
|
$300,000,000
Second Amended and Restated Credit Agreement dated as of June 29, 2007
among CenterPoint Houston, as Borrower, and the banks named
therein
|
CNP’s
Form 10-Q for the quarter ended June 30, 2007
|
1-31447
|
4.4
|
||||
4(c)(2)
|
First
Amendment to Exhibit 4(c)(1), dated as of November 18, 2008, among
CenterPoint Houston, as Borrower, and the banks named therein
|
CNP’s
Form 8-K dated November 18, 2008
|
1-31447
|
4.2
|
||||
4(d)
|
$600,000,000
Credit Agreement dated as of November 25, 2008, among CenterPoint
Houston, as Borrower, and the banks named therein
|
CNP’s
Form 8-K dated November 25, 2008
|
1-31447
|
4.1
|
Exhibit
Number
|
Description
|
Report
or Registration Statement
|
SEC
File or
Registration
Number
|
Exhibit
Reference
|
||||
10
|
City
of Houston Franchise Ordinance
|
CNP’s
Form 10-Q for the quarter ended June 30, 2005
|
1-31447
|
10.1
|
||||
+12
|
|
|||||||
+23 |
|
|||||||
+31.1
|
|
|||||||
+31.2
|
|
|||||||
+32.1
|
|
|||||||
+32.2
|
Year
Ended December 31,
|
||||||||||||||||||||
2004
|
2005
|
2006
|
2007 (1)
|
2008 (1)
|
||||||||||||||||
Income
from continuing operations
|
$ | 282 | $ | 223 | $ | 271 | $ | 273 | $ | 222 | ||||||||||
Income
taxes for continuing operations
|
137 | 108 | 132 | 126 | 121 | |||||||||||||||
Capitalized
interest
|
(2 | ) | (3 | ) | (4 | ) | (10 | ) | (7 | ) | ||||||||||
417 | 328 | 399 | 389 | 336 | ||||||||||||||||
Fixed
charges, as defined:
|
||||||||||||||||||||
Interest
|
345 | 328 | 240 | 230 | 245 | |||||||||||||||
Capitalized
interest
|
2 | 3 | 4 | 10 | 7 | |||||||||||||||
Interest component of rentals
charged to
operating expense
|
1 | 1 | 2 | 1 | 2 | |||||||||||||||
Total fixed
charges
|
348 | 332 | 246 | 241 | 254 | |||||||||||||||
Earnings,
as defined
|
$ | 765 | $ | 660 | $ | 645 | $ | 630 | $ | 590 | ||||||||||
Ratio
of earnings to fixed charges
|
2.20 | 1.99 | 2.62 | 2.61 | 2.33 |
|
(1)
|
Excluded
from the computation of fixed charges for the years ended December 31,
2007 and 2008 is interest expense of $4 million and $7 million,
respectively, which is included in income tax
expense.
|
|
(a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
|
(b)
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
|
(c)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
|
(d)
|
Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial
reporting; and
|
|
(a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
|
(b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
/s/
David M. McClanahan
|
|
David
M. McClanahan
|
|
Chairman
(Principal Executive
Officer)
|
|
(a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
|
(b)
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
|
(c)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
|
(d)
|
Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial
reporting; and
|
|
(a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
|
(b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
/s/
Gary L. Whitlock
|
|
Gary
L. Whitlock
|
|
Executive
Vice President and Chief Financial
Officer
|
/s/
David M. McClanahan
|
|
David
M. McClanahan
|
|
Chairman
(Principal Executive Officer)
|
|
March
11, 2009
|
/s/
Gary L. Whitlock
|
|
Gary
L. Whitlock
|
|
Executive
Vice President and Chief Financial Officer
|
|
March 11,
2009
|