View:
Mail Stop 0308
June 9, 2005
Rufus S. Scott
Vice President, Deputy General Counsel
and Assistant Corporate Secretary
CenterPoint Energy, Inc.
1111 Louisiana
Houston, Texas 77002
Re: CenterPoint Energy, Inc.
Amendment No. 1 to Registration Statement on Form S-4
Filed May 26, 2005
File No. 333-123182
CenterPoint Energy Houston Electric, LLC
Form 10-K for the fiscal year ended December 31, 2004
Filed March 24, 2005
File No. 1-03187
CenterPoint Energy Resources Corp.
Form 10-K for the fiscal year ended December 31, 2004
Filed March 24, 2005
File No. 1-13265
Dear Mr. Scott:
We have reviewed your amended filing and we have the
following
comments. Where indicated, we think you should revise your
document
in response to these comments. If you disagree, we will consider
your explanation as to why one or more of our comments are
inapplicable or a revision is unnecessary. Please be as detailed
as
necessary in your explanation. In some of our comments, we may
ask
you to provide us with information so we may better understand
your
disclosure. After reviewing this information, we may or may not
raise additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
Form S-4
General
1. Please refer to comment 4 in our letter dated April 6, 2005.
Since the amount of any additional indebtedness that you may incur
is
significant and germane to this exchange offering, discuss the
limitations on your ability to incur debt in the registration
statement.
Summary Consolidated Financial Data, page 23
2. Please refer to our comment 20 in our letter dated April 6,
2005.
We note your response, but do not agree that operating income may
properly serve as a substitute for gross profit under the
requirements of Item 1010(c) of Regulation M-A. Under Item
102(bb)(1) of Regulation S-X, registrants may only provide costs
and
expenses applicable to net sales or gross revenues as a valid
substitute to disclosing gross profit. Please revise.
Conditions To The Exchange Offer, page 27
3. Please refer to our comment 24 in our letter dated April 6,
2005.
We note your amendment and response, but believe that you should
amend your filing to tailor your condition so that note holders
may
objectively verify when this condition has been triggered by
events
as they occur. You state on page 28 that "there shall not have
occurred any outbreak or escalation of major hostilities in which
the
United States is involved, any declaration of war by Congress or
any
other substantial national or international calamity or emergency
that makes it impractical to proceed with completion of the
exchange
offer." Given the continued deployment of U.S. armed forces in
Afghanistan and Iraq and the persistent threat of terrorism
against
the United States, we are concerned that your condition is phrased
so
broadly as to make it difficult for note holders to determine
whether
it has been triggered by events as they occur. Further, it is
unclear how a note holder may determine that such a triggering
event
"makes it impractical to proceed with the completion of the
offer."
Please make further revisions to address these concerns.
Description of the New Notes, page 43
4. Please refer to our comment 30 in our letter dated April 6,
2005.
It appears that you have not appropriately calculated the dilutive
impact with respect to the conversion spread in your earnings per
share example. In this regard, you should be dividing the
conversion
spread value by the average share price for the period, not the
conversion price, to arrive at potential common shares. Please
confirm to us your understanding of the calculation. You may
consult
EITF 04-8.
Exhibit 8.1
5. Please revise this opinion to indicate that the disclosure in
the
registration statement is your opinion instead of stating that it
is
a " fair and accurate summary."
CenterPoint Energy Houston, LLC - Form 10-K for the fiscal year
ended
December 31, 2004
Item 1. Business - True-Up Proceeding Developments, page 1
6. Please refer to our comment 38 in our letter dated April 6,
2005.
Paragraph 9 of SFAS no. 71 requires that a regulatory asset be
recorded when the actions of a regulator provides reasonable
assurance that an incurred cost that would otherwise be charged to
expense will be recovered in future regulated rates. Footnote 5
to
paragraph 9 defines an incurred cost as, "a cost arising from cash
paid or obligation to pay for an acquired asset or service, a loss
from any cause that has been sustained and has been or must be
paid
for." Paragraph 9 of SFAS no. 92 limits the capitalization or
deferral of equity cost for financial reporting purposes when it
states, "If any allowance for earning on shareholders` investment
is
capitalized for rate-making purposes other than during
construction
or as part of a phase-in plan, the amount capitalized for rate-
making
purposes share not be capitalized for financial reporting." The
carrying cost you are recovering is not related to plants under
construction or a phase-in plan. It is our understanding that the
equity component of the carrying cost is not a regulatory asset,
and
as you indicate, would not be recognized in income until collected
in
rates. In short, explain in detail why you recorded a regulatory
asset related to the equity component of the carrying cost.
Furthermore, the Final Order that you reference allows for
recovery
of $289 million of interest on the true-balance through August of
2004, although you have recorded a regulatory asset of $374
million.
We realize a portion of the difference may be due to timing issues
regarding when the Final Order was released, and the calculations
associated with period end financial statements. Please provide a
reconciliation and detailed explanation of the difference. We may
have further comment.
Statements of Consolidated Cash Flows, page 31
7. Please refer to our comment 44 in our letter dated April 6,
2005.
We believe that distinguishing between an invested and borrowed
position in a money pool is not subjective, and is reasonably
clear.
Prospectively, confirm to us that you will appropriately segregate
such amounts on your consolidated statement of cash flows.
CenterPoint Energy Resources Corporation - Form 10-K for the
fiscal
year ended December 31, 2004
Statement of Consolidated Comprehensive Income, page 26
8. Please refer to our comment 53 in our letter dated April 6,
2005.
Help us understand why you did not apply SFAS no. 71 initially
with
respect to these non-trading derivative contracts. We may have
further comment.
* * * * *
As appropriate, please amend your registration statement in
response to these comments. You may wish to provide us with
marked
copies of the amendment to expedite our review. Please furnish a
cover letter with your amendment that keys your responses to our
comments and provides any requested information. Detailed cover
letters greatly facilitate our review. Please understand that we
may
have additional comments after reviewing your amendment and
responses
to our comments.
You may contact Robert Babula, Staff Accountant, at (202)
551-
3339 or Michael Moran, Accounting Branch Chief, at (202) 551-3841
if
you have questions regarding comments on the financial statements
and
related matters. Please contact Pradip Bhaumik, Attorney-Advisor,
at
(202) 551-3333, Ellie Quarles, Special Counsel, at (202) 551-3238,
or
me at (202) 551-3720 with any questions.
Sincerely,
H. Christopher Owings
Assistant Director
cc: Gerald M. Spedale, Esq.
Baker Botts L.L.P.
Fax: (713) 229-1522
??
??
??
??
Rufus S. Scott
CenterPoint Energy, Inc. et al.
June 9, 2005
Page 1