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Mail Stop 3561
April 24, 2006
David M. McClanahan
President and Chief
Executive Officer
Centerpoint Energy, Inc.
1111 Louisiana St.
Houston, TX 77002
Re: Centerpoint Energy, Inc.
Form 10-K for the Fiscal Year Ended December 31, 2005
File No. 1-31447
Dear Mr. McClanahan:
We have reviewed your filing and have the following
comments.
We have limited our review of your filing to those issues we have
addressed in our comments. Please provide a written response to
our
comments. Please be as detailed as necessary in your
explanations.
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 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 any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
Notes to Consolidated Financial Statements, page 66
(3) Discontinued Operations, page 83
1. Please explain to us how you reflected the final step of the
transaction involving Texas Genco in the financial statements. In
this regard, you disclose Texas Genco recorded an after-tax loss
of
$426 million related to sale of its fossil fuel plants. However,
it
is not clear whether the sale of the interest in the South Texas
Project resulted in a gain or loss. Please provide us with a
calculation of the gain or loss upon closing of the transactions
that
resulted in the disposition of Texas Genco.
2. We have read the financial statements included in a Form S-1
filed
by Texas Genco. We note that you do not mention the Goldman PPA
and
the related back-to-back power agreement in your filing. Please
provide us the full details of each contract. Explain to us the
business reason for the Goldman PPA contract and the rationale
behind
the 90% price. Tell us whether the 10% guaranteed margin could
represent a benefit to Texas Genco LP II. If it did represent a
benefit, tell us how you recognized such benefit in the gain or
loss
on the sale of Texas Genco LP. In this regard, we understand the
two
separate dispositions were distinct transactions that involved
separate negotiations of purchase price. We also understand the
nuclear disposition closing was not a condition to the initial
fossil
fuel closing. Please tell us why the guaranteed 10% margin that
would be void upon the closing of the nuclear acquisition did not
represent a reduction of the consideration on the fossil fuel
disposition and additional consideration upon the nuclear
acquisition
close. Please be detailed in your explanation.
(4) Regulatory Matters, page 86
(a) Recovery of True-up Balance, page 86
3. We note you recorded an extraordinary charge, net of tax, of
$977
million in response to Texas Utility Commision`s order on final
true-
up application. We further note your recognition of $226 million
and
$121 million relating to the debt portion of the return recognized
in
2004 and 2005 as other income. Please explain the reason for
disparate classification of these items. In this regard, please
tell
us the period over which you computed the true-up return as well
as
the date at which you computed the $977 million extraordinary
charge.
Advise whether you would have reduced the $977 million
extraordinary
charge had the return been known at the date you calculated the
charge. If so, please advise as to why no portion of the credit
was
or will be treated as an extraordinary item. Please be detailed
in
your response.
Disclosure Controls and Procedures, page 117
4. We note your disclosure that your "principal executive officer
and
principal financial officer concluded that your disclosure
controls
and procedures are effective to provide assurance that the
information required to be disclosed by the Company in reports
filed
or submitted under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the
rules and forms of the SEC." Please confirm to us, if true, that
your officers concluded that your disclosure controls and
procedures
are also effective to ensure that information required to be
disclosed in the reports that you file or submit under the
Exchange
Act is accumulated and communicated to your management, including
your chief executive officer and chief financial officer, to allow
timely decisions regarding required disclosure. Otherwise, please
explain to us in detail why your officers were unable to come to
this
conclusion. Refer to Exchange Act Rule 13a-15(e). In future
filings, please include this information in your discussion of
disclosure controls and procedures.
* * * * *
Please respond to these comments within 10 business days or
tell us when you will provide us with a response. Please furnish
a
letter that keys your responses to our comments and provides any
requested information. Detailed letters greatly facilitate our
review. Please understand that we may have additional comments
after
reviewing your responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing to be certain that the
filing includes all information required under the Securities
Exchange Act of 1934 and that they have provided all information
investors require for an informed investment decision. Since the
company and its management are in possession of all facts relating
to
a company`s disclosure, they are responsible for the accuracy and
adequacy of the disclosures they have made.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that:
* the company is responsible for the adequacy and accuracy of the
disclosure in the filing;
* 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
* 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.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.
You may contact Scott Ruggiero at (202) 551-3331 if you have
questions regarding comments on the financial statements and
related
matters. Please contact me at (202) 551-3849 with any other
questions.
Sincerely,
James Allegretto
Senior Assistant Chief Accountant
Mr. David M. McClanahan
Centerpoint Energy, Inc.
April 24, 2006
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