10-KPeriod: FY2010

CENTERPOINT ENERGY INC Annual Report, Year Ended Dec 31, 2010

Filed March 1, 2011For Securities:CNP

Summary

CenterPoint Energy, Inc. (CNP) in its 2010 10-K filing demonstrates a diversified business model with primary operations in Electric Transmission & Distribution and Natural Gas Distribution. The company experienced revenue growth in its Electric Transmission & Distribution segment driven by advanced metering system (AMS) deployment and increased usage, partially offset by customer credits. The Natural Gas Distribution segment saw improved operating income due to rate increases and lower benefit costs. Significant financial activities include managing substantial long-term debt, with a focus on refinancing and maintaining investment-grade credit ratings. The company is actively managing regulatory matters, particularly in Texas, and has secured a significant U.S. Department of Energy grant for its advanced metering and intelligent grid projects, which is accelerating the deployment of advanced metering systems. The company is subject to various risks, including regulatory changes, commodity price fluctuations, and the resolution of a significant 'true-up' proceeding impacting its electric utility operations.

Financial Highlights

46 data points
Beta

Revenue

$8.79B

Net Income

$442.00M

5.0% Net Margin

EPS (Diluted)

$1.07

Total Assets

$20.11B

Cash & Equivalents

$199.00M

Free Cash Flow

$1.39B

Financial Statements
Beta
Revenue$8.79B
Operating Expenses$7.54B
Operating Income$1.25B
Net Income$442.00M
EPS (Basic)$1.08
EPS (Diluted)$1.07
Shares Outstanding (Basic)409.72M
Shares Outstanding (Diluted)412.78M

Key Highlights

  • 1Reported net income of $442 million in 2010, a notable increase from $372 million in 2009, driven by improved operating income across segments and favorable financial adjustments.
  • 2Electric Transmission & Distribution segment operating income grew to $567 million, supported by increased revenues from AMS implementation, higher usage, and rate adjustments.
  • 3Natural Gas Distribution segment operating income increased to $231 million, attributed to base rate increases, annual adjustments, and reduced benefit costs.
  • 4Secured a $200 million U.S. Department of Energy grant for Advanced Metering System (AMS) and Intelligent Grid (IG) projects, accelerating AMS deployment.
  • 5Managed significant debt levels, with ongoing refinancing efforts and a focus on maintaining investment-grade credit ratings.
  • 6Actively engaged in regulatory proceedings, particularly for CenterPoint Houston's rate case in Texas, anticipating a base rate increase for delivery charges and a decrease for wholesale transmission customers.
  • 7Acknowledged risks related to regulatory proceedings, commodity price volatility, and the potential impact of future environmental regulations, particularly concerning greenhouse gases.

Frequently Asked Questions

CenterPoint Energy operates through several key segments: Electric Transmission & Distribution (primarily CenterPoint Houston), Natural Gas Distribution (through CERC Corp.), Competitive Natural Gas Sales and Services, Interstate Pipelines, Field Services, and Other Operations.

The company is involved in a prolonged 'true-up' proceeding related to the Texas electric restructuring law. This involves ongoing appeals, including to the Texas Supreme Court, concerning the recovery of certain stranded costs. The outcome of these appeals, particularly regarding tax normalization issues and potential losses ranging from $190 million to $440 million (pre-tax), remains uncertain and could materially impact the company's financial condition.

CenterPoint Energy has a significant amount of long-term debt, including transition and system restoration bonds. The company relies on internally generated cash, credit facilities, commercial paper, and capital market issuances for its financing needs. Efforts are focused on maintaining investment-grade credit ratings to ensure access to capital on acceptable terms. The company also utilizes various debt financing transactions, including issuing senior notes and managing revolving credit facilities.

Hurricane Ike caused substantial damage to CenterPoint Houston's electric delivery system. The company deferred restoration costs, believing them to be recoverable through the regulatory process. A settlement was reached authorizing recovery of approximately $663 million, with a significant portion ($643 million) eligible for securitization through system restoration bonds. The company also implemented a customer credit related to deferred taxes from storm restoration costs, which reduced operating income in 2010.