8-KOther Events

CENTERPOINT ENERGY INC 8-K Report, Corporate Update (Sep 23, 2008)

Filed September 23, 2008For Securities:CNP

Summary

CenterPoint Energy, Inc. (CNP) filed this Current Report on Form 8-K on September 23, 2008, to report the significant damage to its electric delivery system caused by Hurricane Ike. The hurricane, which struck on September 13, 2008, resulted in the largest outage in the history of its subsidiary, CenterPoint Houston Electric, LLC (CEHE), affecting over 90% of its 2 million customers. The company has made substantial progress in restoring power, with approximately two-thirds of customers back online within eight days of the storm. While transmission circuits and industrial customer service have largely been restored, ongoing restoration efforts continue. The company estimates the total cost for restoration to be between $350 million and $500 million, with uninsured costs to be deferred. CEHE plans to seek legislative approval for securitization of these costs, a potentially lower-cost recovery method, or pursue recovery through traditional rate-making principles.

Key Highlights

  • 1Hurricane Ike caused substantial damage to CenterPoint Energy Houston Electric, LLC's (CEHE) electric transmission and distribution system, leading to the largest power outage in its history.
  • 2Over 90% of CEHE's 2 million customers lost power due to downed lines and debris from 100 mph winds, with significant infrastructure damage on Galveston Island and coastal areas from storm surge.
  • 3CEHE crews and over 8,000 additional workers have restored power to approximately two-thirds of customers within eight days post-storm.
  • 4Substantially all transmission circuits are back in service, restoring power to directly served industrial customers.
  • 5Estimated restoration costs range from $350 million to $500 million, with uninsured costs to be deferred.
  • 6CEHE intends to seek legislative approval for storm cost securitization, a potentially cost-effective recovery method, and also has the option to recover costs through traditional rate-making.
  • 7Temporary outages are expected to negatively impact third-quarter and full-year 2008 earnings due to reduced revenues, although the exact financial impact is not yet determinable.

Frequently Asked Questions

The primary event reported is the significant damage to CenterPoint Energy Houston Electric, LLC's (CEHE) electric delivery system caused by Hurricane Ike, which resulted in widespread power outages and substantial restoration costs.

The estimated cost for storm restoration is between $350 million and $500 million. This is a preliminary estimate, and the final incurred costs could vary.

CenterPoint Energy plans to fund initial restoration efforts from cash on hand and credit facilities. For cost recovery, CEHE intends to seek legislative approval for storm cost securitization, which typically offers a lower cost of recovery, and also has the option to pursue recovery through traditional rate-making principles.

Temporary outages caused by the storm are expected to have a negative impact on CenterPoint Energy's and CEHE's earnings for the third quarter and full year 2008, primarily due to reduced revenues. The exact financial impact is not yet determinable.