CenterPoint Energy 2008 Annual Report Download - page 41

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remediation of sites of similar size. The actual remediation costs will be dependent upon the number of sites to be
remediated, the participation of other potentially responsible parties (PRPs), if any, and the remediation methods
used. CERC has utilized an environmental expense tracker mechanism in its rates in Minnesota to recover estimated
costs in excess of insurance recovery. As of December 31, 2008, CERC had collected $13 million from insurance
companies and rate payers to be used for future environmental remediation.
In addition to the Minnesota sites, the EPA and other regulators have investigated MGP sites that were owned or
operated by CERC or may have been owned by one of its former affiliates. CERC has been named as a defendant in
a lawsuit filed in the United States District Court, District of Maine, under which contribution is sought by private
parties for the cost to remediate former MGP sites based on the previous ownership of such sites by former affiliates
of CERC or its divisions. CERC has also been identified as a PRP by the State of Maine for a site that is the subject
of the lawsuit. In June 2006, the federal district court in Maine ruled that the current owner of the site is responsible
for site remediation but that an additional evidentiary hearing is required to determine if other potentially
responsible parties, including CERC, would have to contribute to that remediation. CERC is investigating details
regarding the site and the range of environmental expenditures for potential remediation. However, CERC believes
it is not liable as a former owner or operator of the site under CERCLA, and applicable state statutes, and is
vigorously contesting the suit and its designation as a PRP.
Mercury Contamination. Our pipeline and distribution operations have in the past employed elemental mercury in
measuring and regulating equipment. It is possible that small amounts of mercury may have been spilled in the
course of normal maintenance and replacement operations and that these spills may have contaminated the
immediate area with elemental mercury. We have found this type of contamination at some sites in the past, and we
have conducted remediation at these sites. It is possible that other contaminated sites may exist and that remediation
costs may be incurred for these sites. Although the total amount of these costs is not known at this time, based on
our experience and that of others in the natural gas industry to date and on the current regulations regarding
remediation of these sites, we believe that the costs of any remediation of these sites will not be material to our
financial condition, results of operations or cash flows.
Asbestos. Some facilities owned by us contain or have contained asbestos insulation and other asbestos-
containing materials. We or our subsidiaries have been named, along with numerous others, as a defendant in
lawsuits filed by a number of individuals who claim injury due to exposure to asbestos. Some of the claimants have
worked at locations owned by us, but most existing claims relate to facilities previously owned by our subsidiaries.
We anticipate that additional claims like those received may be asserted in the future. In 2004, we sold our
generating business, to which most of these claims relate, to Texas Genco LLC, which is now known as NRG Texas
LP. Under the terms of the arrangements regarding separation of the generating business from us and our sale to
NRG Texas LP, ultimate financial responsibility for uninsured losses from claims relating to the generating business
has been assumed by NRG Texas LP, but we have agreed to continue to defend such claims to the extent they are
covered by insurance maintained by us, subject to reimbursement of the costs of such defense from the purchaser.
Although their ultimate outcome cannot be predicted at this time, we intend to continue vigorously contesting claims
that we do not consider to have merit and do not expect, based on our experience to date, these matters, either
individually or in the aggregate, to have a material adverse effect on our financial condition, results of operations or
cash flows.
Groundwater Contamination Litigation. Predecessor entities of CERC, along with several other entities, are
defendants in litigation, St. Michel Plantation, LLC, et al, v. White, et al., pending in civil district court in Orleans
Parish, Louisiana. In the lawsuit, the plaintiffs allege that their property in Terrebonne Parish, Louisiana suffered
salt water contamination as a result of oil and gas drilling activities conducted by the defendants. Although a
predecessor of CERC held an interest in two oil and gas leases on a portion of the property at issue, neither it nor
any other CERC entities drilled or conducted other oil and gas operations on those leases. In January 2009, CERC
and the plaintiffs reached agreement on the terms of a settlement that, if ultimately approved by the Louisiana
Department of Natural Resources and the court, is expected to finally resolve this litigation. We and CERC do not
expect the outcome of this litigation to have a material adverse impact on the financial condition, results of
operations or cash flows of either us or CERC.
Other Environmental. From time to time we have received notices from regulatory authorities or others regarding
our status as a PRP in connection with sites found to require remediation due to the presence of environmental