CenterPoint Energy 2008 Annual Report Download - page 66

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44
to income from mark-to-market accounting for non-trading derivatives ($10 million) and a write-down of natural gas
inventory to the lower of average cost or market ($11 million), compared to a gain from mark-to-market accounting
($37 million) and an inventory write-down ($66 million) for 2006.
Interstate Pipelines
The following table provides summary data of our Interstate Pipelines business segment for 2006, 2007 and 2008
(in millions, except throughput data):
Year Ended December 31,
2006
2007
2008
Revenues................................................................................................................................
$ 388
$ 500
$ 650
Expenses:
Natural gas ................................................................................................................................
31
83
155
Operation and maintenance ................................................................................................
120
125
133
Depreciation and amortization ................................................................................................
37
44
46
Taxes other than income taxes ................................................................................................
19
11
23
Total expenses ................................................................................................
207
263
357
Operating Income ................................................................................................
$ 181
$ 237
$ 293
Transportation throughput (in Bcf) ................................................................................................
939
1,216
1,538
2008 Compared to 2007. Our Interstate Pipeline business segment reported operating income of $293 million for
2008 compared to $237 million for 2007. The increase in operating income was primarily driven by increased
margins (revenues less natural gas costs) on the Carthage to Perryville pipeline that went into service in May 2007
($51 million), increased transportation and ancillary services ($27 million), and a gain on the sale of two storage
development projects ($18 million). These increases are partially offset by higher operation and maintenance
expenses ($19 million), a write-down associated with pipeline assets removed from service ($7 million), increased
depreciation expense ($2 million), and higher taxes other than income taxes ($12 million), largely due to tax refunds
in 2007.
2007 Compared to 2006. Our Interstate Pipeline business segment reported operating income of $237 million for
2007 compared to $181 million for 2006. The increase in operating income of $56 million was driven primarily by
the new Carthage to Perryville pipeline ($42 million), other transportation and ancillary services ($20 million),
lower spending in 2007 on project development costs ($6 million) and a decrease in other taxes ($8 million) related
to the settlement of certain state tax issues. These favorable variances to operating income were partially offset by
lower sales in 2007 of excess gas associated with storage enhancement projects ($15 million) and increased
operating expenses ($6 million).
Equity Earnings. In addition, this business segment recorded equity income of $6 million and $36 million
(including $6 million and $33 million of pre-operating allowance for funds used during construction) in the years
ended December 31, 2007 and 2008, respectively, from its 50 percent interest in SESH, a jointly-owned pipeline.
These amounts are included in Equity in earnings of unconsolidated affiliates under the Other Income (Expense)
caption.