CenterPoint Energy 2008 Annual Report Download - page 70

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48
(4) Material contributions to our qualified pension plan are not expected in 2009. However, we expect to
contribute approximately $9 million and $18 million, respectively, to our non-qualified pension and
postretirement benefits plans in 2009.
(5) Represents capital commitments for material in connection with the construction of a pipeline by our
Interstate Pipelines business segment. This project has been included in the table of capital expenditures
presented above.
(6) For a discussion of other commodity commitments, please read Note 10(a) to our consolidated financial
statements.
(7) Represents estimated income tax liability for settled positions for tax years under examination. In addition,
as of December 31, 2008, the liability for uncertain income tax positions was $117 million. However, due
to the high degree of uncertainty regarding the timing of potential future cash flows associated with these
liabilities, we are unable to make a reasonably reliable estimate of the amount and period in which these
liabilities might be paid.
Off-Balance Sheet Arrangements. Other than operating leases and the guaranties described below, we have no
off-balance sheet arrangements.
Prior to the distribution of our ownership in RRI to our shareholders, CERC had guaranteed certain contractual
obligations of what became RRI’s trading subsidiary. Under the terms of the separation agreement between the
companies, RRI agreed to extinguish all such guaranty obligations prior to separation, but at the time of separation
in September 2002, RRI had been unable to extinguish all obligations. To secure CERC against obligations under
the remaining guaranties, RRI agreed to provide cash or letters of credit for CERC’s benefit, and undertook to use
commercially reasonable efforts to extinguish the remaining guaranties. In December 2007, we, CERC and RRI
amended that agreement and CERC released the letters of credit it held as security. Under the revised agreement
RRI agreed to provide cash or new letters of credit to secure CERC against exposure under the remaining guaranties
as calculated under the new agreement if and to the extent changes in market conditions exposed CERC to a risk of
loss on those guaranties.
The potential exposure to CERC under the guaranties relates to payment of demand charges related to
transportation contracts. The present value of the demand charges under these transportation contracts, which will be
effective until 2018, was approximately $108 million as of December 31, 2008. RRI continues to meet its
obligations under the contracts, and on the basis of market conditions, we and CERC have not required additional
security. However, if RRI should fail to perform its obligations under the contracts or if RRI should fail to provide
adequate security in the event market conditions change adversely, we would retain our exposure to the counterparty
under the guaranty.
Debt Financing Transactions. Pursuant to a financing order issued by the Texas Utility Commission in
September 2007, in February 2008 a subsidiary of CenterPoint Houston issued approximately $488 million in
transition bonds in two tranches with interest rates of 4.192% and 5.234% and final maturity dates in February 2020
and February 2023, respectively. Scheduled final payment dates are February 2017 and February 2020. Through
issuance of the transition bonds, CenterPoint Houston securitized transition property of approximately $483 million
representing the remaining balance of the CTC, adjusted to refund certain unspent environmental retrofit costs and
to recover the amount of the fuel reconciliation settlement.
In April 2008, we purchased $175 million principal amount of pollution control bonds issued on our behalf at
102% of their principal amount. Prior to the purchase, $100 million principal amount of such bonds had a fixed rate
of interest of 7.75% and $75 million principal amount of such bonds had a fixed rate of interest of 8%. Depending
on market conditions, we may remarket both series of bonds, at 100% of their principal amounts, in 2009.
In April 2008, we called our 3.75% convertible senior notes for redemption on May 30, 2008. At the time of the
announcement, the notes were convertible at the option of the holders, and substantially all of the notes were
submitted for conversion on or prior to the May 30, 2008 redemption date. During the year ended December 31,