CenterPoint Energy 2009 Annual Report Download - page 129

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subsidiaries of CenterPoint Energy and CERC Corp. and various non-affiliated companies alleging fraud, unjust
enrichment and civil conspiracy with respect to rates charged to certain consumers of natural gas in Arkansas,
Louisiana, Minnesota, Mississippi, Oklahoma and Texas. Although the plaintiffs in the Miller County case sought
class certification, no class was certified. In June 2007, the Arkansas Supreme Court determined that the Arkansas
claims were within the sole and exclusive jurisdiction of the Arkansas Public Service Commission (APSC) and in
February 2008, the Arkansas Supreme Court directed the Miller County court to dismiss the entire case for lack of
jurisdiction.
In August 2007, the Arkansas plaintiff in the Miller County litigation initiated a complaint at the APSC seeking a
decision concerning the extent of the APSC’s jurisdiction over the Miller County case and an investigation into the
merits of the allegations asserted in his complaint with respect to CERC. In February 2009, the Arkansas plaintiff
notified the APSC that he would no longer pursue his claims, and in July 2009 the complaint proceeding was
dismissed by the APSC. All appellate deadlines expired without an appeal of the dismissal order.
In June 2007, CenterPoint Energy, CERC Corp., and other defendants in the Miller County case filed a petition in
a district court in Travis County, Texas seeking a determination that the Railroad Commission has exclusive original
jurisdiction over the Texas claims asserted in the Miller County case. In January 2009, the district court entered a
final declaratory judgment ruling that the Railroad Commission has exclusive jurisdiction over the Texas claims
asserted against CenterPoint Energy, and the other defendants in the Miller County case.
Environmental Matters
Manufactured Gas Plant Sites. CERC and its predecessors operated manufactured gas plants (MGPs) in the past.
In Minnesota, CERC has completed remediation on two sites, other than ongoing monitoring and water treatment.
There are five remaining sites in CERC’s Minnesota service territory. CERC believes that it has no liability with
respect to two of these sites.
At December 31, 2009, CERC had accrued $14 million for remediation of these Minnesota sites and the
estimated range of possible remediation costs for these sites was $4 million to $35 million based on remediation
continuing for 30 to 50 years. The cost estimates are based on studies of a site or industry average costs for
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 (PRP), 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, 2009, CERC had collected $13 million from insurance
companies and rate payers to be used for future environmental remediation. In January 2010, as part of its
Minnesota rate case decision, the MPUC eliminated the environmental expense tracker mechanism and ordered
amounts previously collected from ratepayers and related carrying costs refunded to customers. As of December 31,
2009, the balance in the environmental expense tracker account was $8.7 million. The MPUC provided for the
inclusion in rates of approximately $285,000 annually to fund normal on-going remediation costs. CERC was not
required to refund to customers the amount collected from insurance companies, $4.6 million at December 31, 2009,
to be used to mitigate future environmental costs. The MPUC further gave assurance that any reasonable and
prudent environmental clean-up costs CERC incurs in the future will be rate-recoverable under normal regulatory
principles and procedures. This provision had no impact on earnings.
In addition to the Minnesota sites, the United States Environmental Protection Agency 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 would be required to determine if other potentially responsible parties, including CERC, would have to
contribute to that remediation. In September 2009, the federal district court granted CERC’s motion for summary
judgment in the proceeding. Although it is likely that the plaintiff will pursue an appeal from that dismissal, further
action will not be taken until the district court disposes of claims against other defendants in the case. CERC
believes it is not liable as a former owner or operator of the site under the Comprehensive Environmental, Response,