CenterPoint Energy 2009 Annual Report Download - page 55

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assumed or indemnified against, and provided we or Reliant Energy had not been released from the liability in
connection with the transfer, CenterPoint Houston could be responsible for satisfying the liability.
In connection with our sale of Texas Genco to a third party, the separation agreement was amended to provide
that Texas Genco would no longer be liable for, and we would assume and agree to indemnify Texas Genco against,
liabilities that Texas Genco originally assumed in connection with its organization to the extent, and only to the
extent, that such liabilities are covered by certain insurance policies held by us. Texas Genco and its related
businesses now operate as subsidiaries of NRG Energy, Inc.
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 but currently owned
by NRG Texas LP. We anticipate that additional claims like those received may be asserted in the future. Under the
terms of the arrangements regarding separation of the generating business from us and its 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 by NRG Texas LP.
The unsettled conditions in the global financial system may have impacts on our business, liquidity and
financial condition that we currently cannot predict.
The recent credit crisis and unsettled conditions in the global financial system may have an impact on our
business, liquidity and our financial condition. Our ability to access the capital markets may be severely restricted at
a time when we would like, or need, to access those markets, which could have an impact on our liquidity and
flexibility to react to changing economic and business conditions. In addition, the cost of debt financing and the
proceeds of equity financing may be materially adversely impacted by these market conditions. Defaults of lenders
in our credit facilities, should they further occur, could adversely affect our liquidity. Capital market turmoil was
also reflected in significant reductions in equity market valuations in 2008, which significantly reduced the value of
assets of our pension plan. These reductions increased non-cash pension expense in 2009 which impacted 2009
results of operations and may impact liquidity if contributions are made to offset reduced asset values.
In addition to the credit and financial market issues, a recurrence of national and local recessionary conditions
may impact our business in a variety of ways. These include, among other things, reduced customer usage, increased
customer default rates and wide swings in commodity prices.
Climate change legislation and regulatory initiatives could result in increased operating costs and reduced
demand for our services.
Legislation to regulate emissions of greenhouse gases has been introduced in Congress, and there has been a
wide-ranging policy debate, both nationally and internationally, regarding the impact of these gases and possible
means for their regulation. In addition, efforts have been made and continue to be made in the international
community toward the adoption of international treaties or protocols that would address global climate change
issues, such as the United Nations Climate Change Conference in Copenhagen in 2009. Also, the EPA has
undertaken new efforts to collect information regarding greenhouse gas emissions and their effects. Recently, the
EPA declared that certain greenhouse gases represent an endangerment to human health and proposed to expand its
regulations relating to those emissions. It is too early to determine whether, or in what form, further regulatory
action regarding greenhouse gas emissions will be adopted or what specific impacts a new regulatory action might
have on us and our subsidiaries. However, as a distributor and transporter of natural gas and consumer of natural gas
in its pipeline and gathering businesses, CERC’s revenues, operating costs and capital requirements could be
adversely affected as a result of any regulatory action that would require installation of new control technologies or
a modification of its operations or would have the effect of reducing the consumption of natural gas. Our electric
transmission and distribution business, in contrast to some electric utilities, does not generate electricity and thus is
not directly exposed to the risk of high capital costs and regulatory uncertainties that face electric utilities that burn
fossil fuels to generate electricity. Nevertheless, CenterPoint Houston’s revenues could be adversely affected to the
extent any resulting regulatory action has the effect of reducing consumption of electricity by ultimate consumers