CenterPoint Energy 2009 Annual Report Download - page 61

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39
Competitive Natural Gas Sales and Services
CERC’s operations also include non-rate regulated retail and wholesale natural gas sales to, and transportation
services for, commercial and industrial customers in 18 states in the central and eastern regions of the United States.
Interstate Pipelines
CERC’s interstate pipelines business owns and operates approximately 8,000 miles of natural gas transmission
lines primarily located in Arkansas, Illinois, Louisiana, Missouri, Oklahoma and Texas. It also owns and operates
six natural gas storage fields with a combined daily deliverability of approximately 1.2 billion cubic feet (Bcf) and a
combined working gas capacity of approximately 59 Bcf. It also owns a 10% interest in an 80 Bcf Bistineau storage
facility located in Bienville Parish, Louisiana, with the remaining interest owned and operated by Gulf South
Pipeline Company, LP. Most storage operations are in north Louisiana and Oklahoma.
Field Services
CERC’s field services business owns and operates approximately 3,700 miles of gathering pipelines and
processing plants that collect, treat and process natural gas from approximately 140 separate systems located in
major producing fields in Arkansas, Louisiana, Oklahoma and Texas.
Other Operations
Our other operations business segment includes office buildings and other real estate used in our business
operations and other corporate operations which support all of our business operations.
EXECUTIVE SUMMARY
Factors Influencing Our Business
We are an energy delivery company. The majority of our revenues are generated from the gathering, processing,
transportation and sale of natural gas and the transportation and delivery of electricity by our subsidiaries. We do not
own or operate electric generating facilities or make retail sales to end-use electric customers. To assess our
financial performance, our management primarily monitors operating income and cash flows from our five business
segments. Within these broader financial measures, we monitor margins, operation and maintenance expense,
interest expense, capital spending and working capital requirements. In addition to these financial measures we also
monitor a number of variables that management considers important to the operation of our business segments,
including the number of customers, throughput, use per customer, commodity prices and heating and cooling degree
days. We also monitor system reliability, safety factors and customer satisfaction to gauge our performance.
To the extent the adverse economic conditions affect our suppliers and customers, results from our energy
delivery businesses may suffer. Reduced demand and lower energy prices could lead to financial pressure on some
of our customers who operate within the energy industry. Also, adverse economic conditions, coupled with concerns
for protecting the environment, may cause consumers to use less energy or avoid expansions of their facilities,
resulting in less demand for our services.
Performance of our Electric Transmission & Distribution and Natural Gas Distribution business segments is
significantly influenced by the number of customers and energy usage per customer. Weather conditions can have a
significant impact on energy usage, and we compare our results to weather on an adjusted basis. During 2009, we
continued to see evidence that customers are seeking to conserve in their energy consumption, particularly during
periods of high energy prices or in times of economic distress. That conservation can have adverse effects on our
results. In many of our service areas, particularly in the Houston area and in Minnesota, we have benefited from
customer growth that tends to mitigate the effects of reduced consumption. We anticipate that this growth will
continue despite recent economic downturns, though that growth may be lower than we have recently experienced in
these areas. In addition, the profitability of these businesses is influenced significantly by the regulatory treatment
we receive from the various state and local regulators who set our electric and gas distribution rates. In our recent
Gas Operations rate filings, we have sought rate mechanisms that help to decouple our results from the impacts of