CenterPoint Energy 2009 Annual Report Download - page 71

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49
Interstate Pipelines
The following table provides summary data of our Interstate Pipelines business segment for 2007, 2008 and 2009
(in millions, except throughput data):
Year Ended December 31,
2007 2008 2009
Revenues..........................................................................................................
.
$ 500 $ 650 $ 598
Expenses:
N
atural gas ....................................................................................................
.
83 155 97
Operation and maintenance ..........................................................................
.
125 133 166
Depreciation and amortization ......................................................................
.
44 46 48
Taxes other than income taxes ......................................................................
.
11 23 31
Total expenses ..........................................................................................
.
263 357 342
Operating Income ............................................................................................
.
$ 237 $ 293 $ 256
Transportation throughput (in Bcf) ..................................................................
.
1,216 1,538 1,592
2009 Compared to 2008. Our Interstate Pipeline business segment reported operating income of $256 million for
2009 compared to $293 million for 2008. Margins (revenues less natural gas costs) increased $6 million primarily
due to the Carthage to Perryville pipeline ($28 million) and new contracts with power generation customers
($20 million), partially offset by reduced other transportation margins and ancillary services ($42 million) primarily
due to the decline in commodity prices from the significantly higher levels in 2008. Operations and maintenance
expenses increased due to a gain on the sale of two storage development projects in 2008 ($18 million) and costs
associated with incremental facilities ($12 million) and increased pension expenses ($9 million). These expenses
were partially offset by a write-down associated with pipeline assets removed from service in the third quarter of
2008 ($7 million). Depreciation and amortization expenses increased $2 million and taxes other than income taxes
increased by $8 million, $2 million of which was due to 2008 tax refunds.
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 in 2008 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 were 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.
Equity Earnings. In addition, this business segment recorded equity income of $6 million, $36 million and
$7 million in the years ended December 31, 2007, 2008 and 2009, respectively, from its 50% interest in SESH, a
jointly-owned pipeline. The 2007 and 2008 year-end results include $6 million and $33 million of pre-operating
allowance for funds used during construction, respectively. The 2009 results include a non-cash pre-tax charge of
$16 million to reflect SESH’s decision to discontinue the use of guidance for accounting for regulated operations,
which was partially offset by the receipt of a one-time payment related to the construction of the pipeline and a
reduction in estimated property taxes, of which our 50% share was $5 million. Excluding the effect of these
adjustments, equity earnings from normal operations was $3 million and $18 million in 2008 and 2009, respectively.
These amounts are included in Equity in Earnings of Unconsolidated Affiliates under the Other Income (Expense)
caption.