CenterPoint Energy 2009 Annual Report Download - page 82

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present value techniques based on estimates of cash flows, or multiples of earnings or revenue performance
measures. The fair value of the asset could be different using different estimates and assumptions in these valuation
techniques.
Unbilled Energy Revenues
Revenues related to electricity delivery and natural gas sales and services are generally recognized upon delivery
to customers. However, the determination of deliveries to individual customers is based on the reading of their
meters, which is performed on a systematic basis throughout the month. At the end of each month, deliveries to
customers since the date of the last meter reading are estimated and the corresponding unbilled revenue is estimated.
Unbilled electricity delivery revenue is estimated each month based on daily supply volumes, applicable rates and
analyses reflecting significant historical trends and experience. Unbilled natural gas sales are estimated based on
estimated purchased gas volumes, estimated lost and unaccounted for gas and tariffed rates in effect. As additional
information becomes available, or actual amounts are determinable, the recorded estimates are revised.
Consequently, operating results can be affected by revisions to prior accounting estimates.
Pension and Other Retirement Plans
We sponsor pension and other retirement plans in various forms covering all employees who meet eligibility
requirements. We use several statistical and other factors that attempt to anticipate future events in calculating the
expense and liability related to our plans. These factors include assumptions about the discount rate, expected return
on plan assets and rate of future compensation increases as estimated by management, within certain guidelines. In
addition, our actuarial consultants use subjective factors such as withdrawal and mortality rates. The actuarial
assumptions used may differ materially from actual results due to changing market and economic conditions, higher
or lower withdrawal rates or longer or shorter life spans of participants. These differences may result in a significant
impact to the amount of pension expense recorded. Please read “— Other Significant Matters — Pension Plans” for
further discussion.
NEW ACCOUNTING PRONOUNCEMENTS
See Note 2(o) to our consolidated financial statements for a discussion of new accounting pronouncements that
affect us.
OTHER SIGNIFICANT MATTERS
Pension Plans. As discussed in Note 2(p) to our consolidated financial statements, we maintain a non-
contributory qualified defined benefit pension plan covering substantially all employees. Employer contributions for
the qualified plan are based on actuarial computations that establish the minimum contribution required under the
Employee Retirement Income Security Act of 1974 (ERISA) and the maximum deductible contribution for income
tax purposes.
Under the terms of our pension plan, we reserve the right to change, modify or terminate the plan. Our funding
policy is to review amounts annually and contribute an amount at least equal to the minimum contribution required
under ERISA.
We made no contribution to the qualified pension plan in 2008; however, a discretionary contribution of $13
million was made in 2009. The minimum funding requirements for this plan did not require contributions for the
respective years.
Additionally, we maintain an unfunded non-qualified benefit restoration plan that allows participants to receive
the benefits to which they would have been entitled under our non-contributory pension plan except for the federally
mandated limits on qualified plan benefits or on the level of compensation on which qualified plan benefits may be
calculated. Employer contributions for the non-qualified benefit restoration plan represent benefit payments made to
participants and totaled $8 million and $7 million in 2008 and 2009, respectively.