CenterPoint Energy 2014 Annual Report Download - page 105

Included in “Benefit Obligations” in the accompanying Consolidated Balance Sheets at December 31, 2014 and 2013 was $28 million
and
$30 million , respectively, relating to postemployment obligations.
(e) Other Non-Qualified Plans
CenterPoint Energy has non-
qualified deferred compensation plans that provide benefits payable to directors, officers and certain key
employees or their designated beneficiaries at specified future dates, upon termination, retirement or death. Benefit payments are made from the
general assets of CenterPoint Energy. CenterPoint Energy recorded benefit expense relating to these plans of $5 million
for each of the years in
2014 , 2013 and 2012 . Included in “Benefit Obligations” in the accompanying Consolidated Balance Sheets at December 31, 2014 and
2013
was $60 million and $64 million , respectively, relating to deferred compensation plans.
Included in Benefit Obligations in CenterPoint Energy’s Consolidated Balance Sheets at December 31, 2014 and 2013 was $33 million
and
$28 million , respectively, relating to split-dollar life insurance arrangements.
(f) Change in Control Agreements and Other Employee Matters
CenterPoint Energy had change in control agreements with certain of its officers, which expired December 31, 2014. In lieu of these
agreements, our Board of Directors approved a new change in control plan, which was effective January 1, 2015. The plan, like the expired
agreements, generally provides, to the extent applicable, in the case of a change in control of CenterPoint Energy and termination of
employment, for severance benefits of up to three
times annual base salary plus bonus, and other benefits. Our officers, including our Executive
Chairman, are participants under the plan.
As of December 31, 2014 , approximately 31% of CenterPoint Energy’
s employees were subject to collective bargaining agreements. The
collective bargaining agreements with the Gas Workers Local Union 340 and International Brotherhood of Electrical Workers Local 949 in
Minnesota, which collectively cover approximately 8% of CenterPoint Energy’
s employees, are scheduled to expire in April and December
2015, respectively. CenterPoint Energy believes it has good relationships with these bargaining units and expects to negotiate new agreements in
2015.
CenterPoint Energy is exposed to various market risks. These risks arise from transactions entered into in the normal course of
business. CenterPoint Energy utilizes derivative instruments such as physical forward contracts, swaps and options to mitigate the impact of
changes in commodity prices and weather on its operating results and cash flows.
(a) Non-Trading Activities
Derivative Instruments.
CenterPoint Energy enters into certain derivative instruments to manage physical commodity price risk and does not
engage in proprietary or speculative commodity trading. These financial instruments do not qualify or are not designated as cash flow or fair
value hedges.
Weather Hedges.
CenterPoint Energy has weather normalization or other rate mechanisms that mitigate the impact of weather on NGD in
Arkansas, Louisiana, Mississippi and Oklahoma. NGD in Texas and Minnesota and electric operations in Texas do not have such mechanisms.
As a result, fluctuations from normal weather may have a significant positive or negative effect on NGD’
s results in Texas and Minnesota and on
CenterPoint Houston’s results in its service territory.
CenterPoint Energy entered into heating-
degree day swaps for certain NGD jurisdictions to mitigate the effect of fluctuations from normal
weather on its results of operations and cash flows for the winter heating season, which contained a bilateral dollar cap of $15 million in 2012 -
2013, $16 million in 2013 - 2014 and $16 million in 2014 -
2015. In both 2013 and 2014, CenterPoint Energy also entered into a similar winter
weather hedge for the CenterPoint Houston service territory, which each contained a bilateral dollar cap of $8 million
. The swaps are based on
ten -year normal weather. During the years ended December 31, 2014 , 2013 and 2012 , CenterPoint Energy recognized losses of $11 million
,
losses of $22 million and gains of $8 million
, respectively, related to these swaps. Weather hedge gains and losses are included in revenues in
the Statements of Consolidated Income.
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(7)
Derivative Instruments