CenterPoint Energy 2014 Annual Report Download - page 22

Liability for Remediation
The Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (CERCLA), also known as
“Superfund,”
and comparable state laws impose liability, without regard to fault or the legality of the original conduct, on certain classes of
persons responsible for the release of hazardous substances into the environment. Such classes of persons include the current and past owners or
operators of sites where a hazardous substance was released and companies that disposed or arranged for the disposal of hazardous substances at
offsite locations such as landfills. Although petroleum, as well as natural gas, is excluded from CERCLA’s definition of a “
hazardous
substance,” in the course of our ordinary operations we generate wastes that may fall within the definition of a “hazardous substance.”
CERCLA
authorizes the EPA and, in some cases, third parties to take action in response to threats to the public health or the environment and to seek to
recover from the responsible classes of persons the costs they incur. Under CERCLA, we could be subject to joint and several liability for the
costs of cleaning up and restoring sites where hazardous substances have been released, for damages to natural resources, and for the costs of
certain health studies.
Liability for Preexisting Conditions
Manufactured Gas Plant Sites. CERC and its predecessors operated manufactured gas plants (MGPs) in the past. There are seven
MGP
sites in CERC’s Minnesota service territory. CERC believes it never owned or operated, and therefore has no liability with respect to, two
of
these sites. With respect to two other sites, CERC has completed state ordered remediation, other than ongoing monitoring and water treatment.
As of December 31, 2014 , CERC had recorded a liability of $7 million
for remediation of these Minnesota sites. The estimated range of
possible remediation costs for the sites CERC believes it has responsibility for was $5 million to $29 million
based on remediation continuing
for 30 to 50 years. The cost estimates are based on studies of a site or industry average costs for remediation of sites of similar size. The actual
remediation costs will be dependent upon the number of sites to be remediated, the participation of other potentially responsible parties (PRPs),
if any, and the remediation methods used. As of December 31, 2014 , CERC had collected $4 million
from insurance companies to be used for
future environmental remediation.
In addition to the Minnesota sites, the EPA and other regulators have investigated MGP sites that were owned or operated by CERC or may
have been owned by one of its former affiliates. We and CERC do not expect the ultimate outcome of these investigations to have a material
adverse effect on the financial condition, results of operations or cash flows of either us or CERC.
Asbestos. Some facilities owned by us contain or have contained asbestos insulation and other asbestos-
containing materials. We or our
subsidiaries have been named, along with numerous others, as defendants 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. In 2004, we sold our generating business, to which most of these claims relate, to a company which is now an affiliate of
NRG. Under the terms of the arrangements regarding separation of the generating business from us and our sale of that business, ultimate
financial responsibility for uninsured losses from claims relating to the generating business has been assumed by the NRG affiliate, 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 the NRG affiliate. We anticipate that additional claims like those received may be asserted in the future. Although their ultimate
outcome cannot be predicted at this time, we intend to continue vigorously contesting claims that we do not consider to have merit and do not
expect, based on our experience to date, these matters, either individually or in the aggregate, to have a material adverse effect on our financial
condition, results of operations or cash flows.
Other Environmental.
From time to time we identify the presence of environmental contaminants on property where we conduct or have
conducted operations. Other such sites involving contaminants may be identified in the future. We have remediated and expect to continue to
remediate identified sites consistent with our legal obligations. From time to time we have received notices from regulatory authorities or others
regarding our status as a PRP in connection with sites found to require remediation due to the presence of environmental contaminants. In
addition, we have been named from time to time as a defendant in litigation related to such sites. Although the ultimate outcome of such matters
cannot be predicted at this time, we do not expect, based on our experience to date, these matters, either individually or in the aggregate, to have
a material adverse effect on our financial condition, results of operations or cash flows.
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