CenterPoint Energy 2014 Annual Report Download - page 43

Climate change legislation and regulatory initiatives could result in increased operating costs and reduced demand for our services or
Enable
’s services.
The United States Congress has from time to time considered adopting legislation to reduce emissions of GHGs, and there has been a wide-
ranging policy debate, both nationally and internationally, regarding the impact of these gases and possible means for their regulation. In
addition, efforts have been made and continue to be made in the international community toward the adoption of international treaties or
protocols that would address global climate change issues, such as the most recent United Nations Climate Change Conference in Lima, Peru, in
2014. Following a finding by the EPA that certain GHGs represent an endangerment to human health, the EPA adopted two sets of rules
regulating GHG emissions under the Clean Air Act, one that requires a reduction in emissions of GHGs from motor vehicles and another that
regulates emissions of GHGs from certain large stationary sources. In addition, the EPA expanded its existing GHG emissions reporting
requirements to include upstream petroleum and natural gas systems that emit 25,000 metric tons or more of CO
2
equivalent per year. These
permitting and reporting requirements could lead to further regulation of GHGs by the EPA. As a distributor and transporter of natural gas, or a
consumer of natural gas in its pipeline and gathering businesses, CERC’s or Enable’
s revenues, operating costs and capital requirements, as
applicable, could be adversely affected as a result of any regulatory action that would require installation of new control technologies or a
modification of its operations or would have the effect of reducing the consumption of natural gas. Our electric transmission and distribution
business, in contrast to some electric utilities, does not generate electricity and thus is not directly exposed to the risk of high capital costs and
regulatory uncertainties that face electric utilities that burn fossil fuels to generate electricity. Nevertheless, CenterPoint Houston’
s revenues
could be adversely affected to the extent any resulting regulatory action has the effect of reducing consumption of electricity by ultimate
consumers within its service territory. Likewise, incentives to conserve energy or use energy sources other than natural gas could result in a
decrease in demand for our services.
Climate changes could result in more frequent and more severe weather events which could adversely affect the results of operations of
our businesses.
To the extent climate changes occur, our businesses may be adversely impacted, though we believe any such impacts are likely to occur very
gradually and hence would be difficult to quantify with specificity. To the extent global climate change results in warmer temperatures in our
service territories, financial results from our natural gas distribution businesses could be adversely affected through lower gas sales, and our gas
transmission and field services businesses could experience lower revenues. Another possible climate change is more frequent and more severe
weather events, such as hurricanes or tornadoes. Since many of our facilities are located along or near the Gulf Coast, increased or more severe
hurricanes or tornadoes could increase our costs to repair damaged facilities and restore service to our customers. When we cannot deliver
electricity or natural gas to customers or our customers cannot receive our services, our financial results can be impacted by lost revenues, and
we generally must seek approval from regulators to recover restoration costs. To the extent we are unable to recover those costs, or if higher
rates resulting from our recovery of such costs result in reduced demand for our services, our future financial results may be adversely impacted.
Aging infrastructure may lead to increased costs and disruptions in operations that could negatively impact our financial results.
CenterPoint Energy has risks associated with aging infrastructure assets. The age of certain of our assets may result in a need for
replacement, or higher level of maintenance costs as a result of our risk based federal and state compliant integrity management
programs. Failure to achieve timely recovery of these expenses could adversely impact revenues and could result in increased capital
expenditures or expenses.
The operation of our facilities depends on good labor relations with our employees.
Several of our businesses have entered into and have in place collective bargaining agreements with different labor unions. There are seven
separate bargaining units in CenterPoint Energy, each with a unique collective bargaining agreement. These contracts will be renegotiated over
the next two years. Any failure to reach an agreement on new labor contracts or to negotiate these labor contracts might result in strikes,
boycotts or other labor disruptions. These potential labor disruptions could have a material adverse effect on our businesses, results of operations
and/or cash flows. Labor disruptions, strikes or significant negotiated wage and benefit increases, whether due to union activities, employee
turnover or otherwise, could have a material adverse effect on our businesses, results of operations and/or cash flows.
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