CenterPoint Energy 2014 Annual Report Download - page 49

The following discussion and analysis should be read in combination with our consolidated financial statements included in Item 8 herein.
OVERVIEW
Background
We are a public utility holding company. Our operating subsidiaries own and operate electric transmission and distribution facilities and
natural gas distribution facilities and own interests in Enable Midstream Partners, LP (Enable) as described below. Our indirect wholly owned
subsidiaries include:
Business Segments
In this Management’
s Discussion and Analysis, we discuss our results from continuing operations on a consolidated basis and individually
for each of our business segments. We also discuss our liquidity, capital resources and certain critical accounting policies. We are first and
foremost an energy delivery company and it is our intention to remain focused on these segments of the energy business. The results of our
business operations are significantly impacted by weather, customer growth, economic conditions, cost management, competition, rate
proceedings before regulatory agencies and other actions of the various regulatory agencies to whose jurisdiction we are subject. Our electric
transmission and distribution services are subject to rate regulation and are reported in the Electric Transmission & Distribution business
segment, as are impacts of generation-related stranded costs and other true-
up balances recoverable by the regulated electric utility. Our natural
gas distribution services are also subject to rate regulation and are reported in the Natural Gas Distribution business segment. The results of our
Midstream Investments segment are dependent upon the results of Enable, which are driven primarily by the volume of natural gas that Enable
gathers, processes and transports across its systems and other factors as discussed below under “-
Factors Influencing Our Midstream
Investments Segment.” A summary of our reportable business segments as of December 31, 2014 is set forth below:
Electric Transmission & Distribution
Our electric transmission and distribution operations provide electric transmission and distribution services to retail electric providers
(REPs) serving over two million metered customers in a 5,000-square-
mile area of the Texas Gulf Coast that has a population of approximately
six million people and includes the city of Houston.
On behalf of REPs, CenterPoint Houston delivers electricity from power plants to substations, from one substation to another and to retail
electric customers in locations throughout CenterPoint Houston’
s certificated service territory. The Electric Reliability Council of Texas, Inc.
(ERCOT) serves as the regional reliability coordinating council for member electric power systems in Texas. ERCOT membership is open to
consumer groups, investor and municipally-
owned electric utilities, rural electric cooperatives, independent generators, power marketers, river
authorities and REPs. The ERCOT market represents approximately 85% of the demand for power in Texas and is one of the nation’
s largest
power markets. Transmission and distribution services are provided under tariffs approved by the Public Utility Commission of Texas (Texas
Utility Commission).
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(3) 2011 Income before Extraordinary Item includes a $224 million after-
tax ($0.53 and $0.52 per basic and diluted share, respectively) return
on true-up balance related to a portion of interest on the appealed true-up amount.
(4)
Calculated using Income before Extraordinary Item.
Item 7.
Management
’
s Discussion and Analysis of Financial Condition and Results of Operations
•
CenterPoint Energy Houston Electric, LLC (CenterPoint Houston), which engages in the electric transmission and distribution business
in a 5,000-square mile area of the Texas Gulf Coast that includes the city of Houston; and
•
CenterPoint Energy Resources Corp. (CERC Corp. and, together with its subsidiaries, CERC), which owns and operates natural gas
distribution systems. A wholly owned subsidiary of CERC Corp. offers variable and fixed-
price physical natural gas supplies primarily
to commercial and industrial customers and electric and gas utilities. As of December 31, 2014, CERC Corp. also owned approximately
55.4% of the limited partner interests in Enable, which owns, operates and develops natural gas and crude oil infrastructure assets.