CenterPoint Energy 2007 Annual Report Download - page 8

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6
Over the last three years, our fastest growing business has been natural gas
field services. We continue to capitalize on strong drilling activity near
our system and benefit from high customer loyalty. Operating income rose
$10 million over 2006, an increase of 11 percent. In 2007, we committed
more than $100 million in growth capital to this business and expect
to invest approximately $75 to $100 million annually over the next four
to five years.
Competitive natural gas sales and services reported a small decrease
in operating income, primarily as a result of reduced profitability
in our wholesale business due to lower locational and seasonal gas price
differentials. Nonetheless, we made solid progress on our long-term
growth strategy by growing our retail commercial and industrial
customer base by 1,700.
IMPROVING OUR FINANCIAL POSITION
We resolved several of the issues remaining from the 1999 restructuring
of the electric industry in Texas. Last summer, the state passed a law
allowing us to sell $488 million of transition bonds to recover certain
previously approved transition costs. This law provides a win-win scenario,
allowing us to recover our funds immediately while customers pay lower
interest rates. The bonds were sold in February 2008, and will result in more
than $100 million in customer savings over the next 15 years. Additionally,
we settled our final fuel reconciliation proceeding, which added $17 million
to operating income.
One important issue remains unresolved: our appeal of the Texas Public
Utility Commission’s decision in our true-up case. In December, we received
a disappointing decision from the Texas 3rd Court of Appeals that reduced
the amount of potential true-up recovery. We have asked the Court of Appeals
to reconsider its decision and will appeal to the Texas Supreme Court if our
motion for rehearing is unsuccessful.
“The concern about global climate change will also
put more focus on conservation and using energy wisely…
We are well positioned to serve in a leadership role.”