CenterPoint Energy 2008 Annual Report Download - page 120

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systematic mismeasurement of the Btu content of natural gas for more than 25 years. In both lawsuits, the plaintiffs
seek compensatory damages, along with statutory penalties, treble damages, interest, costs and fees. CERC believes
that there has been no systematic mismeasurement of gas and that the lawsuits are without merit. CERC does not
expect the ultimate outcome of the lawsuits to have a material impact on the financial condition, results of
operations or cash flows of either the Company or CERC.
Gas Cost Recovery Litigation. In October 2002, a lawsuit was filed on behalf of certain CERC ratepayers in state
district court in Wharton County, Texas against the Company, CERC Corp., Entex Gas Marketing Company
(EGMC), and certain non-affiliated companies alleging fraud, violations of the Texas Deceptive Trade Practices
Act, violations of the Texas Utilities Code, civil conspiracy and violations of the Texas Free Enterprise and Antitrust
Act with respect to rates charged to certain consumers of natural gas in the State of Texas. The plaintiffs initially
sought certification of a class of Texas ratepayers, but subsequently dropped their request for class certification. The
plaintiffs later added as defendants CenterPoint Energy Marketing Inc., CenterPoint Energy Pipeline Services, Inc.
(CEPS), and certain other subsidiaries of CERC, and other non-affiliated companies. In February 2005, the case was
removed to federal district court in Houston, Texas, and in March 2005, the plaintiffs voluntarily dismissed the case
and agreed not to refile the claims asserted unless the Miller County case described below is not certified as a class
action or is later decertified.
In October 2004, a lawsuit was filed by certain CERC ratepayers in Texas and Arkansas in circuit court in Miller
County, Arkansas against the Company, CERC Corp., EGMC, CenterPoint Energy Gas Transmission Company
(CEGT), CenterPoint Energy Field Services (CEFS), CEPS, Mississippi River Transmission Corp. (MRT) and
various non-affiliated companies alleging fraud, unjust enrichment and civil conspiracy with respect to rates charged
to certain consumers of natural gas in Arkansas, Louisiana, Minnesota, Mississippi, Oklahoma and Texas.
Subsequently, the plaintiffs dropped CEGT and MRT as defendants. Although the plaintiffs in the Miller County
case sought class certification, no class was certified. In June 2007, the Arkansas Supreme Court determined that the
Arkansas claims were within the sole and exclusive jurisdiction of the Arkansas Public Service Commission
(APSC). In response to that ruling, in August 2007 the Miller County court stayed but refused to dismiss the
Arkansas claims. In February 2008, the Arkansas Supreme Court directed the Miller County court to dismiss the
entire case for lack of jurisdiction. The Miller County court subsequently dismissed the case in accordance with the
Arkansas Supreme Court’s mandate and all appellate deadlines have expired.
In June 2007, the Company, CERC Corp., EGMC and other defendants in the Miller County case filed a petition
in a district court in Travis County, Texas seeking a determination that the Railroad Commission has exclusive
original jurisdiction over the Texas claims asserted in the Miller County case. In October 2007, CEFS and CEPS
joined the petition in the Travis County case. In October 2008, the district court ruled that the Railroad Commission
had exclusive original jurisdiction over the Texas claims asserted against the Company, CERC Corp., EGMC and
the other defendants in the Miller County case. In January 2009, the court entered a final declaratory judgment
ruling that the Railroad Commission has exclusive jurisdiction over Texas claims. The Company does not anticipate
that an appeal will be filed.
In August 2007, the Arkansas plaintiff in the Miller County litigation initiated a complaint at the APSC seeking a
decision concerning the extent of the APSC’s jurisdiction over the Miller County case and an investigation into the
merits of the allegations asserted in his complaint with respect to CERC. In February 2009, the Arkansas plaintiff
notified the APSC that he would no longer pursue his claims. That complaint remains pending at the APSC, subject
to the review of the Arkansas Attorney General, APSC Staff and the APSC.
In February 2003, a lawsuit was filed in state court in Caddo Parish, Louisiana against CERC with respect to rates
charged to a purported class of certain consumers of natural gas and gas service in the State of Louisiana. In
February 2004, another suit was filed in state court in Calcasieu Parish, Louisiana against CERC seeking to recover
alleged overcharges for gas or gas services allegedly provided by CERC to a purported class of certain consumers of
natural gas and gas service without advance approval by the Louisiana Public Service Commission (LPSC). At the
time of the filing of each of the Caddo and Calcasieu Parish cases, the plaintiffs in those cases filed petitions with
the LPSC relating to the same alleged rate overcharges. The Caddo and Calcasieu Parish lawsuits were stayed
pending the resolution of the petitions filed with the LPSC. In August 2007, the LPSC issued an order approving a
Stipulated Settlement in the review initiated by the plaintiffs in the Calcasieu Parish litigation. In the LPSC
proceeding, CERC’s gas purchases were reviewed back to 1971. The review concluded that CERC’s gas costs were