CenterPoint Energy 2008 Annual Report Download - page 121

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―reasonable and prudent,‖ but CERC agreed to credit to jurisdictional customers approximately $920,000, including
interest, related to certain off-system sales. The refund was completed in the fourth quarter of 2008. A similar
review by the LPSC related to the Caddo Parish litigation was resolved without additional payment by CERC. In
October 2008, the courts considering the Caddo and Calcasieu Parish cases dismissed these cases pursuant to
motions to dismiss and these proceedings have been concluded.
Storage Facility Litigation. In February 2007, an Oklahoma district court in Coal County, Oklahoma, granted a
summary judgment against CEGT in a case, Deka Exploration, Inc. v. CenterPoint Energy, filed by holders of oil
and gas leaseholds and some mineral interest owners in lands underlying CEGT’s Chiles Dome Storage Facility.
The dispute concerns ―native gas‖ that may have been in the Wapanucka formation underlying the Chiles Dome
facility when that facility was constructed in 1979 by a CERC entity that was the predecessor in interest of CEGT.
The court ruled that the plaintiffs own native gas underlying those lands, since neither CEGT nor its predecessors
had condemned those ownership interests. The court rejected CEGT’s contention that the claim should be barred by
the statute of limitations, since the suit was filed over 25 years after the facility was constructed. The court also
rejected CEGT’s contention that the suit is an impermissible attack on the determinations the FERC and Oklahoma
Corporation Commission made regarding the absence of native gas in the lands when the facility was constructed.
The summary judgment ruling was only on the issue of liability, though the court did rule that CEGT has the burden
of proving that any gas in the Wapanucka formation is gas that has been injected and is not native gas. Further
hearings and orders of the court are required to specify the appropriate relief for the plaintiffs. CEGT plans to appeal
through the Oklahoma court system any judgment that imposes liability on CEGT in this matter. The Company and
CERC do not expect the outcome of this matter to have a material impact on the financial condition, results of
operations or cash flows of either the Company or CERC.
Environmental Matters
Manufactured Gas Plant Sites. CERC and its predecessors operated manufactured gas plants (MGPs) in the past.
In Minnesota, CERC has completed remediation on two sites, other than ongoing monitoring and water treatment.
There are five remaining sites in CERC’s Minnesota service territory. CERC believes that it has no liability with
respect to two of these sites.
At December 31, 2008, CERC had accrued $14 million for remediation of these Minnesota sites and the
estimated range of possible remediation costs for these sites was $4 million to $35 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 (PRP), if any, and the remediation methods
used. CERC has utilized an environmental expense tracker mechanism in its rates in Minnesota to recover estimated
costs in excess of insurance recovery. As of December 31, 2008, CERC had collected $13 million from insurance
companies and rate payers to be used for future environmental remediation.
In addition to the Minnesota sites, the United States Environmental Protection Agency 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. CERC has been named as a defendant in a lawsuit filed in the United States District Court, District of
Maine, under which contribution is sought by private parties for the cost to remediate former MGP sites based on
the previous ownership of such sites by former affiliates of CERC or its divisions. CERC has also been identified as
a PRP by the State of Maine for a site that is the subject of the lawsuit. In June 2006, the federal district court in
Maine ruled that the current owner of the site is responsible for site remediation but that an additional evidentiary
hearing is required to determine if other potentially responsible parties, including CERC, would have to contribute
to that remediation. The Company is investigating details regarding the site and the range of environmental
expenditures for potential remediation. However, CERC believes it is not liable as a former owner or operator of the
site under the Comprehensive Environmental, Response, Compensation and Liability Act of 1980, as amended, and
applicable state statutes, and is vigorously contesting the suit and its designation as a PRP.
Mercury Contamination. The Company’s pipeline and distribution operations have in the past employed
elemental mercury in measuring and regulating equipment. It is possible that small amounts of mercury may have
been spilled in the course of normal maintenance and replacement operations and that these spills may have
contaminated the immediate area with elemental mercury. The Company has found this type of contamination at