CenterPoint Energy 2008 Annual Report Download - page 122

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some sites in the past, and the Company has conducted remediation at these sites. It is possible that other
contaminated sites may exist and that remediation costs may be incurred for these sites. Although the total amount
of these costs is not known at this time, based on the Company’s experience and that of others in the natural gas
industry to date and on the current regulations regarding remediation of these sites, the Company believes that the
costs of any remediation of these sites will not be material to the Company’s financial condition, results of
operations or cash flows.
Asbestos. Some facilities owned by the Company contain or have contained asbestos insulation and other
asbestos-containing materials. The Company or its subsidiaries have been named, along with numerous others, as a
defendant in lawsuits filed by a number of individuals who claim injury due to exposure to asbestos. Some of the
claimants have worked at locations owned by the Company, but most existing claims relate to facilities previously
owned by the Company’s subsidiaries. The Company anticipates that additional claims like those received may be
asserted in the future. In 2004, the Company sold its generating business, to which most of these claims relate, to
Texas Genco LLC, which is now known as NRG Texas LP. Under the terms of the arrangements regarding
separation of the generating business from the Company and its sale to NRG Texas LP, ultimate financial
responsibility for uninsured losses from claims relating to the generating business has been assumed by NRG Texas
LP, but the Company has agreed to continue to defend such claims to the extent they are covered by insurance
maintained by the Company, subject to reimbursement of the costs of such defense from the purchaser. Although
their ultimate outcome cannot be predicted at this time, the Company intends to continue vigorously contesting
claims that it does not consider to have merit and does not expect, based on its experience to date, these matters,
either individually or in the aggregate, to have a material adverse effect on the Company’s financial condition,
results of operations or cash flows.
Groundwater Contamination Litigation. Predecessor entities of CERC, along with several other entities, are
defendants in litigation, St. Michel Plantation, LLC, et al, v. White, et al., pending in civil district court in Orleans
Parish, Louisiana. In the lawsuit, the plaintiffs allege that their property in Terrebonne Parish, Louisiana suffered
salt water contamination as a result of oil and gas drilling activities conducted by the defendants. Although a
predecessor of CERC held an interest in two oil and gas leases on a portion of the property at issue, neither it nor
any other CERC entities drilled or conducted other oil and gas operations on those leases. In January 2009, CERC
and the plaintiffs reached agreement on the terms of a settlement that, if ultimately approved by the Louisiana
Department of Natural Resources and the court, is expected to finally resolve this litigation. The Company and
CERC do not expect the outcome of this litigation to have a material adverse impact on the financial condition,
results of operations or cash flows of either the Company or CERC.
Other Environmental. From time to time the Company has received notices from regulatory authorities or others
regarding its status as a PRP in connection with sites found to require remediation due to the presence of
environmental contaminants. In addition, the Company has been named from time to time as a defendant in
litigation related to such sites. Although the ultimate outcome of such matters cannot be predicted at this time, the
Company does not expect, based on its experience to date, these matters, either individually or in the aggregate, to
have a material adverse effect on the Company’s financial condition, results of operations or cash flows.
Other Proceedings
The Company is involved in other legal, environmental, tax and regulatory proceedings before various courts,
regulatory commissions and governmental agencies regarding matters arising in the ordinary course of business.
Some of these proceedings involve substantial amounts. The Company regularly analyzes current information and,
as necessary, provides accruals for probable liabilities on the eventual disposition of these matters. The Company
does not expect the disposition of these matters to have a material adverse effect on the Company’s financial
condition, results of operations or cash flows.
Guaranties
Prior to the Company’s distribution of its ownership in RRI to its shareholders, CERC had guaranteed certain
contractual obligations of what became RRI’s trading subsidiary. Under the terms of the separation agreement
between the companies, RRI agreed to extinguish all such guaranty obligations prior to separation, but at the time of
separation in September 2002, RRI had been unable to extinguish all obligations. To secure CERC against