CenterPoint Energy 2008 Annual Report Download - page 38

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expenses. It also would allow recovery of increased costs related to conservation improvement programs and
provide a return for the additional capital invested to serve its customers. In addition, Gas Operations is seeking an
adjustment mechanism that would annually adjust rates to reflect changes in use per customer. In December 2008,
the MPUC accepted the case and approved an interim rate increase of $51.2 million, which became effective on
January 2, 2009, subject to refund. The MPUC is allowed ten months to issue a final decision; however, an
extension of time can occur in certain circumstances.
Department of Transportation
In December 2006, Congress enacted the Pipeline Inspection, Protection, Enforcement and Safety Act of 2006
(2006 Act), which reauthorized the programs adopted under the Pipeline Safety Improvement Act of 2002 (2002
Act). These programs included several requirements related to ensuring pipeline safety, and a requirement to assess
the integrity of pipeline transmission facilities in areas of high population concentration. Under the legislation,
remediation activities are to be performed over a 10-year period. Our pipeline subsidiaries are on schedule to
comply with the timeframe mandated for completion of integrity assessment and remediation.
Pursuant to the 2002 Act, and then the 2006 Act, the Pipeline and Hazardous Materials Safety Administration
(PHMSA) of the U.S. Department of Transportation (DOT) has adopted a number of rules concerning, among other
things, distinguishing between gathering lines and transmission facilities, requiring certain design and construction
features in new and replaced lines to reduce corrosion and requiring pipeline operators to amend existing written
operations and maintenance procedures and operator qualification programs.
We anticipate that compliance with these regulations and performance of the remediation activities by CERC’s
interstate and intrastate pipelines, and natural gas distribution companies will require increases in both capital
expenditures and operating costs. The level of expenditures will depend upon several factors, including age, location
and operating pressures of the facilities. Based on our interpretation of the rules written to date and preliminary
technical reviews, we believe compliance will require annual expenditures (capital and operating costs combined) of
approximately $17 to 24 million during the initial 10-year period.
ENVIRONMENTAL MATTERS
Our operations are subject to stringent and complex laws and regulations pertaining to health, safety and the
environment. As an owner or operator of natural gas pipelines, gas gathering and processing systems, and electric
transmission and distribution systems, we must comply with these laws and regulations at the federal, state and local
levels. These laws and regulations can restrict or impact our business activities in many ways, such as:
• restricting the way we can handle or dispose of wastes;
• limiting or prohibiting construction activities in sensitive areas such as wetlands, coastal regions, or areas
inhabited by endangered species;
• requiring remedial action to mitigate pollution conditions caused by our operations, or attributable to
former operations; and
• enjoining the operations of facilities deemed in non-compliance with permits issued pursuant to such
environmental laws and regulations.
In order to comply with these requirements, we may need to spend substantial amounts and devote other
resources from time to time to:
• construct or acquire new equipment;
• acquire permits for facility operations;
• modify or replace existing and proposed equipment; and