CenterPoint Energy 2009 Annual Report Download - page 108

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Postemployment Benefits
CenterPoint Energy provides postemployment benefits for former or inactive employees, their beneficiaries and
covered dependents, after employment but before retirement (primarily healthcare and life insurance benefits for
participants in the long-term disability plan). The Company recorded postemployment benefit income of $2 million,
$1 million and $-0- in 2007, 2008 and 2009, respectively.
Included in “Benefit Obligations” in the accompanying Consolidated Balance Sheets at December 31, 2008 and
2009 was $32 million and $29 million, respectively, relating to postemployment obligations.
Other Non-Qualified Plans
CenterPoint Energy has non-qualified deferred compensation plans that provide benefits payable to directors,
officers and certain key employees or their designated beneficiaries at specified future dates, upon termination,
retirement or death. Benefit payments are made from the general assets of CenterPoint Energy. During 2007, 2008
and 2009, CenterPoint Energy recorded benefit expense relating to these plans of $7 million, $4 million and
$6 million, respectively. Included in “Benefit Obligations” in the accompanying Consolidated Balance Sheets at
December 31, 2008 and 2009 was $83 million and $79 million, respectively, relating to deferred compensation
plans.
Effective January 1, 2008, CenterPoint Energy adopted new guidance on accounting for deferred compensation
and postretirement benefit aspects of endorsement split-dollar life insurance arrangements which required
CenterPoint Energy to recognize the effect of implementation through a cumulative effect adjustment to retained
earnings or other components of equity as of the beginning of the year of adoption. CenterPoint Energy calculated
the impact as negligible at the time of adoption on January 1, 2008. During 2009, CenterPoint Energy determined
that its adoption calculation had omitted the impact that increasing future premium costs would have on the liability
and, therefore, it recorded as a cumulative effect adjustment a $15 million correction to increase other non-current
liabilities and accumulated deficit as of January 1, 2008. The effect of the correction is not material to CenterPoint
Energy’s previously issued financial statements and did not affect CenterPoint Energy’s results of operations or cash
flows. Included in Benefit Obligations in CenterPoint Energy’s Consolidated Balance Sheets at December 31, 2008
and 2009 was $16 million and $19 million, respectively, relating to split-dollar life insurance arrangements.
Change in Control Agreements and Other Employee Matters
CenterPoint Energy has agreements with certain of its officers that generally provide, to the extent applicable, in
the case of a change in control of CenterPoint Energy and termination of employment, for severance benefits of up
to three times annual base salary plus bonus, and other benefits. These agreements are for a one-year term with
automatic renewal unless action is taken by CenterPoint Energy’s board of directors prior to the renewal.
As of December 31, 2009, approximately 30% of CenterPoint Energy’s employees are subject to collective
bargaining agreements. One of the collective bargaining agreements covering approximately 14% of CenterPoint
Energy’s employees, the International Brotherhood of Electrical Workers Union Local No. 66, is scheduled to
expire in May 2010. CenterPoint Energy has a good relationship with this bargaining unit and expects to negotiate a
new agreement in 2010.
(3) Regulatory Matters
(a) Hurricane Ike
CenterPoint Houston’s electric delivery system suffered substantial damage as a result of Hurricane Ike, which
struck the upper Texas coast in September 2008.
As is common with electric utilities serving coastal regions, the poles, towers, wires, street lights and pole
mounted equipment that comprise CenterPoint Houston’s transmission and distribution system are not covered by
property insurance, but office buildings and warehouses and their contents and substations are covered by insurance