CenterPoint Energy 2009 Annual Report Download - page 70

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offset by increased revenues from rate increases ($36 million) and lower bad debt expense ($15 million). Revenues
related to both energy-efficiency costs and gross receipts taxes are substantially offset by the related expenses.
Depreciation and amortization expense increased $4 million primarily due to higher plant balances. Taxes other
than income taxes, net of the decrease in gross receipts taxes ($16 million), increased $4 million also primarily due
to higher plant balances.
2008 Compared to 2007. Our Natural Gas Distribution business segment reported operating income of
$215 million for 2008 compared to $218 million for 2007. Operating income declined in 2008 due to a combination
of non-weather-related usage ($13 million), due in part to higher gas prices, higher customer-related and support
services costs ($9 million), higher bad debts and collection costs ($4 million), increased costs of materials and
supplies ($4 million), and an increase in depreciation and amortization and taxes other than income taxes
($3 million) resulting from increased investment in property, plant and equipment. The adverse impacts on operating
income were partially offset by the net impact of rate increases ($11 million), lower labor and benefits costs
($14 million), and customer growth from the addition of approximately 25,000 customers in 2008 ($6 million).
Competitive Natural Gas Sales and Services
The following table provides summary data of our Competitive Natural Gas Sales and Services business segment
for 2007, 2008 and 2009 (in millions, except throughput and customer data):
Year Ended December 31,
2007 2008 2009
Revenues .......................................................................................................... $ 3,579 $ 4,528 $ 2,230
Expenses:
N
atural gas .................................................................................................... 3,467 4,423 2,165
Operation and maintenance .......................................................................... 31 39 39
Depreciation and amortization ...................................................................... 5 3 4
Taxes other than income taxes ...................................................................... 1 1 1
Total expenses .......................................................................................... 3,504 4,466 2,209
Operating Income ............................................................................................ $ 75 $ 62 $ 21
Throu
g
hput (in Bcf) ......................................................................................... 522 528 504
N
umber of customers at end of perio
d
............................................................. 7,139 9,771 11,168
2009 Compared to 2008. Our Competitive Natural Gas Sales and Services business segment reported operating
income of $21 million for 2009 compared to $62 million for 2008. The decrease in operating income of $41 million
was due to the unfavorable impact of the mark-to-market valuation for non-trading financial derivatives for 2009 of
$23 million versus a favorable impact of $13 million for the same period in 2008. A further $28 million decrease in
margin is attributable to reduced basis spreads on pipeline transport opportunities and an absence of summer storage
spreads. These decreases in operating income were partially offset by a $6 million write-down of natural gas
inventory to the lower of cost or market for 2009 compared to a $30 million write-down in the same period last year.
Our Competitive Natural Gas Sales and Services business segment purchases and stores natural gas to meet certain
future sales requirements and enters into derivative contracts to hedge the economic value of the future sales.
2008 Compared to 2007. Our Competitive Natural Gas Sales and Services business segment reported operating
income of $62 million for the year ended December 31, 2008 compared to $75 million for the year ended December
31, 2007. The decrease in operating income in 2008 of $13 million primarily resulted from lower gains on sales of
gas from previously written down inventory ($24 million) and higher operation and maintenance costs ($6 million),
which were partially offset by improved margin as basis and summer/winter spreads increased ($12 million). In
addition, 2008 included a gain from mark-to-market accounting ($13 million) and a write-down of natural gas
inventory to the lower of average cost or market ($30 million), compared to a charge to income from mark-to-
market accounting for non-trading derivatives ($10 million) and a write-down of natural gas inventory to the lower
of average cost or market ($11 million) for 2007.