CenterPoint Energy 2010 Annual Report Download - page 134

112
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. CERC and CenterPoint Energy do not expect the ultimate outcome to have a material adverse
impact on the financial condition, results of operations or cash flows of either CenterPoint Energy or CERC.
Asbestos. Some facilities owned by CenterPoint Energy contain or have contained asbestos insulation and other
asbestos-containing materials. CenterPoint Energy 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 CenterPoint Energy, but most existing claims relate to facilities
previously owned by CenterPoint Energy’s subsidiaries. CenterPoint Energy anticipates that additional claims like
those received may be asserted in the future. In 2004, CenterPoint Energy 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 CenterPoint Energy 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 CenterPoint Energy has agreed to continue to defend such claims to the extent they
are covered by insurance maintained by CenterPoint Energy, subject to reimbursement of the costs of such defense
from NRG Texas LP. Although their ultimate outcome cannot be predicted at this time, CenterPoint Energy 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
CenterPoint Energy’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, is expected to resolve this litigation. CenterPoint Energy 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 CenterPoint Energy or CERC.
Other Environmental. From time to time CenterPoint Energy 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, CenterPoint Energy 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,
CenterPoint Energy does not expect, based on its experience to date, these matters, either individually or in the
aggregate, to have a material adverse effect on CenterPoint Energy’s financial condition, results of operations or
cash flows.
Other Proceedings
CenterPoint Energy 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. CenterPoint Energy regularly analyzes current
information and, as necessary, provides accruals for probable liabilities on the eventual disposition of these matters.
CenterPoint Energy does not expect the disposition of these matters to have a material adverse effect on CenterPoint
Energy’s financial condition, results of operations or cash flows.
(g) Guaranties
Prior to the distribution of CenterPoint Energy’s ownership in RRI to its shareholders, CERC had guaranteed
certain contractual obligations of what became RRI’s trading subsidiary. When the companies separated, RRI
agreed to secure CERC against obligations under the guaranties RRI had been unable to extinguish by the time of
separation. Pursuant to such agreement, as amended in December 2007, RRI (now GenOn) agreed to provide to
CERC cash or letters of credit as security against CERC’s obligations under its remaining guaranties for demand