CenterPoint Energy 2010 Annual Report Download - page 41

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conservation improvement plan (CIP) recovery rate from $9.7 million to $23.2 million annually. In addition, the
MPUC approved a $1.4 million incentive based on Gas Operations’ 2009 CIP program.
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 2002 Act,
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 2006 Act, the Pipeline and Hazardous Materials Safety Administration (PHMSA) at the
Department of Transportation (DOT) issued regulations, effective February 12, 2010, requiring operators of gas
distribution pipelines to develop and implement integrity management programs similar to those required for gas
transmission pipelines, but tailored to reflect the differences in distribution pipelines. Operators of gas distribution
systems must write and implement their integrity management programs by August 2, 2011. CERC’s natural gas
distribution companies are on schedule to meet this deadline.
Pursuant to the 2002 Act and the 2006 Act, PHMSA 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. PHMSA has also updated its reporting
requirements for natural gas pipelines effective January 1, 2011.
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.
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 and distribution systems, 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 environmental conditions caused by our operations or attributable to
former operations;
• enjoining the operations of facilities deemed in non-compliance with permits issued pursuant to such
environmental laws and regulations; and
• impacting the demand for our services by directly or indirectly affecting the use or price of natural gas, or
the ability to extract natural gas in areas we serve in our interstate pipelines and field services businesses.
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;