CenterPoint Energy 2010 Annual Report Download - page 62

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40
Competitive Natural Gas Sales and Services
CERC’s operations also include non-rate regulated retail and wholesale natural gas sales to, and transportation
services for, commercial and industrial customers in 23 states in the central and eastern regions of the United States.
Interstate Pipelines
CERC’s interstate pipelines business owns and operates approximately 8,000 miles of natural gas transmission
lines primarily located in Arkansas, Illinois, Louisiana, Missouri, Oklahoma and Texas. It also owns and operates
six natural gas storage fields with a combined daily deliverability of approximately 1.3 billion cubic feet (Bcf) and a
combined working gas capacity of approximately 59 Bcf. It also owns a 50% interest in Southeast Supply Header,
LLC (SESH). SESH owns a 1.0 Bcf per day, 274-mile interstate pipeline that runs from the Perryville Hub in
Louisiana to Coden, Alabama. Most storage operations are in north Louisiana and Oklahoma.
Field Services
CERC’s field services business owns and operates approximately 3,800 miles of gathering pipelines and
processing plants that collect, treat and process natural gas primarily from three regions located in major producing
fields in Arkansas, Louisiana, Oklahoma and Texas. It also owns a 50% general partnership interest in Waskom Gas
Processing Company (Waskom). Waskom owns a natural gas processing plant and natural gas gathering assets
located in East Texas. The plant is capable of processing approximately 285 million cubic feet (MMcf) per day of
natural gas. The gathering assets are capable of gathering approximately 75 MMcf per day of natural gas.
Other Operations
Our other operations business segment includes office buildings and other real estate used in our business
operations and other corporate operations which support all of our business operations.
EXECUTIVE SUMMARY
Factors Influencing Our Business
We are an energy delivery company. The majority of our revenues are generated from the gathering, processing,
transportation and sale of natural gas and the transportation and delivery of electricity by our subsidiaries. We do not
own or operate electric generating facilities or make retail sales to end-use electric customers. To assess our
financial performance, our management primarily monitors operating income and cash flows from our five business
segments. Within these broader financial measures, we monitor margins, operation and maintenance expense,
interest expense, capital spending and working capital requirements. In addition to these financial measures we also
monitor a number of variables that management considers important to the operation of our business segments,
including the number of customers, throughput, use per customer, commodity prices and heating and cooling degree
days. We also monitor system reliability, safety factors and customer satisfaction to gauge our performance.
To the extent adverse economic conditions affect our suppliers and customers, results from our energy delivery
businesses may suffer. Reduced demand and lower energy prices could lead to financial pressure on some of our
customers who operate within the energy industry. Also, adverse economic conditions, coupled with concerns for
protecting the environment, may cause consumers to use less energy or avoid expansions of their facilities, resulting
in less demand for our services.
Performance of our Electric Transmission & Distribution and Natural Gas Distribution business segments is
significantly influenced by the number of customers and energy usage per customer. Weather conditions can have a
significant impact on energy usage, and we compare our results on a weather adjusted basis. During 2009 and
continuing into 2010, we saw evidence that customers are seeking to reduce their energy consumption, particularly
during periods of high energy prices or in times of economic distress. That conservation can have adverse effects on
our results. In many of our service areas, particularly in the Houston area and in Minnesota, we have benefited from
customer growth that tends to mitigate the effects of reduced consumption. We anticipate that this growth will
continue despite recent economic downturns, though that growth may be lower than we have recently experienced in