CenterPoint Energy 2010 Annual Report Download - page 99

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accounts to collateralize the bonds that were issued in these financing transactions. These restricted cash accounts
are not available for withdrawal until the maturity of the bonds and are not included in cash and cash equivalents.
These restricted cash accounts of $34 million and $39 million at December 31, 2009 and 2010, respectively, are
included in other current assets in CenterPoint Energy's Consolidated Balance Sheets. For additional information
regarding transition and system restoration bonds, see Notes 5(b) and 5(c). Cash and cash equivalents includes
$151 million and $198 million at December 31, 2009 and 2010, respectively, that is held by CenterPoint Energy’s
transition and system restoration bond subsidiaries solely to support servicing the transition and system restoration
bonds.
(o) New Accounting Pronouncements
In June 2009, the Financial Accounting Standards Board (FASB) issued new accounting guidance on
consolidation of variable interest entities (VIEs) that changes how a reporting entity determines a primary
beneficiary that would consolidate the VIE from a quantitative risk and rewards approach to a qualitative approach
based on which variable interest holder has the power to direct the economic performance related activities of the
VIE as well as the obligation to absorb losses or right to receive benefits that could potentially be significant to the
VIE. This new guidance requires the primary beneficiary assessment to be performed on an ongoing basis and also
requires enhanced disclosures that will provide more transparency about a company’s involvement in a VIE. This
new guidance was effective for a reporting entity’s first annual reporting period beginning after November 15,
2009. CenterPoint Energy’s adoption of this new guidance did not have a material impact on its financial position,
results of operations or cash flows. As of December 31, 2010, CenterPoint Energy has four VIEs consisting of
transition and system restoration bond companies which it consolidates. The consolidated VIEs are wholly-owned
bankruptcy remote special purpose entities that were formed specifically for the purpose of securitizing transition
and system restoration related property. Creditors of CenterPoint Energy have no recourse to any assets or revenues
of the transition and system restoration bond companies. The bonds issued by these VIEs are payable only from and
secured by transition and system restoration property and the bond holders have no recourse to the general credit of
CenterPoint Energy.
In January 2010, the FASB issued new accounting guidance to require additional fair value related disclosures. It
also clarified existing fair value disclosure guidance about the level of disaggregation and about inputs and valuation
techniques. This new guidance was effective for the first reporting period beginning after December 15, 2009 except
for certain disclosure requirements effective for the first reporting period beginning after December 15, 2010.
CenterPoint Energy's adoption of this new guidance did not have a material impact on its financial position, results
of operations or cash flows. See Note 8 for the required disclosures. CenterPoint Energy expects that the adoption of
certain disclosure requirements effective in 2011 will not have a material impact on its financial position, results of
operations or cash flows.
Management believes the impact of other recently issued standards, which are not yet effective, will not have a
material impact on CenterPoint Energy’s consolidated financial position, results of operations or cash flows upon
adoption.