CenterPoint Energy 2011 Annual Report Download - page 9

This will ultimately create a more reliable and efficient grid to
better serve our customers.
Natural gas is one of the fastest growing fuels in the nation’s
energy mix. The abundance of this resource is undisputed
given the recent technological breakthroughs in developing
and producing natural gas from shale formations. Because it is
inherently cleaner than any other fossil fuel, the use of natural
gas in power generation as well as home and industrial use is
expected to increase in the years to come. Our various natural
gas segments are poised to be a part of this resurgence. The
regulated gas distribution business, which spans six states, is
ready to invest in new infrastructure. Not only are we building
to serve growing demand, but we are also accelerating the
replacement of aging pipelines.
Our midstream business, which includes interstate pipelines and
the field services unit, will compete for the infrastructure projects
that will be required to get the new sources of natural gas to
end-use consumers. In the near term, our interstate pipelines
will be focused on serving new power plant loads and industrial
customers located near our core system. It is unlikely that any
new, large interstate pipelines will be needed in our current
footprint over the next few years. However, we expect new laterals
and significant gathering and processing facilities will be required,
and we will actively pursue these new opportunities, both within
and outside the areas where we currently operate. Of course, our
competitive energy services business will be there to serve the
growing natural gas needs of commercial and industrial customers.
In short, we believe we have the financial strength, the right
assets, the right employees and the right capabilities to pursue
these strategic opportunities.
In January 2012, our Board of Directors raised our quarterly
dividend from 19.75 cents per share to 20.25 cents per share.
This marks the seventh consecutive year the CenterPoint Energy
dividend has been increased, showing the confidence the Board
has in our ability to deliver sustainable earnings and cash flow.
We hope you share this confidence.
Thank you for your continued support and investment in
CenterPoint Energy.
Our interstate pipelines business turned in a solid performance
last year. Operating income for 2011 was $248 million, compared
to $270 million in 2010. Our focus continues to be on pipeline
safety and integrity, maintaining and acquiring customers and
investing in state-of-the-art automation to more efficiently
manage our assets. Over the next five years, system maintenance
and pipeline integrity will require between $80 and $100 million
in capital annually, and we anticipate additional spending to meet
new environmental regulations.
In response to the growing needs of natural gas-fired power
plants connected to our system, we have developed swing-load
services. We have also implemented system control tools to
provide better service to our customers and capture new
business opportunities.
Thanks to our investment in new gathering systems in the
Fayetteville and Haynesville shales, operating income for our
field services business increased from $151 million in 2010
to $189 million in 2011. Total throughput increased nearly
30 percent with total gathered volumes rising to 2.6 Bcf
per day by year end, compared to 2.0 Bcf in 2010.
Now that we have substantially completed our planned gathering
systems in the Haynesville Shale, we are actively pursuing
opportunities both within and outside our traditional gathering
areas. With increased demand for natural gas expected in the
future, gas infrastructure development will likely be needed in a
number of existing and new producing regions.
Our competitive natural gas sales and services business
struggled in 2011. Operating income for the year was $6 million,
compared to $16 million in 2010. Very low seasonal and
geographic natural gas price differentials caused some of
our pipeline and storage contracts to be uneconomic. A number
of these contracts have expired or will terminate over the
next 12 to 18 months. Our principal focus remains on serving
commercial and industrial customers across our 21-state
footprint and improving the overall profitability of this business.
Pursuing Opportunities
We remain confident about our future. Our electric utility serves
one of the most attractive and vibrant service territories in the
nation. As the first major metropolitan area to recover from the
economic downturn, Houston should remain a leader in economic
growth and job creation. We are building the electric infrastructure
to meet these new demands while continuing to lead the nation in
the deployment of smart meters and intelligent grid technologies.
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Left to Right:
David M. McClanahan
President & CEO
Milton Carroll
Chairman
Milton Carroll
Chairman
David M. McClanahan
President & CEO