CenterPoint Energy 2012 Annual Report Download - page 115

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In addition to the Minnesota sites, the United States Environmental Protection Agency and other regulators have investigated
MGP sites that were owned or operated by CERC or may have been owned by one of its former affiliates. CERC and CenterPoint
Energy do not expect the ultimate outcome of these investigations will 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 subsidiaries of 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 and early 2005, CenterPoint Energy sold its generating business, to which most of these claims relate, to a company which
is now an affiliate of NRG. Under the terms of the arrangements regarding separation of the generating business from CenterPoint
Energy and its sale of that business, ultimate financial responsibility for uninsured losses from claims relating to the generating
business has been assumed by the NRG affiliate, 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 by the
NRG affiliate. 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, based on its experience to date, does not expect 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 Environmental. From time to time CenterPoint Energy identifies the presence of environmental contaminants on property
where its subsidiaries conduct or have conducted operations. Other such sites involving contaminants may be identified in the
future. CenterPoint Energy has and expects to continue to remediate identified sites consistent with its legal obligations. 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 charges under certain gas transportation agreements if and to the extent
changes in market conditions expose CERC to a risk of loss on those guaranties based on an annual calculation, with any required
collateral to be posted each December. The undiscounted maximum potential payout of the demand charges under these
transportation contracts, which will be in effect until 2018, was approximately $73 million as of December 31, 2012. Based on
market conditions in the fourth quarter of 2012 at the time the most recent annual calculation was made under the agreement,
GenOn was not obligated to post any security. As a result, CenterPoint Energy returned to GenOn in the fourth quarter of 2012
the approximately $28 million of aggregate collateral previously posted by GenOn under the agreement. If GenOn should fail to
perform the contractual obligations, CERC could have to honor its guarantee and, in such event, any collateral then provided as
security may be insufficient to satisfy CERC’s obligations.