CenterPoint Energy 2012 Annual Report Download - page 13

Natural Gas Distribution
Our natural gas distribution business turned
in a solid year in 2012, despite lower natural
gas usage due to a warmer-than-usual winter.
Execution of our rate strategy, increased
operational efficiencies and reduced bad debt all
contributed to our success. As a result, operating
income was $226 million, equal to 2011. We also
added more than 22,000 customers, primarily in
the Houston and Minneapolis areas.
Last year, we raised our rates by $18 million,
the majority through annual rate adjustments,
including regulatory approval for a $6.2 million
annual base rateincrease in our East Texas/
Beaumont jurisdiction in the fourth quarter.
Low natural gas prices, reduced usage
andconsistent disconnection practices
contributed to decreasing our bad debt
expense by $7 million.
Value from Investments
Capital investments totaled $359 million,
anincrease of more than 20 percent from
the previous year. The majority of this
increase was spent on system modernization
and safety-related infrastructure, such as
replacing cast iron and bare steel pipe.
We made significant progress in the
deployment of our drive-by meter reading
technology, completing more than 1 million
installations in Houston and South Texas.
This technology not only enhances customer
satisfaction by eliminating the need to enter
yards to obtain monthly readings, it also
improves the productivity of our meter
readers by allowing a single employee in a
vehicle to read up to 10,000 meters per day.
To improve productivity and more eciently
serve our six-state territory, we opened a
122,000 square-foot facility in Houston. This
new building combines operations from
three leased facilities and includes space for
training, warehousing and other aspects of
our business.
Customer Service Vision
We remain committed to enhancing
ourcustomer self-service experience.
Inaddition to our online service
appointment scheduler and other self-
service tools, we introduced email and
text message reminders for bill due dates.
We also continued to provide energy usage
advice and conservation improvement
program rebates in Arkansas, Minnesota and
Oklahoma. These types of eorts helped us
achieve first-quartile rankings in both the
Midwest and South regions in the J.D. Power
and Associates annual gas utility residential
customer satisfaction study.
11
Q&A
Joe McGoldrick, Senior Vice President and
Division President, Gas Operations
Q Why is it important to improve the customer
experience?
A Emerging technologies and higher customer
expectations have changed our view of
customer service, and we are investing in
customer service technologies. These include
enhanced self-service options for our website
and phone system as well as our new option
of automated calls to customers when
service technicians are en route to the home.
Q What is the company doing to ensure its
natural gas infrastructure is safe and reliable?
A Safety and reliability are both priorities. We
continuously modernize our system by
replacing segments of pipe. We spend
millions of dollars annually to protect our
pipelines from corrosion and perform leak
surveys. To help the public identify
thepresence of a leak, we odorize the
natural gas in our pipelines. And we have a
comprehensive public awareness program
for customers who live near pipelines as well
as emergency responders, public ocials
and excavators. Our program exceeds the
federal public awareness requirements.
Q Explain your rate strategy and its success.
A We have been successful at implementing
innovative rate designs that separate
revenues from gas usage and recover much
of our incremental capital investment
through annual adjustments, allowing us to
earn our authorized rate of return. These
steps are consistent with our strategy to
move to more transparent and predictable
regulatory methods that rely on accounting
and auditing-based rate processes. This
promotes ecient regulation by reducing
thefrequency of rate cases and associated
expenses that are passed on to consumers.