CenterPoint Energy 2012 Annual Report Download - page 32

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10
Other Operations
Our Other Operations business segment includes office buildings and other real estate used in our business operations and
other corporate operations that support all of our business operations.
Financial Information About Segments
For financial information about our segments, see Note 16 to our consolidated financial statements, which note is incorporated
herein by reference.
REGULATION
We are subject to regulation by various federal, state and local governmental agencies, including the regulations described
below.
Federal Energy Regulatory Commission
The FERC has jurisdiction under the Natural Gas Act and the Natural Gas Policy Act of 1978, as amended, to regulate the
transportation of natural gas in interstate commerce and natural gas sales for resale in interstate commerce that are not first sales.
The FERC regulates, among other things, the construction of pipeline and related facilities used in the transportation and storage
of natural gas in interstate commerce, including the extension, expansion or abandonment of these facilities. The rates charged by
interstate pipelines for interstate transportation and storage services are also regulated by the FERC. The FERC has authority to
prohibit market manipulation in connection with FERC-regulated transactions and to impose significant civil and criminal penalties
for statutory violations and violations of the FERC’s rules or orders. Our competitive natural gas sales and services subsidiary
markets natural gas in interstate commerce pursuant to blanket authority granted by the FERC.
CERC's natural gas pipeline subsidiaries may periodically file applications with the FERC for changes in their generally
available maximum rates and charges designed to allow them to recover their costs of providing service to customers (to the extent
allowed by prevailing market conditions), including a reasonable rate of return. These rates are normally allowed to become
effective after a suspension period and, in some cases, are subject to refund under applicable law until such time as the FERC
issues an order on the allowable level of rates.
CenterPoint Houston is not a “public utility” under the Federal Power Act and, therefore, is not generally regulated by the
FERC, although certain of its transactions are subject to limited FERC jurisdiction. The FERC has certain responsibilities with
respect to ensuring the reliability of electric transmission service, including transmission facilities owned by CenterPoint Houston
and other utilities within ERCOT. The FERC has designated the NERC as the Electric Reliability Organization (ERO) to promulgate
standards, under FERC oversight, for all owners, operators and users of the bulk power system (Electric Entities). The ERO and
the FERC have authority to (a) impose fines and other sanctions on Electric Entities that fail to comply with approved standards
and (b) audit compliance with approved standards. The FERC has approved the delegation by the NERC of authority for reliability
in ERCOT to the TRE. CenterPoint Houston does not anticipate that the reliability standards proposed by the NERC and approved
by the FERC will have a material adverse impact on its operations. To the extent that CenterPoint Houston is required to make
additional expenditures to comply with these standards, it is anticipated that CenterPoint Houston will seek to recover those costs
through the transmission charges that are imposed on all distribution service providers within ERCOT for electric transmission
provided.
As a public utility holding company, under the Public Utility Holding Company Act of 2005, we and our subsidiaries are
subject to reporting and accounting requirements and are required to maintain certain books and records and make them available
for review by the FERC and state regulatory authorities in certain circumstances.
State and Local Regulation
Electric Transmission & Distribution
CenterPoint Houston conducts its operations pursuant to a certificate of convenience and necessity issued by the Texas Utility
Commission that covers its present service area and facilities. The Texas Utility Commission and municipalities have the authority
to set the rates and terms of service provided by CenterPoint Houston under cost-of-service rate regulation. CenterPoint Houston
holds non-exclusive franchises from the incorporated municipalities in its service territory. In exchange for payment of fees, these
franchises give CenterPoint Houston the right to use the streets and public rights-of-way of these municipalities to construct,
operate and maintain its transmission and distribution system and to use that system to conduct its electric delivery business and