CenterPoint Energy 2012 Annual Report Download - page 67

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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.
Regulatory Matters. Regulatory developments that have occurred since our 2011 Form 10-K was filed with the Securities
and Exchange Commission (SEC) are discussed below.
CenterPoint Houston
June 2010 Rate Case. The order on rehearing issued by the Public Utility Commission of Texas (Texas Utility Commission)
in connection with CenterPoint Houston's 2010 rate case was appealed to the Texas courts by various parties and a trial was
scheduled for December 2012. In December 2012, the parties entered into a settlement agreement prior to the trial dismissing all
material provisions of the appeals.
Other. In May 2012, CenterPoint Houston filed an application, subsequently modified consistent with the Texas Utility
Commission's preliminary order, requesting approval to recover a total of approximately $47.5 million in 2013 consisting of: (1)
estimated 2013 energy efficiency program costs of $42.9 million; (2) a credit of $1.8 million related to the over-recovery of 2011
program costs; (3) a performance incentive for 2011 program achievements of $6.3 million and (4) certain rate case expenses. In
October 2012, the Texas Utility Commission approved a settlement agreement filed by the parties to recover a total of $46.2
million. The $1.3 million reduction was attributable to settlement spending from CenterPoint Houston's 2006 rate settlement
included in the 2011 performance incentive calculation. The settlement preserves the right for CenterPoint Houston to appeal the
reduction in its requested performance bonus amount. The rates took effect with the commencement of CenterPoint Houston's
January 2013 billing month.
Gas Operations
Beaumont/East Texas Rate Case. In July 2012, the natural gas distribution business of CERC (Gas Operations) filed a general
rate case with the Railroad Commission of Texas (Railroad Commission) and certain municipalities requesting an increase of
approximately $8.6 million based on a proposed rate of return of 9.09%, a return on equity (ROE) of 11.00%, and a capital structure
with 42% debt and 58% equity. Rates went into effect in August 2012 for 24 cities. All other cities suspended the rates for up to
90 days or denied any increase outright. The Railroad Commission suspended the rates for the environs and for the cities that
have given up original jurisdiction for up to 150 days. On November 5, 2012, rates went into effect for another 13 cities. On
November 15, 2012, a Unanimous Settlement Agreement was signed by all parties and resolved all issues resulting in a net revenue
requirement increase of $6.2 million. On December 4, 2012, the Railroad Commission approved the Unanimous Settlement
Agreement of $6.2 million and rates went into effect on December 7, 2012. Beginning January 2, 2013, a rate case expense
surcharge of $0.16 was implemented and will only affect customers in the cities that gave up original jurisdictions and cities and
environs of all parties involved in the Unanimous Settlement Agreement. The rate case expense surcharge will continue over the
next 36 months or until all approved expenses are collected.
Mississippi Regulatory Rate Adjustment (RRA). In May 2012, Gas Operations and the Mississippi Public Utility Staff filed
a joint stipulation for the revised RRA and initial Weather Normalization Adjustment which the Mississippi Public Service
Commission (MPSC) approved in May 2012. In June 2012, Gas Operations requested an annual increase of approximately $2.2
million under the newly revised RRA based on calendar year 2011. New rates reflecting an increase of approximately $1.7 million,
as approved by the MPSC, took effect on September 20, 2012.
Minnesota Conservation Improvement Program (CIP). In May 2012, Gas Operations filed a request with the Minnesota
Public Utilities Commission (MPUC) for a $4.6 million CIP incentive. The MPUC approved the incentive in December 2012.
Oklahoma Performance Based Rate Change (PBRC). In March 2012, Gas Operations filed a PBRC with the Oklahoma
Corporation Commission (OCC) showing that it had earnings for 2011 above the prescribed threshold and would refund
approximately $1.9 million to customers beginning in July 2012. The OCC issued a final order approving the refund on June 6,
2012.
Houston and South Texas Gas Reliability Infrastructure Programs (GRIP). Gas Operations' Houston and South Texas Divisions
each submitted annual GRIP filings on March 30, 2012. For the Houston division, the filing was to recover costs related to $51.2
million in incremental capital expenditures that were incurred in 2011. The increase in revenue requirements for this filing period
was $9.4 million annually based on an authorized rate of return of 8.65%. For the South Texas division, the filing was to recover costs
related to $14.5 million in incremental capital expenditures that were incurred since the last rate case. The increase in revenue
requirements for this filing period was $2.4 million annually based on an authorized rate of return of 8.75%. In June 2012, the