CenterPoint Energy 2012 Annual Report Download - page 90

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specifically the prospects for continued low geographic and seasonal price differentials for natural gas, led to a reduction in the
estimate of the fair value of goodwill associated with this reporting unit.
(5) Regulatory Matters
(a) Regulatory Assets and Liabilities
The following is a list of regulatory assets/liabilities reflected on CenterPoint Energy’s Consolidated Balance Sheets as of
December 31, 2011 and 2012:
December 31,
2011 2012
(in millions)
Securitized regulatory assets....................................................................................................... $ 2,289 $ 3,545
True-up Settlement (1)................................................................................................................ 1,684 —
Unrecognized equity return (2)................................................................................................... (600)(553)
Unamortized loss on reacquired debt ......................................................................................... 56 119
Pension and postretirement-related regulatory asset (3)............................................................. 975 1,021
Other long-term regulatory assets (4)......................................................................................... 215 192
Total regulatory assets......................................................................................................... 4,619 4,324
Estimated removal costs ............................................................................................................. 912 919
Other long-term regulatory liabilities......................................................................................... 127 174
Total regulatory liabilities.................................................................................................... 1,039 1,093
Total regulatory assets and liabilities, net............................................................................ $ 3,580 $ 3,231
(1) In accordance with a final order from the Public Utility Commission of Texas, (Texas Utility Commission), the true-up
settlement as of December 31, 2011 was not earning a return. The regulatory asset was securitized in January 2012 as a
result of the issuance of the transition bonds described below in Note 5(b).
(2) As of December 31, 2012, CenterPoint Energy has not recognized an allowed equity return of $553 million because such
return will be recognized as it is recovered in rates. During the years ended December 31, 2010, 2011 and 2012, CenterPoint
Houston recognized approximately $16 million, $21 million and $47 million, respectively, of the allowed equity return.
(3) CenterPoint Houston’s actuarially determined pension and other postemployment expense in excess of the amount being
recovered through rates is being deferred for rate making purposes and was addressed in its 2010 rate application pursuant
to Texas law. Deferred pension and other postemployment expenses of $16 million and $14 million as of December 31,
2011 and 2012, respectively, were not earning a return.
(4) Other regulatory assets that are not earning a return were not material as of December 31, 2011 and 2012.
(b) Resolution of True-Up Appeal
In March 2004, CenterPoint Houston filed a true-up application with the Texas Utility Commission requesting recovery of
$3.7 billion, excluding interest, as allowed under the Texas Electric Choice Plan. In December 2004, the Texas Utility Commission
issued its final order (True-Up Order) allowing CenterPoint Houston to recover a true-up balance of approximately $2.3 billion,
which included interest through August 31, 2004, and provided for adjustment of the amount to be recovered to include interest
on the balance until recovery, along with the principal portion of additional excess mitigation credits returned to customers after
August 31, 2004 and certain other adjustments. To reflect the impact of the True-Up Order, in 2004 and 2005, CenterPoint Energy
recorded a net after-tax extraordinary loss of $947 million.
Various parties, including CenterPoint Houston, appealed the True-Up Order. These appeals were heard first by a district
court in Travis County, Texas, then by the Texas Third Court of Appeals and finally by the Texas Supreme Court. In March 2011,
the Texas Supreme Court issued a unanimous ruling on such appeals in which it affirmed in part and reversed in part the decision