CenterPoint Energy 2013 Annual Report Download - page 116

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Included in “Benefit Obligations” in the accompanying Consolidated Balance Sheets at December 31, 2013 and 2012 was
$30 million and $32 million, respectively, relating to postemployment obligations.
(e) Other Non-Qualified Plans
CenterPoint Energy has non-qualified deferred compensation plans that provide benefits payable to directors, officers and
certain key employees or their designated beneficiaries at specified future dates, upon termination, retirement or death. Benefit
payments are made from the general assets of CenterPoint Energy. CenterPoint Energy recorded benefit expense relating to these
plans of $5 million for each of the years in 2013, 2012 and 2011. Included in “Benefit Obligations” in the accompanying
Consolidated Balance Sheets at December 31, 2013 and 2012 was $64 million and $71 million, respectively, relating to deferred
compensation plans.
Included in Benefit Obligations in CenterPoint Energy’s Consolidated Balance Sheets at December 31, 2013 and 2012 was
$28 million and $29 million, respectively, relating to split-dollar life insurance arrangements.
(f) Change in Control Agreements and Other Employee Matters
CenterPoint Energy has agreements with certain of its officers that generally provide, to the extent applicable, in the case of
a change in control of CenterPoint Energy and termination of employment, for severance benefits of up to three times annual base
salary plus bonus, and other benefits. These agreements are for a one-year term with automatic renewal unless action is taken by
CenterPoint Energy’s board of directors prior to the renewal.
As of December 31, 2013, approximately 30% of CenterPoint Energy’s employees were subject to collective bargaining
agreements.
(7) Derivative Instruments
CenterPoint Energy is exposed to various market risks. These risks arise from transactions entered into in the normal course
of business. CenterPoint Energy utilizes derivative instruments such as physical forward contracts, swaps and options to mitigate
the impact of changes in commodity prices and weather on its operating results and cash flows.
(a) Non-Trading Activities
Derivative Instruments. CenterPoint Energy enters into certain derivative instruments to manage physical commodity price
risks and does not engage in proprietary or speculative commodity trading. These financial instruments do not qualify or are not
designated as cash flow or fair value hedges.
Weather Hedges. CenterPoint Energy has weather normalization or other rate mechanisms that mitigate the impact of weather
on its gas operations in Arkansas, Louisiana, Mississippi and Oklahoma. Gas operations in Texas and Minnesota and electric
operations in Texas do not have such mechanisms. As a result, fluctuations from normal weather may have a significant positive
or negative effect on Gas Operations’ results in Texas and Minnesota and on CenterPoint Houston’s results in its service territory.
In 2013 and 2012, CenterPoint Energy entered into heating-degree day swaps for certain Gas Operations jurisdictions to
mitigate the effect of fluctuations from normal weather on its results of operations and cash flows for the winter heating season.
In 2013, CenterPoint Energy also entered into a similar winter weather hedge for the CenterPoint Houston service territory. The
swaps are based on ten-year normal weather. During the years ended December 31, 2013, 2012 and 2011, CenterPoint Energy
recognized losses of $22 million, gains of $8 million and losses of less than $1 million, respectively, related to these swaps. Weather
hedge gains and losses are included in revenues in the Statements of Consolidated Income.