CenterPoint Energy 2013 Annual Report Download - page 128

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106
(a) Short-term Borrowings
Inventory Financing. Gas Operations has asset management agreements associated with its utility distribution service in
Arkansas, north Louisiana and Oklahoma that extend through 2015. Pursuant to the provisions of the agreements, Gas Operations
sells natural gas and agrees to repurchase an equivalent amount of natural gas during the winter heating seasons at the same cost,
plus a financing charge. These transactions are accounted for as a financing and they had an associated principal obligation of $43
million and $38 million as of December 31, 2013 and 2012, respectively.
(b) Long-term Debt
Debt Repayments. In March 2013, CenterPoint Energy Houston Electric, LLC (CenterPoint Houston) retired $450 million
aggregate principal amount of its 5.70% general mortgage bonds at their maturity.
In April 2013, CERC Corp. retired approximately $365 million aggregate principal amount of its 7.875% senior notes at their
maturity. The retirement of senior notes was financed by CERC Corp. with the issuance of commercial paper. In May 2013, CERC
Corp. applied proceeds from Enable’s May 1, 2013 debt repayment of $1.05 billion to the repayment of $357 million aggregate
principal amount of its commercial paper and to the May 31, 2013 redemption of $160 million aggregate principal amount of its
5.95% senior notes due January 15, 2014 at 103.419% of their aggregate principal amount.
On August 1, 2013, approximately $92 million aggregate principal amount of pollution control bonds issued on CenterPoint
Energy’s behalf were redeemed at 101% of their aggregate principal amount. These bonds had an interest rate of 4%, a maturity
date of August 1, 2015 and were collateralized by first mortgage bonds of CenterPoint Houston.
On October 15, 2013, approximately $59 million aggregate principal amount of pollution control bonds issued on CenterPoint
Energy’s behalf were redeemed at 101% of their aggregate principal amount. These bonds had an interest rate of 4%, a maturity
date of October 15, 2015 and were collateralized by first mortgage bonds of CenterPoint Houston.
In January 2014, approximately $44 million aggregate principal amount of pollution control bonds issued on behalf of
CenterPoint Houston were called for redemption on March 3, 2014 at 101% of their principal amount plus accrued interest. The
bonds have an interest rate of 4.25%, mature in 2017 and are collateralized by general mortgage bonds of CenterPoint Houston.
In February 2014, notice was given that approximately $56 million aggregate principal amount of pollution control bonds
issued on behalf of CenterPoint Houston must be tendered for purchase by CenterPoint Houston on March 3, 2014 at 101% of
their principal amount plus accrued interest pursuant to the mandatory tender provisions of the bonds. The bonds have an interest
rate of 5.60%, mature in 2027 and are collateralized by general mortgage bonds of CenterPoint Houston. The purchased pollution
control bonds may be remarketed.
Transition and System Restoration Bonds. As of December 31, 2013, CenterPoint Houston had four special purpose
subsidiaries consisting of transition and system restoration bond companies, which it consolidates. The consolidated special purpose
subsidiaries are wholly owned bankruptcy remote entities that were formed solely for the purpose of purchasing and owning
transition or system restoration property through the issuance of transition bonds or system restoration bonds and activities incidental
thereto. These transition bonds and system restoration bonds are payable only through the imposition and collection of “transition”
or “system restoration” charges, as defined in the Texas Public Utility Regulatory Act, which are irrevocable, non-bypassable
charges payable by most of CenterPoint Houston’s retail electric customers in order to provide recovery of authorized qualified
costs. CenterPoint Houston has no payment obligations in respect of the transition and system restoration bonds other than to
remit the applicable transition or system restoration charges it collects. Each special purpose entity is the sole owner of the right
to impose, collect and receive the applicable transition or system restoration charges securing the bonds issued by that entity.
Creditors of CenterPoint Energy or CenterPoint Houston have no recourse to any assets or revenues of the transition and system
restoration bond companies (including the transition and system restoration charges), and the holders of transition bonds or system
restoration bonds have no recourse to the assets or revenues of CenterPoint Energy or CenterPoint Houston.