CenterPoint Energy 2013 Annual Report Download - page 40

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and as President and Chief Operating Officer of CenterPoint Houston from August 2002 to June 2004. He served as President and
Chief Operating Officer for both electricity and natural gas for Reliant Energy’s Houston area from 1999 to August 2002.
Gary L. Whitlock has served as Executive Vice President and Chief Financial Officer of CenterPoint Energy since September
2002. He served as Executive Vice President and Chief Financial Officer of the Delivery Group of Reliant Energy from July 2001
to September 2002. Mr. Whitlock served as the Vice President, Finance and Chief Financial Officer of Dow AgroSciences, a
subsidiary of The Dow Chemical Company, from 1998 to 2001. He currently serves on the Board of Directors of KiOR, Inc.
Tracy B. Bridge has served as Executive Vice President and President, Electric Division since February 2014. He previously
served as Senior Vice President and Division President, Electric Operations from September 2012 to February 2014; as Senior
Vice President and Division President, Gas Distribution Operations from May 2011 to September 2012; as Division Senior Vice
President - Support Operations from February 2008 to May 2011; and as Division Vice President Regional Operations of CERC
from January 2007 to February 2008. He currently serves on the Board of Directors of the Greater Houston Chapter of the American
Red Cross.
Joseph B. McGoldrick has served as Executive Vice President and President, Gas Division since February 2014. He previously
served as Senior Vice President and Division President, Gas Operations from September 2012 to February 2014; as Senior Vice
President and Division President, Energy Services from May 2011 to September 2012, and as Division President, Gas Operations
from February 2007 to May 2011.
Item 1A. Risk Factors
We are a holding company that conducts all of our business operations through subsidiaries, primarily CenterPoint Houston
and CERC. We also own interests in Enable Midstream Partners, LP (Enable), a midstream partnership jointly controlled by CERC
Corp. and OGE. The following, along with any additional legal proceedings identified or incorporated by reference in Item 3 of
this report, summarizes the principal risk factors associated with the businesses conducted by our subsidiaries and our interests
in Enable:
Risk Factors Affecting Our Electric Transmission & Distribution Business
A substantial portion of CenterPoint Houston’s receivables is concentrated in a small number of REPs, and any delay or
default in payment could adversely affect CenterPoint Houston’s cash flows, financial condition and results of operations.
CenterPoint Houston’s receivables from the distribution of electricity are collected from REPs that supply the electricity
CenterPoint Houston distributes to their customers. As of December 31, 2013, CenterPoint Houston did business with
approximately 70 REPs. Adverse economic conditions, structural problems in the market served by ERCOT or financial difficulties
of one or more REPs could impair the ability of these REPs to pay for CenterPoint Houston’s services or could cause them to
delay such payments. CenterPoint Houston depends on these REPs to remit payments on a timely basis. Applicable regulatory
provisions require that customers be shifted to another REP or a provider of last resort if a REP cannot make timely payments.
Applicable Texas Utility Commission regulations significantly limit the extent to which CenterPoint Houston can apply normal
commercial terms or otherwise seek credit protection from firms desiring to provide retail electric service in its service territory,
and CenterPoint Houston thus remains at risk for payments not made prior to the shift to another REP or the provider of last resort.
The Texas Utility Commission revised its regulations in 2009 to (i) increase the financial qualifications required of REPs that
began selling power after January 1, 2009, and (ii) authorize utilities to defer bad debts resulting from defaults by REPs for recovery
in a future rate case. A significant portion of CenterPoint Houston’ s billed receivables from REPs are from affiliates of NRG, Just
Energy Group, Inc. (Just Energy Group) and Energy Future Holdings. CenterPoint Houston’s aggregate billed receivables balance
from REPs as of December 31, 2013 was $172 million. Approximately 38%, 8% and 8% of this amount was owed by affiliates
of NRG, Just Energy Group and Energy Future Holdings, respectively. In the fourth quarter of 2013, Energy Future Holdings
publicly disclosed that it had engaged in discussions with certain of its creditors with respect to the capital structure of Energy
Future Holdings and its affiliates, including the possibility of a restructuring transaction in bankruptcy. The disclosures do not
make clear whether those discussions included or addressed the capital structure of affiliates of Energy Future Holdings that are
REPs. Any delay or default in payment by REPs could adversely affect CenterPoint Houston’s cash flows, financial condition
and results of operations. If a REP were unable to meet its obligations, it could consider, among various options, restructuring
under the bankruptcy laws, in which event such REP might seek to avoid honoring its obligations, and claims might be made by
creditors involving payments CenterPoint Houston had received from such REP.