CenterPoint Energy 2013 Annual Report Download - page 48

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Climate change legislation and regulatory initiatives could result in increased operating costs and reduced demand for our
services or Enable’s services.
The United States Congress has from time to time considered adopting legislation to reduce emissions of GHGs, and there
has been a wide-ranging policy debate, both nationally and internationally, regarding the impact of these gases and possible means
for their regulation. In addition, efforts have been made and continue to be made in the international community toward the
adoption of international treaties or protocols that would address global climate change issues, such as the United Nations Climate
Change Conference in Doha, Qatar in 2012. Following a finding by the EPA that certain GHGs represent an endangerment to
human health, the EPA adopted two sets of rules regulating GHG emissions under the Clean Air Act, one that requires a reduction
in emissions of GHGs from motor vehicles and another that regulates emissions of GHGs from certain large stationary sources.
In addition, the EPA expanded its existing GHG emissions reporting requirements to include upstream petroleum and natural gas
systems that emit 25,000 metric tons or more of CO2 equivalent per year. These permitting and reporting requirements could lead
to further regulation of GHGs by the EPA. As a distributor and transporter of natural gas, or a consumer of natural gas in its
pipeline and gathering businesses, CERC’s or Enable’s revenues, operating costs and capital requirements, as applicable, could
be adversely affected as a result of any regulatory action that would require installation of new control technologies or a modification
of its operations or would have the effect of reducing the consumption of natural gas. Our electric transmission and distribution
business, in contrast to some electric utilities, does not generate electricity and thus is not directly exposed to the risk of high
capital costs and regulatory uncertainties that face electric utilities that burn fossil fuels to generate electricity. Nevertheless,
CenterPoint Houston’s revenues could be adversely affected to the extent any resulting regulatory action has the effect of reducing
consumption of electricity by ultimate consumers within its service territory. Likewise, incentives to conserve energy or use energy
sources other than natural gas could result in a decrease in demand for our services.
Climate changes could result in more frequent and more severe weather events which could adversely affect the results of
operations of our businesses.
To the extent climate changes occur, our businesses may be adversely impacted, though we believe any such impacts are
likely to occur very gradually and hence would be difficult to quantify with specificity. To the extent global climate change results
in warmer temperatures in our service territories, financial results from our natural gas distribution businesses could be adversely
affected through lower gas sales, and our gas transmission and field services businesses could experience lower revenues. Another
possible climate change is more frequent and more severe weather events, such as hurricanes or tornadoes. Since many of our
facilities are located along or near the Gulf Coast, increased or more severe hurricanes or tornadoes could increase our costs to
repair damaged facilities and restore service to our customers. When we cannot deliver electricity or natural gas to customers or
our customers cannot receive our services, our financial results can be impacted by lost revenues, and we generally must seek
approval from regulators to recover restoration costs. To the extent we are unable to recover those costs, or if higher rates resulting
from our recovery of such costs result in reduced demand for our services, our future financial results may be adversely impacted.
Additional Risk Factors Affecting Our Interests in Enable Midstream Partners, LP
We hold a substantial limited partnership interest in Enable (58.3% of Enable’s outstanding limited partnership interests as
of December 31, 2013), as well as 50% of the management rights in Enable’s general partner and a 40% interest in the incentive
distribution rights held by Enable’s general partner. Accordingly, our future earnings, results of operations, cash flows and financial
condition will be affected by the performance of Enable, the amount of cash distributions we receive from Enable and the value
of our interests in Enable. Factors that may have a material impact on Enable’s performance and cash distributions, and the value
of our interests in Enable, include the risk factors outlined below, as well as the risks described elsewhere under “Risk Factors”
that are applicable to Enable.
Our cash flows will be adversely impacted if we receive less cash distributions from Enable than we currently expect.
Prior to an initial public offering of Enable, Enable is obligated to distribute 100% of its distributable cash (as such term is
defined in its partnership agreement) to its limited partners each fiscal quarter within 45 days following the end of the applicable
quarter. Following an initial public offering of Enable, (i) we expect that both CERC Corp. and OGE will hold their limited
partnership interests in Enable in the form of both common units and subordinated units, and (ii) Enable is expected to pay a
specified minimum quarterly distribution on its outstanding units to the extent it has sufficient cash from operations after
establishment of cash reserves and payment of fees and expenses, including payments to its general partner and its affiliates
(referred to as “available cash”). The principal difference between Enable’s common units and subordinated units is that in any
quarter during the applicable subordination period, holders of the subordinated units are not entitled to receive any distribution of
available cash until the common units have received the minimum quarterly distribution plus any arrearages in the payment of
the minimum quarterly distribution on common units from prior quarters. If Enable does not pay distributions on its subordinated
units, its subordinated units will not accrue arrearages for those unpaid distributions. Accordingly, if Enable is unable to pay its