CenterPoint Energy 2013 Annual Report Download - page 50

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28
We may not realize the benefits we expect from our interests in Enable.
Enable may under-perform, causing our financial results to differ from our own or the investment community’ s expectations.
In addition, Enable may not be able to achieve anticipated operational and commercial synergies or realize expected growth
opportunities. The success of Enable will in part depend on its ability to integrate the operations of the businesses we contributed
to Enable with those contributed by OGE and ArcLight. The integration process may be complex, costly and time-consuming.
The potential difficulties of integrating the operations include, among others:
• implementing our business plan for the combined business;
• changes in applicable laws and regulations or conditions imposed by regulators;
• retaining key employees;
• operating risks inherent in the contributed businesses;
• realizing growth, revenue and expense targets; and
• unanticipated issues, costs, obligations and liabilities.
Although we jointly control Enable with OGE, we may have conflicts of interest with Enable that could subject us to claims
that we have breached our fiduciary duty to Enable and its unitholders.
CERC Corp. and OGE each own 50% of the management rights in Enable’s general partner, as well as limited partnership
interests in Enable, and interests in the incentive distribution rights held by Enable’s general partner. Conflicts of interest may
arise between us and Enable and its unitholders. In resolving these conflicts, we may favor our own interests and the interests of
our affiliates over the interests of Enable and its unitholders as long as the resolution does not conflict with Enable’s partnership
agreement. These circumstances could subject us to claims that, in favoring our own interests and those of our affiliates, we
breached a fiduciary duty to Enable or its unitholders.
Enable’s contracts are subject to renewal risks.
Enable generates a substantial portion of its gross margins under long-term, fee-based agreements. As these and other contracts
expire, Enable may have to negotiate extensions or renewals with existing suppliers and customers or enter into new contracts
with other suppliers and customers. Enable may be unable to obtain new contracts on favorable commercial terms, if at all. It also
may be unable to maintain the economic structure of a particular contract with an existing customer or the overall mix of its
contract portfolio. For example, depending on prevailing market conditions at the time of a contract renewal, gathering and
processing customers with fixed-fee or fixed-margin contracts may desire to enter into contracts under different fee arrangements.
To the extent Enable is unable to renew its existing contracts on terms that are favorable to it, if at all, or successfully manage its
overall contract mix over time, its revenue, results of operations and distributable cash flow could be adversely affected.
Enable depends on a small number of customers for a significant portion of its firm transportation and storage services
revenues. The loss of, or reduction in volumes from, these customers could result in a decline in sales of its transportation and
storage services and its consolidated financial position, results of operations and its ability to make cash distributions.
Enable provides firm transportation and storage services to certain key customers on its system. Its major transportation
customers are affiliates of CenterPoint Energy, Laclede Group (Laclede), OGE, American Electric Power Company, Inc. (AEP)
and Exxon Mobil Corporation (Exxon). Enable’s interstate transportation and storage assets were designed and built to serve
affiliates of CenterPoint Energy, Laclede, OGE and AEP.
Enable-Mississippi River Transmission, LLC’s (MRT) firm transportation and storage contracts with Laclede are scheduled
to expire in 2015 and 2016. The primary terms of Enable Gas Transmission, LLC’s (EGT) firm transportation and storage contracts
with CERC’s natural gas distribution business will expire in 2018.
Enable’s firm transportation contract with an affiliate of AEP expires January 1, 2015 and will remain in effect from year to
year thereafter unless either party provides written notice of termination to the other party at least 180 days prior to the
commencement of the succeeding annual period. The stated term of the OG&E transportation and storage contract expired April
30, 2009, but the contract remained in effect from year to year thereafter. On January 31, 2014, OG&E provided written notice
of termination of the contract, effective April 30, 2014. Negotiations regarding the new contract are ongoing, and there can be no