CenterPoint Energy 2013 Annual Report Download - page 52

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Enable’s industry is highly competitive, and increased competitive pressure could adversely affect its results of operations
and distributable cash flow.
Enable competes with similar enterprises in its respective areas of operation. The principal elements of competition are rates,
terms of service and flexibility and reliability of service. Enable’s competitors include large crude oil, natural gas and petrochemical
companies that have greater financial resources and access to supplies of natural gas, NGLs and crude oil than Enable. Some of
these competitors may expand or construct gathering, processing, transportation and storage systems that would create additional
competition for the services Enable provides to its customers. Excess pipeline capacity in the regions served by Enable’s interstate
pipelines could also increase competition and adversely impact Enable’s ability to renew or enter into new contracts with respect
to its available capacity when existing contracts expire. In addition, Enable’s customers that are significant producers of natural
gas may develop their own gathering, processing, transportation and storage systems in lieu of using Enable’s systems. Enable’s
ability to renew or replace existing contracts with its customers at rates sufficient to maintain current revenues and cash flows
could be adversely affected by the activities of its competitors and customers. Further, natural gas utilized as a fuel competes with
other forms of energy available to end-users, including electricity, coal and liquid fuels. Increased demand for such forms of energy
at the expense of natural gas could lead to a reduction in demand for natural gas gathering, processing, transportation and
transportation services. All of these competitive pressures could adversely affect Enable’s results of operations and distributable
cash flow.
Enable may not be able to recover the costs of its substantial planned investment in capital improvements and additions, and
the actual cost of such improvements and additions may be significantly higher than it anticipates.
Enable’s business plan calls for extensive investment in capital improvements and additions. The construction of additions
or modifications to Enable’s existing systems, and the construction of new midstream assets, involves numerous regulatory,
environmental, political and legal uncertainties, many of which are beyond Enable’s control and may require the expenditure of
significant amounts of capital, which may exceed its estimates. These projects may not be completed at the planned cost, on
schedule or at all. The construction of new pipeline, gathering, treating, processing, compression or other facilities is subject to
construction cost overruns due to labor costs, costs of equipment and materials such as steel, labor shortages or weather or other
delays, inflation or other factors, which could be material. In addition, the construction of these facilities is typically subject to
the receipt of approvals and permits from various regulatory agencies. Those agencies may not approve the projects in a timely
manner, if at all, or may impose restrictions or conditions on the projects that could potentially prevent a project from proceeding,
lengthen its expected completion schedule and/or increase its anticipated cost. Moreover, Enable’ s revenues and cash flows may
not increase immediately upon the expenditure of funds on a particular project. For instance, if Enable expands an existing pipeline
or constructs a new pipeline, the construction may occur over an extended period of time, and Enable may not receive any material
increases in revenues or cash flows until the project is completed. In addition, Enable may construct facilities to capture anticipated
future growth in production in a region in which such growth does not materialize. As a result, the new facilities may not be able
to achieve Enable’s expected investment return, which could adversely affect its results of operations and its ability to make cash
distributions.
In connection with Enable’s capital investments, Enable may engage a third party to estimate potential reserves in areas to
be developed prior to constructing facilities in those areas. To the extent Enable relies on estimates of future production in deciding
to construct additions to its systems, those estimates may prove to be inaccurate due to numerous uncertainties inherent in estimating
future production. As a result, new facilities may not be able to attract sufficient throughput to achieve expected investment return,
which could adversely affect Enable’s results of operations and its ability to make cash distributions. In addition, the construction
of additions to existing gathering and transportation assets may require new rights-of-way prior to construction. Those rights-of-
way to connect new natural gas supplies to existing gathering lines may be unavailable and Enable may not be able to capitalize
on attractive expansion opportunities. Additionally, it may become more expensive to obtain new rights-of-way or to renew existing
rights-of-way. If the cost of renewing or obtaining new rights-of-way increases, Enable’ s results of operations and its ability to
make cash distributions could be adversely affected.
Natural gas, NGL and crude oil prices are volatile, and changes in these prices could adversely affect Enable’s results of
operations and its ability to make cash distributions.
Enable’s results of operations and its ability to make cash distributions could be negatively affected by adverse movements
in the prices of natural gas, NGLs and crude oil depending on factors that are beyond its control. These factors include demand
for these commodities, which fluctuates with changes in market and economic conditions and other factors, including the impact
of seasonality and weather, general economic conditions, the level of domestic and offshore natural gas production and consumption,
the availability of imported natural gas, LNG, NGLs and crude oil, actions taken by foreign natural gas and oil producing nations,
the availability of local, intrastate and interstate transportation systems, the availability and marketing of competitive fuels, the