CenterPoint Energy 2014 Annual Report Download - page 122

Uncertain Income Tax Positions . The following table reconciles the beginning and ending balance of CenterPoint Energy’
s unrecognized
tax benefits (expenses):
CenterPoint Energy reported no uncertain tax liability as of December 31, 2014 and expects no significant change to the uncertain tax
liability over the next twelve months ending December 31, 2015 to have a material impact on financial position, results of operations and cash
flows.
CenterPoint Energy recognizes interest and penalties as a component of income tax expense. CenterPoint Energy recognized $3 million
of
income tax expense, $3 million of income tax benefit and $7 million
of income tax benefit related to interest on income tax positions during
2014, 2013 and 2012, respectively. CenterPoint Energy had $5 million
of interest receivable on income tax positions accrued at December 31,
2013.
Tax Audits and Settlements.
Tax years through 2011 have been audited and settled with the IRS. The consolidated federal income tax
returns for the years 2012 and 2013 are currently under audit by the IRS. For 2014, CenterPoint Energy is a participant in the IRS’
s Compliance
Assurance Process. CenterPoint Energy has considered the effects of these examinations in its accrual for settled issues and liability for uncertain
income tax positions as of December 31, 2014.
(a) Natural Gas Supply Commitments
Natural gas supply commitments include natural gas contracts related to CenterPoint Energy’
s Natural Gas Distribution and Energy Services
business segments, which have various quantity requirements and durations, that are not classified as non-
trading derivative assets and liabilities
in CenterPoint Energy’s Consolidated Balance Sheets as of December 31, 2014 and 2013 as these contracts meet an exception as “
normal
purchases contracts”
or do not meet the definition of a derivative. Natural gas supply commitments also include natural gas transportation
contracts that do not meet the definition of a derivative. As of December 31, 2014
, minimum payment obligations for natural gas supply
commitments are approximately $696 million in 2015 , $605 million in 2016 , $551 million in 2017 , $507 million in 2018 , $255 million
in
2019 and $114 million after 2019 .
(b) Asset Management Agreements
NGD has asset management agreements (AMAs) associated with its utility distribution service in Arkansas, Louisiana, Mississippi,
Oklahoma and Texas. Generally, these AMAs are contracts between NGD and an asset manager that are intended to transfer the working capital
obligation and maximize the utilization of the assets. In these AMAs, NGD agreed to release transportation and storage capacity to other parties
to manage gas storage, supply and delivery arrangements for NGD and to use the released capacity for other purposes when it is not needed for
NGD. NGD is compensated by the asset manager through payments made over the life of the AMAs based in part on the results of the asset
optimization. NGD has an obligation to purchase its winter storage requirements that have been released to the asset manager under these
AMAs. The AMAs have varying terms, the longest of which expires in 2018.
112
December 31,
2014
2013 2012
(in millions)
Balance, beginning of year
$
—
$
(
23
)
$
51
Tax Positions related to prior years:
Reductions
—
(
1
)
(75
)
Tax Positions related to current year:
Settlements
—
24
1
Balance, end of year
$
—
$
—
$
(
23
)
(14)
Commitments and Contingencies