CenterPoint Energy 2014 Annual Report Download - page 29

keeping, record access, employee training and reporting requirements related to affiliate transactions and reporting in the event of certain
downgrading of the utility’s credit rating.
These regulatory frameworks could have adverse effects on CERC’
s ability to conduct its utility operations, to finance its business and to
provide cost-
effective utility service. In addition, if more than one state adopts restrictions on similar activities, it may be difficult for CERC and
us to comply with competing regulatory requirements.
Risk Factors Affecting Our Interests in Enable Midstream Partners, LP
We hold a substantial limited partnership interest in Enable (55.4% of Enable’
s outstanding limited partnership interests as of December 31,
2014), 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, hence, 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.
Both CERC Corp. and OGE hold their limited partnership interests in Enable in the form of both common units and subordinated units.
Enable is expected to pay a minimum quarterly distribution of $0.2875 per unit, or $1.15 per unit on an annualized basis, 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 minimum quarterly
distribution, the amount of cash distributions we receive from Enable may be adversely affected. Enable may not have sufficient available cash
each quarter to enable it to pay the minimum quarterly distribution. The amount of cash Enable can distribute on its units will principally depend
upon the amount of cash it generates from its operations, which will fluctuate from quarter to quarter based on, among other things:
In addition, the actual amount of cash Enable will have available for distribution will depend on other factors, including:
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•
the fees and gross margins it realizes with respect to the volume of natural gas and crude oil that it handles;
•
the prices of, levels of production of, and demand for natural gas and crude oil;
•
the volume of natural gas and crude oil it gathers, compresses, treats, dehydrates, processes, fractionates, transports and stores;
•
the relationship among prices for natural gas, NGLs and crude oil;
•
cash calls and settlements of hedging positions;
•
margin requirements on open price risk management assets and liabilities;
•
the level of competition from other midstream energy companies;
•
adverse effects of governmental and environmental regulation;
•
the level of its operation and maintenance expenses and general and administrative costs; and
•
prevailing economic conditions.
•
the level and timing of its capital expenditures;
•
the cost of acquisitions;