CenterPoint Energy 2015 Annual Report Download - page 111

CenterPointEnergy’smaximumexposuretolossrelatedtoEnable,aVIEinwhichCenterPointEnergyisnottheprimarybeneficiary,islimitedtoitsequity
investmentaspresentedintheConsolidatedBalanceSheetasofDecember31,2015,CERCCorp.’sguaranteeofcollectionofEnable’s$1.1billionseniornotes
due 2019 and 2024 (Guaranteed Senior Notes) and other guarantees discussed in Note 14, and outstanding current accounts receivable from Enable. As of
December31,2015,certainoftheentitiescontributedtoEnablebyCERCCorp.wereobligatedonapproximately$363millionofnotesowedtoawholly-owned
subsidiaryofCERCCorp.,whichboreinterestatanannualrateof2.10%to2.45%.Enableredeemedsuchnotesscheduledtomaturein2017inconnectionwith
theprivateplacementdiscussedfurtherinNote18.CenterPointEnergyrecordedinterestincomeof$8millionduringboththeyearendedDecember31,2015and
2014,andhadinterestreceivablefromEnableof$4millionasofbothDecember31,2015and2014,onitsnotesreceivablefromEnable.
EffectiveontheClosingDate,CenterPointEnergyandEnableenteredintoaServicesAgreement,EmployeeTransitionAgreement,TransitionalSeconding
Agreement and other agreements (Transition Agreements). Under the Services Agreement, CenterPoint Energy agreed to provide certain support services to
Enablesuchasaccounting,legal,riskmanagementandtreasuryfunctionsforaninitial termendingonApril30,2016,after whichsuchservicescontinueona
year-to-year basis unless terminated by Enable with at least 90days’ notice.  CenterPoint Energy expects to provide certain services to Enable following the
completionoftheinitialterm.
CenterPointEnergyprovidedsecondedemployeestoEnabletosupportitsoperationsforatermendingonDecember31,2014.Enable,atitsdiscretion,had
therighttoselectandofferemploymenttosecondedemployeesfromCenterPointEnergy.Duringthefourthquarterof2014,EnablenotifiedCenterPointEnergy
thatitselectedsecondedemployeesandprovidedemploymentofferstosubstantiallyallofthesecondedemployeesfromCenterPointEnergy.Substantiallyallof
thesecondedemployeesbecameemployeesofEnableeffectiveJanuary1,2015.SeeNote6foradditionalinformation.
OnApril16,2014,Enablecompleteditsinitialpublicoffering(IPO)of28,750,000commonunits,atapriceof$20.00perunit,whichincluded3,750,000
commonunitssoldbyArcLightpursuanttoanover-allotmentoptionthatwasfullyexercisedbytheunderwriters.Enablereceived$464millioninnetproceeds
fromthesaleoftheunits,afterdeductingunderwritingfees,structuringfeesandotherofferingcosts.InconnectionwithEnable’sIPO,aportionofCenterPoint
Energy’scommonunitswereconvertedintosubordinatedunits,asdiscussedfurtherbelow.SubsequenttotheIPO,Enablecontinuestobecontrolledjointlyby
CenterPointEnergyandOGE.
As a result of Enable’s IPO, CenterPoint Energy’s limited partner interest in Enable was reduced from approximately 58.3% to approximately 54.7% .
CenterPointEnergyaccountedforthedilutionofitsinvestmentinEnableasaresultofEnable’sIPOasafailedpartialsaleofin-substancerealestate.CenterPoint
EnergydidnotreceiveanycashfromEnable’sIPOand,assuch,CenterPointEnergydidnotrecognizeagainorloss.CenterPointEnergy’sbasisdifferencein
EnablewasreducedfortheimpactoftheEnableIPO.
InaccordancewiththeEnableformationagreements,CenterPointEnergyhadcertainputrights,andEnablehadcertaincallrights,exercisablewithrespectto
the25.05%interest in Southeast Supply Header, LLC (SESH) retained by CenterPoint Energy on the Closing Date, under which CenterPoint Energy would
contributeitsretainedinterestinSESH,inexchangeforaspecifiednumberoflimitedpartnercommonunitsinEnableandacashpayment,payableeitherfrom
CenterPointEnergytoEnableorfromEnabletoCenterPointEnergy,totheextentofchangesinthevalueofSESHsubjecttocertainrestrictions.Specifically,the
rightswereexercisablewithrespectto(1)a24.95%interestinSESH,whichclosedonMay30,2014and(2)a0.1%interestinSESH,whichclosedonJune30,
2015.
CenterPointEnergybilledEnableforreimbursementoftransitionservices,includingthecostsofsecondedemployees,$16millionand$163millionduring
theyearsendedDecember31,2015and2014,respectively,undertheTransitionAgreements.Actualtransitionservicescostsarerecordednetofreimbursements
receivedfromEnable.CenterPointEnergyhadaccountsreceivablefromEnableof$3millionand$28millionasofDecember31,2015and2014,respectively,
foramountsbilledfortransitionservices,includingthecostofsecondedemployees.
CenterPoint Energy incurred natural gas expenses, including transportation and storage costs, of $117 million and $130 million during the year ended
December31,2015and2014,respectively,fortransactionswithEnable.CenterPointEnergyhadaccountspayabletoEnableof$11millionand$23millionat
December31,2015and2014,respectively,fromsuchtransactions.
AsofDecember31,2015 , CenterPointEnergyheld an approximate55.4%limitedpartnerinterest inEnableconsisting of94,151,707commonunitsand
139,704,916subordinatedunits.AsofDecember31,2015,CenterPointEnergyandOGEeachowna50%managementinterestinthegeneralpartnerofEnable
anda40%and60%interest,respectively,intheincentivedistributionrightsheldbythegeneralpartner.
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