CenterPoint Energy 2015 Annual Report Download - page 18

Failuretocomplywiththeselawsandregulationsmaytriggeravarietyofadministrative,civilandcriminalenforcementmeasures,includingtheassessment
ofmonetarypenalties,theimpositionofremedialactionsandtheissuanceofordersenjoiningfutureoperations.Certainenvironmentalstatutesimposestrict,joint
and several liability for costs required to clean up and restore sites where hazardous substances have been stored, disposed or released. Moreover, it is not
uncommonforneighboringlandownersandotherthirdpartiestofileclaimsforpersonalinjuryandpropertydamageallegedlycausedbythereleaseofhazardous
substancesorotherwasteproductsintotheenvironment.
Therecenttrendinenvironmentalregulationhasbeentoplacemorerestrictionsandlimitationsonactivitiesthatmayaffecttheenvironment.Forexample,the
EnvironmentalProtectionAgency(EPA)hasalsoestablishedairemissioncontrolrequirementsfornaturalgasandNGLproduction,processingandtransportation
activities,whichmayaffectEnable’smidstreamoperations.TheseincludeNewSourcePerformanceStandardstoaddressemissionsofsulfurdioxideandvolatile
organiccompounds,andtheNationalEmissionStandardsforHazardousAirPollutants(NESHAPS)toaddresshazardousairpollutantsfrequentlyassociatedwith
naturalgasproductionandprocessingactivities. Therecanbenoassuranceastothe amountor timingof futureexpendituresforenvironmentalcompliance or
remediation,andactualfutureexpendituresmaybedifferentfromtheamountswecurrentlyanticipate.Wetrytoanticipatefutureregulatoryrequirementsthat
mightbeimposedandplanaccordinglytomaintaincompliancewithchangingenvironmentallawsandregulationsandtoensurethecostsofsuchcomplianceare
reasonable.
Basedoncurrentregulatoryrequirementsandinterpretations,wedonotbelievethatcompliancewithfederal,stateorlocalenvironmentallawsandregulations
willhaveamaterialadverseeffectonourbusiness,financialposition,resultsofoperationsorcashflows.Inaddition,webelievethatourcurrentenvironmental
remediationactivitieswillnotmateriallyinterruptordiminishouroperationalability.Wecannotassureyouthatfutureevents,suchaschangesinexistinglaws,
thepromulgationofnewlaws,orthedevelopmentordiscoveryofnewfactsorconditionswillnotcauseustoincursignificantcosts.Thefollowingisadiscussion
of material current environmental and safety laws and regulations that relate to our operations. We believe that we are in substantial compliance with these
environmentallawsandregulations.
Global Climate Change
ThereisincreasingattentionbeingpaidintheUnitedStatesandworldwidetotheissueofclimatechange.Asaresult,fromtimetotime,regulatoryagencies
haveconsideredthemodificationofexistinglawsorregulationsortheadoptionofnewlawsorregulationsaddressingtheemissionsofgreenhousegases(GHG)
onthestate,federal,orinternationallevel.Someoftheproposalswouldrequireindustrialsourcestomeetstringentnewstandardsthatwouldrequiresubstantial
reductionsinGHGemissions. CERC’s revenues, operating costs and capital requirements could be adversely affected as a result of any regulatory action that
wouldrequireinstallationofnewcontroltechnologiesoramodificationofitsoperationsorwouldhavetheeffectofreducingtheconsumptionofnaturalgas.Our
electrictransmissionanddistributionbusiness,incontrasttosomeelectricutilities,doesnotgenerateelectricityandthusisnotdirectlyexposedtotheriskofhigh
capital costs and regulatory uncertainties that face electric utilities that burn fossil fuels to generate electricity. Nevertheless, CenterPoint Houston’s revenues
couldbe adversely affected to theextentanyresulting regulatory action hastheeffectof reducing consumption ofelectricitybyultimate consumers within its
service territory. Likewise, incentives to conserve energy or use energy sources other than natural gas could result in a decrease in demand for our
services.Conversely,regulatoryactionsthateffectivelypromotetheconsumptionofnaturalgasbecauseofitsloweremissionscharacteristicswouldbeexpected
tobeneficiallyaffectCERCanditsnaturalgas-relatedbusinesses.Atthispointintime,however,itwouldbespeculativetotrytoquantifythemagnitudeofthe
impactsfrompossiblenewregulatoryactionsrelatedtoGHGemissions,eitherpositiveornegative,onourbusinesses.
Totheextentclimatechangesoccur,ourbusinessesmaybeadverselyimpacted,thoughwebelieveanysuchimpactsarelikelytooccurverygraduallyand
hencewouldbedifficulttoquantify.Totheextentglobalclimatechangeresultsinwarmertemperaturesinourserviceterritories,financialresultsfromournatural
gasdistributionbusinesscouldbeadverselyaffectedthroughlowergassales.Ontheotherhand,warmertemperaturesinourelectricserviceterritorymayincrease
ourrevenuesfromtransmissionanddistributionthroughincreaseddemandforelectricityforcooling.Anotherpossibleeffectofclimatechangeismorefrequent
andmoresevereweatherevents,suchashurricanesortornadoes.SincemanyofourfacilitiesarelocatedalongorneartheGulfCoast,increasedormoresevere
hurricanesortornadoescouldincreaseourcoststorepairdamagedfacilitiesandrestoreservicetoourcustomers.Whenwecannotdeliverelectricityornaturalgas
to customers, or our customers cannot receive ourservices, our financial results can be impacted by lost revenues, andwe generally must seek approval from
regulatorstorecoverrestorationcosts.Totheextentweare unabletorecoverthosecosts,orifhigherratesresultingfromourrecoveryofsuchcostsresultin
reduceddemandforourservices,ourfuturefinancialresultsmaybeadverselyimpacted.
14