![]() The Benefits of a Balanced Electric & Natural Gas Portfolio NYSE: CNP www.CenterPointEnergy.com Full Year 2011 Earnings Supplemental Materials February 29, 2012 Exhibit 99.2 |
![]() February 29, 2012 2 Full Year 2011 Earnings Cautionary Statement Regarding Forward-Looking Information This presentation contains statements concerning our expectations, beliefs, plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements that are not historical facts. These statements are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those expressed or implied by these statements. You can generally identify our forward-looking statements by the words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “may,” “objective,” “plan,” “potential,” “predict,” “projection,” “should,” “will,” or other similar words. We have based our forward-looking statements on our management's beliefs and assumptions based on information currently available to our management at the time the statements are made. We caution you that assumptions, beliefs, expectations, intentions, and projections about future events may and often do vary materially from actual results. Therefore, we cannot assure you that actual results will not differ materially from those expressed or implied by our forward-looking statements. Some of the factors that could cause actual results to differ from those expressed or implied by our forward- looking statements include the timing and impact of future regulatory, legislative and IRS decisions, financial market conditions, future market conditions, and other factors described in CenterPoint Energy, Inc.’s Form 10-K for the period ended December 31, 2011, under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Certain Factors Affecting Future Earnings”, and in other filings with the SEC by CenterPoint Energy. You should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of this presentation, and we undertake no obligation to publicly update or revise any forward- looking statements except as required by law. |
![]() Full Year 2011 Operating Income Drivers 12 months ended December 31, 2011 Interstate Pipelines $(22) Field Services $38 Other $(8) Competitive Natural Gas Sales & Service $(10) + Customer growth + Lower bad debt expense + Rate increases ¯ Higher benefit costs ¯ Lower miscellaneous revenues ¯ Other, primarily higher expenses + New firm transportation contracts and higher ancillary services ¯ Restructured contracts with natural gas distribution affiliates ¯ Lower off- system revenues due to declining basis ¯ Expiring Carthage to Perryville pipeline backhaul contract Natural Gas Distribution $(5) Electric TDU $69 + Higher throughput in Haynesville and Fayetteville shales ¯ 2010 gain on sale of non- strategic assets ¯ Lower commodity prices ¯ Higher O&M, depreciation, and other taxes due to Magnolia and Olympia expansion + Increased usage, primarily weather + Customer growth + Lower D&A + Higher net TCOS ¯ Rate case impact ¯ Other, primarily higher O&M + Higher mark-to- market in 2011 versus 2010 ¯ Lower optimization opportunities around pipeline and storage assets ¯ Release of transportation capacity ¯ Higher inventory write- down in in 2011 versus 2010 $1,109 $1,171 (in millions) 2010 2011 Total Operating Income $1,249 Total Operating Income $1,298 Securitization Bonds $140 Securitization Bonds $127 February 29, 2012 3 Full Year 2011 Earnings |
![]() Electric Transmission & Distribution 2011 Operating Income Drivers Increased usage, primarily weather Customer growth Other, primarily higher O&M and lower misc. revenues Lower depreciation expense * Excludes operating income from transition and system restoration bonds of $140 million and $127 million for 2010 and 2011, respectively (in millions) 42% Percentage of adjusted operating income which excludes $127 million of securitization bonds 2010 2011 Higher net TCOS Rate case impact February 29, 2012 4 Full Year 2011 Earnings |
![]() Electric Transmission & Distribution Operating Income Note: Results exclude operating income from the Transition and System Restoration Bond Companies, the Competition Transition Charge and the Final Fuel Reconciliation (see reconciliation on page 28). (in millions) February 29, 2012 5 Full Year 2011 Earnings |
![]() Electric Transmission & Distribution Capital Expenditures (in millions) February 29, 2012 6 Full Year 2011 Earnings |
![]() February 29, 2012 7 Full Year 2011 Earnings Electric Transmission & Distribution Innovative Rate Mechanisms Recovery mechanisms reduce rate case frequency and allow more timely recovery of and on investments Interim Transmission Cost of Service (TCOS) Adjustment Transmission Cost Recovery Factor (TCRF) Distribution Cost Recovery Factor (DCRF) Other Mechanisms – ERCOT transmission service providers (TSPs) charge distribution service providers (DSPs) the cost of transmission investment – Allows CEHE to make a filing up to two times per year to update its TCOS to recover a return of and on transmission related plant investments – CEHE is allowed to request rate increases twice a year to recover increased transmission costs from other TSPs – Additionally, CEHE is allowed to defer, until its next TCRF update, any increase in expense from other TSPs – In September 2011, the PUC approved a periodic rate adjustment mechanism that mitigates regulatory lag for distribution capital investment – Allows CEHE to file to update its rates each year effective September 1 to recover a return of and on new distribution related plant investment (net of changes in distribution related accumulated deferred federal income tax) – No DCRF adjustment if the annual earnings monitoring report shows a utility is earning more than its authorized rate of return on a weather normalized basis – Deferral of Pension Costs – allows a utility to defer the excess pension and other postemployment benefits costs over the amount that was approved in the utility’s last general rate proceeding – Deferral of Bad Debt – authorizes utility to defer bad debts resulting from defaults by REPs for recovery in a future rate case – Energy Efficiency Cost Recovery Factor (EECRF) – recovery of certain energy efficiency program costs – Advanced Metering System (AMS) Surcharge – continues until December 2014 for residential customers and until April 2017 for commercial and industrial customers |
![]() Natural Gas Distribution 2011 Operating Income Drivers Higher benefit costs (in millions) 19% 2010 2011 Lower misc. revenues Other, primarily higher expenses Customer growth Lower bad debt expense Rate increases Percentage of adjusted operating income which excludes $127 million of securitization bonds February 29, 2012 8 Full Year 2011 Earnings |
![]() Earned at or near authorized return on equity over last two years Natural Gas Distribution Operating Income (in millions) February 29, 2012 9 Full Year 2011 Earnings |
![]() Natural Gas Distribution Capital Expenditures Increased capital investments primarily for infrastructure, safety and technology will drive 6 percent growth in rate base (in millions) February 29, 2012 10 Full Year 2011 Earnings |
![]() Natural Gas Distribution Innovative Rate Mechanisms Rate mechanisms reduce rate case frequency and decouple revenues from consumption February 29, 2012 11 Full Year 2011 Earnings |
![]() Interstate Pipelines 2011 Operating Income Drivers Restructured contracts with natural gas distribution affiliates (in millions) 21% 2010 2011 Lower off- system revenues due to declining basis Expiring Carthage to Perryville pipeline backhaul contract New firm transportation contracts and higher ancillary revenues Percentage of adjusted operating income which excludes $127 million of securitization bonds February 29, 2012 12 Full Year 2011 Earnings |
![]() Interstate Pipelines Operating Income Operating income has benefited from core transportation contracts Ancillary services are variable based on market conditions More competition for new and existing customers expected in the future (in millions) Note: Interstate Pipelines also earned $6 million, $36 million, $7 million, $19 million and $21 million of equity income from its 50% interest in Southeast Supply Header, LLC for 2007, 2008, 2009, 2010 and 2011, respectively. February 29, 2012 13 Full Year 2011 Earnings |
![]() (1) Margin equals revenues minus natural gas expense (2) Natural gas and ancillary services (balancing, system management, liquids) 2 February 29, 2012 14 Full Year 2011 Earnings |
![]() (1) Margin equals revenues minus natural gas expense February 29, 2012 15 Full Year 2011 Earnings |
![]() Interstate Pipelines Capital Expenditures Planned capital expenditures support maintenance, pipeline upgrades, and pipeline safety and environmental compliance (in millions) February 29, 2012 16 Full Year 2011 Earnings |
![]() Field Services 2011 Operating Income Drivers Higher throughput in Haynesville and Fayetteville shales (in millions) 16% 2010 2011 2010 gain on sale of non- strategic assets Lower commodity prices Higher O&M, depreciation, and other taxes due to Magnolia and Olympia expansion Percentage of adjusted operating income which excludes $127 million of securitization bonds February 29, 2012 17 Full Year 2011 Earnings |
![]() Field Services Operating Income Operating income has benefited from significant new investments in mid-continent shale plays – Contracted growth supported by fee-based contracts with volume commitments and/or guaranteed returns on capital deployed (in millions) Note: Field Services also earned $10 million, $15 million, $8 million, $10 million and $9 million of equity earnings from its 50% interest in Waskom, a joint processing plant, for 2007, 2008, 2009, 2010 and 2011, respectively. February 29, 2012 18 Full Year 2011 Earnings |
![]() (1) Margin equals revenues minus natural gas expense (2) Natural gas and liquids 2 (in millions) February 29, 2012 19 Full Year 2011 Earnings |
![]() (1) Margin equals revenues minus natural gas expense February 29, 2012 20 Full Year 2011 Earnings |
![]() Field Services Capital Expenditures Developing shale plays drove significant capital prior to 2012 Beyond 2012, expect to deploy moderate level of capital under existing contractual arrangements with customers Capital for significant new opportunities not included (in millions) February 29, 2012 21 Full Year 2011 Earnings |
![]() Competitive Natural Gas Sales & Services 2011 Operating Income Drivers Lower optimization opportunities around pipeline and storage assets (in millions) 1% 2010 2011 Mark-to-market: 2011: $8 gain 2010: $4 gain Inventory write- down: 2011: $11 2010: $6 Release of transportation capacity Percentage of adjusted operating income which excludes $127 million of securitization bonds February 29, 2012 22 Full Year 2011 Earnings |
![]() Competitive Natural Gas Sales & Services Operating Income Operating income has been negatively impacted by the significant reductions in basis and seasonal spreads Pipeline and storage capacity has been reduced to closely match customers requirements (in millions) February 29, 2012 23 Full Year 2011 Earnings |
![]() Competitive Natural Gas Sales & Services Customers and Sales Volumes February 29, 2012 24 Full Year 2011 Earnings |
![]() February 29, 2012 25 Full Year 2011 Earnings 25 Debt and Capitalization Ratio Excluding transition and system restoration bonds * The transition and system restoration bonds are non-recourse to CenterPoint Energy and CenterPoint Energy Houston Electric and are serviced through collections of separate charges which are held in trust. ** The debt component reflected on the financial statements was $131 as of December 31, 2011 and $126 million as of December 31, 2010. The principal amount on which 2% interest is paid was $840 million as of December 31, 2011 and December 31, 2010. The contingent principal amount was $797 as of December 31, 2011 and $805 million as of December 31, 2010. |
![]() Credit Metrics and Ratings * Calculated per CNP’s interpretation of S&P methodology; actual calculations may include other adjustments not anticipated Credit Ratings Rating Outlook Rating Outlook Rating Outlook CenterPoint Energy (Senior Unsecured) Baa3 Stable BBB Stable BBB- Positive CEHE (Senior Secured) (1) A3 Stable A- Stable A- Positive CERC (Senior Unsecured) Baa2 Stable BBB+ Stable BBB Stable (1) General mortgage bonds and first mortgage bonds. Moody’s Fitch S&P February 29, 2012 26 Full Year 2011 Earnings |
![]() February 29, 2012 27 Full Year 2011 Earnings Liquidity Available Liquidity ($MM) Amount Utilized Amount Unutilized Bank Facilities Type of Facility Size of Facility at February 13, 2012 at February 13, 2012 CenterPoint Energy Revolver 1,200 $ 13 $ (1) 1,187 $ CEHE Revolver 300 4 (1) 296 CERC Revolver 950 - 950 Total Credit Facilities 2,450 $ 17 $ 2,433 $ (1) Represents outstanding letters of credit. Temporary Investments Investments in Money Market Funds (as of February 13, 2012) 1,486 Available Liquidity 3,919 $ |
![]() Reconciliation of CEHE Operating Income to Adjusted Operating Income February 29, 2012 28 Full Year 2011 Earnings |