UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): DECEMBER 2, 2004
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CENTERPOINT ENERGY, INC.
(Exact name of registrant as specified in its charter)
TEXAS 1-31447 74-0694415
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
1111 LOUISIANA
HOUSTON, TEXAS 77002
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 207-1111
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CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC
(Exact name of registrant as specified in its charter)
TEXAS 1-3187 22-3865106
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
1111 LOUISIANA
HOUSTON, TEXAS 77002
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 207-1111
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Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 8.01 OTHER EVENTS.
SECURITIZATION PROCEEDING
On December 2, 2004, CenterPoint Energy Houston Electric, LLC
(CenterPoint Houston), an indirect wholly owned subsidiary of CenterPoint
Energy, Inc. (the Company), filed for approval of a financing order to issue
low-cost securitization bonds to recover its $2.301 billion true-up balance
authorized by the Public Utility Commission of Texas (Texas Utility Commission).
The $2.301 billion true-up balance is the balance as of August 31, 2004 and
under terms of the true-up order is subject to adjustment to reflect accrual of
interest and payment of excess mitigation credits after that date and for
benefits associated with certain accumulated deferred federal income taxes. The
Texas electric restructuring law requires the Texas Utility Commission to issue
the financing order within ninety days after filing of the application, which
would require the Texas Utility Commission to issue the financing order by March
2, 2005. After the financing order is issued, the Company anticipates that a new
special purpose subsidiary of CenterPoint Houston will issue bonds in one or
more series through an underwritten offering. Depending on market conditions and
the impact of possible appeals of the financing order, the Company anticipates
completing such an offering by mid-2005.
On December 16, 2004, the Texas Utility Commission issued a preliminary
order in the securitization proceeding in which it made a preliminary
determination that approximately $800 million of the true-up balance was not
eligible for securitization. The Texas electric restructuring law also provides
for the Texas Utility Commission to impose a separate non-bypassable charge
(called a competition transition charge) on CenterPoint Houston's customers to
permit CenterPoint Houston to recover the amount of its true-up balance not
otherwise recovered through the issuance of securitization bonds over a period
of years to be determined by the Texas Utility Commission. CenterPoint Houston
expects to file an application for a competition transition charge to recover
the entire $2.301 billion true-up balance (plus accrued interest and excess
mitigation credits) in January 2005 and will adjust the amount sought through
that charge to the extent that it is able to securitize any of such amount.
Under the Texas Utility Commission's rules, the competition transition charge is
expected to allow the Company to earn its authorized return on the unamortized
true-up balance to be recovered through the competition transition charge.
ACCOUNTING REORGANIZATION
On December 30, 2004, the Board of Directors of the Company adopted a
plan for an accounting reorganization of the Company, to be effective as of
January 1, 2005. At the same time, the Manager for CenterPoint Houston adopted a
similar plan for CenterPoint Houston. These plans were adopted in order to
eliminate the accumulated retained earnings deficit that exists at both
companies.
An accounting reorganization, sometimes called a
"quasi-reorganization", allows a company to extinguish a negative retained
earnings balance. It involves restating a company's assets and its liabilities
to their fair values. The negative balance in the retained earnings account is
then brought to zero through a reduction in the other capital accounts, giving
the company a "fresh start" with a zero balance in retained earnings. As of
September 30, 2004, the Company had an accumulated retained earnings deficit of
approximately $1.8 billion. That deficit stemmed from the accounting effects of
(1) the Company's distribution of its ownership interest in Reliant Resources,
Inc. to its shareholders in September 2002, (2) the extraordinary loss recorded
in connection with the Texas Utility Commission's order related to stranded
costs and other true-up balances and (3) the loss on discontinued operations
that was recorded in connection with the Company's sale of Texas Genco Holdings,
Inc. Those events stemmed from the Company's response to the electric
restructuring legislation enacted in Texas in 1999.
The Company and CenterPoint Houston are seeking to eliminate the
negative retained earnings balance because restrictions contained in the Public
Utility Holding Company Act of 1935 (the 1935 Act) require registered public
utility holding companies and their subsidiaries, like the Company and
CenterPoint Houston, to obtain express authorization from the SEC when current
or retained earnings are insufficient to pay dividends. In addition, the Company
has undertaken an obligation under the 1935 Act to achieve a minimum ratio of
common equity to total capitalization of 30 percent, which, depending on the
results of the restatement of assets and liabilities under the accounting
reorganization, could be affected by, and will be taken into consideration by
the Board of Directors in evaluating the effects of, the accounting
reorganization.
The plan adopted by the Company requires: (1) a report to be
presented to and reviewed by the Company's Board of Directors on or before
February 28, 2005 as to the completion of the valuation analysis of the
accounting reorganization and the effects of the accounting reorganization on
the Company's financial statements, (2) a determination that the accounting
reorganization is in accordance with accounting principles generally accepted in
the United States, and (3) that there be no determination by the Company's Board
of Directors on or before February 28, 2005 that the accounting reorganization
is inconsistent with the Company's regulatory obligations.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
Some of the statements in this report 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", "expect", "believe" or other similar words. We have based
our forward-looking statements on our management's beliefs and assumptions based
on information 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. The ultimate outcome of the true-up proceeding, including proceedings
required for recovery of the true-up balances, and any legal proceedings related
thereto could cause actual results to differ materially from those expressed or
implied in forward-looking statements. You should not place undue reliance on
forward-looking statements. Each forward-looking statement speaks only as of the
date of the particular statement.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CENTERPOINT ENERGY, INC.
Date: December 30, 2004 By: /s/ James S. Brian
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James S. Brian
Senior Vice President and
Chief Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CENTERPOINT ENERGY HOUSTON
ELECTRIC, LLC
Date: December 30, 2004 By: /s/ James S. Brian
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James S. Brian
Senior Vice President and
Chief Accounting Officer