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CenterPoint Energy Inc. Reports Operating Results (10-K)

March 01, 2011 | About:
10qk

10qk

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CenterPoint Energy Inc. (CNP) filed Annual Report for the period ended 2010-12-31.

Centerpoint Energy Inc. has a market cap of $6.71 billion; its shares were traded at around $15.86 with a P/E ratio of 14.7 and P/S ratio of 0.8. The dividend yield of Centerpoint Energy Inc. stocks is 5%. Centerpoint Energy Inc. had an annual average earning growth of 0.7% over the past 10 years.Hedge Fund Gurus that owns CNP: Jim Simons of Renaissance Technologies LLC, Stanley Druckenmiller of Duquesne Capital Management, LLC, Louis Moore Bacon of Moore Capital Management, LP, George Soros of Soros Fund Management LLC, Steven Cohen of SAC Capital Advisors. Mutual Fund and Other Gurus that owns CNP: James Barrow of Barrow, Hanley, Mewhinney & Strauss, Brian Rogers of T Rowe Price Equity Income Fund, Murray Stahl of Horizon Asset Management, Jeremy Grantham of GMO LLC.

Highlight of Business Operations:

In March 2004, CenterPoint Houston filed its true-up application with the Texas Utility Commission, requesting recovery of $3.7 billion, excluding interest, as allowed under the Texas electric restructuring law. In December 2004, the Texas Utility Commission issued its final order (True-Up Order) allowing CenterPoint Houston to recover a true-up balance of approximately $2.3 billion, which included interest through August 31, 2004, and provided for adjustment of the amount to be recovered to include interest on the balance until recovery, along with the principal portion of additional excess mitigation credits (EMCs) returned to customers after August 31, 2004 and certain other adjustments.

To reflect the impact of the True-Up Order, in 2004 and 2005, we recorded a net after-tax extraordinary loss of $947 million. No amounts related to the district court s judgment or the decision of the court of appeals have been recorded in our consolidated financial statements. However, if the court of appeals decision is not reversed or modified as a result of further review by the Texas Supreme Court, we anticipate that we would be required to record an additional loss to reflect the court of appeals decision. The amount of that loss would depend on several factors, including ultimate resolution of the tax normalization issue described below, but could range from $190 million to $440 million (pre-tax) plus interest subsequent to December 31, 2010.

In July 2005, CenterPoint Houston received an order from the Texas Utility Commission allowing it to implement a CTC designed to collect the remaining $596 million from the True-Up Order over 14 years plus interest at an annual rate of 11.075% (CTC Order). The CTC Order authorized CenterPoint Houston to impose a charge on REPs to recover the portion of the true-up balance not recovered through a financing order. The CTC Order also allowed CenterPoint Houston to collect approximately $24 million of rate case expenses over three years without a return through a separate tariff rider (Rider RCE). CenterPoint Houston implemented the CTC and Rider RCE effective September 13, 2005 and began recovering approximately $620 million. The return on the CTC portion of the true-up balance was included in CenterPoint Houston s tariff-based revenues beginning September 13, 2005. Effective August 1, 2006, the interest rate on the unrecovered balance of the CTC was reduced from 11.075% to 8.06% pursuant to a revised rule adopted by the Texas Utility Commission in June 2006. Recovery of rate case expenses under Rider RCE was completed in September 2008.

As of December 31, 2010, we have not recognized an allowed equity return of $178 million on CenterPoint Houston s true-up balance because such return will be recognized as it is recovered in rates. During the years ended December 31, 2008, 2009 and 2010, CenterPoint Houston recognized approximately $13 million, $13 million and $15 million, respectively, of the allowed equity return.

CenterPoint Houston filed with the Texas Utility Commission an application for review and approval for recovery of approximately $678 million, including approximately $608 million in system restoration costs identified as of the end of February 2009, plus $2 million in regulatory expenses, $13 million in certain debt issuance costs and $55 million in incurred and projected carrying costs calculated through August 2009. In July 2009, CenterPoint Houston reached a settlement agreement with the parties to the proceeding. Under that settlement agreement, CenterPoint Houston was entitled to recover a total of $663 million in costs relating to Hurricane Ike, along with carrying costs from September 1, 2009 until system restoration bonds were issued. The Texas Utility Commission issued an order in August 2009 approving the settlement agreement and authorizing recovery of $663 million, of which $643 million was attributable to distribution service and eligible for securitization and the remaining $20 million was attributable to transmission service and eligible for recovery through the existing mechanisms established to recover transmission costs.

In August 2009, the Texas Utility Commission issued a financing order allowing CenterPoint Houston to securitize $643 million in distribution service costs plus carrying charges from September 1, 2009 through the date the system restoration bonds were issued, as well as certain up-front qualified costs capped at approximately $6 million. In November 2009, CenterPoint Houston issued approximately $665 million of system restoration bonds through its CenterPoint Energy Restoration Bond Company, LLC subsidiary with interest rates of 1.833% to 4.243% and final maturity dates ranging from February 2016 to August 2023. The bonds will be repaid over time through a charge imposed on customers.

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