Centerpoint Energy, Inc (holding Co) · NYSE:CNP
Centerpoint Energy, Inc (holding Co) — RBC Capital Markets 2005 North American Energy Conference
46 slides from Centerpoint Energy, Inc (holding Co)'s conference presentation, Jun 6, 2005
Slide 1: RBC Capital Markets 2005 North American Energy Conference
RBC Capital Markets 2005 North American Energy Conference Boston, MA June 6, 2005 David M. McClanahan President & Chief Executive Officer NYSE:CNP www.CenterPointEnergy.com
Slide 2: Cautionary Statement Regarding Forward-Looking Information
From time to time we make 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 Pri
Slide 3: Discussion Points
Discussion Points Company Overview 2005 First Quarter Financial Results Completing Transition Post Transition - What's Next Opportunities Challenges Industry/Sector perspective
Slide 4: Company Overview
June 6.2005 Company Overview RBC Capitd Markets — 2005 North Arner
Slide 5: CenterPoint Energy: A low risk, diversified business with large scale
Houston • • Little Rock • Minneapolis Large-scale, diversified regulated domestic energy delivery business with nearly 5 million metered customers One of the nation's largest combined gas and electric utilities Balanced mix of electric and natural gas assets Attractive service territories Houston an
Slide 6: Three segments focused primarily on regulated domestic energy delivery
Operating Income - adjusted* 2004 : $441MM(1) 2003 : $408MM(2) Natural Gas Distribution Pipelines & Gathering Electric Transmission & Distribution Three segments focused primarily on regulated domestic energy delivery NYSE: CNP CenterPoint Energy Resources Corp. 3 local distribution companies (LDCs)
Slide 7: 2005 First Quarter Financial Results
2005 First Quarter Financial Results
Slide 8: Statement of Consolidated Income
Statement of Consolidated Income (unaudited, in millions except per share amounts)
Slide 9: Operating Income by Segment
Operating Income by Segment (unaudited, in millions)
Slide 10: Completing Transition
e CenterPoint. Energy ee Completing Transition June 6.2005 RBC Capitd Markets — 2005 North Arner
Slide 11: Determination of true-up balance
Determination of true-up balance December 2004: PUC Final True-up Order authorized recovery of $2.3 billion $2.3 billion includes approximately $300 million of interest from January 1, 2002 through August 31, 2004 Final true-up amount will be increased for the principal portion of Excess Mitigation
Slide 12: Recovery of true-up balance
Recovery of true-up balance March 2005: PUC Final Financing Order authorized securitization of approximately $1.8 billion assuming transition bonds are issued mid- 2005 Assumes EMCs paid through April 2005, interest until transition bonds are issued and certain costs of transition bond issuance Appe
Slide 13: Next steps
Next steps 2006 2007 2005 Retail Clawback Received ($177 million) 2004 Implement CTC PUC True-up Order PUC Financing Order Appeals of Financing Order Appeals of True-up Order Sell Transition Bonds Results of True-up Order appeals Results of Financing Order appeals
Slide 14: Post Transition - What's Next
Post Transition - What's Next
Slide 15: Opportunities
Opportunities Maximize value potential of current portfolio through productivity improvements and rate relief Achieve top quartile operating and cost performance Leverage scale and synergies across businesses Share common systems and processes Embrace continuous productivity and process improvements
Slide 16: Opportunities (cont.)
Opportunities (cont.) Grow and expand current businesses Capture organic growth in existing service territories of regulated business Attractive service territories Annual growth rate of 2% plus Expand current asset footprint Capture economic pipeline expansion opportunities Expand field services fo
Slide 17: Opportunities (cont.): De-leveraging and balance sheet
Opportunities (cont.) Continued de-leveraging/enhancement of balance sheet Issuance of transition bonds True-up appeal Growth financed through equity Adjust dividend payout to be consistent with sustainable earnings 50-75% long-term dividend payout ratio Grow dividend consistent with earnings growth
Slide 18: Challenges
Challenges Compliance with Public Utility Holding Company Act of 1935 Achievement of 30% equity guideline Managing dividend declarations Issues eliminated after PUHCA repeal Improving market perception of the company Long, complex transition period Recognition and proper valuation of low-risk busine
Slide 19: Industry/sector perspective
Industry/sector perspective Electric retail deregulation not expected to spread in near term Integrated electric utility will remain entrenched Pure T&D utilities, like CNP, few and far between Gas opportunities will increase Price volatility will drive innovation/change Customers seek risk mitigati
Slide 20: RBC Capital Markets 2005 North American Energy Conference
RBC Capital Markets 2005 North American Energy Conference Boston, MA June 6, 2005 David M. McClanahan President & Chief Executive Officer NYSE:CNP www.CenterPointEnergy.com
Slide 21: Appendix
June 6.2005 Appendix RBC Capitd Markets — 2005 North Arner
Slide 22: Company Management
e CenterPoint. Energy ee Company Management June 6.2005 RBC Capitd Markets — 2005 North Arner
Slide 23: Skilled management team with significant regulatory and industry experience
Numbers in parentheses indicate years with company / years of business experience. Skilled management team with significant regulatory and industry experience Gary Whitlock (4/33) EVP & CFO David McClanahan (33/33) President & CEO Byron R. Kelley (3/34) Sr. VP & Group President Pipelines & Field Ser
Slide 24: 2004 Financial Results
e CenterPoint. Energy ee 2004 Financial Results June 6.2005 RBC Capita Markets ~ 2005 North american Energy Conference »
Slide 25: Financial Results - Consolidated
2002 2003 2004 703 743 810 (in millions, except per share amounts) Financial Results- Consolidated Year ended December 31, 2004 * Adjusted operating income excludes ECOM, the Transition Bond Company and the Final Fuel Reconciliation components of the Electric Transmission & Distribution utility's re
Slide 26: Reconciliation of Operating Income to Adjusted Operating Income - Consolidated
Reconciliation of Operating Income to Adjusted Operating Income - Consolidated (in millions)
Slide 27: Operating Income by business segment
Operating Income by business segment 2002 2003 2004 (in millions) * * Operating income is adjusted to exclude ECOM, the Transition Bond Company and the Final Fuel Reconciliation components of the Electric Transmission & Distribution utility's results (see reconciliation on page 30).
Slide 28: Reconciliation - Electric Transmission & Distribution
Reconciliation of Operating Income to Adjusted Operating Income - Electric Transmission & Distribution (in millions)
Slide 29: Recent financial actions further strengthen company
Recent financial actions further strengthen company Received $2.931 billion from sale of Texas Genco $2.231 billion received December 2004 $700 million received April 2005 After-tax proceeds of $2.5 billion used primarily to reduce debt Contributed $476 million to the pension plan in 2004 $350 milli
Slide 30: Business Segments
June 6.2005 Business Segments RBC Capitd Markets — 2005 North Arner
Slide 31: CenterPoint Energy Houston Electric
CenterPoint Energy Houston Electric Electric Transmission & Distribution Utility Focused strictly on energy delivery 5,000 square mile service area in and around Houston Approximately 1.89 million metered customers added nearly 47,000 metered customers in 2004, a 2.5% increase Reputation for reliabi
Slide 32: Reconciliation - Electric Transmission & Distribution
Reconciliation of Operating Income to Adjusted Operating Income - Electric Transmission & Distribution (in millions)
Slide 33: CenterPoint Energy Resources Corp. Natural Gas Distribution
CenterPoint Energy Resources Corp. Natural Gas Distribution Three LDCs serving 3 million customers in 6 states One of U.S.'s largest natural gas distribution operations in terms of number of customers served Attractive service territories Added 45,000 metered customers in 2004 Recognized for high qu
Slide 34: Natural Gas Pipelines and Gathering
CenterPoint Energy Resources Corp. Natural Gas Pipelines and Gathering Two FERC-regulated pipelines: Current system at or near capacity at peak Potential growth in ancillary services Potential expansion opportunity driven by U.S. supply shifts An unregulated gas gathering subsidiary Minor liquids ex
Slide 35: Vision and Strategy
June 6.2005 Vision and Strategy RBC Capita Markets ~ 2005 North american Energy Conference e CenterPoint. Energy
Slide 36: To Be Recognized As America's Leading Energy Delivery Company...and More
To Be Recognized As America's Leading Energy Delivery Company...and More Focused on domestic energy delivery businesses Focus on continental, U.S. market Focus on regulated energy delivery Will pursue carefully targeted growth opportunities Look for complementary businesses that leverage our core bu
Slide 37: Strategic priorities: Get It Right, Grow, One Company
Achieve high levels of service reliability and customer satisfaction Use applicable bench marking and best practices to achieve top quartile operating and cost performance Embrace continuous productivity and process improvements Maintain constructive, responsive and credible relationships with elect
Slide 38: True-up
e CenterPoint. Energy True-up June 6.2005 RBC Capitd Markets — 2005 North Arner
Slide 39: True-up Final Order: CNP issues on appeal
True-up Final Order CNP issues on appeal $1.3 billion value of CenterPoint Energy's issues on appeal Market value $250 million Capacity auction true-up $819 million EMCs $180 million Fuel reconciliation $ 75 million Resolution of appeal items may take up to 3 years Travis County District Court 3rd C
Slide 40: Debt & Maturity Schedules
Debt & Maturity Schedules As of March 31, 2005
Slide 41: Debt schedule footnotes
(6) Advances under the $250 million receivables facility, which was increased to $375 million on January 19, 2005, are not reflected as debt on the balance sheet. (7) The term loan and pollution control bonds are collateralized by general mortgage bonds. (8) Borrowings under $200 million bank facili
Slide 42: Principal amounts of external debt and trust preferred securities
Principal amounts of external debt and trust preferred securities As of March 31, 2005
Slide 43: Principal amounts of external debt
Principal amounts of external debt As of March 31, 2005
Slide 44: Principal amounts of external debt and trust preferred securities
Principal amounts of external debt and trust preferred securities As of March 31, 2005
Slide 45: Principal amounts of external debt
Principal amounts of external debt As of March 31, 2005
Slide 46: Principal amounts of external debt and trust preferred securities
Principal amounts of external debt and trust preferred securities As of March 31, 2005 ($ in millions)
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