[Federal Register Volume 70, Number 101 (Thursday, May 26, 2005)]
[Notices]
[Pages 30500-30508]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-2675]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-27972]


Filings Under the Public Utility Holding Company Act of 1935, as 
Amended (``Act'')

May 20, 2005.
    Notice is hereby given that the following filing(s) has/have been 
made with the Commission pursuant to provisions of the Act and rules 
promulgated under the Act. All interested persons are referred to the 
application(s) and/or declaration(s) for complete statements of the 
proposed transaction(s) summarized below. The application(s) and/or 
declaration(s) and any amendment(s) is/are available for public 
inspection through the Commission's Branch of Public Reference.
    Interested persons wishing to comment or request a hearing on the 
application(s) and/or declaration(s) should submit their views in 
writing by June 14, 2005, to the Secretary, Securities and Exchange 
Commission, Washington, DC 20549-0609, and serve a copy on the relevant 
applicant(s) and/or declarant(s) at the address(es) specified below. 
Proof of service (by affidavit or, in the case of an attorney at law, 
by certificate) should be filed with the request. Any request for 
hearing should identify specifically the issues of facts or law that 
are disputed. A person who so requests will be notified of any hearing, 
if ordered, and will receive a copy of any notice or order issued in 
the matter. After June 14, 2005, the application(s) and/or 
declaration(s), as filed or as amended, may be granted and/or permitted 
to become effective.

CenterPoint Energy, Inc., et al. (70-10299)

    CenterPoint Energy, Inc. (``CNP''), a registered holding company, 
of 1111 Louisiana, Houston, TX 77002; Utility Holding, LLC (``Utility 
Holding''), a direct subsidiary of CNP and also a registered holding 
company, of 1011 Centre Road, Suite 324, Wilmington, DE 19805; their 
public utility subsidiaries, CenterPoint Energy Houston Electric 
(``CEHE'') and CenterPoint Energy Resources Corp. (``CERC'') (together, 
``Utility Subsidiaries''), both of 1111 Louisiana, Houston, TX 77002; 
and certain of the non-utility subsidiaries (``Non-Utility 
Subsidiaries''),\1\ all of 1111 Louisiana, Houston, TX 77002 
(collectively, the ``Applicants'' or ``CNP System'') have filed an 
application-declaration (``Application'') under Sections 6(a), 7, 9(a), 
10 and 12(b), (c) and (f) of the Act and Rules 42, 43, 44, 45, 46, 53 
and 54 under the Act.
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    \1\ CenterPoint Energy Service Company, LLC; CenterPoint Energy 
Funding Company; CenterPoint Energy Transition Bond Company, LLC; 
CenterPoint Energy Transition Bond Company II, LLC; Houston 
Industries FinanceCo GP, LLC; CenterPoint Energy Investment 
Management, Inc.; CenterPoint Energy Properties, Inc.; Arkansas 
Louisiana Finance Corporation; Arkla Industries Inc.; CenterPoint 
Energy Alternative Fuels, Inc.; CenterPoint Energy Field Services, 
Inc.; CenterPoint Energy Gas Receivables, LLC; CenterPoint Energy 
Gas Transmission Company; CenterPoint Energy--Illinois Gas 
Transmission Company; CenterPoint Energy Intrastate Holdings, LLC; 
Pine Pipeline Acquisition Company, LLC; CenterPoint Energy Gas 
Services, Inc.; CenterPoint Energy--Mississippi River Transmission 
Corporation; CenterPoint Energy MRT Services Company; CenterPoint 
Energy Pipeline Services, Inc.; CenterPoint Energy OQ, LLC; 
CenterPoint Energy Intrastate Pipelines, Inc.; Minnesota Intrastate 
Pipeline Company; NorAm Financing I; HL&P Capital Trust II; 
CenterPoint Energy Funds Management, Inc.; CenterPoint Energy 
International, Inc.; CenterPoint Energy Avco Holdings, LLC; and 
CenterPoint Energy Offshore Management Services, LLC.
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Background

    CNP is a registered holding company that was formed in 2002.\2\ CNP 
indirectly owns all of its subsidiaries through its direct, wholly-
owned subsidiary, Utility Holding. Utility Holding is an intermediate 
registered holding company formed to minimize tax inefficiencies, and 
it serves merely as a conduit. Utility Holding holds, directly and 
indirectly, all of the CNP subsidiaries, including the Utility 
Subsidiaries.\3\
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    \2\ See Reliant Energy, Inc., HCAR No. 27548 (July 5, 2002) (CNP 
was referred to there as ``New REI'').
    \3\ As used herein, the defined-term ``Subsidiaries'' refers to 
the Applicants (other than CNP and Utility Holding), as well as any 
direct or indirect subsidiary companies that CNP may form with the 
approval of the Commission or in reliance on rules or statutory 
exemptions.
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    The electric Utility Subsidiary, CEHE, is engaged in the 
transmission and distribution of electric energy in a 5,000-square-mile 
area of the Texas Gulf Coast that includes Houston. The natural gas 
Utility Subsidiary, CERC, owns gas distribution systems. Through

[[Page 30501]]

unincorporated divisions, CERC provides retail natural gas distribution 
services in Louisiana, Mississippi, Texas, Arkansas, Oklahoma and 
Minnesota. Through wholly owned subsidiaries, CERC owns two interstate 
natural gas pipelines and gas gathering systems, provides various 
ancillary services and offers natural gas supplies to commercial and 
industrial customers and natural gas distributors.
    In addition to the gas pipeline and gathering subsidiaries 
discussed above, CNP has Non-Utility Subsidiaries engaged in, among 
other things, financing activities, real estate and energy and gas-
related activities.\4\
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    \4\ CNP's Utility and Non-Utility Subsidiaries in existence as 
of March 31, 2005 (except Utility Holding and including non-
applicant subsidiaries) are further described in Ex. K-1 to the 
Application.
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Requested Authorization

A. Summary of Transactions
    Applicants request authority to engage in the transactions set 
forth below during the period from the effective date of the order to 
be issued in this filing through the period ending June 30, 2008 
(``Authorization Period'').\5\ Applicants request authority to engage 
in these transactions through September 30, 2006, and ask the 
Commission to reserve jurisdiction over transactions during the 
remainder of the Authorization Period, pending completion of the 
record. Applicants state that, based on their business plans and the 
current conditions in the financial markets, they anticipate that the 
``Current Authority'' requested in their Application will be used 
during the Authorization Period primarily to refinance currently 
outstanding debt obligations and to meet ongoing operational needs of 
their respective businesses.\6\ In summary, Applicants request:
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    \5\ CNP's current financing authority expires June 30, 2005. See 
CNP, HCAR No. 27692 (June 30, 2003) (the ``2003 Omnibus Financing 
Order'').
    \6\ ``Current Authority'' is the total amount of securities that 
are outstanding or could be outstanding (in the case of credit 
facilities that are not fully drawn) under the 2003 Omnibus 
Financing Order. The amounts, as set forth in the first column of 
Ex. G-1 to the Application, are as follows: CNP: $3.834 billion; 
CEHE: $3.780 billion; CERC: $2.756.

    (i) CNP requests authorization for: (a) Securities issuances, 
(b) guarantees and other forms of credit support, as well as 
performance guarantees (``Guarantees''), and (c) hedging 
transactions;
    (ii) With respect to its Subsidiaries, CNP requests such 
authorization as may be required for issuances of securities, 
Guarantees, and hedging transactions;
    (iii) CNP requests that the Commission approve the continuation 
of a CNP Group Money Pool (the ``Money Pool'');
    (iv) CNP and its Subsidiaries request that the Commission 
approve the continuation of existing financing arrangements, 
Guarantees and hedging arrangements, as well as any transactions 
undertaken to extend the terms of or replace, refund or refinance 
existing obligations and the issuance of new obligations in exchange 
for existing obligations, provided in each case that the issuing 
entity's ``Consolidated Capitalization'' \7\ is not increased as a 
result of such financing transaction;
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    \7\ ``Consolidated Capitalization'' is defined to include, where 
applicable, all common-stock equity (comprised of common stock, 
additional paid-in-capital, retained earnings, treasury stock and/or 
other comprehensive income or loss), preferred stock, preferred 
securities, equity-linked securities, long-term debt, short-term 
debt, current maturities and/or minority interests.
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    (v) CNP further requests authority to issue or sell external 
debt securities, preferred stock, preferred securities (including 
trust preferred securities) and equity-linked securities in an 
aggregate amount (including the outstanding securities referenced in 
(iv) above) not to exceed $4.334 billion at any one time outstanding 
during the Authorization Period, with a request that the Commission 
reserve jurisdiction over $500 million of the requested authority; 
\8\
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    \8\ For purposes of the Application, the term ``external'' 
financing refers to a transaction in which securities are issued and 
sold to an entity that is not a member of the CNP System. Each of 
CNP, CEHE and CERC is requesting authority on a corporate, rather 
than a consolidated, basis. Utility Holding is not seeking authority 
to issue and sell external debt or equity securities.
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    (vi) CNP requests authority to issue or sell an additional 200 
million shares of common stock or options, warrants or other rights 
to purchase an equivalent number of shares of common stock (and to 
issue or deliver common stock upon the exercise of such options, 
warrants or other rights) and to issue one Right (as defined below) 
in connection with each share of common stock and to issue 
securities in connection with such Right, in the event such Right is 
exercised;
    (vii) CEHE requests authority to issue or sell external debt 
securities, preferred stock and preferred securities (including 
trust preferred securities) in an aggregate amount (including the 
outstanding securities referenced in (iv) above) not to exceed 
$4.280 billion at any one time outstanding during the Authorization 
Period, with a request that the Commission reserve jurisdiction over 
$500 million of the requested authority;
    (viii) CERC requests authority to issue or sell external debt 
securities, preferred stock and preferred securities (including 
trust preferred securities) in an aggregate amount (including the 
outstanding securities referenced in (iv) above) not to exceed 
$3.256 billion at any one time during the Authorization Period, with 
a request that the Commission reserve jurisdiction over $500 million 
of the requested authority;
    (ix) The Subsidiaries may also finance their capital needs 
through borrowings from CNP, directly or indirectly through Utility 
Holding, and Utility Holding requests authority to issue and sell 
securities to its parent company, CNP, and to acquire securities 
from its subsidiary companies;
    (x) CNP requests that the Commission approve the issuance by CNP 
and its Subsidiaries of nonexempt Guarantees in an amount such that 
the total amount of nonexempt Guarantees issued by CNP and its 
Subsidiaries, in the aggregate, does not exceed $4 billion 
outstanding at any time during the Authorization Period (the ``CNP 
System Guarantee Limit'');
    (xi) CNP and the Non-Utility Subsidiaries request authority for 
the declaration and payment of dividends out of capital or unearned 
surplus;
    (xii) CNP requests authority to form and capitalize financing 
entities (including special purpose subsidiaries) (each a 
``Financing Subsidiary'') in connection with the issuance of 
securities as requested in the Application as well as authority for 
the financing entities to issue such securities and to transfer the 
proceeds of any financing to their respective parent companies;
    (xiii) CNP also requests continued authority for the Non-Utility 
Subsidiaries to restructure their duly authorized businesses from 
time to time; and
    (xiv) CNP and its Subsidiaries request authority during the 
Authorization period in an aggregate amount of up to $5 million for 
``Inactive Subsidiaries.'' \9\
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    \9\ CNP's ``Inactive Subsidiaries,'' as listed on Ex. L-1 to the 
Application, are: CenterPoint Energy Retail Interests, Inc.; Entex 
Gas Marketing Company; Entex, NGV, Inc.; Entex Oil & Gas Company; 
Allied Materials Corporation; National Furnace Company; CenterPoint 
Energy Consumer Group, Inc.; NorAm Utility Services, Inc.; Arkla 
Products Company; ALG Gas Supply Company; Intex, Inc.; United Gas, 
Inc.; CenterPoint Energy Trading and Transportation Group, Inc.; 
CenterPoint Energy MRT Holdings, Inc.; CenterPoint Energy Field 
Services Holdings, Inc.; CenterPoint Energy Gas Processing, Inc.; 
CenterPoint Energy Hub Services, Inc.; HL&P Capital Trust I; REI 
Trust I; CenterPoint Energy Tegco, Inc.; Block 368 GP, LLC; Block 
368, LP; CenterPoint Energy Power Systems, Inc.; CenterPoint Energy 
Products, Inc.; NorAm Energy, Corp.; Utility Rail Services, Inc.; 
CenterPoint Energy, Inc. (a Delaware company); CenterPoint Energy 
Light, Inc.; Reliant Energy Brasil, Ltda.; Reliant Energy Brazil 
Tiete Ltd.; Reliant Energy Brazil Ltd.; Reliant Energy International 
Brasil Ltda.; HIE Brasil Rio Sul Ltda.; CenterPoint Energy 
International Services, Inc.; Reliant Energy Columbia Ltda.; Reliant 
Energy El Salvador S.A. de C.V.; Reliant Energy Outsource Ltd.; 
Venus Generation El Salvador; CenterPoint Energy International 
Holdings, LLC; Worldwide Electric Holdings B.V.; CenterPoint Energy 
International II, Inc.; HIE Ford Heights, Inc.; and HIE Fulton, Inc.
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B. Parameters for Financing Authority
    Applicants request authorization to engage in certain financing 
transactions during the Authorization Period for which the specific 
terms and conditions are not at this time known, and which may not be 
covered by Rule 52 under the Act, without further prior approval by the 
Commission. The following general terms will be applicable where 
appropriate to the financing transactions requested to be authorized in 
the Application:
    (1) Effective Cost of Money. The effective cost of capital for 
long-term

[[Page 30502]]

debt, short-term debt, preferred securities and equity-linked 
securities will not exceed competitive market rates available at the 
time of issuance for securities having the same or reasonably similar 
terms and conditions issued by similar companies of reasonably 
comparable credit quality; provided that in no event will the effective 
cost of capital on (i) any long-term debt securities exceed 500 basis 
points over comparable term U.S. Treasury securities; or (ii) any 
short-term debt securities exceed 300 basis points over the comparable-
term London Interbank Offered Rate (``LIBOR''). The dividend rate on 
any series of preferred stock or preferred or equity-linked securities 
will not exceed (at the time of issuance) 700 basis points over 
comparable term U.S. Treasury securities.
    (2) Maturity. The final maturity of long-term indebtedness will not 
exceed 50 years. All series of preferred stock, preferred securities 
and equity-linked securities will be required to be redeemed no later 
than 50 years after issuance, except for preferred stock or preferred 
securities that are perpetual in duration.
    (3) Issuance Expenses. The underwriting fees, commissions or other 
similar remuneration paid in connection with the issue, sale or 
distribution of securities pursuant to the Application will not exceed 
the competitive market rates that are consistent with similar 
securities of comparable credit quality and maturities issued by other 
companies; provided that in no event will such fees and commissions 
exceed seven percent (7%) of the principal or face amount of the 
securities being issued or gross proceeds of the financing.\10\
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    \10\ Issuance Expenses will not count toward the Effective Cost 
of Money, discussed above.
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    (4) Use of Proceeds. The proceeds from the sale of securities in 
external financing transactions approved herein will be used for 
general corporate purposes including (i) the financing, in part, of the 
capital expenditures of the CNP System, (ii) the financing of working 
capital requirements of the CNP System, (iii) the repayment and/or 
refinancing of debt; (iv) the acquisition, retirement, or redemption of 
securities previously issued by the issuing party, (v) direct or 
indirect investment in companies authorized under the Act, as discussed 
herein, and (vi) other lawful purposes. The Applicants represent that 
no such financing proceeds will be used to acquire a new Rule 58 
Subsidiary unless such transaction is consummated in accordance with an 
order of the Commission or an available exemption under the Act.
    The Applicants submit to a reservation of jurisdiction over use of 
such financing proceeds to invest in one or more new lines of business, 
that is, any line of business other than those utility and non-utility 
businesses in which CNP and its Subsidiaries are currently engaged, as 
described on Exhibit K-1 to the Application.
    CNP requests a reservation of jurisdiction over any investment by 
CNP or any of its Subsidiaries in any new energy- or gas-related 
companies within the meaning of Rule 58 (``Rule 58 Companies'') at any 
time CNP's ratio of common equity to total capitalization (net of 
securitization obligations) is less than 30%; provided, however, that 
CNP may increase its investment in an existing Rule 58 Company to the 
extent necessary to complete any project or desirable to preserve or 
enhance the value of CNP's investment in the company.
    (5) Common Equity Ratio. Net of securitization debt, CNP's 
projected equity capitalization will be 30% or more of its Consolidated 
Capitalization (defined above) by the end of the Authorization Period. 
In connection with the requested authority, CNP is undertaking to 
provide the Commission on a quarterly basis confidential exhibits 
updating CNP's financial projections and assumptions through 2008.
    Applicants represent that, from the date of their formation until 
the date hereof, each of CERC and CEHE has maintained common equity of 
at least 30% of its Consolidated Capitalization.
    At all times during the Authorization Period, CERC will maintain 
common equity of at least 30% of its Consolidated Capitalization.
    In carrying out the Texas Commission's Financing Order, CEHE's 
consolidated member's equity ratio is projected to decrease below the 
Commission's target of 30% of Consolidated Capitalization during part 
of the period that the Transition Bonds are outstanding, if the 
securitization debt is included. The decrease in CEHE's consolidated 
member's equity ratio below 30% is due to the Transition Bonds being 
shown as debt in the consolidated financial statements of CEHE. The 
Transition Bonds will be non-recourse to CEHE and will be serviced by 
the cash flows from the transition charges imposed under the Financing 
Order, not the revenues of CEHE's utility operations. Excluding the 
Transition Bonds from the consolidated pro forma capital structure of 
CEHE, the member's equity ratio would be least 30% of its Consolidated 
Capitalization at all times during the Authorization Period.\11\
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    \11\ Following issuance of the Transition Bonds, CEHE is 
expected to have member's equity capitalization of slightly less 
than 30% of Consolidated Capitalization if the securitization debt 
is included. CEHE will improve its equity ratio as securitization 
obligations are paid down. It is anticipated that CEHE will reach a 
level of at least 30% of Consolidated Capitalization by 2009.
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    Other than with respect to the Money Pool, Applicants submit to a 
reservation of jurisdiction over all authority granted in an order in 
this filing during any portion of the Authorization Period when: (1) 
The common equity ratio of CNP (net of securitization debt), on a 
consolidated basis, falls below its common equity ratio as of March 31, 
2005; \12\ (2) the member's equity ratio of CEHE, on a consolidated 
basis (net of securitization debt) falls below 30% of Consolidated 
Capitalization; or (3) the common equity ratio of CERC, on a 
consolidated basis, falls below 30%.
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    \12\ Based on CNP's Quarterly Report on Form 10-Q for the 
quarter ended March 30, 2005, CNP's common equity represented 11.4% 
of its Consolidated Capitalization (excluding securitization debt).
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    (6) Investment Grade Ratings. Apart from common stock, member 
interests or securities issued for the purpose of funding the 
operations of subsidiaries through the Money Pool, no guarantees or 
other securities may be issued in reliance on the authority requested 
in the Application unless: \13\ (i) The security to be issued, if 
rated, is rated investment grade by at least one nationally recognized 
statistical rating organization as that term is used in paragraphs 
(c)(2)(vi)(E), (F) and (H) of Rule 15c3-1 under the Securities Exchange 
Act of 1934 (``NRSRO''); (ii) all outstanding rated securities of the 
issuer are rated investment grade by at least one NRSRO; and (iii) all 
outstanding rated securities of CNP are rated investment grade by at 
least one NRSRO.
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    \13\ Applicants ask the Commission to reserve jurisdiction over 
the issuance of securities subject to the Investment Grade Ratings 
criteria where one or more of the Investment Grade Ratings criteria 
are not met. As noted previously, Utility Holding is not seeking 
authority to issue external debt or equity securities.
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    (7) Authorization Period. No security will be issued pursuant to 
the authority sought in the Application after the last day of the 
Authorization Period (which is June 30, 2008), provided, however, that 
securities issuable or deliverable upon exercise or conversion of, or 
in exchange for, securities issued on or before June 30, 2008 in 
accordance with the terms of such authorization may be issued or 
delivered after such date.

[[Page 30503]]

C. Description of Specific Types of Financing
(1) CNP External Financing
    CNP requests authority to issue and sell securities including 
common stock, preferred stock and preferred and equity-linked 
securities (either directly or through a subsidiary), warrants, long-
term and short-term debt securities and convertible securities and 
derivative instruments.\14\ CNP also requests authorization to enter 
into obligations with respect to tax-exempt debt issued on behalf of 
CNP by governmental authorities. Such obligations may relate to the 
refunding of outstanding tax-exempt debt or to the remarketing of tax-
exempt debt. CNP seeks authorization to enter into lease arrangements, 
and certain hedging transactions in connection with the foregoing 
issuances of taxable or tax-exempt securities. Applicants state that, 
based on their business plans and the current conditions in the 
financial markets, they anticipate that the Current Authority (defined 
above) requested in their Application will be used during the 
Authorization Period primarily to refinance currently outstanding debt 
obligations and to meet ongoing operational needs of their respective 
businesses. The Current Authority for CNP is $3.834 billion.
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    \14\ Any convertible or equity-linked securities or warrants 
would be convertible into or linked only to securities that CNP and 
its Subsidiaries are otherwise authorized to issue pursuant to rule 
or Commission order and will count against the authorized limits for 
those securities granted pursuant to the authority sought in the 
Application.
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    CNP may sell securities covered by the Application in any one of 
the following ways: (i) Through underwriters; (ii) to initial 
purchasers in transactions in reliance on Rule 144A under the 
Securities Act of 1933 or dealers; (iii) through agents; (iv) directly 
to a limited number of purchasers or a single purchaser; (v) in 
exchange for already outstanding securities, including tender offers; 
or (vi) directly to employees (or to trusts established for their 
benefit), shareholders and others. If underwriters are used in the sale 
of the securities, such securities may be acquired by the underwriters 
for their own account and may be resold from time to time in one or 
more transactions, including negotiated transactions, at a fixed public 
offering price or at varying prices determined at the time of sale. The 
securities may be offered to the public either through underwriting 
syndicates (which may be represented by a managing underwriter or 
underwriters designated by CNP) or directly by one or more underwriters 
acting alone. The securities may be sold directly by CNP or through 
agents designated by CNP from time to time. If common or preferred 
stock or convertible debt is being sold in an underwritten offering, 
CNP may grant the underwriters thereof a ``green shoe'' option 
permitting the purchase from CNP at the same price of additional shares 
or debt then being offered solely for the purpose of covering over-
allotments.
    Sales may be registered under the Securities Act of 1933 or 
effected through competitive bidding among underwriters. In addition, 
sales may be made through private placements, sales to initial 
purchasers in Rule 144A transactions or other non-public offerings to 
one or more persons. All such sales will be upon terms and conditions, 
at rates or prices and under conditions negotiated or based upon, or 
otherwise determined by, competitive capital markets.
(a) Common Stock
    CNP is authorized under its restated articles of incorporation to 
issue one billion shares of common stock, par value $.01 per share, and 
related preferred stock purchase rights. Each share of common stock 
includes one right (``Right'') to purchase from CNP a unit consisting 
of one one-thousandth of a share of CNP Series A Preferred Stock at a 
purchase price of $42.50 per unit, subject to adjustment under 
specified circumstances, as described in Exhibit I-1. The Rights are 
issued pursuant to the Rights Agreement dated as of January 1, 2002 
between CNP and JPMorgan Chase Bank (the ``Rights Agreement''), a copy 
of which was filed with CNP's Annual Report on Form 10-K for the year 
ended December 31, 2001 (File No. 1-31447) and incorporated by 
reference.\15\ As of February 28, 2005, CNP had 308,501,031 shares of 
common stock outstanding. CNP seeks authority to issue 200 million 
additional shares of common stock (including Rights) and to issue 
warrants, options and other rights to acquire an equivalent amount of 
common stock, and to buy and sell derivative securities to hedge these 
transactions. CNP will not engage in speculative transactions.
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    \15\ The Rights will become exercisable shortly after (i) any 
public announcement that a person or group of associated persons has 
acquired, or obtained the right to acquire, beneficial ownership of 
20% or more of the outstanding shares of CNP common stock; or (ii) 
the start of a tender or exchange offer that would result in a 
person or group of associated persons becoming a 20% owner. The 
Rights are also exercisable for shares of (i) CNP common stock in 
the event of certain tender or exchange offers not approved by the 
CNP board; and (ii) the common stock of an acquiring company in the 
event of certain mergers, business combinations, or substantial 
sales or transfers of assets or earning power. Under certain 
circumstances, CNP may substitute cash, property, other equity 
securities or debt, or may reduce the exercise price of the Rights. 
The Rights attach to all certificates representing the outstanding 
shares of common stock and are transferable only with such 
certificates. The Rights are redeemable at CNP's option prior to 
their becoming exercisable and expire on December 31, 2011.
    CNP seeks continued authority to continue to implement the 
Rights Agreement, including the authority to issue shares of CNP 
Series A Preferred Stock or CNP common stock, or to provide other 
consideration issued upon exercise of the Rights. Such securities 
issuances will not be counted against the external financing limits 
requested in this filing.
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    Such issuances may be used for the general corporate purposes 
described above in the ``Use of Proceeds'' section. In addition, CNP 
proposes, from time to time during the Authorization Period, to issue 
and/or acquire in open market transactions or negotiated block 
purchases, shares of CNP common stock for allocation under incentive 
compensation plans and other equity compensation and employee benefit 
plans, and for the CenterPoint Investor's Choice Plan.\16\ Such 
transactions would comply with applicable law and Commission 
interpretations then in effect. The requested authority to issue or 
deliver CNP common stock under these plans includes the authority to 
issue related options, warrants, stock appreciation rights, stock 
units, time-based restricted stock, performance awards and other 
securities pursuant to those plans. Any newly issued shares of common 
stock, including shares of common stock issued upon the conversion or 
exercise of warrants, convertible debt or other equity-linked 
securities, will be counted toward the overall limit on common stock; 
shares of common stock purchased in the open market or otherwise 
acquired for the purpose of reissuance under Stock Based Plans will not 
be counted toward this limit to the extent that the net effect of the 
purchase and reissuance does not increase the number of shares of 
common stock outstanding.
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    \16\ CNP's existing stock-related employee plans are: 
CenterPoint Energy, Inc. Savings Plan; CenterPoint Energy, Inc. 1994 
Long-Term Incentive Compensation Plan; Long-Term Incentive Plan of 
CenterPoint Energy, Inc.; CenterPoint Energy, Inc. and Subsidiaries 
Common Stock Participation Plan for Designated New Employees and 
Non-Officer Employees; NorAm Energy Corp. 1994 Incentive Equity 
Plan; and CenterPoint Energy, Inc. Stock Plan for Outside Directors 
(collectively, the ``Stock Based Plans''). The requested authority 
relating to benefit and compensation plans is intended to apply to 
these plans, as they may be amended or supplemented from time to 
time, and similar plans or arrangements that may be adopted in the 
future without any additional prior Commission order.
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    CNP may also issue common stock as consideration, in whole or in 
part, for acquisitions of securities or businesses

[[Page 30504]]

or assets where such acquisition is otherwise authorized under the Act.
(b) External Debt, Preferred Stock, Preferred and Equity-Linked 
Securities
    CNP requests Commission authorization during the Authorization 
Period to issue debt securities and preferred stock, and to issue 
directly or indirectly through one or more Financing Subsidiaries long-
term debt securities, preferred stock, preferred securities (including, 
trust preferred securities), and equity-linked securities (including 
preferred stock, preferred securities that are convertible, either 
mandatorily or at the option of the holder, into common stock, or 
forward purchase contracts for common stock).
    Long-term debt securities may be comprised of bonds, notes, medium-
term notes or debentures under one or more indentures, long-term 
indebtedness under agreements with banks or other institutional 
lenders, directly or indirectly, and convertible debt.\17\ Long-term 
securities could also include obligations relating to the refunding or 
remarketing of tax-exempt debt issued on behalf of CNP or its 
Subsidiaries by governmental authorities.
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    \17\ Debt will be convertible only into such securities as are 
otherwise authorized under the Act.
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    Long-term debt issued pursuant to the requested authority will be 
unsecured.\18\ Specific terms of any borrowings may include one or more 
revolving credit facilities, and will also continue to be determined by 
CNP at the time of issuance. Any borrowings will comply in all regards 
with the parameters on financing authorization set forth above.
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    \18\ Currently, certain pollution control bonds outstanding at 
CNP are secured by mortgage bond obligations of CEHE.
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    Short-term debt issued by CNP will be unsecured. Types of short-
term debt securities may include borrowings under one or more bank 
loans, commercial paper, short-term notes, bid notes, institutional 
borrowings, and privately placed notes. Specific terms of any short-
term borrowings will be determined by CNP at the time of issuance and 
will comply with the parameters for financing authorization set forth 
above. The maturity of any short-term debt issued will not exceed 364 
days or, if the notional maturity is greater than 364 days, the debt 
security will include put options at appropriate points in time to 
cause the security to be accounted for as a current liability under 
generally accepted accounting principles (``GAAP'').
    CNP may sell commercial paper or privately placed notes 
(``commercial paper''), from time to time, in established domestic or 
European commercial paper markets. Such commercial paper may be sold at 
a discount or bear interest at a rate per annum prevailing at the date 
of issuance for commercial paper of a similarly situated company. CNP 
may, without counting against the limit on parent financings set forth 
above, maintain back-up lines of credit in connection with one or more 
commercial paper programs in an aggregate amount not to exceed the 
amount of authorized commercial paper.
    CNP may sell shares of preferred stock with terms of each series as 
may be designated in the instrument creating each such series. Shares 
of preferred stock may be convertible or exchangeable into CNP common 
stock, provided that preferred stock will be convertible only into such 
common stock as is otherwise authorized under the Act.
    CNP may sell short-term notes through one or more private 
placements or public offerings primarily to traditional money market 
investors. CNP may enter into individual agreements with one or more 
commercial banks that may or may not be lenders under CNP credit 
facilities. These agreements would permit CNP to negotiate with one or 
more banks on any given day for such lender, or any affiliate or 
subsidiary of such lender, to purchase promissory notes directly from 
CNP.
    Equity-linked securities issued by CNP will be exercisable or 
exchangeable for or convertible, either mandatorily or at the option of 
the holder, into common stock or indebtedness or allow the holder to 
surrender to the issuer or apply the value of a security issued by CNP, 
as approved by the Commission, to such holder's obligation to make a 
payment on another security of CNP issued as permitted by the 
Commission. Any convertible or equity-linked securities will be 
convertible into or linked to common stock, preferred securities or 
unsecured debt that CNP is otherwise authorized to issue by Commission 
order directly, or indirectly through Financing Subsidiaries on behalf 
of CNP.
    Preferred stock and equity-linked securities may be sold directly 
or indirectly to or through underwriters, initial purchasers or dealers 
or pursuant to any other method of distribution as described for common 
stock, above.
(c) Risk Management Devices
    CNP requests authority to enter into hedging arrangements intended 
to reduce or manage interest rate risks. These arrangements may 
include, but are not limited to interest rate swaps, caps, floors, 
collars, forward agreements, issuance of structured notes (i.e., a debt 
instrument in which the principal and/or interest payments are 
indirectly linked to the value of an underlying asset or index), or 
transactions involving the purchase or sale, including short sales, of 
U.S. Treasury or U.S. governmental agency (e.g., Fannie Mae) 
obligations or LIBOR based swap instruments (collectively referred to 
as ``Hedging Instruments''). The transactions would be for fixed 
periods and stated notional amounts as generally accepted as prudent in 
the capital markets. In no case will the notional principal amount of 
any interest rate hedge exceed that of the underlying debt instrument. 
CNP will not engage in ``speculative transactions'' as that term is 
described in Statement of Financial Accounting Standards (``SFAS'') 133 
(``Accounting for Derivative Instruments and Hedging Activities''). 
Transaction fees, commissions and other amounts payable to brokers in 
connection with an interest rate hedge will not exceed those generally 
obtainable in capital markets for parties of comparable credit quality. 
CNP may employ interest rate derivatives as a means of prudently 
managing the risk associated with any of its outstanding debt issued 
pursuant to this authorization or an applicable exemption by, in 
effect, synthetically (i) converting variable rate debt to fixed rate 
debt, (ii) converting fixed rate debt to variable rate debt, (iii) 
limiting the impact of changes in interest rates resulting from 
variable rate debt and (iv) managing other risks that may attend 
outstanding securities. Transactions will be entered into for a fixed 
or determinable period. CNP will only enter into agreements with 
counterparties having a senior debt rating at the time the transaction 
is executed of at least ``BBB-'' or its equivalent, as published by a 
NRSRO (``Approved Counterparties'').
    In addition, CNP requests authorization to enter into hedging 
transactions with respect to anticipated debt offerings (the 
``Anticipatory Hedges''), subject to the limitations and restrictions 
expressed below. Such Anticipatory Hedges would only be entered into 
with Approved Counterparties, and would be utilized to fix and/or limit 
the risk associated with any issuance of securities through appropriate 
means, including (i) a forward sale of exchange-traded Hedging 
Instruments, (ii) the purchase of put options on Hedging Instruments,

[[Page 30505]]

(iii) a put options purchase in combination with the sale of call 
options Hedging Instruments, (iv) some combination of the above and/or 
other derivative or cash transactions, including, but not limited to, 
structured notes, caps and collars, appropriate for the Anticipatory 
Hedges, and (v) other financial derivatives or other products including 
Treasury rate locks, swaps, forward starting swaps, and options on the 
foregoing. Anticipatory Hedges may be executed on-exchange with brokers 
through the opening of futures and/or options positions traded on the 
Chicago Board of Trade, the opening of over-the-counter positions with 
one or more counterparties, or a combination of the two. CNP will 
determine the structure of each Anticipatory Hedge transaction at the 
time of execution. CNP may decide to lock in interest rates and/or 
limit its exposure to interest rate increases.
    Each Hedging Instrument and Anticipatory Hedge will be treated for 
accounting purposes as provided for under GAAP. Fees, commissions and 
other amounts payable to the counterparty or exchange (excluding, 
however, the swap or option payments) in connection with Hedging 
Instruments will not exceed those generally obtainable in competitive 
markets for similarly-situated parties of comparable credit quality. 
CNP will comply with SFAS 133 and SFAS 138 (``Accounting for Certain 
Derivative Instruments and Certain Hedging Activities'') or such other 
standards relating to accounting for derivative transactions as are 
adopted and implemented by the Financial Accounting Standards Board.
    (2) Subsidiary Financing
    The Utility Subsidiaries and the Non-Utility Subsidiaries, to the 
extent not exempted pursuant to Rule 52, request authority to issue and 
sell securities, including preferred stock, preferred securities 
(including trust preferred securities) (either directly or through a 
subsidiary), and long-term and short-term debt securities (including 
convertible debt, commercial paper and privately placed short-term 
notes) on the same terms and conditions discussed above for CNP, except 
that Subsidiary debt may be secured or unsecured, and Utility 
Subsidiary debt will be subject to the limits on aggregate amounts of 
securities outstanding in the applicable categories as set forth on 
Exhibit G-1 to the Application.\19\
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    \19\ To the extent CEHE issues secured debt, the debt will be 
secured by assets or securities owned by CEHE. To the extent CERC 
issues secured debt, such debt will be secured by a pledge of the 
stock of its nonutility subsidiary companies. CERC currently does 
not have outstanding secured debt. To the extent a Non-Utility 
Subsidiary issue secured debt, the debt will be secured by assets or 
securities owned by that Non-Utility Subsidiary.
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    The Utility Subsidiaries also request authorization to enter into 
obligations with respect to new tax-exempt debt issued on behalf of a 
Utility Subsidiary by governmental authorities as well as obligations 
entered into in connection with the refunding of outstanding tax-exempt 
debt assumed by CNP in connection with the August 31, 2002 
restructuring by which CNP and Utility Holding became holding companies 
for the Utility Subsidiaries. The Utility Subsidiaries and the Non-
Utility Subsidiaries, to the extent not exempted pursuant to Rule 52, 
also request authority to enter into hedging transactions intended to 
reduce or manage interest rate risks in connection with the foregoing 
issuance of securities, subject to the limitations and requirements 
applicable to CNP. Based on their business plans and the current 
condition in the financial markets, Applicants anticipate that the 
Current Authority (defined above) sought in this Application will be 
used during the Authorization Period primarily to refinance currently 
outstanding debt obligations and to meet ongoing operational needs of 
their respective businesses.
(3) Guarantees and Intra-System Advances
(a) Guarantees
    Authorization is requested for CNP and its Subsidiaries during the 
Authorization Period to enter into guarantees on their own behalf and 
on behalf of their respective Subsidiaries to third parties, obtain 
letters of credit, enter into support or expense agreements or 
liquidity support agreements or otherwise provide credit support with 
respect to the obligations of the Subsidiaries, including performance 
guarantees, as may be appropriate to carry on in the ordinary course of 
CNP or its Subsidiaries' duly-authorized utility and related 
businesses, and the Subsidiaries request authority to provide to their 
respective Subsidiaries guarantees and other forms of credit support 
such that in the aggregate, CNP and its Subsidiaries will not enter 
into guarantees in an amount exceeding the CNP System Guarantee 
Limit.\20\ Excluded from the CNP System Guarantee Limit are obligations 
exempt pursuant to Rule 45 under the Act.
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    \20\ The amount of the requested authority (in the aggregate, 
not to exceed $4 billion outstanding at any time during the 
Authorization Period) is intended to accommodate situations such as 
the CNP System's exposure to, among other things, the volatility of 
natural gas prices.
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    CNP currently has a number of types of guarantees in effect. Among 
other things, it has issued guarantees with respect to payment 
obligations of certain of its Subsidiaries, both to counterparties and, 
in some cases, to regulatory authorities where required under 
applicable laws; entered into indemnification agreements to support the 
issuance of surety bonds on behalf of itself and its Subsidiaries; 
entered into agreements to guarantee certain amounts related to the 
issuance of securities by certain Subsidiaries and to guarantee certain 
other Subsidiary expenses and liabilities. In addition, CERC has 
guaranteed the office space lease of one of its subsidiaries.
    Certain of the guarantees may be in support of obligations that are 
not capable of exact quantification. In such cases, CNP will determine 
the exposure under a guarantee for purposes of measuring compliance 
with the CNP System Guarantee Limit by appropriate means, including 
estimation of exposure based on loss experience or potential payment 
amounts. As appropriate, these estimates will be made in accordance 
with GAAP and sound financial practices. Such estimation will be 
reevaluated periodically.
    The guarantor may charge each Subsidiary a fee for any guarantee 
provided on its behalf that is not greater than the cost, if any, of 
obtaining the liquidity necessary to perform the guarantee (for 
example, bank line commitment fees or letter of credit fees, plus other 
transactional expenses) for the period of time the guarantee remains 
outstanding.
    The amount of any guarantees will be counted toward the applicable 
limits under Rules 53 and 58.
(b) Money Pool
    The ``Participants'' request authorization to continue to conduct 
the Money Pool, as approved in the 2003 Omnibus Financing Order (HCAR 
No. 27962 (June 30, 2003)).\21\ To the extent not exempted by Rule 52 
under the Act, the Participants (other than CNP) also request 
authorization to make, from

[[Page 30506]]

time to time, unsecured short-term borrowings from the Money Pool and 
to contribute surplus funds to the Money Pool and to lend and extend 
credit to (and acquire promissory notes from) one another through the 
Money Pool.
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    \21\ The participants in the Money Pool will be CNP, CenterPoint 
Energy Service Company, LLC (the ``Service Company''), the Utility 
Subsidiaries, CenterPoint Energy Properties, Inc. (owner of CNP's 
office building, parking garage and dispatch facility), CenterPoint 
Energy Products, Inc. (inactive), and CenterPoint Energy Funding 
Company (collectively, the ``Participants''). CenterPoint Energy 
Funding Company is an entity through which CNP had funded or 
acquired foreign utility companies within the meaning of Section 33 
of the Act and so, this company will be an investor in but not a 
borrower from the Money Pool. No exempt wholesale generator, foreign 
utility company or exempt telecommunications company will be a 
borrower from the Money Pool.
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    CNP requests authorization to contribute surplus funds and to lend 
and extend credit to the Participants through the Money Pool. CNP will 
not be a borrower from the Money Pool.
    Under the terms of the Money Pool, each Participant determines each 
day the amount of funds each desires to contribute to the Money Pool, 
and contributes such funds to the Money Pool.\22\ The determination of 
whether a Participant has funds to contribute and the determination 
whether a Participant shall lend such funds to the Money Pool is made 
by such Participant's treasurer, or by a designee thereof, in such 
Participant's sole discretion.\23\ Each Participant may withdraw any of 
its funds at any time upon notice to the Service Company, as 
administrative agent of the Money Pool.
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    \22\ An Amended and Restated Form of Money Pool Agreement is 
attached to the Application as Exhibit J-1.
    \23\ Participants other than Utility Subsidiaries may contribute 
amounts to the Money Pool from either surplus funds or external 
borrowings. Utility Subsidiaries will only contribute surplus funds 
to the Money Pool.
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    Short-term funds will be available from the following sources: (1) 
Surplus funds in the treasuries of the Participants, and (2) proceeds 
from external borrowings, including bank loans, the sale of notes and/
or the sale of commercial paper by the Participants, in each case to 
the extent permitted by applicable laws and regulatory orders.
    Each borrowing Participant will borrow pro rata from each fund 
source in the same proportion that the amount of funds provided from 
that fund source bears to the total amount then loaned through the 
Money Pool. On a day when more than one source of funds is invested in 
the Money Pool with different rates of interest used to fund loans 
through the Money Pool, each borrower will borrow pro rata from each 
such funding source from the Money Pool in the same proportion that the 
amount of funds provided by that fund source bears to the total amount 
of funds invested into the Money Pool. If there are insufficient funds 
to meet all borrowing requests, the needs of the Utility Subsidiaries 
will be met before loans are made to any Non-Utility Subsidiaries.
    The Service Company, as administrator of the Money Pool, will 
provide each Participant with a report for each business day that 
includes, among other things, cash activity for the day and the balance 
of loans outstanding. All borrowings from the Money Pool shall be 
authorized by the borrowing Participant's treasurer, or by a designee 
thereof. No Participant shall be required to effect a borrowing through 
the Money Pool if such Participant determines that it can (and is 
authorized to) effect such borrowing more advantageously directly from 
banks or through the sale of its own notes or commercial paper.
    Funds which are loaned by Participants and are not utilized to 
satisfy borrowing needs of other Participants will be invested by the 
Service Company on behalf of the lending Participants in one or more 
short term instruments, including (i) interest-bearing deposits with 
banks; (ii) obligations issued or guaranteed by the U.S. government 
and/or its agencies; (iii) commercial paper rated not less than A-1 by 
Standard & Poor's and P-1 by Moody's Investors Services, Inc.; (iv) 
money market funds; (v) bank certificates of deposit; (vi) Eurodollar 
funds; (vii) repurchase agreements collateralized by securities issued 
or guaranteed by the U.S. government; and (viii) such other investments 
as are permitted by Section 9(c) of the Act and Rule 40 under the Act.
    The interest rate applicable on any day to then outstanding loans 
through the Money Pool, whether or not evidenced by a promissory demand 
note, will be the composite weighted average daily effective cost 
incurred by CNP for external borrowings outstanding on that date. The 
daily effective cost shall be inclusive of interest rate swaps related 
to such external funds. If there are no external borrowings outstanding 
on that date, then the rate will be the certificate of deposit yield 
equivalent of the 30-day Federal Reserve ``AA'' Non-Financial 
Commercial Paper Composite Rate or if no composite is established for 
that day, then the applicable rate will be the composite for the next 
preceding day for which a composite is established. If the composite 
shall cease to exist, then the rate will be the composite which then 
most closely resembles the composite and/or most closely mirrors the 
pricing CNP would expect if it had external borrowings.
    Interest income related to external investments will be calculated 
daily and allocated back to lending Participants on the basis of their 
relative contribution to the Money Pool on that date.
    Each Participant receiving a loan from the Money Pool shall repay 
the principal amount of such loan, together with all interest accrued 
thereon, on demand by the administrator and in any event not later than 
the expiration date of the Commission authorization for the operation 
of the Money Pool. All loans made through the Money Pool may be prepaid 
by the borrower without premium or penalty.
    Borrowings by the Utility Subsidiaries from the Money Pool should 
not exceed the following amounts at any one time outstanding during the 
Authorization Period:

CEHE--$600 million \24\
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    \24\ CEHE's external borrowings under the $200 million revolving 
credit facility authorized in CNP, HCAR No. 27949 (Feb. 28, 2005) 
will be counted toward the Money Pool limits during the 
Authorization Period.
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CERC--$600 million
(c) Other Intra-System Financing
    In addition to external financings and borrowings as described 
above through the Money Pool, the Subsidiaries may also finance their 
capital needs through both short-term and long-term borrowings from 
CNP, directly or indirectly through Utility Holding. Applicants request 
authorization, consistent with the requirements of Section 12(a) of the 
Act, to engage in intra-system financings with each other.
    Authority is sought for the Utility Subsidiaries to acquire 
securities from their respective subsidiaries and to issue and sell 
securities to their respective parents. Any short-term borrowings by 
Utility Subsidiaries pursuant to this request would be counted toward 
the Money Pool limits above.
    Applicants state that Utility Holding is a subsidiary of CNP and is 
the direct or indirect parent of all of the Subsidiaries. Applicants 
state that Utility Holding may have occasion to issue its debt or 
equity securities to CNP in exchange for funds. Utility Holding could 
then purchase debt or equity securities of its Subsidiaries with those 
funds, adding to the capitalization of those Subsidiaries. Applicants 
state that no such issuance by Utility Holding will increase the CNP 
system's securities held by third-parties. If CNP obtains funds to 
purchase such securities from an external source, CNP's issuance of 
securities will be only as approved by the Commission's order in this 
docket and subject to the limitations imposed in such order, including 
the overall financing limitation of $4.334 billion. All securities 
issuances by a Subsidiary to Utility Holding, will be subject to 
limitations imposed on that Subsidiary regarding securities issuances 
and will be within the dollar limitations imposed by the order in this 
docket, if any.

[[Page 30507]]

Consequently, Applicants assert, there is no need to impose a separate 
dollar limitation on these conduit securities issuances by Utility 
Holding. Applicants state that the approval sought for Utility Holding 
is merely to cover the technical requirement that all of its securities 
issuances be approved, as it is acting as a conduit to invest funds by 
CNP in the Subsidiaries. Applicants also seek authority for Utility 
Holding to transfer any financing proceeds received from the 
Subsidiaries to CNP.
(d) Authority for Inactive Subsidiaries
    The Applicants request authority in an aggregate amount of up to $5 
million during the Authorization Period to pay, on behalf of the 
Inactive Subsidiaries (defined above), administrative expenses and 
dissolution costs; to resolve claims and lawsuits of any Inactive 
Subsidiary, if any; and to pay any other costs and expenses that any 
Inactive Subsidiaries may incur from time to time. Applicants request 
that the Commission reserve jurisdiction over this request.
(4) Changes in Capital Stock of Majority Owned Subsidiaries
    The portion of an individual Subsidiary's aggregate financing to be 
effected through the sale of stock or other equity securities to CNP or 
other immediate parent company during the Authorization Period pursuant 
to Rule 52 and/or pursuant to an order issued pursuant to this filing 
cannot be ascertained at this time. It may happen that the proposed 
sale of capital securities (i.e., common stock or preferred stock) may 
in some cases exceed the then authorized capital stock of such 
Subsidiary. In addition, the Subsidiary may choose to use capital stock 
with no par value.
    As needed to accommodate such proposed transactions and to provide 
for future issuances, request is made for authority to change the terms 
of any 50% or more owned Subsidiary's authorized capital stock 
capitalization or other equity interests by an amount deemed 
appropriate by CNP or other intermediate parent company; provided that 
the consents of all other shareholders or other equity holders have 
been obtained for the proposed change. This request for authorization 
is limited to CNP's 50% or more owned Subsidiaries and will not affect 
the aggregate limits or other conditions contained in the Application. 
A Subsidiary would be able to change the par value, or change between 
par value and no-par stock, or change the form of such equity from 
common stock to limited partnership or limited liability company 
interests or similar instruments, or from such instruments to common 
stock, without additional Commission approval. Any such action by a 
Utility Subsidiary would be subject to and would only be taken upon the 
receipt of any necessary approvals by the state commission in the state 
or states where the Utility Subsidiary is incorporated and doing 
business. CNP will be subject to all applicable laws regarding the 
fiduciary duty of fairness of a majority shareholder to minority 
shareholders in any such 50% or more owned Subsidiary and will 
undertake to ensure that any change implemented under this paragraph 
comports with such legal requirements.\25\
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    \25\ Applicants state that, in the event that proxy 
solicitations are necessary with respect to the internal corporate 
reorganizations, Applicants will seek the necessary Commission 
approvals under Sections 6(a)(2) and 12(e) of the Act through the 
appropriate filing of a declaration.
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(5) Payment of Dividends Out of Capital or Unearned Surplus
    CNP requests authority to declare and pay dividends out of capital 
or unearned surplus in an amount up to $300 million during the 
Authorization Period. CNP requests that the Commission reserve 
jurisdiction over this request.\26\
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    \26\ CEHE will be seeking authority to declare and pay dividends 
in a separate application in connection with the issuance of 
transition bonds.
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    Applicants also request a continuation of authority for the Non-
Utility Subsidiaries to pay dividends with respect to the securities of 
the Non-Utility Subsidiaries and/or acquire, retire or redeem any 
securities of the Non-Utility Subsidiaries that are held by an 
associated company or affiliate, from time to time, through the 
Authorization Period, out of capital or unearned surplus, to the extent 
permitted under applicable corporate law; provided that no Non-Utility 
Subsidiary will declare or pay any dividend out of capital or unearned 
surplus unless it: (i) Has received excess cash as a result of the sale 
of its assets; (ii) has engaged in a restructuring or reorganization; 
and/or (iii) is returning capital to an associate company. Further, no 
Non-Utility Subsidiary that derives any material part of its revenues 
from the sale of goods, services or electricity to Utility Subsidiaries 
will declare or pay any dividend out or capital or unearned surplus. 
The Applicants request that the Commission reserve jurisdiction over 
the payment of such dividends out of capital or unearned surplus when 
any of these conditions are not met.
(6) Financing Subsidiaries
    CNP and its Subsidiaries propose to organize and acquire the common 
stock or other equity interests of one or more Financing Subsidiaries 
for the purpose of effecting various financing transactions from time 
to time through the Authorization Period. Financing Subsidiaries may be 
corporations, trusts, partnerships or other entities created 
specifically for the purposes described herein. The amount of 
securities issued by the Financing Subsidiaries to third parties will 
count toward the respective financing limits of its immediate parent as 
set forth on Exhibit G-1 of the Application. Authorization is requested 
for the issuance of such securities by the Financing Subsidiaries and 
for the transfer of proceeds from such issuance to the respective 
parent companies.
    CNP and, to the extent such issuances are not exempt pursuant to 
Rule 52, the Subsidiaries also request authorization to issue their 
subordinated unsecured notes (``Subordinated Notes'') to any Financing 
Subsidiary to evidence the loan of financing proceeds by a Financing 
Subsidiary to its parent company. The principal amount, maturity and 
interest rate on such Subordinated Notes will be designed to parallel 
the amount, maturity and interest or distribution rate on the 
securities issued by a Financing Subsidiary, in respect of which the 
Subordinated Note is issued. CNP or a Subsidiary may, if required, 
guarantee or enter into support or expense agreements in respect of the 
obligations of such Financing Subsidiaries.
    It is anticipated that the Financing Subsidiaries will be wholly-
owned subsidiaries of CNP and fully consolidated for purposes of 
financial reporting. No Financing Subsidiary shall acquire or dispose 
of, directly or indirectly, any interest in any utility asset, as that 
term is defined under the Act, without first obtaining such further 
approval as may be required.
    The business of the Financing Subsidiary will be limited to 
effecting financing transactions that have been otherwise authorized 
for CNP and its Subsidiaries. In connection with such financing 
transactions, CNP or its Subsidiaries may enter into one or more 
guarantees or other credit support agreements in favor of the Financing 
Subsidiary.
    Any Financing Subsidiary organized pursuant to this filing shall be 
organized only if, in management's opinion, the creation and 
utilization of such Financing Subsidiary will likely result in tax 
savings, increased access to

[[Page 30508]]

capital markets and/or lower cost of capital for CNP or its 
Subsidiaries.
    Each of CNP and its Subsidiaries also requests authorization to 
enter into an expense-related agreement with its respective Financing 
Subsidiary, pursuant to which it would agree to pay all expenses of 
such entity. Any amounts issued by such Financing Subsidiaries to third 
parties pursuant to this authorization will be included in the 
additional external financing limitation requested in the Application 
for the immediate parent of such financing entity. However, the 
underlying intra-system mirror debt and parent guarantee shall not be 
so included. Applicants also seek authority for the Financing 
Subsidiaries to transfer the proceeds of any financing to their 
respective parent companies.
(7) Restructuring of Non-Utility Subsidiaries
    The Commission previously authorized CNP to restructure its Non-
Utility Subsidiaries from time to time as may be necessary or 
appropriate.\27\ CNP seeks a continuation of this authority, provided 
that the Non-Utility Subsidiaries will engage, directly or indirectly, 
only in businesses that are duly authorized, whether by order, rule or 
statute.
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    \27\ See CNP, Holding Co. Act Release No. 27692 (June 30, 2003).

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-2675 Filed 5-25-05; 8:45 am]
BILLING CODE 8010-01-P