Improved performance by CenterPoint Energy's natural gas utilities helped the Houston-based company to achieve net income of $108 million (32 cents/share) for 4Q2007, up a stunning 61% from $67 million (20 cents/share) in 4Q2006.

The company said it expects diluted earnings per share for 2008 to be in the range of $1.15 to $1.25. Last month CenterPoint's board of directors declared a regular quarterly cash dividend of 18.25 cents/share.

"Our natural gas utilities showed significant improvement, reflecting actions we have taken to enhance the operational and financial performance of this business," said CEO David M. McClanahan. "Our interstate pipelines and field services businesses turned in strong performances and our electric utility and competitive natural gas marketing businesses had a very solid year. Our company is well positioned to continue to take advantage of opportunities in each of our businesses."

CenterPoint's natural gas distribution segment reported operating income of $89 million for 4Q2007, compared to $34 million for the same period of 2006 (CenterPoint defines operating income as earnings before interest and taxes). The increase was attributed to customer growth, increased customer usage, the benefit of rate increases and reduced operating expenses, partially offset by higher bad debt expense. Operating income for 4Q2006 included a $21 million write-off for purchased natural gas costs.

The company's competitive natural gas sales and services segment reported a decrease in operating income to $19 million for 4Q2007 from $33 million in 4Q2006. The decrease was due to a reduction in locational and seasonal natural gas price differentials.

The interstate pipelines segment reported operating income of $71 million for 4Q2007, compared to $44 million in 4Q2006, an increase driven primarily by the new Carthage-to-Perryville pipeline, which went into commercial service in May 2007. The volume of gas moving east out of Texas on the pipeline was averaging 1.4 Bcf/d by December 2007, compared with 0.3 Bcf/d for the same period in 2006 (see NGI, Dec. 17, 2007). McClanahan said additional compression and increased operating pressure to expand the pipeline's capacity to 1.5 Bcf/d should be in place by midyear.

At the beginning of the fourth quarter, the Federal Energy Regulatory Commission approved another CenterPoint pipeline project, known as the Southeast Supply Header (SESH) (see NGI, Sept. 24, 2007). The 270-mile pipeline would extend from the Perryville Hub near Delhi, LA, and continue through Mississippi and terminate near Coden, AL. The line would carry up to 1.114 Bcf/d destined for southeastern and northeastern markets. McClanahan said SESH, a joint venture with Spectra Energy, is currently under construction.

"SESH expects to invest approximately $1 billion in the pipeline and has signed a solid group of shippers for 95% of the 1 Bcf/d capacity. We expect this pipeline to be in service in the second half of this year," McClanahan said.

The field services segment reported operating income of $24 million for 4Q2007, compared to $23 million for the same period of 2006.

CenterPoint's electric transmission and distribution segment reported operating income of $104 million for 4Q2007 (up from $96 million a year earlier), including $65 million from regulated electric transmission and distribution utility operations. Operating income for the segment was positively impacted by customer growth of over 53,000 metered customers since December 2006, increased usage primarily due to favorable weather and higher revenues from ancillary services.

CenterPoint reported net income of $399 million ($1.17/share) for full-year 2007, compared to $432 million ($1.33/share) for 2006.

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