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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-K
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2006
 Or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For
the transition period from            to
 Commission file number 1-3187
 CenterPoint Energy Houston Electric, LLC
 (Exact name of registrant as specified in its charter)
 Texas(State or other jurisdiction of incorporation or 
organization)
    
    22-3865106(I.R.S. Employer Identification No.)1111 Louisiana 
Houston, Texas 77002(Address and zip code of principal executive offices)
    
    (713) 207-1111(Registrants telephone number, including area code)
 Securities registered pursuant to Section 12(b) of the act:
 Title of each class
    
    Name of each exchange on which registered9.15% First Mortgage Bonds due 2021
6.95% General Mortgage Bonds due 2033
    
    New York Stock Exchange
New York Stock Exchange
 Securities registered pursuant to Section 12(g) of the act:
 None
 CenterPoint Energy Houston Electric, LLC meets the conditions set forth in general
instruction I(1)(a) and (b) of Form 10-K and is therefore filing this Form 10-K with the reduced
disclosure format.
 o þ
 o þ
 þ o
 þ
  o o þ
 o þ




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TABLE OF CONTENTS
 PagePART IItem 1.
    
    Business
    
    
    1Item 1A.
    
    Risk Factors
    
    
    12Item 1B.
    
    Unresolved Staff Comments
    
    
    17Item 2.
    
    Properties
    
    
    17Item 3.
    
    Legal Proceedings
    
    
    17Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    18PART IIItem 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
    
    
    18Item 6.
    
    Selected Financial Data
    
    
    18Item 7.
    
    Managements Narrative Analysis of Results of Operations
    
    
    18Item 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    28Item 8.
    
    Financial Statements and Supplementary Data
    
    
    29Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    51Item 9A.
    
    Controls and Procedures
    
    
    51Item 9B.
    
    Other Information
    
    
    51PART IIIItem 10.
    
    Directors, Executive Officers and Corporate Governance
    
    
    51Item 11.
    
    Executive Compensation
    
    
    51Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
    
    
    51Item 13.
    
    Certain Relationships and Related Transactions, and Director Independence
    
    
    51Item 14.
    
    Principal Accountant Fees and Services
    
    
    52PART IVItem 15.
    
    Exhibits and Financial Statement Schedules
    
    
    52
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
     ii




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PART I
 
 Item 1. Business
 OUR BUSINESS
 Overview
   www.centerpointenergy.com
 Electric Transmission & Distribution
   Electric Transmission
  Electric Distribution
  1




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ERCOT Market Framework
    True-Up Proceeding
   2




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Securitization
  Competition Transition Charge
   3




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Refund of Environmental Retrofit Costs
  Final Fuel Reconciliation
  4




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Remand of 2001 Unbundled Cost of Service (UCOS) Order
  Rate Case
  Customers
  Distribution Automation (Intelligent Grid)
   5




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Competition
  Seasonality
  Properties
   
    
    the lien of a Mortgage and Deed of Trust (the Mortgage) dated November 1, 1944, as
supplemented; and
    
    the lien of a General Mortgage (the General Mortgage) dated October 10, 2002, as
supplemented, which is junior to the lien of the Mortgage.
  Electric
Lines  Overhead.
 Electric Lines  Underground.
 Substations.
 Service Centers.
 6




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Franchises
    REGULATION
  Federal Energy Regulatory Commission
   7




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State and Local Regulation
    Rate Case
   8




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ENVIRONMENTAL MATTERS
  
    
    restricting the way we can handle or dispose of wastes;
    
    limiting or prohibiting construction activities in sensitive areas such as
wetlands, coastal regions, or areas inhabited by endangered species;
    
    requiring remedial action to mitigate pollution conditions caused by our
operations, or attributable to former operations; and
    
    enjoining the operations of facilities deemed in non-compliance with permits
issued pursuant to such environmental laws and regulations.
  
    
    construct or acquire new equipment;
    
    acquire permits for facility operations;
 9




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
    
    modify or replace existing and proposed equipment; and
    
    clean up or decommission waste disposal areas, fuel storage and management
facilities and other locations and facilities.
    Air Emissions
  Water Discharges
  10




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Hazardous Waste
  Liability for Remediation
  Liability For Preexisting Conditions
  Other Environmental.
 Nuclear Decommissioning Fund Collections
  11




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EMPLOYEES
  
 Item 1A. Risk Factors
  Risk Factors Affecting Our Business
 We may not be successful in ultimately recovering the full value of our true-up components, which
could result in the elimination of certain tax benefits and could have an adverse impact on our
results of operations, financial condition and cash flows.
   12




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Our receivables are concentrated in a small number of REPs, and any delay or default in payment
could adversely affect our cash flows, financial condition and results of operations.
  Rate regulation of our business may delay or deny our ability to earn a reasonable return and
fully recover our costs.
  Disruptions at power generation facilities owned by third parties could interrupt our sales of
transmission and distribution services.
  Our revenues and results of operations are seasonal.
  Risk Factors Associated with Our Consolidated Financial Condition
 If we are unable to arrange future financings on acceptable terms, our ability to refinance
existing indebtedness could be limited.
  13




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
    
    the timing and amount of our recovery of the true-up components, including, in
particular, the results of appeals to the courts of determination on rulings obtained to
date;
    
    general economic and capital market conditions;
    
    credit availability from financial institutions and other lenders;
    
    investor confidence in us and the markets in which we operate;
    
    maintenance of acceptable credit ratings by us and CenterPoint Energy;
    
    market expectations regarding our future earnings and probable cash flows;
    
    market perceptions of our and CenterPoint Energys ability to access capital markets on reasonable terms;
    
    our exposure to RRI as our customer and in connection with its indemnification
obligations arising in connection with its separation from CenterPoint Energy; and
    
    provisions of relevant tax and securities laws.
   The financial condition and liquidity of our parent company could affect our access to capital,
our credit standing and our financial condition.
  14




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We are an indirect wholly owned subsidiary of CenterPoint Energy. CenterPoint Energy can exercise
substantial control over our dividend policy and business and operations and could do so in a
manner that is adverse to our interests.
  
    
    our payment of dividends;
    
    decisions on our financings and our capital raising activities;
    
    mergers or other business combinations; and
    
    our acquisition or disposition of assets.
  Risks Common to Our Business and Other Risks
 We are subject to operational and financial risks and liabilities arising from environmental laws
and regulations .
  
    
    restricting the way we can handle or dispose of wastes;
    
    limiting or prohibiting construction activities in sensitive areas such as
wetlands, coastal regions, or areas inhabited by endangered species;
    
    requiring remedial action to mitigate pollution conditions caused by our
operations, or attributable to former operations; and
    
    enjoining the operations of facilities deemed in non-compliance with permits
issued pursuant to such environmental laws and regulations.
  
    
    construct or acquire new equipment;
    
    acquire permits for facility operations;
    
    modify or replace existing and proposed equipment; and
    
    clean up or decommission waste disposal areas, fuel storage and management
facilities and other locations and facilities.
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Our insurance coverage may not be sufficient. Insufficient insurance coverage and increased
insurance costs could adversely impact our results of operations, financial condition and cash
flows.
   We and CenterPoint Energy could incur liabilities associated with businesses and assets that we
have transferred to others.
  
    
    those transferred to RRI or its subsidiaries in connection with the
organization and capitalization of RRI prior to its initial public offering in 2001; and
    
    those transferred to Texas Genco in connection with its organization and
capitalization.
    16




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Item 1B. Unresolved Staff Comments
  
 Item 2. Properties
 Character of Ownership
  
 Item 3. Legal Proceedings
  17




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Item 4. Submission of Matters to A Vote of Security Holders
  
 PART II
 
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
    
 Item 6. Selected Financial Data
  
 Item 7. Managements Narrative Analysis of Results of Operations
 The following narrative analysis should be read in combination with our consolidated financial
statements and notes contained in Item 8 of this report.
 OVERVIEW
    18




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EXECUTIVE SUMMARY
 Significant Events in 2006
 Debt Refinancing
  Agreement regarding settlement of the Rate Case and the 2001 Unbundled Cost of Service (UCOS)
Remand
   Competition Transition Charge (CTC) Interest Rate Reduction
  CERTAIN FACTORS AFFECTING FUTURE EARNINGS
  
    
    the timing and amount of our recovery of the true-up components, including, in
particular, the results of appeals to the courts of determinations on rulings obtained to
date;
    
    state and federal legislative and regulatory actions or developments, including
deregulation, re-regulation, changes in or application of laws or regulations applicable to
other aspects of our business;
    
    timely and appropriate rate actions and increases, allowing recovery of costs
and a reasonable return on investment;
 19




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
    
    industrial, commercial and residential growth in our service territory and
changes in market demand and demographic patterns;
    
    changes in interest rates or rates of inflation;
    
    weather variations and other natural phenomena;
    
    commercial bank and financial market conditions, our access to capital, the
cost of such capital, and the results of our financing and refinancing efforts, including
availability of funds in the debt capital markets;
    
    actions by rating agencies;
    
    non-payment for our services due to financial distress of our customers,
including Reliant Energy, Inc. (RRI);
    
    the ability of RRI to satisfy its obligations to us, including indemnity obligations;
    
    the outcome of litigation brought by or against us;
    
    our ability to control costs;
    
    the investment performance of CenterPoint Energys employee benefit plans;
    
    our potential business strategies, including acquisitions or dispositions of
assets or businesses, which cannot be assured to be completed or beneficial to us; and
    
    other factors we discuss under Risk Factors in Item 1A of this report.
 20




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CONSOLIDATED RESULTS OF OPERATIONS
   Year Ended December 31,2004
    
    
    2005
    
    
    2006(In millions,except throughput and customer data)Revenues:Electric transmission and distribution utility
    
    $
    1,446
    
    
    $
    1,538
    
    
    $
    1,516Transition bond companies (1)
    
    
    75
    
    
    
    106
    
    
    
    265Total Revenues
    
    
    1,521
    
    
    
    1,644
    
    
    
    1,781Expenses:Operation and maintenance, excluding transition bond companies
    
    
    539
    
    
    
    618
    
    
    
    611Depreciation and amortization, excluding transition bond companies
    
    
    248
    
    
    
    258
    
    
    
    243Taxes other than income taxes
    
    
    203
    
    
    
    214
    
    
    
    212Transition bond companies (1)
    
    
    37
    
    
    
    67
    
    
    
    139Total Expenses
    
    
    1,027
    
    
    
    1,157
    
    
    
    1,205Operating Income
    
    
    494
    
    
    
    487
    
    
    
    576Interest and other finance charges
    
    
    (307
    )
    
    
    (288
    )
    
    
    (110
    )Interest on transition bonds (1)
    
    
    (38
    )
    
    
    (40
    )
    
    
    (130
    )Return on true-up balance
    
    
    226
    
    
    
    121
    
    
    
    Other Income, net
    
    
    44
    
    
    
    51
    
    
    
    67Income Before Income Taxes and Extraordinary Item
    
    
    419
    
    
    
    331
    
    
    
    403Income Tax Expense
    
    
    137
    
    
    
    108
    
    
    
    132Income Before Extraordinary Item
    
    
    282
    
    
    
    223
    
    
    
    271Extraordinary Item, net of tax
    
    
    (977
    )
    
    
    30
    
    
    
    Net Income (Loss)
    
    $
    (695
    )
    
    $
    253
    
    
    $
    271Throughput (in gigawatt-hours (GWh)):Residential
    
    
    23,748
    
    
    
    24,924
    
    
    
    23,955Total
    
    
    73,632
    
    
    
    74,189
    
    
    
    75,877Average number of metered customers:Residential
    
    
    1,639,488
    
    
    
    1,683,100
    
    
    
    1,732,656Total
    
    
    1,862,853
    
    
    
    1,912,346
    
    
    
    1,968,114
 
 (1)
    
    We issued $748.9 million of transition bonds in October 2001 and $1.851 billion in
December 2005. Transition charges are designed to collect revenues in amounts necessary to service
principal and interest of the transition bonds and cover related operating expenses of the
transition bond companies. The net income of the transition bond companies for all periods
presented is $-0-. 2006 Compared to 2005.
 21




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2005 Compared to 2004.
   LIQUIDITY
   Capital Requirements.
 2006
    
    $
    3892007
    
    
    4082008
    
    
    4062009
    
    
    4022010
    
    
    4372011
    
    
    435
 22




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2012 andContractual Obligations
    
    Total
    
    
    2007
    
    
    2008-2009
    
    
    2010-2011
    
    
    thereafterTransition bond debt, including current
portion(1)
    
    $
    2,407
    
    
    $
    147
    
    
    $
    334
    
    
    $
    397
    
    
    $
    1,529Other long-term debt, including current portion
    
    
    1,593
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,593Interest payments  transition bond debt (1) (2)
    
    
    867
    
    
    
    123
    
    
    
    224
    
    
    
    187
    
    
    
    333Interest payments  other long-term debt (2)
    
    
    1,330
    
    
    
    95
    
    
    
    191
    
    
    
    191
    
    
    
    853Capital leases
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Operating leases (3)
    
    
    10
    
    
    
    6
    
    
    
    4
    
    
    
    
    
    
    
    Benefit obligations (4)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total contractual cash obligations
    
    $
    6,208
    
    
    $
    371
    
    
    $
    753
    
    
    $
    775
    
    
    $
    4,309
 
 (1)
    
    Transition charges are adjusted at least annually to cover debt service on transition bonds.(2)
    
    We calculated estimated interest payments for long-term debt as follows: for fixed-rate debt
and term debt, we calculated interest based on the applicable rates and payment dates; for
variable-rate debt and/or non-term debt, we used interest rates in place as of December 31,
2006; we typically expect to settle such interest payments with cash flows from operations
and short-term borrowings.(3)
    
    For a discussion of operating leases, please read Note 7(a) to our consolidated financial
statements.(4)
    
    We expect to contribute approximately $10 million to our postretirement benefits plan in 2007
to fund a portion of our obligations in accordance with rate orders or to fund pay-as-you-go
costs associated with the plan. Off-Balance Sheet Arrangements.
 Credit Facilities.
  Temporary Investments.
 Money Pool.
 23




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Long-term Debt.
 Year
    
    Third-Party
    
    
    Affiliate
    
    
    Sub-Total
    
    
    Transition Bonds
    
    
    Total2007
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    95
    (1)
    
    $
    952008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    159
    
    
    
    1592009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    175
    
    
    
    1752010
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    190
    
    
    
    1902011
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    207
    
    
    
    2072012
    
    
    46
    
    
    
    
    
    
    
    46
    
    
    
    227
    
    
    
    2732013
    
    
    450
    
    
    
    
    
    
    
    450
    
    
    
    245
    
    
    
    6952014
    
    
    300
    
    
    
    
    
    
    
    300
    
    
    
    147
    
    
    
    4472015
    
    
    
    
    
    
    151
    
    
    
    151
    
    
    
    158
    
    
    
    3092016
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    169
    
    
    
    1692017
    
    
    127
    
    
    
    
    
    
    
    127
    
    
    
    181
    
    
    
    3082018
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    194
    
    
    
    1942019
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    208
    
    
    
    2082021
    
    
    102
    
    
    
    
    
    
    
    102
    
    
    
    
    
    
    
    1022023
    
    
    200
    
    
    
    
    
    
    
    200
    
    
    
    
    
    
    
    2002027
    
    
    56
    
    
    
    
    
    
    
    56
    
    
    
    
    
    
    
    562033
    
    
    312
    
    
    
    
    
    
    
    312
    
    
    
    
    
    
    
    312Total
    
    $
    1,593
    
    
    $
    151
    
    
    $
    1,744
    
    
    $
    2,355
    
    
    $
    4,099
 
 (1)
    
    This amount reflects a principal payment of $52 million in February 2007 by Bond Company II.  Issued as
    
    
    Issued as CollateralIssued Directly
    
    
    Collateral for the
    
    
    for CenterPointto Third Parties
    
    
    Companys Debt
    
    
    Energys Debt
    
    
    TotalFirst Mortgage Bonds
    
    $
    102
    
    
    $
    
    
    
    $
    151
    
    
    $
    253General Mortgage Bonds
    
    
    1,262
    
    
    
    229
    
    
    
    527
    
    
    
    2,018Total
    
    $
    1,364
    
    
    $
    229
    
    
    $
    678
    
    
    $
    2,271
  24




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General MortgageYear
    
    First Mortgage Bonds
    
    
    Bonds
    
    
    Total2011
    
    $
    
    
    
    $
    19
    
    
    $
    192015
    
    
    151
    
    
    
    
    
    
    
    1512018
    
    
    
    
    
    
    50
    
    
    
    502019
    
    
    
    
    
    
    200
    
    
    
    2002020
    
    
    
    
    
    
    90
    
    
    
    902026
    
    
    
    
    
    
    100
    
    
    
    1002028
    
    
    
    
    
    
    68
    
    
    
    68Total
    
    $
    151
    
    
    $
    527
    
    
    $
    678
  Impact on Liquidity of a Downgrade in Credit Ratings.
 Moodys
    
    
    S&P
    
    
    FitchInstrument
    
    Rating
    
    
    Outlook(1)
    
    
    Rating
    
    
    Outlook(2)
    
    
    Rating
    
    
    Outlook(3)Senior Secured
Debt (First
Mortgage Bonds)
    
    Baa2
    
    Stable
    
    BBB
    
    Stable
    
    
    A-
    
    
    Stable
 
 (1)
    
    A stable outlook from Moodys indicates that Moodys does not expect to put the rating on
review for an upgrade or downgrade within 18 months from when the outlook was assigned or last
affirmed.(2)
    
    An S&P rating outlook assesses the potential direction of a long-term credit rating over the
intermediate to longer term.(3)
    
    A stable outlook from Fitch encompasses a one-to-two year horizon as to the likely ratings
direction.  25




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Cross Defaults.
 Other Factors that Could Affect Cash Requirements.
 
    
    increases in interest expense in connection with debt refinancings and
borrowings under our credit facility;
    
    various regulatory actions;
    
    the ability of RRI and its subsidiaries to satisfy their obligations as our
principal customers and in respect of RRIs indemnity obligations to us;
    
    the outcome of litigation brought by and against us;
    
    restoration costs and revenue losses resulting from natural disasters such as hurricanes; and
    
    various other risks identified in Risk Factors in Item 1A of this report.
 Certain Contractual Limits on Ability to Issue Securities and Borrow Money.
 Relationship with CenterPoint Energy.
 CRITICAL ACCOUNTING POLICIES
  26




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Accounting for Rate Regulation
  Impairment of Long-Lived Assets and Intangibles
   Asset Retirement Obligations
   
    
    Inflation adjustment The estimated cash flows are adjusted for inflation
estimates for labor, equipment, materials, and other disposal costs;
    
    Discount rate The estimated cash flows include contingency factors that were
used as a proxy for the
 27




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market risk premium; and
 
    
    Third party markup adjustments Internal labor costs included in the cash flow
calculation were adjusted for costs that a third party would incur in performing the tasks
necessary to retire the asset.
  Unbilled Energy Revenues
  NEW ACCOUNTING PRONOUNCEMENTS
  OTHER SIGNIFICANT MATTERS
 Pension Plan.
 
 Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    28




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Item 8. Financial Statements and Supplementary Data
 
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
      
 29




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##### Table of Contents



CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC AND SUBSIDIARIES
(An Indirect Wholly Owned Subsidiary of CenterPoint Energy, Inc.)
 
 STATEMENTS OF CONSOLIDATED OPERATIONS
 Year Ended December 31,2004
    
    
    2005
    
    
    2006(In Millions)Revenues
    
    $
    1,521
    
    
    $
    1,644
    
    
    $
    1,781Expenses:Operation and maintenance
    
    
    541
    
    
    
    621
    
    
    
    614Depreciation and amortization
    
    
    283
    
    
    
    322
    
    
    
    379Taxes other than income taxes
    
    
    203
    
    
    
    214
    
    
    
    212Total
    
    
    1,027
    
    
    
    1,157
    
    
    
    1,205Operating Income
    
    
    494
    
    
    
    487
    
    
    
    576Other Income (Expense):Interest and other finance charges
    
    
    (307
    )
    
    
    (288
    )
    
    
    (110
    )Interest on transition bonds
    
    
    (38
    )
    
    
    (40
    )
    
    
    (130
    )Return on true-up balance
    
    
    226
    
    
    
    121
    
    
    
    Other, net
    
    
    44
    
    
    
    51
    
    
    
    67Total
    
    
    (75
    )
    
    
    (156
    )
    
    
    (173
    )Income Before Income Taxes and Extraordinary Item
    
    
    419
    
    
    
    331
    
    
    
    403Income Tax Expense
    
    
    137
    
    
    
    108
    
    
    
    132Income Before Extraordinary Item
    
    
    282
    
    
    
    223
    
    
    
    271Extraordinary Item, net of tax
    
    
    (977
    )
    
    
    30
    
    
    
    Net Income (Loss)
    
    $
    (695
    )
    
    $
    253
    
    
    $
    271
  30




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##### Table of Contents



CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC AND SUBSIDIARIES
(An Indirect Wholly Owned Subsidiary of CenterPoint Energy, Inc.)
 
 CONSOLIDATED BALANCE SHEETS
 December 31,2005
    
    
    2006(In Millions)ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    40
    
    
    $
    122Accounts and notes receivable, net
    
    
    150
    
    
    
    165Accounts and notes receivableaffiliated companies
    
    
    
    
    
    
    49Accrued unbilled revenues
    
    
    108
    
    
    
    95Inventory
    
    
    60
    
    
    
    63Taxes receivable
    
    
    
    
    
    
    34Deferred tax asset
    
    
    1
    
    
    
    Other
    
    
    34
    
    
    
    69Total current assets
    
    
    393
    
    
    
    597Property, Plant and Equipment, net
    
    
    4,077
    
    
    
    4,257Other Assets:Regulatory assets
    
    
    2,902
    
    
    
    2,820Notes receivableaffiliated companies
    
    
    750
    
    
    
    750Other
    
    
    105
    
    
    
    39Total other assets
    
    
    3,757
    
    
    
    3,609Total Assets
    
    $
    8,227
    
    
    $
    8,463LIABILITIES AND MEMBERS EQUITYCurrent Liabilities:Current portion of long-term debt
    
    $
    73
    
    
    $
    147Accounts payable
    
    
    57
    
    
    
    72Accounts and notes payableaffiliated companies
    
    
    79
    
    
    
    141Taxes accrued
    
    
    139
    
    
    
    105Interest accrued
    
    
    50
    
    
    
    85Other
    
    
    43
    
    
    
    67Total current liabilities
    
    
    441
    
    
    
    617Other Liabilities:Accumulated deferred income taxes, net
    
    
    1,400
    
    
    
    1,341Unamortized investment tax credits
    
    
    42
    
    
    
    35Benefit obligations
    
    
    139
    
    
    
    197Regulatory liabilities
    
    
    294
    
    
    
    336Notes payableaffiliated companies
    
    
    151
    
    
    
    151Other
    
    
    44
    
    
    
    53Total other liabilities
    
    
    2,070
    
    
    
    2,113Long-Term Debt
    
    
    3,998
    
    
    
    3,851Commitments And Contingencies (Note 7)Members Equity
    
    
    1,718
    
    
    
    1,882Total Liabilities and Members Equity
    
    $
    8,227
    
    
    $
    8,463
  31




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CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC AND SUBSIDIARIES
(An Indirect Wholly Owned Subsidiary of CenterPoint Energy, Inc.)
 
 STATEMENTS OF CONSOLIDATED CASH FLOWS
 Year Ended December 31,2004
    
    
    2005
    
    
    2006(In Millions)Cash Flows from Operating Activities:Net income (loss)
    
    $
    (695
    )
    
    $
    253
    
    
    $
    271Extraordinary item, net of tax
    
    
    977
    
    
    
    (30
    )
    
    
    Income before extraordinary item
    
    
    282
    
    
    
    223
    
    
    
    271Adjustments to reconcile income before extraordinary item to
net cash provided by operating activities:Depreciation and amortization
    
    
    283
    
    
    
    322
    
    
    
    379Deferred income taxes
    
    
    86
    
    
    
    123
    
    
    
    (69
    )Amortization of deferred financing costs
    
    
    31
    
    
    
    31
    
    
    
    12Investment tax credit
    
    
    (7
    )
    
    
    (7
    )
    
    
    (7
    )Changes in other assets and liabilities:Accounts and notes receivable, net
    
    
    (36
    )
    
    
    (59
    )
    
    
    14Accounts receivable/payable, affiliates
    
    
    39
    
    
    
    61
    
    
    
    (36
    )Taxes receivable
    
    
    235
    
    
    
    (79
    )
    
    
    (6
    )Inventory
    
    
    3
    
    
    
    (7
    )
    
    
    (3
    )Accounts payable
    
    
    4
    
    
    
    6
    
    
    
    8Interest and taxes accrued
    
    
    25
    
    
    
    16
    
    
    
    1Net regulatory assets and liabilities
    
    
    (518
    )
    
    
    (181
    )
    
    
    56Clawback payment from RRI
    
    
    177
    
    
    
    
    
    
    
    Other current assets
    
    
    2
    
    
    
    (10
    )
    
    
    (2
    )Other current liabilities
    
    
    (6
    )
    
    
    (15
    )
    
    
    17Other assets
    
    
    (2
    )
    
    
    (3
    )
    
    
    9Other liabilities
    
    
    (35
    )
    
    
    (17
    )
    
    
    17Other, net
    
    
    
    
    
    
    
    
    
    
    (6
    )Net cash provided by operating activities
    
    
    563
    
    
    
    404
    
    
    
    655Cash Flows from Investing Activities:Capital expenditures
    
    
    (226
    )
    
    
    (267
    )
    
    
    (381
    )Decrease in notes receivable from affiliates
    
    
    
    
    
    
    73
    
    
    
    Increase in restricted cash of transition bond companies
    
    
    
    
    
    
    (12
    )
    
    
    (32
    )Other, net
    
    
    
    
    
    
    
    
    
    
    1Net cash used in investing activities
    
    
    (226
    )
    
    
    (206
    )
    
    
    (412
    )Cash Flows from Financing Activities:Proceeds from long-term debt
    
    
    229
    
    
    
    3,161
    
    
    
    Payments of long-term debt
    
    
    (42
    )
    
    
    (2,668
    )
    
    
    (74
    )Increase (decrease) in short-term notes payable with affiliates
    
    
    (186
    )
    
    
    68
    
    
    
    49Decrease in long-term payable with affiliates
    
    
    (229
    )
    
    
    (303
    )
    
    
    Debt issuance costs
    
    
    (16
    )
    
    
    (16
    )
    
    
    Contribution from (to) parent
    
    
    
    
    
    
    113
    
    
    
    (36
    )Dividend to parent
    
    
    (100
    )
    
    
    (537
    )
    
    
    (100
    )Other, net
    
    
    1
    
    
    
    (1
    )
    
    
    Net cash used in financing activities
    
    
    (343
    )
    
    
    (183
    )
    
    
    (161
    )Net Increase (Decrease) in Cash and Cash Equivalents
    
    
    (6
    )
    
    
    15
    
    
    
    82Cash and Cash Equivalents at Beginning of the Year
    
    
    31
    
    
    
    25
    
    
    
    40Cash and Cash Equivalents at End of the Year
    
    $
    25
    
    
    $
    40
    
    
    $
    122Supplemental Disclosure of Cash Flow Information:Cash Payments:Interest, net of capitalized interest
    
    $
    315
    
    
    $
    319
    
    
    $
    198Income taxes (refunds)
    
    
    (74
    )
    
    
    155
    
    
    
    304Non-cash transactions:Increase in accounts payable related to capital expenditures
    
    $
    
    
    
    $
    10
    
    
    $
    7
  32




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CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC AND SUBSIDIARIES
(An Indirect Wholly Owned Subsidiary of CenterPoint Energy, Inc.)
 
 STATEMENTS OF CONSOLIDATED MEMBERS EQUITY
 2004
    
    
    2005
    
    
    2006Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount(In millions, except share amounts)Preference Stock, none outstanding
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    Cumulative Preferred Stock, $0.01 par value;
authorized 20,000,000 shares, none
outstanding
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Common stock, $0.01 par value; Authorized
1,000,000,000 sharesBalance, beginning of year
    
    
    1,000
    
    
    
    
    
    
    
    1,000
    
    
    
    
    
    
    
    1,000
    
    
    
    Balance, end of year
    
    
    1,000
    
    
    
    
    
    
    
    1,000
    
    
    
    
    
    
    
    1,000
    
    
    
    Additional Paid-In-CapitalBalance, beginning of year
    
    
    
    
    
    
    2,190
    
    
    
    
    
    
    
    2,278
    
    
    
    
    
    
    
    1,719Contribution from (to) parent
    
    
    
    
    
    
    113
    
    
    
    
    
    
    
    (28
    )
    
    
    
    
    
    
    (8
    )Dividend to parent
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (528
    )
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    (25
    )
    
    
    
    
    
    
    (3
    )
    
    
    
    
    
    
    1Balance, end of year
    
    
    
    
    
    
    2,278
    
    
    
    
    
    
    
    1,719
    
    
    
    
    
    
    
    1,712Retained Earnings (Deficit)Balance, beginning of year
    
    
    
    
    
    
    550
    
    
    
    
    
    
    
    (245
    )
    
    
    
    
    
    
    (1
    )Net income (loss)
    
    
    
    
    
    
    (695
    )
    
    
    
    
    
    
    253
    
    
    
    
    
    
    
    271Dividend to parent
    
    
    
    
    
    
    (100
    )
    
    
    
    
    
    
    (9
    )
    
    
    
    
    
    
    (100
    )Balance, end of year
    
    
    
    
    
    
    (245
    )
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    170Total Members Equity
    
    
    
    
    
    $
    2,033
    
    
    
    
    
    
    $
    1,718
    
    
    
    
    
    
    $
    1,882
  33




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CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC AND SUBSIDIARIES
(An Indirect Wholly Owned Subsidiary of CenterPoint Energy, Inc.)
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (1) Background
   (2) Summary of Significant Accounting Policies
 (a) Use of Estimates
  (b) Principles of Consolidation
  (c) Revenues
  (d) Long-Lived Assets and Intangibles
  WeightedAverage Useful
    
    
    December 31,Lives (Years)
    
    
    2005
    
    
    2006(In millions)Transmission
    
    
    37
    
    
    $
    1,327
    
    
    $
    1,427Distribution
    
    
    25
    
    
    
    4,453
    
    
    
    4,643Other
    
    
    17
    
    
    
    683
    
    
    
    753Total
    
    
    
    
    
    
    6,463
    
    
    
    6,823Accumulated depreciation
    
    
    
    
    
    
    (2,386
    )
    
    
    (2,566
    )Property, plant and equipment, net
    
    
    
    
    
    $
    4,077
    
    
    $
    4,257
  34




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##### Table of Contents



(e) Regulatory Assets and Liabilities
  December 31,2005
    
    
    2006(In millions)Recoverable electric generation-related regulatory assets (1)
    
    $
    332
    
    
    $
    304Securitized regulatory asset
    
    
    2,420
    
    
    
    2,285Unamortized loss on reacquired debt
    
    
    91
    
    
    
    85Pension and postretirement related regulatory asset (2)
    
    
    
    
    
    
    60Other long-term regulatory assets/liabilities
    
    
    21
    
    
    
    23Subtotal
    
    
    2,864
    
    
    
    2,757Estimated removal costs
    
    
    (256
    )
    
    
    (273
    )Total
    
    $
    2,608
    
    
    $
    2,484
 
 (1)
    
    Excludes $248 million and $234 million of allowed equity return on the true-up
balance as of December 31, 2005 and 2006, respectively.(2)
    
    Upon adoption of SFAS No. 158, Employers Accounting for Defined Benefit Pension
and Other Postretirement Plans  An Amendment of FASB Statements No. 87, 88, 106 and
132(R) (SFAS No. 158), the Company recorded a regulatory asset for its unrecognized
costs because it has historically recovered and currently recovers pension and
postretirement expenses in rates. See Note 2(l).   (f) Depreciation and Amortization Expense
  35




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##### Table of Contents



Year Ended December 31,2004
    
    
    2005
    
    
    2006(In millions)Depreciation expense
    
    $
    229
    
    
    $
    237
    
    
    $
    245Amortization expense of transition bond companies
    
    
    35
    
    
    
    65
    
    
    
    135Other amortization expense
    
    
    19
    
    
    
    20
    
    
    
    (1
    )Total depreciation and amortization
    
    $
    283
    
    
    $
    322
    
    
    $
    379
 (g) Allowance for Funds Used During Construction
  (h) Income Taxes
  (i) Accounts Receivable and Allowance for Doubtful Accounts
  (j) Inventory
  (k) Statements of Consolidated Cash Flows
  36




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##### Table of Contents



(l) New Accounting Pronouncements
    Before Adoption
    
    Change due to
    
    After Adoption ofof SFAS No. 158
    
    SFAS No. 158
    
    SFAS No. 158Other Assets:Regulatory asset
    
    $
    
    
    
    $
    60
    
    
    $
    60Other Liabilities:Benefit obligations
    
    
    96
    
    
    
    60
    
    
    
    156
   (m) Employee Benefit Plans
 Pension Plans
  37




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##### Table of Contents



Savings Plan
   Postretirement Benefits
    Year Ended December 31,2004
    
    
    2005
    
    
    2006(In millions)Service cost benefits earned during the period
    
    $
    1
    
    
    $
    1
    
    
    $
    1Interest cost on projected benefit obligation
    
    
    16
    
    
    
    17
    
    
    
    16Expected return on plan assets
    
    
    (10
    )
    
    
    (11
    )
    
    
    (11
    )Amortization of transition obligation
    
    
    9
    
    
    
    6
    
    
    
    6Net postretirement benefit cost
    
    $
    16
    
    
    $
    13
    
    
    $
    12
 38




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##### Table of Contents



Year Ended December 31,2004
    
    2005
    
    2006Discount rate
    
    
    6.25
    %
    
    
    5.75
    %
    
    
    5.70
    %Expected return on plan assets
    
    
    8.50
    %
    
    
    8.00
    %
    
    
    8.50
    %
   Year Ended December 31,2005
    
    
    2006(In millions)Change in Benefit ObligationAccumulated benefit obligation, beginning of year
    
    $
    316
    
    
    $
    296Service cost
    
    
    1
    
    
    
    1Interest cost
    
    
    17
    
    
    
    16Benefits paid
    
    
    (17
    )
    
    
    (19
    )Participant contributions
    
    
    1
    
    
    
    1Plan amendment
    
    
    
    
    
    
    1Actuarial gain
    
    
    (22
    )
    
    
    (2
    )Accumulated benefit obligation, end of year
    
    $
    296
    
    
    $
    294Change in Plan AssetsPlan assets, beginning of year
    
    $
    135
    
    
    $
    134Benefits paid
    
    
    (17
    )
    
    
    (19
    )Employer contributions
    
    
    9
    
    
    
    9Participant contributions
    
    
    1
    
    
    
    1Actual investment return
    
    
    6
    
    
    
    13Plan assets, end of year
    
    $
    134
    
    
    $
    138Reconciliation of Funded StatusFunded status
    
    $
    (162
    )
    
    $
    (156
    )Unrecognized transition obligation
    
    
    51
    
    
    
    Unrecognized prior service cost
    
    
    (4
    )
    
    
    Unrecognized actuarial loss
    
    
    22
    
    
    
    Net amount recognized in balance sheets
    
    $
    (93
    )
    
    $
    (156
    )Actuarial AssumptionsDiscount rate
    
    
    5.70
    %
    
    
    5.85
    %Expected long-term return on assets
    
    
    8.50
    %
    
    
    8.00
    %Healthcare cost trend rate assumed for the next year
    
    
    9.00
    %
    
    
    7.00
    %Prescription drug cost trend rate assumed for the next year
    
    
    
    
    
    
    13.00
    %Rate to which the cost trend rate is assumed to decline
(ultimate trend rate)
    
    
    5.50
    %
    
    
    5.50
    %Year that the rate reaches the ultimate trend rate
    
    
    2011
    
    
    
    2014
  39




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##### Table of Contents



1%
    
    1%Increase
    
    Decrease(In millions)Effect on the postretirement benefit obligation
    
    
    14
    
    
    
    11Effect on total of service and interest cost
    
    $
    1
    
    
    $
    1
  December 31,2005
    
    2006Domestic equity securities
    
    
    30
    %
    
    
    31
    %International equity securities
    
    
    10
    
    
    
    12Debt securities
    
    
    60
    
    
    
    57Total
    
    
    100
    %
    
    
    100
    %
   Domestic equity securities
    
    
    25-35
    %International equity securities
    
    
    5-15
    %Debt securities
    
    
    55-65
    %Cash
    
    
    0-2
    %
   Postretirement Benefit PlanMedicareBenefit Payments
    
    Subsidy Receipts2007
    
    $
    21
    
    
    $
    (3
    )2008
    
    
    22
    
    
    
    (3
    )2009
    
    
    23
    
    
    
    (3
    )2010
    
    
    24
    
    
    
    (4
    )2011
    
    
    25
    
    
    
    (4
    )2012-2016
    
    
    134
    
    
    
    (20
    )
 Postemployment Benefits
  40




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##### Table of Contents



Other Non-Qualified Plans
   (n) Other Current Assets and Liabilities
  (3) Regulatory Matters
 (a) Recovery of True-Up Balance
   41




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##### Table of Contents



(b) Final Fuel Reconciliation
  (c) Remand of 2001 Unbundled Cost of Service Order
  (d) Refund of Environmental Retrofit Costs
  43




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##### Table of Contents



(e) Rate Case
       (4) Related Party Transactions and Major Customers
 (a) Related Party Transactions
  44




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##### Table of Contents



(b) Major Customers
  (5) Long-term Debt
 December 31, 2005
    
    
    December 31, 2006Long-Term
    
    
    Current(1)
    
    
    Long-Term
    
    
    Current(1)(In millions)Long-term debt:First mortgage bonds 9.15% due 2021(2)
    
    $
    102
    
    
    $
    
    
    
    $
    102
    
    
    $
    General mortgage bonds 5.60% to 6.95% due 2013
to 2033(2)
    
    
    1,262
    
    
    
    
    
    
    
    1,262
    
    
    
    Pollution control bonds 3.625% to 5.60% due
2012 to 2027(3)
    
    
    229
    
    
    
    
    
    
    
    229
    
    
    
    Transition Bonds 3.84% to 5.63% due 2006 to 2019
    
    
    2,407
    
    
    
    73
    
    
    
    2,260
    
    
    
    147Other
    
    
    (2
    )
    
    
    
    
    
    
    (2
    )
    
    
    Total long-term debt
    
    $
    3,998
    
    
    $
    73
    
    
    $
    3,851
    
    
    $
    147
 
 (1)
    
    Includes amounts due or scheduled to be paid within one year of the date noted.(2)
    
    Excludes $151 million of first mortgage bonds and $527 million of general mortgage bonds that
the Company had issued as collateral for long-term debt of CenterPoint Energy, and general
mortgage bonds that the Company had issued as collateral for its debt aggregating $229 million
at both December 31, 2005 and 2006. Debt issued as collateral is excluded from the financial
statements because of the contingent nature of the obligation.(3)
    
    These series of debt are secured by the Companys general mortgage bonds.   45




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Transition Bonds.
 Maturities
 Liens
 (6) Income Taxes
  Year Ended December 31,2004
    
    
    2005
    
    
    2006(In millions)CurrentFederal
    
    $
    57
    
    
    $
    (8
    )
    
    $
    208State
    
    
    2
    
    
    
    
    
    
    
    Total current
    
    
    59
    
    
    
    (8
    )
    
    
    208DeferredFederal
    
    
    78
    
    
    
    116
    
    
    
    (76
    )Total deferred
    
    
    78
    
    
    
    116
    
    
    
    (76
    )Income tax expense
    
    $
    137
    
    
    $
    108
    
    
    $
    132
 46




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##### Table of Contents



Year Ended December 31,2004
    
    
    2005
    
    
    2006(In millions)Income before income taxes and extraordinary item
    
    $
    419
    
    
    $
    331
    
    
    $
    403Federal statutory rate
    
    
    35
    %
    
    
    35
    %
    
    
    35
    %Income tax expense at statutory rate
    
    
    147
    
    
    
    116
    
    
    
    141Increase (decrease) in tax resulting from:Amortization of investment tax credit
    
    
    (7
    )
    
    
    (7
    )
    
    
    (7
    )Excess deferred taxes
    
    
    (4
    )
    
    
    (3
    )
    
    
    (2
    )Other, net
    
    
    1
    
    
    
    2
    
    
    
    Total
    
    
    (10
    )
    
    
    (8
    )
    
    
    (9
    )Income tax expense
    
    $
    137
    
    
    $
    108
    
    
    $
    132Effective Rate
    
    
    32.7
    %
    
    
    32.8
    %
    
    
    32.7
    %
  December 31,2005
    
    
    2006(In millions)Deferred tax assets:Current:Allowance for doubtful accounts
    
    $
    1
    
    
    $
    Total current deferred tax assets
    
    
    1
    
    
    
    Non-current:Employee benefits
    
    
    49
    
    
    
    75Other
    
    
    19
    
    
    
    27Total non-current deferred tax assets
    
    
    68
    
    
    
    102Total deferred tax assets
    
    
    69
    
    
    
    102Deferred tax liabilities:Non-current:Depreciation
    
    
    559
    
    
    
    554Regulatory assets, net
    
    
    901
    
    
    
    877Other
    
    
    8
    
    
    
    12Total deferred tax liabilities
    
    
    1,468
    
    
    
    1,443Accumulated deferred income taxes, net
    
    $
    1,399
    
    
    $
    1,341
  Tax Contingencies.
 47




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##### Table of Contents



(7) Commitments and Contingencies
 (a) Lease Commitments
  2007
    
    $
    62008
    
    
    42009
    
    
    2010
    
    
    2011
    
    
    Total
    
    $
    10
  (b) Legal and Environmental Matters
 Legal Matters
 RRI Indemnified Litigation
 Electricity and Gas Market
Manipulation Cases Other Class Action Lawsuits.
 Electricity and Gas Market Manipulation Cases.
  48




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Other Class Action Lawsuits.
 Environmental Matters
 Asbestos.
 49




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##### Table of Contents



Other Environmental.
 Other Proceedings
  Nuclear Decommissioning Fund Collections
  (8) Estimated Fair Value of Financial Instruments
  December 31, 2005
    
    December 31, 2006Carrying
    
    Fair
    
    Carrying
    
    FairAmount
    
    Value
    
    Amount
    
    Value(In millions)Financial liabilities:Long-term debt (including
$151 million of long-term
notes payable to parent)
    
    $
    4,221
    
    
    $
    4,330
    
    
    $
    4,148
    
    
    $
    4,250
 (9) Unaudited Quarterly Information
  Year Ended December 31, 2005First
    
    Second
    
    Third
    
    FourthQuarter
    
    Quarter
    
    Quarter
    
    Quarter(In millions)Revenues
    
    $
    345
    
    
    $
    414
    
    
    $
    484
    
    
    $
    401Operating income
    
    
    80
    
    
    
    122
    
    
    
    183
    
    
    
    102Income before extraordinary item
    
    
    28
    
    
    
    55
    
    
    
    95
    
    
    
    45Extraordinary item, net of tax
    
    
    
    
    
    
    30
    
    
    
    
    
    
    
    Net income
    
    
    28
    
    
    
    85
    
    
    
    95
    
    
    
    45
 50




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##### Table of Contents



Year Ended December 31, 2006First
    
    Second
    
    Third
    
    FourthQuarter
    
    Quarter
    
    Quarter
    
    Quarter(In millions)Revenues
    
    $
    385
    
    
    $
    456
    
    
    $
    533
    
    
    $
    407Operating income
    
    
    110
    
    
    
    151
    
    
    
    219
    
    
    
    96Net income
    
    
    43
    
    
    
    71
    
    
    
    119
    
    
    
    38
 
 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  
 Item 9A. Controls and Procedures
 Disclosure Controls And Procedures
   
 Item 9B. Other Information
  
 PART III
 
 Item 10. Directors, Executive Officers and Corporate Governance
  
 Item 11. Executive Compensation
  
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
  
 Item 13. Certain Relationships and Related Transactions, and Director Independence
  51




---



##### 



Item 14. Principal Accountant Fees and Services
  Year Ended December 31,2005
    
    
    2006Audit fees
    
    $
    365,225
    
    
    $
    414,400Audit-related fees
    
    
    165,000
    
    
    
    34,000Total audit and audit-related fees
    
    
    530,225
    
    
    
    448,400Tax fees
    
    
    
    
    
    
    All other fees
    
    
    
    
    
    
    Total fees
    
    $
    530,225
    
    
    $
    448,400
  
 PART IV
 
 Item 15. Exhibits and Financial Statement Schedules
  
 (a)(1) Financial Statements.Report of Independent Registered Public Accounting Firm
    
    
    29Statements of Consolidated Operations for the Three Years Ended December 31, 2006
    
    
    30Consolidated Balance Sheets at December 31, 2005 and 2006
    
    
    31Statements of Consolidated Cash Flows for the Three Years Ended December 31, 2006
    
    
    32Statements of Consolidated Members Equity for the Three Years Ended December 31, 2006
    
    
    33Notes to Consolidated Financial Statements
    
    
    34(a)(2) Financial Statement Schedules for the Three Years Ended December 31, 2006.Report of Independent Registered Public Accounting Firm
    
    
    53II Qualifying Valuation Accounts
    
    
    54
      52




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
  
  53




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##### Table of Contents



CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC AND SUBSIDIARIES
(An Indirect Wholly Owned Subsidiary of CenterPoint Energy, Inc.)
 
 SCHEDULE II  QUALIFYING VALUATION ACCOUNTS
For the Three Years Ended December 31, 2006
(In Millions)
 Column A
    
    Column B
    
    Column C
    
    Column D
    
    Column EBalance At
    
    Additions
    
    Deductions
    
    Balance AtBeginning
    
    Charged
    
    From
    
    End OfDescription
    
    of Period
    
    to Income
    
    Reserves(1)
    
    PeriodYear Ended December 31, 2006:Accumulated provisions:Uncollectible accounts receivable
    
    $
    5
    
    
    $
    (2
    )
    
    $
    2
    
    
    $
    1Year Ended December 31, 2005:Accumulated provisions:Uncollectible accounts receivable
    
    
    2
    
    
    
    3
    
    
    
    
    
    
    
    5Year Ended December 31, 2004:Accumulated provisions:Uncollectible accounts receivable
    
    
    3
    
    
    
    1
    
    
    
    2
    
    
    
    2
 
 (1)
    
    Deductions from reserves represent losses or expenses for which the respective reserves
were created. In the case of the uncollectible accounts reserve, such deductions are net of
recoveries of amounts previously written off. 54




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##### Table of Contents



SIGNATURES
  CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC
(Registrant)By:
    /s/ DAVID M. MCCLANAHANDavid M. McClanahanManager  Signature
    
    Title/s/ DAVID M. MCCLANAHAN
    
    Manager and Chairman (Principal Executive Officer)(David M. McClanahan)/s/ GARY L. WHITLOCK
    
    Executive Vice President and Chief Financial Officer (Principal Financial Officer)(Gary L. Whitlock)/s/ JAMES S. BRIAN
    
    Senior Vice President and Chief Accounting Officer (Principal Accounting Officer)(James S. Brian)
 55




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##### Table of Contents



CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC
 EXHIBITS TO THE ANNUAL REPORT ON FORM 10-K
For Fiscal Year Ended December 31, 2006
 INDEX OF EXHIBITS
  SEC File orExhibit
    
    
    
    
    
    Registration
    
    ExhibitNumber
    
    Description
    
    Report or Registration Statement
    
    Number
    
    Reference3(a)
    
    Articles of Conversion of REI
    
    Form 8-K dated August 31, 2002 filed
with the SEC on September 3, 2002
    
    1-3187
    
    
    3(a)3(b)
    
    Articles of Organization of
CenterPoint Energy Houston
Electric, LLC (CenterPoint
Houston)
    
    Form 8-K dated August 31, 2002 filed
with the SEC on September 3, 2002
    
    1-3187
    
    
    3(b)3(c)
    
    Limited Liability Company
Regulations of CenterPoint
Houston
    
    Form 8-K dated August 31, 2002 Filed
with the SEC on September 3, 2002
    
    1-3187
    
    
    3(c)4(a)(1)
    
    Mortgage and Deed of Trust,
dated November 1, 1944
between Houston Lighting and
Power Company (HL&P) and
Chase Bank of Texas,
National Association
(formerly, South Texas
Commercial National Bank of
Houston), as Trustee, as
amended and supplemented by
20 Supplemental Indentures
thereto
    
    HL&Ps Form S-7 filed on August 25, 1977
    
    2-59748
    
    
    2(b)4(a)(2)
    
    Twenty-First through
Fiftieth Supplemental
Indentures to Exhibit
4(a)(1)
    
    HL&Ps Form 10-K for the year ended
December 31, 1989
    
    1-3187
    
    
    4(a)(2)4(a)(3)
    
    Fifty-First Supplemental
Indenture to Exhibit 4(a)(1)
dated as of March 25, 1991
    
    HL&Ps Form 10-Q for the quarter ended
June 30, 1991
    
    1-3187
    
    
    4(a)4(a)(4)
    
    Fifty-Second through Fifty-
Fifth Supplemental
Indentures to Exhibit
4(a)(1) each dated as of
March 1, 1992
    
    HL&Ps Form 10-Q for the quarter ended
March 31, 1992
    
    1-3187
    
    
    44(a)(5)
    
    Fifty-Sixth and
Fifty-Seventh Supplemental
Indentures to Exhibit
4(a)(1) each dated as of
October 1, 1992
    
    HL&Ps Form 10-Q for the quarter ended
September 30, 1992
    
    1-3187
    
    
    4
 56




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##### Table of Contents



SEC File orExhibit
    
    
    
    
    
    Registration
    
    ExhibitNumber
    
    Description
    
    Report or Registration Statement
    
    Number
    
    Reference4(a)(6)
    
    Fifty-Eighth and Fifty-Ninth
Supplemental Indentures to
Exhibit 4(a)(1) each dated
as of March 1, 1993
    
    HL&Ps Form 10-Q for the quarter ended
March 31, 1993
    
    1-3187
    
    
    44(a)(7)
    
    Sixtieth Supplemental
Indenture to Exhibit 4(a)(1)
dated as of July 1, 1993
    
    HL&Ps Form 10-Q for the quarter ended
June 30, 1993
    
    1-3187
    
    
    44(a)(8)
    
    Sixty-First through
Sixty-Third Supplemental
Indentures to Exhibit
4(a)(1) each dated as of
December 1, 1993
    
    HL&Ps Form 10-K for the year ended
December 31, 1993
    
    1-3187
    
    
    4(a)(8)4(a)(9)
    
    Sixty-Fourth and Sixty-Fifth
Supplemental Indentures to
Exhibit 4(a)(1) each dated
as of July 1, 1995
    
    HL&Ps Form 10-K for the year ended
December 31, 1995
    
    1-3187
    
    
    4(a)(9)4(b)(1)
    
    General Mortgage Indenture,
dated as of October 10,
2002, between CenterPoint
Energy Houston Electric, LLC
and JPMorgan Chase Bank, as
Trustee
    
    Quarterly Report on Form 10-Q for the
quarterly period ended September 30,
2002
    
    1-3187
    
    
    4(j)(1)4(b)(2)
    
    Second Supplemental
Indenture to Exhibit
4(b)(1), dated as of October
10, 2002
    
    Quarterly Report on Form 10-Q for the
quarterly period ended September 30,
2002
    
    1-3187
    
    
    4(j)(3)4(b)(3)
    
    Third Supplemental Indenture
to Exhibit 4(b)(1), dated as
of October 10, 2002
    
    Quarterly Report on Form 10-Q for the
quarterly period ended September 30,
2002
    
    1-3187
    
    
    4(j)(4)4(b)(4)
    
    Fourth Supplemental
Indenture to Exhibit
4(b)(1), dated as of October
10, 2002
    
    Quarterly Report on Form 10-Q for the
quarterly period ended September 30,
2002
    
    1-3187
    
    
    4(j)(5)4(b)(5)
    
    Fifth Supplemental Indenture
to Exhibit 4(b)(1), dated as
of October 10, 2002
    
    Quarterly Report on Form 10-Q for the
quarterly period ended September 30,
2002
    
    1-3187
    
    
    4(j)(6)4(b)(6)
    
    Sixth Supplemental Indenture
to Exhibit 4(b)(1), dated as
of October 10, 2002
    
    Quarterly Report on Form 10-Q for the
quarterly period ended September 30,
2002
    
    1-3187
    
    
    4(j)(7)4(b)(7)
    
    Seventh Supplemental
Indenture to Exhibit
4(b)(1), dated as of October
10, 2002
    
    Quarterly Report on Form 10-Q for the
quarterly period ended September 30,
2002
    
    1-3187
    
    
    4(j)(8)4(b)(8)
    
    Eighth Supplemental
Indenture to Exhibit
4(b)(1), dated as of October
10, 2002
    
    Quarterly Report on Form 10-Q for the
quarterly period ended September 30,
2002
    
    1-3187
    
    
    4(j)(9)4(b)(9)
    
    Officers Certificates dated
October 10, 2002, setting
forth the form, terms and
provisions of the First
through Eighth Series of
General Mortgage Bonds
    
    CNPs Form 10-K for the year ended
December 31, 2003
    
    1-31447
    
    
    4(c)(10)4(b)(10)
    
    Ninth Supplemental Indenture
to Exhibit 4(b)(1), dated as
of November 12, 2002
    
    CNPs Form 10-K for the year ended
December 31, 2002
    
    1-31447
    
    
    4(e)(10)
 57




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##### Table of Contents



SEC File orExhibit
    
    
    
    
    
    Registration
    
    ExhibitNumber
    
    Description
    
    Report or Registration Statement
    
    Number
    
    Reference4(b)(11)
    
    Officers Certificate dated
November 12, 2002 setting
forth the form, terms and
privisions of the Ninth
Series of General Mortgage
Bonds
    
    CNPs Form 10-K for the year ended
December 31, 2003
    
    1-31447
    
    
    4(e)(12)4(b)(12)
    
    Tenth Supplemental Indenture
to Exhibit 4(b)(1), dated as
of March 18, 2003
    
    Form 8-K dated March 13, 2003
    
    1-3187
    
    
    4.14(b)(13)
    
    Officers Certificate dated
March 18, 2003 setting forth
the form, terms and
provisions of the Tenth
Series and Eleventh Series
of General Mortgage Bonds
    
    Form 8-K dated March 13, 2003
    
    1-3187
    
    
    4.24(b)(14)
    
    Eleventh Supplemental
Indenture to Exhibit
4(b)(1), dated as of May 23,
2003
    
    Form 8-K dated May 16, 2003
    
    1-3187
    
    
    4.14(b)(15)
    
    Officers Certificate dated
May 23, 2003 setting forth
the form, terms and
provisions of the Twelfth
Series of General Mortgage
Bonds
    
    Form 8-K dated May 16, 2003
    
    1-3187
    
    
    4.24(b)(16)
    
    Twelfth Supplemental
Indenture to Exhibit
4(b)(1), dated as of
September 9, 2003
    
    Form 8-K dated September 9, 2003
    
    1-3187
    
    
    4.24(b)(17)
    
    Officers Certificate dated
September 9, 2003 setting
forth the form, terms and
provisions of the Thirteenth
Series of General Mortgage
Bonds
    
    Form 8-K dated September 9, 2003
    
    1-3187
    
    
    4.34(b)(18)
    
    Thirteenth Supplemental
Indenture to Exhibit
4(e)(1), dated as of
February 6, 2004
    
    CNPs Form 10-K for the year ended
December 31, 2005
    
    1-31447
    
    
    4(e)(16)4(b)(19)
    
    Officers Certificate dated
February 6, 2004 setting
forth the form, terms and
provisions of the Fourteenth
Series of General Mortgage
Bonds
    
    CNPs Form 10-K for the year ended
December 31, 2005
    
    1-31447
    
    
    4(e)(17)4(b)(20)
    
    Fourteenth Supplemental
Indenture to Exhibit
4(e)(1), dated as of
February 11, 2004
    
    CNPs Form 10-K for the year ended
December 31, 2005
    
    1-31447
    
    
    4(e)(18)4(b)(21)
    
    Officers Certificate dated
February 11, 2004 setting
forth the form, terms and
provisions of the Fifteenth
Series of General Mortgage
Bonds
    
    CNPs Form 10-K for the year ended
December 31, 2005
    
    1-31447
    
    
    4(e)(19)4(b)(22)
    
    Fifteenth Supplemental
Indenture to Exhibit
4(e)(1), dated as of March
31, 2004
    
    CNPs Form 10-K for the year ended
December 31, 2005
    
    1-31447
    
    
    4(e)(20)4(b)(23)
    
    Officers Certificate dated
March 31, 2004 setting forth
the form, terms and
provisions of the Sixteenth
Series of General Mortgage
Bonds
    
    CNPs Form 10-K for the year ended
December 31, 2005
    
    1-31447
    
    
    4(e)(21)
 58




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##### Table of Contents



SEC File orExhibit
    
    
    
    
    
    Registration
    
    ExhibitNumber
    
    Description
    
    Report or Registration Statement
    
    Number
    
    Reference4(b)(24)
    
    Sixteenth Supplemental
Indenture to Exhibit
4(e)(1), dated as of March
31, 2004
    
    CNPs Form 10-K for the year ended
December 31, 2005
    
    1-31447
    
    
    4(e)(22)4(b)(25)
    
    Officers Certificate dated
March 31, 2004 setting forth
the form, terms and
provisions of the
Seventeenth Series of
General Mortgage Bonds
    
    CNPs Form 10-K for the year ended
December 31, 2005
    
    1-31447
    
    
    4(e)(23)4(b)(26)
    
    Seventeenth Supplemental
Indenture to Exhibit
4(e)(1), dated as of March
31, 2004
    
    CNPs Form 10-K for the year ended
December 31, 2005
    
    1-31447
    
    
    4(e)(24)4(b)(27)
    
    Officers Certificate dated
March 31, 2004 setting forth
the form, terms and
provisions of the Eighteenth
Series of General Mortgage
Bonds
    
    CNPs Form 10-K for the year ended
December 31, 2005
    
    1-31447
    
    
    4(e)(25)4(c)
    
    $300,000,000 Amended and
Restated Credit Agreement
dated as of March 31, 2006
among CenterPoint Houston,
as Borrower, and the banks
named therein
    
    Form 8-K dated March 31, 2006
    
    1-3187
    
    
    4.2
  SEC File orExhibit
    
    
    
    
    
    Registration
    
    ExhibitNumber
    
    Description
    
    Report or Registration Statement
    
    Number
    
    Reference10
    
    City of Houston Franchise
Ordinance
    
    CNPs Form 10-Q for the quarter ended
June 30, 2005
    
    1-31447
    
    
    10.1+12
    
    Computation of Ratios of
Earnings to Fixed Charges+31.1
    
    Rule 13a-14(a)/15d-14(a)
Certification of David M.
McClanahan+31.2
    
    Rule 13a-14(a)/15d-14(a)
Certification of Gary L.
Whitlock+32.1
    
    Section 1350 Certification
of David M. McClanahan+32.2
    
    Section 1350 Certification
of Gary L. Whitlock